South Korea’s HMM is the latest shipping company to jump on the strong car carrier market.
The Seoul-based organisation is said to have invested huge profits made from the liner business to enter the niche sector with an order of three large pure car/truck carrier (PCTC) newbuildings.
Industry sources said HMM has contracted Guangzhou Shipyard International (GSI) in China to build three 8,600-ceu newbuildings. They added that the new ships were ordered against charter contracts from Hyundai Glovis.
Details of the charter deals were not disclosed, but they are believed to be long-term contracts of more than 10 years.
“We believed the length of the charter contracts are similar to the ones Glovis inked with H-Line Shipping,” one source said.
Glovis has fixed a total of seven PCTC newbuildings — three 8,600-ceu and four 7,000-ceu units from H-Line. The new ships will be delivered between 2024 and 2025.
Officials at GSI were not available for comment on the order of the PCTC newbuildings, while HMM declined to comment if it had ordered the vessels.
Car carrier sources think HMM is paying more than $100m each for the newbuildings and it will take delivery of the trio between 2025 and 2026.
One car carrier insider said HMM quit the car carrier business during the 1990s when the “ailing company” — then called Hyundai Merchant Marine — sold the business to Eukor, an Asian car-carrying outfit formed by Wallenius Wilhelmsen Lines.
“The car carrier division was the cash cow of Hyundai Merchant Marine and the sale of the unit enabled the South Korean shipping company to survive,” the car carrier expert said.
HMM was reported to have logged a record operating profit of KRW 9.95trn ($7.79bn) for 2022 — up 34.8% on the previous year despite a sharp drop in the fourth quarter.
“HMM made so much money last year and is investing them on car carriers,” a shipbuilding source said.
In February, HMM splashed out more than $1bn on nine methanol-fuelled container ship newbuildings. It ordered seven 9,000-teu vessels at Hyundai Samho Heavy Industries and two similar size ships at HJ Shipbuilding for about $123.5m per ship.
The newbuildings were reported to be the world’s first 9,000-teu methanol-powered container ships and they are slated to be delivered from 2025 onwards.
Besides the 9,000-teu newbuildings, HMM also has a dozen 13,000-teu LNG-ready neo-panamax boxships and three 1,800-teu feeder vessels on its orderbook.
The two ship types — worth more than $1.55bn — were ordered in 2021. Hyundai Heavy Industries and DSME are constructing the large boxships, while Hyundai Mipo Dockyard is building the feeder ships.
Last year, HMM disclosed that it wanted to grow its eco-friendly boxship fleet from 820,000 teu to 1.2m teu by the end of 2026.
Alphaliner lists HMM as the eighth-largest liner operator, with 75 ships of 816,365 teu.
The shipping company is backed by state-owned Korea Development Bank (KDB) with 20.69% shares, while the national government has 20% through Korea Ocean Business Corp.
Early this month, KDB was reported to have begun the process of selling management rights of HMM, which has a market cap of KRW 11trn ($8.45bn).
The bank took over management rights following a liquidity crisis in 2016.
