South Korean liner shipping operator HMM saw income drop 89% in the second quarter of the year.
The Seoul-based operator reported that net profits fell to KRW 313bn ($238.4m) for the three months to the end of June.
That is massively down from KRW 2.941bn ($1.6bn) in the same quarter of 2022.
Revenues dropped 58% to KRW 2.130bn in the quarter, while operating profit slumped 95% to KRW 160bn.
“The container shipping industry has been experiencing an overcapacity, mainly led by the influx of new container ships ordered during the pandemic and supply chain normalisation at major ports and inland regions,” HMM said.
“The cascading effect of larger vessels from the main East-West trades to smaller lanes intensified the imbalance between supply and demand.
“Consequently, the freight rates in most key trade lanes have been under downward pressure during the first half of 2023.”
Recovery
While rates are massively down, the liner operator expects to see a recovery on certain trades in the coming months.
“In the case of transpacific trade, we expect to see a gradual recovery in cargo volumes as a rebound in inventory restocking and a soft landing for the US economy are likely to come to fruition,” it said.
On that trade, the company said it expected “no drastic changes in the supply side in the near term”.
HMM added that it would carry out service adjustments on routes from Asia to India and the Mediterranean.
The company also plans cost-cutting measures and enhancements to operational efficiency to cope with market uncertainty.
Interest in the performance of HMM has grown since the Korea Development Bank fired the gun on the HMM privatisation in March.
The privatisation has attracted interest from South Korea’s SM Group, which is HMM’s third-largest investor with a stake of 6.56%.
In the first half of the year, HMM reported net profit of KRW 610bn on revenue of KRW 4.212bn and an operating profit of KRW 467bn.
