South Korea’s largest container shipping company HMM has become the latest carrier to announce growth plans fueled by a two-year surge in the container shipping industry. The company detailed a five-year strategy calling for $11.4 billion in investment that responds to “uncertainty arising from ever-changing business circumstances” while laying the foundations for sustainable growth.
The shipping company, currently the eighth largest container carrier, said it intends to invest in a number of initiatives covering core assets such as ships, terminals. and logistics facilities, while focusing on issues facing the shipping industry, including digitalization and decarbonization. The five-point strategy is seen as the next step in the rehabilitation of the former Hyundai Merchant Marine, which in 2016 was spun off from the Hyundai Group and bailed out by the government-owned Korea Development Bank. KDB along with state-owned Korea Ocean Business Corp. now collectively own more than 40 percent of the shipping company with reports that they are looking for a strategy as part of their plans to begin privatizing the company in 2022.
“Our strategy is to ensure the continued growth of HMM under the new vision – a global leading company generating sustainable value for the world,” said Kim, Kyung Bae, President and CEO of HMM. Speaking to reporters in South Korea, he said they are not currently discussing the timing and strategy of privatization. He commented: “If we make the company stronger, its fundamentals will improve and increase shareholder value.”
HMM’s five-year growth strategy focuses on five key business elements, with the majority of investment in new vessels as well as terminals and logistics facilities. Currently deriving 90 percent of its revenue from the segment, HMM said it will almost double container capacity to 1.2 million TEU from the current 820,000 TEU. The company also plans to expand its large fleet from the current 29 ships to 55 ships, which will increase its capacity by 90 percent.
The total planned investment for ships, as well as for the acquisition of terminals and logistics facilities is 7.8 billion dollars. The strategy calls for the investment to be completed by 2026. As part of the effort, they will focus on the environment, including possibly ordering new ships using alternative fuels and research and development efforts to support the goal of achieving carbon neutrality by 2050 Mr.
HMM also plans to continue investing in its digital strategy. The company recently launched an online sales platform for customers. In the next steps, they plan to integrate their internal logistics network and implement freight rate solutions using artificial intelligence. HMM plans to invest $114 million in digitization by improving its online-based platform and accelerating ERP upgrades.
Without providing further details, HMM said it will also invest $3.8 billion over the next five years in future strategic projects to diversify its business.
The investment plans come as HMM is on a steady recovery trajectory after the Korean government struck a debt deal to save the company from bankruptcy in 2016. HMM rebounded in 2021, reporting $11.5 billion in revenue and 4 .6 billion in net income. For most of 2021, there was speculation that the government was looking for a buyer.