South Korea’s second leading ocean carrier Hyundai Merchant Marine Co. (HMM) is considering bidding for its bigger local rival Hanjin Shipping Co.’s Asia-U.S. route, as Maersk Line denied reports it plans to join the auction, industry sources said.
This as the South Korean government confirmed it is soon to release a cluster of measures to help buoy the nation’s ailing shipping industry.
According to the sources, Hyundai Merchant, currently under a creditor-led debt restructuring scheme, is planning to submit a preliminary bid for Hanjin Shipping’s Asia-U.S. route, seen as the most lucrative, and its ships that are up for sale, said Yonhap in a news report.
Part of cash-strapped Hanjin Shipping Co.’s assets has gone up for sale as the company is struggling to raise the cash needed to repay debts and unpaid bills.
The country’s No. 1 shipper, which is currently under receivership, got the nod from a local court to sell its Asia-U.S. route, including manpower, as well as vessels and 10 overseas operations.
The Seoul Central District Court will receive letters of interest from potential buyers until October 28. Potential bidders are required to offer final bids by November 4 and will be given chances to conduct due diligence.
The asset sale will be completed by the end of next month, but the prices were not determined.
Hanjin Shipping’s Asia-U.S. route logs sales of up to KRW4 trillion (US$3.6 billion) annually, and its market share stands at 7%, the sixth largest among global shippers, said the report.
HMM, a member of global shipping alliance 2M, is planning to expand its fleet, so it wants to buy vessels from Hanjin Shipping.
Meanwhile, rumors that Maersk Line, which is also part of the 2M grouping, intends to acquire Hanjin Shipping, or its Asia-U.S. route, have been shot down by the Danish container shipping conglomerate.
“They are only rumors, and we do not comment on rumors,” a representative for Maersk Line was quoted as saying by media.
Speculation that Maersk—the world’s largest container shipping company—may take over Hanjin Shipping resurfaced last week when news reports said Maersk may be one of the buyers of Hanjin’s Asia-U.S. route.
Action plan for shipping’s revival
As this developed, South Korea’s top financial regulator has affirmed that the government will soon unveil a set of measures to help reinvigorate the nation’s shipping industry, currently faced with low freight rates and a protracted slump.
A sense of gloom over its future has enveloped the sector, once hailed as a key business of Asia’s fourth largest economy, after Hanjin Shipping went under court receivership early last month.
“With regard to the Hanjin issue, the part in which the government should have more interest is not to let the competitiveness of the shipping industry be undermined,” Yim Jong-yong, chairman of the Financial Services Commission told reporters.
Related authorities are “comprehensively reviewing” ways to enhance its global competitiveness, he added. “(The government) will wrap up the discussions within this month.”