South Korea’s Hyundai Merchant Marine (HMM), the world’s eighth-largest container shipping company, has announced plans to expand its fleet by building 46 new containerships and 74 new bulk carriers and other ship types, for a total of 120 newbuildings by 2030. The South Korean government, HMM’s largest shareholder, plans to use nearly 11 trillion won (about $790 million) of retained earnings for this new shipbuilding investment program.
However, based on the current situation in the newbuilding market, rising ship costs and a shortage of shipyard slots are likely to be important factors affecting this newbuilding investment program.
As the world’s major shipping companies are expanding their fleets as global shipping alliances are reorganized, HMM’s move is aimed at responding to this global trend of change in order to stay ahead of the competition. According to Korea’s Ministry of Oceans and Fisheries, HMM’s current share of the global container shipping market is only 2.7 %.
According to the medium and long-term strategy formulated by HMM, by 2030, HMM plans to increase the fleet size of containerships from 84 units and 920,000 TEU to 130 units and 1.5 million TEU. In the bulk carrier sector, it plans to expand its fleet size from 36 units and 6.3 million dwt to 110 units and 12.28 million dwt.
However, Korean industry figures believe that HMM will need to build up a fleet capacity of 3 million TEUs to survive on its own on east-west routes between cities in developed countries. There is also need to ensure that the market demand for the new ships, which are planned to be deployed on growing new routes such as the Mediterranean and South-North American routes. However, since the Mediterranean and Atlantic sea routes are dominated by European shipping lines, HMM is not expected to compete easily with them.
Meanwhile, HMM’s largest shareholder plans to use the company’s retained earnings to increase its fleet capacity. As of the end of last year, HMM’s retained earnings amounted to KRW10.889 trillion, enough to order 30 23,000 TEU ultra-large container ships (totaling 690,000 TEU) at a market price of about KRW360 billion (about $258 million) each, without adding new debt.
Nonetheless, it will not be easy for HMM to find shipyards that can build these new ships. South Korea’s three largest shipbuilders HD Korea Shipbuilding & Offshore Engineering (HD KSOE), Hanwha Ocean and Samsung Heavy Industries (SHI), whose shipyards have an annual production capacity of 40~50 ships, have basically sold out of the 2027 delivery schedule, and the delivery date of newly signed orders has already begun to be lined up for 2028.
Even if HMM places an order with these three shipbuilders immediately, it will not start receiving new ships until 2028. In addition, HMM may consider signing shipbuilding contracts with Chinese shipyards or buying or chartering used ships from other shipping companies.
Taking the world’s sixth-largest container shipping company, Japan’s Ocean Network Express (ONE), for example, which plans to increase its fleet size by 700,000 TEUs to 3 million TEUs by 2030. Earlier this year, ONE announced the signing of a total of 12 13,000 TEU methanol dual-fuel containerships with China State Shipbuilding Corporation (CSSC) Jiangnan Shipbuilding (6 ships) and China’s largest private shipbuilder, Yangzijiang Shipbuilding Group (6 ships), with new deliveries to begin in 2027. The order has been confirmed by the shipowner and shipyard respectively.
In addition to its new shipbuilding program, HMM is considering advancing its zero carbon emissions target to 2045, five years earlier than originally planned.Under this goal, the company will improve energy efficiency, build environmentally friendly ships and use low-emission fuels.