South Korean shipping company Hyundai Merchant Marine (HMM) is confident it will fill up the newly ordered mega containerships.
The twenty scrubber-fitted ships, ordered in September this year, include twelve 23,000 TEU and eight 15,000 TEU boxships, which are expected to be ready for deployment in 2020.
“HMM expects that fixed costs will significantly decrease, fuel efficiency will largely improve, and that bunker costs will moderately decrease through installed scrubber systems for compliance with IMO 2020 environmental regulations. The timely deployment with this combination of cost competitiveness is expected to attract customers, partners and investors,” the company said.
Top tier liner companies have been ordering 20K+ TEU ships over the past few years eager to unlock economies of scale. Containership deliveries this year have been dominated by ultra large containership vessels.
Only two ships out of the 150 delivered in 2018 so far, have had a cargo-carrying capacity of between 4,000 and 10,000 TEU, data from BIMCO shows. The introduction of so many ultra-large containerships into the slow-growing Far East to Europe trade lane, has resulted in depressed spot freight rates all year.
What is more, due to market headwinds many liners have had difficulties in tapping into the potential of the economies of scale as they faced challenges in filling up these giant boxships .
Commenting on its ability to fill up the newly ordered sea behemoths, HMM pointed to recovered customer trust and improved financial stability as key factors in making the endeavor possible.
“HMM’s vessel utilization level and handling volume has significantly increased. In terms of average utilization level (round trip), HMM achieved 75% in 2016, but it increased to 78% in the first half of 2018 and we expect over 80% in the second half of this year. HMM’s handling cargo volume has dramatically increased by 30% from 3 million TEU in 2016 to 4 million TEU in 2017 without fleet expansion, and now we expect 4.5 million TEU in handling volume in 2018,” the shipping company continued.
HMM added that it has increased its Far East – Europe service market share by over 50% through its newly introduced AEX service, which has been fully booked since its first sailing in April this year.
Furthermore, the company said it was confident in attaining 7% market share in East-West trades by 2021.
In October this year, HMM raised KRW 1 trillion via bond issuance. The liner giant added it would continue to improve its profits and even pursue autonomous financing if needed.
“Therefore, we believe the apprehension that HMM might have difficulties in filling up the mega containerships is unwarranted,” the company pointed out.