The plan to transfer HMM and agencies under the Ministry of Oceans and Fisheries to Busan, which was initially set to be announced next week, has fallen through. With the Minister of the Ministry of Oceans and Fisheries stepping down and the post vacant, the ministry believes it will be difficult to announce the transfer plan this month. The ministry's official stance is that, because the transfer of HMM and others is a state task, it will push it forward as quickly as possible, but with the HMM resale also gaining speed and strong opposition from the labor union, there is a possibility it will face "rough going."
According to the government and the shipping industry on the 9th, the Ministry of Oceans and Fisheries (MOF) decided to delay the transfer plan to Busan for HMM, its subordinate agencies, the maritime court, and the Southeast Investment Corporation, which had initially been scheduled for announcement in the second week of this month. An MOF official said, "It has become difficult to disclose the Busan transfer plan within this month," adding, "We are trying to set the schedule and move forward as soon as possible."
The biggest reason cited is that the MOF Minister, who should push the HMM Busan transfer plan, is absent. Chun Jae-soo, former Minister of the MOF, upon being appointed in July last year, said he would simultaneously push to move HMM, subordinate agencies, the maritime court, and the Southeast Investment Corporation to Busan. In response, the MOF preemptively completed its own transfer to Busan at the end of last year. Chun Jae-soo met directly in November last year with leaders of HMM's land-based union, which is opposing the Busan transfer, to persuade them of the necessity.
Since the former Minister personally led HMM's transfer to Busan, the internal mood at the MOF is that momentum has now weakened. While the HMM Busan transfer is a state task and thus a ministry-level pending issue, it is difficult to decide on matters such as the transfer method or announcement schedule on its own with the control tower empty. President Lee Jae-myung said at the end of last month that he would appoint a "Busan native" as the next MOF Minister.
The industry expects it will be hard for HMM's transfer to Busan to proceed quickly as planned. That is because the Korea Development Bank is pursuing a resale of HMM, and it is hard to view that as completely separate from the Busan transfer. Last month, the Korea Development Bank began preparations to reassess the value of the HMM equity it holds. As of the end of September, the Korea Development Bank is the largest shareholder of HMM with 35.42% equity. The second-largest shareholder is the Korea Ocean Business Corporation (KOBC), with 35.08%. The Korea Development Bank plans to receive a final report on the value of HMM equity by the end of next month.
Internal pushback at HMM is also a factor that must be considered ahead of the Busan transfer. HMM's land-based union strongly opposes the head office transfer, saying the issue goes beyond a simple change of workplace and could cause a drain of personnel and operational disruptions. HMM has about 1,900 employees, more than 1,000 of whom are land-based staff with their lives centered in Seoul and the greater metropolitan area. The HMM union has said it is prepared to go on a general strike if the government forces the transfer.
Meanwhile, opinions are divided between the Busan city government and the shipping industry over the shortlist of candidates to acquire HMM. There is considerable opposition to POSCO Group, which has expressed interest in acquisition. The argument is that if POSCO, a major shipper, enters the shipping business, operations will center on transporting POSCO's internal cargo, and confusion in freight rate negotiations could drive other shipping companies out of the market.
Dongwon Group also reportedly plans to make another bid to acquire HMM around the end of last year, setting the stage for a two-way race. However, as HMM's valuation is estimated at around 10 trillion won, many say POSCO is ahead in terms of cash mobilization capacity. As of the end of September, POSCO Holdings, POSCO's holding company, had 7.1688 trillion won in cash and cash equivalents. In contrast, Dongwon Industries, the holding company of Dongwon Group, had about 493.4 billion won in cash equivalents.