HMM is accelerating the expansion of its bulk carrier fleet. Even as container shipping rates have been recovering recently, raising the possibility of profitability improving, the company is continuing to secure very large crude carriers (VLCCs) and dry bulk carriers.
HMM is also said to have deferred its plan to add container ships recently, apparently judging that the structural problem of excess container capacity has not been resolved and that the long-term market outlook is unfavorable.
According to the shipping industry on the 10th, HMM recently ordered four 306,000 DWT crude oil tankers from China's Hengli shipyard. At $125 million per ship, the total comes to $500 million (about 771.0 billion won).
HMM has been aggressively increasing its bulk carrier fleet since last year. For VLCCs alone, it ordered two ships from HD Hyundai Heavy Industries last year. Once deliveries are completed in 2029, the VLCC fleet will total 20 ships.
Dry bulk carriers are also increasing rapidly. As it continued purchasing secondhand bulkers since early last year, the number of dry bulk carriers rose from 17 to 23 in the first quarter of this year.
Multipurpose vessels also increased from seven to 11, and three liquefied petroleum gas (LPG) carriers were added. In addition, with the delivery of the pure car and truck carriers (PCTCs) ordered in 2023, the company has also built up that fleet (three ships).
In this context, HMM is said to have reviewed deferring the introduction of 10 new container ships and focusing on expanding its bulk carrier fleet.
It plans to redirect funds that would have gone to ordering 13,000-TEU ultra-large container ships into ordering Suezmax and medium-range tankers and liquefied natural gas (LNG) carriers.
As of the first quarter of this year, container ships account for 62% (95 ships) of HMM's fleet. Bulk carriers such as tankers, dry bulkers, multipurpose vessels, and LPG carriers account for 36% (56 ships), and car carriers account for 2% (three ships). Compared with the first quarter of last year, when non-container ships numbered 44 and made up 34% of the total fleet, the share has risen by about 4 percentage points.
The move is drawing attention because ocean container freight rates have been rising recently. As of the day, the Shanghai Containerized Freight Index (SCFI) closed at 2,726.48, up 6% from the previous week. The SCFI has been on a steady rise since hitting 1,251.46 in Feb. It is the first time the SCFI has topped the 2,700 level since Sep. 2024, about one year and nine months.
Ocean freight rates are trending up on front-loaded demand due to uncertainty over U.S. tariff policy and the impact of Middle East-related rates and oil prices. This has led to expectations that profitability could gradually improve.
Nevertheless, HMM appears to be reducing the share of container ships because it expects long-term oversupply to make profitability improvements difficult, and instead is putting its weight behind bulk carriers, where profitability is relatively solid.
In the first quarter of this year, HMM's container institutional sector sales were 2.2712 trillion won, accounting for 84% of the total. Operating profit was 185.2 billion won, accounting for 69%. As a result, results are heavily affected by container market conditions.
In this situation, operating profit in the bulk institutional sector rose 135%, but operating profit in the container institutional sector fell 68%, bringing total operating profit down 56% year over year to 269.1 billion won.
Global shipping market analysis firm Drewry projected that, due to structural oversupply, the operating margin of deep-sea container companies will decline by 4 percentage points this year from a year earlier.
The maritime trade journal TradeWinds said, "HMM warned that delivery of new container ships when demand growth is weak could lead to oversupply," adding, "With market uncertainty high, it aims to improve profitability by securing long-term contracts for strategic cargoes with bulk carriers."
HMM plans to increase its bulk carrier fleet to 110 ships by 2030 and raise the sales ratio of that institutional sector to 22%. HMM is the only company in Korea that operates various regular container services while running a bulk business, but Pan Ocean and Sinokor Merchant Marine Group, which operate both container ships and bulk carriers, are also strengthening their bulk capabilities.
An HMM official said, "Since last year, we have been strengthening fleet competitiveness to diversify the portfolio of the bulk institutional sector and secure profitability beyond our core container institutional sector," adding, "We plan to continue expanding the bulk institutional sector to generate stable and sustainable revenue."