Hyundai Merchant Marine says it is carrying more containers, but rates were lower and fuel costs were higher.
Despite handling more cargo, Hyundai Merchant Marine (HMM) reported a net loss of 242.7 billion South Korean won ($215 million) in the second quarter of 2018 compared with a net loss of 174 billion South Korean Won in the same 2017 period. The company attributed the loss to lower average freight rates and higher bunker costs.
The company had an operating loss of 199.8 billion won in the second quarter of 2018 compared with an operating loss of 128 billion won in the second quarter of 2017. The portion of the operating loss attributed to HMM’s container business amounted to 175.7 billion won or 88 percent in the second quarter of this year compared with 96 billion won or 75 percent of the operating loss in the second quarter of 2017.
HMM said the bellwether Shanghai Containerized Freight Index was 12 percent lower in the second quarter of 2018 than it was in the second quarter of 2017. The average of 380 CST bunker fuel price was 26.7 percent higher in the second quarter of this year than it was in the same period the prior year, said HMM.
Revenue in the second quarter of 2018 was 1.239 trillion won compared with 1.242 trillion won in the same 2017 period.
HMM handled 1,154,225 TEUs in the second quarter of 2018 compared to 986,495 TEUs in the second quarter of 2017. The company said it handled 17.6 percent more containerized cargo in the second quarter than in the first quarter of this year and revenue was 11 percent higher than the first quarter of 2018. The company attributed the increases to “sales expansion efforts including launch of new Europe service (AEX) and deployment of newly built 11,000-TEU in South America trade.”
The company took delivery of two 11,000-TEU ships in July, one of which will be deployed in the trade to the West Coast of South America and the other to the East Coast of South America. The ships are deployed with scrubber systems to reduce sulfur in engine exhaust to levels required under the International Maritime Organization beginning in 2020.
HMM also said it had increased the load factor on its ships to 79.1 percent in the second quarter compared with 75.6 percent in the first quarter of this year and 75.1 percent in the second quarter of 2017.
Looking forward, HMM said it “expected higher freight rates and load factor through the traditional peak season, third quarter,” but also said “cargo volume is likely to fluctuate due to changes in international situation.”
The company said it will “maximize its enterprise-wide efforts to improve its efficiency and bottom line through rationalizing service routes and pursuing economical speed to reduce bunker costs in order to overcome depressed shipping market.”
On June 15 HMM signed a letter of intent to acquire 20 new ships. Daewoo Shipbuilding and Marine Engineering (DSME) and Samsung Heavy Industries will build seven and five 23,000-TEU containerships, respectively, which are expected to be delivered in the second quarter of 2020. Hyundai Heavy Industries will construct eight 14,000 TEU containerships to be delivered in the second quarter of 2021.
HMM said it “will continue its efforts to secure additional cargo volume” before taking over the 20 ships.
HMM reports $215 million loss
