But Hyundai Merchant Marine saw growing revenue and a smaller operating loss in the fourth quarter.
Korean container carrier Hyundai Merchant Marine said it had an operating loss of 576.5 billion won ($513 million) in 2018, compared with a loss of 406.8 billion won in 2017. The company saw revenue grow to 5.222 trillion won in 2018, an increase over the 5.028 trillion won it reported in 2017. The company said it handled 4,459,037 TEUs in 2018, a 10.6 percent increase over 2017.
In the fourth quarter of 2018, HMM had an operating loss of 83.5 billion won, which was smaller than the 118 billion won loss it reported in the fourth quarter of 2017. Revenue in the fourth quarter 2018 amounted to 1,446 trillion won, up from 1,188 trillion won in the fourth quarter of 2017.
The company noted that cargo volumes headed to the U.S. increased as shippers tried to move cargo ahead of possible tariff increases as well as the Chinese New Year holiday. But it said overall, the freight rate remained weak due to a delay in regional rate recovery, a volume decrease resulting from Iran sanctions and continuous competition in the regional market.
It also noted the average cost of bunker fuel increased 32 percent from an average of $321 per ton in 2017 to $424 in 2018. In the fourth quarter, the company said its average cost for bunker was even higher, $465 per ton. In the coming year it said the burden of high fuel costs will increase due to the U.S.
sanctions against Iran, OPEC agreeing to cut oil production and an increase in demand for low-sulfur fuel oil in preparation for the mandate by the International Maritime Organization that ships use low-sulfur fuel beginning in 2020 or equip their ships with scrubbers.
HMM said it will “put its efforts into collecting the emergency bunker surcharge
to recover the increased bunker costs.”
“Uncertainty over the cargo volumes in 2019 will continue due to the concerns on a global economic slowdown, Brexit and the U.S.-China trade conflict,” the company said.
HMM said it secured financial liquidity by issuing perpetual bonds of 1 trillion won in the fourth quarter and said it will “continue its efforts to stably secure additional cargoes” to fill 20 large containerships it ordered last year. HMM has ordered 12 ships with 23,000-TEU capacity each and eight ships with 15,000-TEU capacity from Korean yards. Delivery of those ships is scheduled to begin in 2020.
HMM reports operating loss of $513 million in 2018
