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Reuters
COPENHAGEN/SEOUL
Doubts about the future of Hyundai Merchant Marine Co Ltd surfaced on Friday after Denmark's Maersk Line said the South Korean shipping firm was no longer being considered for the 2M vessel-sharing alliance.
Joining an alliance with major shipping firms was one of the conditions of a debt restructuring deal between heavily indebted Hyundai Merchant Marine and its creditors in May so any breakdown in talks could raise serious questions about the future of South Korea's largest shipping firm.
Maersk Line, part of A.P. Moller-Maersk, said it was still in talks with Hyundai Merchant Marine but they were no longer about it becoming an operating partner in the alliance. Hyundai, however, said separately that it was still negotiating to join 2M.
Hyundai Merchant Marine shares plunged as much as 11.6 percent early on Friday before recovering to close down 5.9 percent compared with a 0.3 percent broader market drop.
Its rival, Hanjin Shipping Co, collapsed earlier this year, at one time stranding $14 billion in cargo and sending shockwaves through global trade networks.
The world's two largest container shippers, Maersk Line and Mediterranean Shipping Co (MSC), have been in talks with Hyundai since July about the 2M alliance.
"The parties have discussed the possibility of Hyundai Merchant Marine joining 2M as an operating partner and now decided to look at other cooperation possibilities," Maersk Line press officer Michael Storgaard said in an email.
He said the parties were instead discussing the option of partnering with Hyundai through a"slot exchange and purchase agreement", whereby surplus capacity can be shared or traded.
The talks included the possibility of Maersk Line taking over charters and the operations of vessels chartered to Hyundai, with the aim of deploying them in the 2M network, Storgaard said.
Maersk's comments come amid a wave of consolidation in the crisis-hit shipping industry and a week after the Danish company said it would acquire German rival Hamburg S'fcd.
"Hyundai Merchant Marine needs an alliance, not only for the agreement with creditors but because an alliance is key for a shipper with major international routes to secure business volume," said a Seoul-based shipping analyst who declined to be identified before the talks had concluded.
"Joining an alliance is also symbolic of Hyundai Merchant Marine's health as a shipper as it undergoes debt restructuring."
A spokeswoman for MSC said its position remained the same regarding the talks to include Hyundai in the alliance and that discussions were ongoing.
A spokesman for Korea Development Bank, the lead creditor bank for Hyundai Merchant Marine, said the talks were ongoing and it would clarify its position after they had finished.
Hyundai Merchant Marine reported operating losses of 647.3 billion won ($554.8 million) between January and September this year and had 2.9 trillion won in debt at the end of September, according to a company filing.
