Acquires second-hand PCTC to expand fleet to two vessels

Contract runs 5 years and 4 months

'A foundation for expanding our car-carrier business'

Korea Line's pure car and truck carrier SM Oceanus [Korea Line]
Korea Line's pure car and truck carrier SM Oceanus [Korea Line]

Korea Line, the shipping arm of SM Group, said Wednesday it has signed a long-term bareboat charter agreement with Hyundai Glovis for a pure car and truck carrier (PCTC) valued at 73 billion won ($53.1 million).

The contract amount equals 5.7 percent of Korea Line's consolidated revenue of 1.28 trillion won last year, and the agreement runs for five years and four months beginning in November. Korea Line plans to acquire a second-hand PCTC to deploy under the contract, bringing the total number of PCTCs it operates on long-term charter for Hyundai Glovis from one vessel to two.

"The professional vessel-management capabilities and deep trust we have built with Hyundai Glovis since 2015 formed the foundation for winning this contract," a Korea Line official said.

Under the bareboat charter arrangement, Hyundai Glovis handles overall vessel operations while Korea Line takes full responsibility for ship and crew management. The company said more than a decade of top-tier MRO (maintenance, repair and operations) service contributed to the positive evaluation it received.

Korea Line said it intends to reinforce a stable and sustainable business structure centered on long-term contracts with high-quality shippers. The company added that it expects to expand its PCTC business further, as demand for car carriers has risen sharply of late on the back of growing automotive export volumes from Asia.

Korea Line also plans to build additional growth momentum by securing new contracts with key customers such as Korea Gas Corporation, as competition for dedicated LNG carriers intensifies amid energy supply chain risks stemming from the war in the Middle East and elsewhere.

"This agreement with Hyundai Glovis secures a stable new revenue stream and at the same time lays the groundwork for expanding our PCTC business," Korea Line Chief Executive Min Sang-gi said. "We will respond nimbly to shifts and uncertainties in the global shipping market, identify new businesses that deliver both stability and profitability, and continue making strategic investments to drive future growth and enhance shareholder value."

Meanwhile, Korea Line posted operating profit of 63 billion won in the second quarter of this year, up 91 percent from the same period last year. The company said the strong results were driven by favorable shipping market conditions, a stable business structure centered on dedicated vessels, and an expansion of charter operations.


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