25-year contract per vessel

Eight 210,000-ton bulk carriers to be deployed from 2030

Fleet diversification accelerates under President Choi Won-hyuk

An HMM container ship [HMM]
An HMM container ship [HMM]

HMM announced Tuesday that it has signed a large-scale long-term shipping contract with Vale, Brazil's largest mining company.

The deal is the third major contract HMM has secured with Vale, following two agreements signed in May and September last year worth a combined approximately 1.07 trillion won ($794 million). The new contract runs 25 years per vessel beginning in 2030, with total sales projected at 4.7 trillion won.

To fulfill the contract, HMM disclosed in June that it had placed orders for eight new bulk carriers.

The vessels, to be delivered sequentially from 2030, are Newcastlemax-class bulk carriers equipped with the world's first triple-fuel propulsion engines capable of running on methanol, ethanol and heavy fuel oil.

The ships will also be built as LNG- and ammonia-ready, allowing future conversion to those fuel types. They will be fitted with eco-friendly equipment including rotor sails — wind-assisted propulsion devices that harness wind power — to maximize fuel efficiency and minimize carbon emissions.

"This contract again demonstrates our solid partnership with a major global shipper," an HMM official said. "We plan to strengthen our stable earnings base by expanding the share of long-term contracts and restructuring our business portfolio, while growing our operations around high-margin and future-oriented businesses."

Since taking office in late March last year, HMM President Choi Won-hyuk has pushed to strengthen the company's core container business while rationalizing its bulk fleet.

His strategy of sharply reducing short-term charter exposure in favor of long-term contracts with large, high-quality shippers has been credited with delivering results. The bulk segment's operating profit reached approximately 240 billion won in the first half of this year alone, reflecting the improved fundamentals.

Portfolio diversification has also gained momentum. HMM has been actively expanding beyond its traditional dry bulk and tanker fleet into gas carriers, pure car and truck carriers and multipurpose vessels. As a result, the bulk fleet grew rapidly from 44 vessels at end-March last year to 61 vessels in the first half of this year.

Meanwhile, HMM posted sales of 3.4 trillion won and operating profit of 354.1 billion won in the second quarter of this year. Despite revenue losses and higher costs stemming from the war in the Middle East, sales and operating profit rose 30 percent and 52 percent, respectively, from the same period last year.

HMM committed 10 trillion won in investment over the 15 months through the first half of this year and plans to continue investing in the second half. The company described the spending not as simple expansion but as preemptive investment based on projections of market conditions two to three years out — aimed at securing vessels early while global shipbuilding prices continue to rise, in order to maximize future returns.


likehyo85@heraldcorp.com