HMM in clover as it posts record operating profit

South Korean shipping major HMM reported its highest ever operating profit for the first quarter of 2021 amid higher freight rates and increased container handling volumes.

The operating profit was KRW 1019.3 billion with a margin of 42% in Q1 2021 against a loss of KRW 2.0 billion ($ 1.7 million) in Q1 2020. The first-quarter performance surpassed KRW 980.8 billion, the earnings for the whole of 2020.

The net profit was KRW 154.1 billion in Q1 2021 against a loss of KRW 65.6 billion in Q1 2020, while Q1 revenue rose 84.9% to KRW 2428.0 billion when compared to the year earlier.

As informed, container handling volumes increased 6.7% to 0.95 million TEU in Q1 2021 compared to 0.89 million TEU in Q1 2020.

“The highly elevated freight rates will last through at least the first half of this year. Supply chain disruptions primarily caused by port congestions, the shortage of both vessel space and containers, and increased cargo demand are not on course to be relieved over the short term,” HMM said commenting on the market outlook.

To address the upsurge in cargo demand, HMM has deployed a total of 24 extra-loader vessels on a number of trades since August 2020.

Nevertheless, the company expects considerable uncertainty to remain as a result of widespread COVID-19 and insufficient vaccination program in many countries, affecting container volumes on certain trade lanes.

This year, HMM plans to add 120,000 TEU of dry containers to alleviate the current shortage of container equipment. Around 42,000 TEU of containers have already been delivered and HMM plans to acquire the remainder until July.

In terms of vessel capacity, the company is taking delivery of eight 16,000 TEU newly-built, LNG-ready containerships. Five of them have been already deployed on the Asia-North Europe route.

The South Korean shipping heavyweight believes this will enable the company to form an enhanced cost structure and secure greater operational efficiency.

With the delivery of these ships, HMM’s fleet will break the 850,000 TEU mark as the shipowner pushes forward to achieve its 1 million TEU by 2022 goal.

Furthermore, as confirmed to our publication, HMM is considering new orders for ultra-large containerships.