HMM posts record operating profit in 2020

Despite the negative effects of COVID-19, South Korea’s national flagship carrier HMM closed 2020 with a significant earnings boost.

The shipping company reported an operating profit of $831.1 million in 2020, against a loss of $254 million in 2019. The result recorded in 2020 represents HMM’s highest ever operating profit, the company said.

What is more, the carrier’s net profit was $105 million in 2020 against a loss of $499.8 million in 2019.

HMM’s revenue rose 16.3% to $5.4 billion in 2020 from $4.6 billion in 2019.

“HMM significantly improved earnings in 2020, primarily driven by efficient fleet operations including twelve 24,000 TEU containerships, increased freight rates, and lower fuel prices,” the company explained.

On the other hand, container handling volumes dropped 9.2% to 3.89 million TEUs in 2020 compared to 4.28 million TEUs in 2019.

“The scarcity of containers and space on vessels will last through at least the first quarter of this year, with a likelihood that this situation continues until late spring. Supply chain disruptions led mainly by a backlog of containers and terminal congestions at several main ports are on course to remain unabated over the short term,” HMM said.

“However, when the situation stabilised attributed to the supply of coronavirus vaccines worldwide, spending patterns may be shifted to services instead of products, acting as a sign of decline for freight rates.”

HMM further said that oil prices are gradually rising again with the spread between low- and high sulphur fuel, recovering to more than $100 recently. Because of this, HMM sees scrubbers as a viable option in preparation for IMO 2020 environmental regulations in terms of economic feasibility.

In the first half of this year, HMM will acquire eight 16,000 TEU newbuild boxships. The acquisition is expected to enable HMM to form an enhanced cost structure with lower fixed costs and secure greater operational efficiency. The eight new vessels, being built at Hyundai Heavy Industries shipyard in South Korea, will be deployed on the Asia – US East Coast route from the second quarter of 2021.

HMM currently operates a fleet of more than 100 vessels.