Shipowners’ Association Strongly Opposes Posco’s Acquisition of HMM
The Korea Shipping Association announced on September 11 that it has expressed serious concerns regarding recent media reports that the POSCO Group is entering the shipping industry by acquiring HMM, the largest shipping company in South Korea. The association stated that this move would destroy the shipping ecosystem and must be withdrawn.
The association explained, "If HMM, which is mainly engaged in steelmaking, is incorporated into POSCO, there is a risk that it could be reduced to merely a supporting company for POSCO's core business, rather than receiving investment as a specialized shipping company." The association also pointed out, "HMM has a transport capacity of 940,000 TEU (1 TEU is equivalent to one 20-foot container), whereas global shipping giants such as MSC and Maersk have capacities of 6.2 million TEU and 4.4 million TEU respectively. Competing with them would require massive investments."
There are also concerns that HMM could be reduced to a "self-cargo transport company," which would undermine South Korea's shipping ecosystem. The association stated, "POSCO would likely begin by transporting bulk cargoes such as iron ore for its parent company, and then expand to transporting steel products. In this scenario, existing domestic shipping companies would be forced out of the market." The association added, "POSCO previously operated Geoyang Shipping to transport raw materials and products, but ultimately failed to overcome the limitations of being a self-cargo transport company, lost its competitiveness, and sold the company to Hanjin Shipping."
The association also argued that POSCO's stated goal of "reducing logistics costs" through the acquisition is unlikely to be achieved. "As seen in the failures of more than 10 shipping subsidiaries of large corporations since the 1980s-such as Geoyang Shipping (steelmaking raw materials), Hoyu Shipping, Seongwoon
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Trading (crude oil), and Dongyang Shipping (cement)-it is nearly impossible for large cargo owners to reduce transportation costs by entering the shipping industry," the association said. "Internationally, Brazil's Vale, one of the world's three largest iron ore exporters, entered the shipping industry by ordering around 30 ultra-large bulk carriers amid a boom in iron ore exports, but recently sold these vessels and effectively withdrew from the shipping business."
Yang Changho, Executive Vice President of the Korea Shipping Association, stated, "Kyohwa and POSCO Flow signed a mutual cooperation agreement in April 2022, effectively pledging not to enter the shipping industry. However, just three years later, POSCO is seeking to enter the shipping business through HMM, breaking that promise." He urged, "If POSCO acquires HMM, it will undermine the foundation of the domestic shipping industry and cause significant harm to the national economy. We call for this decision to be completely withdrawn."
