Shareholders believe the synergies will offer better value to them, while industry bodies are concerned that logistics skills and capital will be lost if Hapag-Lloyd is successful in its bid. But analysts believe the major beneficiaries will be shippers.

Bids for the 40% combined stake in HMM, currently held by the state banking entities Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC) have been the subject of preliminary bids, with SM Line expected to be a key bidder in the process.

Analysts in Europe believe that if Hapag-Lloyd can convert the 40% stake into a controlling share, giving them the full control over HMM’s assets, it would result in an intensification in competition between the top lines.

Xenata chief analyst Peter Sand argues that going forward carriers will want to reduce their slot costs and for Hapag-Lloyd the sale of HMM represents “an opportunity to let go the more expensive time charter deals and it will see a significant upgrade in the size and efficiency of its fleet.”

Hapag would gain 24 mega-carriers of over 20,000 teu, half of which are owned with the others chartered. Another 12 ships of 13,000 teu are on order with already delivered to HMM, with 12 smaller vessels also on order. Nine of these are 9,000 teu methanol powered dual fuel vessels.

“Carriers will be looking at unit costs in order to reduce pricing, the larger the ships the better economies of scale and the lower those unit costs,” said Sand, in the end that will contribute to greater competition.

It would be necessary for Hapag-Lloyd to control the whole company for any synergies to be properly realised, added the semi-retired analyst and consultant Mark McVicar.

He said that the South Korean government needs to decide on whether it is better to maintain a flag carrier or if the company will be better served as part of a larger merged company.

Korea’s government has decided to go for an auction on its shares which suggests it’s decided on a merger as a better strategy.

“If having been through the Hanjin debacle and it [the government] decided HMM is best merged with something else, then it’s probably the best time to make the sale,” added McVicar.

He went on to say that this is “the most realistic time in the cycle to make the sale,” given that the carriers are emerging from the pandemic years with flush balance sheets, but “they will all be hurting now as they head into bigger losses”.

Having apparently settled on a strategy of merger the government has sparked a debate over whether the foreign carrier would benefit Korean logistics, or act as a drain on talent.

Minority shareholders in HMM have backed the sale to the German carrier, according to local reports.

The Korean Times reports: “According to the financial industry and the minority shareholders' association, some of the minority shareholders of the group have been gathering shareholder proxy statements through their online community set up in Naver Cafe platform, aiming to endorse Hapag-Lloyd as the most suitable candidate for the acquisition.”

The view among some shareholders is that KDB and KOBC have taken decisions “that undermine shareholder value in HMM,” the head of the minority shareholders' alliance Hong Yi-pyo reportedly said.

Minority shareholders expect that if HMM is acquired by Hapag-Lloyd share dividends will increase as synergies are realized.

However, the Korea JoonAng Daily reported that there are “Concerns that the sale of the nation's largest shipping firm to a foreign entity could undermine local maritime industry competitiveness and result in capital outflow, KDB is leaning toward domestic buyers.”

Further concerns were raised about the ability of domestic buyers’ ability to raise the required cash without support from private equity, which would “pose a threat to the stability and sustainability of HMM.”

Meanwhile, it had been expected that SM Line would bid, but local reports suggest that the carrier’s parent company Samira Midas could not meet the $3.8 billion starting price. Three South Korean bidders, Harim Holdings, Dongwon Group and LX Holdings and the German carrier Hapag-Lloyd have made the cut into the second round of bidding.

Assessment of the preliminary bids is expected to be completed by the end of this week with an announcement on which companies have made it through to the second round of the process.

A preferred bidder will then be selected with the sale expected to be completed by the end of this year.

 The port of Rotterdam has for the first time refueled a methanol-powered container ship as the shipping industry turns to the technology to cut its emissions, methanol producer OCI Global said on Tuesday.

The Maersk-owned ship began its 21,500 km (13,359 mile) journey to Copenhagen from South Korea’s Hyundai Mipo Dockyard on July 10.

It also refueled in Singapore, another major shipping hub before its stop-over on Tuesday in Rotterdam, Europe’s largest port and ship-refueling hub, as the entire voyage is powered by green methanol.

A low carbon fuel, green methanol is produced from renewable feedstocks, including hydrogen and biomethane and the shipping industry hopes it will help it to achieve a goal of net zero emissions by 2050.

Maersk, one of the world’s largest shipping companies, will name its new vessel when it reaches Copenhagen in September.

It has ordered another 24 of the vessels that can run on conventional fuel oil as well as methanol.

In all, consultancy DNV expects 30 of the new ships will be launched this year and the number will exceed 200 by 2028.

Key expansions will be completed this year in Caucedo (Dominican Republic), including an additional 1.2 million TEU, Yarimca (Türkiye) projected an additional 579,000 TEU, Sokhna (Egypt) adding 500,000 TEU Jeddah (Saudi Arabia) with an additional 200,000 TEU, among other key markets.

The expansions will take its total gross capacity to 93.6 million teu, aimed at meeting growing demand in key trade markets. The global port operator manages currently approximately 9% of the world’s handling capacity, putting it among the top five global port operators.

UK’s supply chain advisors, Drewry, forecast global container throughput will grow to 932 million TEU by 2025, up from 858 million TEU in 2021.

"We are committed to investing in our infrastructure to meet the growing demand for trade. These capacity additions will further strengthen our position as a leading global supply chain solutions provider connecting economies, businesses, and consumers around the world," said Sultan Ahmed Bin Sulayem, Group Chairman and CEO of DP World,

"We have to take a longer-term view of global economics, looking at how demand will change and how we can meet it in the most efficient way. Our medium-term target is to reach 100 M TEUS a year, subject to demand," added Tiemen Meester, COO Ports & Terminals, DP World,

Alongside the physical expansion, the projects also focus on digitalization - implementing new technology and modern Terminal Operating Systems, which will further increase capacity by automating and streamlining operations within each port, thereby enabling greater flow of trade and more efficient processes for customers.

In February, DP World won a major concession to develop, operate and maintain the Tuna-Tekra mega-container terminal at Deendayal port on the western coast of India. Once complete, the terminal will include a 1,100-metre berth and handle annually 2.19 million teu, helping unlock future container traffic growth in India, catering to exports and imports from Northern, Western and Central India, reducing logistics cost and enhancing efficiencies across supply chains.

Chinese officials are highlighting new research from the UK-based Clarkson Research Service that shows that China has become the world’s largest shipowner based on gross tonnage surpassing Greek shipowners which have been the largest for the past decade. While Greek has a commanding lead in the more significant deadweight tonnage (dwt) measuring cargo capacity, China is still trumpeting the development calling it a demonstration of the emergence of their economy and a shift in world shipping.

Clarkson’s data reflects the rapid growth in the Chinese fleet which analysts said began in approximately 2015. The Chinese-owned fleet is reported to have recently surpassed Greece with a total of 249.2 million gross tons compared to Greece which currently stands at 249 million gross tons. China now has a small lead with a 15.9 percent market share based on the measurement of enclosed space of vessels. China also has a younger overall fleet helping according to Clarkson to reach $180 billion in value to $163 billion for the Greek-owned fleet.

China and Greece dominate the shipping industry. Japan is a distance third now at 181 million gross tons. Both South Korea and the United States own 66 million gross tons each and other leaders including Germany have slipped further down in the rankings.

Greek shipowners had dominated the statics for a decade since they surpassed Japanese shipowners in 2013. Greece still however has a commanding lead in overall cargo capacity with 423 million dwt or an 18 percent market share. Accounting for part of the difference is Greece’s dominance in the global tanker market where it holds a 25 percent market share as well as in liquified natural gas carriers where it currently holds 21 percent of the market, having grown its share three percent in the past decade.

"China's shipping industry has been in a continuous state of development, and our role as the world's largest manufacturing hub remains steadfast. These factors contribute to the high ranking," Li Yanqing, secretary-general of the China Association of the National Shipbuilding Industry, told the Global Times.

In addition, they are highlighting the continued opportunities for growth noting that China currently accounts for 22 percent of global exports and 33 percent of container exports. The officials explained that China has been building dry bulk vessels as it expands its commodity imports of grain and coal and raw materials used in manufacturing. China’s two main shipping companies, COSCO and China Merchants have grown rapidly also focusing on containerships, which in part accounts for the lag between dwt and GT.

Clarkson analyst Stephen Gordon reports that China’s shipping industry is benefitting from strong freight volume, its dramatic growth in shipbuilding, and the growth of its financial sector. Chinese shipbuilding for example overall produced more than 21 million dwt of new ships in the first half of 2023 while taking in orders for nearly 38 million dwt. China’s orderbook is up 20 percent to nearly 124 million dwt, although a large portion of the shipbuilding is for export. Companies such as Mediterranean Shipping Company (MSC) have turned to China to finance and own its new generations of large vessels.

Greek shipowners have lagged overall in newbuilding orders while more active in the secondhand market which helped China to catch up. Analysts point to the slow growth in the tanker market and the emergence of other competitors in LNG and LPG transport. China is eighth in the gas carrier market behind Japan and South Korea both of which are expanding in the segment. 

Looking ahead, Clarkson points to the emerging complexities in trade and the shipping market. They highlight the drive to decarbonize shipping which is expected to have a significant impact on ownership and the makeup of the ship-owning market going forward. 

Shippers are now actively rearranging Asian shipments, moving back from the US east coast to the west coast, as the full ramifications of the Panama Canal’s prolonged reduced operational capacity hits home.

Facing what it has described as an “unprecedented” drought, the Panama Canal Authority has shaved a couple of metres off its maximum draft for its neopanamax locks whereby ships transiting can only go through the waterway with a 13.41 m depth and the number of daily transits has been slashed by 20% to 32 a day – measures that are expected to be in place into the new year as the El Niño weather phenomenon is likely to bring more dry weather.

Aware of the limitations climate change is bringing to bare on this crucial waterway, the canal’s administrators are looking at alternative ways to get shipments across the country.

“The Canal’s focus on the future is not only limited to addressing current challenges but also includes proactive environmental initiatives. Efforts are being made to safeguard the water basin, preserve forest cover, and explore the possibility of developing a logistics corridor to diversify cargo handling options within the country,” the canal’s administrators stated in a release yesterday.

“We have to find solutions so that we can continue to be a relevant route for international trade. If we don’t adapt, we will die,” canal administrator Ricaurte Vasquez said at a recent press conference.

Cruisegoers were left reeling yesterday with the news that Royal Caribbean’s Rhapsody of the Seas has suddenly decided to axe all its Panama Canal crossings for the 2023 – 2024 winter season, with holidaymakers now forced to book alternative flights. While the cruise line failed to provide reasons for the sudden cancellation of this popular transit, the growing queues at the canal are thought to have played a part in the decision.

Waiting times for merchant ships have been growing this month, starting out at 15 days on August 1 and have now topped 20 days with a growing backlog of ships waiting at either end of the canal (see map below).

Special auctions are in place for cancelled slots, with very high fees demanded. Liners have reacted by implementing canal transit surcharges of up to $500 per teu.

Data from Denmark’s eeSea shows the average number of boxship transits over the past eight weeks has been 58 per week. Last week it slipped to 55.

“Obviously, if the drought continues, and we only handle, say 55 vessels like last week, the problem will accumulate,” warned eeSea’s founder Simon Sundboell.

Peter Sand, chief analyst at freight rate platform Xeneta, said shippers must now consider their options as Panama congestion is on the rise.

“Playing the spot market too tight may not be the best option right now, as sentiments push transport costs up again every month,” Sand advised.

Andy Lane from Singapore container advisory CTI Consultancy told Splash that backhaul container services can go 2,000 nautical miles further through the Suez Canal or 5,000 nautical miles further around Africa. Some headhaul services can likely be switched also to Suez routings, he suggested.

“It just takes a few weeks of lead-time to be able make such network changes. The backlog is going to take months to clear it would seem, so it would be good for the container carriers to start planning now,” Lane urged.

Hapag Lloyd has announced increased ocean tariff rates from the United Arab Emirates (Jebel Ali and Abu Dhabi) to North Europe (Germany, Netherlands, United Kingdom, Belgium, France, Poland, Denmark, Sweden, Ireland, Norway, Finland, Lithuania, Czech Republic, Hungary, Latvia, Austria, Switzerland, Slovakia, Estonia, Iceland, Luxembourg) and West Mediterranean / North Africa (Spain, Portugal, Italy, Algeria, Malta, Tunisia, Morocco).

The cost will rise for 20' and 40' dry containers, as well as high cube dry equipment.

This increase will be applicable for sailings beginning on 25 August 2023 and will remain in effect until further notice.