HMM Makes $1 Billion Diversification Into Bulkers
In an attempt to somewhat shield itself from the fluctuating fortunes of the container sector, Korean shipping giant HMM has invested $1 billion to diversify further into the bulk carrier segment.
According to a stock exchange filing made on 27th October, HMM has entered into a large new deal for bulk carriers. The deal will see HMM committing to a long-term contract for four vessels running for 16 years from September 2026 through to the end of 2042. At current exchange rates, the deal is valued at $954 million.
Whilst such a move may be viewed as unusual - especially when compared to the actions of HMM’s peers - this diversification has its roots in a five-year strategic plan from July 2022 which stated that HMM intended to expand its bulk fleet.
At the time of the plan, HMM had a total of 29 bulkers within its global fleet. The target was to grow to 55 ships - a 90% increase in capacity by 2026. This tallies with the fact that HMM added six bulk carriers to its fleet this year alone.
It’s worth noting that this isn’t HMM’s first foray into the bulk carrier segment. HMM’s predecessor company - Hyundai Merchant Marine - had been a large bulk carrier operator (with reports suggesting that 40% of its operations were in the segment in 2010).
Away from the bulk segment, HMM has also been diversifying in other areas, as typified by the company’s order for three vehicle carriers to be built in China. This represents the first time the company has been in the car carrier sector since the early 2000s. It has also been reported that HMM has ordered four new multipurpose heavy-lift ships - also to be built in China.
It’s clear that HMM views diversification as a clear route forward through the currently troubled waters of the container sector. The question is, will their competitors follow suit?
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