Mergers Ahead

Now that CMA CGM will purchase NOL (APL), and China Shipping and COSCO are set to merge,
what will be the next mergers?

Hapag Lloyd was looking to buy NOL, but lost out to CMA CGM, so will Hapag Lloyd be looking for another line to acquire?

Who are the likely candidates?

A merger between the two Korean companies, Hyundai Merchant Marine and Hanjin Shipping is possible. Even though the stock of each company is traded on the Korean stock exchange, somehow I think the government would not let either company be sold to a non-Korean company.

OOCL is listed on the Hong Kong stock exchange.  I don't know if there is a majority owner who could possibly block a sale.  According to published data they are making money.  If I were looking to buy a shipping company, this one has possibilities.

Yang Ming's stock is listed on the Taiwan Exchange.  According to Bloomberg, this company has negative earnings of around 1.00, with the stock trading around 8.00.   This company is leasing newbuilds (ships) from Seaspan, and I don't know how many of their fleet might be owned.  The fundamentals of this company look problematic.  They might be purchased cheaply, but if the industry continues in it's downward trend this company might not make it.

That's it for now.





Hanjin Shipping CEO Resigns

From Bloomberg News



Hanjin Shipping Co. (117930)’s Chief Executive Officer Kim Young Min resigned, taking responsibility for two successive years of losses at South Korea’s largest shipper and a delay in getting financial support from creditors.
Kim, 58, will stay until a replacement is found, the Seoul-based company said in an e-mailed statement today. Kim was appointed as CEO in January 2009 after 20 years with Citigroup Inc. Hanjin posted a loss in each of the past 10 quarters.

Shares of the container-to-commodity shipper, which last month received a loan from its group affiliate Korean Air Lines Co. to ease a “temporary” liquidity shortage, fell in Seoultrading. Laden with debt, Hanjin is among liners trying to overcome a global overcapacity and a slump in shipping rates, factors that pushed rival STX Pan Ocean Co. to file for a court receivership in June. 

“There’s no good news for Hanjin right now,” said Yun Hee Do, an analyst at Korea Investment & Securities Co. in Seoul. “The company hasn’t been able to make money recently and its interest payment has been increasing. There’s quite a sizable amount of debt coming due next year for Hanjin.”

Korean Air said last month it will provide 150 billion won ($142 million) to Hanjin to help ease the company’s liquidity shortage. The shipping line has 736.4 billion won of debt and loans maturing next year, compared with 58 billion won in 2013, according to data compiled by Bloomberg. Its cash and cash equivalent was 506.6 billion won at the end of June.
Korean Air, the nation’s biggest airline, is the largest shareholder of Hanjin’s parent Hanjin Shipping Holdings Co. They are both part of Hanjin Group.
Hanjin fell as much as 1.4 percent to 7,000 won before trading at 7,060 won as of 11:32 in Seoul. The stock was up by much as 3 percent earlier today. Hanjin has slumped 41 percent this year, compared with a 0.6 percent decline in the benchmark Kospi index.
Hanjin Shipping narrowed losses to 121.8 billion won in the first half, from 346.6 billion won loss a year earlier.
To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

 It's not good news for most shipping companies these days.  Will still be a tough few years, and still waiting to see if more consolidation in the industry.


Staff cuts at container carriers

As anticipated, losses at international container companies will lead to staff reductions.

Hanjin has announced they will try to cut staff by offering early retirement to employees with more than 10 years service.

From Trade Winds

A downturn in profitability has led to top South Korean shipowner, Hanjin, launching its first redundancy programme.

The company is believed to be targeting office staff in its liner shipping operation but the extent of the restructuring is currently unclear.

The container business is the largest in Hanjin Shipping, which operates a diversified fleet of some 200 vessels that also includes bulkers and LNG carriers.

South Korea’s MoneyToday website says Hanjin is seeking volunteers of more than ten years service to go from its domestic administrative staff.

It also describes the programme driven by a downturn in liner revenues as “voluntary retirement” implying older employees are the target.


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