Maersk eying Hyundai, Hanjin for growth: Analyst

LONDON • AP Moeller-Maersk's container line, which this month ditched a strategy of building new vessels and will instead try to grow through acquisitions, is targeting South Korea's two biggest shipping firms, according to Jefferies International.

Hanjin Shipping last month filed for bankruptcy protection and Hyundai Merchant Marine is in the middle of a creditor-led debt-restructuring programme.

Both are in need of a strong partner and Maersk Line, the world's biggest, is probably the only rival with the financial muscle to manage a takeover, Mr David Kerstens, Jefferies' transport analyst in London said in an interview.

"Maersk, as the market leader, will definitely participate in the consolidation," he said.

But the takeover options for Maersk are fairly limited, as most container lines are already tied up in alliances or controlled by families or governments. The most likely scenario is that Maersk would take over the assets of Hyundai and Hanjin, he added

Maersk chairman Michael Pram Rasmussen last week said the company's container line - long a pioneer in ship building - will now pursue takeovers to avoid flooding the market with new vessels. He declined to comment on Hanjin Shipping and Hyundai Merchant.

  • HANJIN SHIPPING

  • +21%

    Shares surged to 1,155 won as of 12.47pm in Seoul trading yesterday.

  • HYUNDAI MERCHANT MARINE
     

    -0.5%

    Shares fell to 8,660 won after rising as much as 3.7 per cent.

After years of surplus capacity and declining freight rates, the container shipping industry is in dire need of further consolidation if it is to weather a slowdown in global trade growth. Liners have already responded with mergers and formed vessel-sharing alliances to cut costs, but more needs to happen.

"There's been a lot of consolidation this year and many of the container lines just behind Maersk have grown," Mr Kerstens said. "So Maersk is faced with substantially stronger competition."

Hanjin Shipping rose 21 per cent at 12:47pm in Seoul trading yesterday while Hyundai Merchant fell 0.5 per cent after rising as much as 3.7 per cent.

Maersk Line, which has not made a large acquisition in more than a decade, is in an alliance with the world's No. 2, Mediterranean Shipping, while Hyundai Merchant is in talks to join the venture. Hyundai Merchant has about 2 per cent of the global market while Hanjin Shipping had roughly 3 per cent, about half of which were chartered vessels, according to Alphaliner.

South Korea's government last week said it was drawing up plans to improve competitiveness in the shipping industry and to help Hyundai Merchant transport exports as the country's sole flag carrier.

Maersk Line, which as market leader controls about 15 per cent of the world's container capacity, ranks only third in Trans-Pacific trade, where it ships 8 per cent. Buying Hanjin Shipping and Hyundai Merchant would double its market share on that route.

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A version of this article appeared in the print edition of The Straits Times on September 28, 2016, with the headline 'Maersk eying Hyundai, Hanjin for growth: Analyst'. Print Edition | Subscribe