HMM recovers foreign credibility, begins to invest in vessel purchases

Hyundai Merchant Marine is acquiring super-sized container vessel as it regains credibility overseas.
HMM disclosed that it contracted with the English shipping company Zodiac to build and operate together five 6,800 TEU container vessels in London Oct. 17.
The Korean shipping company explained that it could return to its original place through the rapid recovery of its shipping business and successful reshuffling processes. As a result, the company can attract investments from abroad with its newly regained credibility and, especially in this case, minimizing financial costs with optimum conditions.
For the new joint-venture company, HMM and Zodiac will place orders for four out of five container vessels, and HMM will charter them on a long-term basis, while Zodiac will order the last vessel and HMM will operate it on a long-term basis as well. Two of the four co-invested vessels will be returned to HMM after a 12-year charter period, while profits are distributed evenly between the 2 companies. The venture will receive the five vessels between May and November, 2006 as they are completed.
A 6,800 TEU container vessels cost around 70 million dollars for a single ship, totaling 350 million dollars. This gigantic project is the biggest one for HMM in three years. The company plans to place the five vessels in Pacific and Asia?Europe trades, doubling its competitive power in those trades. Pacific trades have seen 6,500 TEU vessels running in them since 2001.
Jeong-Ik Noh, president and CEO of HMM said, ?e are sure this is the right time to invest in container vessels in order to maintain state-of-art service quality. We are expecting the container business to remain favorable for the next several years.