Shipping Association Strongly Opposes POSCO’s HMM Acquisition
Shipping Industry Fears POSCO's HMM Acquisition
The Korea Shipowners’ Association has raised serious alarms over POSCO Group’s plans to acquire HMM, a major player in the shipping industry. The association fears that this move could undermine HMM’s competitive status and turn it into a mere extension of POSCO’s cargo transport operations. They argue that this could jeopardize the hard-fought recovery of HMM and damage the broader shipping ecosystem in South Korea.
Concerns Over Competitive Integrity
The Korea Shipowners’ Association issued a statement on September 11, outlining their opposition to the acquisition. They warned that if POSCO successfully takes over HMM, the professional management essential for thriving in the container shipping sector could disappear. This, they argue, would force existing shipping companies out of the market, posing a significant risk to the foundation of the shipping industry itself.
Three primary concerns were highlighted by the association. Firstly, they expressed fear that HMM could devolve from a specialized shipping entity to a subsidiary focused on supporting POSCO’s core steel operations. The association noted that if the steel industry encounters economic challenges, HMM could once again be at risk of being sidelined. They emphasized that HMM has been revitalized with taxpayer funds through a five-year reconstruction plan, and any regression would be detrimental.
Additionally, the association challenged the notion that acquiring HMM would lead to lower logistics costs. They pointed out that container shipping management involves complexities distinct from steel logistics. The association underscored that effective shipping management is crucial for competing on the international stage, and it could be compromised under POSCO’s ownership.
Impact on the Shipping Ecosystem
Further concerns revolve around the potential disruption of the shipping ecosystem if POSCO takes control of HMM. The association fears that POSCO would expand its operations into transporting not just raw materials but also finished steel products, which could adversely affect domestic shipping companies. They warned that this shift could destabilize Korea’s shipping industry and have far-reaching consequences for the nation’s import-export sector.
Yang Chang-ho, the standing vice chairman of the Shipowners’ Association, emphasized the historical context of POSCO’s previous failures in the shipping sector. He referenced the company’s past attempt to operate Geoyang Shipping, which ultimately failed and led to significant market losses. Citing the Maritime Transport Act, he noted that large shippers are generally restricted from entering the shipping industry, contradicting the government’s efforts to promote third-party logistics.
Yang also highlighted a prior cooperation agreement between the association and POSCO Flow, which included commitments against entering the shipping industry. He urged POSCO to reconsider its decision, warning that proceeding with the acquisition could have serious repercussions for South Korea’s economic landscape.
