SIMIC

THE annual performance of South Korea's largest container shipping company HMM and bulk carrier operator Pan Ocean plummeted in the fourth quarter of last year due to a slump in the shipping industry.

According to financial information firm FnGuide on January 8, the estimated performance consensus for the fourth quarter of last year for HMM showed a revenue of KRW2.06 trillion (US$1.56 billion) and an operating profit of KRW21.5 billion, reports BusinesKorea.



HMM had been witnessing a notable downturn in performance since the first quarter of the previous year compared to a year earlier and continued to experience declines in each subsequent quarter. As a result, HMM was expected to see a substantial year-on-year decrease, with annual revenue projected to drop by 54.7 per cent to KRW8.41 trillion and operating profit to decline by 94.3 per cent to KRW562.7 billion for the last year.



The dismal performance can be attributed to the downturn in the shipping industry.



For bulk carrier operator Pan Ocean, which transports raw materials such as steel, coal, and grain, the consensus for the fourth quarter of last year indicated a revenue of KRW1.15 trillion and an operating profit of KRW106.1 billion.



This represents a decrease of 19.2 per cent and 32.5 per cent compared to the previous year. On an annual basis, the total revenue amounted to KRW4.49 trillion won, with an operating profit of KRW425.7 billion, reflecting a 30 per cent and 46.1 per cent reduction in scale compared to the previous year.



Despite expectations of a persistent overall downturn in the maritime industry this year, geopolitical risks have emerged as a new variable for the shipping sector.



Currently, Houthi forces in Yemen, backed by Iran, have been attacking ships passing through the Suez Canal since last month. In response, global shipping companies are diverting their vessels around the Cape of Good Hope in Africa.



Consequently, ships now require an additional 6,500 km of travel, leading to an extended transit time of seven to eight days compared to the usual route. Simultaneously, maritime logistics challenges have arisen, leading to a significant surge in freight rates.