HMM dumps AEX in order to cut costs
HMM appears to be going into its partnership with THE Alliance early, announcing that it will be dumping its beleaguered Asia-North Europe service later this month.
It will be terminating its AEX rotation and, instead, making use of capacity from THE Alliance on the Asia-Europe tradelane eight months before its planned entry into the alliance in April 2020.
One source told The Loadstar HMM had, in part, launched the AEX service in an attempt to “protect its identity”, but noted that it had come at a price.
“Its latest results show it was still losing money and by chopping the AEX, which is very expensive partly due to the small vessel size, it will make some savings,” said the source.
“Even so, it will still be required to maintain payments for its contracted service on the 2M, where it is required to pay for slots used or unused.”
The source added that it would be “interesting” to see how much traffic the carrier diverted to THE Alliance vessels.
HMM confirmed that the 2M+H strategic cooperation would be maintained, which it said would see all current services remaining fully operational.
“First and foremost, HMM would like to express its highest gratitude for your unwavering support and encouragement,” it said. “As part of our continuous efforts to broaden network coverage and improve service efficiency… we are pleased to announce the use of services in THE Alliance.”
The final AEX sailing will depart South Korea on Sunday, on a Busan-Shanghai-Ningbo-Yantian-Singapore-Rotterdam-Hamburg-Southampton rotation.
First-quarter results showed the carrier continuing to haemorrhage money, recording an $88m loss, despite a bump in revenues and volumes of 11% for the three months.
It said: “We will maximise efforts to strengthen profitability by successfully securing service contracts, rationalise service network, attract high-value cargo and create competitive new service routes.
“Given rising demand during peak season, both freight rate and container volumes are highly likely to increase in the second and third quarters.”
HMM launched the AEX independently of its slot charter arrangement with the 2M in April last year, but had reliability issues leading to a temporary suspension of the UK call.
The original motivation for the standalone loop came from its Korean electronics customers which complained they were unable to guarantee shipment on nominated 2M vessels. Indeed, one HMM source complained to The Loadstar that it was “always the last to know” about service disruptions on 2M vessels.