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22 January 2021 The on-line newspaper devoted to the world of transports 17:49 GMT+1

December 28, 2020

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Original news
Cartel agreement between five shipping carriers containerized south koreans

The goal of Heung-A, HMM, Pan Ocean, Sinokor and SM Line is to to increase their competitiveness on Asian routes

The five South Korean shipping companies Heung-A Shipping Co., HMM, Pan Ocean, Sinokor Merchant Marine and SM Line Corporation have signed a memorandum of intent to establish a Korean Maritime Transport Federation called the K-Alliance, which will be put into operation in the second quarter of next year. The agreement was promoted by the Ministry of South Korea's Maritime and Fisheries Activities and the Korea Ocean Business Corporation (KOBC), the government agency established in 2018 with the aim of helping to strengthen the competitiveness of national maritime transport.

The aim is to promote the competitiveness of South Korean containerised shipping companies in the South Korean containerised shipping market southeast Asia forming an alliance of carriers composed of only south Korean companies with the aim of creating synergies through economies of scale. It is a market -- it has been specified on the occasion of the signing of the agreement - to which carriers with fleets of load capacity participate total of about 480,000 teu, of which about 190,000 teu (40% of the total) by the South Korean company, the latter share which has gradually decreased due to aggressive investments made by containerised carriers Global.

The parties specified that the agreement for the creation of the K-Alliance is the first step to strengthen the competitiveness of containerised shipping, a market at involving 11 South Korean shipping carriers. It is planned to that the six shipping companies in this market that haven't participated in the establishment of the K-Alliance may establish a strategic cooperation agreement with the alliance and participate in part of the alliance's operations, eventually becoming members of the K-Alliance at any time.

The agreement provides for the establishment of a real "cartel" by eliminating excessive competition between south Korean carriers through the elimination of line services redundant routes and the opening of new routes, increasing the number of departures and sharing fleets. In addition, it is planned to increase competitiveness also by reducing costs and improving efficiency in resource management through joint order of new ships of high efficiency and low cost. It is expected that the conclusion of joint contracts for transport services maritime authorities and for the use of port facilities as well as for the use of equipment and means for containerised transport.

The agreement also includes the possibility of extending the reach of the alliance beyond the Asian routes, on which they operate mainly the companies Heung-A, Pan Ocean and Sinokor, using intercontinental ocean services operated by HMM and SM Line to forward loads to the Americas and Europe.

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