Shown above is a vessel of HMM, South Korea’s flagship carrier. The company announced on May 14 that its first-quarter operating profit topped 1 trillion won for the first time in its 45-year-history. Photo courtesy of HMM

Korean shipper chalks up highest quarterly profit

South Korea’s flagship carrier HMM racked up a record profit during the first quarter of this year as the cargo demand continues to outstrip supply across the world amid the virus pandemic.

The Seoul-based shipping company announced on May 14 that its first-quarter operating profit stood at 1.02 trillion won ($900 million), which is bigger than its full-year 2020 profit of 981 billion won.

This starkly contrasts to the first three months of last year when the company suffered a loss of 2 billion won. Its January-March sales also almost doubled .

HMM, formerly Hyundai Merchant Marine, also saw container-handling volumes increase almost 7 percent year-on-year to achieve the highest quarterly performance since its foundation in 1976.

As COVID-19 shows few signs of abating, the shipping demands remain strong. That is especially the case for Korea, which accommodates such large-sized exporters as Samsung, LG, SK, and Hyundai.

To deal with the upsurge in demand, HMM said that it had deployed up to 24 extra-loader vessels since last August.

Against this backdrop, the freight rates jumped in an unprecedented way to underpin the handsome bottom lines of HMM, which is owned by Korea’s state-run lender KDB.

“HMM is expected to chalk up solid profits throughout the third quarter of this year,” Daishin Securities utilities analyst Yang Ji-hwan said.

Korea Investment & Securities researcher Choi Go-woon concurred. In particular, he expected that the recent Suez Canal fiasco will further improve its profitability in the second quarter.

The Suez Canal was blocked in March and April because a big-sized container was wedged. The accident ended up raising the cargo fares across the globe.