Korean container carrier HMM reported a sharp decline in operating efficiency during the first half of 2024, with operating profit falling 19.4% to 847.1 billion won ($623 million) despite higher revenues.
The state-controlled shipping company said revenue climbed 9.7% to 5.48 trillion won ($4.03 billion) in the six months through June, while net profit edged up 5.7% to 1.21 trillion won ($890 million). The divergence between top-line growth and operational performance signals mounting pressure on the carrier’s core business.
HMM’s deteriorating operating margins reflect broader industry challenges as shipping companies grapple with elevated costs from Red Sea diversions. The Houthi attacks on commercial vessels have forced carriers to reroute ships around Africa’s Cape of Good Hope, extending journey times and burning additional fuel while crew and insurance expenses surge.
The Korean carrier, which emerged from near-bankruptcy in 2016 under government control, has benefited from the capacity constraints created by longer voyage times. Industry-wide freight rates have rebounded from 2023 lows as the effective reduction in available shipping capacity has tightened supply-demand balances on key trade routes.
However, the operational cost inflation appears to be outpacing revenue gains for HMM. The company’s operating margin compressed to approximately 15.5% in the first half from roughly 21% in the same period last year, according to company filings.
South Korea’s largest container shipping company has been pursuing aggressive expansion plans, including a $17.5 billion investment program announced in September to nearly double its container fleet capacity to 1.5 million TEU by 2030. The ambitious growth strategy comes as the industry faces persistent overcapacity concerns with new vessel deliveries continuing to outpace demand growth.
Failed privatization attempts have left HMM under continued state ownership through Korea Development Bank and Korea Ocean Business Corp. The company had been slated for sale to conglomerate Harim Group, but negotiations collapsed earlier this year over pricing and structural disagreements.
