Hello, it’s IINO.
I would like to broadcast IINO san’s logistics radio today.
Today’s news is that wage negotiations at HMM, South Korean shipping company, has been concluded.
The labor union at HMM in South Korea appealed for better working conditions and higher wages, and when they voted for or against the strike, 92% of the union members voted in favor.
The union said that if their demands were not accepted, all the sailors would get off at Busan port and go on strike.
However, the negotiations, which began in the afternoon of 1st September, took 18 hours and finally reached the conclusion between the company and the labor union.
Daily Logistics Radio by IINO san in 3rd Sep. 2021
Initial proposal and request
The company’s proposal :
Wage increase: 8%
Encouragement money + Production incentive: 5 months
Labor union’s demand:
Wage increase: 25%
Outcome money: 12 months
Contents of the conclusion of negotiations:
Wage increase: 7.9%
Outcome money: 6.5 months
As far as I can see, this is a much better deal than the company’s proposal.
Conclusion close to HMM company’s proposal
In relation to this labor negotiation, we have been informed that MSC, a Swiss shipping company, has been offering 2.5 times the wages to the workers, and as of 22nd August, 317 workers have left the company.
Despite the situation, I was impressed that HMM was able to end negotiations close to the company’s original offer. Anyway, I am relieved there will be no more logistical confusion since avoiding the strike.
Inauguration of K-Alliance
And in related news, on 1st September, there was news that five Korean shipping companies will form the “K-Alliance”. These five shipping companies are HMM, SM Merchant Marine, Jang Geum Merchant Marine, Pan Ocean and Huan Shipping, which are all Korean shipping companies.
What is Alliance?
An alliance of shipping companies is, simply put, a joint allocation of vessels by multiple shipping companies. It costs an enormous amount of money to build a single container ship, and it is extremely difficult for a single company to expand its global shipping network.
This is especially true for large ships. It can carry as much as 20,000 TEU per ship, so it is more efficient for multiple shipping companies to share container space.
Furthermore, if there are overlapping routes, it is possible to avoid bleeding competition among companies.
There is also advantage for long-distance routes. It is difficult for medium-sized shipping companies to provide a full range of services on long-distance routes, but HMM is the eighth largest shipping company in the world.
By operating jointly with HMM, the other four companies will be able to provide stable services to their customers on long-distance routes.
K-Alliance will be implemented in the second quarter of 2022.
HMM has put together a labor union and also assembled a strategy for the next year and beyond. There may be some replenishment of seafarers and adjustments in Alliance, but this may be the start of HMM’s future progress.
It will be interesting to see what the company does in the future.