Considerations from Interview with President of HMM Japan. The Future of Shipping Market! Continuing Congestion, Business Diversification.

Hello, it’s IINO.

I would like to broadcast IINO san’s Logistics Radio.

Today, I bring you the contents of an interview with the president of HMM Japan from the news.

Daily Logistics Radio by IINO san in 9th Feb. 2022

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Interview with HMM Japan President

HMM is the largest shipping company in Korea and currently ranked 8th in the world container rankings. Its president is Mr. Choi Gi Woo, who is 51 years old.

He spoke about the market from the shipping company’s point of view, and I would like to share it with you.

Looking Back at 2021

“It was a very good market for shipping companies in terms of freight rates”, he said looking back on 2021.

“The Corona disaster also saw growth in demand for consumer goods and other products, and cargo movements remained at extremely high levels.”

Local Problems Expand Globally

On the other hand, in logistics in general, he was reminded of the risk of local problems developing into global problems.

As examples, the following three issues have left a particularly strong impression on me, as they have spread from local problems to the whole world.

1. The Suez Canal stranding accident at the end of March 2021.
2. Shortage of drivers and workers, and 100-ship waiting offshore at Ports of LA and LB in North America.
3. Worsening of port congestion and disruption of ship schedules at major ports in Asia.

Future Outlook

“As for ocean freight rates, SCFI, which is a freight rate index, will basically remain high, even if there is a short-term decline.” He said.

In the first half of 2022, in particular, there is a strong possibility that favorable market conditions will continue.

Solving Local Problems

He goes on to say that as long as the local problems, such as port congestion, are not resolved, the situation will not improve because global logistics bottlenecks will remain.

Therefore, this disruption will continue throughout 2022, he said.

I really think that’s true, so we should expect the chaos to continue throughout 2022.

Securing Space

“Japan used to be a ‘special market’ for shipping companies with many direct shippers, BCO,” he pointed out.

“However, the situation has changed as the center of gravity for shipments has shifted to Asia.”

Tough Competition

In the past, manufacturing was done in Japan, but with the advent of global capitalism, manufacturing bases are being shifted overseas.

They are moving to China and Southeast Asia, where manufacturing costs are lower.

In those countries, we will have to fight against Wal-Mart for Western retail, Alibaba and Amazon for e-commerce, and so on.

I think it is a very tough battle.

Rate Negotiations in 2022

“At least until the end of 2022, the market will continue to be led by the shipping companies,” he said.

Expansion of Shipping Companies’ Shipping Perimeter

He pointed out, “The major container shipping companies, backed by their high profits, are diversifying their businesses by investing in logistics companies.”

Growth Strategies for Shipping Companies

President HMM personally believes that the future growth strategy of the shipping company will have three phases.

1. Build a logistics platform
2. Environmental investment 
3. M&A (acquisition and integration)

I think these points are pretty much what I’ve been sending out on this radio.

It was very easy to understand what the president of the shipping company talked about as a growth strategy divided into three categories.

After reading this article, I thought it was important to continue to keep these points in mind, because the direction I’m taking with this radio is not out of line.

I would also like to talk about it from a forwarder’s point of view and my unique perspective of international logistics.

That’s all for today. Thank you.