Shipping Partnership

[Anchor Lead]

Hyundai Merchant Marine has agreed to a "limited partnership" with the world's largest shipping network 2M Alliance. The limited partnership, which falls short of a formal membership, raises concern as it could deal a blow to Korea's global competitiveness in logistics.

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Hyundai Merchant Marine, which the government had planned to foster as a national shipping firm, has concluded its negotiations with the world's largest shipping alliance 2M with an agreement on a "strategic cooperative partnership." Whereas the other members of 2M, A.P. Moeller-Maersk A/S and the Mediterranean Shipping Company, jointly operate vessels and trade routes, Hyundai will run separate routes and take part only in the transport of container cargo. Hyundai has praised the deal in a self-evaluation, noting that its share of quota in container transport has increased by 20 percent.

[Soundbite] Yoo Chang-keun(President, HMM) : "Considering our firm's current situation, we believe the agreement is the best possible result."

But critics say the alliance with 2M is only a half partnership, as the Korean shipping firm agreed to lower level cooperative ties instead of formal membership. The fact that Hyundai agreed not to introduce any larger vessels to its fleet over the 3 year contract period has also been a source of controversy.

[Soundbite] Prof. Han Jong-gil(Sungkyul Univ.) : "2M and HMM are partners but also rivals. If a rival builds and adds larger vessels to its fleet, shipping rates can't be expected to rise."

The limited partnership has put the brakes on the Korean government's ambitious plan to build up the size of Hyundai Merchant Marine in order to manufacture new vessels and thereby boost the sluggish domestic shipbuilding sector.