South Korea’s container line HMM has pledged to cut costs following a 90% drop in profit in Q1 2022. The company aims to align its overheads with the business environment and plans several measures to increase efficiencies. While the shipping company has posted a Q1 profit, last year’s inflated $2.4bn Q1 result is unlikely to return. The Shipping Composite Freight Index has fallen to a normal level of around 1,000 points, 80% lower than a year ago, a trend that is likely to continue, HMM believes.
This lower profit period could drive HMM into other shipping markets, such as LNG tankers. The company has announced its intention to participate in an offer to buy back the former LNG shipping operation, which was spun off a decade ago. Rival Maersk has issued similar guidance, with the focus on “proactive cost management”. Falling volumes on key trade routes have continued since the late-stage COVID-19 import boom, and fares have declined despite airlines adjusting capacity. HMM predicts that these low demand conditions will persist due to rising energy and commodity costs and sees “no encouraging signs of a near-term recovery in consumer confidence”.