South Korea’s largest shipping company, HMM, is focusing on overseas port terminal operations. This business involves either directly purchasing port terminals or leasing them for 20 to 30 years to manage ship arrivals and departures, cargo handling and storage, and logistics connections to generate revenue. HMM believes this will create synergies with its core shipping business and is prioritizing investments in new terminals that open or where operating rights become available.
According to industry sources on the 22nd, HMM has decided to participate in the bidding for Tecon 10, a large-scale logistics terminal to be built at the Port of Santos in São Paulo, Brazil. The Brazilian government plans to construct a large terminal on approximately 620,000 square meters (about 187,550 pyeong) of land nearby to improve the logistics processing capacity of the existing Port of Santos, which will handle 3.5 million TEUs annually (1 TEU is one 20-foot container).
The Port of Santos, the largest port in Latin America, handles 6 million TEUs of containers annually. With a surge in container traffic between South American countries like Mexico and Brazil, frequent bottlenecks have been occurring. Currently, there are a total of 58 terminals at the Port of Santos, all operated by private companies. Once Tecon 10 is completed, the annual processing volume is expected to increase by about 50%.
As new terminals are opened at major trade hubs, shipping companies like HMM and terminal specialty operators are expected to engage in fierce competition for terminal operating rights. Having terminal operating rights allows for faster processing of containers compared to other shipping companies. Increased traffic will also boost terminal revenue. Typically, once terminal operating rights are secured, companies operate them for about 20 to 30 years and may extend the operational period based on circumstances.
HMM has decided to expand its container terminal in Algeciras, Spain. The company will invest 35 million euros (approximately 56 billion won) to increase the terminal area from the current 300,000 square meters to 460,000 square meters, also planning to expand the annual container processing volume from 1.6 million TEUs to 2.1 million TEUs. Following this investment decision, the terminal’s operational duration will be extended from the previous 2043 to 2065.
HMM operates 8 terminals across 6 countries worldwide. While HMM ranks as the 8th largest company globally in terms of container shipping capacity, it has fewer terminals compared to other similar-sized shipping companies. The revenue from other business divisions that include terminal operations in the first quarter was only 53.4 billion won, accounting for 1.87% of total revenue.
The world’s largest company, MSC, operates 67 terminals across 34 countries, while Maersk operates 59 terminals in 35 countries. Major shipping companies secure multiple terminals in ports around the world and operate their terminal business units as subsidiaries. Although the initial investment amount for terminals is substantial, they are regarded as crucial investments for enhancing shipping competitiveness.
Choi Won-hyuk, the president of HMM, has repeatedly stated his intention to invest in terminal operations since taking office. He also shared past experiences of difficulties in transshipment due to a lack of overseas terminals. Choi has worked in the logistics industry for over 40 years at companies like CJ Logistics and LX Pantos.
Source: CHOSUNBIZ