Hanjin pushes CMA-CGM to the ropes

By Matthew Beddow,  CONTAINERSHIP INTERNATIONAL

Relations between CMA CGM and South Korea-based Hanjin Heavy Industries (HHI) remain stretched despite recent assurances of ongoing negotiations and a USD 80 million cash injection from the carrier’s banks. According to recent press reports, a second 6,500TEU vessel ordered by CMA CGM in 2006 will be put up for sale by HHI unless the remaining part of its price is paid before Tuesday next week. 

Asked to comment on this, a spokesperson for CMA CGM just replied: ‘We cannot comment as discussions are still ongoing with Hanjin Heavy Industries for the delivery of this vessel.’ The first vessel, valued at around USD105 million, is alleged to have been sold to a Greek owner earlier this month and subsequently chartered to MSC. If true, CMA CGM will have lost its deposit which could have amounted to as much as USD 60 million. 

As with other ocean carriers, CMA CGM’s problem relates to a demand from South Korea’s Exim bank for a greater proportion of the agreed price of each vessel to be paid by purchasers due to the collapse in newbuild values. At the time that the orders were placed, loan-to-value ratios will have been agreed which are no longer obtainable without carriers paying more.

An alternative would be for the loans to be guaranteed by someone else, such as a Government, but the French Government remains quiet on the issue, despite making assuring noises about supporting CMA CGM in this time of crisis. A problem here could be the European Commission’s recent comments over the legality of the German Government’s support last year for Hapag-Lloyd.    

Comment

CMA-CGM and Hapag-Lloyd are now definitely vulnerable to the impending consolidation in the box shipping industry, and I am not very confident that Europe, whose hands are already full with the public debt crisis of some of its members, will be able to help the two carriers cope with such ‘rough seas’.

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