Hyundai Ocean Shipping Announces Major Selloff to Stay Afloat

The Wall Street Journal reported this week that Hyundai Merchant Marine says it will sell some of its shipping facilities and its holdings in a financial unit. Hyundai Merchant Marine has lost money every year since 2011.

Hyundai Merchant Marine is the largest component of Hyundai Group. Its stock price has dropped more than 90% since 2010, its debts are now nearly eight times its market value, and its cash on hand is meager.

Thanks to economies of fuel and crewing, the next generation of supersized cargo ships in recent years are cheaper to operate per unit of volume shipped, and all major shippers have adopted them to stay competitive.

But (in a parallel of the current world oil glut) the wave of bigger ships has produced massive overcapacity, slashing profits and, ironically, leading to the mothballing of some of the very same ships.
This week’s announcement follows a previous unsuccessful attempt to sell off Hyundai Merchant’s financial holdings, and analysts speaking to the Journal said that even if successful, Hyundai Merchant’s yard sale might not save it from bankruptcy.