March 24 - Hyundai Merchant Marine (HMM) is ramping up its exposure in the project forwarding business on the back of vast deals being concluded between South Korean construction firms in the Middle East. Sam Chambers reports from Seoul.
In 2009 South Korean firms tied up USD30 billion of construction business in the Middle East. Last year that figure grew 60 percent, surpassing USD50 billion.
South Korean President Lee Myung-Bak left for the United Arab Emirates (UAE) in the middle of March as part of Seoul's diplomatic drive to expand economic ties with the Middle East. The Seoul administration has moved to make Middle East construction exports one of the main drivers of the economy.
With this in mind, HMM will take delivery of four chartered in heavy lift vessels in the second half of the year from European owners, adding to the five heavy lift ships it already operates. The four added ships are of a much larger lifting capacity than the current set, averaging 900 tonnes lifting capacity compared to the current five which can handle lifts of between 600 and 700 tonnes each.
"We want to strengthen our project carriers this year," David Lee, HMM's head of its bulk division told HLPFI. "Korean construction firms are securing huge business from the Middle East at the moment. Project cargo volumes will increase enormously from the second half of this year," he added.
Korea's top power producer, Korea Electric Power Corporation (Kepco), last year won a significant contract to build a nuclear power plant in the UAE. HMM has been assigned the shipping duties of this project. "We are also approaching many big construction companies," said Lee.
This boom in cargoes has not gone unnoticed by other major Korean lines. Last year STX Pan Ocean entered the heavy lift sector, taking one ship, and ordering a second.
"We have made the investment decision as rapid development and massive construction projects in the Middle East are expected to stimulate demand for the transport of heavy equipment," the company said on ordering its second ship.
Korea does also have heavy lift specialists such as fast expanding TPI Mega Line. The company began operations in December 2008 with the launch of two self-propelled heavy cargo vessels; a third ship was added to the fleet last year.
Moreover, the line has two new vessels - Mega Caravan and Mega Caravan 2 - due for delivery soon this year.
"We envision expanding Mega Lines' participation in the global marine freight transportation and competing among the best to become a world class heavy freight transporter," said Chun Taick Chung, president of TPI Mega Line.
For more on Heavy Lift Ships and Shipping lines, see our supplement, out with the May/June issue of HLPFI magazine.