Five South Korean Carriers have signed a codeshare agreement for services between South Korea and South East Asia.
At the urging of South Korea’s Ministry of Oceans and Fisheries, HMM, SM Line, Pan Ocean, Sinokor Merchant Marine, and Heung-A Line (Sinokor Group) will form a regional alliance as of Q2 2021.
Dubbed ‘K-Alliance’, the agreement is aimed at consolidating the fragmented South Korean liner industry and the respective carrier’s South East Asia routes. So far, the Korean carriers compete intensely on these route corridors.
The ‘K-Alliance’ is expected to take effect in the second quarter of 2021 at the earlies since the detailed framework of the planned alliance has yet to be worked out and agreed upon by the member carriers and the relevant authorities.
The planned new Korean carrier alliance is not the Korean Government’s first effort to consolidate the country’s fragmented liner shipping sector.
In August 2017, just one year after the 2016 collapse of Hanjin Shipping, no fewer than 14 South Korean carriers signed an MoU to form the ‘Korean Shipping Partnership’ (KSP). The line-up of participants included all five designated ‘K-Alliance’ members.
The ‘KSP’ was, at least initially, similarly expected to focus on South Korea - South East Asia routes, but it only received lacklustre support from the South Korean carriers themselves and a concrete consolidation of services never occurred.
In the following years, in line with the South Korean Government efforts to promote consolidation in liner shipping, Sinokor and Heung-A Line agreed to combine their container shipping businesses and continue to form closer partnership with HMM.
Based on estimates of the South Korea’s Ministry of Oceans and Fisheries, the nation’s carrier’s have a combined market share of at least 40% on the South Korea - South East Asia routes, at about 190,000 teu*.
The South Korean government expects that the ‘K-Alliance’ will enable Korean carriers to enhance competitiveness through optimisation of service duplications, ship deployment and joint use of port facilities and containers.
The state-backed Korean Ocean Business Corporation (KOBC) will provide funding and essential operating assets to support this initiative.