Hyundai’s integrated logistics subsidiary Glovis is reported to be shifting the strategic focus of its ocean transport business from finished vehicle shipments to the bulk sector, in an effort to increase business outside of the automotive industry.
Under its 2020 business plan the company stated it will increase the number of ocean going bulk carriers from 20 to 400 over the next six years, while only adding 50 new pure car and truck carriers (PCTCs), though this will double its current fleet. The company plans to quadruple its ocean shipping sales to 8.2 trillion won by 2020, while increasing the share of bulk business carrying grain and coal to 65% from the current 35%.
“As for the auto-carrying business, we are expanding business transactions with third-party car makers such as GM and Toyota,” Kim Jin-ok, head of Hyundai Glovis’ ocean shipping business told reporters last week. “But our strategic focus will be on the bulk goods carrying business.”
Currently automotive accounts for 75% of Glovis’ business, including ocean transport, port processing, stevedoring and inland transport by rail and truck. As well as finished vehicles, this business includes provision for complete knockdown (CKD) shipments. The company is not limited to services for Hyundai-Kia, as indicated by Kim Jin-ok, and has contracts with a number of global carmakers including GM, Chrysler, Honda, Nissan and Toyota, amongst others. Its annual turnover through this business is $6.5 billion.
The refocus on the bulk sector is thought to be affecting only the ocean transport part of the business. Glovis’ bulk business has been growing over the last few years because of increased demand.
According to market data analyst Nasdaq, the supply and demand balance in the dry bulk shipping sector has stabilised following a period of volatility, and the worst of the lull in the sector is behind it. The company reports that the number of ships being scrapped per week by the bulk shipping industry has fallen from an average of more than 16 in mid-2012 to less than seven this year, which could indicate that shippers have more demand to satisfy.
Glovis already transports iron ore and coal from Canada, Australia and Brazil, as well as moving steel goods, infrastructure and equipment for overseas plant construction.
“Glovis is not simply satisfied with our present position and is always prepared for rapid changes in the business environment,” said the company’s CEO KB Kim in a statement last year. “We will consistently foster highly qualified logistics experts, expand our global logistics network and establish advanced logistics systems to become a leading global logistics and trading company.”