South Korea's Hyundai Glovis, a logistics company under the wing of Hyundai Motor Group, plans to boost investment worth hundreds of billions of won in ships.
Hyundai Glovis had bought two ships in November last year and put in an additional 248.9 billion won (USD219.61 million) in June this year to buy three more ships in order to complete purchasing five additional vessels by the end of next year for a total of 13 vessels.
Glovis' intense investment in ships is aimed at expanding sales by increasing the shipping volume through taking over outbound automotive shipments of its parent company, Hyundai Motor Group.
Most of the ships purchased by Hyundai Glovis are high-priced automobile carriers, not bulk carriers for shipping materials.
Over half of the volume of Hyundai Motor Company and Kia Motors' outbound car shipments, which had been shipped mostly by Hyundai Merchant Marine (HMM) in the past, is currently being shipped by Eukor Car Carriers. Eukor Car Carriers has been very profitable as it has recorded over two trillion won in sales on a yearly basis, with its operating profit (OP)-to-sales ratio amounting to 10 per cent.
Glovis is currently generating an estimated nine trillion won in sales, and the amount will significantly grow if its reliance on this business further expands. The prospect for the auto transport business is all the more promising considering Hyundai-Kia's exports are jumping at rapid pace. This is why Glovis, even at high costs, purchases ships and is aggressively penetrating into the auto transport industry.
"We plan to expand our overseas shipping volume of Hyundai-Kia to the 60 percent range", Glovis explained. "It has not been long since the maritime shipping business unit was established and the unit is being strengthened as late as recently. And we are now purchasing ships in a direct manner, staying away from the ship chartering procedures so as to save the cost and secure the reliability as well."
Glovis is putting its emphasis on scaling up its business by exploring into diverse business scopes other than the shipping business. Case in point is its recent entry into the aviation industry by winning the order from Boeing to supply core components of F-15K. The company is concentrating more on the profitable businesses while staying committed as a logistics company.
Sources: Maeil Business Newspaper & mk.co.kr
