The South Korea’s Hanjin Shipping Co. filed for receivership on 31 August 2016, after losing the support of its banks.
For years, container shipping industry has faced key issues for sustainability and profitability of shipping lines. Overcapacity, ordering largest containerships, unpredictable demand in conjunction with the global economic crisis caused the depressing of rates and the limited future growth prospects in industry.
About Hanjin Shipping…
Hanjin Shipping is Korea’s largest container shipping company and one of the world’s top ten carriers that ranks in the 7th position globally and operates some 70 liner and tramper services around the globe transporting over 100 million tons of cargo annually. Its fleet consists of some 150 containerships and bulk carriers. With 4 regional headquarters in the U.S., Europe, Asia and South East & West Asia, approximately 5,000 global staffs as well as container terminals in world’s major ports contribute to Hanjin Shipping’s world-class logistics network around the world.
Hanjin operates in 60 service routes in 35 countries connecting more than 90 major ports and 6,000 destinations around the globe. As regards the global Container Service Network consists of 5 main trades: Europe, America, Asia, Africa and Emerging countries.
Source: Hanjin Shipping
Hanjin is a member of CKYHE (COSCO, “K” LINE, Yang Ming, Hanjin Shipping, and Evergreen Line), one of the four ‘Big’ strategic shipping alliances in the container shipping industry today. Over the years, CKYHE alliance expanded its service network in US trades, reorganize EU network by providing six Asia-North Europe services and three Asia Mediterranean services with the optimum port coverage throughout Asia, North Europe,East Mediterranean, West Mediterranean and Adriatic region.
In the middle of 2016, Seoul, Korea – Hanjin, Hapag-Lloyd, “K” Line, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Yang Ming have agreed to create a new alliance, called “THE Alliance”, which is scheduled to begin operation in April 2017 and covering all East-West trade lanes namely, Asia-Europe/ Mediterranean, Asia-North America West Coast, Asia-North America East Coast, Transatlantic and Asia-Middle East / Persian Gulf / Red Sea. The new partnership will build one of the leading networks in the container shipping industry combining approximately 3.5 million TEU or 18% share of the global container fleet capacity.
Day after bankruptcy…
The fleet of Hanjin is subject to the full asset seizure by creditors under bankruptcy protection, but only the 37 containerships directly owned by Hanjin, not the 62 chartered ships, which fully belong to the leasing company, so a terminal operator may not get paid by the company under receivership.
Hanjin is shareholder in 20 container terminals, totaling and annual capacity of 22.4 million TEU, causing uncertainty about terminals’ operation where Hanjin has a majority stake, such as Korea and Busan (an important transshipment hub for the China trade), while in terminals where Hanjin has a minority stake, disruptions are unlikely since the terminal operating company is a separate entity. Looking the upcoming changes, it is clear that the majority of these terminals will lose ship calls from Hanjin.
The bankruptcy will impact global supply chains by the shock of services interruption without prior notice, in transit cargos will be stuck in ports or transport companies in first stage. Till return to normal, new carriers will deliver the cargo, inducing a surge in rates on routes and ports where Hanjin was providing substantial capacity.
Finally, the global container shipping will be affected by the increase of rates and capacity demand on routes and ports that were serviced by Hanjin, forcing competitors to offer additional services… More