Hanjin Shipping files for receivership

indexExpect unprecedented impact to cargo capacity, bookings and rates resulting from Hanjin Shipping receivership filing

We are closely and carefully following the headlines today about Hanjin Shipping filing for receivership . The steam ship line is South Korea’s biggest. This will impact capacity, rates and peak season bookings. We will keep clients updated through newsletters, social media and conversations, if your cargo could be affected.

About the Hanjin filing:

The potential bankruptcy is creating an unprecedented mass scramble of cancelled bookings, container re-routing and immediate space crunch. We’re reading online news reports and receiving notices today.

  • Hanjin’s filing for court protection would be the largest steamship line failure in history potentially taking out the world’s seventh largest carrier with: 98 ships, some 44 bulk carriers and tankers, and 11 dedicated container terminals. Ships carry over 600,000 TEU (20-foot container) capacity.
  • Shippers who have containers on Hanjin’s vessels will most likely experience delays. We’re receiving information that shipments are being blocked at ports including: Shanghai and Xiamen, China; Valencia, Spain; and Savannah, Georgia.
  • Containers on carriers that are members of the CKYHE steamship line alliance riding on Hanjin ships could also experience delays. The CKYHE alliance carriers include COSCO, K Line, Yang Ming and Evergreen.
  • We’ve received a statement from Evergreen saying they will no longer allow their containers to be loaded on Hanjin vessels, or carry Hanjin containers on Evergreen ships.

What actions do our customers need to take now:

  • Immediately find out if you have Hanjin containers on the water. Also find out if you have any CKYHE carrier containers on Hanjin vessels.
  • Start to plan for delays in receiving impacted containers.
  • Communicate with your international freight forwarder or service provider on a plan of action moving forward on how to handle the space crunch with your current carriers and what alternative services could be utilized to spread out your import supply chain over multiple services including Canadian ports of entry and U.S. East Coast ports of entry.
  • Prepare for rate increases over the next few months.
  • Prepare for port delays, container-rollings and longer transits.
  • Communicate the Hanjin situation and the possible impact it will have on your imports to upper management so they understand what’s going on with your supply chain moving into the busy shipping season.

Industry implications:

  • Container re-routing. Starting this morning, there is a massive re-routing of current container bookings away from Hanjin vessels.
  • Expect immediate space tightening. Anticipate it for all services on the Trans-Pacific routes eastbound to the United States including these ports: U.S. West Coast; Canada; and U.S. East Coast.
  • Assume high demand. Space was already beginning to fill due to the muted peak season increase. Starting now space with be in even higher demand as large importers such as Wal-Mart and Target scramble to route containers to alternative carriers in order to keep goods moving. The cascading effect will be over 100 percent capacity for most TPEB services causing major container-rollings at Asian ports.
  • Rate increases. Rates will be going up quickly and potentially way up for the next few months as customers fight for cargo space during peak season. Be prepared for multiple peak season surcharges and general rate increases as carriers play the pay for space game.

Next steps in Hanjin’s filing for receivership:

  • The court will decide if Hanjin Shipping should remain as a going concern or be dissolved.
  • This court process usually takes one or two months, but it is expected to be accelerated, according to a judges comment as reported in Reuters.
  • Reuters is reporting Hyundai Merchant Marine Co. Ltd., South Korea’s second largest shipping line, will look to acquire this rival’s healthy assets—vessels and key personnel.
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