MarSciGuy
Topic Author
Posts: 456
Joined: Thu Jun 28, 2007 12:14 pm

Hanjian Shipping bankruptcy

Fri Sep 02, 2016 3:29 am

http://www.usnews.com/news/business/art ... tail-fears

With a top 10 shipping company declaring bankruptcy and having their ships and cargo either turned away or basically impounded, what might the impact be on either the weakened shipping industry (of late due to overcapacity) or the holiday retail season?

Discuss...
"There weren't a ton of gnats there where a ton of gnats and their families as well!"
 
User avatar
WarRI1
Posts: 13489
Joined: Thu Sep 20, 2007 10:51 am

Re: Hanjian Shipping bankruptcy

Fri Sep 02, 2016 3:51 am

MarSciGuy wrote:
http://www.usnews.com/news/business/articles/2016-09-01/hanjin-bankruptcy-causes-global-shipping-chaos-retail-fears

With a top 10 shipping company declaring bankruptcy and having their ships and cargo either turned away or basically impounded, what might the impact be on either the weakened shipping industry (of late due to overcapacity) or the holiday retail season?

Discuss...


Obviously higher prices for imported goods that cost us jobs here in the US. Anything and everything always means higher prices. :shock:
It is better to die on your feet, than live on your knees.
 
petertenthije
Posts: 3829
Joined: Tue Jul 10, 2001 10:00 pm

Re: Hanjian Shipping bankruptcy

Fri Sep 02, 2016 5:56 am

The inpact on the shipping industry is the least if my worries. If anything getting rid of excess capacity might be a blessing in disguise.

My fear is the bankruptcy of Hanjin could cascade through evey industry that relies on a steady supply chain... which is pretty much every industry you can think of. Most companies have ever decreasing stock levels of both finished products and raw materials. It's just a matter of time for factories to grind to a halt as necessary products are stuck on Hanjin operated vessels and ports.
Attamottamotta!
 
User avatar
cjg225
Posts: 1904
Joined: Sun Feb 24, 2013 8:59 pm

Re: Hanjian Shipping bankruptcy

Fri Sep 02, 2016 11:10 am

petertenthije wrote:
If anything getting rid of excess capacity might be a blessing in disguise.

American Shipper sent out a short survey yesterday. As a BCO, I replied that I think that in the short-term there'd be some uncomfortable disruption as the CKYHE alliance sorted things out and non-alliance Hanjin loops were satisfied. Long-term, though, I think this is ultimately helps bring the amazing supply/demand disconnect a healthy amount back toward balance (but by no means will solve it). I'm not sure what will become of Hanjin, whether they get bailed out (I think this becomes more likely with each second), get bought out, or completely fail and cease to exist with all its assets being sold off piecemeal (doubtful).

I'm actually very interested to see how this affects the rumors that Hyundai is getting courted by Maersk. If Maersk makes it clearer they want HMM, the South Korean government, in my opinion, absolutely will bail out Hanjin. They won't let both of their global carriers cease to be.

EDIT: Somehow I completely forgot the possibility of HMM merging with Hanjin. Journal of Commerce is reporting that HMM is not-so-subtly being told by a South Korean government agency to buy Hanjin assets and take on its workforce.

My fear is the bankruptcy of Hanjin could cascade through evey industry that relies on a steady supply chain... which is pretty much every industry you can think of. Most companies have ever decreasing stock levels of both finished products and raw materials. It's just a matter of time for factories to grind to a halt as necessary products are stuck on Hanjin operated vessels and ports.

One of the gripes of the transportation industry in the US Import and US Domestic markets right now are that US companies are holding higher than normal levels of inventory because they stocked up so damn much after the 2014-15 West Coast labor unrest.

There is certainly risk to companies who have cargo aboard Hanjin vessels (an American Shipper news flash last nigh said 3 in 4 shippers they surveyed had cargo aboard Hanjin vessels... it's pretty likely my company does, though it'd be our intra-Asia lanes, so not a back-breaking problem). But I don't think this cascades in a very damaging way ultimately. There will be some short term pain, but this will blow over.

One thing I am fairly sure of is that Matson's eastbound express service is going to be extremely popular for a while. They'll wish they had more capacity to take advantage of the shippers who will be tripping over themselves to get replacement shipments on the expedited service.
Restoring Penn State's transportation heritage...
 
ltbewr
Posts: 14678
Joined: Thu Jan 29, 2004 1:24 pm

Re: Hanjian Shipping bankruptcy

Sat Sep 03, 2016 1:33 am

I suspect some form of emergency financing, perhaps from Korean banks, will be arranged to move current vessels to ports to unload and return ships and crews to home ports. Still this means a significant drop in capacity at a peak shipping time to the North America and other markets with premiums on shipping prices by other operators and slightly higher wholesale and retail prices for end purchasers.
 
User avatar
cjg225
Posts: 1904
Joined: Sun Feb 24, 2013 8:59 pm

Re: Hanjian Shipping bankruptcy

Sat Sep 03, 2016 2:05 am

ltbewr wrote:
I suspect some form of emergency financing, perhaps from Korean banks, will be arranged to move current vessels to ports to unload and return ships and crews to home ports. Still this means a significant drop in capacity at a peak shipping time to the North America and other markets with premiums on shipping prices by other operators and slightly higher wholesale and retail prices for end purchasers.

What is "peak season" anymore? The forecasts for this year have been that it really wouldn't be much of a bump. There is so much excess capacity that I'm thinking that it won't be a complete disaster on the eastbound transpacific, where Hanjin was strongest. Plus, there's plenty of excess air capacity. Holiday cargo will get where it has to go. It just might not get there cheaply. Spot rates are apparently already rocketing upward because of this. But... I don't think it'll be easy to pass costs at this point. We're already into September. Shippers and other BCOs may be stuck eating a lot of these increased costs.

You're right, though, about someone having to step up to get these vessels into port, unloaded, and the crews home. A few vessels have already been arrested around the world (as of this morning it was one in Singapore and a couple in China). A few were being denied entry to various ports (I think it was the Hanjin Rome I read about as being denied docking up in Price Rupert).
Restoring Penn State's transportation heritage...
 
YVRLTN
Posts: 2344
Joined: Wed Oct 04, 2006 1:49 pm

Re: Hanjian Shipping bankruptcy

Sat Sep 03, 2016 2:45 am

This is hardly a surprise, the writing has been on the wall for a very long time. I personally have not touched them with a bargepole in a while.

Rates have been in the gutter for years and carriers have been trying to implement a GRI & PSS for well over a year. We have seen rates as low as $600 transpac and Hanjin have been at the forefront of pants dropping just to fill ships and keep equipment moving. This clearly was a failed strategy and the industry is supposedly losing billions of dollars.

There has already been mass consolidation, most recently CMA have bought up APL, Hapag bought UASC, and while less choice is always bad, ultimately these weak carriers need to go away. This is pretty much a mirror of what is going on in the airline industry - mergers, consolidation, buy outs and alliances.

Short term this is going to be a right mess, remember its not only Hanjin customers themselves affected, but other carriers too who share their vessels like China Shipping/Cosco. Ultimately it is going to come down to the Korean government and how involved they get. I cant see them doing nothing, even if just to help out the 100's of Korean businesses and supply of goods caught up in this all. I have heard there are talks of a forced tie up with Hyundai, but legally how they can go about such a thing I have no idea.

Meanwhile, the other carriers are already taking the opportunity to put in their rate increases they have been trying to do for months with more to come in the next couple of weeks. There is no question the rates need to increase, but I dont know that any market can sustain up to $1000 increase within a month, so many contracts are based on hedged container prices. If the big boys like Walmart et al do not get the increases, then that is absolutely going to kill the little guys and trade in general. Think we will see a lot more use of NAFTA!! Don't build that wall yet Donald...
Follow me on twitter for YVR movements @vernonYVR

Who is online

Users browsing this forum: dmg626, FGITD, N212R, Newark727, TTailedTiger and 79 guests

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos