Splash 247

Borrowed time comes to an end as Hanjin Shipping files for court receivership

Borrowed time comes to an end as Hanjin Shipping files for court receivership

Array
(
    [0] => WP_Term Object
        (
            [term_id] => 80
            [name] => Asia
            [slug] => asia
            [term_group] => 0
            [term_taxonomy_id] => 80
            [taxonomy] => category
            [description] => This is the Splash 24/7 news archive related to the Asian Region. News are sorted by release date, from the latest to the oldest.

Find here the updated list of the latest news about Asia. Browse Splash 24/7 for more maritime and shipping news.

            [parent] => 55
            [count] => 6434
            [filter] => raw
            [cat_ID] => 80
            [category_count] => 6434
            [category_description] => This is the Splash 24/7 news archive related to the Asian Region. News are sorted by release date, from the latest to the oldest.

Find here the updated list of the latest news about Asia. Browse Splash 24/7 for more maritime and shipping news.

            [cat_name] => Asia
            [category_nicename] => asia
            [category_parent] => 55
        )

    [1] => WP_Term Object
        (
            [term_id] => 56
            [name] => Containers
            [slug] => containers
            [term_group] => 0
            [term_taxonomy_id] => 56
            [taxonomy] => category
            [description] => This is the Splash 24/7 news archive related to containers sector coming from all over the world. They're sorted by release date, from the latest to the oldest. 

Get the updated list of the latest news about containers. Browse Splash 24/7 for more maritime and shipping news.
            [parent] => 54
            [count] => 1535
            [filter] => raw
            [cat_ID] => 56
            [category_count] => 1535
            [category_description] => This is the Splash 24/7 news archive related to containers sector coming from all over the world. They're sorted by release date, from the latest to the oldest. 

Get the updated list of the latest news about containers. Browse Splash 24/7 for more maritime and shipping news.
            [cat_name] => Containers
            [category_nicename] => containers
            [category_parent] => 54
        )

    [2] => WP_Term Object
        (
            [term_id] => 57
            [name] => Dry Cargo
            [slug] => dry-cargo
            [term_group] => 0
            [term_taxonomy_id] => 57
            [taxonomy] => category
            [description] => Stay updated on what's going on in the Dry Cargo sector while browsing the Dry Cargo news archive. 

Find the latest maritime and shipping news on Splash 24/7.
            [parent] => 54
            [count] => 1988
            [filter] => raw
            [cat_ID] => 57
            [category_count] => 1988
            [category_description] => Stay updated on what's going on in the Dry Cargo sector while browsing the Dry Cargo news archive. 

Find the latest maritime and shipping news on Splash 24/7.
            [cat_name] => Dry Cargo
            [category_nicename] => dry-cargo
            [category_parent] => 54
        )

)

Hanjin Shipping today became the most high profile casualty of the container shipping downturn with management opting for court receivership after its creditors had decided to end support for the ailing line.

Compatriot line Hyundai Merchant Marine (HMM) is now likely to buy Hanjin’s “good” assets, South Korea’s financial regulator said today. HMM’s shares soared in trading, up 24% by the early afternoon.

Meanwhile, the Hanjin Rome, a 3,700 teu ship belonging to the beleaguered line, was arrested in Singapore by a creditor yesterday while another ship, Hanjin Sooho, was denied entry to the port of Shanghai.

Alphaliner states Hanjin’s bankruptcy is the biggest ever in container shipping history. The company is the seventh largest liner in the world, with 98 vessels totalling 609,500 teu as well as 44 bulkers and tankers. It charters in 61 ships. Among tonnage providers scrambling today to find out what will happen to their contracts with the Korean line are Conti, Ciner, Danaos, Pacific International Lines, Rickmers and Seaspan.

Drewry Maritime Equity Research commented today: “The debt burden was just staggering and it doesn’t surprise us that [lead creditor Korea Development Bank] effectively decided to pull the plug. As of end 2Q16, Hanjin had a total debt of $4.2 bn and net gearing ratio of 8.7x, and cash at hand being $156.5m.”

The company’s corporate bonds worth about KRW1.1trn won ($982.3m) are expected to turn into worthless scraps of paper.

Commenting on the news, Lars Jensen from Copenhagen’s SeaIntelligence Consulting mused yesterday on the ramifications for THE Alliance, a new container grouping set to start operations next April.

“This will potentially have a spill-over effect on the members of THE Alliance,” Jensen wrote in a note today. “Since the announcement of THE Alliance, they have seen Hyundai shift to the 2M alliance and in worst case they might also lose Hanjin. The loss of both Korean carriers will then reduce the size of THE Alliance by more than 20% before it is even launched. As the industry is all about scale, it must be of concern for the members that their alliance will the have reduced their size ratio versus Ocean Alliance from 84% at time of announcement to now potentially only 64%.”

Other high profile Korean shipping companies that have gone under in recent years – Pan Ocean and Korea Line – have been auctioned with Korean conglomerates always winning the auction. HMM picking over the Hanjin carcass is very much the likely outcome in the coming months.

SeaIntel’s Jensen reckoned today the demise of Hanjin could be good for those in other alliances.

“For carriers not relying operationally on Hanjin, this is a significant opportunity,” Jensen wrote today. “Shippers who are worried about the fallout might seek safe harbour with the other alliances. If this becomes a material movement, the other alliances will see full ships and we may well see a sudden and sharp rise in spotrates on the key trades.”

Share this article

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

Related Posts

3 Comments

  1. Sam Chambers
    Sam Chambers
    August 31, 2016 at 8:38 am

    Doff of the cap to Drewry Maritime Equity Research for the headline

  2. Brian R. McCaughrin
    August 31, 2016 at 3:58 pm

    WOW what an article to read here…Hyundai Merchant Marine, (HMM) Is In Far Worse Financial Shape, Then HANJIN, at Least HANJIN, Has Cash on Hand at $156M, and lots & lots of Clients. Filing Bankruptcy would of been in HANJIN, Best case, To come back learner and lighter, But to even think about any merger with Hyundai Spell Instant disaster, Because (HMM) Right now is 586% Debt to Equity, ten (10) Times Worse then HANJIN. HANJIN is workable at Any Stage in Bankruptcy where HMM is not.. HANJIN Corporate bonds are worth $982.3M Add that to its existing cash on hand = $1.138.00B and Its present debt load is mere $4.2B, What that??? That is nothing. Banks are worse shape. I, love to see Korea Development Bank, (KDB) Debt Load, I Bet it 50 times More then HANJIN..& You say No to HANJIN for help…You better SAVE HANJIN and RUN from HMM. Because (HMM) wont Survive Four, (4) more months of 2016! (HMM) has $2.2 TRILLION, Debt due September 30, 2016 and HANJIN has $4.2B Hello??? WOW who keeping the books here??? HELLO…

  3. Gopal
    August 31, 2016 at 4:24 pm

    I am intrigued by the statement in the article above QTE If this becomes a material movement, the other alliances will see full ships and we may well see a sudden and sharp rise in spot rates on the key trades UNQTE.

    I wonder what is the correlation with the supply side of tonnage available because the number of container ships remain the same.

    Hanjin filing for bankruptcy does not mean that all Hanjin owned or chartered vessels would straightaway go to the scrap yards….does it? Rather, the charter rates could witness further slide with owners desperately trying to charter out tonnage which would become free.
    This in term of cost of operations could bring down operators costs which they may willingly want to pass on to the consumer by way of freight reductions to have a competitive edge.