Hanjin Shipping given ray of hope with capital promise

Hanjin Shipping given ray of hope with capital promise

The Hanjin bankruptcy debacle continues to have plenty of twists and turns around the world. The South Korean prime minister, Hwang Kyo-ahn, has weighed into the debate urging his government to do more to solve severe supply chain issues arising from the demise last Wednesday of the nation’s top shipping line.

“Related ministries including the Ministry of Oceans and Fisheries should immediately take emergency transportation measures such as sending container ships to replace seized vessels to minimise disruption on trading companies,” Hwang said during a cabinet meeting today.

Hanjin Shipping has received some good news today with commitments by parent Hanjin Group to pump KRW100bn ($90m) into the ailing line, a figure that the government has promised to match itself. Of the KRW100bn, Hanjin Group chairman Cho Yang Ho has vowed to put KRW40bn of his own money in to save the shipping line.

Hanjin Group said it made the decision to “normalize the unloading of Hanjin Shipping’s containers” to “minimize the damage to exporters and importers”. More than 70 Hanjin ships – including 61 boxships have been stranded since last Wednesday’s decision to seek court receivership.

Nevertheless, the combined KRW200bn is nowhere near what is needed to save Hanjin Shipping, the seventh largest containerline in the world.

South Korea’s Ministry of Oceans and Fisheries estimates Hanjin needs more than KRW600bn won for unpaid costs like fuel and port payments.

Meanwhile, the South Korean government has picked Hamburg, Singapore and Los Angeles as main overseas ports to offload existing containers and Busan and Gwangyang ports on home soil.

Compatriot line Hyundai Merchant Marine (HMM) is putting 13 of its own ships onto two Hanjin routes to try and pick up the slack.

Finally, in today’s roundup of Hanjin-related news, Fitch Ratings has warned the Korean line is unlikely to be the last liner to go under in the current depressed freight rate environment.

“Hanjin Shipping’s filing for receivership reflects an unsustainable supply-demand imbalance in container shipping,” Fitch Ratings said in a report. “We expect more defaults and M&A activity in the short and medium term but these will only restore equilibrium and boost freight rates if they prompt capacity reduction.”

At yesterday’s live Q&A Splash Chat session specially convened to discuss the impact of Hanjin’s failure, Lars Jensen from SeaIntelligence Consulting posited that there would only be between six and eight global carriers by the mid-2020s, down from the current total of 15.

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

1 Comment

  1. Brian R. McCaughrin
    September 8, 2016 at 7:16 am

    PRAISE THE LORD! Excellent News, From The South Korea Prime Minister, In seeking long term help for Hanjin Shipping, Global Logistics Problems, To The South Korea Ministry of Ocean & Fishers, In getting Ships to Replace Hanjin Container Ships That Are Anchors In Neutral waters, From being arrested. The CEO of Hanjin Shipping, Putting in his Own money to the Tune of $36M, To Keep Hanjin Shipping, on even Keel, and Hanjin Group of Subsidiary’s, Are funneling, a Further $90M, Along with South Korea Ministry on Ocean & Fishers Investment of $90M. So very soon Client’s, See their cargoes, Soon. Now One of the Statement that I, found Very disturbing In this article from Mr. Lars Jansen, Where he quotes, Their Will only be about Six, (6) to Eight, (8) Global Carriers by 2020.??? I, find that impossible to fathom. #1 According to Expert here: Alphaliner, That Keep a running data on everything that move, anchor in Global Shipping Today, As of September 8, 2016, They Have a list of One, (100) Shipping Companies & In Four, (4) years from Now, Mr. Lars Jansen, Think Ninety, (92) Two Shipping Companies, Will simply demise in Next Four, (4) Years?. Impossible..Even if Fifty, (50%) Percent of Those Companies, Are in some kind of Financial Problems, It still cant be done, #2, Fifty, (50%) of Ship Owner, Still Ordering New Ships, Because, The Global Banks, Are throwing money at these Ship-Owners, With long term cheap interest rate, While, #3 The Other Fifty (50%) Are sending their Ships to The Scrap Heap, To try and balance, Ordering Vs Current Ships in The market place. Sad part out of all this, No One is talking to each Other to put a STOP to this massive parking lot of ships in the world. Mr. Lars, Maybe, In Fifty (50) Years, You May be right. But, Right now their are just too many of these Owners that wont go away that easy! Their is just Way too mush money At stake for anyone to just leave, and The once still in it, They don’t have any debt, Vs The Top Seven, (7) Global Container Owners, They All Have Serious Debt: Maersk, CMA/CGM, Hapag-Lloyd, COSCO, Evergreen Line, Hanjin, & Hamburg Sud. Merging does not work either in the Past Seven, (7) years.