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.