Today marks the one-year anniversary since South Korea’s flagship carrier Hanjin Shipping sought court protection, sparking global supply chain chaos and ultimately the largest container shipping casualty to date. A year on the question remains whether liner shipping has learned its lesson from such a high profile bankruptcy?
Approximately $14.5bn of goods were left stranded on Hanjin ships around the world, and hundreds of seafarers were marooned in international waters as the Seoul-headquartered firm sought in vain to try and keep its fleet in tact.
With all its ships now sold creditors of Hanjin face the grim prospect of getting back just two cents on the dollar. Lawyers have been one of the real winners from the collapse of the Korean carrier.
Twelve months in container shipping however is a very long time and today’s box market is a far cry from the trough it found itself at the moment Hanjin threw in the towel. Rates are up, liners are making profits and the number of global players has consolidated dramatically. Nevertheless, the spectre of overcapacity remains and cheap newbuilds on offer are tempting leading names to place dangerously speculative orders.
“The Hanjin incident illustrates the vulnerability of the complex transport system we rely on today,” Dr Martin Stopford, the president of Clarkson Research, told Splash.
Tobias Koenig, a Splash columnist and managing partner at Lexington Maritime, believes the Hanjin collapse has brought a serious reality check to many of the most experienced names in the box shipping industry.
“The Hanjin demise has changed the liner shipping landscape entirely. But that was long overdue,” he commented, adding: “It gave owners the sad confirmation that liner shipping is an industry with high risk and marginal returns. Size clearly matters and quality owners, such as the Oetkers and Tungs, have decided to sell rather than lose their business. They knew that they simply couldn’t compete in the long run.”
Speaking from Bimco’s headquarters, Peter Sand, the global shipowning body’s chief shipping analyst, recalled the moment the Korean line sought court protection and his now overly hopeful aspirations for the sector in the ensuing days.
“I remember hoping that the container shipping industry would see this meltdown as a wake-up call – and still remember what happened, at least for a year,” Sand told Splash. “Less than half a year later, it all seemed to have been forgotten,” he related, explaining: “One of the things that would be an obvious lesson learned was: stop propping up loss-making liner companies and shipyards with taxpayers’ money. Let loose the free market forces in the global industry. I guess that was a bit too naïve to hope for.”
Ultimately, the Hanjin demise should be seen in the bigger box merger picture, according to Lars Jensen, another regular Splash contributor and the co-founder of Seaintelligence Consulting. In the ensuing months after the Korean company folded dramatic merger announcements surfaced whereby there are now no more than seven mega carriers.
One bonus noted by Jensen is that liners are now conscious of ensuring supply chain chaos is kept to a minimum in case of another Hanjin style debacle. THE Alliance, a new container grouping in operation since this April, has introduced a mechanism aimed at ensuring customers’ cargo can be handled even if an alliance member was to fold.
Three hundred and sixty-five days since the most famous collapse in shipping history the liner landscape is remarkably different, yet its willingness to order vast swathes of new tonnage at just the wrong moment still appears to be an Achilles’ Heel.