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South Korea’s biggest shipping line has filed for bankruptcy protection
- dmoy 10y agoThe article was a bit scarce in some details, can anyone fill in? Is hanjin doing 25k teu, or 50k (of double size)? What fraction of Pacific shipping is that? 7% of US trade, but is it hitting intra Asia trade worse?
- mhandley 10y agoThis FT article has more details: http://www.ft.com/cms/s/0/205af87a-6fba-11e6-a0c9-1365ce54b926.html http://www.ft.com/cms/s/0/205af87a-6fba-11e6-a0c9-1365ce54b9... It says Hanjin has 2.9% of the world market share for container shipping, but among Korean exporters, it's a lot more. For example, Hanjin handles 40% of Samsung's exports and 20% of LG's. Still they're fairly small compared to Maersk, which has 15% market share.
- velodrome 10y agoContainer Freight Operators, Market Share: http://www.statista.com/graphic/5/198206/share-of-leading-container-ship-operators-on-the-world-liner-fleet.jpg http://www.statista.com/graphic/5/198206/share-of-leading-co... China Containerized Freight Index: http://en.sse.net.cn/resource/img/update/ccfiallen.png http://en.sse.net.cn/resource/img/update/ccfiallen.png
- pouetpouet 10y agohttp://www.alphaliner.com/top100/index.php http://www.alphaliner.com/top100/index.php Hanjin represents 2.9% of the world fleet
- MollyR 10y agoWow, Does anyone know what this means for the dry baltic index. A bunch of shipping companies look like they are pretty close themselves to bankruptcy.
- pcurve 10y agoIt looks like an effortless climb back up to 1000-1500.
- deleted 10y ago[deleted]
- macmac 10y agoAbsolutely nothing. Baltic Dry only covers bulk carriers. Hanjin's fleet of bulk carriers consists of only 22 vessels.
- etimberg 10y agoCould look at HARPEX http://www.harperpetersen.com/harpex/harpexRH.do?timePeriod=Total&&dataType=Harpex&floatLeft=None&floatRight=None http://www.harperpetersen.com/harpex/harpexRH.do?timePeriod=... which tracks container freight. It does not have as much historical data though
- TorKlingberg 10y agoIs there some new internet trend to obsess over the Baltic Dry Index?
- confluence 10y agoYes, it's what happens when too many people read zerohedge because they think it makes them smart.
- razster 10y agoVideo by WSJ has some more information https://www.youtube.com/watch?v=PSLAzwobIAI https://www.youtube.com/watch?v=PSLAzwobIAI https://www.youtube.com/watch?v=5bzyTVK-rD8 https://www.youtube.com/watch?v=5bzyTVK-rD8
- deleted 10y ago[deleted]
- pcurve 10y agoI'm surprised there hasn't been more bankruptcy. Baltic Dry Index crash has been spectacular, though it has recovered from its lowest point of 300. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/01-overflow/20160118_bdiy.jpg http://www.zerohedge.com/sites/default/files/images/user5/im...
- macmac 10y agoThere is a strong tradition of state intervention when bankruptcy in container shipping is likely. Both German and French lines have been saved by their respective governments.
- MollyR 10y agoDo you think South Korea will intervene ?
- macmac 10y agoMy guess would be that if they intended to do so they would have done it earlier.
- bsder 10y agoI suspect they already are, just not on behalf of Hanjin.. Quoting: "The Korean government said it wants Hanjin’s domestic rival, Hyundai Merchant Marine Co. , to buy healthy assets from the troubled company. It rejected the idea of a merger." Translation: SK is going to shoot Hanjin in order to prop up Hyundai. I suspect as part of any "deal", Hanjin is going to wind up saddled with a bunch of bad contracts from Hyundai, too ...
- kijin 10y agoThat would be a smart move, at least politically if not economically. People have been wary of large bailouts since 2008. The Chaebol family that owns Hanjin is especially unpopular in Korea, due to a widely publicized incident where one of their daughters threw a tantrum on board an international flight and made it return to the gate. The President of South Korea cannot afford to make any move that would hurt her (already rather low) popularity rating. She needs to throw Hanjin under the bus if she wants her party to have a chance in next year's election. Besides, the government is too busy trying to rescue the shipbuilding industry, which is worth much more to the Korean economy, to babysit a shipping company.
- Animats 10y agoThis is not "bankruptcy protection". The WSJ writer is thinking of the US's lenient Chapter 11 bankruptcy procedures. Hanjin is going into receivership, with a court in charge. Ships and loaded containers are stranded all over the world.[1] Two Hanjin ships are anchored off Los Angeles, unable to unload because there's no one to pay the port fees. Railroads and ports are sending unshippable containers back to the shipper. This isn't a big deal for trade generally, because there's huge overcapacity in shipping right now. Hanjin is only 7% of Korea's export shipping. But it's a huge deal for businesses with product stuck on Hanjin ships.[2] It's also a big deal as US retailers stock up for the Xmas shopping season. Spot container shipping prices just shot up. That won't last, but it may last through the Xmas runup. The court in Korea will probably authorize funds to get the ships unloaded and get them to some storage location, but it's not clear when. That's the biggest headache. The shutdown is not being handled well. Historically, big firms in Korea were protected by the government, and bailouts were common. That's declined, and attempts to put together some kind of rescue deal for Hanjin have already failed. There's no big reason to rescue Hanjin; Korea alone has excess shipping capacity. [1] http://www.seatrade-maritime.com/news/americas/hanjin-shipping-vessels-and-containers-left-stranded.html http://www.seatrade-maritime.com/news/americas/hanjin-shippi... [2] https://theloadstar.co.uk/forwarders-dangerously-exposed-by-hanjin-bankruptcy-as-scramble-for-unpaid-debts-and-fresh-capacity-begins/ https://theloadstar.co.uk/forwarders-dangerously-exposed-by-...
- pnathan 10y ago> Spot container shipping prices just shot up. Curious where you find out that information.
- macmac 10y agohttp://www.sdcexec.com/news/12252450/spot-rates-skyrocket-after-hanjin-collapse http://www.sdcexec.com/news/12252450/spot-rates-skyrocket-af... quoting http://www.worldcontainerindex.com/ http://www.worldcontainerindex.com/
- Animats 10y agoHanjin has obtained an injunction in Korea against seizure of its assets, says Lloyds List.[1] Right now, Hanjin ships have been ordered to stay offshore to prevent seizure for unpaid claims until the legal situation stabilizes. It looks like Hanjin is going to file for Chapter 15 bankruptcy in the US, which means US creditors get Chapter 11-like treatment: old claims are stalled and new bills can be paid. Claims have to be resolved in the primary bankruptcy court in Korea. Then the ships may be able to unload and head back to Korea, pending further court action to unwind Hanjin. BIFA info on What to Do if Your Container is Stuck on Hanjin: [2] Big mess for shippers. Especially Samsung, which used Hanjin heavily. [1] https://www.lloydslist.com/ll/sector/containers/article535342.ece https://www.lloydslist.com/ll/sector/containers/article53534... [2] http://www.bifa.org/news/articles/2016/aug/bifa-information-regarding-hanjin http://www.bifa.org/news/articles/2016/aug/bifa-information-...
- macmac 10y agoFun fact: The top 3 largest container shipping lines are all family controlled companies and are all European based (Denmark, Switzerland and France)
- tener 10y agoEven funnier: Switzerland is landlocked.
- kelvin0 10y agoIt's certainly not cash-locked.
- labster 10y agoBring it up with the Nebraska Admiralty.[1] [1]: https://en.wikipedia.org/wiki/Nebraska_Admiral https://en.wikipedia.org/wiki/Nebraska_Admiral
- pandler 10y agoHa that's great. It reminds me of the Wizard of New Zealand.[1] > In 1982 the New Zealand Art Gallery Directors Association issued a statement that in their opinion the Wizard was an authentic living work of art and the City Council appointed him Wizard of Christchurch. In 1990 the Prime Minister of New Zealand, Mike Moore, an old friend, appointed him the official Wizard of New Zealand. [1]:https://en.wikipedia.org/wiki/Wizard_of_New_Zealand https://en.wikipedia.org/wiki/Wizard_of_New_Zealand
- seanmcdirmid 10y agoOr the Bolivian Navy?
- smcl 10y agoFor the curious... Denmark: Maersk Switzerland: MSC France: CMA-CGM
- eschutte2 10y agoWhere's Flexport? Seems like their PR should be all over this.
- Animats 10y agoProbably having a really bad day. Flexport: "Our logistics managers and licensed customs brokers work around the clock to make sure that your shipments move smoothly." It's their job to deal with the problems created by Hanjin for Flexport customers. The terms and conditions for international freight forwarding are standardized [1], and while some events (wind, wave, war, etc.) let them off the hook, bankruptcy of their subcontractor is their problem. [1] https://www.flexport.com/terms-and-conditions#InternationalOceanTermsAndConditions https://www.flexport.com/terms-and-conditions#InternationalO...
- thedogeye 10y agoFlexport managed this quite well actually. Here's our take: https://www.flexport.com/blog/on-hanjin/ https://www.flexport.com/blog/on-hanjin/
- abecode 10y agowho are the main creditors of a shipping company like Hanjin?
- bkor 10y agoTo add more details to this: To get economies of scale, you want big container vessels. Customers usually want a weekly vessel call to their port. It's impossible to fill the bigger container vessels on your own. Therefore there are various alliances, whereby multiple shipping companies combine their vessels and share their capacity. The amount of containers you can put on a vessel is then determined by how much of the capacity you bring in. Simple example: for a service with 7x 10.0000 TEU vessels, if Hanjin owns/supplies two of those 10.0000 TEU vessels, it'll 28.6% of the capacity on each of the 7 vessels. Then you have another benefit that by loading ("stowage") efficiently you might be able to fit more containers than usual. Hanjin is part of the CKYHE shipping alliance. As such, on various (not all!) Hanjin vessels there's not just containers booked with Hanjin, but also from the other shipping companies. According to http://www.hellenicshippingnews.com/ckyhe-alliance-cooperation-confirmed-until-end-march-2017/ http://www.hellenicshippingnews.com/ckyhe-alliance-cooperati...: "CKYHE alliance members Cosco and Evergeen are set to move to the new Ocean Alliance with CMA CGM and Orient Overseas Container Line (OOCL) in April next year leaving just K-Line, Yang Ming Line and the financially struggling Hanjin Shipping." After the financial crisis, it became really cheap to lend money. Various banks noticed that a slight profit was being made in shipping. As a result many new big container ships were built, mainly due to bad decisions within banks. There's now (again) a huge oversupply of capacity vs demand. This has a drastic effect on freight rates. E.g. http://www.wsj.com/articles/maersk-profit-drops-on-weak-freight-rates-1470984856 http://www.wsj.com/articles/maersk-profit-drops-on-weak-frei... has this bit: "Maersk said average container freight rates for the second quarter were off 24% from a year earlier, while the oil price was down 26%." Container shipping companies are often bailed out by countries. E.g. AlphaLiner had a bit (weekly newsletter, don't have a link) where COSCO got huge amount of money (IIRC 200 MUSD) from the Chinese government in 2015 to scrap vessels. This is the only reason they had a tiny profit in 2015. In 2016 the freight rates are drastically lower! Any company will need to do a crazy amount of cost saving, even though a lot of the costs have already been invested (if you bought containers & container vessels they're not suddenly become cheaper to run or to write-off). COSTCO lost 1.1 billion in the first 6 months of 2016 (http://www.chinadaily.com.cn/business/2016-08/27/content_26613536.htm http://www.chinadaily.com.cn/business/2016-08/27/content_266...), though they're likely also affected because they recently merged with another shipping company. Way more capacity than demand. In news articles this is often misinterpreted. Future: If Hanjin goes bankrupt, their container vessels will still exist. These vessels will likely being purchased at a much lower price. To fill them, anyone purchasing these vessels will likely take advantage of the lower purchase price and offer even lower freight rates. I don't expect the supply and demand to change quickly.
- Animats 10y agoUpdate for today: big mess continues. Four Hanjin ships now off the coast of California. They can't enter US waters without being seized.[1] Almost all of their ships are at sea or at anchor, although a few in China were seized. Lots of lawsuits filed. Hanjin hasn't been paying its bills since June, which is why there are claims against their ships. Freight forwarders (like Flexport) face big financial problems. They may have paid Hanjin already, but still have the responsibility of getting the containers to their destination at their expense. Maritime insurance won't pay for this; it's a financial problem, not an accident. Lloyds List quotes a freight forwarder in Australia: “There are bound (to) be freight forwarders with cargo on these vessels. F+++. I haven’t had one (of) these since the Nigerian crisis 40 years ago. F+++.”" It's not clear if ship crews will ever be paid. There's concern about ships running out of food and fuel. The bankruptcy court in Seoul has given Hanjin until November 25th to come up with a plan. Hanjin web site still says absolutely nothing about problems. [1] http://www.tradewindsnews.com/legal/775929/us-filing-expected-as-hanjin-ships-halted http://www.tradewindsnews.com/legal/775929/us-filing-expecte...