HANJIN SHIPPING update
Hanjin Shipping, the World’s 7th largest container line, reportedly filed for court receivership on Wednesday 31st August 2016. The news has broken having devastating effects, across all markets with the chaos and turmoil that later follow in what is an already difficult market situation.
On the 30th of August 2016, Hanjin Shipping failed to reach the support of the Korean domestic creditors’ to continue their voluntary restructuring process which included certain financial commitments of Korean Air, the company’s largest shareholder, and the Hanjin Group. With this decision reached, it was inevitable that the company would proceed to file court receivership (i.e. rehabilitation proceedings under Korean insolvency law). As a result 44 of their fleet of 98 operating containers ships have been ‘blocked’ from ports and Hanjin have been suspended from the CKYHE shipping alliance.
What does this mean to you our customers who have cargo on Hanjin services?
The impact of this situation affects both direct customers and the Forwarding community alike. It has far reaching implications on multiple trades and whilst it only has minimal implications for NNR and our customers, we would like to reassure all that we are working constantly on how best to resolve the situation for our customers.
Latest situation at the Ports.
Customers will need to be mindful that the Port Authorities are taking the stance to issue a ‘Collect Fee’ or ‘Handing Fee’ against the release of ALL cargo and also a sizable deposit to ensure the return of the empty container to the port. In these unprecedented circumstances our main focus is to ensure that our Customers receive their cargo with minimal additional cost or delay. That said; any resultant costs incurred, including non-refundable deposits and detention charges, will be passed to our customers at cost.
Latest situation for inland container transport.
We need retain control of the containers utilised for the collection and delivery of your cargo to ensure the subsequent refund of deposits paid. NNR will settle these deposits directly with the Port Authorities on behalf of our customers. To be able to retain control, we must utilise certain merchant haulers, potentially resulting in additional cost to you. Again, we are working to keep these to a minimum.
What does this mean for the future of the Shipping Industry and NNR Customers?
A miscalculation of demand has had a huge impact on the state of the industry today but it isn’t the sole contributing factor. The severe decrease in shipping prices are attributed to the sheer over investment in capacity by the ocean carriers. The desire for a bigger and better fleet at a time when markets were showing evidence of increased global demand has felt now devastating consequences, noting the reverse has happened. The expected larger profits that carriers anticipated have never materialised and almost every carrier making these investments has sustained huge losses.
The Far East Westbound trade has experienced the most volatility. Capacity withdrawal has aided some recovery but only over recent months, taking advantage of the seasonal ‘Peak Season’ period. Hanjin Shipping’s bankruptcy will have an impact now as cargo owners scramble to find space on alternative services. With China’s ‘Golden Week’ fast approaching, space will continue to be tight with the compromise being that additional capacity may be available at a premium. Following on from what has been a large shock to the industry, we can only hope that the demise of Hanjin Shipping brings some longer-term stability and the realisation that any sustainable service must come at a sustainable price.
Our Customer Service team will be contacting Customers affected by this current event, however if you have any concerns or would like to know more about how this affects current or future business, then please do not hesitate to contact us.
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