-1.jpg)
The saga continues with Hanjin and we are definitely following closely. Yesterday's Twitter poll results reported that 50% of our community feels that the Hanjin debacle will increase ocean freight rates. We think so as well and the proof is, well ... happening. We have put our antennas out and the feedback from shippers is rather worrying.
Will Hanjin Ruin Christmas?
By golly, it looks like Santa may just not make his rounds everywhere this holiday season. This is no joke. Shippers are reporting that Hanjin has had huge effects on their inventory with their goods stuck in a container at sea and they haven't been able to get them all out. Well, they can get them out, but not without paying hefty costs to whoever is posing themselves in an advantageous position to "help". Everyone is jumping at an opportunity to make money off Hanjin's demise.
That said, the once starving carriers are having a heyday, though it may be temporary. Shippers are reporting globally that carriers have been breaking contracts and now claiming there is no available capacity, with the prices, you guessed it, being jacked up.
Wait, wasn't the talk up to last month all about overcapacity? The 7th largest liner's downfall has affected global trade with a flip of the switch. The struggle is real.
Return of the Carriers (Sometime)?
The once safe locking-in-long-term-contracts strategy at a ridiculous low price, doesn't seem is going to hold any longer. Shippers are now being forced, in many cases, to go on the spot market with 1-3 months quotes not being contracted.
As the year comes to and end, tendering/bidding season starts for many European shippers. Large-volume shippers who were once basking in their long-term contracts low rates, will get a reality check when carriers will deny renewing contracts at the same low prices as last term. Ouch.
With Golden Week nearing (1st week of October) Chinese travelers will be ready to bust out for 7 days abroad and have a shopping frenzy. That's the expectation, at least. However, with delayed cargo, Golden Week 2016 will have enormous impact on European importers, and it may not turn out to be too golden after all.
However, the fall of Hanjin is more of wake-up call for other carriers and the industry as a whole. I would even bet that the Hanjin crisis could be just the beginning, before some real shake up in the industry starts to happen and carriers can dig themselves out of their graves.
Hanjin News Round Up
My good buddy, Professor Andrew Lubin (teaches at the International Business for Rosemont College, Rosemont, PA, where he teaches a series of international business, logistics, and finance courses), is enthralled with the Hanjin drama as much as we are.
He is following the developments closely, and has outlined a nice and sweet summary of where the situation lies as of yesterday. Beware that as the events are changing so quickly, some items below may be outdated by the time you read it.
-
The Hanjin Group scraped up US$ 10 million to begin unloading the Hanjin Greece and the soon-to-arrive Hanjin Gydnia, as the Hanjin Boston and Hanjin Jungil remain moored off Long Beach
-
US Federal Bankruptcy Court Judge John K. Sherwood ordered the unloading with the warning he wanted the Hanjin vessels unloaded and departing ASAP.
-
Hanjin continues to scramble for money. Their US attorney claims an additional US $ 3.5 million will arrive shortly, in order to begin clearing the Los Angeles / Long Beach piers of Hanjin containers.
-
The Hanjin Montevideo, has been seized in Long Beach by US marshals acting for a fuel supplier owed US $775,000
-
The Hanjin Group seems to be hoping the S. Korean government and/or banks will come to its rescue. Other than their initial announcement to put US $ 90 million into getting their ships and their clients containers released, the Group continues to offer the same financial packages the creditors rejected 2x, leading to the bankruptcy: Korean Air, Hanjin’s biggest shareholder, said it will provide US $ 54 million in funding – but only if Hanjin pledged its ownership share of a terminal at Port of Long Beach as collateral.
-
The Hanjin Group’s waffling has convinced Samsung that Hanjin has little chance of exiting bankruptcy and fears its cargo could be stranded for an extended period. Samsung requested the Court revise its order and allow firms to pay third parties such as forwarders or terminal operators to handle Hanjin containers with cargo still inside so their goods can be retrieved.
-
On the Hanjin Greece and/or Hanjin Gydnia off Long Beach: Samsung has 612 boxes with US $ 38 million of electronic goods and home appliances while H-P has some 125 boxes of computer peripherals, and Ashley Furniture has 850 boxes of knocked-down furniture. All have told the Court they need their cargos now, otherwise they will suffer major financial and competitive losses.
-
Container lessors are beginning to announce their losses (as forecast by us last week!) CAI International said it has approx. 15,000 boxes valued at $ 40 million leased to Hanjin, and might suffer some $ 4.6 million in non-insured / deductible losses.
-
Overall, Hanjin has 81 vessels arrested, detained, embargoed worldwide. 12 vessels are off Busan, with nine more in transit. Six have been arrested. Both the Suez and Panama Canals have refused transit to Hanjin vessels. Two ships are sitting off Japan, with ten more off the Chinese coast. Five vessels are in the Mediterranean, while two are in Hamburg / North Sea.
Fancy More Hanjin Commentary? | Follow our Blog
If you don't already, make sure to subscribe to our blog on the top right, to make sure you get an alert each time we post a new blog post. We'll be following the Hanjin case closely and will come back with more posts as things progress.
Stay Informed with Shipping Prices in Real Time
Learn how the Xeneta platform can help you stay on top of the shipping market prices in real time and on demand. Download our webinar to learn how Xeneta can help you benchmark your ocean freight rates and get intelligent data to optimize your logistics and supply chain management.
