Korea’s Hanjin Shipping Co., the world’s seventh largest shipping line by capacity, filed for bankruptcy protection on Wednesday, August 31. Hanjin had recently been struggling financially, with $5.5 billion in debt as of the end of June 2016.
Hanjin will stop releasing equipment for new bookings and essentially stop accepting bookings for an interim period. They advised that shipments currently on the water will continue to move to their respective destination ports. Shippers and forwarders are being forced to secure cargo release and pay for the transportation of cargo from the ports to the final customer destination, without any assistance or information from Hanjin. In some cases vessels have been “arrested”, or detained at port with no cargo discharge allowed.
Global demand and trade have suffered since the 2008 recession, while steamship lines continued to build more and larger vessels — the so-called “Mega Vessels”, that were conceived as much more cost-effective. However, the effects of the Global Recession, especially weaker trade and overcapacity, have sent ocean shipping rates lower in recent years. With about 5 percent of ships in the global trading fleet sitting idle, there is plenty of room to take over Hanjin’s capacity and carriers already are discussing the possibility of adding ships. However, prices will have to rise in order for that to be sustainable.
SGL is monitoring the movement of any of our affected containers daily. We are committed to pursuing the most cost efficient and trouble free solutions for your cargo, and will continue to update the situation.