Hanjin Shipping Files for Bankruptcy Protection
Hanjin Shipping Line has filed for receivership having lost the support of their creditors. This is causing a ripple effect across the globe and shippers should take note. Hanjin is currently the seventh largest container carrier holding 3 percent (600,000 TEU) of the market share.
Major carriers, including Hyundai Merchant Marine, are moving rapidly to fill the void created by Hanjin. HMM has moved thirteen of its vessels into trade lanes that were previously serviced by Hanjin exclusively. This will have short term impacts on capacity and schedule for a brief period before the extra cargo is absorbed. It is highly recommended to book cargo as early as possible to reserve space and split shipments across multiple carriers to hedge bets.
What if you have cargo currently booked in Hanjin vessels?
If you have cargo currently moving under a Hanjin bill of lading, we anticipate their service partners (including stevedoring terminals, railroads, trucking lines, etc.) may not handle the cargo until there are firm assurances about payments to be made.
We are already seeing this in China, U.S. ports and some carrier intermodal shipments. This situation is expected to be resolved soon. It is best to alert stakeholders and follow up with logistics partners to take any feasible mitigating actions.
What if you are planning a sourcing exercise now or in the near term?
If you are currently engaged in an ocean sourcing event, or are planning one in the near future, we advise you to continue this action. However, intentionally add time into the process while the noise works itself out of the system. Carriers can and will react quickly to the changes by being reactive and increasing prices.
Key trade lanes that could be impacted
Hanjin has a 7.5 percent market share in the transpacific route and 4.5 percent share in the Asia-Europe trade lanes. The impact would be acutely felt in the transpacific segment. We will see an immediate price increase for the transpacific lanes due to the prevailing peak season. The same rate buoyancy is expected to wear off as other carriers bring in idle capacity to fill the void.
Currently the idle capacity is expected to be about 1 million TEUs, equivalent to 5 percent of global capacity. The Hanjin failure will not change supply/demand significantly.