The trade paper of Thursday, Sept. 1 made the headline of “Hanjin Shipping went bankrupt – legal management application”. It is said that Hanjin Shipping is No. 7th rank in the world and No.1 among Korean flags in the number of operating containerships with 157 ships (64 owned, 93 chartered) and dealing with 16,400 shippers of more than 80 countries in the world. They had already agreed this May to participate in the new alliance of “The Alliance” from next May.Besides, Hanjin Shipping is a member of Hanjin Group same as Korean Air Lines.
“Is Hanjin Shipping went bankruptcy?” I hardly believed my eyes for an instant. I heard that they have financially had a problem these days, but they have had a similar rumor in the past but they overcame difficulties. Hanjin Shipping is No. 1 in Korea and they are Korean Flag Carrier. They were established in 1977 that is a relatively new shipping company. They purchased German shipping line of “Senator” in 1997 and they became to occupy the corner of 5 big shipping companies of the world in a loading capacity scale. They are taking a part in Korean economy.
By the way, Port Busan loses 40% of transit freight by legal management of Hanjin Shipping. In addition it loses the profit of 440 billion wons (41.2 billion yen) and it is said that it would bring instability of employment of 11,000 people. Everybody believed that Korea’s greatest shipping line, Hanjin finally never go bankrupt and the public institutions do something for them in any situation. However, the worst fear became reality.
It is a big loss for economy of Korea. In addition, it will cause confusion to not only Korean economy but economy worldwide. Why would a soft landing not be possible a little more?
Hyundai Merchant Marine (HMM), another large Korean shipping line has gotten over present critical situation by selling their assets. HMM will join 2M Alliance (Maersk, MSC) from next April. It is said that bankruptcy of Hanjin Shipping was caused by the fact that valuable assets not left in Hanjin Shipping. HMM seems to purchase the assets of Hanjin Shipping and possibility of merger seems to progress.
On the other hand, the rise in price of the freight rate happens by bankruptcy of Hanjin Shipping. According to the press release 60 containerships or more out of 97 under operation of Hanjin Shipping seem to have been waiting in the open sea and were refused cargo work in a port. The number of shippers using Hanjin’s ships would come to 8,300 companies. They say that the total freight sum is approximately 16 trillion wons (approx. 1,500 billion yen). The shipper and consignee will suffer big damage if container with cargo will delay by causing containership waiting in open sea and cargo work refusal at the port.
Is it necessary for other shipping lines to help such cargo to be delivered to the consignee without problem when one of the major shipping lines like Hanjin Shipping goes bankrupt? Of course, a shipping line is a normal private company but in a sense we think shipping lines take public nature to some extent.
Is it necessary that the alliance should have set up the backup system to help such cargo to be delivered to the consignee smoothly and safely when one of the members who operates in the big scale is bankrupted? The signification of existence of the shipping industry will be high in future in view of increasing cargo worldwide and to support the global distribution industry. Therefore, may I emphasize a phase of public nature of the marine transportation industries?
Each shipping line has been making terrible effort to cut the cost under the freight competition. Considering about shipping line who is retiring from the market is it really good to the shipper, the marine industry and people engaging in marine business and people of the whole world that receives a benefit. As a result what is the thing left after the freight rate competition? Is it about the time to seriously think what the problem is?
On the other hand, as for new container price is around $1,400 per 20f. The number of stock of new production in China factory is over 710,000TEU.