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Basil D Soufi
On Tuesday, a consortium of banks led by the Korea Development Bank (KDB) cancelled funding of Hanjin, claiming that the parent company’s offer to restructure $ 5 billion-debt is inadequate. Now, the court must determine fate of the company, no longer supported by the government. The most likely outcome is dissolution of Hanjin. The company’s competitor, Hyundai Merchant Marine (HMM), will be the first to buy remained good assets, including containers and key staff.
Hanjin’s bankruptcy and transfer of assets will take some time. There are 540,000 TEUs in transit on Hanjin’s vessels. Container ports, including the key ports of Busan, Shanghai, Xiamen and Savannah (United States), are already refusing to handle the cargo for fear of not getting related fees, according to the company’s spokesman. On Monday, Hanjin Rome container vessel has already been arrested in Singapore on request of a creditor. Other port operators are refusing to accept containers intended for Hanjin. The Ministry of Maritime Transport of South Korea estimated possible delay in Hanjin’s delivery of goods at two to three months.
This impediment may well result in disruption of global supply chains, writes CNBC with reference to the largest manufacturers in South Korea. This primarily concerns large household appliances. Thus, LG Electronics Inc. is already looking for a new shipping company to deliver its products abroad, according to Bangkok Post.
Hanjin Shipping Co. accounted for 15% to 20% of supply of LG Electronics Inc.’s products on the American continent. The manufacturer of electronics is now urgently looking for a new carrier since it can be late for high sales season of Thanksgiving Day and Christmas.
In recent years, shipping companies around the world have suffered due to fall in international trade and associated sharp drop in freight rates with excess capacity of lines.
The reason is the current crisis, the strongest since 2008. Giants of the shipping industry, such as Danish Maersk Line, German Hapag-Lloyd AG and China Cosco Bulk Shipping Co., are vigorously fighting for markets. Meanwhile, freight tariffs have fallen so low that it barely covers cost of fuel.
This year, average rates on the main route linking Europe and Asia are 575 dollars per container. Last year, the figure was slightly higher - $ 620. In 2014, delivery of one container on average was worth 1165 dollars. Meanwhile, experts point out that rates below $ 1,400 per container are already damaging for the industry.
"Tariffs for cargo transportation are terrible - agrees Anil Sharma, President and Director of US-based Global Marketing Systems, the world's largest cash buyer for ship recycling. – All that is left to do is to lay up ships, though not everyone can afford this, or junk them."
source: zerohedge.com, cnbc.com, bangkokpost.com, wsj.com
Hanjin’s bankruptcy and transfer of assets will take some time. There are 540,000 TEUs in transit on Hanjin’s vessels. Container ports, including the key ports of Busan, Shanghai, Xiamen and Savannah (United States), are already refusing to handle the cargo for fear of not getting related fees, according to the company’s spokesman. On Monday, Hanjin Rome container vessel has already been arrested in Singapore on request of a creditor. Other port operators are refusing to accept containers intended for Hanjin. The Ministry of Maritime Transport of South Korea estimated possible delay in Hanjin’s delivery of goods at two to three months.
This impediment may well result in disruption of global supply chains, writes CNBC with reference to the largest manufacturers in South Korea. This primarily concerns large household appliances. Thus, LG Electronics Inc. is already looking for a new shipping company to deliver its products abroad, according to Bangkok Post.
Hanjin Shipping Co. accounted for 15% to 20% of supply of LG Electronics Inc.’s products on the American continent. The manufacturer of electronics is now urgently looking for a new carrier since it can be late for high sales season of Thanksgiving Day and Christmas.
In recent years, shipping companies around the world have suffered due to fall in international trade and associated sharp drop in freight rates with excess capacity of lines.
The reason is the current crisis, the strongest since 2008. Giants of the shipping industry, such as Danish Maersk Line, German Hapag-Lloyd AG and China Cosco Bulk Shipping Co., are vigorously fighting for markets. Meanwhile, freight tariffs have fallen so low that it barely covers cost of fuel.
This year, average rates on the main route linking Europe and Asia are 575 dollars per container. Last year, the figure was slightly higher - $ 620. In 2014, delivery of one container on average was worth 1165 dollars. Meanwhile, experts point out that rates below $ 1,400 per container are already damaging for the industry.
"Tariffs for cargo transportation are terrible - agrees Anil Sharma, President and Director of US-based Global Marketing Systems, the world's largest cash buyer for ship recycling. – All that is left to do is to lay up ships, though not everyone can afford this, or junk them."
source: zerohedge.com, cnbc.com, bangkokpost.com, wsj.com
