South Korean shipping giant, Hanjin shipping, doesn’t seem to find a silver lining amidst ongoing difficulties. Several vessels of the Hanjin shipping are standing still at various ports across the world, for unloading and loading of containers. In a recent incident, though Hanjin shipping could arrange money to unload a container at the New York Port, it couldn’t succeed, as the container wasn’t allowed to sail back to sea.
Founded in 1977, Hanjin shipping is South Korea’s largest and world’s seventh largest shipping company. They operate on a fleet of 200 containers and have 230 offices across 60 nations.
Hanjin shipping faced several financial troubles and hence filed for receivership in August 2016 at Seoul District Court. Since then, Hanjin vessels are facing difficulties across all ports to load and unload the containers.
This misfortune has also affected the retails who are expecting goods for the upcoming holiday season. It is estimated that cargos with a net worth of nearly $14 billion are trapped on Hanjin containers. NRF (National Retail Foundation) requested Penny Pritzker, Commerce Secretary, to resolve the issue as this will very strongly impact the small and medium size retailers.
The district court handling Hanjin shipping’s case doubts the shipping giant’s capability to survive reformation. According to news reported by South Korea’s leading news agency, Yonhap, the rehabilitation plan for Hanjin shipping is next to impossible if their total debts exceed $869 million (which includes many top priority debts). Hanjin has been asked to submit a complete rehabilitation plan by December end. This plan then will be approved by the major creditors of the Hanjin shipping.
In an attempt to come out of the current situation and to raise funds for loading and unloading of containers, Hanjin is trying to sell vessels to their owners. Meanwhile, South Korean Airline has decided to pour in some funds for Hanjin shipping. In addition to the airline’s fund, chairman of Hanjin group has also provided 40 billion won, however, both the funds put together will not suffice to unload all the cargos. Earlier this month, government bodies have granted stay orders to protect Hanjin ships from confiscation in USA, South Korea, Japan, Britain, and Singapore.
With all these news, shares of Hanjin shipping has dropped down at a significant low point, whereas shares of its rival Hyundai Merchant Marine co Ltd (HMM) has increased by more than ten percentage. To grab this opportunity further, HMM has added a new vessel from 29th September on Busan to Europe route. Speculations are that if Hanjin shipping doesn’t survive then HMM will take a majority of Hanjin’s pie.
Hanjin shipping’s financial crisis might be perfect example of the downturn in the shipping industry. Changing consumer pattern and overcapacity of container vessel are supposedly few of the reasons for this downturn. If Hanjin shipping doesn’t survive then it will be one of the biggest bankruptcy cases in container shipping industry.
Reference: Retuers/ finance.yahoo/fortune