Hanjin Shipping’s filing for bankruptcy protection harms global trade
by ChemOrbis Editorial Team - content@chemorbis.com
According to media reports, South Korea’s biggest shipping line, Hanjin Shipping Co., stopped accepting new cargoes and ships were turned away from US ports after the shipping company filed for bankruptcy protection on Wednesday. Hanjin’s banks refused to provide financial support this week and its ships failed to dock as workers were worried that they wouldn’t get paid.
The decision from Hanjin took its toll on global trade as US retailers are stocking up for holidays and this could cause higher rate increases on routes to and from Asia.
Hanjin filed for bankruptcy protection in Seoul a day after its creditors cut off its lifeline of financial assistance. Three ships were supposed to dock in the ports of Los Angeles and Long Beach, California, however, they drifted off the coast on Wednesday and their contents were marooned indefinitely. Uncertainties arose regarding Hanjin’s future and it raised concerns that its assets might be seized by creditors, which would lead to congestion at the ports.
Peter Schneider, vice president of T.G.S. Transportation Inc. in California stated, “There’s going to be exorbitant costs.”
There are two main concerns stemming from Hanjin’s recent decision. One is the potential for surging costs of freight rates and the second one is capacity issues as Hanjin accounts for 3.1% of global container capacity, according to maritime data provider Alphaliner. Hanjin is the world’s seventh largest shipping line by capacity and the company carries around 25,000 containers across the Pacific each day.
The South Korean court is yet to determine whether the shipping line should get financial support or be given a chance to get over this crisis after restructuring, the company said.
The decision from Hanjin took its toll on global trade as US retailers are stocking up for holidays and this could cause higher rate increases on routes to and from Asia.
Hanjin filed for bankruptcy protection in Seoul a day after its creditors cut off its lifeline of financial assistance. Three ships were supposed to dock in the ports of Los Angeles and Long Beach, California, however, they drifted off the coast on Wednesday and their contents were marooned indefinitely. Uncertainties arose regarding Hanjin’s future and it raised concerns that its assets might be seized by creditors, which would lead to congestion at the ports.
Peter Schneider, vice president of T.G.S. Transportation Inc. in California stated, “There’s going to be exorbitant costs.”
There are two main concerns stemming from Hanjin’s recent decision. One is the potential for surging costs of freight rates and the second one is capacity issues as Hanjin accounts for 3.1% of global container capacity, according to maritime data provider Alphaliner. Hanjin is the world’s seventh largest shipping line by capacity and the company carries around 25,000 containers across the Pacific each day.
The South Korean court is yet to determine whether the shipping line should get financial support or be given a chance to get over this crisis after restructuring, the company said.
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