Hanjin’s bankruptcy was an eye-opener to many as well as a barometer of the health, or lack thereof, of the liner industry. After years of red ink, ocean carriers are realigning their organizations, buying out competitors or merging with other container lines.
2015 brought us the mergers of Hapag-Lloyd and CSAV as well as Hamburg-Sud and CCNI.
In September 2016, Maersk announced it was reorganizing its business units to better align with their respective functions. Transportation and Logistics in one division and Energy in another.
Earlier this year, we saw COSCO merge with China Shipping, Hapag-Lloyd with United Arab and the CMA-CGM buyout of APL.
Just yesterday, the Japanese contingent entered the fray. NYK, MOL and K-Line announced plans to merge their container businesses. They plan to establish a joint venture company July 1, 2017 and begin operations of the combined company on April 1, 2018.
Our guess…these changes are not going to be the last we see.
Before you folks from around the country start trucking your Hanjin empties to Oakland, this home applies to Oakland discharged containers only.
Now that we have that out of the way, kudos to both SSA and the Port of Oakland for being the first to develop and implement a plan for these unwanted empty containers. The two parties worked together to establish a return location in Oakland at the Roundhouse off-dock empty depot. Without a return location for Hanjin empties, these containers would sit idly on chassis awaiting a final disposition, which could be years away. A chassis shortage was a very real and imminent possibility, and without the chassis to move containers on and off the terminal, a bottleneck and congestion would have ensued.
A big thank you for the leadership and forward thinking exhibited by the port and SSA in ensuring cargo moves efficiently and releasing the burden from motor carriers and cargo owners alike.
After months of negotiations between Hanjin and Korea Development Bank (KDB) (the shipping company’s main creditor) to restructure Hanjin’s debt, the attempts have failed. KDB withdrew its support of Hanjin because the final funding plan proposed was not enough to meet the company’s debt of $5.5B.
As a result, Hanjin has filed for receivership, which is a form of bankruptcy protection. The courts will now decide if the company will be liquidated or restructured.
Reports indicate that restructuring is remote. There will be no Korean government bailout for the 7th largest ocean carrier, and the government has requested Hyundai, also a Korean ocean carrier, to buy Hanjin’s healthy assets.
Hanjin’s ships both in the US and abroad have been denied berthing access or even seized. Terminal operators around the world, including Oakland, are restricting the movement Hanjin equipment. Cargo worldwide is going to be at risk. It is going to be a long and messy clean up.
We will let you know more as the picture comes into better focus.