After declaring bankruptcy last month Hanjin shipping has an murky future ahead. A South Korean court had declared that the company must sell as many of its ships as possible and return any chartered ships to their owners according to a report from The Wall Street Journal. The company has been struggling with debt over the past month and is looking at total liquidation or downsizing.
The reconstruction plan that Hanjin is working on right now would mean only keeping 15 of its 37 ships and returning almost all 60 chartered vessels it currently has in their possession. The company has already returned 4 of the chartered ships and will be handing in the rest after the cargo is unloaded. This cannot come soon enough because it is estimated that they are losing nearly $2 million a day on the remaining chartered fleet.
34 of the ships Hanjin has out at sea are stranded as of now due to fear the cargo and ship will be seized by creditors when they dock. Even after these ships reach port, the shipping company does not have the money to unload the cargo or move it the rest of the way to its intended destination. Hanjin has opened dialog with governments from around the world to fix the cargo crisis and has already taken steps in rectifying the situation. Meanwhile Korean Airlines Co., Hanjin’s biggest shareholder, has promised to disperse the $53.3 million to help alleviate these recent pressures.
In December the South Korean court will decide whether or not to approve the restructuring proposed by Hanjin, but as of now the government has no intention of bailing the company out. Lars Jensen chief-executive of SeaIntelligence Consulting said “If the restructuring plan is accepted by the court, Hanjin will emerge a ghost of its former self.”(on.wsj.com/2cJcmZO)
This news is especially troubling to the global manufacturing industry considering the amount it relies on shipping from overseas especially from Asia. Hanjin shipping did control about 3% of the market share in the shipping industry and moved roughly 25,000 containers across the Pacific ocean daily. Countless businesses in not only manufacturing but across many industries have been affected by this unfortunate situation. When a major shipping company runs into these kind of issues, it sends a shockwave out that spans the globe. Retailers, manufacturers, logistics and vessel owners all feel the pressure of an idle port, especially one the size of Hanjin. We will be following these developments as they unfold, check back soon to find the latest details on Hanjin Shipping Company.