Hanjin Shipping go bust
Discussion
http://www.reuters.com/article/us-hanjin-shipping-...
$14bn worth of freight currently sat in limbo around the world
$14bn worth of freight currently sat in limbo around the world
I'm getting daily updates on this. Yes it's bad, but plans are in place to resolve.
S. Korean government have piled in $90m USD to pay terminal & port fee, trucker and chassis fees, reclaim of empty boxes, Panama and Suez Canal fees, food and water for the crews and fuel so that the vessels can depart parts and return to Korean ports.
Hanjin US have filed for protection in the US and Canada and the US government has said that the ships can be docked and unloaded without fear of being seized by creditors.
Fortunately there is not many Hanjin vessels or boxese in Europe. The concentrate mostly on the APAC - N. America route. They are in an alliance with Cosco, Evergreen, Hyundai and K Line who are all safe.
I cannot see that the rates will increase above what they are at the moment. The market is so unstable, it might just add some stability rather than an increase so to speak.
The cost increase numbers they are talking about are standard GRI increases that normally hot around every 6 weeks or so. Give it 10-15 day and the cost will have settled back again.
S. Korean government have piled in $90m USD to pay terminal & port fee, trucker and chassis fees, reclaim of empty boxes, Panama and Suez Canal fees, food and water for the crews and fuel so that the vessels can depart parts and return to Korean ports.
Hanjin US have filed for protection in the US and Canada and the US government has said that the ships can be docked and unloaded without fear of being seized by creditors.
Fortunately there is not many Hanjin vessels or boxese in Europe. The concentrate mostly on the APAC - N. America route. They are in an alliance with Cosco, Evergreen, Hyundai and K Line who are all safe.
I cannot see that the rates will increase above what they are at the moment. The market is so unstable, it might just add some stability rather than an increase so to speak.
The cost increase numbers they are talking about are standard GRI increases that normally hot around every 6 weeks or so. Give it 10-15 day and the cost will have settled back again.
Edited by Chris200 on Saturday 10th September 21:23
My big concern is that this is just the tip of the iceberg, to use an unfortunate metaphor.
If Hanjin were vulnerable with their relatively diversified portfolio (they run some ports as well as ships) then you have to start asking questions about other players. There's been a lot of consolidation in the market over the last few years and I'm a bit concerned that if another line goes belly-up it might affect us in Europe more directly.
I had an email waiting for me from my Kuala Lumpur office earlier in the week and I then had a fairly frantic hour making sure we didn't have anything affected - luckily we only had one box scheduled on a Hanjin ship, and that had been bumped the night before!
If Hanjin were vulnerable with their relatively diversified portfolio (they run some ports as well as ships) then you have to start asking questions about other players. There's been a lot of consolidation in the market over the last few years and I'm a bit concerned that if another line goes belly-up it might affect us in Europe more directly.
I had an email waiting for me from my Kuala Lumpur office earlier in the week and I then had a fairly frantic hour making sure we didn't have anything affected - luckily we only had one box scheduled on a Hanjin ship, and that had been bumped the night before!
jammy_basturd said:
For someone completely ignorant to the shipping world - how has this happened? Simply a case of not being competitive, or trapped in a race to the bottom, or has there been some kind of downturn in worldwide shipping and Hanjin found themselves over exposed?
Race to the bottom; there's too much capacity as all the shipping majors went on a spending spree in the decade before the crash and the giant ships ordered back then are more or less all delivered now, so freight rates are at or below the direct cost even with the benefit of the reduced price of fuel.davepoth said:
My big concern is that this is just the tip of the iceberg, to use an unfortunate metaphor.
If Hanjin were vulnerable with their relatively diversified portfolio (they run some ports as well as ships) then you have to start asking questions about other players. There's been a lot of consolidation in the market over the last few years and I'm a bit concerned that if another line goes belly-up it might affect us in Europe more directly.
I had an email waiting for me from my Kuala Lumpur office earlier in the week and I then had a fairly frantic hour making sure we didn't have anything affected - luckily we only had one box scheduled on a Hanjin ship, and that had been bumped the night before!
I agree Dave, I thing this might just be the beginning. It may start stronger alliances or mergers like Hapag Lloyd purchasing UASC. This will make a more solid and stable company and will actually reduce capacity. If Hanjin were vulnerable with their relatively diversified portfolio (they run some ports as well as ships) then you have to start asking questions about other players. There's been a lot of consolidation in the market over the last few years and I'm a bit concerned that if another line goes belly-up it might affect us in Europe more directly.
I had an email waiting for me from my Kuala Lumpur office earlier in the week and I then had a fairly frantic hour making sure we didn't have anything affected - luckily we only had one box scheduled on a Hanjin ship, and that had been bumped the night before!
The forwarder who I work for, we are in a fortunate position in the fact that we don't actually contract to Hanjin and globally we have circa 200 boxes affected. However some of the larger players in the market place have thousands of boxes affected.
It is a race to the bottom in terms of price, considering Nov/Dec 2015 the market rate was around $250 for a 20ft and $350 for a 40ft. This week, with the GRI, the market is around $1000 for a 20ft and $2100 for a 40ft. However, some of us are sensible and have basket rates with some lines that guarantee rates for month to month or quarter to quarter and at the moment I am around $800 for a 20ft and $1400 for a 40ft. Again, just an example of the difference in the market.
cptsideways said:
I bet the price reductions have been led by a series of competitors? I have no idea but I bet that's the case
No not really, as all of the steamship lines rates are pretty much the same as each other give or take $50 here and there. Plus most of them are in an alliance with three or 4 other carriers. Hanjin were part of an alliance with Hyundai, Cosco, Evergreen and K Line.This basically means that they you'll find all of these lines boxes on each others ships.
Roscco said:
So probably being naive here, but if shipping costs are below what they physically cost and all operators are stuck in this position, why can't they all up the price?
Oversupply; hence posts above talking about literally parking vessels up and welding door shut.In part, there were a lot of new ships ordered a while back. Ship s take a while to put together, so orders placed before things went quiet were still coming into commission. The other side of the coin is that the newer, bigger and generally more fficient ships have moved the goalposts.
jammy_basturd said:
Is there an element of some shipping firms deliberating driving down prices to try and get competitors to go bust?
Possible, but I think it is more a case of very long supply-side reaction times coinciding with very much shorter demand side reactions to create a sever mismatch.Digga said:
Possible, but I think it is more a case of very long supply-side reaction times coinciding with very much shorter demand side reactions to create a sever mismatch.
That, mainly. There's a big lead time on a 20,000 TEU ship, and all the big lines were ordering them on the assumption China would keep growing. It didn't, and now the market is flooded by enormous ships with not a lot of stuff to put on them. However, seven years of feast is usually followed by seven years of famine. They'll stop ordering ships for a few years, and the drought of new tonnage will appear just when the world economy is getting up some steam, causing a shortage in capacity and much higher rates.
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