Free Republic

The problems that sank South Korea’s Hanjin Shipping last week could be just the tip of the iceberg, with the long global downturn leaving the industry burdened by excess capacity. With growth refusing to budge and consumer demand still slack, the world’s freight carriers have more ships than they can fill — a quarter of cargo space lies empty. That has led to fierce price cuts and cut-throat competition, badly impacting the bottom lines of some of the giants of the seas. Those problems played out last week when Hanjin, the world’s seventh-largest shipping firm, filed for bankruptcy in Seoul,...

But while manufactured cargo can survive indefinitely, crews on ships can not, and as Hanjin ships drift at sea, their crews face increasing uncertainties and diminishing supplies. “We usually have food and water for about two weeks,” said the captain of a Hanjin-operated ship speaking by satellite phone from the South China Sea. But, after 12 days at sea, “everything is getting tight—food, water and fuel,” he said.The captain added that he is rationing water and cutting back air conditioning to save energy. “The heat is driving the crew crazy,” he said. His ship was carrying lubricants and home appliances...

When we first reported about the imminent paralysis of an unknown number of global supply chains and a potential shock in worldwide trade as a result of the historic bankruptcy of Hanjing Shipping, one of the world's largest container shipping companies which handles 8% of Trans-Pacific trade volume for the US market, we concluded that "the global implications from the bankruptcy are unknown: if, as expected, the company's ships remain "frozen" and inaccessible for weeks if not months, the impact on global supply chains will be devastating, potentially resulting in a cascading waterfall effect, whose impact on global economies could...

South Korea's biggest shipping firm, announced the filing for receivership and a request to the court to freeze its assets, which the Seoul Central District Court planned to grant, a judge told Reuters. As part of the company's insolvency process, the court will now decide whether Hanjin Shipping should remain as a going concern or be dissolved, a process that usually takes one or two months but is expected to be accelerated in Hanjin's case, the judge said. A bankruptcy for Hanjin Shipping would be the largest ever for a container shipper in terms of capacity, according to consultancy Alphaliner,...

Today a big Korean shipping company called Hanjin declared bankruptcy. It may be far away, but that move is a testament to an industry in trouble. Volume is way down all over the world as trade remains sluggish. Add to that the fact that just as demand wanes, a whole load of new vessels come online, and there’s a problem. Shipping hit a crisis in 2008 as demand for goods plunged. It’s never fully returned. John Butler is CEO of the World Shipping Council. He said after the financial crisis, when oil prices were spiking, “There was an expectation that...