Hanjin Shipping

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Hanjin Shipping Co. Ltd
Hanjin Shipping
Native name
한진해운
Shipping
Founded May 16, 1977 (1977-05-16)
Defunct February 17, 2017 (2017-02-17)
Headquarters South Korea
Key people
Cho Yang Ho (Chairman & Co-Chief Executive Officer), Suk Tai Soo (Co-Chief Executive Officer, Director)
Products Shipping, ocean freight
Website hanjin.com

Hanjin Shipping Co. Ltd is a bankrupt South Korean integrated logistics and container transport company. Prior to its financial demise, Hanjin Shipping was South Korea's largest container line and one of the world's top ten container carriers in terms of capacity.

Hanjin shipping formerly operated some 60 liner and tramper services around the globe transporting over 100 million tons of cargo annually. Its fleet consisted of many container ships, bulk and LNG carriers. Hanjin Shipping had its own subsidiaries dedicated to ocean transportation and terminal operation and it had several branch offices in various countries.

On February 17, 2017, Hanjin Shipping Co. was declared bankrupt by South Korean courts.[1]

Bankruptcy[edit]

HANJIN container.jpeg

Prelude to bankruptcy[edit]

The financial struggles of Hanjin Shipping were attributable to an ongoing downturn in the container shipping industry that is the result of numerous interrelated factors such as weak global GDP, overcapacity on container vessels, "bloated" US retail inventories, changing consumer spending patterns, Chinese economic slowdown, and muted growth in demand for container shipping. The downturn has dented profits and crippled the financial health for the majority of the top twenty ocean carriers.[2]

2016 financial collapse and subsequent liquidation[edit]

In April 2016, Hanjin applied to its creditors for debt restructuring, in order to avoid formal insolvency proceedings.[3] On August 31, 2016, Hanjin filed for receivership at the Seoul Central District Court and requested the court to freeze its assets, after losing support from its banks the previous day.[4] After news of Hanjin's breakdown was publicized, creditors initiated a wave of asset confiscation and Hanjin vessels experienced access issues to ports globally because service providers were not informed if and how they would be paid to load and unload Hanjin vessels .[5]

On September 2 Hanjin Shipping Co. filed papers in U.S. Bankruptcy court in Newark, New Jersey that would allow its vessels to dock without its ships, cargo or equipment being confiscated by creditors.

Bogged down with tremendous debt, trapped in a struggling industry unlikely to improve in the near future, and with assets confiscated by creditors or abandoned by the company, signs quickly began to appear that Hanjin would likely be dissolved by the South Korean government and stakeholders.[6] In a matter of weeks after its receivership Hanjin's global presence and dominance in it's industry withered away. The company announced plans to shut down offices around the world,[7] lay-off workers,[8][9] sell remaining assets,[10] and dismantle its service network. Other container lines distanced themselves from Hanjin and joint operations with the company were terminated.

On February 17, 2017, Hanjin Shipping Co. was declared bankrupt by South Korean courts, with a court order to be liquidated.[1]

Aftermath and legacy[edit]

Hanjin Shipping's dissolution was the largest and most significant bankruptcy in the container transport industry[11] and it caused worldwide disruption in shipping as cargo ships were left stuck at ports and canals waiting for cash payments.[4] Hanjin's bankruptcy created a massive ripple effect. Other businesses that rely on physical products found themselves without the expected revenue from inventory that became stuck at sea. Hanjin's abrupt cave-in occurred at an especially inconvenient time for retailers furnishing their inventories with imported items in preparation for a seasonal uptick in Thanksgiving, Christmas, Black Friday, and New Years sales. Although large companies such as Nike were affected, the repercussions were more prominent on smaller companies..[12]

Services[edit]

Hanjin 20 foot containers
  • Container – Transports approximately 3.7 million TEU containers a year. This service consists of 24 container ships[13] which allows for this service to produce such an output per year. Recently, in 2010 the South Korean shipping company was the first to introduce a 10,000 TEU class carrier ship, which travels between Asia and Europe.[12][14]
  • Bulk - This division of the shipping company delivers a variety of resources and raw materials through its ‘contract of affreightment’ with other companies. The division's ships are LNG and VLCC ships which carry crude oil and chemicals.[14]
  • Terminal – The shipping terminals for this company are distributed internationally. There are fourteen dock yards that this company owns: four in Korea, two in the United States of America, two in Japan, and the rest in Spain, Taiwan, Vietnam and Belgium.[14]

See also[edit]

References[edit]

  1. ^ a b Nam, In-Soo (February 16, 2017), Hanjin Shipping Is Declared Bankrupt, New York City: The Wall Street Journal, retrieved February 17, 2017 
  2. ^ Northam, Jackie (August 20, 2016). "Amid Industry Downturn, Global Shipping Sees Record-Low Growth". NPR. Retrieved February 19, 2017. 
  3. ^ Nam, In-soo. "Hanjin Shipping Asks Creditor to Restructure Debt". wsj.com. Wall Street Journal. Retrieved 26 April 2016. 
  4. ^ a b "Hanjin Shipping files for receivership, as ports turn away its vessels". Reuters. Retrieved 31 August 2016. 
  5. ^ "Shipping collapse leaves freight stranded, portends weak economy". 2016-09-05. Retrieved 2016-09-05. 
  6. ^ "Hanjin Shipping liquidation likely, experts say". JOC.com. Retrieved February 19, 2017. 
  7. ^ Nam, In-soo (October 24, 2016). "Hanjin Shipping to Close European Operations". Wall Street Journal. Retrieved February 19, 2017. 
  8. ^ "Hanjin Shipping layoff 2,500 marine crew until end of January". Maritime Herald. November 12, 2016. Retrieved February 19, 2017. 
  9. ^ "Hanjin Shipping Lays Off Over 500 Mariners". Maritime Executive. 2016-11-10. Retrieved February 19, 2017. 
  10. ^ "Here's Who Might Bid for Hanjin Shipping's Assets". Fortune - Reuters. October 17, 2016. Retrieved February 19, 2017. 
  11. ^ "Move by South Korea's Hanjin Shipping Roils Global Trade". Wall Street Journal. August 31, 2016. Retrieved February 19, 2017. 
  12. ^ a b "HANJIN SHIPPING : Customer Advisory View". www.hanjin.com. Retrieved 2016-10-20. 
  13. ^ "Alphaliner - TOP 100 - Existing fleet on October 2016". www.alphaliner.com. Retrieved 2016-11-30. 
  14. ^ a b c "Overview". Service. Hanjin Shipping. Retrieved 14 August 2013. 

External links[edit]