Hanjin Shipping, which was once the seventh largest carrier in the world by capacity, filed for receivership Wednesday afternoon after banks withdrew backing. The companies midyear report showed total debts of $5.5 billion and their current funding plan was insufficient.
Hanjin has requested for their assets to be frozen by the court, who will make the ultimate decision of whether the shipping company should be given a chance to recover or be dissolved. This process typically takes a couple of months but is expected to be accelerated for this case. If ordered to fold, Hanjin would become the largest company in the industry to go under.
Hyundai Merchant Marine, the country’s second-largest shipping line, is looking to acquire Hanjin’s healthy assets. Hyundai is also in the process of debt restructuring and the idea of a merger was rejected.
Hanjin Shipping’s Asia offices have stopped all bookings, their vessels are being captured by terminals and others are being rejected for berthing. Ports do not want to accept these vessels out of fear that port and other fees will not be paid. This will have a major impact on the market, especially during peak season. Space will become extremely tight throughout September and October, and GRIs will be implemented starting September 1st. Shippers should be aware that this space issue may cause shipments to be rolled and prices to soar.
Hanjin’s overall capacity was 26,500 TEUs per week and they rank 4th in the US market. Losing this amount of space will cause a major shakeup in the market as there isn’t enough space to cover such a loss. Carriers GRIs will be maintained and the PSS from September 15th will also be applied to base ocean freight rates.