14-09-2016 Truckers and bankers alike face pain from Hanjin collapse, says Marsh, By David Osler, Lloyd’s List
THE collapse of Korean boxship major Hanjin stands to hurt everyone from blue-overall indie truckers to bankers and all points in between, according to a new report published today from leading broker Marsh. While the document inevitably devotes considerable space to the insurance aspects of the high-profile bankruptcy, as detailed in an accompanying article, it also spotlights potential pain for huge swathes of the maritime industries.
Problems are already in evidence for the CKYHE alliance, in which Hanjin sits alongside Cosco, K Line, Yang Ming and Evergreen. The others have announced that they will no longer ship goods on Hanjin vessels, and will not carry Hanjin containers on their own vessels. Many ports are refusing Hanjin vessels entry, for fear of not being paid port fees. A number of Hanjin ships are also reported arrested. Additionally, goods due to be loaded onto Hanjin vessels barred from entry have begun to build up in ports. Cargo interests are thus exposed to financial risks, as contractually agreed delivery dates are likely to be missed. Goods will need to be stored, and extra expenses incurred as alternative routes for delivery are arranged.
The timing could not have been worse, as August to October is generally the busiest time of the year for the container shipping industry, with retailers stocking up for the holiday season. The majority of vessels operated by Hanjin were chartered rather than owned. Owners are likely to terminate charterparties and retake possession, with a view to chartering the vessels out elsewhere. The increased supply of tonnage could put downside pressure on rates. “As a result, owners may face a reduction in income when they do find a new charterer, or, failing that, be forced to have the vessels laid up and suffer a complete loss of earnings,” Marsh predicts.
Terminals and ports may need to protect their own financial position, to ensure that they are covered for port fees and tug and pilot services. Ships owned by Hanjin may be subject to mortgages from banks, which could seize vessels under the terms of the finance agreements if the Korean outfit defaults on loans.
Freight forwarders could find themselves over a barrel if they have taken goods into their care, or contractually agreed to do so, as contracts may impose financial penalties if goods are not delivered to the right place at the right time. If goods are scheduled to load onto a vessel that does not arrive, forwarders will have to find an alternative. That could prove expensive, particularly as other forwarders will be chasing the same slots with the same carriers. All this could lead to ports becoming rapidly inundated with containers that cannot be shipped quickly, Marsh adds. Some might even close their gates to Hanjin-scheduled containers.
This could mean knock-on effects for truckers, rail freight companies and hauliers, as those refused entry to ports will have to find somewhere to park a backlog of boxes. Alternatively, they may have to refuse to load boxes scheduled to be carried on Hanjin vessels. “Since many trucking companies work on very tight financial margins, the financial insolvency of Hanjin could lead to the financial default of others all along the supply chain,” Marsh suggested.
Crews are at risk of not being paid, or receiving reduced pay, or being left stranded at various ports around the world. Hanjin’s port agents stand to see loss of income if their agency fees are unpaid. Bunker, food and equipment suppliers may also be in the firing line.