Dive Brief:
- The world's 7th largest shipping line in terms of capacity, Hanjin Shipping Co. of South Korea, filed for bankruptcy protection yesterday disrupting cargo shipments worldwide.
- News outlets reported ports from Singapore to Virginia were planning to reject the shipping line's vessels and hold the cargo until payment was made. Hanjin also announced it would stop taking in new freight.
- Spot freight rates have risen and logistics operators are having to pay terminals for release of their goods, albeit at inconsistent rates, according to JOC reports.
Dive Insight:
The bankruptcy is a shipping and logistics disaster.
One German supply chain director told JOC he had more than 1,000 containers stuck on Hanjin ships worldwide. Terminal operators are facing a frenzy of transporters whose contracts suddenly fell through, while storing additional cargo and demanding payment in cash. Logistics managers are facing hiked spot freight rates and their clients, particularly the retail industry, must deal with unanticipated delays during peak Christmas shipping season.
In addition, news outlets reports some transport companies are now facing financial crises of their own if their main customer was Hanjin. Even those that did not must still face the prospect of recontracting during a period of now-contracted shipping supply, which could mean higher contract costs.
Freight transport has been at historically volumes, however, so the removal of 98 vessels and 600,000 TEUs from the market may come as a blessing for other shipping lines. So although spot rates are momentarily high, many hope the shipping company's bankruptcy will not heavily impact long-term costs.
