Economic analysis of Hanjin bankrupcy as example of shipping cycle case.

1. HANJIN, what’s next?
Lecturer
Max Galarza
Grade
8/10
Group Members:
 Christian Salgado
 Josselyn Vargas
 Carolina Jarrin
 Melissa Vera
 Carlos Narváez

2. About Hanjin
 Hanjin Shipping is Korea's largest and one of the world’s top ten
container carriers.
 Transport over 100 million tons of cargo annually.
 With 4 regional headquarters in the U.S., Europe, Asia and South
East & West Asia.
 Hanjin Shipping’s world-class logistics network around the world.

3.  In 5 of september of 2016, Stocks of Hanjin Shipping reported a fall of
13.7% in the Price.
 Affected by the financial problems it faces and that led it to declare
bankruptcy.
 Hanjin vessels have been arrested and ports are refusing to work Hanjin
ships for fear they will not be compensated.
 The largest container shipping bankruptcy in history and the
consequences will continue to reverberate throughout international
supply chains and the transportation sector.

4.  Its debt totalled $5.5bn.
 Hanjin’s banks decided to end financial support for the shipper.
 he collapse comes at a time of high seasonal demand for the shipping
industry ahead of the year-end holidays.
 Hanjin represents nearly 8% of the trans-Pacific trade volume for the US
market.
 the bankruptcy was having “a ripple effect throughout the global supply
chain” that could cause significant harm to both consumers and the US
economy, the association wrote.

5. Impact on the economy of South Korea
exports
 The suspension of payment of
the shipping South Korean Hanjin
Shipping, prices will skyrocket of
container shipments that have
been reduced transport capacity,
as has predicted today the
director of enterprise quality of
Catalan shipping iContainers,
Anna Mateu.
Hanjin, which operates in the ports of Barcelona, Valencia
and Algeciras, filed bankruptcy to justice Seoul following
the refusal of the creditor banks to refinance their debts,
increasing about 4,500 million euros at the end of 2015.

6. • Economic impact to shareholders Hanjin
Shipping Company
 Meanwhile, Korean Air Lines, the
parent company of Hanjin Group, lost
today in stock Exchange the 2 percent
on fears that forced to inject liquidity
into the shipping.
Hanjin's creditors, led by Korea Development Bank (KDB)
announced last week that it would not provide more funds
to the shipping indebted insufficient considering the
proposed plan to improve the finances.
Hyundai Merchant Marine, which also experiencing
economic difficulties and is in the process of restructuring,
would also be interested in acquiring some of the assets of
Hanjin, as its port terminals and global transport routes,
according to South Korean media collected.

7. Encouragement and support from the
Government of South Korea
However, after learning that the government of
South Korea will extend financial support to
contractors of the company, totaling 457 to Hanjin
owed a total of 64,000 billion won (about 52
million euros at current exchange rates), the shares
of the company closed with a decrease of 13.71%.
Among the measures included in the Government is
replacing Hanjin Shipping vessels by other shipping
Korean ships to ensure the entry and exit of goods from
China.
The shipping branch of Hyundai will provide 13 of its
container ships for this purpose to routes operated by
Hanjin, according to South Korean minister.

8. Advantages for competitors
 Competitors will have more costumers. Specially in
high season.
 Increase freight and routes.
 Debt would not increase.
 Raise on freight from other ways of transportation.

9. Effects with Clients
 Merchandise may rotten on the boats that may not enter the
ports.
 The clients forecast to receive merchandise on a certain time,
mainly for seasonal businesses or orders.
 Clients will lose their trust towards the company.
 Higher costs by 50% in comparisons to previous freights.

10. Effects with clients
 Security to the merchandise of other clients and the crews.
 Stocks lose value, investors lose money.
 The clients acquire debt and hope to recover the investment
with the merchandise.
 Cargos may be seized.
 98 container ships had been denied access to ports including
Shanghai, Sydney, Hamburg, and Long Beach, California.

11. Other facts.
 Hanjin accounts for 7.8% of trans-Pacific trade volume for the U.S. market
and a Hanjin bankruptcy would be the largest ever for a container shipper.
 50 containers with components for a nuclear power plant under
construction in the United Arab Emirates by a consortium led by Korea
Electric Power Corp (KEPCO) are parked on the outskirts of the port of
Singapore.
 Maersk will offer 9 routes that used to offered Hanjin.

12. Panama canal
• Hanjin Shipping represent
1.2% of transits through the
Canal, and 2.7% of revenue
received by the ACP toll.
Big lawsuits from
companies like
Samsung, LG
Electronics and
Nexen Tire
Corporation.
Many users of the shipping company
will have to seek other services to
send or receive merchandise.
Retailers will turn
more towards to
products
manufactured
closer to home –
the U.S. and
Mexico.

13. Bibliography
 Panamá analiza el impacto de la quiebra la naviera Hanjin Shipping.
(n.d.). Retrieved October 28, 2016, from
http://www.estrategiaynegocios.net/lasclavesdeldia/996673-330/panamá-
analiza-el-impacto-de-la-quiebra-la-naviera-hanjin-shipping
 McGrath, B. (n.d.). South Korea’s Hanjin Shipping bankruptcy has global
impact - World Socialist Web Site. Retrieved October 28, 2016, from
https://www.wsws.org/en/articles/2016/09/09/hanj-s09.html
 CNBC. CNBC . s.f.  http://www.cnbc.com/2016/08/31/hanjin-shipping-vessel-
unable-to-dock-at-south-korea-port-yonhap.html (last access: 27 de OCTOBER de
2016).

14. Bibliography
FORTUNE. FORTUNE . s.f. http://fortune.com/2016/09/02/hanjin-shipping-ports-us-firms/
(Last access: 27 OCTOBER of 2016).
. FORTUNE. s.f. http://fortune.com/2016/09/05/hanjin-shipping-ships/ (last Access : 27
OCTOBER of 2016).
INSIGHTS, OECD. OECD INSIGHTS. s.f. https://oecdinsights.org/2016/09/09/container-
shipping-why-hanjin-went-under/ (last Access : 27 OCTOBER of 2016).
TIMES, FINANCIAL. FINANCIAL TIMES . s.f. https://www.ft.com/content/205af87a-6fba-11e6-
a0c9-1365ce54b926 (last access: 27 OCTOBER of 2016).

15. Bibliography
 The guardian (2016), Hanjin Shipping bankruptcy causes turmoil in global
sea freight, retrived from:
https://www.theguardian.com/business/2016/sep/02/hanjin-shipping-
bankruptcy-causes-turmoil-in-global-sea-freight
 Financial times (2016), Debt-laden Hanjin Shipping seeks court protection,
Retrived from:
https://www.ft.com/content/93dcd36e-6f4b-11e6-a0c9-1365ce54b926