Hanjing shipping Effects of bankruptcy

1. HANJIN SHIPPING : EFFECTS OF BANKRUPTCY
Members:
Chica Anaid
Flores Annelys
Petroche Brigitte
8

2. EFFECTS
Freight cost
The suspension of payments of the shipping
company Hanjin causes prices of shipments of
containers increase because of the reduction of
capacity of transport.
Unemployment
There are 15,000 workers serving in the vessels
operated by Hanjin and which at the moment are
not working after the bankruptcy.

3. MERCHANDISE
Merchandise
Their vessels were rejected and as a guarantee of
payment at various ports and is not allowed the
load and unload of containers that is because of
the insecurity that the company is able to pay.
Even creditor in Singapore seized one of its
ships as a form of payment due to the debt that
had Hanjin.

4. Main Companies Affected
Samsung Electronics, which was more than
40% of their shipments through this operator
LG Electronics, it did in a 20%, are among
the most affected manufacturers due to
carrying high volumes of cargo.
Panama
The Panama channel has been affected by the
reduced movement of goods Hanjin represents 1.2% of
the transit through the channel and the 2.7% of income it
receives the ACP (The Panama Channel Authority) by
tolls.

5. Market of Seoul
Stocks of Hanjin Shipping in the Bank fell in a 13.70% in the price that is
with the financial problems that the company is experiencing.
Korea Development Bank
(KDB), the public bank that led the
negotiations decided not to support
financially to Hanjin Shipping from 4
September.
The South Korean
government announced that it
would grant financial support
with a fund to support the banks
exposed, the 457 contractors of
the company to which Hanjin owe
57 million

6. Hanjin owned 37 containerships and
chartered 62 others, making it the
world´s seventh largest container
shipping line, which represents
about 3.2% the global container
shipping capacity.
The 37 containerships directly
owned by Hanjin are subject to the
full asset seizure by creditors under
bankruptcy protection, but the
matter is more complex for the 62
chartered ships.
Chartered ships fully belong to
the leasing company and are
thus not subject to seizure,
only to be declined services
since a terminal operator may
not get paid the company
under receivership
Many chartering agreements
are under “bareboat”
conditions where the owner
gives possession of a
containership to the shipping
line, who assumes all the
operational costs, including
crew, fuel, insurance and
terminal charges
Such chartering arrangements
can be used as a form of
shipping financing, which
could lead to legal
complications in terms of if the
ship was truly leased or if the
chartering arrangement is a
sale in disguise.

7. The first stage involves a “shock” for supply
chains that were using Hanjin, since
services are interrupted without prior
notice. Cargo becomes stuck in transit as
shippers (ports, transport companies) are
refusing to handle Hanjin ships since they
would likely not get paid for that service.
In the second stage, the increase
in rates and the capacity demand
on routes and ports that were
serviced by Hanjin will incite
competitors to quickly offer
additional services and capture
such low hanging fruits.The last stage concerns the allocation of
Hanjin’s assets. With liquidation, most of
its assets will be captured at discount
prices, giving opportunities to
established actors and even new
entrants.

9. IMPACT
 The impact of the current situation hits a wide number of parties – not just those with cargoes stuck on the
vessels. The impact is likely to be far-reaching. These include charter parties, ports and terminals, freight
forwarders, alliance parties, as well as cargo owners.
 The current situation will also knock through to other parts of the supply and production chain. “It is clear that
end users of goods or components could suffer delay or a loss of supplies. In either case, the disruption could
be significant and have knock-on effects as facilities become clogged and competition for alternative capacity
intensifies”

10. IMPACT
 Even once Hanjin’s vessels have been unloaded what happens
to the ships next remains open to question. While the 65
chartered in vessels will over time be returned their owners,
three of which have discharged their cargoes having done so
already, what happens to Hanjin’s own tonnage is not clear.
The company clearly does not have money to operate the
vessels and there have been reports of crews running low on
basic supplies such as food and water.
 Over time the vessels will presumably be sold, but this will no
be that easy in a market already suffering from overcapacity,
even if the ships put on the block at fire sale prices. Hyundai
Merchant Marine has been put up as a possible buyer of some
of the assets but it is worth remembering it is undergoing its
own restructuring having narrowly avoided receivership in July
this year.

11. Although the bankruptcy of Hanjin is a significant event in
global container shipping, the situation of overcapacity ensures
that the shock will be short lived and quickly absorbed. While
competitors may rejoice, this reflects an enduring weakness of
the shipping market.
CONCLUSION

12. BIBLIOGRAPHICAL SOURCES
 http://www.eleconomista.es/empresas-finanzas/noticias/7794888/08/16/El-armador-surcoreano-Hanjin-
quiebra-y-expone-la-crisis-de-la-industria-naviera.html
 http://www.expansion.com/empresas/2016/09/17/57dd809b268e3ee0768b4650.html
 http://www.prensa.com/in_english/efectos-quiebra-Hanjin-Shipping_21_4569503006.html
 http://economia.elpais.com/economia/2016/09/09/actualidad/1473435543_108090.html