Last week news broke that South Korean-based company, Hanjin Shipping Co., filed for bankruptcy, leaving many in chaos and confusion. Hanjin announced that it would stop releasing equipment and accepting new bookings for a period of time. The company’s assets are currently frozen. They are reportedly the world’s seventh largest shipping line by capacity.
The bankruptcy has sent the worldwide shipping and logistics market into turmoil. Many ports around the world have already turned away Hanjin’s vessels due to fears of not being paid, and worries about shipping delays are beginning to mount. Others speculate that other large shipping lines such as Hyundai Merchant Marine might not be far behind in terms of financial woes.
How will this affect your supply chain? Some have speculated increased prices and delays on commodities originating out of Southeast Asia. The U.S. has already granted temporary bankruptcy protection from creditors to Hanjin, which should allow for some vessels to continue being unloaded in U.S. Ports for the time being. The retail sector, particularly electronics, is expected to feel the most impact as they enter their busy season.
On a brighter note, industry analysts have reported overcapacity of equipment in the shipping industry with Hanjin accounting for less than 3% of the ships, resulting in little worldwide impact on shipping capacity even if Hanjin did exit the market. If anything this debacle has brought more awareness and attention to the worldwide shipping market.