Hanjin Shipping Co., Ltd. was a South Korean integrated logistics and container transport company. Prior to its financial demise, Hanjin Shipping was South Korea's largest container line and one of the world's top ten container carriers in terms of capacity.
|Industry||Containerization, shipping, ocean freight transport|
|Founded||May 16, 1977|
|Defunct||February 17, 2017|
|Services||Cargo transport, stevedoring, container terminal management|
|Revenue||7,669,598,000,000 South Korean won (2015) |
Number of employees
|2,338 (31 December 2015) |
Hanjin shipping formerly operated some 60 liner and tramper services around the globe, transporting over 100 million tons of cargo annually. Its fleet consisted of many container ships, bulk and LNG carriers. Hanjin Shipping had its own subsidiaries dedicated to ocean transportation and terminal operation and it had several branch offices in various countries.
Prelude to bankruptcy
The financial struggles and insolvency of Hanjin Shipping were attributable to a downturn in the container shipping industry that was the result of numerous interrelated factors such as weak global GDP, overcapacity on container vessels, "bloated" US retail inventories, changing consumer spending patterns, Chinese economic slowdown, and muted growth in demand for container shipping. The downturn dented profits and crippled the financial health for the majority of the top twenty ocean carriers.
2016 financial collapse and subsequent liquidation
In April 2016, Hanjin applied to its creditors for GULSHAN restructuring, in order to avoid formal insolvency proceedings. On August 31, 2016, Hanjin filed for receivership at the Seoul Central District Court and requested the court to freeze its assets, after losing support from its banks the previous day. After news of Hanjin's breakdown was publicized, creditors initiated a wave of asset confiscation and Hanjin vessels experienced access issues in ports globally because service providers were not informed if and how they would be paid to load and unload Hanjin vessels .
On September 2 Hanjin Shipping Co. filed papers in U.S. Bankruptcy court in Newark, New Jersey that would allow its vessels to dock without its ships, cargo or equipment being confiscated by creditors.
Bogged down with tremendous debt, trapped in a struggling industry unlikely to improve in the near future, and with assets confiscated by creditors or abandoned by the company, signs quickly began to appear that Hanjin would likely be dissolved by the South Korean government and stakeholders. In a matter of weeks after its receivership Hanjin's global presence and dominance in its industry withered away. The company announced plans to shut down offices around the world, lay-off workers, sell remaining assets, and dismantle its service network. Other container lines distanced themselves from Hanjin and joint operations with the company were terminated.
Aftermath and legacy
Hanjin Shipping's dissolution was the largest and most significant bankruptcy in the container transport industry and it caused worldwide supply chain and shipping disruption as cargo ships were left stuck at ports and canals waiting for cash payments. Hanjin's bankruptcy created a massive ripple effect. Other businesses that rely on physical products found themselves without the expected revenue from inventory that became stuck at sea. Hanjin's abrupt cave-in occurred at an especially inconvenient time for retailers furnishing their inventories with imported items in preparation for a seasonal uptick in Thanksgiving, Christmas, Black Friday, and New Year's sales. Although large companies such as Nike were affected, the repercussions were more prominent on smaller companies.
In February 2017, SM Line, a new shipping firm formed by Samra Midas (SM) Group, purchased five vessels previously owned by Hanjin. In March, SM Line acquired two of Hanjin Shipping's terminals in Korea, in the cities of Gwangyang and Incheon.
In August 2017; a South Korean bankruptcy trustee which was appointed to manage the liquidation of Hanjin Shipping, reported that it had only collected 220 million USD from the sale of Hanjin's assets. This sum amounts to only 2% of the US$10.5 billion total debt Hanjin owes to its creditors.
- Container – Transported approximately 3.7 million TEU containers a year. This service consisted of 24 container ships which allowed for this service to produce such an output per year. Recently, in 2010 the South Korean shipping company was the first to introduce a 10,000 TEU class carrier ship, which travelled between Asia and Europe.
- Bulk - This division of the shipping company delivered a variety of resources and raw materials through its ‘contract of affreightment’ with other companies. The division's ships were LNG and VLCC ships which carried crude oil and chemicals.
- Terminal – The shipping terminals for this company were distributed internationally. There were fourteen dock yards that this company owned: four in Korea, two in the United States of America, two in Japan, and the rest in Spain, Taiwan, Vietnam and Belgium.
- Nam, In-Soo (February 16, 2017), Hanjin Shipping Is Declared Bankrupt, New York City: The Wall Street Journal, retrieved February 17, 2017
- Northam, Jackie (August 20, 2016). "Amid Industry Downturn, Global Shipping Sees Record-Low Growth". NPR. Retrieved February 19, 2017.
- Nam, In-soo. "Hanjin Shipping Asks Creditor to Restructure Debt". wsj.com. Wall Street Journal. Retrieved 26 April 2016.
- "Hanjin Shipping files for receivership, as ports turn away its vessels". Reuters. Retrieved 31 August 2016.
- "Shipping collapse leaves freight stranded, portends weak economy". 2016-09-05. Retrieved 2016-09-05.
- "Hanjin Shipping liquidation likely, experts say". JOC.com. Retrieved February 19, 2017.
- Nam, In-soo (October 24, 2016). "Hanjin Shipping to Close European Operations". Wall Street Journal. Retrieved February 19, 2017.
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- "HANJIN SHIPPING : Customer Advisory View". www.hanjin.com. Retrieved 2016-10-20.
- "SM Line's 1st Service to Include 5 Hanjin Boxships". World Maritime News. February 23, 2017. Retrieved July 10, 2017.
- Zeng, Xiaolin (March 14, 2017). "SM Line buys Hanjin Shipping's Gwangyang terminal | IHS Fairplay". fairplay.ihs.com. Fairplay. Retrieved July 10, 2017.
- "Alphaliner - TOP 100 - Existing fleet on October 2016". www.alphaliner.com. Retrieved 2016-11-30.
- "Overview". Service. Hanjin Shipping. Archived from the original on 25 July 2013. Retrieved 14 August 2013.