Hanjin Shipping falloutThe insolvency of Korea’s largest cargo carrier, Hanjin Shipping, has taken a heavy toll on the Korean trade front. Some 45 of the company’s vessels were either seized or declined entry and exit from ports around the world after it was placed in court receivership earlier this week.
The 41 containerships and four bulk carriers make up half of the company’s total fleet of 98 vessels. Cargo schedules of export-reliant Korean companies have been disrupted because the country’s biggest maritime flag carrier went under.
The case poses a serious threat to the country’s exports as a whole, which are already struggling with a slowdown in global trade and overall economic growth. Shipments carrying Korean products are being held hostage at ports around the world.
Hanjin carriers are being held up in ports in China, Spain, the United States, Canada, Singapore, Japan, Australia, and Germany. Even upon docking, unloading of cargoes was stopped at some ports.
According to a Hanjin Shipping estimate, a freight volume of 120,000 TEU, or 20-foot containers, has been affected.
Worse, the global alliance Hanjin Shipping was in kicked the shipper out, stripping the shipper of joint freight rates and port benefits.
As result, the cost of freight shot up about 50 percent.
The government formed an emergency logistics team, but without fast and radical actions, Korea Inc. will be hit hard by such widespread delivery disruptions. Hanjin Shipping has been carrying 43 percent to 45 percent of Samsung Electronics’ sea shipments and 20 percent of LG Electronics’. The damage could be bigger depending on the exact kind of cargo.
Jobs of port workers at the Busan port, where Hanjin Shipping facilities are based, also are at risk. The Seoul government must come up with swift and effective countermeasures to minimize the fallout from the Hanjin Shipping debacle.
JoongAng Ilbo, Sept. 3, Page 26