Hanjin’s loss benefits foreign rivals
Hanjin Shipping, Korea’s largest container carrier, is in a rehabilitation procedure, and it makes 7 trillion won ($6.33 billion) in annual revenue. While its debt is undeniably large, it made a profit in 2015. Hanjin Shipping spends or pays 7 trillion won in loading and unloading, pilotage and tugging fees, fuel charges, wages for the crews, chartering fees and financial interests.
If Hanjin Shipping disappears, many economic entities who relied on Hanjin for income are in jeopardy. Hanjin Shipping is the successor of the Korea Shipping Corporation founded in 1949 and inherited its network and business knowledge. The blood and sweats of the crews, administrators and operation specialists over the past 70 years have made Hanjin Shipping exist, and the opinions of the shipping and trade industry insiders should be reflected in the decision on Hanjin’s future.
I agree with the need for restructuring, however, a restructuring that makes Hanjin Shipping disappear into thin air and loses the 7 trillion won of revenue would be useless. The restructuring process needs to continue the business network and structure of the 7 trillion won value Hanjin Shipping.
A merger or acquisition by another shipping company and all other scenarios are possible only if Hanjin’s current sales network, workforce and knowledge is maintained. If not, Korea would suffer the loss of an established shipping company. As the global cargo volume is decreasing, there are too many ships out there, and it is a race to see which shipping company goes out of business first. Hanjin’s helpless bankruptcy will only benefit its foreign rivals.
Hanjin Shipping, the Hanjin Group, it’s creditors, the government and the courts need to bring all parties together with a long-term perspective to promptly end the logistics crisis and help Hanjin maintain it’s sales network and resources for recovery. We need to also consider the positive impact that Hanjin’s revenues have brought in the past three decades. Let’s think about the heyday of Hanjin, from 2002 to 2007. Now may be the last days of the decade-long slump, and let’s hope for the arrival of a long-awaited boom.