Ever since Hanjin, one of the world’s biggest shipping lines owning 2.9% of total container capacity, file for bankruptcy protection August 31st, 2016 in Seoul, Hanjin’s ships halfway through their voyages have been tellingly “prohibited” from shores at ports around the world have turned the company’s ships away; from Europe to Asia to the USA in fear that the Hanjin ships won’t be able to pay port and docking fees, or the ship would be seized by creditors and agitate normal port operations.
Operating close to 100 container ships, Hanjin has been an integral part of global delivery, shipping everything from electronics to Christmas toys coming in from overseas for this 2016 season. This bankruptcy comes after months of weak attempts to infuse cash back into the company by operating below costs in order to raise their liquidity and help with their restructuring of debt. The bankruptcy announcement has now started a “free-for-all” struggle from shippers and cargo owners around the world to locate and regain control of their containers again. With multiple Hanjin vessels being arrested at ports from Singapore to Sydney, ports are refusing to work with Hanjin owned ships in fear that they will not be paid; forcing Hanjin to file for bankruptcy protection in jurisdictions around the world to allow their cargo laden ships to enter ports and discharge cargo owned by over 8,000 cargo owners and estimated to be valued at more than $14 billion.
“It is difficult to predict such company failures, especially with governments frequently asked to bail out failing firms, and they often do so.” Says H.J. Tan, a consultant at Alphaliner. However, “The shipping company’s plans fell short of the requirements for creditors to provide help.” Main lender, Korea Development Bank has said late August, as the bank and creditors have denied Hanjin further financial support. Lee Dong Geon, Korea Development Bank’s chairman further criticized, “While Hanjin Group has shown some efforts to turn around, the owner hasn’t shouldered enough responsibility as head of the company.” Hanjin Shipping held out till September 4th 2016, the last day of their voluntary debt-restructuring program – before filing for court receivership and then bankruptcy. This bankruptcy was announced at a particularly bad time, since the U.S. and Europe retail industries are currently in “peak shipping season”, getting their Asia made products shipped to them in time for Thanksgiving and Christmas sales.