Transportation

Hanjin Shipping files for bankruptcy protection

South Korea’s Hanjin Shipping Co., the seventh largest shipping line in the world, has filed for bankruptcy protection, creating uncertainty among shippers, including many exporters of recyclables. Hanjin filed for bankruptcy after its creditors rejected a restructuring plan the company proposed.

Over the past several years the container industry has struggled with overcapacity on vessels, low freight rates and a sluggish global economy. These challenges have resulted in losses for the past several years, with one report noting Hanjin’s accumulated loss was $5 billion.

According to a number of news sources, Hanjin stopped taking in new cargo and a number of ports—in North America, Asia and Europe—have begun turning away its vessels because the company failed to pay the fees for using the ports.

Adding to the concern for some shippers have been reports of some Hanjin vessels being seized at a number of Chinese ports. Bloomberg reports that 10 Hanjin vessels were impounded at Chinese ports.

The uncertainty about cargo has concerned companies that have containers on Hanjin vessels that are en route.

Meanwhile, the South Korean government is putting together a financial package that could assist Hanjin in continuing operations, though several reports speculate that the company will have to liquidated its assets. A possible merger with Hyundai Merchant Marine, another South Korean shipping line, also was mentioned as a possibility.

In other shipping news, the board of directors for China’s Cosco Holdings Co. Ltd. has decommissioned and disposed of five container vessels in 2016: one in July, and four more vessels that were decommissioned and disassembled in August.

The five vessels had an aggregate capacity of 224,560 tons, according to reports. They were sold for $13.5 million to third-party scrap firms, resulting in a loss of $51 million for the company.

The decommissioned vessels were previously owned by Shanghai Pan Asia Shipping Co. Ltd., a wholly owned subsidiary of Cosco Holding.