The Collapse of Hanjin Shipping and its implications
Thursday, 29th December 2016
We continue our roundup of events concerning the marine industry in 2016, as well as looking forward to 2017, by looking at how the collapse of Hanjin affected the world of shipping.
On 31 August 2016, Hanjin Shipping Co Ltd, at that point the seventh biggest container shipping company in the world, filed in the South Korean courts for receivership. Its collapse sent shockwaves throughout the world as customers, terminals, suppliers, partners and workers the world over were all affected. That this could happen to one of the biggest operators in this field was indeed surprising, although some had predicted at least one of the big operators taking a fall, following years of poor financial returns in container shipping.
Given the sheer scale of Hanjin's demise it is understandable that court proceedings in Seoul are set to take a long time, as creditors and other parties line up to stake a claim in its affairs. As has been noted in the journal International Corporate Rescue and elsewhere, the legal entanglements alone that have arisen concerning British interests have already become vexed. This is because they involve a nexus of insolvency, property and maritime laws as well as cross-jurisdictional laws and conflicts of law.
As to the future, Hanjin is under a South Korean court order to cut its workforce and sell of its assets in ships and terminals. The main prediction seems to be that Hanjin will be liquidated or eventually reduced to a small regional operator. As to the shipping world generally, with the year already having begun with other major shipping lines in the red, this has been sobering news indeed, with many seeing tougher times ahead before they get better. It is yet another example of the now-common perception in business that the only certainty is uncertainty.