Hanjin Shipping - and what it all means

 Photo by AmstelBright/iStock / Getty Images

Photo by AmstelBright/iStock / Getty Images

For those that do not know, Hanjin shipping is a major ocean carrier, they control a reported 8% of the Asia to US market in ocean freight, and they have just filed for receivership (bankruptcy protection) with the Korean Government. 

Let me start with "How does this impact the market as a whole?" Well, the best example I can think of is to take a glass and fill it about 90-95% full of water, then find another glass that's 8% smaller and put all the water from the full glass into the new glass. That's how this is going to affect the market. Does this mean we will see huge rate increases? Peak Season Surcharges increased? Emergency surcharges implemented? Honestly, I (nor do I think anyone at this point) knows for sure. The possibility is there, and I think it is a very real threat for delays and additional work that must be done to protect any company's supply chain. Its terrible for me to say this, but we're going to just have to wait and see what happens.

So before we start talking completely about the negative, let me talk about my positive experiences with this once great Korean carrier. Many of you know that prior to my current position I worked with a logistics firm, when I started at that company in May of 2003 (wow I'm old), the first account that I ever managed was an automotive tier 1 supplier (who has since been absorbed by another tier 1). At that time we were moving approximately 45-50 ocean containers per week from Korea to predominantly South Texas, and were using Hanjin. Their US office in Phoenix and their coordinator in Long Beach were really really good. I remember being on the phone with them and their willing to work with me to resolve several issues timely, and even if we couldn't always find a solution we would find a way to mitigate the issue. So my impression of them from 2003-2006 has always been very very high. 

However, as we all are aware of, you can have excellent customer service and still not be able to meet the profitability to remain strong. 

As we see more carriers expanding their fleet and offering larger, and larger ships. Hanjin did not keep pace. This might have been due to cash flow issues, this might have been a strategic decision to play more into a niche market; either way it appears to have been at least one missed step. 

It saddens me to see Hanjin go under like this. In all honesty if you would have asked me 3 months ago to name the next carrier to withdraw from the market, I would have echoed everyone else and stated Hyundai Merchant Marine. No one anticipated this happening.

So what is the future of Hanjin? At this point, no one knows. It's possible that another carrier may come in and scoop up some of her vessels and put them into their own rotation. It's possible that all of these vessels may just be sent for scrap. The sad thing is, that it's about more than just the vessels - there are people, real people involved in every shipment - from dock workers to deck hands, the documentation clerks to the human resources personnel, from sales to truckers; this is happening now to all of these people who were not an executive or a "person in the know" and happening to them all around the globe.

It's so easy to see an ocean carrier for the big boats and maybe the containers that they transport; however it's much harder to see the love, friendship, and passion put forth by the members of the corporate family. To all the members of the HJ family I want to thank you as a former customer for your hard work and to also send you (and your personal families) my prayers and wishes for good fortune in the future (whatever that may be). 

 

 Photo by pidjoe/iStock / Getty Images

Photo by pidjoe/iStock / Getty Images

- james