There seems to be no end to the freight crisis of the bankrupt shipping giant, Hanjin Shipping: After the South Korean shipping line – the estimated seventh largest in the world – filed for bankruptcy on August 31, 2016, according to media reports dozens of ships with hundreds of thousands containers worth several billion Euros are still grounded and can’t find any ports that they can call at in order to unload the urgently needed goods. Because, on the one hand, the port operators are not allowing the freight ships to dock because nobody will pay the fees, on the other hand the creditors of the shipping company are threatening to seize the ships in a bid to reinforce their claims. A few individual ships have been able to unload their freight since bankruptcy was declared, but the majority of the Hanjin fleet is still at anchor at sea. A financial injection that the group received at the beginning of September, only covers a fraction of the 600 bil. Wons (approx. 480 mil. Euros), that according to the South Korean media is needed alone to unload the ships. Hanjin has been given until November 25 to present a restructuring plan to a court in South Korea.
The crisis is not only facing the retail trade with huge problems – particularly with a view to the imminent Christmas business, but is also having an effect on the promotional products industry. Goods with a fixed delivery date are particularly effected, for example customer-specific special designs. Stock goods are having to be produced again at own expense. In some cases companies are opting for alternative products that are still available from stock in sufficient quantities. The other shipping companies have not introduced price increases as yet, but this could follow – and the costs for air freight could also rise mid-term too. All of this although the available worldwide freight capacity is at the moment ironically much higher than the demand.
You are also affected by the Hanjin crisis and would like to comment on the matter? You are welcome to send us your statement or discuss the theme online.
We are luckily not affected to a serious degree by the bankruptcy. We have a few containers with repeat orders for stock goods stuck on the Hanjin ships. At the moment we are winding up the remaining projects, especially custom-made designs and forward transactions, with other, smaller, reliable shipping companies. Some of the shipping companies have indeed already announced that they are planning to increase their prices as a result of the Hanjin crisis, however so far none of the companies have actually done so. Because we continually book contingents with our shipping partners, we will be able to cushion possible price increases well.
It is difficult to say how the situation will develop. It is clear that many of the market players are faced with huge problems, especially in the cases where goods for customer-specific orders that have a corresponding delivery deadline are tied up. It is frequently not possible to unload the goods at sea (which is happening in some cases as an emergency solution), for example if the respective container is located in the bottom rows. Even if it is possible to reproduce batches in time for delivery, this involves an enormous financial burden, of course.
I don’t think there is anyone, who is not affected by the bankruptcy at the moment. The end consumers will probable really get to feel the impact when they start shopping for Christmas presents. We too have goods on Hanjin ships, but we have got off lightly. Many of the containers could be shipped back to the original ports where they are currently being unloaded onto other ships. A ship loaded with a lot of our containers has set off en route again in the Suez Canal and we hope that the goods can soon be unloaded in a European port. So, luckily, we haven’t got any goods missing, we can only complain about delays, furthermore we also still have enough articles in stock that are suitable as alternatives. The new items are arriving on time as well so that we will be well geared up for the year-end business. At the moment the weather still too hot anyway and the demand for winter and Christmas items is only modest.
Since we wind up most of our orders per air freight due to the fast delivery times, we are not directly affected by the insolvency of Hanjin. We only use sea freight for high-volume orders that are planned with a long lead-time and for stock goods. However, we do fear that the costs for air freight will increase. Importers, who fall behind with their deliveries, will be forced to opt for this transport means instead.
We haven’t had any negative effects as a result of the Hanjin insolvency, because we were able to swap over to other shipping companies on time. The Christmas business will therefore not be affected. A permanent increase in the freight prices is not to be expected because the share of the Hanjin shipping company was too small compared to the large and ever-increasing freight capacities available.