Posted on 22 Sep 2016
Steve Cox, Commercial Director at Warrant Group offers some insight and comment on the collapse of the Korean shipping line Hanjin.
At Warrant Group customer service is paramount and managing risk evaluation and management across supply chains is vital to protect customers' business. This includes monitoring all key drivers including supplier financial performance.
We had been having growing concerns about Hanjin for a while and around three months ago decided to avoid using this carrier and ensure our customers knew of the potential risk.
The warning signs have been there for about a year -- the high cost base, coupled with low freight returns and erosion of market shares.
Thankfully, we are not in the difficult position of having to track down cargo and reclaim it, generally we just have a few small matters to deal with where cargo has been shipped on a Hanjin vessel under a consortium arrangement.
I think there has been a level of apathy from the market, suppliers, partners and even within Hanjin that the banks and investors would come to the rescue, particularly when comparing it to the very similar situation with Hyundai Merchant Marine.
Whether Hanjin could be resurrected or salvaged in some form, remains to be seen. There are still lots of unknowns and of course, all this against a backdrop of low freight rates which ironically have recently just started to rise.
Understandably with a collapse of such widespread impact, magnitude and complexity it's difficult to work any quick contingencies. However, carriers, ports, truckers, rail operators, customers and not forgetting employees will have to deal with the far reaching fallout and a period of uncertainty.
It's not inconceivable that others may follow via further market consolidation or business failure.
Steve Cox has more than 30 years of global freight expertise and joined Warrant Group in 2015. He has also spent several years as a member of the European Shippers' Council. Steve has worked on projects involving 300 country-to-country supply chain combinations.
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