Hanjin Shipping in Receivership

On August 31st, 2016, Hanjin Shipping filed a receivership petition with Seoul’s Central District Court, and on September 6th, for Chapter 15 protection at US Federal Bankruptcy Court in Newark, NJ. Filings in approximately 45 jurisdictions worldwide, where Hanjin vessels trade, are expected to be filed in the very near term.

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Containership MV ‘Hanjin Monaco’ against the downtown Manhattan skyline in better days. Image credit: Karatzas Images.

With approximately 140 vessels under management, only 40 of which are self-owned and 100 chartered-in or leased, there have been serious implications for the market, at least in the short term. With only US$ 700 mil in equity, US$ 1.7 billion value of its fleet and $5.4 billion in outstanding obligations, the capital structure resembles a house of cards. The value of the cargo on-board of Hanjin’s vessels at the time of filing for receivership was estimated at $14.5 billion. The ensuing result has been a logistical nightmare, given all such cargo had contractual obligations to be delivered on time, but Hanjin’s vendors would not render any services unless they were getting paid in advance. Receivership and Chapter 15 can stop creditors from knocking on the door, but vendors would now perform only on cash basis payments. Hanjin’s financial nightmare has been compounded by the legal complexity of the business which is further compounded by the logistical complexity of the containership liner business. Only the fact that the containership market has appr. 25% capacity (which has caused Hanjin’s financial troubles in the first place) can alleviate concerns that Hanjin’s potential demise will no be a threat to the supply chain and international trade.

Hanjin’s filing has been front page news for the whole last week. Here’s a list of articles in the print, TV and radio coverage where Basil M Karatzas and Karatzas Marine Advisors & Co were quoted:

Moral Hazard Case Study: Hanjin Shipping                                                          Maritime Executive, September 6th 2016

Containers Stranded at Sea After South Korean Company Goes Bankrupt         NPR, All Things Considered, September 8th, 2016                                                    To Listen to the Audio Clip, Please Click here!  

Retailers Seek U.S Help With Shipping Crisis                                                            The Wall Street Journal, September 1st, 2016

Hanjin Shipping Bankruptcy Unlikely to Ease Gluts of Vessels                                    The Wall Street Journal, September 2nd, 2016

Shipping Chaos                                                                                                              The Exchange CBC News Canadian Broadcasting Corporation                                TV Interview, September 2nd, 2016

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Basil Karatzas on CBC News – The Exchange about Hanjin Shipping’s Receivership. Image credit: CBC

© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information here within has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

 

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Media Mentions for Basil M. Karatzas (II)

The shipping industry has been making big waves of late. Unfortunately, this is mostly due to the weakest state that the industry has been in the last several decades: too many ships chasing too few cargoes (for dry bulk and containerships) while CapEx for offshore and drilling getting slashed worldwide, and tankers benefiting for now from OPEC’s (weakening) will to go after market share.

Since our last update a few months ago, Basil M Karatzas and Karatzas Marine Advisors & Co. have been quoted extensively in the business press about developments in the shipping industry. A short list of pertinent articles have been displayed herebelow. We thought that our readership and clients could get a summary report of the 10,000-ft issues that are driving our beloved industry:

Private Equity on Collision Course with Shipping Banks                                            IHS Fairplay, March 16, 2016

Chinese Shipping Majors Splash $2.5 Billion for 30 Giant Valemax Vessels              Wall Street Journal, March 10th, 2016

The article was re-published in the respected investment advisory Morningstar website under the title: Beijing Moves to Tighten Grip on Trade Route

Container Ship Capacity Growth Dips to Historic Low                                               EBN: The Premier Online Community for Global Supply Chain Professionals, March 8th, 2016

Algoma Pares Bulk-Commodity Freighter Fleet amid Shipping Slump                       The Globe and Mail, March 4th 2016

Commodity Slump Puts Dry-Bulk Shipping on Hold                                                    Wall Street Journal, February 21, 2016

Shipowners in Financial Distress as Dry Bulk Crisis Deepens                                    The Financial Times, February 7th, 2016

Indebted Chinese Companies Increase Pressures on Government                         The New York Times, January 17th, 2016

Cash Burning up for Shipowners as Finance Runs Dry                                               The Financial Times, January 3rd, 2016

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Quote from The Wall Street Journal; February 2016.


Copyrighted material. Copyright of articles belongs to the perspective publishers / publishing houses.


© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information here within has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.