Han­jin bank­ruptcy: A les­son to all

Han­jin Ship­ping Line’s bank­ruptcy hogged the head­lines around the world and has thrown sev­eral ques­tions to ports and re­tail­ers, what’s go­ing to hap­pen with the tonnes of cargo that were sup­posed to reach their con­cerned shelves. Though there could be a l

Cargo Talk - - Guestcolumn -

Con­tainer­ised cargo hap­pens to be one of the ma­jor driv­ing force for the ship­ping lines. The growth of the ship­ping com­pany is driven by this vol­ume. Till few years back, all the ship­ping lines use to be de­pen­dent on freight for­warders to fill in their ships. Sud­denly we saw a trend where ship­ping lines opened their freight for­ward­ing units and en­tered into con­tract with the cus­tomers di­rectly.

Now, the re­mains how change? With moot ques­tion did the sce­nario de­pen­dency on freight for­warders there was an el­e­ment of un­cer­tainty as re­gard to ca­pac­ity and the mar­ket was driven as per the de­mand and sup­ply. Sud­denly with con­tracts signed di­rectly with the cus­tomers, the ship­ping lines got their con­fir­ma­tion ei­ther for six months or one year. With this trend, there was a false sense of ca­pac­ity growth. Ship­ping lines started in­creas­ing their ca­pac­ity based on this.

With one look at the trend it shows that the growth in con­tainer­ised cargo we can make out that the ca­pac­ity growth by in­di­vid­ual ship­ping lines was not jus­ti­fied. With the world econ­omy in dol­drums, I feel that the ca­pac­ity growth was not re­quired. With high ca­pac­ity and low de­mand the rates started go­ing down with it came low mar­gins. I feel Han­jin fell to this and may be few more will also face this.

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