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
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.