Hanjin shipping formerly operated some 60 liner and tramper services around the globe, transporting over 100 million tons of cargo annually. Its fleet consisted of many container ships, bulk and LNG carriers. Hanjin Shipping had its own subsidiaries dedicated to ocean transportation and terminal operation and it had several branch offices in various countries. On February 17, 2017, Hanjin Shipping Co. was declared bankrupt by South Korean courts.
Bankruptcy
Prelude to bankruptcy
The financial struggles and insolvency of Hanjin Shipping were attributable to a downturn in the container shipping industry that was the result of numerous interrelated factors such as weak global GDP, overcapacity on container vessels, "bloated" US retail inventories, changing consumer spending patterns, Chinese economic slowdown, and muted growth in demand for container shipping. The downturn dented profits and crippled the financial health for the majority of the top twenty ocean carriers.
2016 financial collapse and subsequent liquidation
In April 2016, Hanjin applied to its creditors for debt restructuring, in order to avoid formal insolvency proceedings. On August 31, 2016, Hanjin filed for receivership at the Seoul Central District Court and requested the court to freeze its assets, after losing support from its banks the previous day. After news of Hanjin's breakdown was publicized, creditors initiated a wave of asset confiscation and Hanjin vessels experienced access issues in ports globally because service providers were not informed if and how they would be paid to load and unload Hanjin vessels. On September 2 Hanjin Shipping Co. filed papers in U.S. Bankruptcy court in Newark, New Jersey that would allow its vessels to dock without its ships, cargo or equipment being confiscated by creditors. Bogged down with tremendous debt, trapped in a struggling industry unlikely to improve in the near future, and with assets confiscated by creditors or abandoned by the company, signs quickly began to appear that Hanjin would likely be dissolved by the South Korean government and stakeholders. In a matter of weeks after its receivership Hanjin's global presence and dominance in its industry withered away. The company announced plans to shut down offices around the world, lay-off workers, sell remaining assets, and dismantle its service network. Other container lines distanced themselves from Hanjin and joint operations with the company were terminated. On February 17, 2017, Hanjin Shipping Co. was declared bankrupt by South Korean courts, with a court order to be liquidated.
Aftermath and legacy
Hanjin Shipping's dissolution was the largest and most significant bankruptcy in the container transport industry and it caused worldwide supply chain and shipping disruption as cargo ships were left stuck at ports and canals waiting for cash payments. Hanjin's bankruptcy created a massive ripple effect. Other businesses that rely on physical products found themselves without the expected revenue from inventory that became stuck at sea. Hanjin's abrupt cave-in occurred at an especially inconvenient time for retailers furnishing their inventories with imported items in preparation for a seasonal uptick in Thanksgiving, Christmas, Black Friday, and New Year's sales. Although large companies such as Nike were affected, the repercussions were more prominent on smaller companies. In February 2017, SM Line, a new shipping firm formed by Samra Midas Group, purchased five vessels previously owned by Hanjin. In March, SM Line acquired two of Hanjin Shipping's terminals in Korea, in the cities of Gwangyang and Incheon. In August 2017; a South Korean bankruptcy trustee which was appointed to manage the liquidation of Hanjin Shipping, reported that it had only collected 220 million USD from the sale of Hanjin's assets. This sum amounts to only 2% of the US$10.5 billion total debt Hanjin owes to its creditors.
Services
Container – Transported approximately 3.7 million TEU containers a year. This service consisted of 24 container ships which allowed for this service to produce such an output per year. Recently, in 2010 the South Korean shipping company was the first to introduce a 10,000 TEU class carrier ship, which travelled between Asia and Europe.
Bulk - This division of the shipping company delivered a variety of resources and raw materials through its ‘contract of affreightment’ with other companies. The division's ships were LNG and VLCC ships which carried crude oil and chemicals.
Terminal – The shipping terminals for this company were distributed internationally. There were fourteen dock yards that this company owned: four in Korea, two in the United States of America, two in Japan, and the rest in Spain, Taiwan, Vietnam and Belgium.
