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That Ship is Sunk

The 7th largest ocean carrier in the world, Hanjin Shipping was placed under court protection in Seoul late on Aug. 31.   

Shockwaves reverberated through the international shipping market.  Shipper's woke up this morning to their biggest nightmare - their freight held hostage.  Today, ports across the globe refused entry of Hanjin ships and ports are refusing to unload vessels without prepayment.  Containers that are still in the port are put on hold and international shipping on Hanjin ships and in Hanjin containers was halted abruptly this morning.

Truckers that have empty Hanjin containers are being turned away by the yards that hold the empty containers, leaving the truckers scratching their heads over where to leave the equipment.  Already in short supply, the wheels (chassis), that the containers are mounted on will rapidly move into short supply.

From a market perspective, given that Hanjin was carrying 20,000 TEUs to 25,000 TEUs in the trans-Pacific eastbound trade, the withdrawal of its capacity will create a rush of volume to other carriers who are already operating at 90 percent to 100 percent utilization.

(Update 9/2) - The Sep. 1 increase will take spot rates up to $1,700 per 40ft container, up from $1,100 or 54% prior to the increase. On top of that, carriers have announced a $600 peak season surcharge to take effect Sep. 15, which also stands a good chance of taking effect, and an Oct. 1 GRI on top of that. (source)

According to the Agriculture Transportation Coalition in a member advisory on Wednesday, “There is currently, overall for all carriers, about 8,000 TEUs to 10,000 TEUs of unused capacity (in the) trans-Pacific eastbound. With Hanjin’s abrupt cessation of operations, suddenly we are in a massive demand-over-supply situation. Impact on westbound shipments will be significant.” (source JOC.com)

American Shipper reports that 3 in 4 shippers are immediately affected by the Hanjin collapse.

The critical TransPacific east bound market, still recovering from the labor disruption on the West Coast in 2014, is in the midst of Peak Season.  Christmas goods for the second time in three years are going to be embroiled in shipping disruptions, delays, and a huge spike in pricing.

The ocean carriers have been losing billions of dollars and this bankruptcy is certainly not the last.

Buckle up folks, it's about to get crazy.

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