Site icon Ships & Ports

CMA CGM, others sever ties with Hanjin

French shipping major CMA CGM has sent a notice of termination to South Korea’s Hanjin Shipping related to each of the company’s services with immediate effect.

CMA CGM also said that Hanjin containers, which are already onboard on CMA CGM vessels, would be discharged to the final destination and that the company would no longer loads its containers on Hanjin Shipping’s vessels.

Additionally, all CMA CGM containers which are currently on Hanjin vessels “are being unloaded and will be trans-shipped onto vessels of CMA CGM and other partners.”

The move was made after Hanjin revealed its plans to file for court receivership amid a prolonged depression in the shipping industry.

Hanjin Shipping, apart from being a member of CKYHE Alliance, is a partner of CMA CGM group on 5 out of the its 200 shipping lines.

Liner analysts warned box shippers and their forwarders to expect severe disruption throughout the container supply chain as the complicated web of alliances, vessel sharing agreements and slot swaps unravels.

Alan Murphy, chief executive of shipping analyst SeaIntel Maritime Analysis, said, “Due to the increased cooperation of container carriers, the impact will be felt far beyond Hanjin and its customers, especially by its partners in the CKYHE alliance.

“But the impact will also ripple through the many vessel sharing agreements in non-alliance trades, as well as through carriers trading slots with Hanjin.

“Shippers are likely to be surprised by the extent of such cooperation, and that even though they are not customers of Hanjin they may be still be heavily affected by the turmoil.”

He said “considerable disruptions” should be expected to any services in which the carrier’s vessels deployed, “and the extent of these disruptions will to a large degree depend on how the other CKYHE carriers react in the coming days”.

“We may see them scramble to pull Hanjin vessels out of major rotations, or set up quick-and-dirty sub-charter agreements to ensure that the charter vessels can keep on sailing, but due to the sheer size of Hanjin’s fleet, this is not going to be an easy task,” he said.

Trading in Hanjin shares remained suspended today after slumping 29% on Wednesday following a decision by chief creditor Korea Development Bank to end its support for the line after rejecting its latest rescue plan.

According to Drewry Maritime Equity Research, after the first six half of the year, Hanjin had a total debt of $4.2bn and net gearing ratio of 8.7x, with cash reserves of just $156.5m.

Hanjin’s deployed capacity amounted to 609,500 teu across 98 container vessels, according to Alphaliner; compared with the next largest bankruptcy, that of US Lines in 1986, which had a total capacity of 93,000 teu, although at the time it was the second largest fleet in the world.

Already there have been reports of some vessel arrests, with the 5,300 teu Hanjin Rome in Singapore and the 13,100 teu Hanjin Sooho in Shanghai reported to have been detained, while some of the line’s partners in the CKYHE alliance have begun to announce their contingency plans.

Evergreen told forwarders and shippers that, effective immediately, no Evergreen Line cargo will be loaded on a Hanjin vessel and vice versa, while Cosco announced it had begun emergency contingency planning for its containers already aboard Hanjin vessels.

“With regard to the cargo already shipped or to be shipped, we will do our utmost to take care and execute our liability of custody so as to avoid any possible obstacles to shipping and prevent both of us from the negative influence,” it said, and called for shippers to supply relevant information “about any influence caused by potential bankruptcy of Hanjin Shipping so that we can try our best to protect your interests”.



Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.

Exit mobile version