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Have you heard of South Korean’s Hanjin Shipping Company? Maybe you’ve seen their containers being transported cross-country on a freight train or piled high in a port. Operating approximately 60 regular lines world-wide, with over 140 container shipping vessels, Hanjin ranks as one of the world’s largest container shipping companies, transporting over 100 million tons of cargo a year.
And on Friday September 2nd, they declared bankruptcy.
We’ll see how it all plays out, but Hanjin’s looming demise could be the largest container-shipping failure in history, dwarfing all previous carrier bankruptcies. The aftermath will be far reaching. For example, since Hanjin called in their bankruptcy lawyer, ports across the globe have refused to handle Hanjin’s cargo, stranding over 45 ships and more than half a million containers at sea. And that’s just what’s happened in the first week.
Naturally, merchants and retailers around the world are feeling anxious. Those who are effected directly have cargo stranded in the middle of the ocean. Even those who don’t ship through Hanjin are feeling the reverberations, as Hanjin’s bankruptcy influences the entire global supply chain.
What does this mean for you?
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Cargo Delays. “My product(s) aren’t shipped through Hanjin, so I’ll be fine… right?” Not necessarily. Some experts are worrying that railroad and trucking companies that contract with Hanjin will be ransacked by the bankruptcy. If you manufacture products or any part of your products in Asia, check in with your entire supply chain. Manufacturers, vendors, suppliers, all other logistics partners… ask them if the Hanjin bankruptcy affects any part of the manufacturing and shipment of your products.
Increased shipping prices. Keep an eye out for this one. Other shipping lines may take on some of Hanjin’s cargo… but at a price. Since vessels already are operating at high capacity, shippers may wind up paying a premium to squeeze their cargo containers on board. For example, the price of shipping a 40-foot container from China to the U.S. jumped by 50% in a single day last week. Granted, some of this is due to the upcoming Chinese holiday, but that’s a higher percentage than usual for this time of year. (Check this out for more tips on keeping your business running smoothly during Chinese holidays.)
Possible Disruption in U.S. Holiday Sales. This global shipping disruption comes just as companies are shipping merchandise to fill shelves and warehouses for the end-of-year holiday season. According to this article by USA Today, Samsung is among the companies hit heavily with “…about $24.5 million in visual display products and parts and $13.5 million in refrigerators and other appliances on two ships near Long Beach, California.” Do you have any shipments arriving via ocean freighter between now and December? Plan ahead, as some already-busy U.S. ports are now even more congested.
What should you do?
Our best advice is to stay in the loop. Here are three quick tools to help you out:
- Join our Facebook Group. We’ll continue following this story and will post about it so you don’t have to waste time looking for relevant updates. Stay on top of the events that will transpire in the coming weeks and months with us!
- Check the news yourself. We’ve been following this story, and trust us, it’s changing daily! That link (here it is again) is a great place to keep coming back to for updates.
- Are your shipments are on Hanjin container ships? This map will become your new best friend (according to Bloomberg, it shows the locations of Hanjin’s container ships).