2 BULKDISTRIBUTOR Shipper
2 BULKDISTRIBUTOR Shipper
September / October 2016
Freight rates rise following Hanjin collapse
Shockwaves from Hanjin collapse may be felt for months as $ 15 million worth of goods is left stranded at sea
Shipping giant Maersk Line is reporting a rise in freight rates and a surge in new clients following the collapse of Hanjin Shipping company . Hanjin , South Korea ’ s biggest container company with around 200 ships , filed for bankruptcy relief in Seoul , leaving many vessels effectively marooned at sea as ports around the world initially refused to allow them to dock . However , a last-minute $ 54 million bail-out from its biggest shareholder , Korean Air Lines , allowed the beleaguered company to pay for the remaining goods to be unloaded from its fleet at the beginning of September . Now Maersk Line , the world ’ s largest container shipping company , says the market is responding to the situation . “ There ’ s no doubt that we ’ re seeing a reaction in the rate market ,” Klaus Rud Sejling , the executive in charge of Maersk Line ’ s east-west network , told Bloomberg . “ The question is , what will happen with the rates in the longer term . In the short term , the effect is positive , but there are many factors that can influence rates in the medium and in the long term . What we ’ re hearing from the customers that are coming to us is that they are seeking a partner that ’ s stable . Customers are coming to us because we are financially strong .”
Maersk Line announced it will open a new service from Asia to the United States west coast to match the demand from Hanjin ’ s former customers . Sejling said that the new capacity would add
0.6 percentage points to Maersk Line ’ s market share on the route , which is currently at about 7.5 %. He confirmed : “ We are constantly optimising our network and our port calls , but we don ’ t have any plans to add more services at this point .” Dock workers at the Port of Long Beach , California , began unloading cargo on Saturday , September 10 , from the container ship Hanjin Greece , breaking a logjam that has stranded goods on a dozen vessels bound for the US west coast . But the Hanjin shipping crisis could roll on for months as port operators , cargo owners , union officials and shippers must reach financial agreements with Hanjin before each ship can be docked .
Two other ships owned by the company were anchored close to the Long Beach port but did not have orders to dock , according to the Marine Exchange of Southern California , a group that tracks cargo ship traffic . Union officials said nine others were floating in the Pacific . Nearly $ 15 billion of cargo has been tied up globally as ports , tugboat operators and cargo handling firms refused to work for Hanjin , the world ’ s seventh-largest container carrier , which filed for receivership on September 4 . Once it ’ s unloaded , the Hanjin Greece will be reloaded with empty containers or with containers filled with goods for export , according to one local official . Spot container freight rates on the major routes from Asia soared by up to 42 % at the beginning of September following the collapse of Hanjin Shipping , data from the World Container Index ( WCI ) confirmed . Rate assessment increased by 42 % to $ 1,674 per 40ft container on the Shanghai-Los Angeles route , by 19 % to $ 2,151 on the Shanghai-New York route and by 39 % to $ 1,826 on the Shanghai- Rotterdam route . “ Unpredictable freight rates are not a new phenomenon in the container industry , however a major upheaval of supply like this is likely to cause extreme short-term price volatility . Shippers should expect increasing freight costs and tight allocation for several weeks at least ,” said Richard Heath , general manager of WCI .
Hapag-Lloyd shareholders give go-ahead for UASC merger plans
Hapag-Lloyd ’ s AGM in August saw the company ’ s shareholders approve all items on the agenda , including the capital conditions required for the planned merger with Arabian liner shipping company UASC . The shareholders gave the nod to the creation of new authorised share capital for the merger , which will see UASC incorporated into Hapag-Lloyd as a contribution in kind . The shareholders also approved the expansion of the Supervisory Board from the current 12 members to 16 , to take place once the merger with UASC is concluded . This expansion is due to the current majority shareholders of UASC , Qatar Holding LLC ( QH ) and Saudi Arabia ’ s Public Investment Fund ( PIF ), each being set to receive a place on the Hapag-Lloyd AG Supervisory Board . The merger is still subject to antitrust approvals . Hapag-Lloyd submitted the relevant applications soon after signing the business combination agreement . Rolf Habben Jansen , CEO of Hapag-Lloyd AG , told the 300 or so shareholders attending the AGM : “ The pending merger with UASC is another strategic milestone for Hapag-Lloyd . We intend to bring the skills of Hapag-Lloyd and UASC together in such a way that the company is in a stronger position to face both current and future industry challenges . “ Hapag-Lloyd is not only growing , it is also becoming more international and , above all , more competitive . This merger gives us the large vessels we need in order to achieve low transport costs per container . With the investments already made by UASC in these ship classes , Hapag-Lloyd will not need to make any more investments in large vessels in the next few years . “ With this merger , we are consolidating our position among the world ’ s five biggest container shipping companies in the long term and are considerably increasing the gap between us and the shipping companies that come after us .”