Posted on 09/10/2016 9:52:13 AM PDT by Lorianne
The problems that sank South Korea’s Hanjin Shipping last week could be just the tip of the iceberg, with the long global downturn leaving the industry burdened by excess capacity.
With growth refusing to budge and consumer demand still slack, the world’s freight carriers have more ships than they can fill — a quarter of cargo space lies empty.
That has led to fierce price cuts and cut-throat competition, badly impacting the bottom lines of some of the giants of the seas.
Those problems played out last week when Hanjin, the world’s seventh-largest shipping firm, filed for bankruptcy in Seoul, seeking court protection after creditors rejected its latest plan for dealing with its hulking $5.37 billion of debt.
A third of its fleet is either stuck in port or unable to dock, with port authorities fretting the company will not be able to pay its bills.
Analysts say Hanjin’s cash-flow management has been problematic, but caution that shipping companies worldwide are vulnerable to the same conditions of oversupply and low trade volumes.
Nearly 80 percent of goods and commodities traded globally are transported by sea.
The industry had boomed as China’s manufacturing and export-heavy economy mushroomed over recent decades, moving a record 9.6 billion tons of cargo in 2008, according to Richard Clayton, maritime and trade principal analyst at IHS global business consultancy.
Those volumes plummeted when the global financial crisis struck.
Recession is nothing new for an industry used to riding out the occasional economic storm, but the length and depth of the downturn was different this time, said Clayton.
“The thing about shipping is that you order to anticipate an upturn,” he said, adding it could take up to five years to take delivery of a vessel after ordering it.
“We saw a rise in orders in 2010 and 2012 but there has been no (economic) upturn,” he said.
“China’s economy is down, and too many ships have been delivered. This has led to competition within the industry, which drives prices down.”
Beijing’s attempt to pivot away from exports toward domestic demand is also impacting the industry, he said.
Clayton estimated that some 25 percent of global container capacity now sits empty.
Shippers desperate to cover at least some of their costs have slashed prices — the cost of chartering a container vessel has plunged from 2008 highs of $200,000 a day to just under $5,000 a day, according to a July report by brokers JLT Speciality.
SNIP
Let's anchor them offshore and convert them into prisons.
That way we can send all illegals and their kin packing on a sea cruise, at the same time!
The old "slow boat to China" route works.
Put one or 2 of them in one of the many surplus shipping containers and dump them off on an island. Fill the shipping container with just enough food and water. Come by 3-4 times a year. If there are any father-sons rotting in separate jails let them get reacquainted with each other(no distractions).
This is scary because we have sent so much of our manufacturing overseas. No one carries an inventory anymore and rely on on-time deliveries.
No need to for America to live with all of their child brides, female babies' genital cuttings, Muslim divorce laws, honor killings, beheadings, etc.
Could be another black swan similar to what premonitioned the 2008 plunge.
Or it could be that Hanjin was vastly over optimistic and over extended itself.
I’d love to get you/On a slow boat to China...
Screw that, I figure we can comfortably - COMFORTABLY - set up 400 studio apartments on one. Park that off the coast of San Francisco, pay $150,000 per month for the charter - and charge out $1,200,000 per month for rent ($3000 per month for a studio apartment). Quick money!
No one carries an inventory anymore and rely on on-time deliveries.
From Hanjin?
$5,000 a day?
Is that even enough to pay for their fuel?
Yes, have you not seen the Hanjin containers on every train?
Sorry, I shoulda used the /s tag.
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