The waves of financial distress stemming from Hanjin Shipping’s potential sinking threaten to extend up and down B.C.’s coast.
Initial concerns following the world’s seventh-largest container cargo shipping company filing for creditor protection focused on the fate of the goods on Hanjin ships. With uncertainty over payment, terminal operators stopped loading and unloading the vessels. Those near-term worries will be resolved.
Longer-term complications, however, will take more than quick fixes. Hanjin, with US$6.9 billion in 2015 sales, had been in financial trouble for years. As U.K.-based shipping consultancy Drewry pointed out in a September 4 analysis, Hanjin’s operating loss over the past six years has totalled US$580 million.
In B.C., the company’s financial woes could hurt two major container-shipping players. Hanjin, for instance, has been one of Prince Rupert’s main customers since the northern B.C. port began handling container cargo in 2007. The expansion of what has been one of North America’s fastest growing container ports could stall if Hanjin is not replaced with another major shipping line customer.
Also Vancouver’s Seaspan Corp., the world’s largest independent containership lease company, was one of Hanjin’s main leased vessel suppliers.
In the wider world, a loss of confidence in the global container trade’s ability to continue to grow each year, regardless of economic volatility, will be reflected in postponed or cancelled investment in port and other transportation infrastructure.
Nearer to consumers’ pocketbooks, Hanjin’s financial distress will also be bad news for shippers, who have enjoyed record low container rates because of overcapacity in the global container cargo-shipping sector. Hanjin’s collision with the financial realities of that overcapacity, coupled with stalled economies in Asia and Europe, could reduce that container glut and raise shipping rates. That increase would find its way to consumers far faster than any decrease shippers previously enjoyed from lower shipping costs.
