The problems that sank South Korea’s Hanjin Shipping this week could be just the tip of the iceberg, analysts say, with the long-running global economic downturn having left the industry drowning in 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./ AFP PHOTO /
SEOUL, South Korea (AFP) — South Korea’s Hanjin Group said Tuesday it would provide its debt-ridden shipping unit with 100 billion won ($90.4 million) to help ease huge disruptions to global maritime freight.
Hanjin, the world’s seventh largest shipping company, is seeking bankruptcy protection at home and in the US after creditors rejected its latest plan to deal with a $5.37 billion debt.
Its bankruptcy would be by far the largest in the history of container shipping, which is suffering from its worst downturn in six decades because of slumping global trade and a slowdown in China.
More than half of Hanjin’s fleet — 79 vessels — is either stuck in port or unable to dock, with authorities fretting the company will not be able to pay its bills.
Its parent Hanjin group said it would spend 100 billion won, which includes a personal donation of 40 billion won from its chairman and biggest shareholder Cho Yang-Ho, to “normalise” operations of its container ships.
“We have reached the decision to minimise damages on export companies,” it said in a statement.
Hanjin said it would also use its other subsidiaries including flag carrier Korean Air to move cargo as concerns grow over the delayed delivery of goods ahead of Thanksgiving and Christmas holiday shopping in the US.
The group has been under growing pressure to offer aid to the shipper, with South Korean finance minister Yoo Il-Ho on Tuesday urging Cho to “take responsibility” as the controlling shareholder.
“The government may be able to discuss ways…to help (Hanjin) pay for suspended cargo handling under the condition that Hanjin and its biggest shareholder take responsible measures,” Yoo told reporters.
The firm is seeking stay orders in 43 countries to protect its vessels from being seized with applications in 10 others to be made this week, Seoul said Monday.
Hanjin has struggled for years since its failure to recover from the impact of the 2008 global financial crisis.
It posted a net loss of more than 473 billion won in the first half of this year alone, after racking up total net losses of about 1.2 trillion won over the past three years.
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