With the fate of South Korea’s Hanjin shipping line still unclear, insurance broking and risk advisory group Marsh has issued a report examining the extensive risk and insurance implications of the company’s problems on the increasingly interdependent global shipping industry.
The company, which had been loss making for years, filed for bankruptcy protection at the end of August and stopped accepting new cargo after its banks withdrew their support for the shipper. With its assets frozen, Hanjin’s vessels were refused permission to offload or take aboard containers as there were no guarantees that tugboat pilots or stevedores would be paid.
Hanjin is the world’s seventh-largest container shipper and its bankruptcy has created uncertainty for ports and retailers around the world. An estimated total US$14bn in cargo has been tied up globally. Giant container ships have been marooned and merchants have been uncertain whether hundreds of tonnes of goods being transported by company will reach shelves.
The Marsh report examines the impact on specific groups, including the owners of cargoes entrusted to the care of Hanjin; shipowners who have leased their ships to the company under charterparty agreements; and some freight forwarders, whose contract terms might expose them to financial penalties-as well as the effect on terminals and ports which Hanjin vessels were scheduled to visit.
“The wider ramifications of such an important company failure are only beginning to unfold,” said Marcus Baker, chairman of Marsh’s global marine practice. “The situation is particularly acute, as August to October is generally the busiest time of year for the shipping industry as companies stock up for the holiday season.
“There is now considerable concern throughout the industry as to whether or not companies are insured against this scenario. Marine cargo insurance policies are written on a wide variety of terms and conditions, for which there are going to be very different answers on a ‘case-by-case’ basis.”
In a more positive development Cho Yang-ho, chairman of the company’s parent Hanjin Group transferred 40bn won (KRW) – about US$36m – to Hanjin Shipping to help unload cargo stranded on the shipper’s vessels, following a pledge last week to raise KRW100bn. However, regulators warned that securing further funds could take “considerable time.”
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