Hanjin Shipping, Korea’s largest and one of the world’s top ten container carriers, has been ordered to cut its fleet immediately in a court ruling.
The Wall Street Journal is reporting that a South Korean bankruptcy court ordered the company to return the ships it charters back to their owners and to sell as many of its own ships as possible.
In response to the immediate order, ships have been unloading goods at ports in California, Spain, and other parts of the world.
According to Fortune, the company had a fleet of 141 vessels as of early September. And out of the 97 container ships in the fleet, 60 were chartered and 37 owned by Hanjin.
This is the strongest indication that the Korean business will be liquidated or reduced.
This month Hanjin Shipping filed for bankruptcy protection, leaving a portion of its fleet stranded as the company is unable to pay unloading fees.
It has previously received a $US90 million bailout from its parent company. Business Insider’s Bob Bryan has more on that here.
Analyst Mark Levinson told the ABC this month that the Hanjin crisis underscores the soft outlook for global trade and over capacity in the container shipping market.
“On the one hand, many of the ship lines have built enormous, enormous ships – these ships can carry as many as 10,000 40-foot containers at one time – and so there’s a lot of capacity floating around the world,” he said.
This view has been reflected by many others who see reduced shipping levels is slowdown in global trade.
Back in February, the chief executive of Maersk, the world’s biggest shipping company, warned that conditions for global trade were now even worse than they were during the height of the 2008 financial crisis.
“It is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn’t look like going up soon. Freight rates are lower. The external conditions are much worse”.
There’s more on the Hanjin ruling at the WSJ article.
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