20 BULKDISTRIBUTOR
South East Asia
September/October 2016
What does Hanjin collapse mean Case study:
for South East Asia?
Seaco
T
he Hanjin Shipping Co terminal at Busan, South Korea,
has come to a virtual standstill as hundreds of containers
stacked four-high wait on the dockside as cargo owners
scramble to find alternative ways to send their goods.
The port of Busan, 200 miles south east of Seoul, handled more
than 70% of the containers that enter or leave South Korea. Until
its collapse at the end of August, Hanjin – the world’s seventhlargest container – alone accounted for about 10% of goods that
get loaded and unloaded.
Now the port operators fear vessels could head to other ports
in the region as the remaining shipping companies use large
centralised transshipment ports like Singapore to store containers
and distribute them among vessels in order to move goods more
efficiently around the world.
And while Busan faces an uncertain future of the asset sale of
Hanjin has already started. Three of its chartered ships had been
sold within two weeks of the company’s bankruptcy petition and
two more were put up for sale.
Analysts believe around $14 billion of cargo has been tied up
globally as ports, tugboat operators and cargo handling firms refuse
to work for Hanjin because of concerns about not getting paid.
Bottlenecks are forming at some ports and truck yards as
containers continue to pile up while Hanjin works to a court
deadline of late November to formulate a financing plan that
creditors agree to.
However, the fleet of 63 ships Hanjin owns is estimated to be
worth around $1.76 billion, well short of the $5.5 billion of debt
the company reported at the end of last June. It had chartered a
further 78 vessels before its failure.
Around two-thirds of Hanjin’s fleet are not operating properly,
including vessels seized, barred entry to ports or terminals, denied
services or moving slowly, according to shipping data.
Hanjin Shipping is to return all of its chartered vessels to their
owners to cut costs, after the South Korean container line said it
was losing $2m a day amid the logistics chaos prompted by its
bankruptcy in August.
The company has returned or plans to return soon 18 container
carriers and 17 bulk ships to their owners while it scrambles to
resolve the $14bn cargo logjam created by the industry’s largest
bankruptc y in three decades.
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S
eaco has been serving the container shipping industry
for more than 50 years and it is one of the world’s
largest container leasing companies, providing a fleet of
approximately 2.2 million TEU across a diversified fleet of
Dry Boxes, Reefers, Tanks, Specials and Swapbody
containers.
Seaco purchases new container equipment for leasing and
re-leasing to 792 customers worldwide, delivering to 179 port
locations across 49 countries and 420 third-party depots, and
supported by an established network of appx. 200 Seaco
employees, providing expertise in regional/global container
leasing and sales solutions.
With a rich history in container design, manufacturing and
equipment supply, Seaco has one of the world’s largest and
youngest container fleets to support every cargo including,
liquids, powders and gases.
Due to the acquisition of Cronos in 2015, Seaco has doubled
its fleet size to over 40,000 tanks, offering a diverse portfolio
of T11 to T50 ISO tanks. As Seaco continues to invest and
grow the size of its fleet with market demand, the focus is on
niche markets where Seaco has the equipment to provide
flexible bespoke solutions to service customer needs and in line
with market developments.
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In South East Asia, one of the key challenges the industry
faces, is the lack of available and qualified professionals with
the level of knowledge and expertise to facilitate customer
needs. It is proving to be a perennial problem and training to
upskill is necessary in order to address the knowledge gap in
this region. The other challenging factor is the growing
demand for good tank repair and maintenance facilities, in
order to cope with strict industry rules and safety procedures.
As repair regulations differ across South East Asia, there is an
urgent need for a more standardised working mandate.
So far in 2016, the market has been slow and there is an
oversupply of tanks worldwide. This being said, the industry is
experiencing some growth in the bulk liquid market and a
continued shift from parcel tankers to ISO tanks. There is a
growing trend towards the provision of flexible supply chain
solutions, notwithstanding the still prevalent use of flexi-bags.
While larger tanks attract relatively more demand, there is also
a growing trend for gas, LNG and lined tanks. The increasing
awareness of health and safety issues in relation to hazardous
cargo handling, has led to more enquiries for ISO tanks.
However, the market is not growing fast enough to absorb the
oversupply and it will take some time for the market to
neutralise the overhang situation that both leasing companies
and operators currently face.
With greater global competition, this has subsequently
pushed down rates and triggered an increase in demand for
shorter flexible leasing terms by customers. Whilst the market
continues to emerge, the industry may experience some
weaker players dissolve or be acquired by bigger and stronger
competitors. As the market consolidates with fewer new
stocks, the oversupply situation may ease and the overall
market may recover.
Seaco aims to be a “value add” long term partner to our
customers, providing the right container at the right place and
at the right time.
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