Hanjin Shipping, once the seventh-largest ocean shipping company in the world, recently declared bankruptcy, leaving dozens of ships, carrying over 14 billion dollars in cargo, stranded at sea.
Port operators and inland carriers are now refusing to load or move Hanjin containers for fear of not being paid, leaving import and export shipments from many companies stuck on board.
To add to the scope of the bankruptcy’s impacts, Hanjin was also a member of the CKYHE Alliance and participated in vessel-sharing agreements with other carriers. This means Hanjin ships may have been carrying containers tendered to other carriers such as COSCO, K-Line, Yong Ming Line and Evergreen Line.
What will happen if my goods are stuck on an ill-fated Hanjin ship?
- Late or undelivered shipments may be refused by the ultimate consignees, resulting in lost sales.
- Importers may not have sufficient inventory to tide them over in the short term while the courts decide on the fate of the stranded ships.
- Idle shipments may incur significant storage charges from intermediaries throughout the supply chain.
Unfortunately, shippers have little recourse when port operators refuse to allow ships to dock and unload their containers. But all is not lost: this situation certainly presents a valuable learning opportunity as it brings to light the issues that can arise from selecting a shipper based on cost alone.
Hanjin got to be as large and successful as it was by offering a cut rate on shipping fees. On the surface, lower rates can be very enticing. And in many cases, it will save companies money and give satisfactory results.
However, your choice of shipping company comes down to much more than price alone. Arm yourself with information and knowledge so you have full awareness of your risk and vulnerability.
- Make an informed choice: be proactive and do your research. Have evaluation criteria for choosing a carrier, and include corporate financial stability as a requirement.
- Adopt a strategic long-term approach to supply chain management, not a short-term, cost-based strategy.
- Develop strong, communication-based relationships with suppliers and intermediaries throughout your supply chain. Maintain contact so you know what’s what and don’t get hit with surprises.
- Ensure contingency planning is part of your supply chain strategy, particularly where complex international supply chains are involved.
- Consider getting cargo insurance for peace of mind.
Finally, foster allegiances with professionals who can support your business. Having a solid relationship with your freight forwarder and customs broker – as well as active business relationships with contingency carriers – will help take the headache and unknowns our of your import business.
Contact your local branch to talk to a professional about your options.
Information provided by: Freight Forwarding Dept. - Cole International