Hanjin is not alone. Of the biggest 12 shipping companies that have published results for the past quarter, 11 have announced huge losses. Several weaker outfits are teetering on the edge of bankruptcy. In Japan three firms, Mitsui OSK Lines, NYK Line and Kawasaki Kisen Kaisha, look vulnerable. Activist investors are now pressing for them to merge to avoid the same fate as the South Korean line.
If the shipping is bad now, wait until Trump renegotiates the trade agreements.
Mad Robert, I think the state of shipping suggests that TRADE is presently stalled. You can’t make zero more negative unless there is a valid metric…Trump renegotiating Trade agreements can’t made the dead…more dead….
Two powerful forces have rocked the industry.
The first is the ebbing of world trade since the financial crisis.
The second factor is a surge in the size of the global container fleet following a ship-ordering binge that began around 2011. Overcapacity has crushed freight rates. Sending a container from Shanghai to Europe now costs half what it did in 2014.
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World trade is still anemic, so there won’t be a quick fix there.
The easier route will be to dismantle and scrap the least profitable ships and write down the shipping inventory.
Seeing that Maersk just renewed their fleet, they will likely accelerate the decommissioning of the ships which are costing them the most money.
Not a happy time for shipping, but they will likely do what is necessary as the financial bloodletting won’t go on forever.
Additional computerization to minimize time at sea, route optimization, container optimization, ship management hold out the option for some cost savings but will these be enough in an anemic economic environment?
Cheers
Hans Rupprecht, Commander in Chief
1st Saint Nicolaas Army
Army Group ‘True North’
After having three faulty alternators (Asian) in the last year, no pity from this guy!! Fed up of cut rate garbage!
Short walmart. No stock
5 years ago the shipping companies were expecting a great rebound in global trade and order a couple of megatons of new ships. These ships are now coming online. The ship are build with mortgaged backed fund, in which the interest must be paid or the creditor seize the vessels. There are way too much shipping capacity right now, but these new toys must be use right now, further depressing the shipping rates.
“Activist investors are now pressing for them to merge to avoid the same fate as the South Korean line.”
Does this remind anyone of swimming and water safety lessons where they tell you if you are drowning find someone else who is too and grab hold of each other?