Hanjin Bankruptcy Poses New Challenges for Global Supply Chain Managers

The bankruptcy of Hanjin Shipping will have supply chain managers scrambling for transport alternatives during Peak Season, as global seaports also struggle to find ways of mitigating the impact of this colossal event.

Hanjin operates 98 container ships totalling 600,000 twenty-foot equivalent units (TEUs), 11 port terminals and 74 deployments.

The largest container line bankruptcy in history already has other carriers scrambling to accommodate shippers, too.

CKYHE Alliance partner, Evergreen Line, for example, is activating a “contingency plan.” According to spokesmen, no Evergreen Line cargo will be loaded on the vessels operated by Hanjin and Hanjin cargo will not be allowed to load on the vessels operated by Evergreen Line.

“Evergreen Line, as the Carrier to issue the Bill of Lading for the shipment under Evergreen Line’s custody, will not prejudice to cargo owner’s rights,” added spokesmen. “Evergreen Line undertakes all carrier’s obligations and responsibilities under the governing Bill of Lading clauses will remain binding in all circumstances.”

As reported in Logistics Management and SCMR, the seventh largest maritime container line had been enduring a long period of economic distress before this collapse. Shippers who had not anticipated the event are now being schooled in risk management.

According to Rick Bridges of Roanoke Trade Insurance logistics managers should be cancelling bookings with Hanjin and look for space with other container lines.

Meanwhile, they should take the following precautions:

*The shipper should take all reasonable measures to protect the cargo and to ensure it is delivered to the intended destination should Hanjin fail to complete the voyage(s). In such cases, the shipper will likely be reimbursed for charges properly and reasonably incurred via the cargo insurance provider.

*The shipper should confirm that insured cargo will continue to be covered for physical loss or damage even if insolvency is the cause of physical loss or damage.

“It is also suggested that your company consider the possibility of abandonment of freight and how to best protect against non-payment of demurrage and storage charges,” said Bridges.

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