AFP, Singapore :
The problems that sank South Korea’s Hanjin Shipping this week could be just the tip of the iceberg, analysts say, with the long-running global economic downturn having left the industry drowning in excess capacity.
With growth refusing to budge and consumer demand still slack, the world’s freight carriers have more ships than they can fill-a quarter of cargo space lies empty.
That has led to fierce price cuts and cut-throat competition, badly impacting the bottom lines of some of the giants of the seas. Those problems played out this week when Hanjin, the world’s seventh largest shipping firm filed for bankruptcy in Seoul, seeking court protection after creditors rejected its latest plan for dealing with its hulking $5.37 billion of debt.
A third of its fleet is either stuck in port or unable to dock, with port authorities fretting the company will not be able to pay its bills. Analysts say Hanjin’s cashflow management has been problematic, but caution that shipping companies worldwide are vulnerable to the same conditions of oversupply and low trade volumes.
Nearly 80 percent of goods and commodities traded globally are transported by sea.
The problems that sank South Korea’s Hanjin Shipping this week could be just the tip of the iceberg, analysts say, with the long-running global economic downturn having left the industry drowning in excess capacity.
With growth refusing to budge and consumer demand still slack, the world’s freight carriers have more ships than they can fill-a quarter of cargo space lies empty.
That has led to fierce price cuts and cut-throat competition, badly impacting the bottom lines of some of the giants of the seas. Those problems played out this week when Hanjin, the world’s seventh largest shipping firm filed for bankruptcy in Seoul, seeking court protection after creditors rejected its latest plan for dealing with its hulking $5.37 billion of debt.
A third of its fleet is either stuck in port or unable to dock, with port authorities fretting the company will not be able to pay its bills. Analysts say Hanjin’s cashflow management has been problematic, but caution that shipping companies worldwide are vulnerable to the same conditions of oversupply and low trade volumes.
Nearly 80 percent of goods and commodities traded globally are transported by sea.
