It is not uncommon for big business to go under, especially in the transportation sector with airlines and train companies struggling in the current economical climate.  However it is a lot more complicated when it involves the oceans as we are learning with the Hanjin bankruptcy.

With the festive season in sight, many retailers around the world and growing increasingly worried at the latest developments of one of the world’s larger shipping freight companies. The Hanjin shipping company is one of Korea’s biggest businesses, and was founded 1977. Nearly 40 years on and the Seoul based company’s failed attempts to raise the capital on their 5.5 billion dollar debt has caused them to file for bankruptcy, leaving employees and 400,000 containers stranded at sea.

hanjins-bankruptcy

All cargo companies have been hit due to decrease in international trade however none harder than Hanjin. Being such a competitive industry is one of the main reasons for their plight. But another key factor was their attempts at a government bailout were resisted after being successfully sued by them in 1999 for a massive $445 million evasion of tax.

The implications could be huge with expensive docking and unloading fees meaning Hanjin are reluctant to deliver to the 70 ports across 40 countries. Such a wide network causes huge complications with each country’s own laws coming into play. As their transport network spans the globe delivering to all major continents bar Africa and Antarctica, retailers, governments and porting staff are concerned about the effect. With the threat of creditors waiting to seize ships and its cargo, Hanjin shipping company have their fleet waiting in open water.

Almost one hundred ships have been affected, most having been already rejected at the ports. A judge in New Jersey has already ruled against creditors seizing the cargo from a recent shipments as it would cause a massive implications for the progression of trade.

With such a range of goods, bulk cargo, oil and natural gases being held it will not just be Hanjin feeling the effect. Most notably Samsung (Korea’s largest company and world’s biggest technology firm) have $38 million worth of goods being held and are desperate to get them to retailers with the festive countdown firmly on.

Startlingly crew members , unless they have a medical emergency, are legally not allowed to leave the ships so have to wait for a viable solution. With security guards enforcing this law their families are expressing concern, especially with monsoons being such a threat to their open water “home”.

Thanks to Hanjin’s sister company Korea air and Hanjin group’s chairman, baring the meddling of creditors, Hanjin have raised enough funds to deliver 90% of their ships cargo by the end of October. However they will then sell their ships or return leased ones to their owners.

The future is still unclear for the Hanjin shipping company, as it is never simple when such a big company fails but we will be sure to find out in the next few months. For more information included in a larger breakdown of what happened with check out this Hanjin bankruptcy guide.