Korean truckers end strike – but supply chains remain seriously disrupted
Following an eight-day strike, South Korean truckers went back to work today after hammering out ...
All the talk at the World Ocean Forum (WOF) this week in South Korea is of its two major companies that are both struggling.
As the event starts in Busan, the country is striving to repair the damage from the collapse of its biggest shipping line (and the severe downturn in its shipbuilding business), while hi-tech manufacturer Samsung is also having a tough time.
Samsung yesterday announced it would be “adjusting” the production schedule of its over-heating Galaxy Note 7 smartphone, after users of replacements reported they were catching fire too.
The news will have ramifications both for the intra-Asian supply chain as well as the country’s transpacific trade.
Samsung has also suffered from its compatriot’s demise, being a big supporter of Hanjin and reportedly shipping up to 40% of its exports with the carrier.
Hanjin Shipping-operated vessels remain stranded around the world more than 40 days after the carrier entered court receivership on 31 August. But sources in Korea believe the government still might step in to save the business.
Shippers have millions of dollars’ worth of freight held hostage in a maritime stand-off with Hanjin’s bunker, container leasing and other service provider creditors. And the timing for retailers – just ahead of the all-important holiday season sales – just couldn’t be worse.
Hanjin containers are locked in messy lien claims in terminals and depots around the world, with shippers being asked to pay exorbitant amounts to retrieve and reposition their cargo.
It is perhaps unsurprising that creditors are trying to squeeze as much out of the carrier’s counterparties as possible by holding Hanjin assets gainst the daunting prospect of an eventual 10 cents in the dollar settlement from liquidators, perhaps years down the line.
Many of the dubious liens placed on Hanjin boxes by creditors are based on the age-old premise of “possession being nine tenths of the law”. This provides the unpaid companies with short-term comfort and hope of mitigating losses from an inevitable unpalatable balance sheet write-off.
But despite the embarrassing meltdown of its leading shipping line being played out on the world stage, there is a surprising optimism among the Korean shipping fraternity in Busan about Hanjin’s future.
One WOF delegate told The Loadstar today, on the sidelines of the conference, he was still convinced that the government would rescue the beleaguered shipping line. His view is that “it is not too late” to force the state-owned Korea Development Bank to u-turn and provide financial support and guarantees for Hanjin, whose imposing sky tower headquarters dominates the Busan waterfront.
He may have been influenced by noises from Korea’s main political opposition party, which has demanded some action from the government to support Hanjin.
Park Yong-jin, of the Minjoo Party, has accused the government and Korea Development Bank of having “turned a blind eye to Hanjin Shipping’s court receivership, even when they could expect massive economic damage and a loss of national wealth”.