Founded in 19771, Hanjin Shipping Company is the world’s seventh-largest container shipping company2. Throughout the years, they have operated about 141 ships, 97 for containers, and 44 bulk carriers. The Korean shipping company has made recent headlines when they announced that they were filing for bankruptcy. The ripple effects of the announcement were drastic. It brought some of Hanjin’s cargo-filled fleet of ships to an abrupt stop since ports blocked them from service, while other ships were seized. The announcement had many shippers scrambling to find or rebook their freight. The biggest effect of all has been the realization for many manufacturers and retailers that their supply chains are subjective to many forms of supply chain disruption.
Supply chains have so many moving parts that disruptions pose a significant risk. Hanjin Shipping Company shipped about 3% of the world’s cargo3. That may not seem like an impactful amount, but the bankruptcy announcement brought ships containing about 400,000 containers and $14 billion worth of goods to a halt. 8,300 shippers have been directly affected by the recent announcement. For instance, Samsung alone has had $38 million of merchandise stranded aboard the ships4. Hanjin is the first company to collapse under pressures of overcapacity, a slowing of global trade, and the production of larger post-panamax sized ships.
The sudden cease of movement for Hanjin ships has left a build up of cargo, specifically at the West Coast ports, which is creating bottlenecks and challenges at other ports, drayage operations, and truck yards. These challenges couldn’t come at a worse time as retailers are on the eve of the busiest shopping period of the year. A majority of shippers are stocking up on inventory to prepare for the holiday surges. Shippers will have to plan possible scenarios with alternate routes and be more nimble to all possible modes of transportation to continue to manage their inventory without supply chain disruption. They may also choose to forgo ocean transportation all together.
Many shippers are turning to their global logistics providers to help manage their international shipments during these troubling circumstances. Diversifying supply chains, diverting freight, and determining timing of hauls will be important as strategies continue to shift to avoid disruption. A sophisticated supply chain solutions provider can utilize advanced software to better predict and plan ahead for possible disruptions as opposed to having to react. They can help companies navigate through supply chain challenges by leveraging their expertise and relationships, allowing shippers to focus on other aspects of running their business successfully.
It could take several months for Hanjin and its effects to straighten out. In the meantime, it’ll be important for all stakeholders within a supply chain to continue to communicate and leverage opportunities through different modes and possible routes.