Lessons from bankruptcy of Hanjin Shipping Company in chartering

Abstract

This paper aims to analyze the charter contract management of major container shipping companies in response to fluctuations in shipping market conditions in terms of contract duration using data of containerships between 2010 and 2016. Duration analysis was conducted to examine the relationship between charter duration and shipping market conditions. Moreover, this paper explores the causes of Hanjin Shipping Company's bankruptcy, drawing managerial implications. Test results from Cox PH (Proportional Hazard) model show that most container shipping companies in Europe having net earnings purchased large vessels instead of chartering vessels, while some ocean carriers featuring poor financial performance, in particular the Hanjin Shipping Company, chartered bigger ships with higher charter rates and longer duration. Contract charter rates and duration of Hanjin Shipping Company featured greater risk compared to competitors.

Determinants of cargo and eco-efficiencies of global container shipping companies

“…Although owned/chartered-in fleet ratio is crucial to a CSC (Magirou et al , 1992), this study finds out TYPE is not significantly related to cargo and eco-efficiencies, showing that owned/chartered-in fleet ratio has no impact on both dimensions of efficiency. This may be owned/chartered-in fleet ratio does not directly impact on the efficiencies because it depends on other factors such as the CSCs' strategies (Huang et al , 2017) or their charter duration (Shin et al , 2019). Some CSCs prefer owning ships, while others prefer chartering ships (Huang et al , 2017), for example, larger CSCs prefer owning their vessels to hiring ships from the charterers to prevent risks in tight periods (Shin et al , 2019).…”

“…This may be owned/chartered-in fleet ratio does not directly impact on the efficiencies because it depends on other factors such as the CSCs' strategies (Huang et al , 2017) or their charter duration (Shin et al , 2019). Some CSCs prefer owning ships, while others prefer chartering ships (Huang et al , 2017), for example, larger CSCs prefer owning their vessels to hiring ships from the charterers to prevent risks in tight periods (Shin et al , 2019).…”

Legal Disputes under Time Charter in Connection with the Stranding of the MV Ever Given

“…Pedersen and Zhang [10] provided simple expressions involving the structural dimensions and building material of ships, showing that the density distribution for collision and grounding damage normalized by the main dimensions of the ship depends on the size of the ship-a larger ship has a higher probability of greater relative grounding damage length than a smaller ship. Shin et al [31] explored why most container shipping companies in Europe with positive earnings purchase large vessels instead of chartering vessels, while some ocean carriers with poor financial performance (negative earnings), such as the Hanjin Shipping Company, instead charter larger ships, with higher charter rates and longer durations.…”

“…However, in the time policy of the MIA, the privacy of the insured (which is a condition of the insurer's immunity from liability for reasons of unseaworthiness) is a concept in common law, which means that the insured is aware not only of the cause of the ship's unseaworthiness but also that the ship will not be able to withstand ordinary marine perils due to that cause. In other words, the insured's privacy is a concept that includes the insured's positive knowledge of the ship's unseaworthiness as well as the insured's act of turning a blind eye to the ship's unseaworthiness, or not taking action to secure the ship's seaworthiness despite knowing that it may be unseaworthy [31]. Therefore, the time charterer Evergreen must verify that due diligence was exercised to ensure the Ever Given's seaworthiness with the shipowner and ship management company at the beginning of the voyage, and share the information.…”

Short Sea Shipping on the West Coast of Korea: Keys to Activating the Shipping Industry in Preparation for Korea Unification Era

“…It is difficult to find a positive outlook for the global shipping industry in the near future, and the domestic shipping industry is facing difficulties as well. It is evaluated that Hanjin Shipping, the world's seventh largest container shipping company, has lost its competitiveness in domestic shipping industry (Shin et al 2019).…”