A Federal Maritime Commission said that Hanjin’s 2016 bankruptcy negatively disrupted the entire maritime industry.
The fallout resulting from last year’s of South Korean container transport company Hanjin Shipping was a “debacle” that must never happen again, Federal Maritime Commissioner William P. Doyle said as part of larger comments regarding the so-called “THE Alliance” seeking authority to form a contingency plan to protect itself against the possibility of one member becoming financially insolvent.
“The August 2016 collapse of Hanjin Shipping was a wake-up call for the entire ocean transportation and logistics chain. Over $14 billion worth of cargo was stranded at sea on 100 ships scattered around the globe,” Doyle said in his written comments,” which were published in the Maritime Commission’s website Aug. 11.
“It is so important that another Hanjin debacle does not happen again,” he said. “Companies may fail, but the responsibility lies with everyone, at least to the extent that we do not have the damage that occurred post-Hanjin.”
“Looking back, things could have been done differently. Looking forward, things must be done differently. We need safeguards, and THE Alliance is heading in this important direction,” he said.
THE Alliance, announced in May 2016, is composed of Hapag-Lloyd of Germany; Taiwan’s Yang Ming; and three Japanese carriers: “K” Line, MOL and NYK. Initial plans also include Hanjin Shipping, before it filed for insolvency that August. The carriers have said its services will call over 75 ports in the Far East, North Europe, the Mediterranean, the U.S., Canada, Mexico, Central America, the Caribbean, the Indian subcontinent and the Middle East.
In its amendment, which was filed with the FMC on Aug. 7, THE Alliance said it’s seeking authority to create and manage a contingency fund that would protect it if one of its members experiences severe financial difficulties or goes bankrupt.
In his comments, Doyle said he was studying the proposed amendment, but gave no timeframe regarding when a decision to approve might or not might come. He did indicate, however, that some type of safeguards are needed.
He made the point that Hanjin’s bankruptcy managed to roil the entire industry, in large part because at the time, Hanjin was a member of the CKYHE alliance, which also included China COSCO, “K” Line, Yang Ming Marine Transport Corp. and Evergreen Marine Corp.
“I firmly believe that if a carrier joins an alliance, it is the responsibility of the alliance members to ensure the cargo gets to where it needs to go,” he said. “Hanjin was carrying the cargo not only of Hanjin but of the other alliance members of CKYHE as well. Everyone suffered in the ocean maritime transportation chain. So it is essential that all take responsibility.”
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