Two Taiwanese container shippers have implemented contingencies to minimize disruptions for their clients in the wake of the bankruptcy of South Korea’s Hanjin Shipping Co.
Yang Ming Marine Transport Corp (陽明海運) and Evergreen Marine Corp (長榮海運) were forced to find alternative freight arrangements because they are members of CYKHE Alliance, which also comprises China Ocean Shipping (Group) Co (中遠集團) of China, Japan’s Kawasaki Kisen Kaisha Ltd — known as the “K” Line — and Hanjin Shipping.
Financially distressed Hanjin has left dozens of ships carrying cargo worth as much as US$14 billion stranded due to their inability to pay docking, storage and unloading bills, and to elude seizure by creditors, South Korea’s Chosun Ilbo reported last week.
Yang Ming said in a statement on Wednesday that the company would prioritize recovering cargo seized by Singapore port authorities due to Hanjin’s inability to pay docking and other logistics fees.
The company said it would also furnish shipping capacity of 20,000 to 30,000 containers next week with other shippers in China, Hong Kong, Japan and Singapore to capture sales opportunities as clients reroute freight orders.
While these measure would inevitably affect the company’s earnings in the short term, Yang Ming said that it remains focused on maintaining long-term relations with its clients.
In addition, the current quarter is the high season for electronics, clothing and other goods, with most major routes running at about 90 percent capacity, Yang Ming said.
Evergreen on Saturday last week said that it had allocated two vessels to ship cargo on Hanjin’s behalf and that it is ready to charter more capacity to meet its clients’ needs.
Yang Ming and Evergreen have also set up Web sites for clients to access up-to-date information on vessels’ locations, status, substitute services, as well as local contacts.
The ocean freight sector has been tormented by falling freight rates amid a glut of shipping capacity, driving some companies to form alliances.
Alliance members have highly structured vessel and slot-sharing agreements aimed at consolidating resources and reducing costs by avoiding redundancy.
However, disruption at one partner affects the entire organization.
Yang Ming’s aggregate sales in the first eight months of this year dipped 14.61 percent annually to NT$74.3 billion (US$2.345 billion), while Evergreen Marine’s declined 14.59 percent to NT$79.05 billion over the same period, according to filings with the Taiwan Stock Exchange.
The two companies might see better sales for the remainder of the year, as freight rates on some routes where Hanjin operates have surged.
However, it remains to be seen whether a gain in freight rates alone could trigger a sustained recovery in the industry, analysts said.
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