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The Hanjin crisis - cheap freight can prove very expensive for shippers

The Hanjin crisis - cheap freight can prove very expensive for shippers

Senior container line executives are hopeful that the collapse of Hanjin Shipping will show shippers that always trying to get the lowest possible rate can have major negative consequences.

“One aspect of this crisis (Hanjin) is on the shipper side that cheap is always very expensive,” Serge Corbal cfo of Neptune Orient Lines (NOL) said at the Marine Money Asia conference on Tuesday.

With some 400,000 containers stranded on ships and ports around the world many shippers are facing huge headaches in getting their cargoes. “This will get the shippers to reflect on the price they are paying… paying $200 for 25,000 miles of sea freight…is absurd,” he stated.

“This (Hanjin crisis) is the price of this. The price has to be paid.”

Spot rates on the transpacific trade, where Hanjin had a 7% market share have jumped by 50% since, the Korean line filed for receivership.

Orient Overseas Container Line (OOCL) deputy cfo Michael Fitzgerald, noted that when there is disruption companies look a bit more closely at what they are doing.

“For the next few months people will look more closely at the financial health of their counterparties, “ he said.

While Fitzgerald thinks this change in behavior is unlikely to last long-term he said it would be at the top of the minds of logistics managers for the next one – two years.

Read all the background to the Hanjin Shipping bankruptcy on our timeline

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