FMC Commissioner Doyle wants container alliance safeguards for carrier bankruptcy

When the Korean Development Bank pulled support for Hanjin in August last year the line filed for insolvency within 24 hours leaving $14bn worth of cargo stranded around the world. “Yes, the warning signs were there that a potential collapse of Hanjin Line could occur. However, nobody really thought that South Korea would allow the world’s seventh largest carrier to go bust,” Doyle said a speech to the TPM Conference 2017 in Long Beach.

He said that government-supported companies such as Hanjin left a lot to be concerned about, and warned that similar scenarios continue to play out in terms of state backing in the global liner industry.

“We are seeing once again government financed entities stepping in to prop-up liner companies. These include the South Korean-supported Korea Shipping Company, Korea Development Bank, Export-Import Bank of Korea, and the Korea Asset Management Corporation,” Doyle stated.

“We are also reading about the National Development Bank of the Taiwan Government and Taiwan’s Ministry of Transport and Communication.”

He said that alliance members must ensure that cargo goes where it is meant to noting that only one third of the boxes onboard a containership may actually belong to the line operating it.

“We need safeguards. Upcoming new alliances should be jointly responsible for their partner lines. You get limited antitrust immunity to form alliances and you need to make sure the shipping public is treated fairly,” he said.

“The responsibility is to get the ship into port and get it unloaded, get the empties on board and get the ship back out to sea. The industry needs to investigate options such as insurance contracts or pooled funds to protect shippers from the fallout of a carrier collapse.”

THE Alliance, which starts operation on 1 April, is creating an emergency fund in the event of a Hanjin style bankruptcy among its members. Doyle has previously called on 2M and the Ocean Alliance to adopt a similar mechanism.

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