Korean Job Discussion Forums

[kberger]

http://www.koreatimesus.com/retailers-scramble-as-shipper-bankruptcy-puts-goods-in-limbo/

I would have thought that moving freight across the Pacific would be a good business to be in, with the US having such appetite for all the cool stuff made in Asia. I guess the problem is too many other people also thought it was a good business, which meant too many ships were built, which lowered the price they could get for moving goodies across the ocean. I see a lot of shippers are not doing so well.

This will get sorted out. Some ships will sit idle and companies operating the remaining ships will get back to being able to run profitably. It will be kind of messy until this happens.

[Redcap]

I tend to agree that things could get a lot more "messy" before they get better.

Hanjin Shipping has been trying to navigate through a sea of red ink for some time now..

With a skyrocketing debt to equity ratio in the last few years, combined with an overly saturated marketplace and ailing global economy, it's little surprise that the creditors' increasingly itchy fingers were ready to pull the trigger.

It's always interesting to see how deeply involved the Korean government will get in instances involving the chaebols. These conglomerates not only represent a source of employment for a lot of Koreans, but also an immense source of national pride. I think the government will undoubtedly toss a financial life preserver in the direction of Hanjin Shipping. The question is, how big ?

Let's not forget about poor old Hyundai Merchant Marine. While not on economic life support, they are also carrying an excessive debt to equity ratio. They will also come calling for similar economic relief should the government offer it to Hanjin Shipping. The government has to perform a bit of tight-rope act here.

There is also the question of the degree of involvement by the holding company. For the most part, they've been holding their cards close to their chest. They have some hard decisions to make.

In the meantime, Hanjin Shipping is going to have to stay its course of company restructuring and debt servicing. To this end, they will likely have to jettison assets as a source of capital to pay the bills.

Shares in Hanjin Shipping were up about 30% at the end of trading today - a tidy ROI for some of the bargain hunters who managed to get in and out quickly. We'll see if the greedy ones get burned tomorrow.