Hanjin Shipping

Hanjin Shipping was a South Korean logistics and maritime transport company that became one of the largest container carriers in the world before collapsing in 2016–2017. It was associated with Hanjin Group, the South Korean conglomerate whose transportation interests also included Korean Air and other logistics businesses. The company’s activities covered scheduled container shipping, bulk transport, terminal operations, and related ocean-freight services. The wider Hanjin business originated in transportation work established by Cho Choong-hoon in 1945. Its early operations used trucks in the port city of Incheon and included contracts supporting the United States military in Korea and Vietnam. Hanjin entered containerized shipping in 1969 through an agreement with Sea-Land Service and opened its first container yard at Busan in 1970. During the 1970s and 1980s, it expanded its port and cargo activities internationally, including contracts and operations in the Middle East and North America. Hanjin Shipping was established as a distinct shipping business in 1977. Over time, it developed a worldwide network of liner and tramp services, transporting containers, raw materials, energy products, and other cargo. Its operations included container vessels, bulk carriers, liquefied-natural-gas carriers, very large crude carriers, inland and port logistics, and a network of terminals and overseas offices. The company handled approximately 3.7 million twenty-foot equivalent units of container cargo annually during its later operating period and transported more than 100 million tons of cargo across its services, according to descriptions of its pre-collapse operations. The company expanded during a period when container demand and freight rates appeared favorable. From 2008 onward, it ordered a large number of new ships, with planned capacity reportedly reaching about 250,000 TEU. The global financial crisis then weakened demand and freight rates. Hanjin reduced its orders, but ships delivered between 2010 and 2013 contributed to a sharp rise in debt. As the container market remained under pressure, the company relied substantially on chartered tonnage and faced increasing difficulty matching its financial obligations with operating income. In 2014, Korean Air acquired a 33.2 percent stake in Hanjin Shipping as part of an effort to provide liquidity. This support did not resolve the underlying financial problems. In April 2016, Hanjin sought creditor-led debt restructuring. Creditors later rejected the funding and restructuring plan proposed by the Hanjin side, judging it insufficient. On 31 August 2016, Hanjin filed for receivership with the Seoul Central District Court and requested protection for its assets. The filing quickly created operational problems because ports, terminal operators, suppliers, and other service providers were uncertain whether they would be paid. Hanjin subsequently sought protection under United States bankruptcy law so that its vessels could continue docking without immediate seizure by creditors. Ships and containers were nevertheless stranded at ports and in transit around the world. Retailers, manufacturers, smaller importers, and other businesses were affected because merchandise and equipment remained inaccessible during a crucial period preceding major year-end shopping seasons. The disruption exposed the interdependence of modern supply chains and became a prominent case study in the consequences of a large carrier insolvency. South Korean courts declared Hanjin Shipping bankrupt on 17 February 2017. Its assets and operating infrastructure were then liquidated or sold. SM Line acquired several former Hanjin vessels and purchased terminals in Gwangyang and Incheon. A bankruptcy trustee later reported that only approximately US$220 million had been collected from asset sales against reported total liabilities of about US$10.5 billion. Hanjin Shipping therefore ceased to exist as an independent…

Hanjin Shipping developed from the broader Hanjin transportation enterprise founded by Cho Choong-hoon in 1945. The original business began with a single truck in Incheon and built its early scale through military logistics contracts. It secured a major contract with the United States Eighth Army in 1956 and later supported United States armed forces operating in Vietnam. These activities established Hanjin’s experience in cargo handling, transport coordination, and port-centered logistics. The business entered containerized transport in November 1969 through an agreement with Sea-Land Service. In September 1970, it opened its first container yard at Busan, marking an important transition from conventional trucking and cargo work toward integrated intermodal and maritime operations. Hanjin expanded its international footprint during the late 1970s and early 1980s, obtaining contracts connected with ports in Kuwait and Saudi Arabia. Hanjin Shipping was established in 1977 as the group’s dedicated shipping company. During subsequent decades, Hanjin built a global network of container routes, bulk services, port terminals, and overseas offices. In 1992, its joint venture Total Terminals International began handling cargo at the ports of Long Beach and Seattle. Hanjin’s fleet eventually included container ships as well as bulk, LNG, and very large crude carriers. Its terminal portfolio extended across South Korea, the United States, Japan, Spain, Taiwan, Vietnam, and Belgium. The company also operated liner and tramp services, allowing it to serve both scheduled container markets and contract-based cargo movements. Leadership of the shipping business changed within the Hanjin family after Cho Choong-hoon died in 2002. His third son, Cho Soo-ho, received responsibility for Hanjin Shipping, while Cho Yang-ho inherited Korean Air. Cho Soo-ho died of lung cancer in 2006, and his widow, Choi Eun-young, became chairwoman the following year. Hanjin expanded its vessel capacity before and during the global financial crisis. With container rates rising before the recession, it ordered ships representing approximately 250,000 TEU of additional capacity from 2008 onward. Demand and rates then deteriorated sharply. Although the company reduced its orders, seven ships were delivered between 2010 and 2013, and the resulting financing burden helped drive debt to approximately US$8 billion. The company later operated with a substantial share of chartered vessels, increasing its exposure to market conditions and fixed contractual costs. In June 2014, Korean Air acquired 33.2 percent of Hanjin Shipping to provide additional liquidity. The investment did not prevent continuing losses as container rates remained weak. By August 2016, Hanjin owned only about 44 percent of the container fleet it operated, with the balance chartered. In April 2016, the company asked creditors to support a debt-restructuring program. Creditors eventually withdrew their backing after determining that the proposed contribution from Hanjin Group was inadequate. Hanjin filed for receivership at the Seoul Central District Court on 31 August 2016 and asked the court to freeze its assets. The filing immediately disrupted normal maritime operations. Creditors attempted to seize assets, while ports, terminal operators, tug companies, and other suppliers hesitated to service Hanjin vessels because they lacked assurance of payment. On 2 September 2016, Hanjin filed in United States bankruptcy court in Newark, seeking protection that would allow its ships to dock without immediate confiscation. The insolvency became an international supply-chain event. Cargo and containers were stranded at ports and on vessels, and some businesses could not obtain inventory needed for seasonal retail demand. The disruption affected large multinational companies but was particularly damaging to smaller importers with less financial capacity and fewer alternative sources of transport. Hanjin’s collapse demonstrated how the failure of one major carrier could affect manufacturers, retailers, freight forwarders, ports, and customers across multiple continents. A South Korean court declared Hanjin Shipping bankrupt on 17 February 2017. The company’s fleet, terminals, and other assets were subsequently liquidated or transferred. SM Line acquired five former Hanjin vessels in February 2017 and purchased terminals in Gwangyang and Incheon in March. A trustee later stated that asset sales had generated approximately US$220 million against reported total debt of US$10.5 billion. Hanjin Shipping’s failure remains one of the defining bankruptcies in container transport and contributed to broader industry attention on consolidation, capacity discipline, debt exposure, and supply-chain resilience.

• 2017

  Bankruptcy and liquidation

  [1]Hanjin Shippingen.wikipedia.org

  South Korean courts declared Hanjin Shipping bankrupt, after which its vessels, terminals, and other assets were sold or liquidated.

• 2016

  Receivership filing

  [1]Hanjin Shippingen.wikipedia.org

  Hanjin filed for receivership in South Korea after creditors rejected its restructuring and funding arrangements.

• 2014

  Korean Air investment

  [1]Hanjin Shippingen.wikipedia.org

  Korean Air acquired a 33.2 percent stake in Hanjin Shipping as part of a liquidity-support effort.

• 1992

  North American terminal expansion

  [1]Hanjin Shippingen.wikipedia.org

  The Total Terminals International joint venture began loading and unloading cargo at Long Beach and Seattle.

• 1977

  Hanjin Shipping established

  [1]Hanjin Shippingen.wikipedia.org

  Hanjin Shipping was formed as the group’s dedicated ocean-shipping company.

• 1970

  First Busan container yard

  [1]Hanjin Shippingen.wikipedia.org

  The company opened its first container yard at the Port of Busan.

• 1969

  Entry into container shipping

  [1]Hanjin Shippingen.wikipedia.org

  Hanjin entered containerized shipping through an agreement with Sea-Land Service.

• 1945

  Hanjin transportation business begins

  [1]Hanjin Shippingen.wikipedia.org

  Cho Choong-hoon started a transportation enterprise in Incheon with a single truck, laying the foundation for the wider Hanjin logistics group.

Global ocean-freight and logistics provider

• Maritime transport · 1969

  Container shipping

  Hanjin’s principal business was scheduled ocean container transport on international liner routes. The company operated container ships and transported approximately 3.7 million TEU annually during its later operating period. Its network linked major Asian, European, North American, and other global ports, and it also used chartered vessels to supplement its owned fleet.

• Maritime transport

  Bulk shipping

  The bulk division transported raw materials and other non-containerized cargo under contractual arrangements, including contracts of affreightment. Its fleet and services included vessels used for energy and industrial commodities, complementing Hanjin’s container liner operations.

• Maritime transport

  Energy shipping

  Hanjin operated or managed maritime services involving LNG, crude oil, chemicals, and related energy cargoes. The reported fleet included LNG carriers and very large crude carriers, giving the company exposure to specialized shipping markets beyond container transport.

• Port logistics · 1970

  Terminal operations

  Hanjin owned or operated container terminals and cargo-handling facilities in several countries. Its terminal network included facilities in South Korea, the United States, Japan, Spain, Taiwan, Vietnam, and Belgium, supporting the company’s ocean routes and broader logistics activities.

• 2016

  Debt restructuring requestStrategy

  Background

  Persistent freight-rate weakness, losses, debt, and reliance on chartered capacity placed pressure on Hanjin’s balance sheet.

  Action taken

  Hanjin asked its creditors to support a debt-restructuring program intended to avoid formal insolvency.

  Aftermath

  Creditors withdrew support after finding the proposed Hanjin funding plan inadequate, leading to the receivership filing in August 2016.

  Source

• 2016

  Court receivership and asset protectionOther

  Background

  After creditor support ended, Hanjin faced the risk of vessel seizures and disruption of port services around the world.

  Action taken

  The company filed for receivership in South Korea on 31 August and sought United States bankruptcy-court protection on 2 September.

  Aftermath

  Some vessels were able to seek protection from immediate seizure, but cargo and containers were widely stranded and the company proceeded toward liquidation.

  Source

• 2014

  Korean Air acquires a minority stakeM&A

  Background

  Hanjin Shipping needed additional liquidity while container freight markets remained challenging.

  Action taken

  Korean Air acquired 33.2 percent of Hanjin Shipping.

  Aftermath

  The investment provided group-level support but did not prevent Hanjin’s subsequent restructuring attempt and insolvency.

  Source

• 2008

  Large-scale vessel expansionStrategy

  Background

  Container freight rates and demand had been favorable before the global financial crisis, encouraging Hanjin to plan substantial additions to its fleet.

  Action taken

  Hanjin ordered ships representing approximately 250,000 TEU of capacity, although it later reduced the order program after market conditions deteriorated.

  Aftermath

  Seven ships were delivered between 2010 and 2013, and the associated financing burden contributed to a major increase in company debt.

  Source

1. 1Hanjin Shippingen.wikipedia.org