South Korea’s biggest shipping line has filed for bankruptcy protection

This isn't a big deal for trade generally, because there's huge overcapacity in shipping right now. Hanjin is only 7% of Korea's export shipping. But it's a huge deal for businesses with product stuck on Hanjin ships.[2] It's also a big deal as US retailers stock up for the Xmas shopping season. Spot container shipping prices just shot up. That won't last, but it may last through the Xmas runup.

The court in Korea will probably authorize funds to get the ships unloaded and get them to some storage location, but it's not clear when. That's the biggest headache. The shutdown is not being handled well.

Historically, big firms in Korea were protected by the government, and bailouts were common. That's declined, and attempts to put together some kind of rescue deal for Hanjin have already failed. There's no big reason to rescue Hanjin; Korea alone has excess shipping capacity.

[1] http://www.seatrade-maritime.com/news/americas/hanjin-shippi... [2] https://theloadstar.co.uk/forwarders-dangerously-exposed-by-...

Baltic Dry Index crash has been spectacular, though it has recovered from its lowest point of 300.

http://www.zerohedge.com/sites/default/files/images/user5/im...

Freight forwarders (like Flexport) face big financial problems. They may have paid Hanjin already, but still have the responsibility of getting the containers to their destination at their expense. Maritime insurance won't pay for this; it's a financial problem, not an accident. Lloyds List quotes a freight forwarder in Australia: “There are bound (to) be freight forwarders with cargo on these vessels. F+++. I haven’t had one (of) these since the Nigerian crisis 40 years ago. F+++.”"

It's not clear if ship crews will ever be paid. There's concern about ships running out of food and fuel.

The bankruptcy court in Seoul has given Hanjin until November 25th to come up with a plan. Hanjin web site still says absolutely nothing about problems.

[1] http://www.tradewindsnews.com/legal/775929/us-filing-expecte...

7% of US trade, but is it hitting intra Asia trade worse?

To get economies of scale, you want big container vessels. Customers usually want a weekly vessel call to their port. It's impossible to fill the bigger container vessels on your own. Therefore there are various alliances, whereby multiple shipping companies combine their vessels and share their capacity. The amount of containers you can put on a vessel is then determined by how much of the capacity you bring in. Simple example: for a service with 7x 10.0000 TEU vessels, if Hanjin owns/supplies two of those 10.0000 TEU vessels, it'll 28.6% of the capacity on each of the 7 vessels. Then you have another benefit that by loading ("stowage") efficiently you might be able to fit more containers than usual.

Hanjin is part of the CKYHE shipping alliance. As such, on various (not all!) Hanjin vessels there's not just containers booked with Hanjin, but also from the other shipping companies. According to http://www.hellenicshippingnews.com/ckyhe-alliance-cooperati...: "CKYHE alliance members Cosco and Evergeen are set to move to the new Ocean Alliance with CMA CGM and Orient Overseas Container Line (OOCL) in April next year leaving just K-Line, Yang Ming Line and the financially struggling Hanjin Shipping."

After the financial crisis, it became really cheap to lend money. Various banks noticed that a slight profit was being made in shipping. As a result many new big container ships were built, mainly due to bad decisions within banks. There's now (again) a huge oversupply of capacity vs demand. This has a drastic effect on freight rates. E.g. http://www.wsj.com/articles/maersk-profit-drops-on-weak-frei... has this bit: "Maersk said average container freight rates for the second quarter were off 24% from a year earlier, while the oil price was down 26%."

Container shipping companies are often bailed out by countries. E.g. AlphaLiner had a bit (weekly newsletter, don't have a link) where COSCO got huge amount of money (IIRC 200 MUSD) from the Chinese government in 2015 to scrap vessels. This is the only reason they had a tiny profit in 2015. In 2016 the freight rates are drastically lower! Any company will need to do a crazy amount of cost saving, even though a lot of the costs have already been invested (if you bought containers & container vessels they're not suddenly become cheaper to run or to write-off). COSTCO lost 1.1 billion in the first 6 months of 2016 (http://www.chinadaily.com.cn/business/2016-08/27/content_266...), though they're likely also affected because they recently merged with another shipping company. Way more capacity than demand. In news articles this is often misinterpreted.

Future: If Hanjin goes bankrupt, their container vessels will still exist. These vessels will likely being purchased at a much lower price. To fill them, anyone purchasing these vessels will likely take advantage of the lower purchase price and offer even lower freight rates. I don't expect the supply and demand to change quickly.