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Comment by pcurve | Hacker News Reader

I'm surprised there hasn't been more bankruptcy.

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...

There is a strong tradition of state intervention when bankruptcy in container shipping is likely. Both German and French lines have been saved by their respective governments.

Do you think South Korea will intervene ?

My guess would be that if they intended to do so they would have done it earlier.

I suspect they already are, just not on behalf of Hanjin.. Quoting:

"The Korean government said it wants Hanjin’s domestic rival, Hyundai Merchant Marine Co. , to buy healthy assets from the troubled company. It rejected the idea of a merger."

Translation: SK is going to shoot Hanjin in order to prop up Hyundai. I suspect as part of any "deal", Hanjin is going to wind up saddled with a bunch of bad contracts from Hyundai, too ...

That would be a smart move, at least politically if not economically.

People have been wary of large bailouts since 2008. The Chaebol family that owns Hanjin is especially unpopular in Korea, due to a widely publicized incident where one of their daughters threw a tantrum on board an international flight and made it return to the gate.

The President of South Korea cannot afford to make any move that would hurt her (already rather low) popularity rating. She needs to throw Hanjin under the bus if she wants her party to have a chance in next year's election.

Besides, the government is too busy trying to rescue the shipbuilding industry, which is worth much more to the Korean economy, to babysit a shipping company.

That will not be as easy as it may sound. The court (the appointed receivership) is obligated to ensure the best possible price for the assets, so Hyundai is likely to have to bid for the vessels in competition with other actors. What the government might do (a model used in the past) is to offer Hyundai support (guarantees) for the financing of the purchase, which might enable them to enter a winning bid at a de facto lower cost than the competition.

No. RoK chief financial regulator: “The government will let the company resolve its liquidity crisis on its own and handle the issue in accordance with ‘principles’ in case of failure.”

There have been negotiations underway for months. They broke down on August 30 because the parent Hanjin Group and key family members didn't want to put in enough of their own money, for fear of bringing down the entire group. If the parent wouldn't put in more money, neither would the banks or creditors.

Best overview of the resulting mess, from the BBC: [1] There are 540,000 containers stuck in transit. Hanjin runs some port facilities; those are shut down. Nobody is paying the seafarers stuck on ships. Empty Hanjin containers are piling up and Hanjin facilities aren't taking them back. (You pay $50-$100 a day until you return an empty.) The association of big US retailers is trying to get the US government to get the Korean government to do something to get things unstuck.

It's not clear what this means for Total Terminals Inc, which runs the biggest terminal in Los Angeles and another one in Seattle. TTI is a subsidiary of Hanjin Shipping Holdings Co. Ltd.

The last time a big shipping line went bust, it took six months to clear the backlog.

Hanjin's own web site still has no indication anything is wrong. They don't seem to have prepared for a shutdown. It looks like management assumed that somebody would step in and save the company. That didn't happen.

[1] http://www.bbc.com/news/business-37241727

>The last time a big shipping line went bust, it took six months to clear the backlog.

So I don't know a lot about accounting, but it sounds like the total costs of this backlog are likely to be far greater than the port fees?

If so, it seems like it would make sense for insurance to be structured such that it pays these fees now rather than having to pay out all the claims for late delivery later?

When did that occur?

There's been a ton of bankruptcies among dry bulk shippers, actually.

You're right, I stand corrected.

http://www.hellenicshippingnews.com/dry-bulk-shipping-under-...

Baltic Dry Index is for dry bulk not containers.

It's a general proxy for shipping industry price levels and general health.

Not restricted to Baltic Sea countries, the index provides "an assessment" of the price of moving the major raw materials by sea.

https://en.wikipedia.org/wiki/Baltic_Dry_Index

There is a freight-specific index, the HARPEX. It's not looking (or smelling) so good either:

http://www.harperpetersen.com/harpex/harpexVP.do

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