Hanjin Shipping: Slow-Steaming into Bankruptcy Causes and Effects

Abstract

Container shipping is vital to and a driving force behind global economic growth. One of the industry’s largest carriers collapsed in August 2016, an event of unprecedented magnitude and predicted to cause major disruptions for world trade. Hanjin Shipping was Korea’s main container shipping line and played an essential role for the country that is exceedingly dependent on seaborne trade. The carrier collapsed at a time when market conditions had gotten progressively worse and market participants believed that a bankruptcy would be imminent. The causes and effects of Hanjin Shipping’s demise were not only exceedingly complex but also highly debated. Thus, the purpose of this paper was to investigate the contributing factors to Hanjin Shipping’s insolvency and its effects. A qualitative case study was conducted by means of in-depth interviews with seven respondents with extensive knowledge of the container shipping industry. The findings suggest that Hanjin Shipping’s demise was a combination of a number of interdependent factors. The carrier’s managerial decisions played a decisive role in its collapse and can be traced back to its operational, investment and financial strategies. These decisions were implemented over the course of several years and were based on developments of the changing, external market conditions the carrier operated under. The actors closest to Hanjin Shipping, in particular its fellow alliance members and customers, as well as the international shipping industry did not suffer too severe consequences from the carrier’s bankruptcy, but the Korean economy at large has been affected more profoundly.