It sounds like the critics of the Hanjin bankruptcy think the Korean government should have bailed them out like the US did the too big to fail banks in 2008:
A container terminal is shown above in Singapore, Sep. 3, containing seized cargo from Hanjin Shipping. Analysts say that Hanjin’s court receivership could be just the tip of the iceberg for the shipping industry as the long-running global economic downturn has left it drowning in excess capacity. / AFP-Yonhap
Hanjin Shipping’s filing for court receivership is inflicting far larger-than-expected negative impacts both at home and abroad as major routes for trade are being suspended.
The government and creditors are facing growing criticism that they are responsible for having thrown global ports and traders into confusion.
About half of Hanjin’s fleet is stuck in ports around the world as the authorities there fear the shipper whose assets have been frozen is unable to pay fees.
The government will not be able to avoid criticism for underestimating the fallout of the bankruptcy of the world’s seventh largest shipper.
It is still pondering over contingency plans to contain the backlash, creating a task force to ensure there are no delays in the flow of cargo.
The Ministry of Oceans and Fisheries will lead the task force along made up of ranking officials from nine related ministries and agencies.
“The government will make sure that the fallout from Hanjin Shipping doesn’t lead to chaos in logistics or a transmission to the real economy including exports,” said Oceans and Fisheries Minister Kim Young-suk, after an emergency meeting held Sunday.
“We will closely cooperate to support damaged industries, taking all possible policy measures,” he said.
However, officials from the shipping industry criticize the government for allowing the shipper to go bankrupt without having drawn up proper countermeasures.
The most urgent problem is that exports may fail to arrive at their final destination on time as 68 of Hanjin Shipping’s vessels are stranded at sea worldwide as of Sunday. [Korea Times]
You can read more at the link, but it is pretty amazing that a huge company like Hanjin has gone into bankruptcy. It seems like the simple answer is that another company buys Hanjin and then restarts operations with a fresh cash flow to pay the various port fees that are currently delaying shipping.
When a (big) company goes under, the assets do not vanish. They are sold to a new group of investors who (presumably) enter the business without repeating the mistakes of the previous company.
The previous managers who failed to manage and the previous investors who failed to insure accountability in management lose out… as they should.
Bailouts reward incompetence… sometimes even being considered income which bonuses are paid on.
Example: American car companies have continued producing uninspired mediocrity after their bailouts… while the same people who caused the need for a bailout are still in charge.
That all being said, it is in Korea’s best interest as a nation to resolve this to the benefit of all other foreign and domestic companies not at fault… such as customers and crew.
It would be proper for the Korean government to guarantee all port fees would be paid so that all shipped goods arrived on time. This would build confidence in Korea as an exporter and would likely be a small percent of the income generated by the shipped goods. This is a correct application of “sociialism” where government works for the good of everyone with wider and longer-term thinking… and even better if some of this can be recovered.
It may also be correct for Korea to pay for fuel and crew to return to Korea… as this likely maintains the value of the ships as well as provides the cheapest place for possible long-term anchorage… though a calculator is required to know the best course of action.
Once the action winds down, Hanjin should then be allowed to fail… with its assets sold off to pay back creditors… including the government which funded the proper end to the business to the satisfaction of customers and future customers throughout the world who will know that dealing with Korea and Korean companies is low-risk.
Flyingsword
8 years ago
Hell no. Don’t reward bad behavior. The market will self correct and it will be fine. In reality some back room corrupt deal will be struck with the required white envelopes of cash….
Smokes
8 years ago
Most of my views on this have been addressed above, unless you’re a part of critical infrastructure government should stay hands-off. Even in those cases government’s role should be only that of zero-sum transitory oversight to maintain continuity of operation and to flush out all responsible for putting the company in that position to being with.
You can thank today’s pampered entertainment nation for bailouts.
The Korean government seems to have worked the Hanjin issue pretty well. They found three international ports that will provide legal protection to allow their ships to dock at and unload cargo. However, Hanjin is still responsible for fees:
Choi said the government has chosen the three offshore base ports as they will provide legal protection for Hanjin vessels which have faced seizure of vessels and decline of port leave and entry.
Hanjin has filed a petition for stay orders before a U.S. court and the result is expected to come out on Wednesday, while the authorities of Hamburg and Singapore are very supportive, noted Choi.
“The top priority is to help Hanjin ships have their freight safely offloaded in the port,” said the official.
For unpaid unloading fees, however, the vice minister said Hanjin has to take responsibility in the first place.
“The company and its major shareholders are responsible for the costs,” said Choi. “The government has no plan to provide payment guarantee or support fiscal injection, as it is a matter between the shipper and consignor.”
British artist Rebecca Moss went aboard the Hanjin Geneva container ship for a “23 Days at Sea Residency.” But the company that owns the ship went bankrupt on August 31, and ports all over the world have barred Hanjin’s ships because the shipping line is unable to pay the port and service fees.
The ship is now just sitting in the Pacific Ocean near Tokyo, and the captain has told everyone on board to conserve food and water.
The Vancouver Sun interviewed Moss about the situation.
“What’s it feel like to be on a ship with containers full of stuff with no place to go?”
“I change between emotions of amusement to anger and incredulity. It is a dumb situation. The fact that nobody is rushing to buy these containers off of us shows that they cannot be needed that desperately in Asia. In some ways they feel very valuable (surely some contain food?!) but apparently they are worthless. Some of the containers contain animal skins. What did they die for?”
You don’t need to click on the link, because that’s the entire article. Seems to me that a lot is missing, maybe the reporter’s USB stick was corrupted and that’s all he was able to save?
Anyways, someone owns or is expecting the cargo on board. Someone wants those furs that Ms. Moss mentioned, but they are unlikely to go bad if they are onboard a few days or even weeks longer. Her “23 Days at Sea” is probably how long it takes to cross from Seattle to Tokyo. Most cargo shipped in containers isn’t likely to spoil, and since there is no emergency, nothing is “desperately” needed. It’s just the usual stuff people want. Clothes, appliances, cars, etc.
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The Korean government should not bail out Hanjin.
When a (big) company goes under, the assets do not vanish. They are sold to a new group of investors who (presumably) enter the business without repeating the mistakes of the previous company.
The previous managers who failed to manage and the previous investors who failed to insure accountability in management lose out… as they should.
Bailouts reward incompetence… sometimes even being considered income which bonuses are paid on.
Example: American car companies have continued producing uninspired mediocrity after their bailouts… while the same people who caused the need for a bailout are still in charge.
That all being said, it is in Korea’s best interest as a nation to resolve this to the benefit of all other foreign and domestic companies not at fault… such as customers and crew.
It would be proper for the Korean government to guarantee all port fees would be paid so that all shipped goods arrived on time. This would build confidence in Korea as an exporter and would likely be a small percent of the income generated by the shipped goods. This is a correct application of “sociialism” where government works for the good of everyone with wider and longer-term thinking… and even better if some of this can be recovered.
It may also be correct for Korea to pay for fuel and crew to return to Korea… as this likely maintains the value of the ships as well as provides the cheapest place for possible long-term anchorage… though a calculator is required to know the best course of action.
Once the action winds down, Hanjin should then be allowed to fail… with its assets sold off to pay back creditors… including the government which funded the proper end to the business to the satisfaction of customers and future customers throughout the world who will know that dealing with Korea and Korean companies is low-risk.
Hell no. Don’t reward bad behavior. The market will self correct and it will be fine. In reality some back room corrupt deal will be struck with the required white envelopes of cash….
Most of my views on this have been addressed above, unless you’re a part of critical infrastructure government should stay hands-off. Even in those cases government’s role should be only that of zero-sum transitory oversight to maintain continuity of operation and to flush out all responsible for putting the company in that position to being with.
You can thank today’s pampered entertainment nation for bailouts.
The Korean government seems to have worked the Hanjin issue pretty well. They found three international ports that will provide legal protection to allow their ships to dock at and unload cargo. However, Hanjin is still responsible for fees:
A light (honestly, airheaded) article about an Artist stuck onboard the Hanjin Geneva:
https://boingboing.net/2016/09/07/artist-in-residence-stuck-on-b.html
You don’t need to click on the link, because that’s the entire article. Seems to me that a lot is missing, maybe the reporter’s USB stick was corrupted and that’s all he was able to save?
Anyways, someone owns or is expecting the cargo on board. Someone wants those furs that Ms. Moss mentioned, but they are unlikely to go bad if they are onboard a few days or even weeks longer. Her “23 Days at Sea” is probably how long it takes to cross from Seattle to Tokyo. Most cargo shipped in containers isn’t likely to spoil, and since there is no emergency, nothing is “desperately” needed. It’s just the usual stuff people want. Clothes, appliances, cars, etc.