Things Get Worse for Hanjin
That’s what Seaspan called Hanjin Shipping Co.’s request for a cut in charter rates on the ships it leases from the container ship leasing company.
“We do not accept any rate cut,” [Gerry Wang, Seaspan’s chief executive officer] said in a phone interview Thursday. “We have never done it. We won’t tolerate a contract re-negotiation. Any call for rate cut is illegal by international laws.”
This is a painful response for Hanjin, South Korea’s biggest carrier, to hear in response to its attempts to lower charter rates by around 30 percent.
Hanjin is trying to avoid being placed under court receivership. While Hyundai Merchant Marine (HMM), South Korea’s other large international shipping carrier, managed deals to swap debt for stock and lower its container ship charter rates to stay out of receivership, Hanjin has not yet found similar success.
These painful words from Seaspan saying that it not only won’t re-negotiate its charter contract with Hanjin, but even the call for such rate cuts is illegal makes the possibility of Hanjin being pushed into a merger with HMM even more likely.
There could, however, be a little bit of sunshine poking through the clouds that dampen Hanjin’s future.
According to Hellenic Shipping News, “Industry sources believe that Wang made tough remarks in order to have advantage over the negotiations.”
That would mean negotiations between Hanjin and Seaspan are not as dead as Wang’s words make them sound.
In fact, there may be another way Hanjin could lower its costs on ships it leases from Seaspan. According to the Bloomberg article:
The Hong Kong-based ship lessor could instead consider ordering new, fuel-efficient vessels from a South Korean shipyard and leasing them to Hanjin Shipping, helping improve the liner’s competitiveness, said Gerry Wang, Seaspan’s chief executive officer.
That alone would not be enough to save the floundering carrier. Hanjin is expected to end up in court receivership.
Of course, getting bailed out at the last moment is not out of the question. HMM did manage to keep afloat after it initially failed to produce lower charter rates in its negotiation with ship lessors. By all accounts that company was expected to go into receivership too. Perhaps a similar turn of events could happen for Hanjin.