HANJIN

If freight volumes and rates don't come up were going to see more carrier failures on this side of the water too .

 

I had a very interesting conversation with someone who works at evergreen over the weekend. Seems Hanjin was only able to get $600/box from LPC to Asia. It costs $1,500 just in rail charges to get it to the West coast. They were trying to make it up on Asia back to US, but just wasn't able to get the rate high enough to cover the loss going from US to Asia.

 

Latest news is that Hanjin has received protection from bankruptcy court and has started offloading in Long Beach. Something like $14 billion in goods are "on the water" in their ships.

Freight rates for 40' containers from Asia to the west coast have actually gone down since 2000, when I first started booking freight for my business. This is due to over capacity. Too many ships being built, coupled with the South Korean government subsidizing that capacity. This is now coming to bite them in the derriere.

Expect rates to stabilize with the loss of Hanjin. There are hundreds of ships in mothballs anchored off Singapore, so new freight surges can be handled. I don't expect inbound shipping rates to spike for at least 10 years.