Hanjin to off-hire 38 charter vessels by 2017

The struggling South Korean shipping line plans to return 20 containerships and 18 bulk vessels when their charters expire this year and next as the latest step in its cost cutting and restructuring efforts.    Hanjin Shipping plans to off-hire a total of 38 chartered vessels when their agreements expire this year and in 2017 as part of an ongoing cost cutting and restructuring effort.
   The struggling South Korean shipping line has in recent months been attempting to renegotiate charter rates with shipowners, but has thus far been unsuccessful in doing so. As a result, Hanjin intends to return 20 containerships and 18 bulk vessels in the next year and a half.
   Gerry Wang, chief executive of containership lessor Seaspan, for example, said in a recent interview the South Korean government needs to do more to help Hanjin in its recovery shortly after refusing to grant the carrier any reduction in charter rates.
   “We do not accept any rate cut,” Wang said in an interview with Bloomberg. “We have never done it. We won’t tolerate a contract re-negotiation. Any call for rate cut is illegal by international laws.” 
   Wang indicated his company would rather cancel the charters for the seven 10,010-TEU ships currently contracted to Hanjin through 2024 and 2025 and take back the vessels than accept any rate cut. Those contracts run for 10 years on fixed rates of $43,000 per day.
   Hanjin currently operates 47 chartered containerships and is still in negotiations with other owners in an attempt to reduce fees by around 30 percent as required by its primary creditor, state-owned Korea Development Bank (KDB), as part of the company’s financial restructuring.
   The company has not indicated which specific ships might be returned, or whether they would be replaced in their respective trades with other vessels of a similar capacity, which could have an effect on shared loops operated with other carriers.
   Hanjin is presently a member of the CKYHE Alliance, along with COSCO, “K” Line, Yang Ming and Evergreen, on the major east-west trades, but is set to join a new grouping called THE Alliance when the CKYHE agreement expires at the end of the year. THE Alliance will include current G6 Alliance members Hapag-Lloyd, Mitsui O.S.K. Line (MOL) and Nippon Yusen Kaisha (NYK), as well as “K” Line and Yang Ming from the CKYHE.