Hanjin Bankruptcy and the Supply Chain

By Rich Weissman

September 15, 2016 at 7:06 AM

Line up 10 supply chain folks this morning and ask them their feeling on the recent Hanjin bankruptcy and the impact on their suppliers, and sadly I think you will get a blank look from half of them. The other half will be in a panic and rightly so. The collapse of the South Korean shipping giant has immediate and long-term ramifications on your supply chain. The problem is where those issues will manifest. Unless you have end-to-end supply chain visibility you may be up the proverbial creek without a paddle (metaphor acknowledged).  

The big boxes know exactly what is trapped in the containers on those ghost ships and how it will impact their retail customers, especially with the important holiday shopping rush on our doorstep. The smaller industrial customers have less insight. Certainly their direct purchases shipped via Hanjin can be identified, but the ones to their tier 2, tier 3 or tier x suppliers are a bit murkier. I have a feeling that many a shortage meeting will have a familiar refrain that the parts their supplier needs are stranded on an Hanjin ship with no idea of when, or if, it will be unloaded. Look for the word “Hanjin” to take on a whole new meaning, and not a positive one. 

Fortune Magazine had a recent article about the impact of the Hanjin bankruptcy. With thanks to them I will share some of the more glaring statistics: 

  • There is $14 billion in cargo on Hanjin ships that are not being allowed into ports globally.
  • There are 400,000 containers stranded on Hanjin ships.
  • There are 8,300 cargo owners involved.
  • Nearly 8% of the trans-Pacific trade volume for the U.S. market is carried by Hanjin.
  • Hanjin has 141 ships (97 container and 44 bulk carriers). More than half are blocked from docking and four have been seized as of September 11. 

For those who don’t pay much attention to logistics in their supply chain risk profile, here is a question: 

Where is your freight this morning?

Also see the My Purchasing Center article, Will Hanjin's Bankruptcy Cause Freight Rates to Rise?



Tags: purchasing logistics Risk management Supply chain management Procurement sourcing shipping
Category: Blog Post

Rich Weissman

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Endicott College Assistant Professor Rich Weissman teaches management courses for the School of Business and the Van Loan Graduate School. He is also the director of corporate education, which includes the Center for Leadership, Endicott’s management development institute. He is vice chair of the planning committee and also serves on the technology committee and the Institution Review Board.  A practitioner turned educator, Weissman has more than 25 years of experience in all facets of procurement and supply chain management. He has held positions with large business units of Fortune 500 companies, medium-sized contract manufacturing companies, small venture-backed Internet startup firms, and third-party procurement, consulting and strategic sourcing firms. 

Rich holds an M.S. in Management from Lesley University and a B.A. in Economics from Rutgers University. He is past president of the Purchasing Management Association of Boston and a recipient of the Harry J. Graham Memorial Award, the highest honor bestowed by the association.


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