Financial Risk Example: Hanjin Shipping Insolvency
Hanjin Shipping Co., Ltd. was a shipping company based out of South Korea. One of the world’s top ten container carriers, Hanjin transported approximately 3.7 million containers a year.
In 2016, it was revealed that Hanjin was suffering a financial breakdown. Ships were seized, and those that docked at ports weren’t unloaded because service providers didn’t know if they would be paid. After debt restructuring, asset freezing and asset confiscation, Hanjin announced office shutdowns, employee layoffs and the dismantling of their service network. In 2017, they were declared bankrupt and liquidated.
To this day, Hanjin Shipping is the most significant bankruptcy in the container transport industry—millions of dollars in revenue were lost due to inventory being stuck at sea.