The downfall of Hanjin not only surprised a number of folks in the shipping industry, but also resulted in big shipment delays. As the now bankrupted container operator looks to offload remaining containers by the end of this month, we asked social media friends if they know the financial situation of their shipping partners.
Financial Status of Partners Remains a Mystery
Our unscientific survey found that over half of the respondents did not know the financial status of their shipping partners while 33% indicated they knew and 9% cited uncooperative partners.
Commenting on our survey on LinkedIn, industry expert, Jason Kearney questioned the ability to truly determine the financial health of shipping companies, “How can the true financial health of private shipping companies such as Mediterranean Shipping Company be assessed? Also, are financial health reports for OOCL and UASC credible? These being sample highlighted company examples.”
Indeed, social media and other media is awashed with questions of who’s next to fall in the shipping industry. Like Mr. Kearney points out, it’s not so simple but when determining one’s supply chain partners, it is imperative to know.
It Pays to Be Informed
Incorporating supplier financial risk management into your risk management plan is usually a given. But, as Pierre Mitchell of Spend Matters writes in a recent article, “supplier financial risk management only goes so far. It does provide an ‘assurance of supplier,’ but it doesn’t necessarily protect your assurance of supply from that supplier.” Even though, Mr. Mitchell’s focus in the article is more on manufacturing suppliers and procurement, the same concept can be used within the shipping community.
What can one do to avoid another “Hanjin”? Besides establishing and regularly reviewing a supply chain risk plan, it's important to communicate on a regular basis with all of your supply chain partners, end-to-end. While you may know the particular shipping alliance that is managing and booking your freight, it pays to find out exactly who is moving it. This is where true visibility comes into play. Technology is playing a bigger role. Use it to help mitigate risks.
How “Healthy” are the Container Vessel Operators?
We have introduced a series of blog posts in which we take a look at each container vessel operator. We’ll review financials, their pain points and their strong points but most importantly, we look forward to hearing your thoughts as well.