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"Red Alert" for Shipping Lines ???

Drewry has released a report announcing a "red alert" for shipping, stating that the risk of carrier failure is still high.

Drewry's Z-score carrier financial stress index sunk to its lowest ever point following the first-half 2016 results. The decline in the Z-score index has coincided with the heavy reduction in container freight rates that dropped to historical lows in the second-quarter.

After the collapse of Hanjin Shipping, creditors and shippers are demanding a higher transparency from carriers regarding their debts and balances.

Drewry's report stated: "There is still much work to be done to clean up the logistical chaos created by Hanjin's bankruptcy, but even so there are lessons from the sorry mess that need to be learned to avoid a repeat occurring.

"Firstly, all stakeholders must understand that no carrier is too big to fail. The hitherto expectation that some white knight would rescue an ailing carrier has been erased forever.

"Secondly, while Hanjin's financial position was at the extreme edges and its demise is not expected to create a domino effect, a number of major carriers are still struggling and the risk of another following the same path as the Korean line cannot be discounted.

"Knowing these things, any company doing business with ocean carriers must undertake more due diligence than was previously the case."

On October 6, 2016, Drewry released a report stating that the last three months of 2016 have been some of the worst the multipurpose and project carrier sector has endured in living memory.

Via Port Technology

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