(Bloomberg) — Hanjin Shipping Co., South Korea’s largest container line that has put its Asia-U.S. business on sale after filing for bankruptcy protection late August, won approval from a court to wind down its European operations as demand for its services to the continent slumped.
The judge overseeing Hanjin’s receivership at the Seoul Central District Court approved the firm’s request, a court spokesman said. Hanjin will close all its 10 branches in Europe, including its regional headquarters in Germany, the container line’s spokeswoman said separately on Monday. The Seoul-based company expects to start the process as early as this week, she said.
The decision to shut down its Europe business is part of the breakup process of Hanjin kicked off by the Seoul court, which earlier said it would consider selling the company entirely. Hanjin is also seeking separate bids for its Asia-U.S. network as well as the investment in a terminal in Long Beach, California. The closure may benefit bigger rivals, such as A.P. Moeller-Maersk A/S and CMA CGM SA, as competition eases on one of the world’s biggest trade lanes.
“The biggest shipping lines will be the biggest gainers because they have the ability to move in much faster,” said Rahul Kapoor, a director at Drewry Financial Research Services Ltd. in Singapore. “The European lines like Maersk Line have already moved in to increase market share and they will continue to do so.”
Shares of Hanjin fell 12%, the biggest decline since Sept. 21, to close at 1,005 won in Seoul.
Hanjin had about 4.3% market share on the Asia-Europe trade last year, according to the company. It hauled 1.27 million 20-foot containers last year on the route, accounting for 27% of its total 4.62 million. The company’s representative declined to say how many employees Hanjin had at its Europe business, and how many of them would lose their jobs.
The court is receiving initial bids for the marketing network of Hanjin’s Asia-U.S. operations by the end of this week and expects to sign an agreement by mid-November in efforts to raise funds for the indebted company. The South Korean company is also in talks to sell its 54% stake in the Long Beach port container terminal .
The South Korean shipping company filed for court receivership as losses piled up after a global slowdown in trade and excess capacity depressed freight rates. Creditors decided to halt all financial support to Hanjin in August, causing its box carriers to be stranded at sea and disrupting the global supply chain ahead of the year-end holiday season. On the court’s advice, Hanjin has been returning vessels to owners as soon as they are unloaded.
Of the 97 container vessels it operated, unloading of cargo from 80 ships have been completed as of Oct. 23, according to Hanjin’s website.
Bloomberg News by Kyunghee Park