As might be expected, the Hanjin bankruptcy debacle has impacted many ports and logistics firms quite significantly and it has caused havoc to a wide spectrum of shippers and their supply chains.  Whether it is electronics products being stranded on a vessel or automotive products coming off an assembly line in Asia and bound for Europe or North America, shipper supply chain risk management is experiencing high-focus from very senior corporate management.

The article from Lloyds Loading List below speaks to how some shippers are dealing with these disruptions.  Given the over-capacity in the ocean carrier space is allowing for a fair bit of flexibility for diverted cargo shipments to other carriers.  While most shippers are switching future shipments to other ocean carriers, some shippers whose supply chains have been impacted more severely have chosen to find faster logistics solutions for some kinds of products including via air cargo.  Other shippers have explored using all rail routes to Europe.

We’re seeing some but limited use of replacement-mode air cargo, and we believe that some companies are using the opportunity to consider back-up strategies, circumstance-specific transportation alternatives including some specialized use of air cargo.   It’s interesting how sometimes it takes unannounced challenges to force new solution strategies.  We’ll keep an eye on the use of air cargo in this regard and report back with some examples later.

From the September 21 Lloyd Loading List:

Hanjin customers that have suffered delays due to the container line’s bankruptcy are now seeking alternative shipment modes into European markets to ensure key products are in stores ahead of the holiday season, according to leading forwarders.

Forwarders reported that the preferred option for shippers trying to expedite shipments to Europe while also limiting transport costs is rail. However, air freight solutions are expected to become more prominent the longer cargo is stranded in Hanjin’s network as the countdown to the Christmas sales season begins.

A spokesperson for DHL Global Forwarding said: “In view of the current situation, we are seeing higher demand for rail services to Europe. We are also receiving more enquiries in Europe for rail deliveries to Asia, especially Korea.”

DB Schenker also reports growing demand for accelerated shipments resulting from Hanjin’s bankruptcy and the subsequent supply chain chaos that has followed.

“Some leading electronics customers face serious challenges to get time-critical supplies to Europe,” a DB Schenker spokesman said. “From the corporate side, we have counted three major customers asking for rail as a substitution for ocean to avoid air shipments.”

He said the rising number of corporate rail enquiries was being replicated across DB Schenker’s country offices. “Meanwhile, we are working diligently to take possession of all of our customers’ Hanjin shipments as they arrive and become available at destination, or as they are awaiting vessels at origin ports,” he added. “It is our first priority to minimize the impact to our customers.”

Ashley Cruz, procurement research analyst at market research firm IBISWorld, said the inability to retrieve cargo from stranded Hanjin ships had sent retailers and forwarders into a spin.

In the aftermath of Hanjin’s receivership filing, which left as many as 500,000 containers of cargo stranded offshore, she said freight forwarders were scrambling to reorganize and redirect the rail, air freight and trucking services that were supposed to follow the docking and unloading of Hanjin ships.

“Forwarders have also been rushing to arrange alternative transport routes for cargo that was due to be carried on Hanjin ships,” she added. “Most freight forwarders are seeking other deep sea cargo carriers, in spite of the substantial spot price spikes that have occurred during the past few weeks and could potentially last for months.

“However, some forwarders are also looking to international air cargo transportation services as a substitute for ocean shipping in order to avoid further delays. Although air freight prices are measured by cargo weight rather than size, making heavy goods extremely expensive to ship, some manufacturers, distributors and retailers may benefit from this alternative until the deep sea cargo transportation market stabilizes.”

A number of airlines have already reported an upsurge in demand out of Asia post-Hanjin and many others have capacity on standby. Korean Air, a shareholder in Hanjin Shipping, has also reportedly laid on extra freighters to help out Korean exporters including Samsung. However, a spokesperson for the carrier refused to confirm the reports.

But although there will be some switch to alternative modes, Swiss forwarder Panalpina believes it will be minimal, at least in terms of volumes. A spokesman predicted any modal shift in the short-term away from ocean would be limited, while the low-cost of ocean box services due to overcapacity across the global fleet would mean that alternative transport methods would always be up against tough competition both now and in the future.

He added: “Hanjin is not a strategic partner for us, and we have had only very small volumes with them. Where customers are affected, our local offices are in close contact with them to work out solutions on a case-by-case basis.”