Friday, September 23, 2016

Shipping: AP Moller-Maersk Break-up, Hanjin Breakdown

The Financial Times has the shipping news:

AP Moller-Maersk break-up will hang on family ties
When Danish businessman Maersk McKinney Moller was 94, he ordered a new yacht for delivery in two years’ time.

It was typical of the long-term view that Moller, who died aged 98 in 2012, took in both his personal and business life. He spent more than 50 years helping to build AP Moller-Maersk into a conglomerate — spanning the world’s biggest container shipping line, oil exploration, drilling rigs and port terminals. 

Since the death of Moller — who was at various times chief executive, chairman and head of the main shareholder at Maersk — the influence of his family has seemed to wane.
But, as the group takes its biggest strategic decision in decades — to break itself up — there are growing signs of the founding family reasserting control over Denmark’s biggest company by revenue. 

“The family were pretty quiet for a few years,” says one senior Maersk manager. “But now we feel their influence much more.”

That influence has played out in Thursday’s move to split Maersk in two: a new transport and logistics business that will form the core of the company, and an energy unit that could be spun off, sold, or used for joint ventures.

And from the FT's flagship Alphaville blog (see what I did there?):

Hanjin could be “the 100­year flood in the container industry”
Admiralty law is old, fun and messy.
From CreditSights:
The order of claim seniority is cargo, crew, supplier, mortgage holder. What is unique is a claim against a company or vessel can be enforced against a different asset or bank account. This allows creditors greater scope but also can generate a blizzard of litigation.
In a typical but very simplified case: 1) a mortgage holder receives a judgment in local court for non payment; 2) checks to see where any debtor vessels are steaming; 3) goes to that port with a lawyer and replacement crew; 4) court accepts the judgment; 5) port sheriff, lawyer, and replacement crew “physically” arrest the vessel, pay off the existing crew, cover supplier claims, and deliver the cargo if the vessel is not empty. Problem is the mortgage holder now owns a ship, and that costs cash money every day. If the vessel is not marketable, there usually is an “as is” auction under port sheriff supervision.

And South Korea’s Hanjin Shipping — which filed for bankruptcy last month after assumed government support didn’t materialise — is rather more complicated than that simplified case.
As the FT said, “Hanjin’s move to seek bankruptcy protection last month was the first time a big container shipping line had done so for 30 years, and it caught out many in the industry....MORE