Shipping Line Crisis Reveals Downside of Overseas Partnerships

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As the collapse of the world’s seventh-largest container shipper unfolds, Hanjin Shipping reminds manufacturers of the sobering reality of partnering with companies overseas. The inevitable lack of control that results in long-distance business relationships impacts every facet of your operations.

From quality to capacity, the potential for disruption in both your manufacturing process and your customers’ increases as the distance between firms spans to other continents. The ports affected by this global shipping disaster include those in the U.S., China, Singapore, Canada, and Germany, with dozens of Hanjin’s more than 500,000 containers clogging up ports and truck yards as the ships are denied access.

Ongoing Problems With Overseas Business and Shipping Lines

The bankruptcy of Korea’s major shipping line stems from an oversupply of ocean-shipping containers in the industry, a capacity that was growing faster than demand. More shipping lines could end up in financial trouble due to the imbalance in supply and demand, while an immediate outcome is a 50% spike in shipping rates between Asia and the U.S. Hanjin Shipping represents nearly 8% of the trans-Pacific trade volume for the U.S. market.

Another outcome of this crisis is the surcharges being imposed on importers and exporters who use Hanjin, adding an additional burden to already soaring costs. A total of approximately 95% of the world’s manufactured goods are carried on container ships, suggesting the possible reach of this crisis could be much bigger as the world watches long-term structural problems in the shipping industry surface.

It’s feared the ripple effects will spread further into the global economy, with a reported $14 billion worth of cargo stranded on Hanjin ships. While merchandise and product sit in containers on ships anchored outside of, or circling ports, companies face delayed orders, long lead times, and empty shelves. Others are considering new and costly shipment methods to retrieve goods, including Samsung, who said it might charter sixteen cargo planes in order to meet its shipment contracts.

Rather than worry about the fate of your product marooned on giant container ships or struggle with ongoing shipping difficulties, go local with a manufacturer who is easily reached for instant collaboration. Establishing a partnership with a local, stateside firm gives you the benefits of consistent high quality and on-time delivery, as well as a cost savings advantage shared by everyone.

As your local partner, Sirois Tool works with both suppliers and customers to develop a collaboration that benefits everyone, helping both partners to achieve common goals. We offer a complete supply program and can ship your parts on the same day as ordered when needed, or drop directly to your customer, repair center, or distributor.