Alliance Precautions After Hanjin Lessons


In response to the Hanjin bankruptcy, THE Alliance has formulated a “catastrophic instrument” funding mechanism to be immediately implemented if one of its member lines were to fail, reported The Loadstar.

The draft agreement, filed with the US Federal Maritime Commission (FMC) by alliance members K Line, MOL, NYK, Yang Ming and Hapag-Lloyd seeks to re-establish vessel-sharing shipper confidence which has been recently tested by the collapse of the South Korean carrier. The proposals intend to allow fellow alliance lines to “take actions to facilitate the movement of cargo carried by the affected party to the intended port of discharge or other locations”.

It is believed that THE Alliance wants to make arrangements directly with agents or subcontractors of the affected party.

FMC Commissioner William Doyle confirmed the details of the initiative and said “for the first time, we are seeing an alliance agreement attempt to make projections on ways to deal with a failed carrier in an alliance”. Mr. Doyle went on to say that he had had “direct discussions with principals of THE Alliance” and “though the details have not been completely worked out, the intent in part is to set up a per se catastrophic instrument that could be used when an individual member liner fails in the network.”

These precautions are being made in the wake of the Hanjin bankruptcy that left the company with 500,000 TEU of cargo, worth US$12 billion, left on 100 containerships. This caused mass disruptions, in particular to Hanjin’s CKYHE alliance partners.

However, the FMC still has “serious concerns” about THE Alliance’s “proposed language in the agreement related to the joint contracting and purchasing power” of the VSA.

Nevertheless, the new alliance networks are set to commence operations in April 2017.

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