The company beat larger rival Hyundai Merchant Marine Co. as the preferred bidder for Hanjin’s Asia-U.S. business, a spokesman for the Seoul Central District Court said in a text message Nov. 14. Final sale documents will be signed Nov. 21, according to the court.
The sale marks the start of Hanjin’s breakup as a persistent slump in global trade led to weak demand and depressed freight rates, prompting some shipping companies such as the Seoul-based operator to post losses and pile up debt. The acquisition of the Hanjin assets will mark Korea Line’s entry into the container-shipping business, posing a challenge to Hyundai Merchant on the busy U.S.-Asia trade route.
Korea Line, which trails Pan Ocean Co. among South Korean bulk-shipping companies, is expanding after exiting from bankruptcy protection in late 2013. Bought by Samra Midas Group that year, it operates 29 vessels hauling goods such as iron ore, crude oil and cars.
Korea Line offered better terms in its bid, including taking on all employees, the court spokesman said in the text message, without elaborating. Also included in the bid was Korea Line’s interest to buy Hanjin’s 54% stake in a port terminal in Long Beach, California, according to the court.
Box shipping companies carry a wide range of goods such as clothes, furniture and bananas packed in containers, while bulk carriers ship unpacked cargo including coal, chemicals and grains.
Hanjin on Nov. 14 reported a third-quarter operating loss of 309.4 billion won ($263 million), widening from a loss of 1.87 billion won a year earlier. Hyundai Merchant posted an operating loss of 230.3 billion won, compared with a loss of 77.7 billion won. Daewoo Shipbuilding & Marine Engineering Co., which builds vessels used in the shipping industry, had an operating loss of 141.3 billion won, narrowing from a 646.2 billion won loss.
Hanjin filed for bankruptcy protection Aug. 31 after creditors balked at extending loans. Once the world’s seventh-biggest container line, its fleet has shrunk to 14 ships, about a tenth of its former size, after returning most of the chartered vessels to owners on the advise of the court.
Hanjin also is winding down its Europe business and said last week it would let go of about 700 of its crew.
The company had 7% market share on the Asia-U.S. trade in the first six months of this year, according to Hanjin. It hauled 1.85 million 20-foot containers on that route in 2015, accounting for 40% of the total of 4.62 million.
Hyundai Merchant will focus on improving its financials in the short term and strengthening its competitiveness in the long term, the company, which is undergoing a debt revamp, said in an e-mailed statement Nov. 14. It also will add more container terminals in South Korea and overseas.