The (anticipated) collapse of the world’s seventh biggest carrier has
undoubtedly created tsunami-class waves that continue to ripple throughout the supply
chain: from shippers and forwarders, to ports, terminals and creditors. Still,
this is just a temporary inconvenience and the Government of Korea, together
with the Korean Development Bank, are only to be complimented for their tough
stance. Had the same thing happened with the bankruptcies of 2009, the liner
shipping industry would be in a much better state today than it actually is.
The issue here has to do with the important aspect of moral hazard; i.e. exercising lesser due
diligence, or assuming a higher investment risk than what would normally be
warranted, just because you know that if things turn out badly, there will
always be a helping hand stepping forward to your rescue.
If carriers know that this is no longer the case, and “out
is out”, they would be much more prudent before ordering new tonnage. Supply
would thus correspond more closely to demand, rates would as a result be more
sustainable, and the financial performance of the industry would be less of a
roller-coaster.
A “no one is too big not to fail” approach in shipping is
therefore just as good for the taxpayer as it is for the carrier himself. HH
