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