Hanjin declared bankruptcy, cargoes are in limbo, and 8% of capacity is off the market. Cost of shipping a container from China to USA jumped 50% in one day. Don't be surprised if toy train orders are delayed.
What, me worry?
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Also read it here-
The price of shipping a 40-foot container from China to the U.S. jumped up to 50 percent in a single day, said Nerijus Poskus, director of pricing and procurement for Flexport, a licensed freight forwarder and customs broker based in San Francisco.
The price from China to West Coast ports rose from $1,100 per container to as much as $1,700 on Thursday, while the cost from China to the East Coast jumped from $1,700 to $2,400, he said.
This is part and parcel of dealing with offshore suppliers. Better get used to it.
Dave Warburton posted:This is part and parcel of dealing with offshore suppliers. Better get used to it.
It really has nothing to do with offshore suppliers. It has to do with a shipping company. It's a world economy, and has been for a long time now. Anyone who isn't in tune with that after all this time needs to get a new radio.
It's Just normal supply and demand at work. Shipping supply shortage, shipping prices go up..... until the shortage is remedied, which it will be. Prices will come back down at some point when some of the smoke clears around the sudden announcement of Hanjin's situation, and financial arrangements are undertaken.
"Following the Hanjin default there has been a considerable rise in freight rates, brokerage firm Fearnley Securities wrote in a note to clients on Friday.
"To our understanding this has been driven by shippers being reluctant to put their cargoes on Hanjin vessels, whilst ports are not accepting the vessels as they are afraid of not getting paid," Fearnley wrote.
A Hanjin spokeswoman said that 44 of its 98 container ships had been denied access to ports including Shanghai, Sydney, Hamburg, and Long Beach, California. One ship had been seized, in Singapore.
As the collapse happened in the midst of the peak season it has spurred a supply shock in a market which, despite poor freight rates, was characterized as relatively tight, the Fearnley note said."
I would say it has a lot to do with off shore suppliers. I read Hanjin has been losing money for years and it was a state-owned bank that shut their money off. Plus there are several other shippers in bad shape. It doesn't do any good to have all that stuff in China at Xmas. One shipping guy said that the containers may never get to their destination unless Obama rides to the rescue.
There is such a glut of shipping companies, that it's cheaper to ship corn from Brazil to Maryland chicken farmers than by rail from Iowa.
Jon 
That doesn't help the thousands of containers full of product now stranded on Hanjin ships and at ports. In an article I read, a shipping agent said it might take a year to get some of the containers-if ever.
When General Mills had Fun Dimensions, a general rule was the cartons of toys had to be out of their three distribution centers by ten days before Thanksgiving. Generally to customer's distribution centers, this gave them time to unload a truck of toys, stock it, pick a store's order and get it to the store one day before Thanksgiving. The stocking crew would have it on the shelves when the stores opened the day after Thanksgiving. As much as we get bog down with pre-orders (who ever dreamed up that phrase), Christmas time is the big sales season for toys. Ten days before Thanksgiving may no longer be valid as so many retailers are using shelve space for toys before Thanksgiving. John in Lansing, ILL
If they can't deliver them, I would expect them to scuttle their ships or dump cargo overboard.
Fred
Dump all those heavy boxes overboard ?? With what ?? And have them floating around?? Scuttle the ship ?? How about insurance and it is an asset in the bankruptcy. Plus navies and coast guards are funny about sunken ships.
Would this be a good reason to move production back to the U.S.A?
No, that's just the cost of doing business in Asia. Don't forget, model trains are just a small, very small, part of commodities possibly being affected. Retailers gearing up for the holidays who sell everything from clothes to appliances to the latest electronic gadgets and gizmos will feel the crunch on a much greater magnitude.
OK everybody... Let's see how long it takes for prices to increase on those Atlas-O Hanjin containers. After all, they're bound to become collectors items now, right? 
I can't wait to see the first eBay listing by some "opportunist" asking $75 for one plastic Hanjin container. 
(Hey, the starting bid on many of those K-Line 20' ISO tanks is now $40+, and they could be had years ago for less than $15/each).
David
my thread gets deleted and another shows up yet stays
what's up with that?
Rocky Mountaineer posted:OK everybody... Let's see how long it takes for prices to increase on those Atlas-O Hanjin containers. After all, they're bound to become collectors items now, right?
I can't wait to see the first eBay listing by some "opportunist" asking $75 for one plastic Hanjin container.
David
Bankruptcy can take the form of reorganization or liquidation. Expect the former is Hanjin's case and the company will continue to exist.
From what I've read, shipping companies that declare bankruptcy usually do not recover and are liquidated. Reason being, once customers lose faith in the shipper they will not risk the loss to use them again. If be willing to bet the worst we see is a short delay while everyone works out the logistics and then a continued price increase. I'll bet that the big solvent shippers are looking at ways to accumulate the asserts at a discount.
bigdodgetrain posted:my thread gets deleted and another shows up yet stays
what's up with that?
Well... now that I talked about the effect this bankruptcy might have on the price of Atlas-O Hanjin containers, we can now say this thread is talking about TRAINS. 
David
jim sutter posted:Would this be a good reason to move production back to the U.S.A?
Yes indeed, but , could they do that and avoid significant price increases?
I read the same thing-that a shipper has never come back from a bankruptcy and they expect the company to be broken up. What isn't being said, is that Hyundai, another big shipper and 5 others are in a "debt monitoring" program of some sort. I think that is short of bankruptcy. But this is Korea so who knows what will happen.
That is why every shipped item is late unless it was the MTH Philosophy at the 2015 October York with Breast Cancer Awareness GE EVO and Caboose.
Does anyone know which major model train manufactures used Hanjin? Do they alternate who they use or do they set long term contracts with a single shipper? I am not familiar with the process.
I still have all of my fingers crossed hoping that some how, some way, the Atlas CZ GSC 12 Cars sets will arrive before Christmas 
It is the first new Atlas product I have ordered and I really am looking forward to it as Ive wanted the CZ for a long time but did not want to chase it down car by car. After reading about how many of Atlas's major offerings have been delayed (sometimes for years), I have my doubts that I will see it before Christmas 
I really hope Atlas didn't exclusively use Hanjin.
Toy trains are not the only trains effected by this shipping problem. These are very large ships and each one can fill ten to twenty real trains with containers. Container traffic was about the only freight class that has not been in decline recently. We will have to see what impact this has on the railroads, both short term and in the long run.
I was listening to a trucker talking on the news last night. He, and many other truckers, will not touch a Hanjin container. He said last time this happened it took him three years to get paid and only after he hired a lawyer. One fuel supplier in Oakland said Hanjin owed him $50,000 and he would not provide them any more fuel. The Port of Oakland has been talking pre payment to unload Hanjin ships.
There was talk that other shippers may pay to unload and deliver the containers hoping to gain new customers. But there is a large over capacity in container shipping and no one has been making much money, so taking additional losses may be hard to take.
It has to be tough for a ships captan to be on the other side of the Pacific from home with a ship load of freight no one will unload, no way to get fuel to go home, and crew that needs to be feed and wanting to go home.
It is possible that Hyundai Merchant Marine will take over Hanjin. It is unlikely the Korean govt will let the situation deteriorate. Importers will get their containers once Hyundai/Korean govt guarantee payment of any disbursements, for example, port and stevedoring costs, fuel, etc. At worst importers may have to pay the freight charges again. Container shipping is heading for a crisis, too many vessels chasing the available cargo made even worse by newbuilds with ever growing container capacity. The slow down in growth of the global economy is not helping. The situation also affects bulk cargoes with the daily rate for handysize bulkers (35-40000mt) around US$5300 per day - not really enough to pay the bank let alone fuel and crew. Again new builds are part of the problem. Shipping is cyclical but some shipowners never learn!
From what I read Hyundai & other shippers aren't in great shape either. Not too sure about the govt. bailing them out, it was a state bank that cut them off. Their best hope is Obama riding to the rescue.
We're actively waiting and praying that The Madison Hardware Story books are not on a Hanjin container. They're supposed to leave port Tuesday...
John's Laundromat Theory of Economics
After WW II, many veterans returned and started families. Many of those attending schools on the GI bill and others not attending schools lived in apartments or dorms which lacked in unit washer and dryers. An entrepreneur built a Laundromat in an area and did very well. Enough to buy a Cadillac, a second car for his wife and maybe a small boat. Seen by others as a good way to make money, soon a second person built a Laundromat. As the market hadn't substantially increased the new capacity gave the same customers a choice of which one to use. Any sane person can see this option reduced the profit generated by the first one. While continuing to operate, the first in town no longer can afford the boat and second car for his wife and the second one can only afford his Cadillac. After a third person built a laundromat, the money generated no longer paid a decent return on investment nor covered a reasonable wage for the entrepreneurs and they either closed, reduced maintenance or sold them to people willing to work for less. This theory holds true in all businesses be they steel mills, shopping centers, box stores for building supplies, or maritime companies.
We won't discuss what happens if government loans and grants are thrown into the scenario. John in Lansing, ILL
I was reading this AM that Hanjin owns less than half their ships and I bet the ones they charter are the new, bigger ones. This would limit their assets. I also red that appears the Korean govt. seems to be leading them to liquidation. On the bright side, some Korean ports are guaranteeing payments so the ships can sail, I guess or unload. One guy said that in a similar situation it took him 3 years to get his cargo. The people I feel sorry for are the hobby store owners who are caught between a rock and a rock. You might see them at shows and Da Bay trying to buy stock to sell.
Rocky Mountaineer posted:bigdodgetrain posted:my thread gets deleted and another shows up yet stays
what's up with that?
Well... now that I talked about the effect this bankruptcy might have on the price of Atlas-O Hanjin containers, we can now say this thread is talking about TRAINS.
David
mine talked about trains!!!!!
because I knew this would be a big deal.
Hanjin even owns a part of the Long Beach terminal so this affects a very large shipping segment and probably will affect our trains.
KOOLjock1 posted:There is such a glut of shipping companies, that it's cheaper to ship corn from Brazil to Maryland chicken farmers than by rail from Iowa.
Jon
Jon, what is the source of your info? Was there an article on this? Maybe US should consider requiring the fumigation of the containers like China just did to us to guard against the Zika virus.
Penn-Pacific posted:jim sutter posted:Would this be a good reason to move production back to the U.S.A?
Yes indeed, but , could they do that and avoid significant price increases?
Don't worry though with the significant manufacturing costs you can still pay more.
Read on today's Wall Street Journal website that Hanjin has filed for bankruptcy protection in the US and protects their ships from being seized by creditors. They have 45 ships on the oceans with almost 500,000 containers most of which, I am sure, are full of toy trains. There is a court hearing Tuesday in NJ so maybe a little bit more news but, I think, this will take awhile to unravel. Better hit your LHS now while they have trains in stock.
I don't know about the rest of you but the sky is still firmly in place here in Pennsylvania.
OMG! 
The great train drought of 2016...
A sign of the apocalypse...
Hobby stores will be looted...
UPS, FedEx, USPS drivers will be held up and robbed of any valuable train booty...
Hospitals will be overrun with hobbyists going through withdrawals...
Model Railroaders Anonymous ranks will grow exponentially...
Dogs and cats, living together...
Rusty
Yes, any time now !!
For those of you who mentioned Obama to bail out the companies. Why would he do that? Bail out a foreign shipping company?
Gee....where is Onassis when you need him? Is this why it takes preorders this long to reach your heirs, (or their heirs). I guess we need another Ice Age so the ocean level will drop and they can bring preorders, and all other products, in on pack mules to Alaska from Siberia.
If there is profit in shipping containers then someone will take over for Hanjins customers. It may even mean an increase in cost but that is the cost of doing business so far away from your customer base.
Bring the making of our trains back to the USA? That is not going to happen anytime soon, if ever. It is still cheaper to put up with all the problems by mfg in China then doing it here. If the cost in China gets too high they then will move to other 3rd world locations where it is safe and cheap. Cheap labor is what it is all about, don't kid yourself.
Since there are quite a few shipping companies in financial trouble there must not be profit in the business. Expect higher shipping costs which will drive retail prices up.
