DAC Danaos Corp

By Paul Page 

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The beginning of the end may be underway at Hanjin Shipping Co. The fire sale of the shipping line's fleet has started with the sale of three bulk carriers, the WSJ's Costas Paris reports, as the South Korean government is signaling strongly that it won't bail out the troubled company. Hanjin had been chartering the three ships, one a cape-size dry bulk vessel and the others smaller commodities carriers, and the operator's recent bankruptcy left the ship owners with a troubling prospect that now confronts other charter companies. An analyst says the companies can either try to place the vessels on the spot market at lower rates or dump them at a discount. With more than two-thirds of Hanjin's fleet chartered, ship owners including Danaos Corp., Navios Maritime Partners LP will face similar questions. South Korea's president, Park Geun-hye, dismissed suggestions that the government may offer Hanjin a financial lifeline, saying that's just "lazy thinking." That means Hanjin will have to raise money from its existing investors or by selling the ships that it owns to get through the coming weeks.

The global shipping industry rout is taking a heavy toll on German investors. The country's banks and individuals are such big backers of shipping that they now own about 29% of the world's container ship capacity, more than the investors of any other country. The weakness in the industry, highlighted by the ongoing collapse of Hanjin Shipping, has left many of those investments underwater, the WSJ's Friederich Geiger reports. The research firm Deutsche Fondsresearch estimates that almost one-fifth of the 2,200 ships owned by the funds are insolvent, and the group says no fresh money from bankers or investors is in sight. One fund established in 2007 with a forecast that it could double the value of investments within 20 years has instead plummeted 95%, with no payouts to participants. The impact may be felt across the shipping industry as some funds collapse and some seek emergency sales of vessels to raise cash, actions that will undermine the values of fleets and some more ships to scrapyards.

The fate of national rules requiring electronic logging devices on trucks may rest with a federal appeals court. The largest independent truckers group in the U.S. is asking an appellate panel to throw out the Department of Transportation requirement, due to take effect at the end of next year, that drivers install devices that log their hours behind the wheel. Lawyers for the Owner Operator Independent Drivers Association told judges in Chicago that the devices known as e-logs would violate the privacy of millions of drivers, the WSJ's Kelsey Gee reports, and make highways less safe by giving employers data to push drivers to stay on the road longer. Trucking customers are watching the outcome closely because of widespread belief that shining a light on driving hours will cut shipping capacity by sidelining drivers who reach their work limits.

SUPPLY CHAIN STRATEGIES

The world's largest furniture retailer is thinking outside the big box. IKEA says it has opened more click-and-collect locations this year than traditional stores, a big shift in the company's strategy and a stark sign of the impact e-commerce is having on the retail business. Chief Executive Peter Agnefjäll tells the WSJ's Saabira Chaudhuri that IKEA is undertaking a "total conversion" from a brick-and-mortar retailer to a multichannel seller "with the stores at the heart." The shift is especially significant because IKEA pioneered the concept of big-box retailing, combining sprawling stores that act as showrooms and warehouses -- distribution centers, effectively, where customers provide the last-mile delivery and final assembly. But as e-commerce has become a bigger growth driver, IKEA has rolled out smaller, centrally located click-and-collect points that allow customers to collect online orders and carry a limited range of products for immediate purchase. The company is still adjusting the model: Mr. Agnefjäll says IKEA is using its 22 click-and-collect locations to test which products the company should stock and which should be pushed its budding delivery network.

QUOTABLE

IN OTHER NEWS

Incomes in the U.S. surged 5.2% in 2015, the first increase for family households in eight years. (WSJ)

The Obama administration filed a World Trade Organization complaint alleging that China is illegally subsidizing its domestic wheat, rice and corn growers. (WSJ)

Samsung Electronics Co. is racing to contain damage from a recall of its Galaxy Note 7 phone that has hit confidence in the world's biggest smartphone maker. (WSJ)

Arch Coal Inc. won bankruptcy-court approval for a plan to cull nearly $5 billion in debt from its books and emerge from chapter 11 protection. (WSJ)

Target Corp. plans to hire 7,500 distribution center workers during the holidays this year, up from 6,500 last year. (Internet Retailer)

Business groups are urging Congress to restore full financing authority to the Export-Import Bank. (The Hill)

An alliance of three Asian container shipping lines will start trans-Pacific service to the ports of Long Beach and Oakland. (Logistics Management)

Russia plans to halt exports of oil products from foreign ports on the Baltic Sea by 2018. (Reuters)

The four largest ports in the north of England agreed to a partnership aimed at consolidating investment and drawing shipping trade. (city a.m.)

Drone maker IFM is running pilot programs with several companies to test the use of drones in warehouses for inventory management. (TechCrunch)

Freight brokers want U.S. regulators to crack down on cargo terminal operators they say are charging them unfairly for failing to pick up shipments. (American Shipper)

Cargolux and CAL Cargo Airlines are adding weekly freighter flights to Puerto Rico this fall. (Air Cargo News)

General Electric plans to shut its turbine manufacturing operations in East Houston amid falling energy industry demand. (Fuel Fix)

Boeing Co. lifted its forecast for aircraft demand in China in the next two decades, saying a rising middle class would spur travel. (Industry Week)

General Motors Corp. says its auto sales in China jumped 8.1% in the first eight months of the year as U.S. sales dropped 4.2%. (Agence France-Presse)

South Carolina Ports Authority Chief Executive Jim Newsome expects the largest 20 container shipping lines will consolidate down to 12 in two years. (Charleston Post and Courier)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @lorettachao, @RWhelanWSJ and @EEPhillips_WSJ, and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

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Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

September 14, 2016 06:57 ET (10:57 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.