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By Jhoo Dong-chan
Walmart, the world's largest retailer with over 6,000 stores worldwide, has severed all contracts with Korean shippers after sustaining severe damage by the South Korean government's abrupt decision to let debt-ridden Hanjin Shipping go under in the name of corporate restructuring.
According to industrial sources, Tuesday, Walmart sent an email to Hanjin Shipping's local unit in the United States in December, saying, "Thank you for doing business with us. It is our company's policy not to deal with any Korean shipping line from now on. It is not because of Hanjin Shipping but because we don't trust the Korean government."
Walmart, which has been one of Hanjin Shipping's major consignors for more than 20 years since the 1990s, is believed to have been hit the hardest by the ailing shipping company filing for court receivership. The Seoul-based company had reportedly handled about 10 percent of Walmart's total freight volume every year, which means that Hanjin's amount was up to 30,000 containers.
As Hanjin Shipping could not deal with the transportation properly, Walmart has shipped its products with shipping companies with its headquarters in other countries such as China.
"It's evident that the nation's shipping companies are losing credibility after Hanjin filed for court receivership," said an industry source. "I believe there are more angry consignors like Walmart. The government should come up with a contingency plan as soon as possible."
The nation's other shipping giant Hyundai Merchant Marine (HMM), which also had a rocky year last year, also expressed its concerns about Walmart's stance, but said that the impact won't be significant in the company's future.
"Concerns could, of course, be raised over Walmart's announcement. But the impact will be minor," said an HMM official.
"Unlike the case with Hanjin Shipping, HMM's credit rating was just upgraded from D to BB yesterday as the market recognized the government and creditors' strong support for the company. I don't think such a mentality would prevail for a long time."
Another expert suggests the possibilities of Walmart or other global retailers intentionally spreading such stories nearing the upcoming shipping contract renewal season.
"Retailers renew their shipping contracts with container carriers in March and April every year," he said. "It is possible they spread such stories in the industry in order to gain the upper hand in contract negotiation with shipping lines."
The world's seventh-largest shipping line, Hanjin Shipping's crisis started after the 2008 global financial crisis. As the slump in the global shipping industry became protracted, the company was hit by a liquidity crisis.
Chairwoman Choi Eun-young, who began leading the company after her husband and company Chairman Cho Soo-ho died in 2006, also sold her share right before Hanjin Shipping's liquidity and management crisis came to the surface in 2014.
A Seoul court ruled earlier this month to end the bankruptcy protection of Hanjin Shipping, bringing the world's No. 7 shipping company to an end.
