The collapse of Hanjin Shipping Company sent shock waves rippling through global supply chains as some 530,000 containers worth an estimated $14 billion were suddenly stranded.
As the world’s seventh-largest carrier with a fleet of 98 vessels and a carrying capacity of 611,682 TEUs, Hanjin was an important link in the global supply chain.
The impact of Hanjin’s bankruptcy on U.S. commercial real estate is negligible. It will not undermine the growth trajectory of the U.S. industrial market, derail leasing at U.S. port markets, or alter commercial real estate leasing by retailers.
Hanjin’s demise could not have come at a worse time for retailers who must stock shelves for the holiday season. Thegood news is that retailers still have time to make other arrangements; the bad news is that it is going to be costly.
This event will likely weigh on operating margins for some retailers and it makes clear that while focusing on the “last-mile” is important, the first 5,000 miles matter too.
This is a matter of great legal and logistical complexity that will not be resolved quickly. It is unclear if Hanjin will obtain sufficient funding to attend to its stranded vessels and cargo. It is likely that many of Hanjin‘s creditors will not be paid. Servicing of its ships will remain intermittent and require up-front payment.
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