To every smart investor, diversification means more than just an investment portfolio composed of varying asset classes. Diversification must also be present in potential sources of income. Consider this development for Teamsters union members in New York: New York Teamsters relying solely on pension benefits and Social Security are in tough shape right now. Both are expected to be cut. To have the pension/Social Security rug pulled from under retirees, or those near retirement, is a major risk which should be accounted for in any financial plan. Further: the plan in reference is a multi-employer pension plan, in an industry shaken by the threats of automation and declining union influence. I don’t have to explain the parallels to waterfront workers living in the wake of Hanjin’s bankruptcy. …
Shipping’s Lehman Moment?
Or just a blip on the radar? However history remembers Hanjin’s bankruptcy, the parallels are worth considering. Disclaimer: this is just a fun speculative exercise. This is not a prediction nor a prognostication. You can see my other Hanjin post here. Some industry commentators surprisingly point to conspiracy theory, which I seriously doubt. In the end, this is likely a conclusion the container shipping industry just simply deserves. Could the financial industry’s notorious crisis, ten years prior, be a reasonable comparison? They are both very important pieces of the global economy, after all. Let’s have some fun with questions and headlines. First: Debt-fueled expansion with questionable fundamentals? Then: Now: Forced consolidation between strange bedfellows? Then: Now: …
Hanjin’s Bankrupt — What Now?
This week we learned Hanjin Shipping Co. has filed for receivership, capping off months of decline for Korea’s largest shipping company. What does this mean and what’s the longshore investing angle? We can finally settle the “debate” about industry employers being fat-cats flush with cash. This is not a healthy industry. Healthy industries are rising tides which, pardon the pun, don’t let ships sink. Despite the constant negative newsflow about the finances of shipping companies worldwide, this the-employers-are-so-rich claim has been a constant refrain. Let’s put that to rest. Consolidation will continue. All signs point to Hyundai picking at the healthy Hanjin pieces while other weak hands are likely to give way to takeover offers, allowing the few strong operators (Maersk, MSC and CMA-CGM) …