Posted on May 10, 2016
By Xiaolin Zeng, IHS
Describing the state of Hanjin Shipping’s operations as an “emergency”, the embattled shipping line is requiring senior staff to return part of their salaries that they received in 2015.
The move appears to be part of Hanjin’s plan to raise liquidity and came just two days before Hanjin Shipping’s creditors decide whether to permit the company to carry out autonomous restructuring.
Hanjin Shipping’s president and CEO, Seok Tae-soo, will return half of his salary, while executive vice-presidents will return 30% of their salaries. Vice-presidents will turn in 20% of their compensation.
The company will also cut personnel costs by 10%, while fringe benefits for various staff levels will be slashed by 30% up to 100%. Hanjin will also cut back on staff welfare, and has decided to shut the staff restaurant that it has run in the Yeouido district, where South Korea’s largest shipping company is headquartered.
Around 30% of Hanjin’s staff are stationed abroad and the company has cut business travel by 20%, as well as downsizing the office space of 26 overseas offices by up to 45% since 2014.
As the business climate of container shipping continues to be challenging, Hanjin will concentrate on cost cutting, and plans to downsize the office space of another 32 overseas offices.
A Hanjin spokesman told IHS Fairplay that these moves are in addition to the company’s plan to sell assets to raise KRW411 billion (USD400 million). These plans were announced on 26 April.
At a company-wide staff meeting on 2 May, Seok said, “When trust is broken, everything falls apart. We will do all we can to keep the faith in Hanjin Shipping.
“Our survival is based on cargo owners, alliance partners, trade partners, and stevedoring companies, and through our actions, we keep faith in our recovery. Do not think of doing less than everything we can.”
Seok runs the company with Hanjin Shipping’s chairman and CEO Cho Yang-ho, who is also the head of Korean Air Lines.
Source: Fairplay
