Recent news out of South Korea suggests that Hanjin Shipping Company has lost the support of its creditor banks and may be headed for bankruptcy. The news, as reported by the Journal of Commerce, has prompted the Korean Exchange to halt trading in Hanjin shares as it looks for further clarification from the Hanjin Group. Hanjin’s board of directors is expected to meet within a day to determine whether the struggling steamship line will be heading for receivership.

Like many ocean carriers, Hanjin has struggled over the last couple of years to turn a profit; a result of weak ocean rates caused by a glut of new capacity and a soft global economy. According to the Wall Street Journal, Hanjin had amassed a debt of $6.6 trillion won ($5.9 billion) and a debt-to-equity ratio of nearly 850% at the end of last year.

The struggling steamship line had been under mounting pressure from both the South Korean government and their creditors to negotiate new agreements with vessel owners and even considered selling off assets to raise capital. Hanjin is currently the ninth-largest shipping line, by volume, and is a part of several vessel sharing agreements (VSA). The loss of such a sizable competitor from the marketplace will have a significant, long-term effect on global freight rates and an immediate effect on carriers that utilize Hanjin vessels.

Shapiro will continue to monitor the situation and provide updates as they become available.