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All at sea? The ripple effect of Hanjin's crisis

Trade is down dramatically: Expert
VIDEO3:1203:12
Trade is down dramatically: Expert

The fallout from the financial crisis surrounding Hanjin Shipping is having huge effects across several sectors the economy, analysts say.

The South Korean shipping company had to file for bankruptcy at the end of August and the ensuing crisis has heavily disrupted shipping and trade.

Many Hanjin ships were seized or blocked from entering ports, leaving billions of cargo stranded at sea. This could seriously affect trade and retail sales, according to John Ahearn, global head of trade at Citi.

David McNew | AFP | Getty Images

"[The Hanjin crisis] has the ability to impact retail sales in the U.S. for Christmas and everything else. There's an enormous amount of merchandise that still on the seas and no one knows what's going to happen with it," he told CNBC's Squawk Box.

"And from the banking industry, all of a sudden I end of up with indirect exposure, because I have got a lot of small to medium-sized companies that if they can't get that merchandise off the ship, they may not be in good financial condition come the end up the year."

It's also had some unfortunate results. A British art student was stranded on a Hanjin cargo ship for several days, until finally disembarking in Tokyo, while four Scottish cadets remain stranded on one of Hanjin's ship near Singapore.

Meanwhile, Hanjin's competitors in the shipping industry initially benefitted as shipping rates rose, but overcapacity in the sector will remain a problem

"It is quite possible that Hanjin's failure will bolster the ailing financial status of many of its competitors. Rates are increasing following the stress on the market," Will Bennett, senior analyst at shipping data company Vessels Value, told CNBC via email earlier in September.

"I think it is most likely Hanjin's vessels will be reabsorbed into the market and its cargoes reallocated," he added. "Overcapacity is likely to remain a problem, however, Hanjin's competitors' strategies of consolidation and finding further efficiencies may lessen the effect of this, and we may find this was the 'blood-letting' the industry needed."


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