Sanko Steamship Comes Crashing Down Once Again

sanko line steamshipSanko Steamship has had one of the most tumultuous histories of any shipping company in the world.

Established in 1934, Sanko Line has its origin in the Sanko Kaiun Kaisha which was an operator of a shipping services on the Japan-Korea/China trade route.   Prior to World War II, Sanko Line was one of Japan’s largest carriers in the Asian Shipping routes.

After being almost entirely destroyed by the Allies in World War II, Sanko Line slowly and deliberately rebuilt itself, re-emerging in the mid 1960’s to the early 1970’s as one of the world’s top shipping companies, operating a fleet many types of newly developed vessels totalling, at its peak, 316 vessels of about 25,200,000 DWT.

This was just in time for the oil crisis which struck the global economy and devastated the shipping company once again, although from a much different standpoint than in the 1940s.

In an attempt to miraculously build their way out of the economic depression and capitalize on low shipbuilding costs at the time, Sanko ordered the construction of 125 bulk carriers using financing largely from foreign trading companies.  Unfortunately, the miracle never appeared and in 1984, while in £3.3 billion in debt, the shipping company became insolvent.

Sanko was eventually rescued in a joint effort by the Japanese government and Sanko’s business partners, however today, with liabilities in excess of USD $1 billion, the shipping company has filed for Chapter 15, title 11 bankruptcy protection.

“Since incorporated, we had actively been expanding our spot-contract business mainly for overseas routes.  However, we saw a sharp drop in the freight and charter revenue which were the main sources of our revenue because the growth of transportation demands rapidly slowed down due to the global financial crisis in the wake of the Lehman shock in September 2008, which caused a growing gap between supply and demand, and also because it was too late for us to take drastic actions for high-cost charter contracts.  As a result, our profitability had rapidly and seriously deteriorated.  

While Sanko wished to avoid the expense and inconvenience of formal proceedings during its rehabilitation process, the disruptive actions of certain creditors made this unrealistic…Sanko deeply regrets that it has been forced to take these measures.”

According to a report by Reuters,

“For the industry, this won’t be a bad thing. Another major player is off the scene, which could help put the supply and demand balance in better order,” said a Singapore-based ship broker.

“The problem is that the company’s ships are still out there. It would be better if they were sent to be scrapped.”