But service for Hanjin ships resumed at South Korea’s main ports of Busan and Incheon on Friday after the government said port authorities would guarantee payments for service providers.
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Target Corp. said it is watching the situation closely and Wal-Mart said it is waiting for details about Hanjin’s bankruptcy proceedings and the implications to its merchandise before it could assess the effect.
South Korea’s oceans ministry estimates a two- to three-month delay in the shipping of someKorean goods that were to be transported by Hanjin Shipping, and plans to announce in September cargo-handling measures which could include Hyundai Merchant Marine taking over some routes, a ministry spokesman said on Wednesday. Trucking and railroad companies (especially those heavily dependent on moving the shipper’s cargo from USA ports) are wary, further complicating the matter, and some 540,000 containers may see delivery delays ranging from a few days to more than a month, freight brokers in Asia said.
In the United States, the National Retail Federation, the world’s largest retail trade association, wrote to Secretary of Commerce Penny Pritzker and Federal Maritime Commission Chairman Mario Cordero on Thursday, urging them to work with the South Korean government, ports and others to prevent disruptions.
Jon Talton of The Seattle Times writes that the effects of the bankruptcy “could be profound”. “Some of it is sitting in Asia waiting to be loaded on ships, some is already aboard ships out on the ocean and some is sitting on USA docks waiting to be picked up”.
A South Korean aluminum scrap dealer said offloading operations at Busan port was slow as companies engaged in offloading operations were refusing to handle Hanjin cargoes since Wednesday, fearing they may not be paid.
Only empty Hanjin containers are being accepted at the port’s Pinners Point Container Yard.
“It’s going to be exceptionally hard to turn it around as cargo owners are going to be very wary of booking with Hanjin, for fear that their boxes may be stuck in port if Hanjin vessels get arrested by the creditors”, said Alan Murphy, CEO of consultants SeaIntel Maritime Analysis.
An automotive components manufacturer in Japan who was using Hanjin Shipping had a narrow escape.
Hanjin filed for court receivership on Wednesday after creditor banks chose to end financial support.
“The bankruptcy is a slap in the face to an industry that hasn’t adequately addressed the issue of overcapacity”, said Jock O’Connell, global trade adviser to Beacon Economics.
Ocean freight shipping fees between China and the USA have soared as much as 50 percent since the bankruptcy was announced. Shipping rates have soared as a result, increasing to $2,300 per container by Thursday, up from $1,700 four days earlier. Overall freight charges could also rise on limited shipping tonnage available, deteriorating exporters’ profitability.
The weaker trade and overcapacity has sent ocean shipping rates plunging in recent years.
That wouldn’t even cover fuel costs for the huge ships, he said.
Hanjin Shipping’s local-currency notes due June 2017 tumbled to 13.4 percent of face value as of 3:29 p.m.in Seoul, according to Korea Exchange prices, after fetching 90 percent in March.
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