While the Japanese aluminum market had limited exposure to the bankruptcy of South Korean container shipping firm Hanjin, there could be long-term impact as shipping of aluminum from the Middle East may take longer than usual due to port congestion, Japan market sources said Friday.
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However, with Hanjin vessels not now calling at the Port of Felistowe – it’s United Kingdom container bookings being handled on ships operated by allied lines – the number of ships using the port will not be affected by the company’s collapse.
Major U.S. ports are forecast to handle 1.61 million 20-foot equivalent units this month, down 0.6 percent from the same month a year ago, according to the Washington-based trade organization. The conglomerate he built helped propel South Korea into one of the world’s major economies. Workers in the Korean port of Busan refused to work on a ship because the company hasn’t paid dues, forcing the cancellation of a berthing.
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.
“Hanjin is a very solid company with a long history – the biggest shipping line in Korea and one of the top biggest shipping lines worldwide”, he said. Another was seized in Singapore late Monday.
The National Retail Federation, the world’s largest retail trade association, wrote to U.S. 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.
About 10 more were impounded at Chinese ports, including Tianjin and Shanghai, for failing to pay service providers, the Korea International Trade Association said. Terminals won’t accept or work Hanjin ships and in some cases ships may be “arrested” by local authorities to ensure coverage of local debts and obligations.
About 70 percent of South Korea’s overseas shipments is through sea, of which Hanjin Shipping accounts for about 6 percent, according to Cheong Seung Il, a trade ministry official. “We are just praying that our cargos are not seized”, said Ra Kyung-moon, executive vice president at Forman Shipping, a freight-forwarding firm in Seoul.
Other shipping lines may take on some of Hanjin’s traffic – but at a price.
To many South Koreans, Hanjin’s woes are typical of the difficulties chaebol are facing as offspring of the founding generation fumble in their attempts to keep control of their fathers’ and grandfathers’ business empires.
Hanjin’s bankruptcy comes at a time when retailers are gearing up for the fall shipping season, its busiest tine of the year in advance of the holidays. “The impact on importers and exporters is having a ripple effect throughout the global supply chain”, he said.
The move came after Hanjin’s biggest creditor, the Korea Development Bank (KDB), rejected the company’s last voluntary restructuring plan to deal with its ballooning debts, which have reached 5.6 trillion won ($5.6 billion) according to a report by Maeil Business News Korea.
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However, industry insiders and analysts have said it is unlikely that Hanjin Shipping can survive as creditors make claims on its assets and customers looks elsewhere, setting the stage for what would be the industry’s largest-ever bankruptcy in terms of capacity.
