In this Wednesday, Aug. 31, 2016, photo, the container ship Hanjin Montevideo is escorted from the Hanjin Terminal in the Port of Long Beach, in Long Beach, Calif. Hanjin has filed for bankruptcy and the ship Hanjin Montevideo is to be anchored inside the breakwater.
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Roughly half of Hanjin Shipping Co Ltd’s container vessels have been blocked from ports since the South Korean firm’s collapse, putting manufacturers and their customers increasingly on edge about the fate of cargo and spikes in freight costs.
At least one Hanjin vessel is in a Canadian port.
Following its decision, Hanjin ships on the China-to-Canada route have been refused permission to offload or take aboard containers, because there are no guarantees that tugboat pilots or stevedores will be paid.
Also effected are ships not owned by Hanjin but contracted by it or belonging to its alliance members, along with cargo and containers on board those vessels.
The South Korean giant represents almost 8 percent of the trans-Pacific trade volume for the US market.
Kawasaki Kisen, which is in the same shipping alliance as Hanjin Shipping, is studying the impact of the Korean company’s filing, Masaya Futakuchi, a company spokesman, said by phone.
One ship had been seized, in Singapore. Hanjin ships carry crews of 15 to 25 sailors, and with the vessels unable to call at ports, the sailors could be stranded at sea for weeks or longer.
A fourth has been prevented from leaving until payment is settled. October is the busiest month for cargo from South Korea to the USA, accounting for about 11.5 percent of the annual total.
“Retailers’ main concern is that there (are) millions of dollars’ worth of merchandise that needs to be on store shelves that could be impacted by this”, said Jonathan Gold, the group’s vice president for supply chain and customs policy. Trucking and railroad companies (especially those heavily dependent on moving the shipper’s cargo from US 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.
OOCL’s notice on Friday comes after other shipping lines such as COSCO Container Lines and Evergreen Marine Corp Taiwan Ltd sent out similar assurances to customers. Since vessels already are operating at high capacity, shippers may wind up paying a premium to squeeze their cargo containers on board, said Jock O’Connell, global trade adviser to Los Angeles-based Beacon Economics.
The price of shipping a 40-foot container from China to the US jumped up to 50 percent in a single day, said Nerijus Poskus, director of pricing and procurement for Flexport, a licensed freight forwarder and customs broker based in San Francisco. Shipping rates have soared as a result, increasing to $2,300 per container by Thursday, up from $1,700 four days earlier. Hanjin’s bankruptcy was a major factor, he said.
The crisis has badly hit the oversupplied global shipping industry, suffering from its worst downturn in six decades, and sent ripples as far as the United States economy, with retailers fearing it may damage Christmas trade.
“The company is internally looking into measures in case our cargo gets stranded while it’s being shipped”, LG said in the e-mail in a response to a Bloomberg query.
Major U.S. ports are forecast to handle 1.61 million 20-foot equivalent units this month, down 0.6% from the same month past year, according to the Washington-based trade organization.
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The reason for this, he explained, is that their global share is relatively small, while there is a bigger problem for Korean shippers who favor Korean carriers, with Hyundai Merchant Marine benefiting, as they are already introducing extra ships to carry Hanjin cargo.
