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.
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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.
A Hanjin spokeswoman said that 44 of its 98 container ships had been denied access to ports including Shanghai, Sydney, Hamburg, and Long Beach, California.
The Seoul-based company said Friday that one ship in Singapore had been seized by the ship’s owner.
As the collapse happened in the midst of the peak season it has spurred a supply shock in a market which, despite poor freight rates, was characterized as relatively tight, the Fearnley note said.
An estimated 540,000 containers are expected to face delivery delays, according to the reports.
The port said that effective Thursday, it will not load any cargo from Cosco Container Lines, “K” Line, Yang Ming Line and Evergreen Line – the other alliance members – on to a Hanjin vessel.
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.
Kim Byung-hoon, a director at the KITA, said the association had confirmed that about 10 Hanjin vessels also had been turned away from Chinese ports or were waiting offshore. 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 now struggling under a debt estimated at six trillion won ($5.37 billion), after posting huge losses over the past several years. But without a longer-term fix, Hanjin may be just the first to founder, Giannetta said.
“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 National Retail Federation’s vice president for supply chain and customs policy.
Hanjin Shipping filed for court protection Wednesday after lenders rejected its restructuring proposal, scuttling revival efforts by the firm that’s been trying to reschedule debt under a voluntary creditor-led program since May. Cargo owners said rates from Busan, Korea, to Los Angeles had risen by $600 per container by Thursday from $1,700 four days earlier.
Global demand and trade have suffered since the 2008 recession, while steamship lines continued to build more and larger vessels – enormous ships that were conceived as cost-effective when freight costs were higher several years ago.
Apart from troubles with its management, Hanjin is operating in a brutally competitive, consolidating industry, where profits are being squeezed as shipping rates fall while capacity continues to climb.
“The cost of shipping is now jumping through the roof and carriers are filing requests for a full increase in rates from September 1”, said Paul Tsui, managing director of the Janel Group in Hong Kong, a freight forwarding and logistics firm. With about 5 percent of ships in the global trading fleet sitting idle, there is plenty of room to take over Hanjin’s capacity and carriers already are discussing the possibility of adding ships, he said.
“This situation has come as a result of tremendous downward pressure on freight rates for the past several years”, he said.
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