A number of Hanjin ships which were in port at the time of its collapse have been impounded while others are effectively stranded at sea, unable to put in to port due to the risk of being seized. A potential bankruptcy announcement would represent the biggest ever for a container shipping company, and retailers are rightfully concerned.
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Hanjin operates partly with its own ships, and partly with vessels it leases from others.
The National Retail Federation – the world’s largest retail trade association – urged the U.S. Secretary of Commerce and Federal Maritime Commission Chairman to work with the South Korean government and ports to try and prevent disruptions.
As Hanjin Shipping is the world’s seventh largest sea carrier, its fallout has caused turmoil not only in Korean cargo, but also for global trade.
International Container Services Inc., the operator of Manila International Container Terminal Inc., and Asian Terminal Inc. that oversees South Harbor said Hanjin Shipping had little operations in the Philippines.
The containership Hanjin California, capable of carrying 3,600 containers and possibly not far off that due to this being the start of the busy trade season, is now off Port Botany.
But in the meantime, ship running costs can not be covered and dozens of vessels with thousands of containers are tied up in ports, about to be or not being allowed in, with a knock-on effect for customer supply chains and landside container transport and empty container park (ECP) operations.
The company is foundering under a debt estimated at some six trillion won ($5.37 billion), posting a net loss of more than 473 billion won in the first half of this year after racking up total net losses of about 1.2 trillion won over the past three years.
Hanjin, the world’s seventh-largest container shipper, represents almost eight per cent of the trans-Pacific trade volume for the US market.
Other shipping lines were moving to take over some of the Hanjin traffic but at a price.
One vessel has also been seized by a creditor in Singapore while firms in the United States have launched legal action against Hanjin to seize vessels and other assets over unpaid bills. “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”.
Hanjin filed for court receivership on Wednesday after creditor banks chose to end financial support.
The country’s maritime ministry said earlier that it will work to help smooth out flows in the cargo trade for local exporters and importers by putting in substitutes for Hanjin’s vessels that may be seized.
“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. But Hackett said that will be a short-term thing that is focused primarily on Hanjin customers.
Gonzales assured the release of those containers in MICT would not be affected by Hanjin’s troubles.
Global demand and trade have suffered since the 2008 recession, but steamship lines continued to build more and larger vessels.
Until Hanjin, carrier bankruptcies were confined to smaller lines, but if a carrier this size goes down, it sends a signal of just how vulnerable ocean carriers are if they are not able to increase their rates in the coming year.
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Poskus expects the spike in prices to last a month or two.
