The failed Hanjin shipping group is desperately seeking funds to rescue $14bn (£10.5bn) worth of cargo stranded round the world following its collapse. But analytics company Datamyne estimates Hanjin brought in 12 percent of all inbound shipments to the Port of Long Beach in California, one of the country’s busiest maritime hubs.
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A slowdown in Europe and Asia’s economy, mixed with a push to build increasingly larger ships, has left Hanjin and the rest of the industry with too much capacity for a declining supply of goods. “The economy of Busan will be hit if Hanjin Shipping fails”.
On Tuesday, South Korean authorities rushed to piece together a capital injection.
The Korea Development Bank, one of the company’s largest creditors, has yet to approve a disbursement of new funds to help alleviate the situation.
Even though a U.S. judge has allowed the company’s ships to enter United States ports without fear of seizure from creditors, there are concerns that Hanjin may not be able to afford to pay people to unload the vessels, Tom Corrigan of the Wall Street Journal reported on Tuesday.
Hanjin Shipping shares have tumbled 63 percent this year, compared with a 5.4 percent gain in the benchmark Kospi index.
Hanjin and its clients are scrambling to move an estimated $14 billion worth of cargo off ships that are no longer operating normally amid in the shipping industry’s peak season ahead of the year-end holidays.
About 86 of Hanjin’s ships were stuck at 50 ports in 26 countries, with vessels turned away out of concern the company has no cash to pay various docking fees and handling charges.
The French shipping company CMA CGM said that it would discharge the South Korean company’s containers already on-board its vessels to the final destination, but it would no longer load its containers on the carrier’s ships. Tuesday, the shipper’s parent company said it will pour $90 million into efforts to resolve the disruption. It will dispatch more than 20 substitute container ships next week to try to offload the cargoes.
A favourable ruling from a USA bankruptcy court this week protected Hanjin’s assets in the U.S. against creditors, while the shipping line proceeds with its reorganisation in South Korea.
“We formed the alliance to minimize losses for owners of goods in Southeast Asian routes caused by Hanjin Shipping Co. under court receivership and stand more formidably against global alliances, ” said an official of Hyundai Merchant Marine.
Not surprisingly, freight rates from South Korea to the US jumped immediately upon Hanjins bankruptcy.
Hanjin’s container vessels have food supplies, including drinking water and other essential goods, which can last for several weeks.
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