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.
Advertisement
LG was seeking alternatives among other shippers including, Hyundai Merchant Marine, South Korea’s second-largest container line.
Hanjin Shipping, South Korea’s biggest shipping firm, announced the filing for receivership and a request to the court to freeze its assets, which the Seoul Central District Court planned to grant. Hanjin vessels also reportedly faced the possibility of seizure at some ports.
Only empty Hanjin containers are being accepted at the port’s Pinners Point Container Yard. One vessel has also been seized by a creditor in Singapore while firms in the USA have launched legal action against Hanjin to seize vessels and other assets over unpaid bills.
A San Miguel Corp. official said the conglomerate was not affected by the Hanjin shipping crisis, specifically the delivery of coal to power plants. 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.
“Some of their clients would be anxious about getting their cargo if the vessels can’t enter ports”, said Shin Ji Yoon, an analyst at KTB Investment & Securities Co.in Seoul.
The National Retail Federation, the world’s largest retail trade association, wrote to the USA secretary of commerce, Penny Pritzker, and the Federal Maritime Commission chairman, Mario Cordero, on Thursday, urging them to work with the South Korean government, ports and others to prevent disruption.
They had received several hundred tons of secondary ADC12 aluminum ingot from South China at a minor port in east Japan two weeks ago, and the cargo had been offloaded already.
“This is a serious predicament for a lot of companies”, said Jock O’Connell, global trade adviser at Beacon Economics. As of Thursday, 13 ports in nine countries have refused to let Hanjin’s vessels dock for fear that they will not get paid.
The price of shipping a 40ft container from China to the USA jumped by up to 50% 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, who predicted the higher prices would last a month or two. Shipping rates have soared as a result, increasing to $2,300 per container by Thursday, up from $1,700 four days earlier.
Over the past several years the container industry has struggled with a combination of an overcapacity of space on vessels, low freight rates and a sluggish global economy, which has made it extremely hard for container lines to operate profitably.
The shipping industry has struggled with overcapacity prompted by an increase in shipbuilding and a slowdown in global trade. But without a longer-term fix, Hanjin may be just the first to founder, Giannetta said. A few months ago, Poskus said, prices hit historic lows globally down to as much as $600 per container from Shanghai to Los Angeles. Brokers said freight rates likely would continue to rise in coming days as cargo owners are trying to get their goods from stranded ships and are willing to pay a premium.
Poskus expects the spike in prices to last a month or two.
Advertisement
Hanjin’s shares, which have been suspended since plunging 24 percent on Tuesday, will resume trading on September 5, the stock exchange said.
