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.
Advertisement
The trade organization forecasts that major US retail container ports will handle 1.61 million Twenty-Foot Equivalent Units this month, down 0.6% from the same month a year ago, and said that “all parties” must work together to ensure that cargo gets onto retail warehouses and store shelves as intended. At the same time, they have been increasing capacity and building larger and larger ships while prices have fallen.
“Our business relations with Hanjin Shipping are very limited – most notably, we have a vessel-sharing agreement on the trade between North East Asia and the East Coast of India”, the company said in a statement.
Freight charges from South Korea surged about 50 percent after Hanjin Shipping filed for court receivership Wednesday, Korea Economic Daily reported, citing shipping industry officials it didn’t identify. Because assets are being frozen, ships from China to Canada are being refused permission to offload or take aboard containers because there are no guarantees tugboat pilots or stevedores will be paid.
Wal-Mart Stores Inc., the world’s largest retailer, said it was too early to see what effect the Hanjin situation will have.
The South Korean giant represents almost 8 percent of the trans-Pacific trade volume for the US market.
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 PPA said there are about 100 boxes for export pending at the South Harbor to be handled by Hanjin, but the cargo owners could transfer it to other shipping lines.
Some 44 of Hanjin’s 98 ships have been so far denied access to ports while one ship has been seized, a company spokeswoman said on Friday.
“No, because Hanjin has issued clearance that so long as all chargers paid, the importer may claim their containers so long as they return the empties to Hanjin’s designated container yard”, he added.
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.
A spokesman for the Port of Felixstowe, the UK’s largest container port, said that, in line with its normal practice, the company would not comment on commercial matters.
Chris Rogers, a research analyst at Panjiva, which tracks worldwide imports to the United States, said the situation isn’t yet dire but could become so.
About 10 more were impounded at Chinese ports, including Tianjin and Shanghai, for failing to pay service providers, the Korea International Trade Association said.
Another group, the Retail Industry Leaders Association, urged U.S. Secretary of Commerce Penny Pritzker and Federal Maritime Commission Chairman Mario Cordero to step in. It said the bankruptcy is rippling through the global supply chain and could cause significant harm to consumers and the USA economy.
LG Electronics said it expected some delays on home appliance shipments, since Hanjin was handling about a fifth of its North America-bound cargo.
“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.
Ocean freight shipping fees between China and the United States have soared as much as 50 percent since the bankruptcy was announced, although experts expect the increase to be temporary. But Hackett said that will be a short-term thing that is focused primarily on Hanjin customers.
Global demand and trade have suffered since the 2008 recession, but steamship lines continued to build more and larger vessels.
Hyundai Merchant Marine, Korea’s No. 2 shipper, has added 13 ships on routes to the American and European regions to replace Hanjin Shipping’s capacity.
Even the biggest ocean shipping company, A.P. Moller-Maersk, is seeing its profits fall, and scrambling to cut costs.
Advertisement
Poskus expects the spike in prices to last a month or two.
