Hanjin filed for bankruptcy Wednesday in Seoul, South Korea.
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Suppliers with goods that have yet to leave Asian ports, and that had been scheduled for Hanjin ships, are hustling for new shippers.
But the failure of the firm, which ranks as the world’s seventh-largest shipper of containers, is unlikely to have a significant impact on operations at the Port of Felxistowe, with none of Hanjin’s own ships now operating on routes calling at the port.
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.
“Finally, given that Hanjin is part of a larger shipping alliance, uncertainty about its future is effecting the ability to move cargo unassociated with Hanjin”.
There were fears over a Christmas shopping crisis after one of the world’s biggest shipping companies was left with a third of its cargo fleet marooned at sea.
Richard Ormond, a lawyer at Buchalter Nemer, which specializes in receiverships, said he has a client with $3 million worth of goods aimed for holiday sales stuck on a Hanjin vessel.
“It’s going to be exceptionally hard to turn it around as cargo owners are going to be very wary of booking with Hanjin, for fear that their boxes may be stuck in port if Hanjin vessels get arrested by the creditors”, said Alan Murphy, CEO of consultants SeaIntel Maritime Analysis. The alliance includes China COSCO, Yang Ming Marine Transport Corp and Evergreen Marine Corp Taiwan Ltd. Shipments through Hanjin account for between 15 percent and 20 percent of LG’s deliveries to America. Almost a dozen Hanjin vessels have been seized by creditors, ports authorities and others in China and Singapore in the wake of the bankruptcy announcement.
If Hanjin doesn’t offload here, then it can’t be used to ship Washington products overseas either.
The failure of the world’s seventh biggest containerline, one that controls almost a tenth of transpacific trade, has the US National Retail Federation (NRF), the world’s largest retail trade body urging Washington to liaise with Seoul to minimise disruption, particularly in ports and reports that US trucking might suffer due to cancelled haulage contracts.
Other shipping lines may take on some of Hanjin’s traffic – but at a price. “I think it will have more impact on somebody whose cargo is in one of those containers”.
He added that air freight volumes would probably rise to replace urgent orders stranded in ports or at sea.
Philip Damas, Director at Drewry, said: “The Hanjin bankruptcy means a shock to the market – some of our shipper customers are making contingency plans and asked us to assess the impact of this on their supply chains”.
Hanjin Shipping’s local-currency notes due June 2017 tumbled to 13.4 percent of face value as of 3:29 p.m.in Seoul, according to Korea Exchange prices, after fetching 90 percent in March.
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The bankruptcy of Hanjin Shipping will have supply chain managers scrambling for transport alternatives during Peak Season, as global seaports also struggle to find ways of mitigating the impact of this colossal event.
