South Korea’s Hanjin Shipping Co Ltd. filed for court receivership on Wednesday after losing the support of its banks, setting the stage for its assets to be frozen as ports from China to Spain denied access to its vessels. A fourth vessel that was supposed to leave Long Beach on Thursday morning remained anchored inside the breakwater. On the Shanghai-Rotterdam route, perhaps the world’s most important shipping lane, spot rates have jumped 39 percent, Drewry said.
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Hanjin operates partly with its own ships, and partly with vessels it leases from others. Hanjin ships 18 percent of Korea’s exports to North America and 22 percent of imports from the region. “Someone from the garment industry called earlier today asking: ‘How long is this going to go on, because I’ve got clothing out there,”‘ Louttit said.
Ports, fearing they will not get paid, refuse to let them dock or unload.
One U.S. importer said he was getting rate quotes of $2,000 a container, compared with $700 before the Hanjin news.
But service for Hanjin ships resumed at South Korea’s main ports of Busan and Incheon on Friday after the government said port authorities would guarantee payments for service providers. Other manufacturers of major mechanical and large-electronic products, including Samsung, have also confirmed feeling the Hanjin-related pinch.
“We decided quickly to begin court receivership for Hanjin Shipping, the country’s leading shipper and the world’s major container shipping line, given its presence in the local shipping industry and its impact on the economy as a whole”, the Seoul Central District Court said.
The Port of Virginia on Friday updated some policies announced on Wednesday, reflecting Hanjin’s connections with some other big ocean carriers that together make up the “CKYHE” alliance, by which they share space on one another’s ships.
Jon Talton of The Seattle Times writes that the effects of the bankruptcy “could be profound”.
Shipments bound for U.S. retailers are either sitting in Asia, onboard Hanjin ships now stuck out at sea, or in USA docks.
A bankruptcy for Hanjin Shipping would be the largest ever for a container shipper in terms of capacity, according to consultancy Alphaliner, exceeding the 1986 collapse of United States Lines.
The 255-metre long container ship, Scarlet, is anchored in the port of Prince Rupert.
They said the firm failed to present a viable plan to turn around its business, which has been in the red every year since 2011 amid slowing demand in China and rising charter fees to shipowners.
LG Electronics told Reuters it was cancelling orders with Hanjin and seeking alternatives to ship its freight.
A report on the company’s financial status is due by September 28, the local Yonhap News Agency reported, citing the Seoul Central District Court.
With Hanjin not taking bookings, freight rates are expected to climb as shippers who typically booked with Hanjin look to place containers on other vessels.
“The bankruptcy is a slap in the face to an industry that hasn’t adequately addressed the issue of overcapacity”, said Jock O’Connell, worldwide trade adviser to Beacon Economics.
The price of shipping a 40-foot container from China to the USA jumped up to 50 percent 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.
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.
“It ends up costing more money for everyone”, said Harris.
Even the biggest ocean shipping company, A.P. Moller-Maersk, is seeing its profits fall, and scrambling to cut costs. The ship was set to ship electronic goods overseas, the sources said.
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It’s a case of unprecedented scale, with experts expecting the deadlock to last for weeks, if not months.
