The tenuous financial situation of Hanjin Shipping – the world’s seventh-largest container shipping company, which accounts for almost 8 percent of America’s Pacific maritime trade volume – has made headlines for days as dozens of the outfit’s vessels sit stranded at sea.
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Still, shipping prices have spiked in the wake of Hanjin’s ongoing legal disputes, and companies and retailers could be forced to either raise prices on the shelves or take a sizable earnings hit.
A third ship, the Hanjin Greece, was off the shore of Mexico, where it could avoid USA anti-pollution regulations that require use of low-sulfur fuel, the tracking group said.
South Korea’s Hanjin Shipping Co has been keeping up with its rent payments for the use of wharfs at Kaohsiung Port, even though the container carrier has applied for bankruptcy protection in the U.S., the Ministry of Transportation and Communications said yesterday, adding that it would meet with Taiwanese shipping firms today to determine how they would respond to the changing circumstances.
Creditors of Hanjin Shipping, led by the state-run Korea Development Bank, said earlier it would not extend fresh financial aid to the ailing shipper now under court receivership, calling on the shipper to provide collateral for their funding.
Another container ship, Hanjin Mexico, has stopped operation because the ship owner, PIL, refused to allow it to sail due to overdue charter fees from the shipping line. With the South Korean shipper in receivership, it is unclear if shippers would recoup any added costs they pay out of pocket to retrieve their goods.
Singapore-based crop shipper Agrocorp International said that DP World, terminal operator at Port Metro Vancouver, last week held 24 containers, or 600 tonnes, of its Canadian lentils that were bound for India and Bangladesh, demanding a release fee of $450 per container. “If that comes to pass, Korea’s exports would depend heavily on the service of foreign shipping lines”.
Karatzas says Hanjin is more than $5 billion in debt, and an emergency rescue plan in South Korea was rejected by creditors earlier this week. “However, inventory availability is good”, Paul Toms, CEO of Hooker Furniture (HOFT.O), said on an earnings conference call on Thursday. But “there is going to be some pricing pressure”.
“We are responding to increased demand in the transpacific”, said Klaus Rud Sejling, head of Maersk Line’s East-West Network.
Hanjin now has 43 ships en route to deliver goods and has “no idea when their cargo will be unloaded”, CEO of the maritime analysis outfit SeaIntel Lars Jensen said to the Journal.
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Container freight charges have more than doubled since May and could appreciate further, the agency said.
