Around $14 billion of cargo has been tied up globally as ports, tugboat operators and cargo handling firms refuse to work for Hanjin, the world’s seventh-largest container carrier, which filed for receivership in a Seoul court last week.
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Finance Minister Yoo Il-ho said at a government meeting that he expects the cargo crisis caused by Hanjin’s slide toward bankruptcy will begin to ease this week, according to a ministry statement.
Hanjin’s main creditors said it would be hard to accept a request from the court presiding over the company’s receivership to give it fresh funds. HPR’s Bill Dorman has more in today’s Asia Minute.
Hanjin Shipping entered court receivership on September 1, after its creditors halted financial support to the debt-ridden shipper. “Meantime retailers are scrambling to find alternate shipping options in this important run-up to the holiday season as merchandise is coming through now”.
South Korean authorities, criticized for propping up failing companies in the past, have shown little appetite to step in to save Hanjin.
Hanjin’s parent company, Hanjin Group, planned to raise around US$90 million to help cover the cost of unloading cargo, but the court said the amount was inadequate and that it wasn’t clear when that plan would be executed, the report said.
South Korean government officials have also said government-backed creditors are ready to provide a separate 100 billion won in funds if Hanjin Group, the parent firm, provides collateral.
Hanjin Shipping won a provisional ruling Tuesday, protecting its assets in the USA against creditors, while the shipping line proceeds with its reorganisation in South Korea.
An American court temporarily approved Hanjin Shipping’s application for bankruptcy protection.
“Our ships can become ghost ships”, Kim Ho Kyung, a manager at Hanjin Shipping’s labor union, told Bloomberg.
Hanjin Shipping filed for bankruptcy protection last week after its proposal for restructuring failed to pass muster with lenders led by state-owned Korea Development Bank. The port said the railway had agreed to move the containers coming off the ship.
Attorneys for the South Korea based- Hanjin Shipping said the company got approval from the bankruptcy court in its home country to spend roughly $10 million to unload cargo from four ships that were headed to ports in the USA, according to an investors update from Teresa Lii, a legal analyst at Reorg Research.
“Right now, there is much more (freight) demand than there is supply”.
The global shipping industry has been operating at a loss since the end of 2015, and it’s set to lose about $5 billion this year amid an oversupply of vessels, according Drewry Maritime Research.
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Decisions by the owner family have also been cited as a major factor in Hanjin Shipping’s financial woes. The company’s assets were frozen-stranding ships-many of which have been unable to unload or take on cargo.
