South Korean giant Hanjin Shipping said Friday about a third of its cargo fleet – some forty vessels – is marooned at sea or has been seized at ports, as the industry staggers after its biggest ever bankruptcy filing. “One lesson for shippers is to maintain multiple carrier options and to spread shipments across multiple carriers to avoid being stuck in such situations”. APM-Maersk controls 15.4 percent of shipping capacity.
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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. TVs, cars and sneakers sail about 10 days to reach Los Angeles from Asia, while they could take as many as 30 days to Rotterdam. It is also not accepting export loads for Hanjin ships.
“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. “This is going to play out for the next few weeks”. The Wall Street Journal reports US exporters are jostling to rebook containers with other carriers to reload their cargos, ahead of the retail boom that accompanies Thanksgiving, Hannuka and Christmas.
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.
United States retailers, bracing for fallout from Hanjin’s woes as they stock up for the crucial Christmas holiday sales season, have asked Washington to step in to help resolve a growing crisis, the Wall Street Journal reported Thursday.
One Japan-based trader handling Middle East aluminum said his company had “switched away from Hanjin some time ago”, and so was not impacted.
Target Corp. said it is watching the situation closely and Wal-Mart said it is waiting for details about Hanjin’s bankruptcy proceedings and the implications to its merchandise before it could assess the effect.
A Seoul court on Thursday made a decision to start rehabilitation proceedings for the company, Hanjin said in a separate regulatory filing. A revival plan must be submitted by November 25, said the court, which also named the company’s Chief Executive Officer Seok Tae Soo as the manager. Ships leaving ports around the world have been told to drop anchor and stay put until further notice, sources said. Another was seized in Singapore late Monday.
The confusion might sink some trucking firms that contract with Hanjin to deliver cargo containers carrying everything from electronics to auto parts from ports to company loading bays.
Even the biggest ocean shipping company, A.P. Moller-Maersk, is seeing its profits fall, and scrambling to cut costs. And it’s responsible for about 5 percent of USA shipping trade. Trading in its shares were suspended after a 24 percent plunge Tuesday to their lowest level since December 2009.
Until Hanjin, carrier bankruptcies were confined to smaller lines, but if a carrier this size goes down, it sends a signal of just how vulnerable ocean carriers are if they are not able to increase their rates in the coming year.
On Thursday (Wednesday in North America), a court in Seoul accepted Hanjin Shipping’s application for receivership, which gave the company time to put together a revival plan that is due by November 25, Bloomberg reported.
Philippine port operators said on Friday the collapse of South Korean-based Hanjin Shipping will have minimal impact on their operations.
Hyundai Merchant plans to add four vessels to the USA starting September 9, and nine on Europe routes later this month. Japanese shipping companies Kawasaki Kisen Kaisha Ltd. and Nippon Yusen KK said they are working to limit delays to clients’ cargo. Nippon Yusen isn’t part of the same alliance but has a business partnership with Hanjin, spokesman Brandon Kitamura said.
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.
KDB and analysts said Hanjin would need to generate 1 trillion to 1.2 trillion won ($1 billion to $1.08 billion) from a restructuring plan to keep the company running until next year.
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Major Hanjin customers, like Samsung Electronics, said they were striving to minimize the impact on their own businesses.
