Bloomberg reported that South Korean electronics giant Samsung said it has about $38 million United States in goods aboard two ships at Long Beach, in a document Hanjin filed as part of its court petition.
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One Hanjin captain operating a ship in global waters near Japan said his vessel has been given permission to enter a Japanese port Wednesday to unload cargo, but will be required to head back out soon after.
Vessels stranded in the ocean belonging to a South Korean shipping company that filed for court protection spell higher profits and lower bond risk for troubled Japanese competitors-at least for a while.
The main creditor of Hanjin Shipping refused a South Korean court’s request to give further financial support to the debt-ridden shipper, local news reported on September 8.
On Tuesday, South Korean officials said the government might provide the carrier with about $90.60 million of cheap loans if Hanjin’s parent company provided collateral.
While Hanjin’s filing was not the only factor (China’s upcoming Golden Week holiday is also contributing), the shipping price from China to the US west coast rose from $1,100 per container to as much as $1,700, and the price from China to the USA east coast from $1,700 to $2,400 last week.
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.
Hanjin Shipping, like Samsung a South Korean firm, collapsed last week. “It means the containers on board these vessels will soon be discharged and make the way to the store shelves”.
Samsung Electronics has said it has goods worth about $38m on Hanjin ships in worldwide waters. But Hanjin Shipping, with $5.5 billion in debt, would be the largest cargo carrier to fail if the company is dissolved.
“The number of people who are providing services as part of a complete logistics chain, it is staggering”, said Charles Gale, deputy city attorney in Long Beach. “Despite difficulties at individual carriers, we expect the fundamental imbalance to remain a problem in the industry in the longer term”.
Australia has adopted and legislated the Model Law in the Cross-Border Insolvency Act 2008 (Cth) and Australian courts have recognised a number of foreign shipping insolvencies over recent years, including some other Korean shipping receiverships.
The 381-acre former naval property brings in about $81 million for the port, but the lease expires in 2027.
“September is the peak season” for shipping before seasonal holidays, said Seigo Ando, a senior analyst at Mitsubishi UFJ Morgan Stanley Securities.
What supplier would tow a large container vessel into a port or deliver supplies to the crew, knowing that the owner is unable pay for the service?
Currently, Hanjin’s fleet is carrying roughly $14.5 billion dollars worth of cargo and its inability to reach port is considered a significant threat to the global logistics network.
Gold said it was “too early to say” what the impact of the Hanjin crisis might be on retailers taking in large volume shipments for the upcoming holiday season.
A Hanjin Shipping Co ship is seen stranded outside the Port of Long Beach, California, September 8, 2016. That includes $36 million from the personal fortune of the company’s chairman.
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Singapore-based crop shipper Agrocorp International said DP World, terminal operator at Port Metro Vancouver, last week held 24 containers, or 660 tons, of its Canadian lentils that were bound for India and Bangladesh, demanding a release fee of $450 per container. Retailers in the United States depend heavily on it to bring such things as shoes and flat-screen televisions from the Pacific Rim, a top trading partner for the US market, especially California.
