The shipping company’s shares rose more than 20% on the news of a lifeline.
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Hanjin Shipping’s 68 vessels were reported to have been stranded at 44 ports around the world, four days after the cash-strapped shipping company filed for court receivership after failing to receive additional help from its main creditors.
South Korea’s financial regulator said the company wanted to extend the legal action to cover 40 countries as it seeks to protect its fleet. There were reports that some Hanjin ships had been seized in China on behalf of creditors. The company is at risk of creditor action in the USA, and its current financial state renders it impossible to repay 3.14 trillion won of loans maturing within one year, the filing showed.
“The most important thing that we need to do is ensure that the cargo keeps moving”, said Mario Cordero, chairman of the Federal Maritime Commission, which regulates the shipping industry.
“The government asked Hanjin Group to pay some overdue fees and payments to resolve outstanding cargo issues, saying that it can help”, said Ryu Jae-hyun, an analyst at Mirae Asset Daewoo Securities.
Many port authorities and port service providers are demanding cash to work on Hanjin ships, the Hanjin spokeswoman said.
If the moratorium is granted by the Singapore courts it would also put a stay on proceedings against the Hanjin Rome, which was arrested in Singapore on 30 August, the day before Hanjin Shipping filed for receivership in the Seoul courts.
The troubled shipper may get another 100 billion won in policy loans, as Korea’s government and the ruling Saenuri Party agreed Tuesday to provide collateralized loans as part of measures to minimize the aftermath of Hanjin’s collapse.
Global demand and trade have suffered since the 2008 recession, while steamship lines continued to build more and larger vessels – vast ships that were conceived as cost-effective when freight costs were higher several years ago.
“The ongoing disruption to HP’s supply chain caused by the Foreign Debtor’s bankruptcy filings is material, costly, and worsening on a daily basis”, it said.
Hanjin accounts for 7.8 per cent of trans-Pacific trade volume for the U.S. market and a Hanjin bankruptcy would be the largest ever for a container shipper.
But weaker trade and overcapacity have sent ocean shipping rates plunging in recent years.
As of Tuesday, 73 of 128 of Hanjin’s vessels have had their operations disrupted, with more expected to follow in the coming days, according to Hanjin officials.
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Korea Shipowner’s Association said that 410,000 TEUs out of 1.2 million cargos operated by Hanjin Shipping were already shipped.
