The bankruptcy of Hanjin shipping line has thrown ports and retailers around the world into confusion, with giant container ships marooned and merchants worrying whether tonnes of goods will reach their shelves.
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Hanjin’s problems come at a particularly poor time for the US retail industry.
The country’s second-largest shipping line, Hyundai Merchant Marine, has been linked with bid to acquire some of its rival’s assets, including profit-making vessels and routes and overseas business networks.
On Wednesday, Hanjin Shipping, South Korea’s largest and the world’s seventh-largest shipping company, filed for court protection after its creditors, led by the state-run Korea Development Bank (KDB), rejected its self-rescue scheme.
Smaller operators like Hanjin, which with 618,133 TEUs, or Twenty-foot Equivalent Units, of container capacity is in the lower tier of the top 10 shippers, can not muster the scale needed to get by.
A number of Hanjin ships which were in port at the time of its collapse have been impounded while others are effectively stranded at sea, unable to put in to port due to the risk of being seized. “This is going to play out for the next few weeks”.
Hanjin’s vessels, sailors and cargo are stuck in a maritime limbo as ports, wary they will not be paid for their services, refuse to let them dock and refuse to handle or free cargo already landed.
During six months of port slowdowns a year ago, the state lost nearly $770 million, according to Eric Schinfeld, president of the Washington Council on International Trade.
Another group, the Retail Industry Leaders Association, urged U.S. Secretary of Commerce Penny Pritzker and Federal Maritime Commission Chairman Mario Cordero to step in.
“While the situation is still developing, the prospect of harm is significant and apparent”, RILA President Sandy Kennedy said in a statement.
Stevedore Patrick says that Hanjin is a “very small customer and while it is early days we expect any effects to be marginal to Patrick”.
Marilee McInnis, a spokeswoman for Wal-Mart, said, “Right now, we are waiting to hear the final determination on bankruptcy proceedings and the implications to their current assets before we will be able to assess any impact”.
“The government will swiftly push forth corporate restructuring following the rule that companies must figure out how to survive and find competitiveness on their own while taking responsibility”, Finance Minister Yoo Il-ho said.
The Port of Virginia on Friday updated some policies announced on Wednesday, reflecting Hanjin’s connections with some other big ocean carriers that together make up the “CKYHE” alliance, by which they share space on one another’s ships.
One ship was already seized in Singapore by a creditor last week. (KOREAN) (PHONE INTERVIEW) “Shipping companies have a lot of customers outside of Korea”.
But since Cho’s son Yang-Ho took over in 2014, Hanjin Group has spent about 1.2 trillion won ($1.07 billion) trying to save the troubled shipping company, which has foundered as freight rates have tanked due to weak demand and soaring global capacity.
Hanjin’s bankruptcy was a major factor, he said, although rates also were affected by the upcoming Chinese National day holiday, which will close factories, and by shipping lines sidelining vessels to reduce overcapacity.
“Some of their clients would be anxious about getting their cargo if the vessels can’t enter ports”, said Shin Ji Yoon, an analyst at KTB Investment & Securities Co.in Seoul.
Hyundai Merchant plans to add four vessels to the US starting September 9, and nine on Europe routes later this month. “We called the [shipping] agents and said, ‘What is going on?’ and they said they were told to stop”. Nippon Yusen isn’t part of the same alliance but has a business partnership with Hanjin, spokesman Brandon Kitamura said.
South Korean shipping line Hanjin has filed for bankruptcy.
Hanjin filed for court receivership this week after creditor banks made a decision to end financial support. It is also not accepting export loads for Hanjin ships.
However, the Subic Bay shipyard of Hanjin Heavy Industries, which employs some 28,000 people here in the Philippines, is unaffected by the woes of Hanjin Shipping.
The Hanjin group suffered a severe blow to its reputation in 2014 when Cho Hyun-ah, Cho Yang-ho’s daughter and a vice president of Korean Air, threw a tantrum over how macadamia nuts were served to her on a flight and ordered the plane she was on to return to the gate at John F. Kennedy Airport in NY.
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The price from China to West Coast ports rose from $1,100 per container to as much as $1,700 on Thursday, while the cost from China to the East Coast jumped from $1,700 to $2,400, he said.
