South Korea’s Hanjin Shipping company saw ships left at sea or seized at ports after a filing for bankruptcy protection, with press reports saying the company faces a cash shortage.
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The South Korean giant filed for bankruptcy protection on Wednesday, Aug. 31, and stopped accepting new cargo. With its assets being frozen, ships from China to Canada found themselves refused permission to offload or take aboard containers because there were no guarantees that tugboat pilots or stevedores would be paid. Both the 10,100 teu Hanjin Greece and 3,400 teu Hanjin Constanza are reported to be idling off the Ports of Los Angeles and Long Beach having arrived after Hanjin filed for court receivership in Korea on Wednesday.
A fourth has been prevented from leaving until payment is settled.
However, industry insiders and analysts have said it is unlikely that Hanjin Shipping can survive as creditors make claims on its assets and customers looks elsewhere, setting the stage for what would be the industry’s largest-ever bankruptcy in terms of capacity. But another ship previously anchored at sea, the Hanjin Constanza, came into the Los Angeles port Thursday afternoon. It arrived August 30.
But the failure of the firm, which ranks as the world’s seventh-largest shipper of containers, is unlikely to have a significant impact on operations at the Port of Felxistowe, with none of Hanjin’s own ships now operating on routes calling at the port.
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.
Ten Hanjin vessels were either seized or denied access at Chinese terminals in Shanghai and Tianjin over the past 48 hours, according to local media reports, with another vessel seized in Singapore earlier the week. Hanjin Shipping spokesman Park Min did not confirm any other seizures. Workers in the Korean port of Busan refused to work on a ship because the company hasn’t paid dues, forcing the cancellation of a berthing.
South Korea’s Hanjin Shipping Co. container ship Hanjin Montevideo, top, is anchored outside the Port of Long Beach in Long Beach, Calif., on Thursday, Sept. 1, 2016.
Also affected are ships not owned by Hanjin but contracted by it or belonging to its alliance members, along with cargo and containers on board those vessels.
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.
US National Retail Federation vice president for supply chain and customs Jonathan Gold commented: “Retailers’ main concern is that there is millions of dollars worth of merchandise that needs to be on store shelves that could be impacted by this”.
“U.S. -bound cargo is already being delayed at origin ports and Hanjin ships loaded with cargo idle unable to enter USA ports, containers are being detained”, she stated. If Hanjin ships with cargo fail to dock at ports, exporters could also have to bear additional expenses on extra loading and offloading of goods, as well as on finding other vessels for shipping their goods to the final destinations.
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The company is foundering under a debt estimated at some six trillion won ($5.37 billion), posting a net loss of more than 473 billion won in the first half of this year after racking up total net losses of about 1.2 trillion won over the past three years.
