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Hanjin Collapse Leaves Crews and Cargoes Stranded

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By Paul Benecki 2016-09-02 00:07:15

The list of parties affected by the Hanjin bankruptcy continued to grow Wednesday with reports of additional vessel arrests and disruption to other segments of the supply chain. 

Many segments of the supply chain with ties to Hanjin may be impacted in the course of the line’s bankruptcy: shipowners; crew; shipping alliances; ports; pilots; harbor tug operators; chandlers; bunker dealers; crewing firms; hauliers; container lessors; cargo owners; freight forwarders; manufacturers; retailers; and consumers, who may not see as many South Korean-made LG televisions on the shelves this Christmas as so many were booked on Hanjin sailings. 

Just before the busy holiday season, "there are some 540,000 containers with cargo caught up at sea," said Lars Jensen, CEO of Sea Intelligence Consulting, speaking to BBC. 

As most of the cargo is delayed rather than damaged, the owners are unlikely to be able to file an insurance claim for any losses due to the holdup – even if goods are held for months, says Ron Atapattu, president of freight forwarder Overseas Cargo, Inc.

His firm has not felt the direct effects, but he expects that going forward, Hanjin’s competitors will use the disruption as a reason to raise rates. "Container rates have been depressed for some time, and the carriers are likely to use this as an opportunity to charge more for many routes, not just Hanjin's," he says. "With all of the news of the supply chain problems from Hanjin's collapse, corporate logistics employees will be primed to accept the rate increases rather than take risks.”

Reuters reports that as of Thursday, the cost of shipping a 40-foot container on the Busan-Los Angeles route has jumped about 55 percent, from $1,100 to around $1,700.

An Idled Fleet 

Hanjin owns nearly 40 container ships valued at a combined $1.4 billion, according to VesselsValue.com; in addition, it has over 50 container ships chartered-in. This combined 600,000 TEU of capacity accounts for roughly three percent of the world's container fleet, and it has been effectively sidelined overnight, left to await the resolution of Hanjin's operating status. 

The majority of Hanjin's vessels remain at sea or at anchor. At least a dozen vessels have been detained or are expected to be detained, including the Hanjin Europe in Hamburg, the Hanjin Rome in Singapore and at least ten more ships in China, according to the Korea International Trade Association.

At least one is in port awaiting orders. The chartered-in ship Hanjin Vienna has been at the Deltaport terminal in Vancouver since August 30; she was scheduled to depart the same day but remains at the pier. 

"The Hanjin Vienna completed cargo operations Tuesday evening and is still at GCT Deltaport awaiting instructions from her owners. If she does not sail to a foreign port, she will be moved to anchorage to free up the berth," GCT Canada spokeswoman Louanne Wong said in an emailed statement. "At present, the carrier is unable to make or guarantee payments for future vessel arrivals and cargo handling. GCT Canada has made the decision to suspend receiving cargo for Hanjin."

Reverend Peter Smyth of the Mission to Seafarers' office in Vancouver, BC said that the crew of the Hanjin Vienna were in good shape, but they do not yet have information on when they will be able to return to their families. 

"We brought them some supplies, some milk and some bread," he said. "They were lucky and got paid before the news of the bankruptcy broke, but they're concerned about when they'll get to go home."

Rev. Smyth noted that the crew was also fortunate in that the Vienna was alongside at the time of the bankruptcy. Many of their fellow seafarers on other Hanjin ships are at anchor or at sea, with limited options for resupply of food or fuel.