[Updated] Hanjin: U.S. Retailers Call for Help

Hanjin

By MarEx 2016-09-02 18:30:35

U.S. retailers urged their government to take steps to minimize disruption from the collapse of South Korea's Hanjin Shipping as more of its vessels have been seized or blocked from entering ports around the world.

The failure of the world's seventh-largest container shipping company comes during the industry's busiest season ahead of the year-end holidays, and has also sent manufacturers scrambling as they worry about the fate of their cargo and surges in freight rates.

“While the situation is still developing, the prospect of harm is significant and apparent,” said Sandy Kennedy, president of the U.S. Retail Industry Leaders Association in a Thursday letter to the Department of Commerce and the Federal Maritime Commission. “The impact on importers and exporters is having a ripple effect throughout the global supply chain,” he said.

“U.S. bound cargo is already being delayed at origin ports and Hanjin ships loaded with cargo idle unable to enter U.S. ports, containers are being detained on arrival clogging already congested ports and preventing merchandise from reaching store shelves. Further, the inability to return empty containers is causing backups and interfering with chassis availability. 

“Finally, given that Hanjin is part of a larger shipping alliance, uncertainty about its future is effecting the ability to move cargo unassociated with Hanjin. We understand that U.S. exporters are experiencing similar disruptions, as outbound cargo is turned away for the same reasons.”
 
Hanjin accounts for 7.8 percent of trans-Pacific trade volume for the U.S. market.

Hanjin filed for court receivership this week after creditor banks decided to end financial support. Adding insult to injury, it has also been suspended from the CKYHE shipping alliance, which includes COSCO and Evergreen.

Port Operations Resume

South Korea's oceans ministry said on Friday the port authorities of Busan and Incheon will guarantee payments for qualifying services offered to Hanjin Shipping Co Ltd vessels.

The ministry said in a statement it is taking measures to ensure that cargo-related services for the troubled shipping company's ships will resume.

Lashing operations for two Hanjin ships have resumed in Busan as of 10 a.m. Friday, the ministry said, while another Hanjin vessel scheduled to arrive in Incheon at 5 p.m. Friday will be able to get relevant services to enter the port and offload cargo.

Some 44 of Hanjin’s 98 ships have been so far denied access to ports while one ship has been seized, a company spokeswoman said on Friday.

The 44 ships include instances where port service providers such as lashing firms have denied service, or port authorities are denying entry to ports, the spokeswoman added.

Minimal Effect for Maersk

Maersk Line said on Friday it expects minimal impact on its customers' cargo. On August 30, the line instructed its global operations centers to not load any cargo onto Hanjin owned vessels.

Customers have cargo on board two of Hanjin's operated vessels, Maersk Sebarok and Maersk Senang, sailing on the Chennai Express service between Far East Asia and South East India.

The vessels Hanjin New Jersey and Hanjin Florida sailing on the Mashariki service between Far East Asia and East Africa are both operated by Maersk Line, and are neither owned nor operated by Hanjin Shipping.

Survival Plan 

A South Korean court has ordered the start of rehabilitation proceedings and set a November 25 deadline for the carrier to submit a plan, appointing Hanjin Shipping CEO Suk Tai-soo as trustee.

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.

"It's going to be exceptionally difficult to turn it around as cargo owners are going to be very wary of booking with Hanjin, for fear that their boxes may be stuck in port if Hanjin vessels get arrested by the creditors," said Alan Murphy, CEO of consultants SeaIntel Maritime Analysis.

Hanjin's shares, which have been suspended since plunging 24 percent on Tuesday, will resume trading on September 5, the stock exchange said.