Ailing Korean shipper Hanjin moves to resolve cargo chaos

Samsung Electronics and LG Electronics have been customers of Hanjin Shipping. Out of 141 vessels the company operates, 68 were not operating normally, were stranded or seized, as of Sunday. The company reportedly filed for bankruptcy in the United States last Friday.

Hanjin’s bankruptcy would be by far the largest in the history of container-shipping, which is suffering from its worst downturn in six decades.

The troubled shipping company filed for bankruptcy protection at the Seoul Central District Court on August 31 and requested the court to freeze its assets, after losing support from its banks.

As of Monday, 79 Hanjin ships including 61 container ships and 18 bulk carriers have been denied port access, according to South Korea’s maritime ministry.

Drewry Maritime Research said in a note on Monday it was hard to see how Hanjin can survive as customers look for alternative carriers.

It left the company’s fleet around the world in uncertainty and unable to enter ports as creditors were eager to seize and repossess the vessels.

Hanjin vessels are now carrying cargo worth 16 trillion won ($14.5 billion) belonging to some 8,300 cargo owners, the Korea International Trade Association said, adding that the carrier has unpaid bills of 610 billion won.

South Korea’s financial regulator said the owners of Hanjin Shipping should take more action on the container line, whose court receivership filing last week is roiling the supply-chain of companies ahead of the year-end holiday shopping season.

The Hanjin Group’s Chairman Cho Yang Ho and the shipping company’s largest shareholder Korean Air Lines should take steps to ease the disruptions, Yim said. Last week, creditors led by the Korea Development Bank rejected a plan by Hanjin Group to spend another 500 billion won ($447.2 million) to rescue the shipping firm, way short of Hanjin Shipping’s more than 6 trillion won ($5.37 billion) in debts.

“What’s most desirable, of course, is for Hanjin Shipping to revive itself”.

Almost 80 Hanjin vessels have been either seized or denied cargo handling or docking at ports in countries including the US, China, Japan, Spain and Canada, South Korea’s government said Monday.

It was more uncertain what would happen in jurisdictions such as Hong Kong, China and Singapore that have not signed the Model law, they said.

Hanjin Shipping shares plunged 30 percent to a record low on Monday, ending 13.7 percent lower as trading resumed after being halted since August 30 when banks pulled support.

“The top priority is to help Hanjin ships have their freight safely offloaded in the port”, said the official.

Hanjin accounts for 7.8 percent of trans-Pacific trade volume for the US market.

The Korean Government is said to have chose to slowly move Hanjin towards liquidation, which would be biggest bankruptcy in the shipping industry.