Hanjin: U.S. Retailers Call for Help

“U.S. bound cargo is already being delayed at origin ports and Hanjin ships loaded with cargo idle unable to enter US ports, containers are being detained on arrival clogging already congested ports and preventing merchandise from reaching store shelves”.

Freight charges from South Korea surged about 50 percent after Hanjin Shipping filed for court receivership Wednesday, Korea Economic Daily reported, citing shipping industry officials it didn’t identify. With its assets frozen, ships were refused permission to offload or take aboard containers because there were no guarantees that tugboat pilots or stevedores would be paid.

The new restrictions follow others that took effect Wednesday, banning any inbound cargo from Hanjin, as well as any Hanjin containers for export, at any of the port’s marine or intermodal terminals.

State-run Philippine Ports Authority said there was no request from the Korean government or any of the creditors of Hanjin to hold the vessels.

And it added that port terminals throughout the USA said they will turn away outbound containers destined for Hanjin ships, which, in turn, forces “U.S. exporters to rebook, truck, reload and repack their cargo into other carriers’ containers”.

The potential for cargo to be stranded, perhaps indefinitely, is unnerving for many – particularly as industry insiders and analysts believe that Hanjin has little chance of being rehabilitated and its assets will eventually be liquidated. Hanjin’s collapse has come during the shipping industry’s busiest season ahead of the year-end holidays.

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.

Lawyers acting for two other firms, Hastay Marine and Montemp Marine, applied on August 31 to a court in California to have Hanjin’s assets in the USA including cash and property totaling more than $3-million seized to pay outstanding rental payments on two Hanjin ships, court documents showed.

Global demand and trade have suffered since the 2008 recession, but steamship lines continued to build more and larger vessels.

Three Hanjin container ships carrying a total of 10,000 containers were anchored off the coast of Southern California, awaiting instructions about what to do, said Capt. J. Kip Louttit, executive director of the Marine Exchange of Southern California, which tracks all the vessels headed for the Port of Los Angeles and the Port of Long Beach.

The South Korean giant represents almost 8 percent of the trans-Pacific trade volume for the USA market.

“Retailers’ main concern is that there (are) millions of dollars’ worth of merchandise that needs to be on store shelves that could be impacted by this”, said Jonathan Gold, the group’s vice president for supply chain and customs policy.

Shipments bound for United States retailers are either sitting in Asia, onboard Hanjin ships now stuck out at sea, or in USA docks. As of Thursday, 13 ports in nine countries have refused to let Hanjin’s vessels dock for fear that they will not get paid. The Seoul Central District Court decided late Thursday to put the ailing company under court-led restructuring, providing as much help as possible to ensure Hanjin stays afloat.

Other shipping lines were moving to take over some of the Hanjin traffic but at a price.

“It impacts Canadian importers and exporters because if I have a container on that vessel I can’t get it”, she said.

Also, no Hanjin cargo will be loaded onto any of the other alliance members’ vessels.

A weakened economy since the 2008 recession hurt global demand and trade at the same time that steamship lines continued to build more and larger vessels – vast ships that were conceived as cost-effective when freight costs were higher several years ago.