South Korea moves to minimize disruption from shipper’s woes

A group of California’s congressional delegation led a call Sunday for federal assistance after South Korean shipping company Hanjin filed for bankruptcy protection.

Hanjin Shipping shares jumped more than 25 percent after Yonhap reported the funding decision, citing party and government officials, before later paring some gains.

The South Korean line’s parent Hanjin Group will provide KRW60bn, while chairman Cho Yang-ho will provide KRW40bn.

Rival Hyundai Merchant Marine Co Ltd is in talks with firms such as Samsung Electronics Co Ltd and LG Electronics Inc to carry their cargo, South Korea’s Financial Services Commission said today.

Shares in South Korea’s foundering shipping giant Hanjin were volatile on Monday after filing for bankruptcy protection in Seoul and reportedly the U.S., rocking the troubled maritime freight industry. “So those toys held up in container boxes will be able find their way to consumers”. Whether Hanjin can fend off ship seizures will depend on the jurisdictions involved, lawyers said. The stock has plunged 62 percent this year, trimming its market value to 341 billion won, while Korea’s Kospi index has gained 5.4 percent in the period. This is because Hanjin is only the world’s seventh largest shipper, accounting for only 3% of global fleet capacity. “This is going to help ease some of the bottlenecks in the supply chain”.

The measure is aimed at “minimizing the cases where Hanjin Shipping’s vessels are being seized in foreign countries”, South Korea’s government said in a statement jointly released by several ministries including the FSC.

Hanjin Shipping’s labor union chief, Lee Yo-han, said that while the 510 crew aboard Hanjin-operated vessels are not facing any immediate crisis, they could suffer from shortages of food and water if they are stranded too long at sea.

On Friday, the firm had filed for bankruptcy protection in the United States, making a so-called “Chapter 15” filing with a USA court, a spokeswoman said on Monday, which would help protect its ships from being seized.

South Korea’s two policy lenders – the Korea Development Bank and the Industrial Bank of Korea – will roll over maturing loans to some of the companies and provide special credit guarantee, Yim told reporters.

The shipping line had total current liabilities of 6.03 trillion won as of June 30, compared with total current assets of 6.62 trillion won, according to another filing.

The confusion might sink some trucking firms that contract with Hanjin to deliver cargo containers carrying everything from electronics to vehicle parts from ports to company loading bays.

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