Business, Freight News, Sea

Hanjin Bankruptcy causing shipping mayhem

[ September 2, 2016   //   ]

South Korea’s Hanjin Shipping Co., one of the largest shipping companies in the world, announced the bankruptcy filing on August 31. The move is causing havoc around the world.

Effective immediately starting August 31, the Port of Virginia is not accepting any inbound Hanjin cargo (freight for export) at any of the port’s marine or intermodal terminals. The port, however, will accept empty Hanjin containers at the Pinners Point Container Yard (PPCY).

Further, the port is developing plans for how to handle Hanjin cargo that is already on-terminal. Those plans will be communicated to all port customers, users and stakeholders as soon as they have been finalized.

This decision, said John F. Reinhart, CEO and executive director of the Virginia Port Authority, comes as a result of the announcement by the ocean carrier that it had filed for court protection after losing support of its banks in South Korea.

Three Hanjin ships were reported stranded off the Ports of Los Angeles and Long Beach and one off British Columbia’s Port of Prince Rupert as well. Complicating matters at the Port of Seattle, Hanjin is the key user its Terminal 46 where the port authority agreed to millions of dollars in improvements to the terminal in 2012 to assure Hanjin remained a customer.

Hanjin Shipping, South Korea’s biggest shipping firm, announced the filing for receivership and a request to the court to freeze its assets, which the Seoul Central District Court planned to grant. Korean Financial Services Commission (FSC) says that the Korean government “will promote sales of Hanjin Shipping’s core assets to Hyundai Merchant Marine (HMM) in a bid to maintain competitiveness of the shipping industry.”

Although facing its own creditor-led debt restructuring program resulting in the Korea Development Bank now being its biggest shareholder, HMM is considering acquiring some of Hanjin’s core assets such as ships, overseas sales network and staff.
Korea’s second largest steamship line, HMM itself is in the midst of a creditor-led debt restructuring program. Unlike Hanjin Shipping, it managed to obtain financial help after meeting all requirements for funds. State-run Korea Development Bank is now the biggest shareholder (14%) of HMM, the result of swapping debt for equity.
Reports state that HMM plans to add 13 vessels  to help abate worldwide shipping disruptions as a result of Hanjin’s bankruptcy : four vessels to the United States, starting September 9 and nine on Europe routes later in the month.  Hanjin represents 2.9% of the market share in ocean shipping.
Bloomberg News reported that LG Electronics is trying to find new carriers for its goods, the world’s second-largest manufacturer of televisions said. Shipments through Hanjin account for between 15 and 20% of LG’s deliveries to America.
The Wall Street Journal reported that Seattle’s is one of the many retailers that rely heavily on Hanjin ships to move large quantities of merchandise, but said there was no immediate word on how Amazon would respond to the setback.