BREAKING NEWS: Hanjin Collapse Disrupting Trade
Hanjin Shipping announced a few days ago that it is seeking court receivership—essentially filing for bankruptcy—after its creditors refused a rescue plan.
Already the move is taking its toll on global shipping, with ports in China and Spain reporting to be denying access to Hanjin vessels, and several ships stranded in or near North American ports.
Evergreen, Hanjin’s alliance partner, has taken steps to purge Hanjin cargo from its vessels.
A South Korean court will decide if the company can continue to operate or if it must liquidate. That process is expected to take less than two months.
Hanjin fell victim to the downturn in the container shipping industry. Revenues for the first half of this year were down 18 percent and carriers have scrambled to cut costs.
The carrier had debts of around $5 billion at the end of 2015. A recent repayment plan obligated the company to repay around $1 billion within a year. Hanjin’s self-rescue plan would have extended those payments.
The Korea Development Bank, one of Hanjin’s main creditors, released a statement saying that the new plan did not differ from previous plans which had been rejected by creditors.
In June, another Korea-based carrier, Hyundai Merchant Marine Co., saved itself from bankruptcy by renegotiating charter rates with ship owners, a scheme that was approved by the company’s creditors.
Meanwhile, three Hanjin Shipping vessels have been reported stranded off the coast of southern California and another stuck at the British Columbia port of Prince Rupert.
Work has been halted on the vessel Hanjin Scarlet in the Port of Prince Rupert. The Canada National railroad announced that export container that were destined for Hanjin vessels and currently located at CN inland terminals will not be loaded onto trains.
Two other vessels, the Hanjin Greece and Hanjin Constantza, were stranded at sea off the coast of southern California after their scheduled arrival on August 31. Yet another Hanjin vessel was reported anchored off the port Long Beach instead of proceeding on its route toward Japan.
Evergreen Line, a partner of Hanjin Shipping’s in the CKYHE Alliance, announced that has activated a contingency plan. “No Evergreen Line cargo will be loaded on the vessels operated by Hanjin Shipping,” the company said, in a statement. “Hanjin Shipping cargo will not be allowed to load on the vessels operated by Evergreen Line.”
Observers noted that ports and shipping lines alike are concerned that their fees won’t be paid and that, as a result of the Hanjin situation, there will be some short-term disruptions to supply chain.