BREAKING NEWS: Hanjin Shipping–$14 Billion in Cargo Drifting at Sea
The financial collapse of Hanjin Shipping has left an estimated $14 billion worth of cargo stranded at sea, the Wall Street Journal is reporting.
South Korea’s Hanjin Shipping Co. filed for bankruptcy protection there last week after its principal creditor refused to go along with a self-help plan to deal with the company’s $5 billion in debt.
As a result, “dozens of ships carrying more than half a million cargo containers” have been locked out of world ports because of uncertainty about how docking and handling fees would be paid. Eighty-two Hanjin ships are either on the high seas or anchored in the vicinity of ports while eight other vessels have been seized.
Samsung Electronics has $38 million in cargo stuck on Hanjin, vessels according to the WSJ. Samsung is Hanjin’s biggest shipper and receiver of cargo on U.S. ocean trade routes.
Retailers reacted immediately to the Hanjin bankruptcy, urging U.S. officials to take action to see that cargo issues are resolved. Retailers fear that prolonged legal proceedings could show up as a shortfall of merchandise on store shelves during the holiday shopping season.
According to the Wall Street Journal, Hanjin has been granted legal protection in South Korean and U.S. courts in the wake of its bankruptcy filing, allowing the company’s vessels to move in and out of port and preventing governments and creditors from seizing ships and cargo. But that doesn’t resolve the issue of getting cargo unloaded because of the concern that ports and terminals won’t get paid for their services. In addition, the court proceedings don’t necessarily apply to every region and country on the globe.
Freight rates on Asia-to-U. S. routes are spiking in the wake of the Hanjin crisis. The WSJ reported rates up 56 percent over last week and that several ports are are charging cargo owners special fees to offload cargo from Hanjin ships.
As for Samsung, the WSJ reported it is considering chartering 16 cargo planes to fulfill its contracts.