On Friday, September 2, 2016, South Korea’s Hanjin Shipping Co., filed for bankruptcy protection in the U.S. just days after filing for receivership in South Korea. Hanjin Shipping’s creditors withdrew support after deeming a funding plan drafted by the parent company, Hanjin Group, was inadequate.
As consequence of the filing, Hanjin stopped taking new shipments. The refusal of ports to handle Hanjin’s cargo has stranded 45 ships at sea.
On Tuesday, 11 October 2016, Chris Dupin of American Shippers provided the following update on one NVOCC’s EXPORT shipments:
“Hanjin Shipping is relinquishing the right to claim freight charges on U.S. export shipments from the shipping and freight forwarding company Globerunners if other container shipping lines carry those shipments.”
In an order issued Friday by a U.S. bankruptcy court in Newark, N.J., Judge John K. Sherwood expanded relief outlined in a Sept. 9 order that covered import cargo.
Judge Sherwood ordered those export shipments in which Globerunners tendered cargo to Hanjin (either on an intermodal basis or directly to a maritime terminal for export on Hanjin’s partners’ vessels) be transported pursuant to Hanjin’s bills of lading, and Hanjin relinquish all rights to claim freight charges on these shipments to the extent they are shipped to their destinations by other ocean common carriers on Globerunners’ behalf. The order only applies to Globerunners.
If cargo is in a container not owned by Hanjin, Globerunners can negotiate a new agreement with the owner of the containers. However, if the cargo is in a container owned by Hanjin, Globerunners can devan the cargo and return it, or continue to utilize the container, paying rent of $10 per day up to a maximum of $700 and then return it to the South Korean carrier.
Meanwhile, Hanjin has sent a note to customers saying that “it will allow Hanjin-owned containers to be terminated at either Terminal 46 in Seattle or Pier T in Long Beach. The offer does not apply to leasing company containers or Hanjin sale/leaseback containers, and the containers must be on a list of Hanjin-owned containers that are in the Southern California/Pacific Northwest region.”
While Dupin’s article reveals how a single NVOCC’s exports would be managed; other NVOCCs and the shippers they represent, find solace by the precedent set in week 7 of legal proceedings.
Here are some other key numbers to review (source: Hanjin Shipping, Korea Shipowners Association, Thomas Reuters Eikon data):
- U$14 Billion – the estimated value of cargo tied up globally as Hanjin ships idle outside ports that won’t let them in.
- 400,000 – the estimated number of containers stranded on Hanjin ships.
- 8,300 – the approximate number of cargo owners involved
- US $38 Million – the value of goods, mostly TVs, and appliances that Samsung Electronics has said it has stuck aboard 2 Hanjin ships.
- US $1,700. – the average cost to move goods in 40’ containers from the U.S. West Coast to Asia (up from US$788 in May).
- 7.8% – the trans-Pacific trade volume for the U.S. market carried by Hanjin
- 141 – the number of ships Hanjin has (97 containers ships, 44 bulk carriers). More than half are blocked from docking, and 4 have been seized as of September 11, 2o16.
- U$5.5 Billion – Hanjin’s debts as of June 30, 2016.