Hanjin Shipping Files for Bankruptcy
Hanjin Shipping, the largest shipping company in South Korea and seventh largest in the world, has filed for court receivership to reorganize its operations. Exporters, including those in the recycling industry, can expect delays and increased costs.
What is Happening to Current Shipments:
- Port authorities are now blocking Hanjin vessels from berthing;
- Seizure of Hanjin vessels and stranded cargo are expected in ports throughout the world, and at least one Hanjin vessel has already been arrested while docked in Singapore; and
- Terminal operators are refusing to handle or accept any export containers and insisting on payment in advance of container release.
Increased Costs Expected:
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“Even under court receivership, the Company will exercise its utmost efforts to fulfil its duty to protect the interests of customers. In this regard, we [Hanjin] would like to ask for your kind cooperation in our continued efforts to resolve various issues that may arise upon.” – Statement from Hanjin |
- Additional chassis, container storage, and trucking fees have been reported.
- In the port of Ningbo, shippers are being required to pay RMB 20,000 (about $3,000) to get containers back for reloading onto other shipping lines containers.
- In Hong Kong, container transshipment requires an extra deposit of HKD 19,500 (about $2,500)/20 ft., and HKD 39,500 (about $4,500)/40 ft. As shipping capacity shifts in the region, an increase in shipping rates from carriers is anticipated.
- For Freight Conference booking shipments within CKYHE, consisting of Hanjin, Evergreen, Yangming, COSCO, and K Line., similar delays and increased costs are also expected.
What Recyclers Can Do:
All shippers with cargo on board Hanjin vessels should check with their insurance companies, and consult with admiralty attorneys to ensure that their interests are protected.
What this Means for the Future:
South Korean courts are likely to expedite Hanjin’s request. Nevertheless, as this issue brings together a number of complex, distinguishing features (Hanjin is a big, global company; bankruptcy has been filed in South Korea; admiralty law can be complicated; and, mobile, rather than hard, assets are moving around the world) the commercial impacts of the bankruptcy could take a number of years to sort out.
Korea’s Financial Services Commission said the government will promote sales of Hanjin’s Shipping’s core assets to Hyundai Merchant Marine in a bid to maintain competitiveness of the Korean shipping industry.
ISRI is working with a maritime specialist to address specific concerns that may impact scrap related shipments and will keep members up to date on the situation. If you have been impacted by this issue, or need additional information, please contact Eric Harris with ISRI.
Additional Resources: The Federal Maritime Commission Statement Regarding Status of Hanjin Shipping