A Hanjin vessel transporting containers. (Photo: Bernhard Fuchs/CC BY 2.0)

Hanjin’s bankruptcy leads to global freight chaos

SOUTH KOREA
Saturday, September 03, 2016, 02:40 (GMT + 9)

Hanjin shipping line bankruptcy is causing turmoil in the global sea freight with giant container ships marooned and merchants worrying whether hundreds of tonnes of goods being carried by the South Korean company will reach shelves.

t has been estimated that about 540,000 containers are at sea without a certain destination.

With its assets frozen after the shipper’s s banks decided to end financial support, the firm’s ships were refused permission to offload or take aboard containers because there were no guarantees that tugboat pilots or stevedores would be paid, The Guardian reported.

Hanjin has been losing money for years and filed for bankruptcy protection a day after its creditors, led by a state-run bank, refused to prop it up.

The Korea International Trade Association pointed out that about 10 Hanjin vessels in China have been either seized or were expected to seized by charterers, port authorities or other parties. That adds to one other ship seized in Singapore by a creditor earlier in the week.

The Southern Korean firm's collapse comes at a time of high seasonal demand for the shipping industry ahead of the year-end holidays.

In the US, at the ports of Los Angeles and Long Beach, three Hanjin container ships were either sitting offshore or anchored away from terminals. Besides, a fourth vessel that was supposed to leave Long Beach remained anchored inside the breakwater.

The National Retail Federation, the world’s largest retail trade association, wrote to the US secretary of commerce, Penny Pritzker, and the Federal Maritime Commission chairman, Mario Cordero, urging them to work with the South Korean government, ports and others to prevent disruption.

Hanjin represents nearly 8 per cent of the trans-Pacific trade volume for the US market and the bankruptcy was having “a ripple effect throughout the global supply chain” that could cause significant harm to both consumers and the US economy, the association wrote.

“Retailers’ main concern is that there [are] millions of dollars’ worth of merchandise that needs to be on store shelves that could be impacted by this,” said Jonathan Gold, the group’s vice president for supply chain and customs policy.

Meanwhile, other shipping lines were moving to take over some of the Hanjin traffic but at a price, with vessels already are operating at high capacity because of the season.

To add to this scenario, further concern is caused by the fact that each stranded ship has about 15 to 25 crew on board, who will have to depend on the supplies they have with them until a solution can be found, BBC News informed.

Aside from the prospect of being stuck for weeks at sea, the sailors will also face uncertainty over their wages. Most of them are not actually hired by Hanjin but by crewing agencies. Those agencies are unlikely to get paid by Hanjin and therefore won't be able to pay the crews.

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