South Korean shipping firm's vessels stranded after filing for court protection
Hanjin Shipping Co.’s vessels are getting stranded at sea after the South Korean container mover filed for court protection, roiling the supply chain of televisions and consumer goods ahead of the holiday season.
LG Electronics Inc. is trying to find new carriers for its goods, the world’s second-largest manufacturer of televisions said. Shipments through Hanjin account for between 15 per cent and 20 per cent of LG’s deliveries to America. Hyundai Merchant Marine Co., the nation’s second-biggest container line, stepped in saying it plans to add 13 more vessels to ease the squeeze.
Woes at Hanjin Shipping, South Korea’s largest sea container shipping firm and the world’s seventh-biggest with a 2.9 per cent market share, are derailing the supply chains of companies that need to send goods well in advance of the year’s biggest shopping season as Thanksgiving and Christmas holidays approach.
“Ports will not have these vessels because they are worried port and other fees won’t be paid,” said Rahul Kapoor, a Singapore-based director at Drewry Maritime Services Pvt. “This is going to play out for the next few weeks.”
Three of Hanjin’s vessels were stuck off the Los Angeles-Long Beach port complex, while one was stranded near the Port of Prince Rupert in British Columbia. Workers in the Korean port of Busan refused to work on a ship because the company hasn’t paid dues, forcing the cancellation of a berthing. Another was seized in Singapore late Monday.
About 10 more were impounded at Chinese ports, including Tianjin and Shanghai, for failing to pay service providers, the Korea International Trade Association said.
“The company is internally looking into measures in case our cargo gets stranded while it’s being shipped,” LG said in the e-mail in a response to a Bloomberg query.
Hanjin Shipping’s local-currency notes due June, 2017, tumbled to 13.4 per cent of face value in Seoul, according to Korea Exchange prices, after fetching 90 per cent in March. Trading in its shares were suspended after a 24 per cent plunge Tuesday to their lowest level since December, 2009.
The 255-metre long Hanjin Scarlet arrived at the Prince Rupert port Tuesday night and was immediately anchored in the inner harbour, said port spokesman Michael Gurney.
Under normal circumstances, the ship would go directly to the terminal for unloading, but it has not been handled because of the uncertain situation, Mr. Gurney said.
The port authority said in a release that it is working with DP World, which owns the terminal, and CN Rail to find a resolution. DP World’s terminal manager in Prince Rupert declined comment.
CN Rail said in a statement that all Hanjin containers in its system will be released for pickup and that the rail company will not accept additional export loads from the shipping company or bookings from other shipping lines destined for Hanjin vessels.
A separate CN Rail statement said the company is “closely monitoring the fluid and evolving Hanjin bankruptcy issue, and is developing the necessary steps to protect the interests of our customers and our business.”
Mr. Gurney said the Hanjin Scarlet began its voyage in Busan, South Korea, and port schedules show the vessel was due to make its next stop in Delta, B.C., just outside of Vancouver, later this week.
The shipping line’s financial fortunes are having a big impact on the Canadian freight industry, said Ruth Snowden, executive director of the Canadian International Freight Forwarders Association.
She said members from across the country have been contacting her, concerned about the fate of the cargo on Hanjin vessels.
“It’s most unusual. This is going to impact ports around the world,” Ms. Snowden said. “It impacts Canadian importers and exporters because if I have a container on that vessel I can’t get it.”
There are thousands of containers on Hanjin ships and many more Canadian products could be sitting on docks abroad, Ms. Snowden added. Traders will now have to retrieve their cargo and arrange for it to be shipped on other lines, she said.
“It’s going to be very confusing for the next few weeks.”
With files from The Canadian Press