Hanjin Shipping Unloads Cargo at U.S. Port
At least three more cargo ships were expected to unload freight at Port of Long Beach
SEOUL—A Hanjin Shipping Co. vessel was set to finish unloading freight in California on Monday, clearing the way for more of its ships to dock, as the ailing South Korean company works with ports in the U.S. and around the world to get a frozen supply chain moving again.
The Hanjin Greece docked at Long Beach, Calif., on Saturday and began unloading cargo Sunday after days of being stranded off the coast. A Hanjin Shipping spokeswoman in Seoul said at least three more cargo ships—the Hanjin Gdynia, the Hanjin Jungil and the Hanjin Montevideo—were expected to follow suit at the U.S. port.
The financial woes of one of the world’s largest shipping lines have left as much as $14 billion of cargo stranded at sea, and pressure is mounting on South Korea and the U.S. to break the logjam. Several Hanjin ships have been seized by creditors or turned away from ports, with terminals refusing to unload cargo for fear they won’t get paid.
Court papers show a total of 13 ships either owned or leased by Hanjin are set to make their next port of call in the U.S..
The cargo operator got some respite over the weekend after Korean Air Lines Co., its largest shareholder and Hanjin Group’s flagship company, agreed to lend it 60 billion won ($54 million), using Hanjin Shipping’s Long Beach port-terminal assets as collateral.
The airline’s agreement Saturday is part of Hanjin Group’s earlier pledge to put up 100 billion won in aid to help resolve the cargo crisis. Hanjin Group Chairman Cho Yang-ho has promised to make the remaining 40 billion won available by Tuesday, according to Korean
Air.
One of Hanjin’s lawyers on Friday said in a U.S. federal court that the company has both the funding and the legal permission necessary to unload four ships bound for U.S. ports.
Hanjin also has asked a South Korean court for authorization to use a further $3.5 million to have goods that have already been unloaded and are sitting at U.S. ports delivered to their owners, a process that its lawyer said could be jump-started as soon as Wednesday.
South Korean Minister of Trade, Industry and Energy Joo Hyung-hwan met with local exporters and smaller shippers Sunday and promised to use government funds to help deliver cargo to its final destination on time. Mr. Joo also said the government was working with Hanjin’s smaller South Korean rival, Hyundai Merchant Marine Co., and other companies to deploy extra vessels to deal with stranded cargo.
Hanjin filed for the equivalent of chapter 11 in South Korea last month and days later sought chapter 15 bankruptcy protection in the U.S.
Chapter 15 gives a foreign company the benefits of U.S. bankruptcy law, including protections that prevent creditors from seizing assets. But the U.S. court’s power is limited and much of the aftermath of the bankruptcy will have to be worked out in South Korea.
The Seoul central district court has given Hanjin until Nov. 25 to submit a rehabilitation plan that will determine whether it can continue operating. However, this is seen by analysts as granting the company more time for an orderly liquidation, given that the government has signaled that it sees no future for Hanjin by calling on smaller rival Hyundai Merchant to buy its healthy assets.
The company and Hyundai Merchant handle the bulk of Korea’s exports and have been unprofitable for several years, amassing debts in a global shipping market awash in excess capacity and plummeting prices.
Hanjin ship unloads in U.S. as fresh funds pledged
A Hanjin Shipping Co Ltd (117930.KS) vessel is finishing unloading in California and scheduled to leave port on Monday, shipping industry officials said, as shareholders and executives associated with the South Korean firm pledged funds to help resolve the turmoil created by its collapse.
The Hanjin Greece docked in Long Beach on Saturday after a U.S. bankruptcy court granted it protection and terminal operators agreed to take it.
Truck drivers probably will begin moving containers from the Greece on Monday while the vessel prepares to leave late in the day for the Port of Oakland, said Teamsters spokeswoman Barbara Maynard and shipping traffic controllers.
However, the Greece carries only a fraction of the $14 billion in goods on dozens of ships owned or leased by the world’s seventh-largest container carrier.
The collapse of Hanjin under debts of $5.5 billion has caused havoc in global trade networks and a surge in freight rates. Some vessels have also been seized.
On Monday, Choi Eun-young, a former chairwoman of Hanjin Shipping pledged to provide $9 million in private funds to help resolve the situation “in which economic damage is increasing from the turmoil in shipping due to its unexpected court restructuring”.
Choi, who controlled Hanjin Shipping between 2007 and 2014, will provide the funds “within days”.
Parent company Hanjin Group pledged last week to raise 100 billion won ($90 million) in funds to help rescue stranded cargo.
Korean Air Lines (003490.KS), the biggest shareholder of Hanjin Shipping, on Saturday approved a conditional plan to provide a loan of 60 billion won to the troubled shipper. Hanjin Group chairman Cho Yang-ho will raise the remaining 40 billion won and the goal is to raise it by Tuesday as the funds are needed as soon as possible to unload cargo, a Korean Air spokesman said on Monday.
MORE SHIPS COMING
Charter owner Seaspan Corp (SSW.N) has three ships under charter with Hanjin – the Hanjin Buddha, Hanjin Namu and Hanjin Tabul – which are all due to hit the U.S. West Coast within the next few days. Chief executive Gerry Wang said he was confident the South Korean government would provide sufficient funds to pay port operators and Seaspan by the time those ships arrived to ensure they were unloaded.
“We’re keeping our fingers crossed, but South Korea is an export economy and the government needs to ensure the flow of goods to consumers,” Wang said. “I don’t think they want that supply chain to be interrupted on a permanent basis.”
Creditors have sought an arrest warrant against the Seaspan Efficiency, a ship hauling cargo for Hanjin that was due to arrive in Savannah. Wang said the cargo concerned amount to just around $800,000 and that he was confident the parties involved could come to an agreement.
It is not clear when port operators will bring others to berths in Southern California and elsewhere. The U.S. court on Friday gave three other Hanjin ships protection from seizure.
The three other Hanjin ships protected by the U.S. court order are the Hanjin Boston, which remained off the Port of Long Beach awaiting orders on Sunday, and the Hanjin Gdynia, which was several hundred miles away from Long Beach, and the Hanjin Jungil, 310 nautical miles west of San Francisco with its destination listed as Long Beach, according to Marine Exchanges on the west coast that coordinate shipping traffic.
Another Hanjin ship off Long Beach, the Hanjin Montevideo, is under the supervision of a court-ordered custodian after two fuel companies obtained an arrest warrant for it over unpaid bills. Hanjin and the fuel providers are trying to work out an arrangement to release the vessel.
In Hong Kong, the Hanjin Belawan arrived from Shanghai on Monday loaded with containers and was anchored a short distance from the city’s Kwai Chung Container Terminal.
Terminal operator Hongkong International Terminals, a unit of Hutchison Port Holdings Trust controlled by tycoon Li Ka-shing, has outraged local cargo owners by charging fees of between HK$10,000–HK$15,000 ($1,285-$1,928) per Hanjin container to release them at the port.
The delays have concerned importers like Alex Rasheed, president of Pacific Textile and Sourcing Inc in Los Angeles, which has a shipment of clothing in 16 containers on Hanjin ships off Long Beach.
“We’re already starting to run out of some colors and some sizes,” Rasheed said, noting Hanjin’s collapse comes as U.S. retailers prepare for the all-important holiday shopping season.
In Singapore, cargo owner AP Oil International said it had been sending replacement cargos on urgent orders.
“On the procurement side, we do also face some issues to receiving raw materials shipped on Hanjin vessels, which of course we are adjusting our supply chain and production to meet and replace the cargo due to the uncertainty of the situation now,” Group Chief Executive Ho Chee Hon said.
(Additional reporting by Nick Carey and Keith Wallis; Editing by Peter Henderson and Lincoln Feast)
The BOC Blast 145 – Hanjin Shipping Unloads Cargo at U.S. Port
