By Mike Wackett
Captains on bankrupt Hanjin Shipping vessels have been ordered to slow steam or stop altogether to avoid the risk of being served a writ during a port stay. Meanwhile, many ports around the world have refused to accept Hanjin-operated ships until they receive a bank guarantee for port and harbour dues – but are also reluctant to have a vessel arrested in their quaysides and threatening to block cargo operations.
The Loadstar also understands this morning that some tug companies are refusing to provide towage facilities without similar guarantees. And in what is a further problem for shippers who have containers in terminals awaiting collection that were off-loaded before the bankruptcy was announced, is that terminal operators are insisting on payment of stevedoring charges before they will release Hanjin boxes. Likewise, hauliers are demanding ‘cash only’ to transport Hanjin containers.
The issue could leave freight forwarders dangerously exposed to losing payments already issued to the carriers, as well as to claims from shippers, law firm Holman Fenwick Willan (HFW) said in an advisory last night. “Delays caused by Hanjin’s position, such as vessel arrest or the refusal of ports to let Hanjin vessels berth, may leave freight forwarders open to claims from their customers. Some freight forwarders have already moved to obtain redelivery of containers due to be shipped by Hanjin, in order to arrange carriage by another operator.
“In some instances, forwarders have paid Hanjin in advance, and forwarders will now be concerned about recovery of these sums. Some freight forwarders had reportedly in recent weeks already stopped booking slots on Hanjin vessels as a matter of company policy,” it said. Meanwhile, one UK contact told The Loadstar this morning that a message had come from Hanjin’s headquarters in Seoul yesterday evening to “withdraw credit for both CIF & FOB shipments immediately” and that all cargo deliveries “must be carried out against cash payment only”.
The events of the last few days arguably represent the biggest ever threat to the supply chain and could bring down hundreds of businesses and service providers in countries around the world. Shippers are said to be scrambling to find space on non-CKYHE alliance vessels to North Europe, despite commitments from Yang Ming and Evergreen that no Hanjin cargo would be loaded, and no Hanjin ship would be utilized.
Reports on social media suggest that freight rates are “skyrocketing” between Asia and Europe and Asia and US as shippers are prepared to “pay almost anything” to get their containers shipped and delivered in time for the holiday season. Indeed, one major UK high street retailer told The Loadstar yesterday, “this could not have happened at a worse time” given that it is the peak season and many of the goods in transit are destined for the Christmas market. He said that he did not generally ship with the South Korean line but was very concerned about reports he received of delays to other lines’ containers that had been co-loaded onto Hanjin ships.
And according to South Korea media reports two of the country’s biggest manufacturers, LG and Samsung, have thousands of containers caught up in the Hanjin bankruptcy crisis which could result in serious product shortages around the world in the coming months.
Compatriot Hyundai Merchant Marine (HMM) is understood to be taking up some of the slack of Hanjin’s demise by offering replacement services at “reasonable rates”, on selected routes, but HMM is a member of a different east-west vessel sharing alliance, so the effect on some routes could be limited. Some reports have said HMM is preparing to deploy 13 vessels to the Asia-Europe and transpacific trades, many of which had been idled earlier in the summer as its G6 partners sought to replace its vessels with others to limit their exposure in the possible event of its bankruptcy.
And now that HMM has completed its restructuring, it is being touted as a possible buyer for Hanjin’s assets. However, one source close to the situation told The Loadstar that unless forced by the South Korean government, HMM had no intention of merging with Hanjin. “Why should HMM take over Hanjin”? he said, “All it needs to do is to pick over the carcass.”
Alphaliner said Hanjin’s bankruptcy represents the largest container shipping failure in history, dwarfing the 1986 crash of United States Lines (USL). When USL stopped trading and entered US Chapter 11 bankruptcy protection, thousands of creditors around the world, including feeder and barge operators, ports and terminals, and a myriad of service providers attempted to put a lien on USL’s containers, wherever they were. However, most of the boxes were not owned and eventually the leasing companies succeeded in overturning the liens to retrieve their equipment. This resulted in months of delays for shippers in getting their cargo, which they often had to pay again to transport containers from wherever they had been abandoned.
HFW suggested Hanjin had also been recently trying to renegotiate the terms of its container leases as bankruptcy loomed. “Efforts are already likely to be underway by those wishing to recover possession of their containers in order to facilitate their re-hire to alternative carriers. Container lessors may also be seeking to arrest Hanjin assets in order to obtain security,” it added.
Reprinted courtesy of The Loadstar (www.theloadstar.co.uk)