By Alex Binkley

Canadian shippers face months of stress and financial uncertainty in the wake of the insolvency crisis at Hanjin Shipping, warns Ruth Snowden, Executive Director of the Canadian International Freight Forwarders Association. CIFFA has issued six special bulletins to its members starting within hours of Hanjin revealing in early August that it was seeking bankruptcy protection, Snowden said in an interview. The logistical nightmare will likely drag on into the New Year. “We have three problems to deal with—imports, exports and empty containers. There is a big uncertainty around all three at the moment. It’s going to take weeks and more likely months to get this all cleared up. It will be time consuming and stressful for shippers.” And most likely very expensive.

Bob Ballantyne, President of Freight Management Association of Canada (FMA), says the feedback on Hanjin from its members “indicates that the impact has been minimal to date, although a small number of importers have reported that containers have been caught up in the Hanjin receivership.” As Hanjin is primarily a container line, the fate of cargo in containers on its ships is the main issue. He said FMA has sent to all its members copies of bulletins issued by the U.S. National Industrial Transportation League and the Global Shippers Forum, which outline in considerable detail the measures that shippers need to take to protect themselves, such as notifying insurers.

CIFFA members are heavily into container shipping while FMA represents many bulk and other shippers.

Mike Broad, President of Shipping Federation of Canada, said “Ports, pilotage authorities and the like are waiting to hear more of what will transpire. It looks like Hanjin will try to get creditor protection in the countries they operated in to unload cargo stuck on ships – which will likely mean more costs for cargo – and wind the operation down. It is a difficult situation, however indicative of the market conditions which have prevailed since 2009.”

Hanjin’s two main corporate owners are attempting to raise about US$90 million to pay for the unloading of cargo stranded on its ships around the world “to minimize the damage to exporters and importers.” That would be separate from efforts to extricate the line from court receivership. South Korean reports suggest that Seoul is trying to assemble financial guarantees to keep the world’s seventh-largest container line in operation.

Hanjin Shipping says that 73 of its ships—66 container ships and seven bulk carriers—have been seized or denied access to ports. They were carrying cargo belonging to more than 8,300 shippers around the world. No one knows what will happen to cargo on board ships that haven’t reached port yet.

Snowden says the import containers that were offloaded a Hanjin ship in Prince Rupert would be forwarded if the importers paid the trucking or railway costs even if it had already paid Hanjin to have the containers delivered. That could mean an additional $3,000 per container in freight costs. However containers still on the ship in the ports of Prince Rupert or Vancouver were not being handled because the terminal operator DP World feared it wouldn’t be paid, she said. “We’re trying to arrange for those containers to be unloaded.” Her members “will have to make hard decisions about their freight,” she notes. “The bill just gets bigger and bigger, and not everyone knows what the insurance companies will pay for.”