By Nam Hyun-woo
The fallout of Hanjin Shipping’s court receivership is quickly spreading around the global sea freight industry on Friday, just two days after the world’s seventh-biggest shipping line filed for court protection.
The shipping line was also notified that its membership in the CKYHE Alliance was suspended, casting doubts on the company’s prospects of joining a new shipping group, The Alliance.
As of Friday, the company said 45 of its vessels have been stranded at sea worldwide. The number is almost half of the 98 vessels that the company operates on its own.
Those include more than 10 vessels at Shanghai, Tianjin and other ports in China, which have been sitting offshore as they failed to get departure permission or were denied entry to the ports. Also, multiple vessels are stranded at ports in Spain, the U.S., Canada, Japan and other countries.
Of them, one container vessel was seized in Singapore by the local court following a creditor’s claim.
The holdups came as unloading companies and terminals, fearing the shipper may go bankrupt and not pay fees to them, refused to work unless Hanjin paid in advance.
The company said one of its vessels was denied from passing through the Suez Canal, because the company might not be able to pay the toll.
The situation was not so different domestically. Until Friday morning, Hanjin’s vessels were denied from anchoring at Busan Port because three lashing companies refused to operate unless the company made some overdue payments. The lashing companies began operations late Friday as the Busan Port Authority decided to pay some of the fees.
Also, an additional hike in the freight rate will come in the aftermath of the Hanjin debacle. According to Korea International Trade Association, the freight rate of a route between China and the U.S. costs $1,200 per TEU, but it will be raised to $2,200 starting this month. The association attributed the rate hike to the tonnage shortage following Hanjin’s receivership filing.
Hanjin’s massive failure also impacts domestic exporters. Samsung Electronics reportedly contracted 45 percent of its shipments with Hanjin Shipping, while LG Electronics contracted 23 percent.
The impact also spread to the U.S., where the Wall Street Journal reported that a group of local retailers asked the Department of Commerce to step in and help resolve the growing crisis, as well as urging the Korean government to provide clarity and speed in the proceedings.
Other Hanjin clients are reportedly searching for alternative shippers for their goods, as the company’s vessels are feared to be seized by creditors.