Second ship from bankrupt Hanjin allowed into California ports
A portion of the $14 billion in cargo trapped at sea by the bankruptcy of Hanjin Shipping Co Ltd (117930.KS) began moving out of one California port on Monday, and a second ship received orders to head to dock, after the turmoil created by the South Korean company’s collapse.
Truckers began moving freight from the Hanjin Greece, one of roughly a dozen of the company’s ships destined for the U.S. West Coast, out of the port of Long Beach on Monday, following a U.S. bankruptcy court’s grant of protection.
A second ship, the Hanjin Boston, received orders to unload at the Port of Los Angeles on Tuesday morning, according to the Marine Exchange of Southern California, a group that tracks cargo ship traffic.
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.
The movement of products marked a step forward in clearing the bottleneck of clothing, furniture and other cargo meant for store shelves ahead of the busy holiday shopping season. But the two Hanjin ships allowed to unload carry only a fraction of the billions in goods on dozens of ships owned or leased by the world’s seventh-largest container carrier.
Companies with goods still sitting on Hanjin’s ships were waiting to see if the shipper could raise enough money to rescue the rest of the stranded cargo.
Two California companies represented by lawyer Bill Taylor are waiting to see if Hanjin can raise money so they can avoid having to pay terminal operators and other companies with control of their freight to release the cargo.
“Both have significant product in limbo,” said Taylor, a partner and transportation lawyer in Sacramento. “My clients right now are taking a wait and see attitude until there is a better understanding about interim financing to see if they’ll have to write a check.”
Taylor declined to name the two companies, a producer of specialty foods and a clothing retailer.
On Monday, Choi Eun-young, a former chairwoman of Hanjin Shipping, pledged to provide $9 million in private funds to help resolve the situation. 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 release 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. 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, 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.
“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 amounted to just around $800,000 and that he was confident the parties involved could come to an agreement.
A U.S. court on Friday gave three other Hanjin ships protection from seizure.
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.
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Source: Reuters
