Ship­ping com­pany’s bank­ruptcy strands ships, roils mar­itime cargo in­dus­try

China Daily (Canada) - - ACROSS AMERICAS -

pro­cure­ment for Fl­ex­port, a freight for­warder and cus­toms bro­ker in San Francisco.

“Now you add that plus 7 per­cent re­duc­tion in ca­pac­ity... it cre­ates a per­fect storm, and ocean freight car­ri­ers are able to raise prices (sup­ply-de­mand im­bal­ance),” he said, adding that one in 15 con­tain­ers “from Asia to USA will need to find a new home”.

The price to ship a 40-foot con­tainer from China to the US rose al­most 50 per­cent in one day, Poskus said. The cost from China to US West Coast ports in­creased from $1,100 per con­tainer to as much as $1,700 a week ago, while a China-East Coast trip jumped $700 to $2,400, he said.

The in­dus­try al­ready is strug­gling with over­ca­pac­ity re­sult­ing from a global trade slow­down, in­clud­ing China’s eco­nomic eas­ing, that co­in­cided with a boom in ship­build­ing.

Han­jin won an in­terim rul­ing on Tues­day pro­tect­ing its US as­sets against cred­i­tors as it re­or­ga­nizes in its home coun­try, South Korea. A US Bank­ruptcy Court in New Jer­sey asked lawyers in the case for more in­for­ma­tion be­fore a fi­nal hear­ing Fri­day. Han­jin filed the Chap­ter 15 pe­ti­tion on Sept 2.

“There are in­nu­mer­able par­ties that can ar­rest and levy on the debtor’s property in the United States,” the com­pany said in its fil­ing. “These par­ties in­clude, but are not lim­ited to, fuel provider, ship own­ers (where the debtor is a char­terer), ter­mi­nals, port pi­lots, truck­ing com­pa­nies, re­pair ven­dors, rail com­pa­nies, and con­tainer lessors.”

In Chap­ter 15, com­pa­nies can pro­tect their US as­sets from cred­i­tors while try­ing to sell their hold­ings or re­struc­ture in their home coun­tries.

Elec­tron­ics gi­ant Sam­sung sup­ported Han­jin’s pe­ti­tion, say­ing it has about $38 mil­lion in mer­chan­dise on two Han­jin ships off the Port of Long Beach, Cal­i­for­nia, that can’t dock with­out a US court or­der pro­tect­ing the com­pany against cred­i­tors try­ing to seize cargo.

Han­jin ap­plied for re­ceiver­ship in Seoul last week. Its par­ent Han­jin Group said on Tues­day that it is plan­ning to raise a to­tal of $90.46 mil­lion on its own to fund un­load­ing of cargo.

Han­jin Group and ma­jor share­holder Korean Air Lines will raise 60 bil­lion won by putting up stakes in over­seas ter­mi­nals such as Long Beach Ter­mi­nal as col­lat­eral, while Han­jin Group chair­man Cho Yang-ho will raise 40 bil­lion won from pri­vate funds, the group said.

With the com­pany’s as­sets frozen, Han­jin ships are be­ing de­nied per­mis­sion to off­load or pick up con­tain­ers at ports around the world over con­cern that tug­boat pi­lots or steve­dores won’t be paid.

“Our ships can be­come ghost ships,” Kim Ho Kyung, a man­ager at Han­jin Ship­ping’s labor union, told Bloomberg. “Food and water are run­ning down in those ships float­ing in in­ter­na­tional wa­ters.”

Last week, cred­i­tors led by the Korea De­vel­op­ment Bank re­jected a plan by Han­jin Group to spend $447.2 mil­lion more to res­cue the ship­ping firm, far short of Han­jin Ship­ping’s $5.4 bil­lion in debts.

Chi­nese ports and ter­mi­nals that ac­cepted Han­jin ships be­fore the com­pany an­nounced bank­ruptcy pro­ceed­ings are charg­ing de­posits of as much as $1,800, The Wall Street Jour­nal re­ported. Seven Han­jin ships were stranded out­side Chi­nese ports.

A Sept 1 Fed­eral Mar­itime Com­mis­sion state­ment said: “The Com­mis­sion will be vig­i­lant in watch­ing for, and quick to act on, any im­proper be­hav­ior by other car­ri­ers and reg­u­lated par­ties (such as marine ter­mi­nal op­er­a­tors, non-ves­sel-op­er­at­ing­com­mon-car­ri­ers, and freight for­warders) that would con­sti­tute vi­o­la­tions of the Ship­ping Act.”

Bloomberg, The As­so­ci­ated Press and Reuters contributed to this story. Con­tact the writer at williamhen­nelly@ chi­nadai­


Some of the ce­ram­ics from the Met go­ing on sale next week.

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