Hanjin Services Freeze Worldwide as Carrier Goes Under

The world’s seventh-largest container line, Hanjin Shipping, sent shockwaves throughout the industry as it filed for and was placed under court protection on Wednesday, August 31.   After a liquidity plan fell short and was rejected by the Korea Development Bank, Hanjin applied for receivership, which, once granted, will allow the company to ‘wind down’ under the direction of its main creditor.

Response from both the financial and shipping industries has been swift and sharp.  Since the news broke, terminals and service operators across the world have refused to service Hanjin vessels or release cargo until payment has been received, creating a “hostage-like” scenario for shippers and importers trying to receive goods from a steamship line that is entering bankruptcy and liquidation.

For the U.S. market, Hanjin has the option to file for Chapter 15 bankruptcy which allows a foreign company access to the U.S. court system during insolvency.  This protection would force ports, terminals, truckers, and other service providers to file their claims in Korean proceedings and forbid them from holding Hanjin property or cargo.  Until a Chapter 15 filing occurs, conditions on the ground will likely continue to be more fluid and volatile as service providers scramble to gain access to cargoes.

Shapiro will be updating the following list of affected services as they are received:

  • Port of Prince Rupert, DP World, CN – all Hanjin containers currently in its system will be released for pickup from its origin terminals, with no storage charges for these boxes. CN will not accept additional Hanjin export loads — or bookings from other shipping lines destined for Hanjin vessels.
  • Georgia Ports Authority – blocked Hanjin vessels from calling at the Garden City container complex.  No official statement has been released.
  • Port of Virginia – effective immediately, the Port of Virginia will not be accepting any inbound Hanjin cargo (freight for export) at any of the port’s marine or intermodal terminals. The port, however, will accept empty Hanjin containers at the PPCY.  Further, the port is developing plans for how to handle Hanjin cargo that is already on-terminal. Those plans will be communicated to all port customers, users and stakeholders as soon as they have been finalized.
  • Global Container Terminals – the terminals at the Port of Vancouver, B.C. will no longer receive Hanjin ships.  No official statement has been released.
  • Maher Terminals (NY/NJ) – A statement released on 9/20 by Maher terminals shows that an agreement has been made with the Hanjin in order to unload the Hanjin Miami at the Port of New York and New Jersey. Hanjin was able to pay the port fees in order to unload this vessel, but it is unknown what will happen once two other Hanjin vessels arrive at NY/NJ eventually.

Vessel Specific Updates:

  • Hanjin Baltimore- Currently at anchor in Panama and arrested by bunker company and pending legal resolution.
  • Hanjin Bremerhaven- Currently at anchor in Panama. and arrested pending legal resolution.
  • Hanjin Chongqing- Currently en route to NY.
  • Hanjin Switzerland- Currently off the coast of Spain en route to the U.S.

Hanjin is currently the member of the CKYH-E alliance (Cosco, K-Line, Yang Ming, and Evergreen) as well as several other vessel sharing agreements (VSA).  Alliance members have announced that they will no longer move or book cargo on Hanjin vessels.  For shipments that have not yet sailed, it is likely there will be delays in lining up alternate routings.

Hanjin Shipping have also announced that they will no longer accept any new bookings causing shippers reliant on their service to flood the market.  This substantial reduction in trans-Pacific capacity serves to strengthen the hefty GRI announced by carriers, set to take effect today, September 1.  With cargo volumes strong, this added strain on capacity will likely create challenges as BCOs and NVOCCs adjust routings and bookings.

As of September 7, a list of “safe haven ports” where Hanjin Shipping’s container vessels can discharge without risk of arrest by creditors seeking outstanding payments has been announced and are listed below:

  • Singapore
  • Hamburg
  • Los Angeles
  • Busan
  • Gwangyang

Shapiro customers with cargo booked on Hanjin or alliance VSAs will be contacted immediately.  We will continue to monitor the situation closely and provide updates as they become available.