The fallout of Hanjin Shipping’s court receivership was quickly spreading around the global sea freight industry on Friday, just two days after the world’s No. 7 shipping line filed for court protection.
The shipping line was also notified that its membership in the CKYHE Alliance was suspended, casting doubts about the company 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 is running by itself.
Those include more than 10 vessels in Shanghai, Tianjin and other ports in China, which were sitting offshore as they failed to get departure permissions 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 refused to work unless Hanjin paid its fees in advance, fearing the shipper may go bankrupt and they would not be paid.
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 the 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 some $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 some 45 percent of its shipments with Hanjin Shipping, while LG Electronics some 23 percent.
The impact also spread to the U.S. The Wall Street Journal reported that a group of American retailers asked the Department of Commerce to step in and help resolve the growing crisis stemming from Hanjin’s troubles, 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.
South Korean ports could also be hard hit by the receivership filing by Hanjin Shipping.
According to analysts Genscape while Hanjin only accounted for 2.9% of global container shipping capacity it was the largest line in South Korea accounting for 20% of calls at the country’s container ports and its demise would leave a gap in the Korean market.
The country’s largest port Busan has 141 calls scheduled by Hanjin Shipping from September 2016, according to data from Genscape. It has a smaller number of calls scheduled at Incheon, Kwangyang and Ulsan.
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