Hanjin Greece, one of several dozen Hanjin vessels that had been stranded at sea since the company’s August 31st filing for receivership, began unloading its cargo on Saturday morning at Long Beach in California. A US court granted the company a reprieve from the threat of assets seizure.
Unloading of the Hanjin Greece, which is carrying mainly retail goods for the Christmas shopping period, will continue until Monday, after which the port will begin unloading Hanjin Gdynia.
There was more relatively good news for Hanjin on Saturday when shareholder Korean Air Lines (KAL) agreed to provide $54m in emergency funds. This was part of $100m promised on September 6th, but the KAL board subsequently held an inconclusive meeting to approve the release of the funds. The rest of the emergency fund is due to come from Hanjin Chairman Cho Yang . South Korea’s ruling Saenuri Party also proposed that the government offer about KRW100bn ($90m) in low-interest loans, on condition the owners provide collateral.
The South Korean government said that “while it will take some time to fully resolve the situation, we expect slowly to start seeing some improvements.” It also said that nine more vessels would be deployed to Southeast Asia to take on cargo from Hanjin’s shipsIt did not identify the companies involved.
Separately, Hyundai Merchant Marine had said it would deploy nine vessels to Europe and four to the US, and that it would form an alliance with three other South Korean lines to offer services to Southeast Asia to minimize disruptions in the region.
On Friday Hanjin Shipping attorney Ilana Volkov asked US Bankruptcy Judge John Sherwood in Newark, New Jersey to issue an order preventing creditors from seizing Hanjin ships or property. This would permit cargo owners to retrieve goods stranded in warehouses. Hanjin Shipping said that it had received the required authority to spend the money needed to dock at US ports and begin unloading four vessels. Volkov said at least $10m was authorized by a Korean court to begin servicing the four ships. Hanjin identified 14 US-bound ships but Volkov said she did not have information about the other vessels.
More than half of Hanjin’s 141 ships have been blocked from docking at ports. Four vessels have been seized.
The poor way in which the receivership has been perceived to have been handled by management and major shareholders is thought to have made it less likely that a rescue takeover can be achieved, analysts claimed. Extinction, and ensuing chaos, is now seen as a real threat. Severe supply chain disruption is already a reality in many parts of the world.
Representatives of the US Department of Commerce have met with South Korea’s oceans and fisheries vice minister Yoon Hag-bae and asked the Korean government to step in to prevent further delays in shipments to the US.
If Hyundai Merchant (HMM) were to buy all of Hanjin’s 141 ships, including 97 container movers, it could become the world’s fifth-biggest and Asia’s second-biggest container line, with a market share of 5%, according to data from Alphaliner. HMM had 120 vessels in its fleet at the end of August, including 63 container vessels.
But HMM itself has made losses in four of the last five years. The company was able to agree to adjust charter rates on vessels it leased from shipowners and extended
maturity of bonds with investors, winning financial support from its creditors. KDB is now HMM’s biggest shareholder, with a stake of about 14%.
Korea Development Bank has been at the forefront of restructuring industries, especially after the 1997-98 Asian financial crisis, to help indebted companies to turnaround. The state-owned lender took over companies such as Kia Motors Corp. and Daewoo Shipbuilding & Marine Engineering Co.