Hanjin Group chairman Cho Yang-ho has followed through with his promise to inject KRW40bn ($36m) into Hanjin Shipping, while $9m has also arrived from former Hanjin chairwoman Choi Eun-young. The money is intended as stopgap funding to help unload cargo.
Last week Hanjin Group said that it would raise KRW100bn ($90m), but funds promised from major shareholder Korean Air come with conditions that would require the approval of other shareholders. Those conditions include providing as collateral Hanjin Shipping’s stake in Los Angeles’ Long Beach terminal.
Hanjin Shipping estimates that it could cost KRW173bn to unload all its stranded cargo.
Even if the loan is approved by other shareholders, obtaining it from Korean Air could take a “considerable time”, according to South Korea’s Financial Services Commission.
South Korea has said no government or central bank money will be directly injected into firms restructuring in the shipping and shipbuilding industries. However, it would be willing to help small-to-medium sized businesses affected by the restructuring at Hanjin Shipping.
Elsewhere, in Sydney the Hanjin California remains held in port following a Federal Court order filed by Glencore Singapore over unpaid fuel bills. Most of the containers on the 182-metre-long vessel have been offloaded, but some destined for other ports were still being held, port authorities said. Hanjin California docked on September 3rd.
Six other Hanjin vessels were heading towards Australia when Hanjin Shipping went into receivership. Hanjin has no protection in Australia against creditors for unpaid bills, and Glencore has been vocal in the US courts about providing judicial protection for Hanjin vessels that dock anywhere.
About 93 of Hanjin’s 141 vessels are seized, barred entry to ports, denied services, or moving slowly, according to Hanjin Shipping data on September 12th.
Freight from Hanjin Greece, which docked at the weekend after receiving court protection, began being moved out of Long Beach port on Monday.
There are unconfirmed reports that Hanjin Rotterdam, with 9,300 containers, had been detained at China’s southern Shenzhen Yantian Port. The plan appears to be for customs officials to work their way through 3,000 of the containers so that customers can claim their goods.
Just unloading the containers will not solve the problem, because a logjam could then be created. For non-perishable goods it is, paradoxically, less of a problem if they are in abeyance offshore than if they are in abeyance in an overcrowded port or terminal.
Hanjin Boston received orders to unload at the Port of Los Angeles on Tuesday morning, according to the Marine Exchange of Southern California. It would be following Hanjin Greece into the port.
Charter owner Seaspan has three ships under charter with Hanjin and all are scheduled to arrive on the US West Coast within days. Seaspan CEO 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.
Wang observed that South Korea was “an export economy and the government needs to ensure the flow of goods to consumers. … 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, which was due to arrive in Savannah. Wang said the cargo was worth about $800,000 and that he was confident the parties involved could come to an agreement.
He described the bankruptcy of Hanjin Shipping as the industry’s equivalent of the Lehman Brothers collapse on September 15th 2008.
“It’s like a huge, huge nuclear bomb that shakes up the supply chain, the cornerstone of globalisation” Wang said on Bloomberg TV, adding: “You’re talking about $120bn worth of goods that are stuck on those ships …..there is material impact to the supply chain.”