Vessels, sailors and cargo of bankrupt Hanjin Shipping are now stranded at sea or in port. South Korea’s Ministry of Oceans and Fisheries has convened an emergency response team to mitigate the fallout of the event. Ports are refusing to let Hanjin vessels to dock or unload.
“[It is] a major disaster for the shipping companies and for the companies that own the goods in those containers,” Greg Knowler, maritime and trade analyst with IHS Markit, said.
Alan Murphy, chief executive of shipping analyst SeaIntel Maritime Analysis, told The Loadstar that: “due to the increased cooperation of container carriers, the impact will be felt far beyond Hanjin and its customers, especially by its partners in the CKYHE alliance. But the impact will also ripple through the many vessel sharing agreements in non-alliance trades, as well as through carriers trading slots with Hanjin”.
Containers waiting to be picked up are being held back by the ports as collateral.
Acts of philanthropy on the part of the ports would not help, because Hanjin would worry that, if the ships docked, they might be repossessed by the firm’s creditors. Hanjin owes some $5bn; its fleet is worth an estimated $1.7bn.
Lars Jensen, chief executive of Sea Intelligence Consulting in Copenhagen, said there were some 540,000 containers stranded at sea. This could have implications for Christmas supplies in Europe and the US.
Ships owned by Hanjin itself would most likely have to be sold before anyone would supply the money to get them into a port and cleared. The fact that they would have to be sold “as is”, (at sea, with overdue containers on board) would depress the price of the vessels.
Sailors on board Hanjin vessels face the prospect of being stuck for weeks at sea, and not being paid. Most are hired by crewing agencies, which are unlikely to get paid by Hanjin, and therefore will not be able to pay the crews.
Here are some known situations for Hanjin’s 63-odd vessels:
Hanjin Scarlet arrived at the port of Prince Rupert, British Columbia, on August 30th and was anchored in the inner harbour. It would normally go directly to the terminal for unloading, but port spokesman Michael Gurney said Hanjin Scarlet had not been handled because of the uncertain situation. The port authority later said that it was working with DP World, which owns the terminal, and CN Rail to find a resolution.
Hanjin Greece and Hanjin Constantza were scheduled to arrive at Los Angeles and Long Beach on August 31st. They are idling off the ports.
Hanjin Montevideo departed Long Beach on August 31st, en route for Japan, but instead was brought to anchor near Long Beach.
Meanwhile, Greek shipowner Danaos Corp said that it was “disappointed” at the turn of events. It currently has eight containerships on charter to Hanjin, representing $560m, or about 20% of its $2.8bn contracted revenue backlog, as of June 30th 2016. Danaos is said to be the shipowner with the greatest exposure to Hanjin, income from which made up 17% of Danaos’ revenue during its fiscal year 2015.
The vessels under charter to Hanjin are the 10,100-teu post-panamax containerships Hanjin Italy, Hanjin Germany and Hanjin Greece; and the 3,400-teu panamaxes Hanjin Constantza, Hanjin Algeciras, Hanjin Buenos Aires, Hanjin Santos and Hanjin Versailles.
Finally. French shipping major CMA CGM has sent a notice of termination to Hanjin Shipping related to each of the company’s services, with immediate effect.
CMA CGM said that Hanjin containers already onboard CMA CGM vessels would be discharged to the final destination, but that the company would no longer load its containers onto Hanjin Shipping’s vessels. All CMA CGM containers currently on Hanjin vessels would be unloaded and transshipped onto vessels of CMA CGM and other partners, the French company said. Hanjin Shipping is a partner of CMA CGM group on 5 out of the its 200 shipping lines.