Hanjin in Talks to Sell Stake in Long Beach Terminal

Korea’s Hanjin Shipping Co. is in talks with Switzerland-based Mediterranean Shipping Co (MSC) to sell its stake in Long Beach Terminal, California, as part of a plan to dispose of most of its overseas assets, reports Wall Street Journal, citing unnamed people involved in the matter.

The talks involve Hanjin’s 54% stake in Total Terminals International LLC, which runs Long Beach Terminal in California. MSC already owns the remaining 46%.

Long Beach Terminal has capacity for 3m teu containers a year.

The port of Long Beach said this month that container volumes in September fell 16.6% year on year, as the effects of the Hanjin bankruptcy reached West Coast ports. Hanjin Shipping accounted for about 12.3% of the port’s total containerized volume.

Hanjin has also reached out to European shipping majors and locally based Hyundai Merchant Marine (HMM) with offers to sell other assets. These include five 13,000 teu container ships. Hianjin hopes to restructure as a smaller intra-Asia operator, and has until mid-December to submit to the courts a viable rehabilitation plan. Hanjin’s problem is that, even if it sells off all of the assets that it wants to, it will be some distance from clearing its debts.

Both the Korean government and Hanjin’s main creditor, Korea Development Bank, have said they would back HMM in buying Hanjin assets, provided such a move would help HMM stay competitive. At the end of Q2 Hanjin had total debts of $4.2bn. Its asset sales are unlikely to realize $2bn.

In addition, apart from the five 13,000-container vessels, the remainder of Hanjin’s 37-ship fleet consists mostly of Panamaxes, which carry fewer than 10,000 containers. Since the widening of the Panama Canal earlier this year, allowing ships moving 12,000 containers or more to pass through the isthmus, the demand for such vessels has fallen..