Recently, Hanjin Shipping Co. has filed for chapter 15 bankruptcy with the US Bankruptcy Court as well as the equivalent of chapter 11 in South Korea. This filing came following 13 ships, that were either leased or owned by Hanjin, being seized by creditors or turned away from ports. Many terminals refused to unload cargo out of fear of not getting paid. This has resulted in up to $14 billion of cargo being stranded at sea, and has made South Korea and U.S. responsible for navigating this delicate situation.
While one of their shareholders has agreed to lend them $54 million, intended to aid Hanjin in their negotiating for unloading ships that are still in route to U.S. ports. Many ports have opted to deny Hanjin from port access until all of Hanjin’s port charges are paid in advance. Hanjin vessels are experiencing ad hoc decisions at ports around the world. Some ships are being seized by creditors, some are refused portage, and others are experiencing non-Hanjin cargo being unloaded as normal, while the Hanjin cargo is reloaded and refused attention.
As this bankruptcy impacts the Asia to US market, we are finding that many low price contracts are being over-looked in deference to higher priced FAK rated containers and shippers. This is resulting in an overall lack of organization and many ad hoc bookings and pricings. This has resulted in accurate information being difficult to find and manage.
At TOC Logistics, we are in constant contact with our clients and destination plants providing status updates, exploring our options, and making quick decisions to provide efficiency and transparency. Based on the commentary from market leaders and the legal commentary on the realities of this bankruptcy at a global level, it could be possible that access to a product could take as long as 60 days. It is TOC’s position to do everything possible to avoid that scenario, which has, so far, been successful due to our ability to work with our vested partners and ports authorities. As this situation is constantly evolving, the team at TOC is working hard to stay engaged with with our carriers to keep our clients’ supply chains as protected as possible.
During this time, TOC recommends that all impacted parties stay in contact and engage with their account representative to keep communication pathways open for creating flexible solutions to potential problems. There are many alternative methods and modes available, and logistics organizations throughout the world are working diligently to protect their clients and help clear out the logjam that the Hanjin bankruptcy has created.