The South Korean shipper—the seventh largest container shipper in the world—was forced to file for court receivership (Korea’s version of bankruptcy) after the creditors that support it said they wouldn’t be dishing out any more money to help the carrier out of its years of losses.
Hanjin had suggested a plan to raise $446 million by selling some of its assets and getting aid from Korean Air Lines (Hanjin is part of the conglomerate that owns the airline), but backers at Korean Development Bank said it wouldn’t be enough to tackle the more than $5.9 billion in debt Hanjin has amassed.
The company requested the courts freeze its assets as part of the receivership filing, Reuters reported, and now the court will have to decide whether it will dissolve the company altogether, which could take as little as two months—and likely less.
Hyundai Merchant Marine, Hanjin’s biggest competition for Korean exports, could take over some of those assets, like profitable vessels and key personnel, South Korea’s Financial Services Commission told Reuters.
Shipping delays and rate hikes likely ahead for brands and retailers
Goods that Hanjin was scheduled to transport could face up to two- to three-month delays in shipping, according to South Korea’s Ministry of Oceans and Fisheries, though measures for handling the cargo will be announced next month and could include Hyundai Merchant Marine taking over some of Hanjin’s routes.
Ports in Shanghai and Xiamen in China, Valencia in Spain and Savannah, Georgia, in the U.S. have already blocked access to Hanjin ships for fear the company wouldn’t be able to pay the necessary fees, according to Reuters. One vessel was even seized in Singapore by a creditor.
Freight forwarder United Global Logistics (UGL) sent a note to its clients Wednesday, bearing what will be bad news for retailers.
“United Global is working on getting your cargo rebooked on new carriers. Please note this may incur additional fees as we work through each of your unique situations. If your cargo is already en route, we are working on getting additional details from Hanjin about its plans,” the emailed note said.
UGL also took the opportunity to warn its clients that Hanjin’s bankruptcy will lead to shipping rate increases.
“It is our belief that other carriers will use this as an opportunity to increase rates through General Rate Increases (GRIs) and a possible Peak Season Surcharge (PSS),” the company said, adding, “This situation will cause capacity issues as space becomes tight.”
Makiko Yamamoto, CEO of Orange County, California-based freight forwarder Aqualine International, has also started the process of rebooking with other carriers for upcoming Hanjin shipments.
“This may incur additional fees at port of arrivals,” Yamamoto said. “Situations are varied so we need to contact local offices, terminals and truckers.”