Managing Your Risk During the Hanjin Bankruptcy

Both of the Korean steamship lines have been suffering financial difficulties over the last year. The latest reports indicated positive developments for both Hyundai Merchant Marine and Hanjin Shipping, but the last couple of days have seen Hanjin fall off the cliff. Hanjin’s announcement that it has filed for receivership has left the shipping industry in disarray. Hanjin customers are dealing with the repercussions, realizing they will not be receiving their cargo until the terminals and other operators get paid, and these amounts are not yet specified. Ports around the United States have either blocked the Hanjin vessels from entering the port, are and are refusing to accept any bookings on their vessels.

If WSSA is insuring your cargo, you can rest assured that

our policy includes the clauses necessary to cover claims

based on the Hanjin situation.

Please contact us if you do have any questions on the insurance coverage or potential exposure and we will be happy to assist.

 

Below is an excerpt from American Shipper magazine, by Chris Dupn, September 1, 2016:

Shippers – both the customers of Hanjin and its alliance partners, COSCO, “K” Line, Yang Ming and Evergreen Line, are scrambling to find out what will happen to their cargo if it is on a Hanjin vessel.

Don Pisano, the president of American Coffee Corp. and chairman of the Ocean Transportation Committee of the National Industrial Transportation League, said the league is monitoring Hanjin’s financial collapse, which would be the largest container line bankruptcy to date and would have a significant impact on the league’s members and shippers worldwide. “With nearly 100 ships operating in 74 routes in the liner trade, along with marine terminals and bulk operations, even those that have never shipped with Hanjin may feel the effects as services are disrupted and capacity tightened further than the already reduced deployments, which carriers have self- imposed to support higher freight rates,” Piano said.

“While everyone will look to minimize their risks and financial exposures, the fact is that the cargo has to move and get delivered to its intended destination as safely and expeditiously as possible,” Pisano said. “It is a bit early in the process and we are calling on all parties to work together to minimize the impact of this situation, use their available resources to protect the cargo, facilitate the movements and mitigate the costs, which will be borne by all.”

Peter Friedmann, the executive director of the Agriculture Transportation Coalition (AgTC), said, “So much is at stake here. Perishable products cannot withstand delay in release of containers that inevitably follows from a bankruptcy action. And even for non perishables, the foreign buyers have the right to get out of their commitments if the delivery is not timely. While ownership and obligations are being sorted out, who is monitoring the reefer gensets?  And even if the railroad or terminal will release a container, they may only do so after their receivables from Hanjin are paid, even if Hanjin has already been fully paid by the shipper,” Friedmann said. “The complexity of these matters is significant, and if Hanjin goes completely out, it will be the largest bankruptcy of a container line since the beginning of containerization, making the complexity even greater, even unprecedented. We are providing as much guidance as possible to our AgTC members, including having provided early warning ahead of the bankruptcy declaration.”

Jonathan Gold, vice president, supply chain and customs policy at the National Retail Federation, said, “Retailers’ main concern is that there is millions of dollars worth of merchandise that needs to be on store shelves that could be impacted by this. Some of it is sitting in Asia waiting to be loaded on ships, some is already aboard ships out on the ocean and some is sitting on U.S. docks waiting to be picked up. It is understandable that port terminal operators, railroads, trucking companies and others don’t want to do work for Hanjin if they are concerned they won’t get paid. However, we need all parties to work together to find solutions to move this cargo so it does not have a broader impact on the economy.”

Gold added, “There are more questions than answers at this point, but retailers are working to get all issues addressed. Retailers are working with all of their service providers to find ways to get their cargo moving to ensure that there is no or limited interruption in the supply of merchandise.”

NRF noted the Hanjin bankruptcy comes as the Global Port Tracker report published by NRF and Hackett Associates forecasted that major U.S. retail container ports will handle 1.61 million TEUs this month, down 0.6 percent from the same month last year.

Hanjin ships and cargo have been turned away from ports around the world.

A Hanjin spokeswoman told American Shipper that, “It has been reported in Korean media that Hanjin vessels were declined to enter container terminals in Xiamen and Xingang, China; Prince Rupert, Canada; Valencia, Spain; Savannah, Georgia; and Busan, Korea.”

On Wednesday afternoon, the Port of Virginia said it will “not be accepting any inbound Hanjin cargo (freight for export) at any of the port’s marine or intermodal terminals. The port, however, will accept empty Hanjin containers at the PPCY (Pinners Point Container Yard)”

It was not clear what would happen to Hanjin freight arriving by ship. The port added it is “developing plans for how to handle Hanjin cargo that is already on-terminal.”

The Port of Prince Rupert said Wednesday morning that the container vessel Hanjin Scarlet is not presently being handled or worked at the port’s Fairview Container Terminal, which is operated by DP World. Following the Hanjin Scarlet’s arrival Tuesday evening, the vessel proceeded directly to an assigned anchorage, the port added.

In a statement Tuesday night, Canadian National Railway said, “All Hanjin import containers will be released for pickup. This includes Hanjin containers on ground at CN inland terminals as well as containers currently moving on the CN network to CN destination terminals. There will be no storage charges for these boxes. All Hanjin export units currently at CN inland terminals will not be loaded onto trains and can be picked up from the CN origin terminal. There will be no storage charges for these boxes.”

The Hanjin spokeswoman said Hanjin Rome has been arrested in Singapore and that operation of a Hanjin vessel in Busan New Port was stopped.

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