Without the capacity to dock, unload cargo at terminals, or transport any goods by rail or truck, Hanjin Shipping was in dire need of help. Hanjin finally saw a glimmer of hope on Friday, September 9, 2016, after a United States Bankruptcy Court ruled to protect the company from creditors temporarily. While there are limits to the court’s power, Judge John K. Sherwood from New Jersey made it possible for some vessels to procede to dock and unload at U.S. Ports. His ruling granted Hanjin protection from possible seizures in U.S. territory. The decision will help cargo owners recover goods held in storage as some of Hanjin’s vessels stranded off U.S. coastal waters can now port and unload.
Before the judgment, Hanjin released funding to unload four vessels, but also had four ships seized as well. Currently, there are over 70 ships stranded at sea or unable to make port as a result of the Hanjin’s collapse. However, things for these ships do not seem to get easier. Korean Air Lines (KAL) has a significant stake in the shipping company, but unfortunately, the airline was not able to reach a consensus to spend $90.7 million to save over 530,000 containers in flux around the globe.
OCEANAIR’s coverage of Hanjin’s demise reported shippers would see a rise in freight rates and some disruption of global trade was imminent. Even though there are signs of freight rates stabilizing, Hanjin containers clogging warehouses at Port terminals are due to the uncertainty in the rates. However, the company’s failure has wide-reaching effects at these terminals, causing new issues for retailers and cargo owners. Retailers are bearing more storage costs now as terminal operators are not routinely accepting empty Hanjin shipping containers from them. There are also more containers on the dock resulting from peak season shipping, while there is a diminishing supply of chassis needed to transport containers.
Another issue accused a terminal at the Port of NY-NJ with illegally charging extra for Hanjin containers affected by the bankruptcy. In response, the Federal Maritime Commission (FMC) warned U.S. Ports and Terminals to refrain from using predatory practices and fees resulting from Hanjin’s fall. These combined factors are leading to more disruptions and congestion at the ports that have a connection with Hanjin’s mishap.
While it is likely Hanjin still has many more legal worries yet to come, Samsung Electronics is proactively seeking legal recourse to reclaim more than $38 million in goods from aboard Hanjin ships. The Korean electronics company filed a request with Federal Bankruptcy Court to directly pay cargo handlers who refused to work for Hanjin after learning the container line would not be able to pay them. Samsung is aggressively pursuing this legal recourse because there are concerns the company’s products will not reach shelves in time for holiday shopping in the U.S. or even Black Friday.
Hanjin will continue to push for longer Chapter 15 recognition, which allows for U.S. courts and judges to assist a foreign entity in restructuring corporate debt. Additionally, Hanjin will likely pursue legal action in about dozen countries to get more goods released. Although these measures represent positive steps by Hanjin to help cargo owners and shippers, it is unclear how the company will gain the funding and legal permission to unload all its vessels holding cargo.
