Hanjin, the world’s seventh largest container carrier, is filing for court receivership following 5 years of operating losses and a withdrawal of further funding from their largest creditor. Hanjin has already stopped accepting bookings, and several of their vessels have been detained at loading ports. This means cargo onboard Hanjin vessels may be subject to operational delay. This is the single largest ocean carrier bankruptcy by far. Many speculated it would not happen, particularly with Hanjin being a state sponsored carrier in Korea. However, it appears there is little hope Hanjin will emerge from this by their September 4th refinancing deadline.
Who is keeping an eye out?
While announcements are yet to be made, regarding how, when, and where, cargo currently moving aboard Hanjin vessels will be delivered. Many parties involved have a keen interest in keeping the wind-down very orderly. First among these parties are Hanjin’s primary vessel sharing partners in the CKYHE alliance, which include: COSCO, K-Line, Yang Ming Line and Evergreen. Each of these carriers have cargo aboard Hanjin vessels. There are smaller slot-charter arrangements, with other ocean carriers worldwide, that may also be impacted. As such, partner carriers are closely monitoring the situation with Hanjin while they implement their contingency plans for ceasing operations.
What could happen?
The best scenario would be that the Hanjin vessels complete their current voyages, calling each discharge port, and delivering only cargo destined to those ports. They will not pick up any new loads. There is a possibility, however, that the Hanjin vessels could dump all their cargo at their next port of call. Which means containers could be abandoned in ports they were not intended to discharge, leaving it up to the consignee to organize retrieval and on-carrying costs. In some cases, where creditors arrest a Hanjin vessel in a port, Hanjin may have little choice in the matter of continuing the voyage.
Cargo terminating at ocean ports on a Hanjin Bill of Lading is safer than containers moving to inland (IPI) destinations. Where oncarriage has been prearranged with Hanjin beyond the discharge port (particularly by rail), we will likely have to sever these containers from the Hanjin Bill of Lading and arrange alternate delivery via domestic services. This may mean transloading your cargo to domestic trucks if the container will not be released for long-distance termination.
Delays are likely if your cargo is aboard a Hanjin vessel, which is easy to spot, since all Hanjin operated vessels begin with “Hanjin”. It is also possible there may be additional costs incurred.
We will continue to provide updates about this issue on our website. Please check with your operations representative at Mohawk for status updates on your cargo.
Rich Roche is Vice President, International Transportation for Mohawk Global Logistics. Click here to read more about Rich.