US freight industry’s Hanjin reaction

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Legal leeway for Hanjin Shipping

At last, some breathing space for Hanjin Shipping. It’s been over a week since the South Korean liner filed for court receivership after creditors walked away from its request for additional funds. On Tuesday, a US bankruptcy judge granted the embattled carrier temporary legal protection from asset seizure by its creditors. It will still be a while before the ocean freight industry regains its steam. But surely, the seafarers stuck out at sea with a dwindling food supply as they await further developments will welcome this development.

Following the ruling, Hanjin’s vessels are finally starting to mobilize again. Many will likely head towards ports where creditors are less likely to take action such as Singapore, Hamburg, and Busan. You can find full details of all of the carrier’s ships here.

Despite the silver lining, other challenges remain. The US ruling only prevents creditors from taking Hanjin’s assets but does not ensure that shippers can go ahead to unload goods. Over 500,000 TEUs on Hanjin’s vessels face delays. As long as these cargoes remain unclaimed, the risk of theft and degradation of time-sensitive cargoes increases.

Reports estimate $14 billion worth of goods stranded on board Hanjin’s ships. On Wednesday (9/7), Samsung Electronics announced it has $38 million worth of cargo in limbo. It is even considering chartering freighter planes to re-inject some fluency into the jammed supply chain. Hewlett-Packard also has millions of dollars of goods in over 500 containers floating around international waters.

“We’re passengers on a bus, and we’re being told we can’t get off.” – Evan Jones, Samsung lawyer

“The ongoing disruption to HP’s supply chain caused by the foreign debtor’s bankruptcy filings is material, costly and worsening on a daily basis.” – HP attorney

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Hanjin status at US ports

Parent company Hanjin Group has pledged financial action to unload the stuck containers. Starting next week, the South Korean government will also send 20 containerships to relieve the supply jam. But shippers should take these developments with a spoonful of salt. Given the fluid nature of this situation, it’s always better to be safe than sorry.

Shippers should take note of how ports across the country are currently handling Hanjin’s shipments and any possible shipping delay charges. Some require fees be paid up front prior to delivery, others request for truckers to bring their own chassis. Here’s an infographic of various ports and their management of Hanjin’s cargo. Do note that because of its unprecedented nature and lack of proper protocol, the following information could still change.

US ports Hanjin infographic

Already, we’re seeing reports that various US ports are taking advantage of the situation, demanding exorbitant prices of as much as $4,200/container. The Maher Terminal at the Port of NY and NJ reportedly charged between $1,000 and $2,500 per container to a group of US customs brokers and forwarders. They have since filed a complaint with the Federal Maritime Commission.

Federal Maritime Commission steps in

In light of the situation, the FMC has set up a channel for affected shippers. Those wishing to report violations of the Shipping Act or requests for help relating to cargo in transit can get in contact. You should relay these concerns via email to complaints@fmc.gov. Do note the following information you should include if submitting request for assistance or reports of illegal activity:

  1. Email subject line should state “URGENT – HANJIN SHIPPING”
  2. Your name or company name
  3. Contact information and/or representative
  4. Name of person/company with whom you’re having the problem
  5. Full description of the matter (including previous attempts to resolve the problem)
  6. Desired solution
  7. All relevant documentation (e.g., contract, Bill of Lading, proof of payment, bookings, Order for Service, invoice for the services, emails about the issue, dock receipts, arrival notices, invoices, terminal appointments, terminal operating hours/stoppages, etc.)
  8. Description of cargo
  9. Ports of origin and destination (including terminal, rail ramp, etc.)
  10. Date of shipment or sailing

The FMC also notes that is a non-U.S. legal matter and has no right to intercede. But it’s monitoring the situation closely and has advised all affected parties to seek legal advice on their available options.

“The Commission continues to monitor the operational and competitive impacts of this disruption and is particularly interested in learning of any conduct by any regulated entity that may violate the Shipping Act. Members of the shipping public are encouraged to share with the agency any specific allegations of illegal behavior.” – Federal Maritime Commission

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