Hanjin says cargo owners withholding $ 80 m in payments

Monday, 26 September 2016 00:01 -     - {{hitsCtrl.values.hits}}


Crew members onboard the Hanjin Rome, stranded off the coast of Singapore, hold up signs in this undated handout photo received on 22 September – Reuters


WILMINGTON, Del (Reuters): Failed South Korean container carrier Hanjin Shipping Co. Ltd. told a US judge on Friday that cargo owners were withholding up to $ 80 million in payments for completed shipments, complicating the company’s ability to move stranded freight.

“Hanjin is not the only bad guy here,” Ilana Volkov, an attorney for the shipping company, said at a status hearing at a US Bankruptcy Court in Newark, New Jersey.

Hanjin lawyers said that many cargo owners had received their goods on credit but have yet to pay the shipping company.

Hanjin, the world’s seventh-largest container carrier, filed for bankruptcy in August, stranding $ 14 billion worth of cargo at sea as the company lacked cash to pay cargo handlers, tug operators or ports.

South Korea’s government said on Friday that enough money had been pledged to unload Hanjin ships by the end of October.

An attorney for Ashley Furniture Industries, a Wisconsin-based furniture maker, told Friday’s hearing the company anticipated that costs related to Hanjin’s failure would eventually exceed what it owed for past shipments.

“To hold onto this money is important,” said Jeremy Ryan, the attorney for Ashley.

Like many retailers and other cargo owners, Ashley has been stuck paying to get its cargo from the dockside, even though Hanjin had been paid to deliver it to an inland destination.

In addition, many retailers and other cargo owners have complained they have been stuck with empty Hanjin containers that ports have been unwilling to take back.

Ryan said Ashley was paying up to $ 7,000 daily related to storage and other fees for the empty containers and the only way to recoup those costs was to refuse to pay Hanjin what was owed for completed deliveries.

Judge John Sherwood said he understood the need to “minimise the pain” of Hanjin’s collapse.

The judge told Hanjin’s attorneys the company was right in trying to get cargo moving “but there has to be some recognition you might be able to deliver on the terms you promised to deliver on.”

Rail operators and other cargo handlers defended themselves at Friday’s hearing against allegations they were price-gouging freight owners.

Hanjin had said in a court filing it was told that cargo handlers such as rail operators were charging more than what those handlers charged Hanjin. 

Drewry: Spot container rates surge after Hanjin collapse


Spot container freight rates on the major routes from Asia soared by up to 42% on 1 September following the collapse of South Korean container carrier Hanjin Shipping, according to data provided by Drewry’s World Container Index.

Rate assessment increased by 42% to USD 1,674 per 40ft container on the Shanghai-Los Angeles route, by 19% to USD 2,151 on the Shanghai-New York route and by 39% to USD 1,826 on the Shanghai-Rotterdam route.

“Unpredictable freight rates are not new phenomenon in the container industry, however a major upheaval of supply like this is likely to cause extreme short-term price volatility. Shippers should expect increasing freight costs and tight allocation for several weeks at least,” said Richard Heath, General Manager of WCI.

“The Hanjin bankruptcy means a shock to the market – some of our shipper customers are making contingency plans and asked us to assess the impact of this on their supply chains,” said Philip Damas, director at Drewry, which jointly owns WCI alongside Cleartrade Exchange.