Like many shipping companies, Hanjin has struggled with low demand and prices as the Chinese economy has slowed, putting it billions of dollars in debt.
This week, three cargo-laden Hanjin ships bound for Long Beach were forced to sit at sea because they couldn’t pay docking fees, according to the Marine Exchange of Southern California. One of them eventually was able to dock at the Port of Los Angeles because, although owned by Hanjin, another carrier was operating the vessel. A fourth Hanjin ship was at anchor in the Long Beach harbor under orders by local authorities not to leave.
Ormond said one of his clients, a textile manufacturer, had about $3 million in goods waiting to be offloaded from two of the ships for delivery to retailers Target, Wal-Mart, and Macy’s. An additional $2 million to $3 million in cargo was in China waiting to be shipped by Hanjin in the next few days, but his client had no idea when or how that cargo will make to it to the United States.
Even getting just one cargo container moved last week was difficult.
American Export Lines, a Harbor Gateway company that transports containers and works as an intermediary between shipping companies and manufacturers, couldn’t find a spot on any carrier’s ship for a single empty cargo container in Kansas City that was supposed to return to China via Hanjin, said Kasra Ferasat, its marketing director.
“It’s sad, because we use them a lot,” he said of Hanjin. “We have a great relationship with them. … It’s definitely going to be a problem for us, for the whole industry.”
Ferasat also said he received word that carriers are going to be implementing a peak season surcharge, something that isn’t unusual before the holidays but which he thought might be avoided this year because of the previously low shipping demand.
Ormond said the financial industry could take a hit, too, because many manufacturers take out loans to ship their products, but if the goods can’t reach retailers, they won’t have the cash to pay back their lenders.
Publicly traded Hanjin Shipping is part of the Hanjin Group, a Korean chaebol, or conglomerate, that includes Korean Air Lines and a host of other businesses that are tied together through a complex ownership web. The airline is the largest shareholder in the shipping line, with a 33 percent stake. While Korean Air said in a securities filing that the shipping line’s receivership would cost it up to $344 million, according to Bloomberg, spokeswoman Lisa Gritzner said its Wilshire Grand Center project under construction downtown would be unaffected.
Cho Yang-ho, chairman and co-chief executive of both the shipping company and the airline, did not appear to have a significant ownership stake in either the shipping line or airline.
Trade, transportation, and manufacturing reporter Paul Eakins can be reached at email@example.com. Follow him on Twitter @Pauleakins.
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