As Hanjin Shipping Co. finally sank Friday, the Port of Long Beach looked to a future without its most important cargo carrier and former lease-holder of its largest terminal.
A South Korean court declared Hanjin bankrupt Friday, officially ending the company’s 40-year history in the global shipping trade. A court-appointed caretaker will sell any remaining ships and other assets Hanjin owns to pay off its creditors, according to the Wall Street Journal.
Since the debt-laden company filed for bankruptcy protection Aug. 31, cargo volume has plummeted at the port, particularly at the formerly Hanjin-controlled Pier T, which has since been acquired by another shipper.
“Going forward with Pier T … we have every confidence that the port will have cargo coming in,” said Lee Peterson, a spokesman for the Port of Long Beach.
The court receivership announcement last year caused immediate turmoil as Hanjin ships were stranded off the Port of Long Beach due to terminal operators denying entry for fear of not getting paid. The effects of the delay were felt by many small and big businesses as they waited for their goods to unload.
Hanjin had leased the 385-acre Pier T, one of six container terminals, at the Port of Long Beach since 2002, though it did business with the port for many years prior.
Because of its collapse, cargo traffic slowed at Pier T, which saw 5.8 percent less cargo in 2016 compared to 2015. Hanjin moved 12.3 percent of the port’s total 7.2 million container units in 2015 compared to 9.06 percent of almost 6.8 million units in 2016, Peterson said.
The Port of Long Beach saw overall cargo volume decline in the last four months of 2016.
That finally changed in January, when cargo was up from the same month a year ago by 8.7 percent as a new lease-holder took over Pier T.
“This was partly due to increased activity at Pier T,” said Peterson. “Over this year, as Mediterranean Shipping Co. increases activity, we should see Pier T activity continue to return to normal.”
Hanjin’s lease at Pier T was bought out by Geneva-based MSC, which already had a partial stake in the terminal operator, Total Terminals International, but now has an 80 percent share through its subsidiary, Terminal Investment Ltd. MSC paid $78 million in the deal, along with relieving Hanjin of $54 million in debt.
Hyundai Merchant Marine, South Korea’s largest shipper now that Hanjin is out of the picture, purchased the remaining 20 percent stake in the Pier T operator.
As for the impact Hanjin’s failure will have on the local economy, experts aren’t too worried.
“Right now the shipping industry has an over-capacity problem, there are too many large ships, low shipping rates, and other factors,” said William Yu, an economist at UCLA Anderson Forecast. “If a shipping company cannot work, another will step in.”