mihail-ivanov-_43964287
© Mihail Ivanov

At a US bankruptcy court hearing last week a lawyer representing Hanjin Shipping said the carrier is owed up to $80m for completed shipments, hobbling its efforts to move stranded containers.

Hanjin’s credit terms were known to be some of the most generous in the industry, but many shippers want to offset freight costs against additional charges incurred in the wake of the carrier’s collapse.

Ilana Volkov, an attorney from New Jersey-based law firm Cole Schotz, claimed shippers were deliberately holding up payments.

Ms Volkov, a bankruptcy and corporate restructuring specialist, told the judge: “Hanjin is not the only bad guy here.”

Credit terms of 90 days or more have been widely available to big-volume forwarders and BCOs (beneficial cargo owners) in the liner industry for some time; it is seen as an extra selling point when freight rates are at rock bottom levels.

The Loadstar has heard several anecdotal reports of forwarders that run their entire business on ocean carrier credit – enjoying positive cash flow due to their own stricter terms with clients.

However, this is nothing new in an industry that has been severely challenged in the past few years, but what is surprising is how Hanjin was able to squeeze generous credit out of most of its own suppliers.

Notwithstanding service providers such as hauliers and barge and feeder operators, who are used to having to give extended credit lines to ocean carriers, it is unusual to find shipowners and bunker suppliers also granting extended credit, by default.

As at the middle of September, Seaspan was reported to be owed some $40m in daily container hire payments and one US bunker supplier said it was owed $750,000 for fuel supplied to Hanjin’s ships.

These amounts are likely to be replicated around the world as the Hanjin saga unravels: it seems shipowners and suppliers were all caught by the apparent “too-big-to-fail” status of South Korea’s biggest shipping line.

Meanwhile, Jeremy Ryan, a lawyer for Ashley Furniture Industries, told the US bankruptcy court it was withholding freight payment to the carrier because the company anticipated that the extra costs related to the Hanjin failure could exceed the amount due.

“To hold onto this money is important,” he said.

He explained that his client had had to pay to retrieve its cargo from the dock, even though it had contracted Hanjin to deliver the containers to an inland depot.

Mr Ryan claimed that Ashley was incurring costs of “up to $7,000 a day, related to storage and other fees” on empty Hanjin equipment that ports are not prepared to accept back.

According to the latest Alphaliner update, there are still 44 of the 97 Hanjin-operated vessels stranded at sea with containers on board – down from the 60 reported a week ago.

The eventual cost to businesses from delayed and ruined cargo will be enormous, as will the eventual claims against the Hanjin liquidators, meaning that creditors will likely receive very little, if anything, in the final reckoning, several years from now.

 

Comment on this article


You must be logged in to post a comment.
  • David

    September 30, 2016 at 7:02 am

    KAL, Korea Air Line transmitted KRW 60 billion to Hanjin Shipping company under the morgage of Hanjin Shipping company Office building in Atlanta and its company workers Apartment complexes in Seoul and Busan on September 29, 2016. It seemed to take times to establish collaral securities on the register record of its office building in USA.