Suk Tai-Soo, president and chief executive officer of Hanjin Shipping Co., arriving at court in Seoul, South Korea on August 31st, 2016
Exceeding the 1986 collapse of United States Lines, consultancy Alphaliner has declared that Hanjin Shipping’s bankruptcy is now officially the largest ever for a container shipper in terms of capacity. With so much press coverage regarding Hanjin’s bankruptcy, very little is given regarding how to proceed – leaving many people frustrated, confused, and angry as they try to sort out this Hanjin debacle during prime peak shipping season, a time where many are gearing up for holiday sales. An October 21st, 2016 screenshot of Hanjin’s website landing page now displays a series of floating windows with hot links directing visitors easier access to what they are trying to accomplish:
Perhaps the most interesting side note slipped into this bankruptcy flurry though, is the little known fact that if you believe you have a claim against Hanjin, you need to file that claim in the Korean bankruptcy proceeding between October 11th through the 25th, 2016, with reports that if you miss that claim deadline, you will be out of luck. With a handful of Korean lawyers representing the interests of cargo owners and other potential claimants, they should be contacted immediately if you believe you need to file a claim.
As Hanjin containers pile up and cause a delay in the entire freight forwarding industry, Hanjin Shipping Co. has asked its customers to pay more than usual to bring freight into U.S. ports, creating a backlog that could keep goods off the shelves during the holiday shopping season. With everyone along the supply chain now demanding higher fees to unload and deliver cargo that was stranded abroad the South Korean shipper’s vessels, logistical problems have persisted and economic repercussions are still yet to be seen. “I don’t see a scenario where there isn’t a minimally shortened holiday retail season, and I see the potential for a very shortened retail season.” Said attorney James Van Horn, a restructuring specialist at McGuireWoods LLP, a representative of Eastman Chemical Co., whom is a Hanjin client.
With huge name companies like Wal-Mart Stores Inc., Kroger Co., Eastman Chemical, and Forever 21 Inc. all filing notices to appear in the U.S. bankruptcy case for their claims, many lawyers feel that the fee increases that have exponentially grew since Hanjin’s filing has made it wildly difficult to predict the costs of bringing in stranded ships into U.S. ports. “I’m not sure estimates will hold.” States Ilana Volkov, a lawyer for Seoul-based Hanjin, continuing on that her best guess would be anywhere from $1 to $2 million more per ship due to all the raising fees charged to customers with cargo on its vessels. As Hanjin has approached railways, marine terminals, and container supplies regarding alleged price-gouging, they have also notified the Federal Maritime Commission, but there’s little else it can do, with many troubled by the complaints of profiteering by people in the supply chain.
Nonetheless, lawyers for railways and other service providers have strongly objected to the term “price-gouging” and have simply stated that their clients were only trying to get Hanjin to cover the losses they were incurring because of these delays. As untended shipping containers gather on the docks, some still filled with holiday goods, many terminals and yards are now at full capacity during precious peak season when space is prized at a premium. Fed up with paying again and again for the same containers as prices have risen to double or more the original container prices since the bankruptcy, Ashley Furniture Industries filed papers October 4th asking the court to allow an “administrative freeze” on payments owed to Hanjin for services that were only partially provided as a result of the carrier’s failure to fulfill contractual obligations, stating that they’ve already accrued damages of almost $1 million USD since Hanjin’s collapse. Ashley Furniture asked for permission to set up an escrow fund for freight payments owned to Hanjin, estimating it will amount to about $986.41 per container.
With Hanjin ships now playing a childish last ditch effort of “Run-and-Hide” in international waters to avoid ship seizure and arrests, the shipping industry worldwide is slowly realizing two things (the TL;DR version):
- This overcapacity problem isn’t going to end anytime soon, and many ships will have to be scrapped prior to “supply and demand” righting itself to sustainable (and profitable) levels again.
- If you feel like you have a Hanjin claim, make it NOW before the Tuesday, October 25th, 2016 deadline.