September 22, 2016:
Korean Air’s Board (Hanjin’s sister company in the same conglomerate group) has authorized a $60 million transfusion to facilitate Hanjin vessels’ cargo unloading in the U.S. ports. Below are quick updates regarding upcoming schedules.
- Hanjin Miami, which arrived approximately 2 weeks ago, was scheduled to approach the port of Newark on September 22.
- Hanjin Jungil was also scheduled to approach the Long Beach terminal on September 22.
- Issues surrounding return of empty containers and general chassis shortages will continue to be exacerbated.
September 14, 2016:
For the past week, the Long Beach port community was in a frantic scramble to assess the implications of the Hanjin bankruptcy, and to find solutions for companies whose cargo was on Hanjin’s ships parked near the shoreline. We spoke with Jay Lee of WeConnectLogistics, and other industry members, to bring this update to our readers.
Late on Friday, September 9, 2016, the New Jersey federal bankruptcy court issued an order granting Hanjin’s motion to stay any actions against Hanjin or any of its assets in a Chapter 15 proceeding (which permits for recognition of foreign bankruptcy proceedings in the U.S. courts). The Court accepted Hanjin’s argument that certain creditors’ efforts to arrest, control, or execute upon its assets could impair Hanjin’s restructuring efforts.
Subsequently, the Korean bankruptcy court (the lead court in this case) granted permission for Hanjin to use some of its remaining funds in unloading the cargo. On Saturday, September 10, 2016, Hanjin Greece entered the Long Beach terminal, unloading 4,500 containers, and departed for Oakland on Monday, September 12, 2016. Other ships, such as Hanjin Gdynia and Hanjin Boston, are scheduled to begin unloading cargo on September 14, 2016. Cargo owners should note that Hanjin Boston will be entering a terminal not owned by Hanjin – there remains a possibility that the cargo owners will need to make separate payments to the terminal to retrieve their goods. Hanjin Jungil is also slated to enter the port this week.
Now, while cargo owners may feel some relief from this development, this story is far from over. The Korean government’s decision to use three ports (Seattle, New York, and Long Beach) as the hub ports for the entry of Hanjin ships is likely to have some repercussions, as the transportation arrangements for the final destinations likely need to be altered. To move their goods to the original destination, cargo owners may need to bear additional transportation costs, which they may not be able to recover from Hanjin. The inland transportation costs are also likely to be higher than normal.
Further complicating this matter are other logistics problems. For example, what are the cargo owners to do with the empty containers once the contents are unloaded? The terminal may not take the containers back due to the concern with Hanjin’s ability to pay. Cargo owners may also encounter issues relating to leasing the chassis, which Hanjin can no longer pay for.
Successful unloading of cargo during the weekend and in the coming days is only the first step. Many issues, both foreseen and unforeseen, are likely to arise. We expect effective (to the extent possible under the circumstances) solutions to follow as the Korean government in Seoul, the L.A. Consulate, and private industry are working together to mitigate the situation. For now, we recommend any affected parties to document any costs incurred during this Hanjin situation, and to seek experts’ guidance as necessary.
If you have any questions, please do not hesitate to contact us today.
