2016 Newsmakers: Hanjin Bankruptcy Sinks a Lot of Importer’s Revenue Goals
Los Angeles clothing importers were hit hard this year when Hanjin Shipping Co. filed for bankruptcy in South Korea on Aug. 31.
The bankruptcy left several Hanjin vessels drifting at sea while the shipping line came up with funds to dock at global ports and terminals.
Off the coast of Southern California and Mexico, there were three Hanjin cargo-container vessels in early September with 10,000 cargo containers waiting to be unloaded at the ports of Long Beach and Los Angeles.
Meanwhile, thousands of cargo containers dotted around the world had to be rerouted to other carrier lines.
The result is that many companies did not receive their merchandise until mid-November and incurred thousands of dollars in late fees and extra costs to find other shipping lines to transport the cargo containers to their destinations.
But that wasn’t the end of the problem. Once Hanjin containers were unloaded in Los Angeles, there was no place to return the empty containers because the bankrupt company wasn’t accepting them. Trucking companies and distribution centers had to warehouse the empty boxes, which also tied up thousands of chassis—those wheeled frames used to transport containers on the roads.
It wasn’t until mid-November that the Express Athens, a cargo-container ship owned by Emirates Shipping, arrived at the Port of Long Beach’s Total Terminals International terminal to collect some 4,300 empty cargo containers that were leased by Hanjin and parked in various spots around Southern California and the ports.
Before its demise, Hanjin Shipping was South Korea’s largest container line and the seventh largest in the world. Its biggest shareholder was Korean Air Lines Co.
Hanjin’s financial struggles were a result of a worldwide cargo shipping glut caused by several global shipping lines incorporating mega-ships into their fleets. The large vessels came online at a time when U.S. retail inventories were shrinking and retail sales showed only modest gains.
Shipping rates on the Asia–West Coast route dropped to $750 per 40-foot container when they typically had been $1,800 to $2,000. At the time of its bankruptcy, Hanjin had accrued $6 billion in debt.