Hanjin Shipping Bankruptcy Causes Havoc at LA Ports

Cargo containers stuck on Hanjin Shipping Co. vessels anchored beyond the ports of Los Angeles and Long Beach could be unloaded soon.

Hanjin Shipping, which filed for bankruptcy in South Korea on Aug. 31, had been fearful its ships would be seized by creditors if it docked at any ports around the world.

But the large cargo-container company filed papers in U.S. Bankruptcy Court that allow its vessels to dock without its ships, cargo or equipment being confiscated by creditors. Terminal operators at the ports have been refusing to let the ships dock.

The Chapter 15 filing on Sept. 2 in a Newark, N.J., court deals with international insolvency matters and gives the shipping company some breathing space to unload its containers.

As of Sept. 9, there were three Hanjin cargo-container vessels with 10,000 cargo containers anchored off the coast of Southern California and Mexico. TheHanjin Greece moved from drifting 20 miles off the coast of Carlsbad, Calif., to drifting 30 miles off the Mexican coast.

The Hanjin Montevideo remains anchored off the coast of the Port of Long Beach and the Hanjin Boston was scheduled to be moved on Sept. 9 to inside the Port of Long Beach breakwater to be refueled, according to Capt. J. Kip Louttit, executive director of the Marine Exchange of Southern California, which monitors the ships coming and going at the Southern California ports.

With the Chapter 15 bankruptcy filing, Hanjin Shipping can now dock at ports without their vessels being seized. “The good news is that we have heard that the bankruptcy judge is allowing for containers to be released from the terminals,” said Mark Hirzel, chairman of the Los Angeles Customs Broker and Freight Forwarders. “We just got word that Hanjin can discharge their containers at three ports without risk. They are Hamburg, Germany; Singapore; and Los Angeles/Long Beach. We are likely to see vessels call at Los Angeles and Long Beach, but now they may not call at San Francisco.”

Cargo containers that are transported by rail to other parts of the country, however, will have a problem, Hirzel said. Railroad companies said they would not accept Hanjin containers, in fear of not being paid transportation costs. “What you are going to have is Hanjin cargo orphaned in Los Angeles,” Hirzel said.

The other problem is that once those Hanjin cargo containers have been unloaded and sent to their destinations, nobody wants to accept the empty containers in fear of not being reimbursed for storage costs. “Nobody wants those empty blue containers back,” Hirzel said.

The Los Angeles Customs Broker and Freight Forwarders is working with the Los Angeles/Long ports to establish a temporary facility to hold them.

Customs brokers are telling their clients to be aware of where their containers are and be ready to pick them up quickly. “Know where every one of your containers are—on the water, on the dock—because there is a chance that some will get released and there is a chance there is only a small window of time you can pick them up,” said Tom Gould, senior director of customs and international trade for Sandler, Travis & Rosenberg.