Container Ships Stranded At Sea After South Korean Company Goes Bankrupt
Dozens of massive container ships are stranded at sea, looking for a place to dock after one of the world's largest shipping companies went bankrupt. Lars Jensen, the CEO of Sea Intelligence Consulting, which focuses on container shipping, says the container ships are operated by the South Korean-owned Hanjin Shipping company.
"It is some 85 to 90 vessels, and they really are scattered all over the world," he says.
Jensen says the ships anchored in or circling the high seas represent about half of Hanjin's fleet. The company was the seventh-largest shipping line in the world until it declared bankruptcy Aug. 31, leaving an enormous amount of cargo stranded at sea.
"In terms of how much cargo is impacted, the only solid number we've heard came from the Korean ministry that said we're talking about 500,000 containers," Jensen says. He believes the actual amount of cargo is higher than that.
That's because other shipping companies have likely put some of their containers on the Hanjin vessels as well. Industry analysts say the ships are carrying $14 billion worth of merchandise — everything from electronics to clothing to furniture, and, according to one report, 80 tons of kimchi, a spicy Korean fermented vegetable side dish.
Getting that cargo off the Hanjin ships has created a logistical nightmare during the peak shipping period ahead of the holiday season, says Brian Dodge, the vice president of the U.S.-based Retail Industry Leaders Association.
"Without a doubt, it is a mess of an issue for the businesses themselves to be forced to untangle. We've got an inordinate amount of shipping containers containing merchandise destined for U.S. shelves trapped on Hanjin ships, unable to be offloaded and delivered to stores," he says.
Basil Karatzas of the New York-based Karatzas Marine Advisors says Hanjin is reluctant to dock its ships in some of the world's ports, fearing they will be seized by creditors. And he says other ports around the world have simply turned the Hanjin ships away.
"The port terminals do not want to accept the vessels before they get paid in advance. The company is in bankruptcy, so nobody will give you credit anymore," he says. Now it's cash, payable upfront.
Karatzas says Hanjin is more than $5 billion in debt, and an emergency rescue plan in South Korea was rejected by creditors earlier this week. He says the shipping company sought Chapter 15 bankruptcy protection in the U.S. — and was granted permission by a bankruptcy court, which means it could soon be able to dock its ships here. But it's not clear who will pay to dock those ships — or unload them.
Jensen, with Sea Intelligence Consulting, says in the few ports where cargo has been unloaded, owners are having their own problems.
"The port is saying, 'Sure, you're going to have to pay me a large amount of money as collateral for this container, otherwise we're not going to give it to you because Hanjin owes me money. And as long as I'm sitting on Hanjin's containers, at least I have some collateral. So if you want your cargo, you got to pay me through the nose for the privilege of taking the container out,' " he says.
While all this is getting sorted out, Jensen says, other shipping companies are moving in to snap up Hanjin's customers.
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