S. Korean shipper's bankruptcy crisis could affect U.S. Holiday Sales
Wednesday, September 7, 2016
By Mike Snider, USA Today
10:43 a.m. EDT / September 7, 2016
Troubled South Korean firm Hanjin Shipping has been granted temporary bankruptcy protection in the U.S.
U.S. Bankruptcy Judge John Sherwood on Tuesday ordered a hearing for Friday for the world's seventh largest ocean shipper. Hanjin filed for bankruptcy in South Korea last week and is seeking similar protections in dozens of countries globally to prevent seizures of ships and cargo.
With its assets frozen Hanjin, which handles about 8% of all U.S. cargo, is faced with its ships not being allowed to unload or take on cargo, as dock workers and tugboat pilots are concerned about not being paid.
The crisis for the shipper is creating "a ripple effect" that could impact retailers' shelves come the crucial holiday shopping season. "U.S. bound cargo is already being delayed at origin ports and Hanjin ships loaded with cargo idle unable to enter U.S. ports, containers are being detained on arrival clogging already congested ports and preventing merchandise from reaching store shelves," Retail Industry Leaders Association President Sandra Kennedy said in a letter last week to Commerce Secretary Penny Pritzker and Federal Maritime Commission Chairman.
"We are entering peak season — when the entire shipping industry must work together to get gifts on shelves for holiday shoppers — our priority should be getting these ships unloaded," several U.S. House members of the Congressional Ports Caucus urged Pritzker Tuesday in a letter of their own Tuesday. Many of the caucus members represent the Long Beach and L.A. ports affected by the Hanjin situation.
The U.S. bankruptcy judge's ruling happened on the same day that Hanjin Group, a large, family-dominated conglomerate that also owns Korean Air, said that it would provide $90 million -- including $36 million from Chairman Cho Yang-ho -- to help resolve transport disruptions.
Hanjin Shipping company has posted net losses annually since 2011. Last week, creditors led by the Korea Development Bank rejected a Hanjin Group proposal to rescue the shipping firm by spending $447.2 million, far short of Hanjin Shipping's debts of more $5 billion.
Port workers and labor union officials in the South Korean port city of Busan held rallies Wednesday urging government, creditors and the Hanjin Group to save the shipping company. Meanwhile, Finance Minister Yoo Il-ho, the country's top economic policymaker, said Wednesday that he expects the crisis to ease this week.