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Thread: Bankrupt Hanjin Strands $14 Billion of Cargo at Sea

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  1. #1
    Senior Member lorrie's Avatar
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    Bankrupt Hanjin Strands $14 Billion of Cargo at Sea

    **These are China Imports into USA

    Bankrupt Hanjin Strands $14 Billion of Cargo at Sea




    9 Sep 2016

    With “globalism” under political attack, South Korea’s Hanjin Shipping Co., one of the world’s largest shipping companies, filed for bankruptcy and stranded $14 billion of holiday stock on the open ocean after container rates tanked by 96 percent.

    Hanjin controls about 3.2 percent of all worldwide shipping traffic. It filed for bankruptcy protection on August 30, after banks pulled their funding to pay dock fees and container unloading and storage charges. Of Hanjin’s fleet of 200 vessels, 97 ships loaded with about 500,000 containers are stranded at sea.

    As the American public’s rebellion against globalism and multi-national corporations’ crony capitalism has dominated this year’s U.S. presidential election, the Baltic Freight Rate Index (BDIY:IND), which tracks container shipment demand, has collapsed by 96 percent from its high of almost $12,000 per container in 2008 to an epic low of $290 in early February 2016.

    Despite the Hanjin bankruptcy turmoil stranding its fleet and creating a logistics nightmare, the Index has only risen from $711 to $773 per container.

    Global container shipping capacity began accelerating during the Clinton administration’s opening up of trade with China. From a base of 20 million deadweight tons in the early 1990s, capacity grew by over 1,100 percent to 228 million deadweight tons at the end of 2015.

    Although container shipping demand has been flat for the last three years, ship capacity continued to grow and still is expected to expand by 7.7 percent in 2016, as China desperately continues building enormous new ships to maintain employment and consume some of its massive excess steel-making capacity.

    The timing of Hanjin’s bankruptcy filing presents significant risks for U.S. retailers stocking up for the fall, Thanksgiving and Christmas shopping seasons.

    Samsung Electronics Co., which introduced its Galaxy 7 smartphone in March, told the Wall Street Journal that it has $38 million in various device inventory stranded on Hanjin ships in international waters. The company’s lawyer, Evan Jones, commented, “We’re passengers on a bus, and we’re being told we can’t get off,”

    But the real show-stopper could be slowing deliveries of Apple Inc.’s new iPhone 7 and iPhone 7 Plus smartphones, which will begin taking pre-orders on September 9 and are expected to start shipping on September 16.

    Most Wall Street analysts have panned the new Apple products as not “disruptive.” But the Apple’s iPhone 7 Plus was expected to earn better sales traction initially, after the hot-selling Samsung Galaxy Note 7 was recalled due to a number of batteries exploding during charging.

    Hanjin owes South Korean banks about $5 billion, and has negative cash flow. It is assumed that eventually the South Korean government will facilitate a merger with Hyundai Merchant Marine Co Ltd., the country’s second-largest shipping line.

    But such a consolidation would require huge layoffs and scrapping billions of dollars worth of assets, according to South Korea’s Financial Services Commission. It would also require paying damages for breaking contracts and stranding merchandise.

    Under International Commercial Terms published by the International Chamber of Commerce, referred to as Incoterms, shipping customers generally receive a letter of credit against payment when their products leave the freight dock. Consequently, Asian manufacturers have probably already been paid by their banks.

    But that means that U.S. and European retailers own the merchandise on board Hanjin ships. Huge international retailers like Walmart usually have insurance, and will be paid for their goods quickly, but mid-size and smaller companies could be delayed in legal negotiations for weeks or court battles with Hanjin creditors for months before they gain access to their inventory.

    Nate Herman, senior vice president for the American Apparel & Footwear Association, which represents 150 of the top U.S. shoe manufacturers and retailers, told PYMNTS.com after an all-hands-on-deck industry conference call with 150 members: “People are still trying to figure out how to get their boxes off the boat and move them.”

    Mr. Herman said his members believe “This is not impacting store shelves now.” But, he added, “It will impact store shelves if the situation isn’t resolved.”

    http://www.breitbart.com/california/...per-goes-bust/
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  2. #2
    Senior Member JohnDoe2's Avatar
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    U.S. workers unload first of Hanjin ships stalled by bankruptcy
    Reuters‎ - 21 hours ago

    A Hanjin Shipping Co ship is seen stranded outside the Port of Long Beach, California, ...
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    Senior Member JohnDoe2's Avatar
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    Judge tells Hanjin Shipping to relinquish all of its chartered vessels

    Natalie Kitroeff

    A South Korean judge early Monday morning ordered Hanjin Shipping Co. to return all of its chartered ships to their owners as a part of the company’s bankruptcy proceeding, a company executive said.

    Hanjin filed for bankruptcy on Aug. 31 and recently began unloading cargo at ports across the globe, after being denied access for several days.


    Hanjin bankruptcy is the tip of the iceberg for flailing shippers

    The South Korean carrier will finish discharging all of the cargo on its 63 leased vessels, and then return them to their owners, said Mike Radak, the chief operating officer of Hanjin Shipping America, LLC.

    “Once it’s empty, we hand the keys over to the chartering company,” Radak said.


    Three ships that made their final stops at U.S. ports have already been returned to the chartering companies, according to Radak. He said the company plans to bring the 41 vessels that it owns back to Busan, South Korea, once they’ve delivered all their cargo.

    http://www.latimes.com/business/la-f...nap-story.html

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  4. #4
    Senior Member JohnDoe2's Avatar
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    Hanjin Shipping collapse leaves up to 15,000 cargo containers piled up


    Nearly 20 mostly empty Hanjin containers sit idle on the T K Transportation lot in an unincorporated area of Compton on Thursday, Sept. 29, 2016. With Hanjin shipping company in bankruptcy, transportation companies don’t have a place to send their Hanjin containers and since they are still responsible for the containers, the companies must store them on their properties, taking up valuable space. (Photo by Scott Varley, Daily Breeze/SCNG)

    By Rachel Uranga, Long Beach Press Telegram
    POSTED: 09/30/16, 8:15 PM PDT | UPDATED: 5 HRS AGO
    0 COMMENTS




    Ohana Transportation, a containter yard in Wilmington, has 29 Hanjin containers since the company filed bankruptcy last month. The seventh largest shipping company has essentially orphaned thousands of their 40 foot containers. Sept. 28, 2016. (Photo by Brittany Murray, Press Telegram/SCNG)


    As many as 15,000 steel cargo boxes leased or owned by the failed Hanjin Shipping Co. have nowhere to go.


    Since the company collapsed at the end of August, the orphaned containers have piled up in and around the ports of Long Beach and Los Angeles — and no one’s quite sure what to do with them. They can’t stay here; the real estate is too scarce, especially ahead of the busy holiday season.


    “Some people were hinting to take (the boxes) out in the desert and abandon them,” said Dan Monnier, who sits on the board of the Los Angeles Customs Brokers & Freight Forwarders Association, which arranges transportation for retailers. “It sounds cute, but remember, (the containers) still belong to the bankrupt company Hanjin.”


    Lawyers for Hanjin could not be reached for comment.


    Hanjin, the seventh-largest shipping company in the world, failed to secure funding from the Korea Development Bank on Aug. 30, then abruptly ended services, leaving ships and crews stranded and billions of dollars worth of cargo in limbo.

    As the courts slowly unwind the finances of the company and work to get creditors paid, the company’s assets and leased property — including the steel containers — are scattered around the world.


    Container company Seaco Global Ltd., based in London, leased about 50,000 containers to Hanjin that it cannot account for, said Neil B. Klein, an Irvine-based attorney representing the company. Right now, he is looking for the location of those boxes.


    At the local ports, there may finally be a solution in store for the blue containers with Hanjin painted in white. On Friday, Alex Chernin, a spokesman for logistics company Total Transportation Services Inc., confirmed the company is hammering out a plan to open up a 100-acre facility in Ontario where the containers can be stored. The specific location has not been disclosed, and details are still being ironed out, Chernin said.


    Asked if the opening of a yard was good news, Klein replied, “We would like to think so. I want to know if our boxes are there, so we can collect our boxes,” he said.


    These 40-foot long industrial orphans are a linchpin to global trade, moving millions of dollars worth of goods from the ports to retailers across the country. Freight handlers, retailers and others said local yards have filled up over the past several weeks, and the ports won’t accept Hanjin-owned containers (to make matters more complicated, some of the containers are leased, and some of those are being accepted).


    Another pressing issue is a shortage of the trailers that the containers sit on. Many of the containers that are being turned away by the ports are going to storage yards near the ports, but many yards don’t have the equipment needed to remove the containers from the chassis.


    That means chassis — a critical and somewhat scarce piece of equipment — are being held hostage, Monnier said.


    Industry experts worried that if a solution was not found soon, there could be a shortage of these chassis — a situation that caused major disruptions in 2015 when a breakdown in labor contract talks provoked slowdowns and major congestion.


    But the Hanjin failure caused a shortage in chassis because so many were taken out of the system at one time.


    “There is light coming through the tunnel, but this is not a wide-open solution,” Monnier said. He warned, there are still many questions, including how the chassis will be moved to the port, where truck drivers usually pick them up.


    Local port officials, however, welcomed Friday’s development.


    “This depot will put containers into a safe, secure location, which frees up chassis for use in the San Pedro Bay port complex during our busiest season,” said Gene Seroka, CEO of the Port of Los Angeles. “It’s an example of supply-chain partners stepping up to improve logistics in Los Angeles.


    A day earlier, Mario Cordero, the head of the Federal Maritime Commission, which regulates the maritime industry, issued a statement urging players across the supply chain to “find ways to cooperate and collaborate.”

    -------------------
    Cargo containers: The invention that created globalization
    Cargo container boxes made it possible for Americans to have cheap imports from around the world. If you have an iPhone, flat screen television or even Nike shoes, chances are it came in a box shipped from Asia or elsewhere around the world.

    Blame the phenomenon on Malcom McLean, an American businessman who first used the containers to ship goods from the East Coast in the 1950s, dramatically cutting the cost of transportation and pioneering a revolution, now more drably known as containerization.

    • About 90 percent of all trade is now done by sea.
    • The box can be attached to stacked on ships, unloaded and placed on trailers for trucks or trains
    • Most all containers used in the U.S. are 40-feet long and 8 feet-wide and high. The industry measures the steel boxes in 20-foot equivalent units, known as TEUs.
    • There are now 24 million TEUs around the world.
    • About 22,000 pairs of shoes or half a million pounds of chicken feet can fit in one 40-foot box.
    • 12 to 15 years is the average life of a container box, but they can last up to 20 years.
    • The average cost of a 20-foot box is $1,500.
    • China is now the largest manufacturer of these boxes.
    • The corrugated boxes are most often made of Corten steel. Because of their sturdy material, recycled boxes are now used to make homes and offices.
    Source: World Shipping Council, Drewry Research, Marc Levinson, Bennett Consulting

    http://www.presstelegram.com/busines...iners-piled-up

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  5. #5
    Senior Member JohnDoe2's Avatar
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    Port of Long Beach reaches deal to get thousands of stranded Hanjin containers removed

    In this aerial view, cargo is stacked up at the Hanjin terminal on Terminal Island (File photo).

    By Rachel Uranga, Long Beach Press Telegram
    POSTED: 11/03/16, 5:13 PM PDT | UPDATED: 6 HRS AGO
    0 COMMENTS

    Thousands of cargo containers stranded on port terminals after the collapse of Hanjin Shipping Co. will be cleared from local storage yards next week thanks to an agreement announced Thursday.

    Long Beach port officials are working with terminal operator Total Terminals International — which the now-defunct Hanjin has a majority stake in — to bring in a vessel Tuesday that could move up to 4,300 containers out of the Port of Long Beach and local storage yards and back to Asia, freeing up coveted real estate.


    Until recently, Hanjin cargo containers had been turned away at the ports, leaving the steel containers piled high at terminals and in storage yards as freight handlers struggled to figure out what to do with them.


    Just as problematic, freight handling companies weren’t equipped to pull the containers off of chassis, causing a shortage of these vital pieces of equipment that allow trucks to haul goods.


    “This is an opportunity to reposition over 4,300 Hanjin containers back to Asia, but just as importantly, providing much important relief to the chassis inventory and keep the supply chain moving,” said Noel Hacegaba, Long Beach port’s chief commercial officer.


    With the latest move, there will still be about 3,000 Hanjin leased or owned cargo containers left in the area, he said.


    The mostly 40-foot-long industrial containers carry hundreds of billions of dollars worth of goods from the ports to retailers across the country. Everything from furniture to car parts is loaded into the boxes.


    “People are trying to return these (containers) so they can get them out of their hair,” said Mark Hirzel, chairman of the Los Angeles Customs Brokers and Freight Forwarders Association.


    Truckers normally take the empty containers back to the port and load them onto a new container ship to return to their origin country. But with Hanjin buried in bankruptcy proceedings, the company hadn’t been running new ships to pick up and replenish empty containers.


    “In the warehouse business, the worst thing is to have dead space,” Hirzel said. “Nobody wants something that takes up space.” he said.


    “There was no space on several terminal docks,” he added. “They simply need to get it cleared out.”


    In addition to the containers owned by Hanjin, the terminal will also be accepting boxes that had been leased by the shipping giant.


    Under the agreement announced Thursday, the Port of Long Beach agreed to waive its fee for access to the terminal. The terminal, meanwhile, is loading the vessel arriving Tuesday at its own cost.


    “We feel this is a fair and necessary accommodation to keep goods moving through the ports in Southern California and to ensure our customers are able to remove their containers,” Hacegaba said in a statement.


    Hanjin, the seventh-largest shipping company in the world, collapsed Aug. 31 after failing to secure funding from the Korea Development Bank. It cut services off shortly after, leaving ships with billions of dollars worth of cargo stranded and cargo containers scattered around the world.


    At one point an estimated 15,000 Hanjin leased and owned containers in Southern California had nowhere to go.

    Truckers couldn’t drop them off at the port, as terminals weren’t accepting the goods. Terminals began to accept some of the containers a few weeks ago.

    http://www.presstelegram.com/busines...ainers-removed

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    Make tiny homes out of them for the American homeless as a transition for somewhere to stay while looking for work.

  7. #7
    Senior Member JohnDoe2's Avatar
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    Quote Originally Posted by Beezer View Post
    Make tiny homes out of them for the American homeless as a transition for somewhere to stay while looking for work.
    They'll sell you all you want.

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    Senior Member JohnDoe2's Avatar
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    Los Angeles port cargo volumes rise after Hanjin’s collapse


    Ships filled with cargo line the APL Container TermInal at the Port of Los Angeles. (File photo.)

    By Rachel Uranga, Long Beach Press Telegram
    POSTED: 11/15/16, 5:42 PM PST | UPDATED: 8 HRS AGO
    0 COMMENTS


    The financial collapse of shipping giant Hanjin Shipping Co. continued to affect cargo volumes at the Los Angeles and Long Beach ports during October.

    As a backlog of cargo stuck at sea came to shore, the Port of Los Angeles saw a 16.4 percent jump in imports compared to the same period last year – the most volume the port’s ever seen in one month.


    Meanwhile Long Beach, which depends heavily on Hanjin carried cargo, saw its imports decline 3.4 percent.


    “Right now, we are seeing peak season shift back and the fallout of Hanjin,” said John Martin, a maritime consultant.


    Los Angeles benefitted so much from the holiday season, in part, because Long Beach relies more heavily on traffic from Hanjin, the world’s seventh largest carrier. The South Korean company filed for bankruptcy protection on Aug. 31, stranding crews and cargo containers on the high seas as creditors fought in courts.


    Many of those cargo boxes have finally docked, but the backlog of empty containers to be returned to Asia is still being cleared.


    “We expected this given Hanjin’s bankruptcy,” said Noel Hacegaba, chief commercial officer for the Port of Long Beach. “However we remain optimistic about the future.”

    Hanjin owns a majority stake in the Long Beach-based Total Terminals International, which accounted for about 12 percent of Long Beach’s cargo volume last year.

    When Hanjin suspended operations in September, the terminal nearly came to halt. Shippers that were using the Hanjin service scrambled to switch carriers or come up with alternative arrangements, bringing more business to the Los Angeles port.


    That meant a jump in cargo with the Los Angeles’ port, which moved 417,311 imported cargo containers that were twenty-foot equivalent, or TEUs, an industry term used to measure volumes. A standard cargo box is two TEUs.


    By comparison, Long Beach handled 296,711 imported TEUs.


    Meantime, the Long Beach terminal’s future remains unclear.

    This week, a Seoul court named Korean Line Inc. the preferred bidder for Hanjin, beating out Hyundai Merchant Marine. The company has until the end of this month to strike an agreement for the U.S. Asia route.

    http://www.presstelegram.com/busines...njins-collapse

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