Hanjin Move Likely to Raise Shipping Rates for U.S. Firms
West Coast freight businesses rush to rebook shipments on other ocean carriers
The Hanjin California container ship docked at the Port Botany shipping and container terminal in Sydney in April. The South Korean shipping company filed for receivership Wednesday and stopped taking new shipments. PHOTO: DAN HIMBRECHTS/EUROPEAN PRESSPHOTO AGENCY
Up and down the West Coast, freight businesses were scrambling Wednesday in the wake of news that Hanjin Shipping Co.of South Korea had filed for receivership.
As port terminals from Long Beach, Calif., to Seattle turned away outbound containers destined for Hanjin ships, cargo businesses were rushing to rebook shipments on other ocean carriers. That involves the extra work of shuttling the cargo on trucks, then unloading and repacking it into the new carriers’ containers.
“There’s going to be exorbitant costs,” said Peter Schneider, vice president of T.G.S. Transportation Inc. in California. He said he offered to help customers rebook their Hanjin shipments and is waiting to hear back. “Everything is unraveling,” he said.
On trans-Pacific routes, Hanjin accounts for about 7% of cargo traffic, according to an industry source. Canceling that capacity, however small a portion of U.S.-Asia trade, will force hasty adjustments and raise shipping rates for many U.S. retailers and manufacturers.
Mr. Schneider said his company has about $6,000 to $7,000 in outstanding bills to Hanjin, which he’ll likely write off, but other trucking companies could be harder hit. Smaller companies that “had all their eggs in one basket with Hanjin—they may go under."
Meanwhile, two Hanjin ships scheduled to arrive Wednesday at the nation’s two largest ports, Los Angeles and Long Beach, Calif., canceled their plans to berth and were drifting off the coast, their contents—bound for retail shelves, factories and warehouses—marooned indefinitely.
A spokesman for the National Retail Federation on Wednesday afternoon said he was beginning to hear from member companies, but they didn’t know what would happen to the goods packed in containers on Hanjin’s inbound vessels.
Several freight businesses in recent weeks said their customers—retailers and manufacturers with big import orders—chose to send their goods via other ocean carriers, shifting shipments away from both Hanjin and Hyundai Merchant Marine Co. as the Korean carriers’ financial conditions worsened.
Kip Louttit, executive director of the Marine Exchange of Southern California, which keeps tabs on vessels and directs ship traffic, said the two ships would owe fees to the exchange if they came within 20 miles of the port, “but whether we get paid or not will depend on how the firm handles its bankruptcy or emerges from bankruptcy or whatever.”
