Cargo chaos spreading worldwide over Hanjin fiasco

Cargo disruptions triggered by the cash-strapped Hanjin Shipping deepened worldwide Wednesday, with shippers holding both the parent company and the government responsible for failing to come up with preventative measures.

Of 128 Hanjin Shipping carriers owned by the company, 85 or about 66 percent of the total are in abnormal status, according to the company’s latest data released late Tuesday. 

Abnormal status refers to ships standing by on the high seas or banned from loading and unloading at ports.

The shipper has been seeking stay orders in over 40 countries to stop its ships from being seized by its creditors.

According to the Korea International Trade Association, a total of 161 export damage cases have been reported as of Wednesday morning. The number is five times higher than when the association first started to receive damage reports on Sept. 1.

This is projected to have caused over $50 million in financial losses, the agency said.

“There have been calls from small and medium-size trading companies that this week is the most critical,” said KITA officials.

By types of damage, ship arrest accounted for the most, with 58 cases, followed by docking refusal with 54 cases.

By regions, the Asian region and the Americas faced the most losses with 84 cases in total, followed by Europe, with 69 cases.

The state vowed to provide financial support and the parent company promised to inject 100 billion won ($91.5 million) on Tuesday to ease the chaos.

Meanwhile, local shippers have urged the government to take practical measures against the snowballing damages.

“The operation halt of Hanjin vessels will not only damage the international image of the Korean shipping industry but also strike a serious blow to small and medium-size trading companies. The current chaos is caused by the lack of preventive restructuring and a risk management system,” said the Korean Shippers’ Council under KITA, which is the only support group for shippers in Seoul.

It demanded that the government deploy a sufficient number of alternative vessels and quickly come up with measures to normalize sea freight transportation.

Currently, only 13 vessels -- nine Europe-bound lines and four US-bound lines -- have been temporarily deployed.

It also requested that Hanjin Shipping transparently release information about all vessels and cargo, as trading companies have not been able to figure out the “whereabouts” of their freight.

Meanwhile, the US court on Tuesday temporarily granted the protection of the near-bankrupt company in the states, allowing Hanjin ships to enter ports without ship arrest concerns.

The protection measures disallow US creditors from taking actions against ships and assets of the ailing company.

The temporary order will be finalized Friday after talks with shareholders over the issue of using ports and terminals, the court said.

By Lee Hyun-jeong (rene@heraldcorp.com)