Hanjin Shipping Co.’s vessels are getting stranded at sea after the South Korean container mover filed for court protection, roiling the supply chain of televisions and consumer goods ahead of the holiday season.
LG Electronics Inc. is trying to find new carriers for its goods, the world’s second-largest manufacturer of televisions said in an e-mail. Shipments through Hanjin account for between 15 percent and 20 percent of LG’s deliveries to America, the company said Thursday.
Woes at Hanjin Shipping, South Korea’s largest sea container shipping firm and the world’s seventh-biggest with a 2.9 percent market share, are derailing the supply chains of companies that need to send goods well in advance of the year’s biggest shopping season as Thanksgiving and Christmas holidays approach. TVs, cars and sneakers sail about 10 days to reach Los Angeles from Asia while they could take as many as 30 days to Rotterdam. Hanjin Shipping owns 59 of the 132 container and bulk ships in its fleet.
“There’s going to be a short-term disruption in the supply chain,” said Rahul Kapoor, a Singapore-based director at Drewry Maritime Services Pvt. “This is going to play out for the next few weeks. Ports will not have these vessels because they are worried port and other fees won’t be paid.”
Hanjin Shipping’s local-currency notes due June 2017 tumbled to 13.5 percent of face value as of 1:49 p.m. in Seoul, according to Korea Exchange prices, after fetching 90 percent in March. Trading in its shares were suspended after a 24-percent plunge Tuesday to their lowest level since December 2009.
About 70 percent of South Korea’s overseas shipments is through sea, of which Hanjin Shipping accounts for about 6 percent, according to Cheong Seung Il, a trade ministry official. While the government doesn’t expect a large impact on exports, there could still be some issues with machinery and textiles shipped via Hanjin, he said.
Freight charges from South Korea surged about 50 percent after Hanjin Shipping filed for court receivership Wednesday, Korea Economic Daily reported, citing shipping industry officials it didn’t identify. The fees on Hanjin’s main shipping route between Busan and Los Angeles have jumped 55 percent to $1,700 per 40-foot equivalent box from $1,100, it said.
Three Hanjin vessels were stranded off the US West Coast, Kip Louttit, executive director of the Marine Exchange of Southern California said. Large container ships that come within 20 miles of the port complex owe the exchange fees of as much as $1,000, while harbor pilots and tug-boat operators also receive payments for their services to incoming vessels, Louttit said in a telephone interview, without elaborating on the reason for the status of the Hanjin ships.