South Korea’s financial regulator said Hanjin Shipping Co. will seek stay orders in 43 countries to protect its vessels from being seized, after its court receivership filing last week roiled companies’ supply chain before the year-end shopping season.
Applications in 10 countries will be made this week and the remainder soon, the Financial Supervisory Commission said in a statement Monday. Hanjin Group, owner of the shipping line, should also take more action to account for the “chaos” caused to the shipping industry, FSC Chairman Yim Jong Yong said in comments confirmed by a spokesman.
Vessels of Hanjin—the world’s seventh-largest container carrier with a 2.9 percent market share—are getting stranded at sea and ports after the box carrier sought protection, hurting the supply of LG Electronics Inc. televisions and other consumer goods ahead of the holiday season. Hanjin Shipping shares resumed trading Monday limit down 30 percent and later erased losses to rally as much as 18 percent. Any optimism may be misplaced, said Park Moo Hyun, an analyst at Hana Financial Investment Co. in Seoul.
“Retail investors are hoping for the best on false hopes,” Park said. “They think that government measures to help resolve the supply-chain disruptions could mean it’s also supporting Hanjin Shipping. They don’t seem to realize that that’s the wrong conclusion.”
The commission said 79 of Hanjin’s vessels, including 61 container ships, have had their operations disrupted. Hanjin Group chairman Cho Yang Ho and Korean Air Lines Co., the shipping company’s largest shareholder, should take steps to ease the disruptions, Yim said.
Hanjin Shipping declined to comment on the applications for stay orders and Yim’s comments. Korean Air also declined to comment.
Hanjin Shipping fell 8.9 percent to 1,130 won as of 1:58 p.m. in Seoul, cutting its market value to 278 billion won ($251 million). The stock tumbled 24 percent on Aug. 30, when trading was halted. The Seoul Central District Court accepted the company’s filing for receivership on Sept. 1 and asked for a revival plan to be submitted by Nov. 25.
While shares of Hyundai Merchant Marine Co. fell as much as 5.8 percent in Seoul Monday, other container lines in Asia such as Orient Overseas International Ltd., Nippon Yusen KK, Mitsui OSK Lines Ltd. and Kawasaki Kisen Kaisha Ltd. all rallied.
Hanjin’s woes show the container-shipping industry hasn’t recovered from the troubles it has been facing since the 2008 global financial crisis hurt trade. Companies in the industry have shed people, tried to merge with their rivals and cut costs.
Even so, rates to move boxes from Asia to the US and Europe haven’t revived.