A Hanjin container ship that was stranded off the California coast for more than a week began unloading Saturday after a judge protected the global shipping giant from having its assets seized in the U.S. as it struggles to avoid bankruptcy.
"This is good news for cargo owners and American consumers, just in time for the holiday shopping season," Noel Hacegaba, the port's chief commercial officer, said in a statement.
The Hanjin Greece was one of four vessels that were blocked from entering or leaving the port after Hanjin filed for bankruptcy protection on Aug. 31 in South Korea and the U.S. on Sept. 2. Creditors had refused to extend it any financial aid.
Container ship Hanjin Greece - Image courtesy: Ed van Dort
Dozens of ships around the world were stranded because Hanjin couldn't cover fuel bills or guarantee that dockworkers, crane operators, tugboat captains and others would be paid for their services. The vessels reportedly contain about $14 billion worth of merchandise.
The disruption has sent ocean shipping rates soaring and left major retailers scrambling to work out contingency plans to get their merchandise into stores.
Several ships were seized on behalf of creditors, including the Hanjin Montevideo, which was unable to leave Southern California after unloading. Two suppliers claim that Hanjin owes them about $775,000 for fuel in the ship's tanks.
On Friday, U.S. Bankruptcy Judge John K. Sherwood in New Jersey granted Hanjin protection from any more seizures in United States territory.
Lawyers for Hanjin told the judge that a South Korean bankruptcy court had approved releasing $10 million to cover the costs of unloading the four ships that were off the U.S. coast, the Long Beach Press-Telegram reported.
Other nations have granted similar protections as Hanjin tries to keep afloat. The company has lost money for years thanks to a global trade slump and a huge oversupply of ships to carry cargo, which has driven ocean shipping costs to historic lows.
The world's seventh largest ocean shipper, Hanjin Shipping is part of the Seoul-based Hanjin Group, a huge, family-dominated conglomerate, or chaebol, that also includes Korean Air.
Earlier in the week, the Hanjin Group said it will inject nearly $90 million, including $36 million from its chairman Cho Yang-ho's personal assets, to help resolve disruptions to the supply chain. The group said it will provide its stakes in overseas terminals, such as the one Hanjin operates in Long Beach, as collateral to borrow $54 million.
That still falls short of the fees that Hanjin Shipping must pay for services it needs to offload cargoes already on its vessels. According to local media reports, that amounts to $543 million.
Source: Yahoo Finance