• Leadership Update

Hanjin Shipping Update

Movement on resolution of the status of hundreds of thousands of containers stranded on Hanjin ships on the high seas and in ports is progressing, albeit at a much slower pace than shippers and consignees would like to see.

Judge John K. Sherwood of the U.S. Bankruptcy Court in Newark, NJ, issued an interim order on Friday affording Hanjin Shipping protection under Chapter 15 of the U.S. Bankruptcy Code. Chapter 15 is a part of the U.S. Bankruptcy Code that gives a U.S. Bankruptcy Court judge the discretion to issue an order to cooperate with a foreign bankruptcy court that has original jurisdiction.

By issuing his interim order, Judge Sherwood has allowed Hanjin ships to enter U.S. ports without risk of being “arrested” (a term in admiralty law that is synonymous with seized). Notwithstanding the fact that the ships can now enter the ports without risk of arrest, everyone involved in the process of unloading the ship has to be willing to play their role. However, because there are significant questions about Hanjin’s ability to pay for post-bankruptcy expenses, the terminals, stevedores, railroads, and trucking companies are balking at performing any work until there are some assurances that they will be paid.

Nonetheless, the Hanjin Greece arrived early Saturday morning at Total Terminals International (TTI) in the Port of Long Beach and began discharging its cargo. It is important to note that TTI is majority owned by Hanjin and operated as a subsidiary of Hanjin Shipping. The work being done at TTI came after news that Korean Airlines, the largest shareholder in Hanjin, approved $54 million in assistance to Hanjin. During the hearing on Friday in Judge Sherwood’s court, Hanjin stated that it had $10 million allocated to work several ships sitting at anchor of the coast of California.

This progress followed news on Thursday that cargo aboard the Hanjin Scarlet was being discharged at the Fairview Container Terminal (FCT) in the Port of Prince Rupert, British Columbia. FCT is jointly owned by the Canadian National Railway (CN) and DP World. It was reported that DP World was requiring pre-payment for the handling of all Hanjin containers. CN has offered to move the containers being discharged and was in the process of publishing relevant rail charges to destinations in Canada and the U.S.

Another hearing was scheduled for September 12 to address a number of issues raised by creditors as well as those who would have to provide post-bankruptcy services to discharge and move Hanjin cargoes. At the same time, it was reported that HP and Samsung both supported the issuance of the Chapter 15 order, hoping that it will expedite the process of recovering the hundreds of containers with tens of millions of dollars currently aboard Hanjin ships.

The Commerce Department told American Shipper on Friday that, “The Administration is aware of the Hanjin bankruptcy and its impact on the movement of U.S. cargo around the world. We are in close touch with the South Korean government as they work to provide needed financing that will allow U.S. goods to reach their destinations. Additionally, we are maintaining strong coordination across the Federal government and will continue to closely track this situation. We encourage all parties to work together to continue moving these goods through the shipping network and to their intended destinations as quickly as possible while bankruptcy proceedings continue.”

ISRI will continue to provide information regarding this matter, which is affecting a large number of scrap recyclers, as it becomes available.

For more information, contact Scott Horne.

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