Pacific Maritime Magazine - Marine Business for the Operations Sector

Hanjin Hardship

 

Terminals in Seattle have continued to unload cargo from Hanjin vessels, but the terminal operator has put fees in place for people picking up that cargo. Photo courtesy of the Port of Seattle.

When South Korea-based container carrier Hanjin Shipping filed for bankruptcy protection in its home country in late August, it set off a chain of events that reverberated across the globe, including along the North American West Coast, as ships were left in a state of limbo either in port or offshore.

Hanjin, the seventh largest shipping company in the world, accounts for about eight percent of US transpacific trade. As of 2015, it was South Korea's biggest containership service, with 13 container terminals, including at the ports in Long Beach and Seattle. The company also operates 170 containerships and bulk carriers, has a capacity of 640,348 TEU, and conducts operations at 90 seaports globally.

For a time after Hanjin filed for receivership on August 31, roughly half of its container carrying vessels were temporarily barred from ports around the world at one time or another, including more than a handful in the waters stretching from British Columbia to Southern California.

Making matters worse, Hanjin's financial collapse came during peak shipping season, the period in the summer and early fall, when retailers import more goods than usual in order to build up inventories for holiday shoppers. Earlier this year, cargo owners forecasted a three to five percent increase in volume during peak season.

The Northwest Seaport Alliance, a marine cargo operating partnership of the Port of Seattle and Port of Tacoma reported double digit increases in imports during the summer, but that momentum was slightly curtailed by the temporary halting of Hanjin ships.

According to Marine Exchange of Puget Sound Executive Director Capt. John Veentjer, about 80 Hanjin vessels arrive at Puget Sound Ports each year, an average of about 6.6 a month.

But that traffic came to a relative standstill for weeks and resulted in delays and cargo backlogs in the wake of Hanjin's receivership. Even though Hanjin owns majority stake in Total Terminals Intl., or TTI, which has sites at both the Seattle and Long Beach ports, no Hanjin ships called at the Seattle or Tacoma seaports in the first half of September, Tara Mattina, spokeswoman for the Northwest Seaport Alliance told Pacific Maritime Magazine.

Hanjin's main Pacific Northwest home is Seattle's Terminal 46, but its cargo is also handled at Husky Terminal and Olympic Container Terminal in Tacoma, although it comes in on "K" Line and Yang Ming ships, respectively.

"The terminals have continued to unload the cargo, but OCT has put fees in place for people picking up that cargo," Mattina explained.

Hanjin is one of three weekly services that call at Terminal 46; the facility handles cargo for MSC and Maersk as well as Hanjin. Hanjin vessels made up about 31 percent of total vessel calls at T-46 in 2015, and 27 percent so far in 2016, according to port data.

The South Korean court that accepted the receivership application is in the process of deciding whether Hanjin Shipping should remain in business or be dissolved. The process is expected to be complete in the late October-early November timeframe.

"It's too soon to know what the longer-term effects might be (on the Seattle-Tacoma port complex)," Mattina said. "We're focused on what we can control: making our gateway as efficient as possible and investing strategically so that we can handle the bigger ships cascading into service as the shipping lines form new alliances and share space on ever-larger ships."

At the Port of Long Beach, which like the Port of Seattle is home to a Hanjin-run terminal, five Hanjin vessels wound up idled in the aftermath of the shipping company's receivership filing. But according to Capt. Kip Loutit, executive director of the Marine Exchange of Southern California, it had no effect on vessel traffic.

"We opened up what we call a 'contingency anchorage' that is adjacent to but apart from the regular anchorages since we don't know how long the Hanjin ships would be at anchor and didn't want to block the regular anchorages," he explained to Pacific Maritime Magazine.

Hanjin ships at Long Beach were and still are affected by the receivership. As of mid-September, the 4,250-TEU Hanjin Montevideo was still at anchor at Long Beach, where it had been for more than two weeks, and the 10,114-TEU Hanjin Greece drifted for more than a week before coming in to berth. Hanjin Boston, which has a capacity of about 7,500 TEUs came to anchor outside the breakwater, moved to anchor inside the breakwater to refuel, moved back outside to resume waiting, and finally went to a berth.

The vessel then made a call to the adjoining Port of Los Angeles before setting sail for the Port of Oakland on Sept. 16.

At the Port of Los Angeles, Hanjin has a much smaller footprint than at the Port of Long Beach; the shipping company doesn't own or lease any land from the port; when Hanjin ships have called the Port of LA, they have done so via vessel sharing agreements with other shipping lines.

And with that being the case, LA hasn't seen its flow of Hanjin vessel traffic suffer much disruption, port spokesman Phillip Sanfield told Pacific Maritime Magazine. Two Hanjin ships were allowed to come into the Port of LA in the two weeks after the crisis began, he said.

"During the first six months of 2016, only about four percent of POLA containers were Hanjin," according to Sanfield. "Other shipping lines and terminals could fill the void if Hanjin was no longer calling at the Port of Los Angeles."

Hanjin's receivership has also barely made a ripple in the San Francisco Bay Area, home to California's third-busiest seaport, the Port of Oakland. Hanjin, the No. 5 containerized import carrier into Oakland, doesn't operate a marine terminal at the port.

Port spokesman Mike Zampa told Pacific Maritime Magazine that no Hanjin ships called on Oakland from the day of the bankruptcy filing, August 31, until the afternoon of September 14, when the Hanjin Greece arrived, followed by the Hanjin Boston two days later.

"There's not likely to be any change in cargo volume at Oakland; cargo may migrate to other carriers as a result of this situation, but Oakland doesn't anticipate any loss of business," Zampa said.

At the Port of Long Beach, five Hanjin vessels wound up idled, but the ships had no effect on vessel traffic, thanks to "contingency anchorages." Photo courtesy of the Port of Long Beach.

Hanjin's problems on the West Coast essentially began following the 4,600-TEU Hanjin Scarlet's arrival at the Port of Prince Rupert the evening of August 30. The vessel proceeded directly to an assigned anchorage, where it remained for days following news that the Hanjin had filed for receivership.

The vessel was not handled or worked for a full week until being berthed at the port's Fairview Container Terminal, which is operated by DP World, the morning of Sept. 7. Work only began after DP World began requiring pre-payment for handling of all Hanjin containers.

The original plan for the Hanjin Scarlet after leaving the Port of Prince Rupert was for it to sail to the Port of Seattle, but it was arrested by DP World on September 15 over millions of dollars in unpaid bills.

As of mid-September, the vessel remained at anchorage 27 off Prescott Island outside Prince Rupert harbor.

 
 

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