Bankruptcy of Hanjin Shipping Co., South Korea’s largest and one of global top 10 sea carriers, has caused disarray in maritime traffic as clients of Korea’s largest cargo carrier scurry to look for alternatives to keep their deliveries on time.

According to Korea International Trade Association (KITA) on Thursday, about 73 percent of Korea’s exports by amount were shipped via sea as of last year while 26 percent via aviation. Of the total amount of goods exported using marine transportation, Hanjin Shipping accounted for 6.6 percent, and transported 18.1 percent of export shipments to North America.

Considering its large presence in global trade, many have been worried that its bankruptcy would deal a big blow to Korean exporters by delaying deliveries of exporters’ goods and payments. If Hanjin ships with cargo fail to dock at ports, exporters could also have to bear additional expenses on extra loading and offloading of goods, as well as on finding other vessels for shipping their goods to the final destinations. Overall freight charges could also rise on limited shipping tonnage available, deteriorating exporters’ profitability.

After Hanjin Shipping that failed to receive fresh loans from the creditors following a month-long tug-of-war with the creditors was finally placed under court’s control yesterday, such concerns are already becoming reality.

According to KITA, as of Wednesday, about 10 Hanjin Shipping vessels have failed to dock at ports in China including those in Shanghai and Tianjin. KITA projected that the freight charge for shipments from China to Long Beach in the United States would increase from $1,200 per twenty-foot equivalent unit (TEU) in August to up to $2,200 this month amid growing concerns over a shortage of sea carriers following the Hanjin’s fallout.

Korean exporters including home appliance manufacturers that have depended much of their shipments on Hanjin Shipping are on alert and are devising emergency plans to minimize impact.

Samsung Electronics Co. exports about 40 percent of its home appliance products to North America via Hanjin vessels while LG Electronics Inc. about 20 percent. Nexen Tire Corp. also exported 24.9 percent of its total goods to North America using Hanjin Shipping’s freight service. An unnamed official from Nexen Tire said the company has formed a special team to prepare contingency plans, such as finding other shipping firms.

Forwarding agents or non-vessel operating common carriers that organize shipments for manufacturing companies and merchants are also faced with mounting concerns as a delay in shipments due to vessels being held at ports would increase spending on compensations.

As Hanjin Shipping is the world’s seventh largest sea carrier, its fallout has caused turmoil not only in Korean cargo, but also for global trade. Since Hanjin Shipping filed for court receivership early this week, its vessels have been rejected to dock at ports for loading and offloading of goods in Japan’s Yokohama and Moji, China’s Shanghai and Ningbo, the U.S.’s Long Beach, Australia’s Sydney, and Germany’s Hamburg. Port handling operations were also restricted in China’s Xiamen and Xinjiang, Spain’s Valencia, the U.S.’s Savannah, Canada’s Prince Rupert, and Singapore. About 30 Hanjin ships are known to have been banned from arriving and departing from ports at home and abroad. Global trading companies including those from the U.S. that received Hanjin Shipping service to deliver their goods are busy looking for other shippers.

Such chaos in global cargo is expected to continue for a while after a Seoul district bankruptcy court on Thursday embarked on reorganization procedure for the country’s once shipping tycoon, and the CKYHE Alliance informed Hanjin Shipping to immediately leave the alliance.

By Kim Jung-hwan and Yoon Jin-ho

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]