Korea’s largest cargo carrier Hanjin Shipping Co. has been behind payment on container leases on top of its vessel fleet to suggest how pitifully bankrupt the company is. According to financial and industry sources, the shipper may soon have to suspend business unless it gets immediate emergency funds from parent Hanjin Group.

The sources said Hanjin hasn’t been able to pay for the container boxes it leases for months. Shippers typically rent out containers from domestic and foreign leasers. Hanjin with 550,000 containers at its dock leases out 27 from seven leasing companies. It pays about 10 billion won ($8.7 million) monthly for them.

The company that applied for creditors reprieve is said to be months behind its container dues, owing the leasers billions of won.

A Hanjin Shipping official admitted the company was behind the payment and that it was in talks with leasing companies to plead for their grace. Hanjin has been unable to pay for its chartered vessels and persuading ship owners to receive its dues in installments or debt that could be later converted into equity.

The company has been late in charter dues worth 200 billion won, including 13.6 billion won owed to Canada-based Seaspan. Another ship owner prevented Hanjin’s dry bulk carrier from leaving a South African port, demanding the Korean shipper to pay overdue fees.

“The fact that the company cannot even afford container leases which are just 10 percent to 20 percent of vessel charter fees suggests that Hanjin is really broke. The company cannot last beyond this month unless the parent group provides fast life-support actions,” an industry source said.

Hanjin Shipping that reported an operating loss of 115.8 billion won in the first quarter is mostly likely to have incurred losses in the second. Local rating companies recently downgraded the shipper’s debt credit to junk status.

By Kim Hye-soon and Yoon Jin-ho

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