Scramble to stock shelves as Hanjin fights to stay afloat
Rotterdam (Netherlands) (AFP)
With Black Friday and Christmas on the horizon, manufacturers and retailers would usually be dreaming of a fat boost to their bottom lines at this time of year.
But instead a "nightmare" is unfolding as an estimated $14 billion in goods lie stranded on the high seas thanks to the dramatic collapse of Hanjin, the world's seventh-largest shipping firm.
Ports are refusing entry to dozens of ships run by the South Korean company, for fear they will be unable to pay docking fees, leaving an estimated 500,000 containers stuck on its ships across the globe even as it pleads with creditors and starts a fire sale of vessels to other companies.
Particularly hard hit are firms transporting electronics and other consumer goods to stock up their retail partners ahead of the crucial festive season, when most of the year's profits are booked.
LG has 10 to 20 percent of its North America shipments handled by Hanjin.
"Black Friday is coming soon," fretted Cho Sung-Jin, head of LG's home appliances unit, referring to the day after Thanksgiving on November 25 when US retailers indulge in a mania of discounting.
"I'm not sure if we can cover demand with our current inventory in the US," he said, describing the situation as "worrisome".
Samsung, the world's largest smartphone maker, last week said it had $38 million in goods on board two Hanjin vessels, adding it was worried the goods would be seized by creditors if the ships do make it to dock.
Hanjin sought court receivership on August 31 in Seoul, in the industry's biggest ever bankruptcy filing, after its creditors rejected a plan to deal with a towering $5.37 billion (4.77 billion euros) of debt.
- BBQs all at sea -
A shipping industry insider based in Germany, who asked not to be named, told AFP: "The issue with Hanjin is a nightmare happening in the peak ahead of Black Friday and the festive season."
The standoff could also hit consumers in their pockets as shipping costs surge, the insider said.
In Beijing, Stephen Zhu, Asia director for premium barbeque maker Weber, said two containers holding $800,000-worth of grills destined for Los Angeles and Australia were affected.
"We don't know what to do with these two containers now," he told AFP. "We will send our clients a new batch of products first and then deal with these two containers."
"Everyone is stocking up for Thanksgiving and Christmas. We can't let this delay our supply," he said.
In Rotterdam, port authorities confirmed to AFP there were Hanjin containers "both empty and full" stuck at the Euromax Terminal, and discussions were underway with the owners of the goods.
There are believed to be several thousand containers languishing at the western hemisphere's largest port.
One court in the US state of New Jersey did hand the South Korean company a temporary reprieve by allowing it to unload some cargo without fear of creditors seizing its ships.
And Hanjin announced Monday three vessels were in line to unload cargo at Long Beach in California once a fourth had cleared its cargo, easing pressure in the US market.
On Saturday a key member of the Hanjin group, Korean Air, agreed to a company bailout of 60 billion won ($55 million) but the government in Seoul insists there will be no official rescue.
Regulators have warned that securing further funds "could take some considerable time".
"What is of more concern is the fact that, as with every bankruptcy, a company has outstanding bills," Port of Rotterdam spokesman Sjaak Poppe told AFP.
"Given Hanjin's large debt, it's unlikely it will ever be paid," Poppe said.
© 2016 AFP