September 6, 2016

Hanjin Shipping and Receivership Update #4


To Our Valued Customers: 

Regarding the situation with Hanjin Shipping, we are sharing in our fourth update what we have learned since over the weekend:

Hanjin Shipping filed for Chapter 15 bankruptcy protection in US Court on Friday, September 2, 2016.  The hearing is set for Tuesday, September 6, 2016 and once that process is complete, we expect Hanjin to file injunctions to prevent vessels from being seized at ports in the United States.  That is important to allow CKYH+E Alliance members access to their equipment that is currently stuck on those vessels.

Fortunately, we are seeing some Hanjin vessels being allowed to berth, and non-Hanjin CKYH+E member containers being made available to importers.  For Hanjin containers arriving, there are numerous obstacles preventing the release of those containers: holds, liens, terminals assessing handling fees in order to process the release, and truckers and chassis providers refusing to work Hanjin equipment for fear of non-payment.

Update on what other carriers are doing?

Carriers are scrambling in Asia to provide capacity as quickly as possible to replace the 30,000 x Teus per week that Hanjin used to carry from Asia to the US.  What we have learned so far is that there will be extra loaders in the next few weeks, details as follows:

Hyundai:  Firm new service beginning 9/11/16, servicing Shanghai, Busan, Kwangyang with 5,000 x Teus vessels primarily servicing Korean shippers impacted the most from Hanjin’s bankruptcy.  G6 members reportedly will not have access.

COSCO:  Firm extra loader week 37 servicing Yantian (9/11), Xiamen, Shanghai, Ningbo, Prince Rupert, Long Beach.

Kline:  Firm restart of AWE3 immediately with a rotation of Hong Kong, Yantian, Kaohsiung, Shanghai, Busan, Savannah, Charleston, and Norfolk

2M (Maersk, MSC):  Will have 2 extra loaders week 38, servicing EC (Yantian, Shanghai, Busan, NYC, Savannah) and WC (Yantian, Shanghai, Busan, LAX)

APL/CMA:  Firm extra loader, servicing Shanghai (9/23), Ningbo (9/25), Yantian (9/27) through to Los Angeles

Yangming and Evergreen:  Releasing vessels from dry-dock to add extra loaders but no firm schedule yet.

Why aren’t carriers adding more capacity and sooner?  Despite close to 1 million teus of capacity idling, it still takes considerable time and effort to release vessels from dry-dock and add to a rotation.  It takes time for the vessels to be made sea-worthy, for fuel to be sourced and added, crews to be organized, berthing arrangement to be made, canal transit schedules to conclude, and alliance members to agree on routing and port pairs.  So you’ll notice that most of the additional capacity doesn’t sail for another 2-3 weeks, and by that time, we will be one week away from China’s National Day Holiday closings.  And for US exports to Asia, this means the additional capacity will not be available until the end of October on the west coast, and early November on the east coast.

What will happen with pricing?

Transpacific Eastbound:  We know that carriers have accelerated their GRIs and Peak Season Surcharges in light of the lost capacity in the market and the dramatic increase in demand on non-Hanjin assets.  The below is a list of proposed (and in the case of September 1 GRI already implemented) General Rate Increases and Peak Season Surcharges:

Peak Season Surcharge:     $540/20’, $600/40’, $675/HQ, $760/45’

2nd Stage Peak Season Surcharge:  $360/20’, $400/40’, $450/HQ, and $510/45’

September 1, 2016 GRI:  $900/20’, $1000/40’, $1125/HQ, and $1270/45’

October 1, 2016 GRI:  $1350/20’, $1500/40’, $1690/HQ, $1900/45’

For US Exports to Asia and World:    Carriers have filed increases for October 1, 2016 and November 1, 2016.  However,the October 1, 2016 GRI has since been increased by as much as 100% and we are still waiting for November 1, 2016 GRI to be reassessed and possibly increased as well.

Where’s all the Equipment? 

The easy answer:  stuck on a Hanjin vessel.  Equipment will be in acute shortage all over the world, but most acutely felt by US exporters, who are always struggling to get the right empty equipment at the right location at the right time.  With all the Hanjin vessels in limbo, that will keep CKYH+E equipment from flowing effectively to where it is needed.  And without those vessels returning empties to Asia from the United States, equipment will be in short supply in Asia as well for US imports.  It is simply stuck.  So again, we are urging our customers to book early and be flexible with carrier selection, transit times and to be mindful of increases in market rate levels.

Our priority as we navigate this unprecedented situation, is to keep your cargo flowing as quickly and as seamlessly as possible, given the current conditions – and to communicate effectively along the way.  We will get through this together.

Thanks for all your support. 





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