Samsung struggles to free cargo from insolvent Hanjin ships | Business| Economy and finance news from a German perspective | DW | 09.09.2016
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Samsung struggles to free cargo from insolvent Hanjin ships

The South Korean electronics giant is seeking a US court order to unload goods worth millions of dollars from Hanjin vessels moored near US ports after the world's seventh-largest container carrier filed for bankruptcy.

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Help for Hanjin

Samsung said in a statement Thursday it had asked a US judge to allow the South Korean company to pay cargo handlers to remove its goods from Hanjin Shipping vessels after a court order earlier "did not encourage the Hanjin ships to enter US ports as Intended."

The maker of electronic goods including Galaxy smartphones said the judge should issue an order barring the seizure of ships and allow it and other cargo owners to retrieve their goods by paying cargo handlers, who have been demanding payment guarantees.

"There's no earthly reason why these parties should not be permitted to cut their own deals," Samsung said in a court filing with the US Bankruptcy Court in Newark, New Jersey.


As many as 85 Hanjin ships are stranded around 50 ports in 26 countries, according to the company.

South Korea-based Hanjin Shipping - the world's seventh largest container carrier filed for Chapter 15 bankruptcy protection in the United States last week. It won a provisional ruling Tuesday, protecting its assets in the US against creditors, while the shipping line proceeds with its reorganization in South Korea.

Samsung hit hard

The world's biggest smartphone maker has about $38 million (33.7 million euros) worth of its goods and parts on board two vessels operated by the distressed shipping company. Samsung said in its court filing that without an order protecting the shipping line against creditors, the vessels wouldn't be able to dock, causing the company maker losses that may "continue to escalate so long as the cargo aboard these ships remains unloaded."

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Samsung said its visual display business division had $24.4 million of parts and finished goods in 304 containers meant for its factory in Mexico, while its home appliance business division had products such as refrigerators, washing machines, dishwashers and microwave ovens worth $13.5 million in 312 containers.

If the cargo can't be unloaded immediately, Samsung would be forced to transport alternative parts by air to help meet contractual obligations, entailing "great costs," it said. For instance, it would have to charter at least 16 planes at a cost of $8.8 million to transport 1,469 tons of goods, it said.

“All these costs and delays will be a loss not only to Samsung, but also to major retailers in the US and, ultimately, to US consumers," Samsung said in the filing. "It is vital to Samsung's and US retailers' interests to avoid major disruptions in production particularly ahead of the holiday shopping season."

Mounting costs

Hanjin's bankruptcy has sparked concerns across the world that its vessels won't be able to pay docking fees and handling charges or their cargo might be seized by creditors. This has prompted many ports in the US, Asia and Europe to turn them away.

Around $14 billion of cargo has been tied up globally as ports, tug boat operators and cargo handling firms refuse to work for Hanjin because they fear they will not be paid due to uncertainty over plans to provide new financing. According to US agencies, shippers and retailers, this would boost the cost to U.S. businesses and consumers of a wide range of imported goods, from furniture and clothing to fresh fruit and frozen meat.

Carriers have announced they will hike container freight rates by as much as 50 percent beginning next month as retailers scramble to secure shipping ahead of the peak year-end holiday season.

Peter Friedman, executive director of the Agriculture Transport Coalition - a US shipping industry group - said freight demand is outstripping supply by far at the moment.

"People are scrambling to find a carrier with space," he told the news agency Reuters. "But the biggest challenge right now is for people with cargo on Hanjin ships," he added.

Cautious cargo handlers

However, cargo handlers in US ports have urged the Newark bankruptcy court not to protect Hanjin vessels from seizure without considering the rights of suppliers.

Maher Terminals, which operates a container terminal in the Port of New York and New Jersey, said in court papers it was currently being "victimized by having hundreds of Hanjin containers clogging up its facility", which would impede the company's business with its customers. "Nothing in the court order "should be deemed to compel parties like Maher to continue to provide services without receiving payment or adequate assurance of such payment," it added.

Total Terminals International a West Coast marine terminal operator partly owned by Hanjin, also cautioned the court that a plan was needed to pay for several levels of port services, such as tug boats and stevedores, and to ensure Hanjin vessels would be able to refuel and leave port. "This lack of a short term plan for these vessels will lead to mayhem," it said in the filing.

Meanwhile, one Hanjin ship - the Hanjin Scarlet - is currently being unloaded in Canada's Port of Prince Rupert, with cargo owners covering charges, port spokesman Kris Schumacher said. "It remains unclear if the vessel would proceed to stops in Vancouver, British Columbia, and Seattle, he added.

Tara Mattina, a spokeswoman for The Northwest Seaport Alliance said: "All the supply chain partners - the pilots, the tug boat operators, the marine terminals operators, railroads and trucking companies - are saying they want a guarantee they will be paid."

uhe/kd (Reuters, dpa, Bloomberg)

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