Hanjin Cuts Fleet as Court Advises Return of Chartered Shipsby
Return makes sense as vessels chartered at high rates: Court
Hanjin already sent back four box movers, three bulk carriers
Hanjin Shipping Co., the South Korean container line that sought bankruptcy protection last month, received a court advisory to return all chartered vessels to cut costs while the company is in the midst of reducing its fleet.
Giving the ships back to the owners makes sense as they were chartered at high rates, a spokesman at the Seoul Central District Court said Monday, declining to be identified in accordance with court practices. Hanjin estimates it may face penalties of about $1.7 billion for the early return, but the contracts could be renegotiated if the company is revived, the spokesman said. A Hanjin representative declined to comment.
The Seoul Central District Court is hearing Hanjin Shipping’s application for receivership and will decide whether it can be resuscitated or should be liquidated. A collapse of the firm will probably spark fresh consolidation among container lines as they attempt to ride out shock waves faced by the industry, Germany’s No. 1 carrier Hapag-Lloyd AG said last week.
Hanjin has already returned four box movers and three bulk carriers to their owners, and plans to remove 13 more container carriers, the company said in an e-mail earlier Monday. In addition, one ship owner has informed the company that it plans to take back a container ship. Of the Seoul-based liner’s 97 container ships, 60 were chartered, while among its 44 bulk ships, 23 were leased as of Sept. 11.
Stranded at Sea
The bankruptcy filing by the Korean company, which controlled 2.9 percent share of the global container ship traffic, threw supply chains in turmoil during peak season when retailers look to stock up warehouses and shelves to prepare for the year’s biggest holiday sales -- Thanksgiving and Christmas.
About 30 percent of Hanjin’s container ships have completed unloading, according to Hanjin’s website, while 34 are still stranded at sea and 35 will return to South Korea.
Maersk Line, the world’s biggest container line, said in an e-mail Monday that it is in talks with Hanjin on the return of Maersk Sebarok ship after receiving notice on Sept. 17 from the South Korean company that it is terminating the contract. Hi Gold Ocean No.2 Ship Investment Co. said in a regulatory filing it plans to sell a bulk carrier that Hanjin is returning to help cut losses from the annulment of the charter agreement.
In a setback to revival efforts, the board of Korean Air Lines Co., the biggest shareholder of Hanjin Shipping, failed to reach a resolution when it met Sunday to discuss ways to expedite the injection of 60 billion won ($54 million) it had pledged earlier. The board of the airline will meet again, though the date is undecided, a Korean Air spokesman said.
Korean Air is discussing new measures to ease the disruption, Yonhap News reported Monday, citing people it didn’t name.
The Wall Street Journal reported over the weekend that Hanjin Shipping is working on a plan that requires more than halving its fleet, and the most likely scenario is that it will be liquidated. The nation’s Financial Services Commission had on Sept. 1 said the possibility of liquidation can’t be ruled out. A representative for Hanjin Shipping declined to comment.
Shares of the company dropped 1.9 percent to close at 1,260 won in Seoul on Monday. The stock has slid 65 percent this year, compared with a 2.8 percent gain in the benchmark Kospi index.