Korean Air Lines, the biggest shareholder in Hanjin Shipping, yesterday delayed a decision on a funding plan for the troubled company for a second time, adding to uncertainty about cargo stranded at sea following the failure of the world’s seventh-largest container carrier.
Around $14bn 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.
“We haven’t reached a conclusion at today’s board meeting, so we have decided to discuss the matter again tomorrow,” a spokesman for Korean Air Lines said.
The collapse of Hanjin has caused havoc in global trade networks and a surge in freight rates, as more than half of Hanjin’s 141 ships have been blocked from docking at ports. Four vessels have also been seized as of Thursday, according to Hanjin Shipping.
Hanjin’s collapse came during the peak shipping period ahead of the year-end holiday season, stranding cargo for the likes of HP Inc and Samsung Electronics Co Ltd. Samsung on Thursday asked a US judge to allow the South Korean company to pay cargo handlers to remove its goods from Hanjin Shipping vessels stationed near US ports.
While the US bankruptcy court has prevented Hanjin ships being seized if they enter US ports, it should also allow the ships to leave port once unloaded and for cargo holders to recover their property, Samsung argued ahead of the hearing yesterday.
Earlier this week, Samsung said goods worth $38mn, mostly televisions and appliances, were stuck aboard two Hanjin ships.
The tech giant said it may have to charter at least 16 planes to move the goods if the cargo cannot be unloaded immediately, costing it at least $8.8mn.
“This lack of progress continues to result in significant damage to cargo owners, including Samsung,” Samsung lawyers said in the court documents.
South Korean authorities, criticised for propping up failing companies in the past, have shown little appetite to step in to save Hanjin.
“I’m aware that some exporters are going through considerable difficulties from the Hanjin Shipping incident,” Bank of Korea Governor Lee Ju-yeol said at a press conference in Seoul yesterday.
“However, the impact on the economy won’t be big if measures in place from the government including deployment of alternative vessels are carried out smoothly.”
Representatives of the US Department of Commerce met with the vice minister of South Korea’s maritime ministry yesterday morning, a ministry spokesman said, but declined to comment on what was discussed before a planned official statement. Banks led by state-run Korea Development Bank (KDB) withdrew backing for Hanjin last week, saying a funding plan by its parent group was inadequate to tackle debt that stood at 6.1tn won ($5.5bn) at the end of June 2016.
Hanjin Group, the parent of both Hanjin Shipping and Korean Air earlier pledged to raise 100bn won in funds to help rescue cargo.
Hanjin Group planned to raise 60bn won by putting up as collateral stakes in overseas terminals such as Long Beach Terminal and other assets, while Hanjin Group chairman Cho Yang-ho will raise 40 bn won from private funds, the group said in a statement.
The court presiding over Hanjin’s receivership asked KDB on Wednesday for fresh funds to normalise operations but met resistance.
Cho still expected to provide the 40bn won in private funds next week, the Korean Air Lines spokesman said.