Hanjin – £10.5bn of cargo all at sea

After its collapse last month, the Hanjin Shipping Group is seeking funds to bring £10.5bn worth of cargoes ashore for its customers.

Hanjin went into receivership in South Korea last week after banks refused to extend their lines of credit. As a result many ships have been seized in ports while others have been refused entry without advance payment of docking fees.

Despite filing for protection from the courts last week, governments and banks alike are reluctant to release any funds to bail it out.

The main reason for the collapse of the company is due to the overcapacity of the container shipping industry combined with relatively weak global growth. Hanjin went under with debts of around £4.1 billion.

Of the fleer of 141 ships around the world, it is estimated that 89 Hanjin ships are in difficulty with many others seized by creditors in ports.

Cargoes include computer components, TVs and even perishable goods. Much of the cargo on the ships was headed for the Christmas shopping season in the US and Europe. Samsung Electronics alone estimates that it has around £27 million of goods on the ships, and it has now considering chartering 16 aircraft to get goods to customers in the US.

The shipping line’s main creditors have said that it would be difficult to accept a request from the court to give it fresh funds. The state owned Korea Development Bank has indicated that it may help but there was no certainty that Hanjin would survive even after the funds were paid.

However, the shipping company’s parent, Hanjin Group, has pledged to raise 100bn won (£60m) – although there are doubts as to whether that would be enough to cover the cost of unloading cargo.

The South Korean government has said government-backed creditors would offer another 100bn won if collateral was provided. It will dispatch more than 20 substitute container ships next week to try to offload the cargoes. Hanjin Group is considering the offer.