By Mike Wackett
Container lessors will take a multi-million dollar hit from the collapse of Hanjin Shipping in unpaid hire fees and the termination of hire contracts for 750,000 teu of equipment.
The lessors have issued an industry alert through the Container Owners Association (COA), that includes the Hanjin container types, prefixes and number range.
The move is a desperate call for assistance to help recover their containers.
The statement said: “If you come across any equipment previously on lease to Hanjin Line, this document will help you identify the rightful owner, and facilitate its return to the rightful owner.”
It also warns Hanjin creditors against placing a lien on their containers.
“Please be aware any attempt to interfere with legal rights of the container owners is unlawful, and the relevant company may respond accordingly, to enforce its rights.”
The lessors say they face a massive challenge to recover their containers.
The world’s biggest lessor, Textainer, appears to also have the biggest exposure to Hanjin. It said in a statement that the number of containers leased to Hanjin represented 4.8% of its 2.2 million teu fleet.
It said: “Significant costs may be incurred in recovering, repairing and repositioning containers leased to Hanjin.
“The rates achieved for re-leased containers may be substantially below those paid by Hanjin,” the lessor cautioned.
The equipment is scattered around the world: stuck on ships, locked into terminals and storage depots, arrested by creditors and abandoned by shippers who are being refused restitution by depots and terminals.
Meanwhile, lessor CAI International said it had about 15,000 containers on lease to Hanjin, representing $40m of equipment exposure.
Like its peers, CAI will be able to claim a certain percentage of its loss from insurers, but there will be substantial deductibles and other limitations.
CAI said: “At this point, while we are unable to estimate the total impact of Hanjin’s bankruptcy filing on our financial results, we believe our exposure will be limited to $2.6m of accounts receivable related to income recognised prior to the third quarter of 2016, which is not insured and may not be recovered, and up to the $2m deductible on our insolvency insurance policy.”
Nothing in recent history can compare, but when United States Lines (USL) declared Chapter 11 protection from its creditors in 1986 there were frantic attempts by hundreds of unpaid service providers around the world to arrest USL boxes.
It took the container lessors many months to recover boxes USL had on lease, involving legal action worldwide. And a year after the carrier had collapsed, there was still an estimated 25% of equipment that had not been accounted for.
Hanjin had mid- and long-term lease agreements with most of the world’s major container leasing firms for some 750,000 teu at the time it entered into receivership on 31 August.
Ironically, in order to prop up its balance sheet Hanjin had made a number of sale and leaseback deals with container lessors on owned equipment.
According to sources, the South Korean line was “significantly behind” on hire payments, as it was with vessel charter hire payments, stevedoring charges, bunker supply costs and had many other creditors.
In theory, Hanjin’s container control system should be able to determine the status of the containers, but it is unlikely that the data has been updated sufficiently since the carrier entered receivership.
Cosco: Q&A Regarding “Hanjin Shipping” Bankruptcy
1: With regard to the event of “Hanjin Shipping”, does COSCO SHIPPING lines have solutions?
A: In order to protect our customer’s interest, following measures have been taken to help minimize the impact on the affected cargo：
- COSCO SHIPPING’s cargo will no longer be booked or loaded on vessel operated by Hanjin Shipping from the date that Hanjin Shipping filed an application for bankruptcy reorganization to the Court on Aug. 31, 2016.
- With respect to cargo already booked on vessels operated by Hanjin Shipping, we will arrange transfer to other service or lines operated by COSCO SHIPPING lines or other alliance members and make sure your cargo is safely delivered. Meantime, the situation of your containers is being updated proactively though our company’s website (www.coscon.com) and official WeChat account (cosconlines).
- With respect to cargo already on board of vessels operated by Hanjin Shipping, we have been closely monitoring the situation and in cooperation with concerned parties such as Hanjin Shipping, terminal operator and others to ensure your cargo is always protected with quick and safe delivery.
Q2： Where is our cargo and when will the cargo be discharged?
A: COSCO SHIPPING Lines thrives to closely communicate and cooperate with all concerned parties. However, due to the difficult and complex requirements among governments, the actual berthing time should be confirmed after negotiation with local government and terminal operation by Hanjin Shipping.
If your cargo needs to be further trans-shipped after discharging, we will arrange other service or lines operated by COSCO SHIPPING lines or other alliance members and to ensure your cargo is safely delivered.
Q3: How to get the cargo status in real time?
A: You may query the cargo status through following ways:
u Querying Cargo status through COSCO SHIPPING Lines official website（www.coscon.com）or official WeChat (cosconlines）.
Meanwhile, our company will post the latest information of COSCO SHIPPING cargo on board Hanjin Shipping Vessels though above channels with daily updates.
u Contacting with your local COSCO SHIPPING Lines office to get the cargo status from your sales representative.
u Calling Customer Service Hotlines 400-960-1919. (This service is only for china mainland.) In North America you can call:
North American Operations Center (NAOC) in Houston: +1-866-830-2550
Canada / +1-604-689-8989
Long Beach +1 866 502-6726
Q4: Why has my cargo been loaded on Hanjin Shipping Vessel when my booking has been submitted to COSCO SHIPPING Lines?
A：COSCO SHIPPING Lines and HANJIN Shipping are both members of CKYHE alliance. In the purpose of provide more versatile services, all members share allocations within the alliance. Thus, your cargo could be arranged on HANJIN vessels. However, what’s ensured is that as long as you are holding a COSCO SHIPPING Lines issued Bill of Lading, our company undertakes all Carrier obligation and responsibilities under the governing Bill of Lading clauses to complete the cargo delivery. With the unremitting efforts of HANJIN Shipping and our company, an increasing number of HANJIN vessels are calling at ports to unload cargoes. In the meantime, we will arrange following transportations for these cargoes with top priority.
Q5：How can I handle the failure in cargo delivery in time or cargo damage caused by this event?
A： First of all, we deeply regret for any inconvenience caused by this event. We are also facing great loss due to this event. If you need to raise a claim for the cargo damage in the transportation carried by our company, please provide necessary materials to our local offices after the cargo delivery procedure is completed. We will fulfill the obligations of the maritime carrier according to relevant legal regulations and B/L clause.
Q6: Can COSCO SHIPPING Lines provide the B/L clause in electronic edition?
A： The BL clause in electronic edition is available on our official website (www.coscon.com). You can retrieve the information in “Bill of Lading Terms and Conditions” column.
Source: cosco
