Daily Management Review

$80 Million in Payments Withheld by Hanjin Cargo Owners, says the Failed Shipping Company


09/24/2016




$80 Million in Payments Withheld by Hanjin Cargo Owners, says the Failed Shipping Company
South Korean container carrier Hanjin Shipping Co Ltd’s ability to move stranded freight were getting complicated as cargo owners were withholding up to $80 million in payments for completed shipments, the failed South Korean container carrier told a U.S. judge on Friday.
 
"Hanjin is not the only bad guy here," Ilana Volkov, an attorney for the shipping company, said at a status hearing at a U.S. Bankruptcy Court in Newark, New Jersey.
 
The company was in a soup after applying for bankruptcy as cargo owners were yet to pay Hanjin for completed shipments despite such owners having received their goods, the shipping company’s lawyers said in the court.
 
$14 billion worth of cargo were stranded at sea as the company lacked cash to pay cargo handlers, tug operators or ports after the South Korean chipping company, the world's seventh-largest container carrier, filed for bankruptcy in August.
 
Enough money had been pledged to unload Hanjin ships by the end of October, the South Korea's government said on Friday.
 
The company anticipated that costs related to Hanjin's failure would eventually exceed what it owed for past shipments, said an attorney for Ashley Furniture Industries, a Wisconsin-based furniture maker, at Friday's hearing.
 
"To hold onto this money is important," said Jeremy Ryan, the attorney for Ashley.
 
Even though Hanjin had been paid to deliver it to an inland destination, Ashley has been stuck paying to get its cargo from the dockside like many retailers and other cargo owners. The problems have been compounded for the cargo owners who complained that in addition to not getting delivery of the cargo, since many ports are unwilling ot take back empty Hanjin containers, many retailers and other cargo owners have been stuck with such empty containers.
 
Ryan said Ashley argued that they had refused to pay Hanjin what was owed for completed deliveries as they were being forced to pay up to $7,000 daily in relation to storage and other fees for the empty containers that should have been taken back by Hanjin by now.
 
He understood the need to "minimize the pain" of Hanjin's collapse, judge John Sherwood said.
 
The company was right in trying to get cargo moving "but there has to be some recognition you might be able to deliver on the terms you promised to deliver on," the judge told Hanjin's attorneys.
 
Allegations about price-gouging the freight owners have also been laid by a section of the litigants on the rail operators and other cargo handlers. However such cargo movers vehemently defended themselves at Friday's hearing against all the allegations about them.
 
Compared to what the cargo handlers such as rail operators used to charge Hanjin, they were charging the cargo owners significantly higher rates, Hanjin was reportedly informed and said this in a court filing.  
 
(Source:www.reuters.com) 






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