Cargo involved in Hanjin bankruptcy

Hi Celia

Earlier this month, one of South Korea’s largest shipowners, and the world's seventh largest container carrier, Hanjin Shipping Co. Ltd. (“Hanjin”), applied for and received ‘court rehabilitation’ in Korea. Hanjin vessels are currently carrying cargo worth USD 14.5 billion belonging to some 8,300 cargo owners, according to the Korea International Trade Association. That rehabilitiation process has now failed. Hanjin has filed a Chapter 15 Petition in the US Bankruptcy Court in Newark N.J. USA.

We understand that Hanjin vessels have been refused permission to transit the Suez Canal because of unpaid dues. As of Monday 5^th September, 79 Hanjin ships - including 61 container ships - have been denied port access but some vessels have apparently been allowed into ports where those ports have received cash or guarantees for debts. Note that Hanjin may have re-directed some of their vessels to ports where the ships cannot be seized by creditors, so cargo can be unloaded. Any freight paid to Hanjin should probably be considered lost. Hanjin will not be organising or paying for any transhipments of cargo already in transit. Hanjin have been demanding bonds or guarantees in return for delivering containers to be destuffed and returning the empty containers.

For our mutual Cargo clients, Vero Marine's Marine Open Cover wordings and (for third party holders of issued insurance certificates) the Institute Cargo Clauses provide some limited cover for the expenses of on-forwarding cover in these circumstances. If the cargo has stopped in transit, we need to know as soon as possible so we can discuss how to continue cover.

We do not recommend that any of our Cargo clients pay money to Hanjin for container release, as that money could be lost without performance. We can put clients in contact with an Australian law firm who have arranged a solicitor’s guarantee with Hanjin for the release of containers to be destuffed. These costs and expenses will need to be met by clients, but we will consider these under the broad heading of claim mitigation expenses.

Please contact our mutual clients to ascertain -

• whether they have any cargo on Hanjin vessels. If they or their forwarders have a credit facility with Hanjin, this can be used as leverage. Note that vessels Hanjin New Jersey and Hanjin Florida are not owned or operated by Hanjin Shipping

• where the cargo is situated and whether it is stopped in transit

• what their terms of sale or purchase are (Incoterms CIF, FOB etc.) and whether they have paid or been paid by their buyer / seller

• whether they want to utilise our arrangements re. solicitor’s guarantee for cargo release.

Please provide us with the above details, any correspondence and letter of indemnity or other demands. We'll do what we can to assist.