Daniel Yoo, head of global wealth management at Kiwoom Securities believes that the funds flowing to listing Hanjin Shipping were likely to fall far short of what was needed to get its stalled cargo moving.

“Hanjin Group is now going to raise $90 million to fund the cargo ship unloading around the world. Estimated amount is about $543 million. It’s still short of the overall, but nevertheless, it is the beginning point,” he said. “The Korean government as well as the company is acting quite fast in terms of trying to solve this problem,” Yoo told CNBC.

While carrying an estimated $14 billion worth of stranded cargo, much of it Christmas goodies headed for retailers’ shelves, Hanjin’s ships were stalled around the world as the company filed for court receivership on August 31.

With 98 ships and a 2.9 percent market share, industry data provider Alphaliner placed Hanjin at the seventh largest globally and it was no minor industry player. In comparison, with around 622 ships and a 15.4 percent market share the largest is APM-Maersk.

Reuters reported last week that the around $90 million to help cover the cost of unloading cargo planned to be raised by Hanjin’s parent company, Hanjin Group, was inadequate and that it wasn’t clear when that plan would be executed, the court said.

In exchange for collateral in the form of Hanjin’s stake in a terminal at Port of Long Beach, around $54 million of that amount was reportedly agreed to be paid by shareholder Korean Airlines, media reports said last weekend.

While there was no timeline for other vessels at ports globally, Reuters reported Monday that one ship, Hanjin Greece, managed to dock in Long Beach, California, over the weekend and had its cargo unloaded.

The stalled cargo has dogged retailers.

His organization’s members, as the cargo owners, were paying fees directly to terminals, stevedores and truckers to get their products unloaded from Hanjin ships, Nate Herman, senior vice president of supply chain for the American Apparel and Footwear Association told Citigroup in a conference call last week.

“These are payments for services that they had already paid Hanjin for and so now they’re having to repay it. And so the issue is, will they get money back. That’s unclear but the chief goal throughout all this for our members is to get a hold of their cargo so they can get it to where it’s supposed to be. And why – because it’s holiday cargo,” he said, according to a transcript of a conference call published by Citigroup.

But with the ships that were still in the middle of the ocean, he noted that it wasn’t clear what would happen. He noted that hundreds of thousands of dollars a ship would be the costs for those ships as they had to cross the Panama Canal as they had been expected to go to East Coast ports.

He said that there could by further disruption if instead those ships would be brought into West Coast ports – which was however not clear.

It wasn’t clear what Hanjin Shipping’s final shape would be ahead looking past the immediate funding issues, Kiwoom’s Yoo said.

“The size of this company will definitely shrink. The actual breakup is definitely happening,” he said, noting that another South Korean shipper, Hyundai Merchant Marine, would likely buy some of the assets.

(Adapted from CNBC)

Categories: Economy & Finance