Retailers are working to minimize the fallout from the bankruptcy of South Korea's Hanjin Shipping, the world’s seventh-largest ocean shipper by capacity, the National Retail Federation said Thursday.
Hanjin carries 7.8% of the U.S. market's trans-Pacific trade volume: Millions of dollars worth of merchandise could be delayed by the shipper's woes, some stuck in Asia and some at U.S. ports, as trucking companies and others avoid taking up the cargo for fear of not being paid, according to the NRF. The trade organization forecasts that major U.S. retail container ports will handle 1.61 million Twenty-Foot Equivalent Units this month, down 0.6% from the same month last year, and said that “all parties” must work together to ensure that cargo gets onto retail warehouses and store shelves as intended.
Another trade group, the Retail Industry Leaders Association, wrote a letter to the U.S. Department of Commerce and the Federal Maritime Commission asking the federal government to step in to help smooth out the Hanjin situation and expressing hope that the South Korean government will also work to clarify and speed up bankruptcy proceedings, according to the Wall Street Journal.
Hanjin Shipping filed for bankruptcy protection Wednesday, disrupting supply chains just as retailers are preparing for the all-important holiday shopping season. The situation is now being handled in South Korean court, and the government there says it will help prop up Hanjin.
Hanjin is part of an alliance of six shipping companies, which complicates the problem even further, according to the Wall Street Journal. Trucking and railroad companies (especially those heavily dependent on moving the shipper’s cargo from U.S. ports) are wary, further complicating the matter, and some 540,000 containers may see delivery delays ranging from a few days to more than a month, freight brokers in Asia said. Shipping rates have soared as a result, increasing to $2,300 per container by Thursday, up from $1,700 four days earlier.
“Retailers’ main concern is that there is millions of dollars worth of merchandise that needs to be on store shelves that could be impacted by this,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement Thursday. “It is understandable that port terminal operators, railroads, trucking companies and others don’t want to do work for Hanjin if they are concerned they won’t get paid. However, we need all parties to work together to find solutions to move this cargo so it does not have a broader impact on the economy.
Gold admitted that there are more questions than answers at this point, but said retailers are working to address the matter, "working with all of their service providers to find ways to get their cargo moving to ensure that there is no or limited interruption in the supply of merchandise."