U.S. business owners who use the international shipping company Hanjin to transport their goods overseas are in a scramble to reserve space on other cargo ships, following the news that the South Korean shipping giant filed for bankruptcy this week.
Hanjin has long been a player in the global movement of goods, but the company succumbed to market pressures, including competition from other shippers and less demand from global traders.
Importers and exporters who planned to use the carrier in future weeks and months are finding that competing carriers have limited space and are charging more for it.
"Pricing for shipping has skyrocketed," said Nina Luu, the founder and CEO of Shippable, which manages ocean shipments for importers.
However, Luu says the bigger problem is getting reservations at all because many ships are already booked full at this time of year, as products arrive for the holiday season.
"I think most shippers are less concerned about the prices than they are about capacity," said Luu.
Hanjin is the largest shipping company ever to file for bankruptcy. Ports around the world, including in Los Angeles and Long Beach, will not allow its ships to dock out of fear the company can't pay its bills.
“There’s nothing we can do directly," said Robert Krieger, president of Norman Krieger, Inc., an L.A.-based international freight forwarder and customs broker.
Krieger's clients are awaiting goods from India – things like shoes and auto parts.
“They’re on ships that are still in transit," said Krieger. "In other cases they’re sitting outside the ports.”
And it seems it could be a while before Hanjin, and U.S companies, can complete the legal steps necessary to get those ships moving again.
"There’s a legal black hole that has been created," said Richard Ormond, an attorney at Buchalter Nemer who’s representing some of the many companies who have their goods stranded on ships at sea, such as electronics, textiles, and luggage.
“One of the problems is that there is a language barrier with the attorneys in South Korea as well as a different judicial system,” said Ormond.
On Thursday, Ormond began legal proceedings in U.S. courts, which he says have jurisdiction because Hanjin has many assets in the U.S., such as a major shipping terminal at the Port of Long Beach.
"We are witnessing a race to the courthouse to try and mobilize goods sitting off shore and assert various creditor and customer rights," said Ormond.