FMC to US shippers: Report unreasonable practices tied to Hanjin bankruptcy

http://www.joc.com/maritime-news/container-lines/hanjin-shipping/fmc-urges-shippers-report-unreasonable-practices-tied-hanjin-bankruptcy_20160901.html

Bill Mongelluzzo, Senior Editor | Sep 01, 2016 4:19PM EDT

US maritime regulators are urging shippers to report any unreasonable increases in cost or decreases in service tied to the bankruptcy of Hanjin Shipping.

Although it has limited ability to help US shippers with the fallout from Hanjin’s bankruptcy because it’s not a US legal matter, the Federal Maritime Commission said it will continue to enforce the Shipping Act of 1984, which protects shippers from such unreasonable practices.

“The commission will be vigilant in watching for, and quick to act on, any improper behavior by other carriers and regulated parties (such as marine terminal operators, non-vessel-operating common carriers, and freight forwarders) that would constitute violations of the Shipping Act,” the FMC said in a statement.

The commission added that it has no authority to resolve bankruptcy claims, so it won’t intercede in actions between third parties and the court. The FMC, however, is concerned about how Hanjin’s bankruptcy will affect US supply chains and liner competition, and will be monitoring how the US shipping industry is affected.

The FMC statement came after major US retailers urged government leaders and transportation companies to act quickly to mitigate the impact on their global supply chains of Hanjin Shipping company’s bankruptcy, with federal action to address the crisis being a possible option.

Retailers acknowledge the sensitivity of handling Hanjin’s vessels and freight when the payment for services is not certain, but on the other hand, if vessels and freight back up at U.S. ports, the impact on the supply chains of all importers and exporters could be especially damaging during this peak-shipping season.

“Retailers’ main concern is that there is millions of dollars worth of merchandise that needs to be on the store shelves that could be impacted by this,” said Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation. “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 said.

The NRF urged its member companies to work with all of their service providers to develop strategies to keep their cargo moving and to ensure there is no significant interruption in the supply chain.

The Retail Industry Leaders Association Thursday urged the Department of Commerce and the FMC to work with transportation industry stakeholders and the South Korean government “to resolve the immediate disruption and mitigate the harms posed by the current situation.”

Hanjin represents about 7.8 percent of the U.S. trans-Pacific trade volume. The ripple effects of Hanjin’s financial problems are already being felt in the transportation supply chain, with U.S.-bound cargo being delayed at origin ports in Asia and some Hanjin vessels idled at anchorage outside U.S. ports. The ripple effects include delays in the unloading of import containers and the refusal of some terminal operators to accept export loads in Hanjin containers, as well as rejection of the return of empty Hanjin containers at the terminals.

In order to mitigate the impact of Hanjin’s woes on cargo booked with Hanjin’s vessel-sharing alliance partners, some terminal operators are working the Hanjin vessels and immediately delivering cargo that was booked with other carriers but is being discharged from the Hanjin ships. Those terminals appear to be requiring that import loads in Hanjin containers be paid for upfront before the terminals will release the shipments.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzz

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