Officials Call For Action on Cargo Delivery Crisis at Ports of Los Angeles, Long Beach
Politicians gathered at the Port of Long Beach on Sept. 4 to call for the flow of cargo to Southern California to resume, days after the bankruptcy of one of the world’s largest shipping lines disrupted the global supply chain.
Officials said the collapse of South Korea’s Hanjin Shipping Co., which declared bankruptcy Aug. 31, threatened local union workers’ jobs and merchants’ access to goods at a crucial time, just before the holiday season.
Because Hanjin, the world’s seventh-largest shipping line, cannot pay ports and terminals to unload, ships filled with merchandise have sat idle for days. As of Aug. 4, officials said one massive containership was still drifting 50 miles south of the Long Beach and Los Angeles ports; another ship was anchored at the Port of Long Beach, inside the breakwater; a third was anchored outside the harbor.
RELATED: Drayage firms look for answers in wake of Hanjin Shipping bankruptcy
The stranded goods include auto parts, coffee tables, pillows, lamps, toys and pulp and paper products from the Pacific Northwest, said Brian Bourke, vice president of marketing for Seko Logistics, which helps customers arrange shipment of imports and exports.
“We have … ships just sitting out, their goods spoiling. This is unacceptable,” Rep. Alan Lowenthal (D-Long Beach) said at the news conference.
“We want to make sure that American workers and American consumers … are not going to pay an undue cost for mistakes that were made thousands of miles away,” Lowenthal said.
RELATED: Truckers face wide-ranging challenges from stranded Hanjin freight
Rep. Janice Hahn (D-San Pedro) said Hanjin’s insolvency “poses an unprecedented global crisis” and called on Secretary of Commerce Penny Sue Pritzker to step into the fray.
Krisztian Bocsi/Bloomberg News“Leaving these ships stranded with thousands of containers is not the answer,” Hahn said. “Every day these ships remain outside our ports is another day that our local port workers and truck drivers go without work, and businesses waiting on goods are losing money.“
Fallout from the company’s decline could have particularly acute effects in Southern California because Hanjin owns a majority stake in Total Terminals International, which operates Long Beach's largest terminal.
RELATED: Hanjin ships get stranded in high seas, roiling supply chain
From January to July, Hanjin accounted for about 4% of containerized cargo imported to the Port of Los Angeles and 12% of containerized cargo to the Port of Long Beach, according to Datamyne, which tracks import-export transactions in the Americas.
Standing in front of a concrete sign emblazoned “Hanjin Terminal,” Mark Jurisic, a business agent at International Longshore and Warehouse Union, Local 13, which represents longshore workers, assessed the situation bluntly.
“The gates have been shut. Nobody is coming to work,” he said. “Today we would have had 200 to 300 employees here.”
Officials at the Port of Long Beach have said its terminals are not accepting any new Hanjin imports or exports.
Meanwhile, the three stranded ships that officials have been monitoring since Aug. 30 “haven’t moved,” said Capt. J. Kip Louttit, executive director of the Marine Exchange of Southern California.
Hanjin “is bankrupt,” he said, “so nobody wants to have the ships come [into the dock] … because they’re not sure that the ship can pay their bills.”
#Hanjin-here's a visual representation showing the position of the three Hanjin ships in SOCAL waters. pic.twitter.com/fyTGe9YtGi — Marine Exchange (@MXSOCAL) September 6, 2016
Mario Cordero, chairman of the Federal Maritime Commission, acknowledged that Hanjin’s troubles could pose “a major crisis.”
But he also confirmed that Hanjin filed a Chapter 15 proceeding late on Sept. 2 that will allow it to bring its case into federal Bankruptcy Court in New Jersey. A hearing could occur as soon as Sept. 6, which Cordero said could hasten the process of getting the stranded ships to dock.
Hanjin and other large shipping lines have struggled with overcapacity brought on by a massive ship-building boom and sluggish demand. It's still unclear exactly how Hanjin’s situation will be resolved.
In a statement Sept. 1, South Korea's Financial Services Commission said its chairman asked Hanjin's lead creditor, the state-owned Korea Development Bank, and competing shipping line Hyundai Merchant Marine to "exert their utmost concerted efforts to minimize problems with cargo delivery and shippers in the aftermath of Hanjin's filing for bankruptcy protection."
The commission said Hyundai will be adding more than 13 ships to routes served by Hanjin "as soon as possible," while maintaining freight rates for those routes at an "appropriate level."
The Long Beach Board of Harbor Commissioners said in a statement on Sept. 4, that members were monitoring the Hanjin situation “round the clock” to ensure that the flow of cargo is as smooth as possible.
