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Bankrupt Shipping Company Unloads Stranded Cargo

Hanjin Shipping Co. has announced that 28 vessels have unloaded their cargo, nearly one-third of the 97 container ships that have been stranded at sea since one of the top 10 largest global shipping companies filed for bankruptcy at the end of August. Ships carrying more than half a million cargo containers had been denied access to ports because of concerns over who would pay for unloading bills and docking fees.

It’s a silver lining for retailers and other companies that have been worried their goods won’t be available in time for the holiday season. “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,” said Jonathan Gold, vice president for supply chain and customs policy for the National Retail Federation.

Hanjin handles about 8% of all U.S. cargo, but accounts for only 3.2% of global container capacity. The South Korean government has asked courts to protect Hanjin ships from being seized in several European countries and plans to request the same from Australia, India and the United Arab Emirates.

The Wall Street Journal reports that of the 69 ships still carrying cargo, 34 remain at sea while 35 ships are headed back to South Korea. The company has been negotiating with port authorities in New York, Singapore and Manzanillo, Mexico, to start unloading additional cargo this week.

Hanjin has been spending $2 million a day in delay fees to owners of its chartered ships. On Monday, a Seoul bankruptcy court judge ordered the South Korea shipping company to return its 60 chartered vessels to their owners (once their cargo is unloaded) and to sell as many ships as possible, not ruling out eventual liquidation of the company. Meanwhile, the company has developed a restructuring plan that will keep a maximum 15 of its 37-owned ships and return to owners almost all of its chartered vessels. A South Korean court will decide in December whether to accept the restructuring plan or let the company go under, court officials say.

Korean Air Lines Co., the largest shareholder of Hanjin Group, hasn’t decided how it will disperse the 60 billion won ($54 million) it promised to lend Hanjin Shipping. Hanjin Group has pledged to inject a total of 100 billion won to help the shipping line.

Rates on Asia-U.S. cargo have risen 40% to 50% on all sea lanes, Citigroup reported. Freightos, an online freight shipment booking agency, reported that the average price per container on Asia-U.S. routes rose to $4,423 from $2,835 within a week.