Korea’s two largest container operators are at a crossroads in negotiations with shipowners to cut leasing rates for their chartered ships, sources said Thursday.

Hanjin Shipping is struggling to make progress in talks on charter fees -- a major burden on the heavily indebted shipper’s balance sheet. Meanwhile, its smaller rival Hyundai Merchant Marine is expected to reach an agreement this week at earliest. 


“Hanjing Shipping is reaching out to foreign shipowners but none of them gave a positive response,” a source said.

As a critical condition for creditors’ bailout, lenders of the debt-ridden duo have pressed them to persuade shipowners to lower the lease fee by 10 to 20 percent to move forward with their voluntary restructuring proceedings and avoid court receivership.

Jang Jin-woong, a spokesperson at Hanjin said the company is “working hard to produce the best results at an earlier date,” but declined to comment further.

Both Hanjin Shipping and HMM are currently under contracts to pay charter fees four to five times higher than the current market rate by 2026. Their combined payments exceed 5 trillion won ($4.2 billion) by that year, according to Financial Services Commission.

Making the situation worse, Hanjin has been at odds with some foreign shipowners.

On May 24, Hanjin Paradip, a bulker owned by the firm, was detained in Richards Bay, South Africa, due to unpaid charter fees to an unspecified owner.

Canadian shipowner Seaspan Corporation issued a prospectus warning that Hanjin was behind on more than $11 million in charter payments for three container ships.

Hyundai Merchant Marine’s move toward its voluntary restructuring proceedings is relatively smooth sailing as it is forging ahead with its plans for cash raising and bond payment extension.

According to HMM and its main creditor Korea Development Bank, the shipping line has made “remarkable progress” in the charter fee readjustment negotiations.

On Wednesday, bondholders of HMM approved the container transporter’s proposal to reschedule debt worth 800 billion won.

As for joining a new global shipping alliance, another key precondition set by its creditors, Hanjin has gained an upper hand over HMM.

In May, Hanjin reached an agreement to set up a new alliance named “The Alliance” along with five shippers including Germany’s Hapag-Lloyd, Japan’s NYK and Taiwan’s Yang Ming.

HMM plans to join the same ocean carrier consortium before the group confirms membership in September.

By Park Han-na (hnpark@heraldcorp.com)