South Korean financial authorities are drawing criticism from the market for their inability to pre-emptively deal and manage repercussions in the logistics sector following the fallout of Hanjin Shipping.
As of early this week, about 70 percent of more than 120 ships run by Hanjin have been blocked, stranded and denied entry at major ports around the world, according to the Korea Shipowners’ Association.
Yim Jong-yong (left), chairman of the Financial Services Commission, and Maritime Affairs Minister Kim Young-seok enter a Cabinet meeting hall on Tuesday. (Yonhap)
The Korea International Trade Association also reported that losses from business disruptions following Hanjin’s court receivership filing amounted to over $11 million, with more than 2,300 jobs to be lost soon.
Even with the government’s belated measures, the KSA expects that all of Hanjin ships may ground to a halt within the next two to three days as the US and Korean courts have begun their bankruptcy protection process for the country’s largest shipping line.
Industry experts warned that Hanjin’s debt fallout will severely affect Korean exports, and increasing losses on Hanjin woes will further exacerbate the economy of the country’s southern coast area.
The government’s position remains the same over the matter, saying that this was Hanjin’s owners problem to deal with in the first place.
Nevertheless, it is carefully looking into the situation and trying to stop the problem from getting worse, with the Oceans and Fisheries Ministry operating as its “control tower,” it said.
“It is the responsibility of Hanjin Shipping to have those goods transported to their destination, and that its largest shareholder should take full responsibility (to carry out its duties),” Finance Minister Yoo Il-ho told reporters after the G20 summit in China.
“The government will deal with the most urgent task of making sure ships transport goods to their final destination as safely as possible.”
Yoo added that the government has requested courts in 43 countries to make sure Hanjin ships can enter and leave major ports without being seized.
Hanjin Group Chairman Cho Yang-ho has about a 20 percent stake in Hanjin KAL, which owns Korean Air. The country’s flagship carrier was the biggest shareholder of Hanjin Shipping, according to a regulatory filing.
Yim Jong-yong, the chairman of the Financial Services Commission, said Tuesday that it would be socially and morally unacceptable if the government helps out the company when its owner avoids accepting responsibility, stressing that this goes against Cho’s earlier pledge that he will do all he can to make Hanjin financially solvent.
“Hanjin’s largest shareholder Cho should be socially responsible and seek to actively resolve these logistics problems,” Yim told reporters.
Yim’s remarks follow those made by Finance Minister Yoo, who said that the government will deal with companies under creditor-led restructuring programs by the book and those that do not come up with reasonable self-rescue plans will not receive any state support.
The Finance Ministry backed the creditor’s decision, despite concerns raised by the Ministry of Oceans and Fisheries, saying that a court protection filing by Korea’s biggest shipper is “not only unprecedented, but also would cause a disruption in logistics.”
By Park Hyong-ki (firstname.lastname@example.org