Farmers, exporters eye higher freight charges as Hanjin Shipping struggles to stay afloat
ABC RURAL BABS MCHUGH
FRI SEP 23 17:26:16 EST 2016
The Hanjin Milano is stranded outside Port Phillip Bay in Melbourne.
PHOTO The plight of Korean Hanjin Shipping likely to lead to spikes in export freight prices.
SUPPLIED: DALE CRISP
East coast fruit and vegetable growers are grappling with the fallout from the bankruptcy of Hanjin Shipping.
The Korean company has an estimated 40-plus vessels around the world carrying cargo estimated at $US14 billion that they have not been unable to unload.
Australian vegetable growing industry group AUSVEG said it was aware of some containers of onions in this situation, but in the main, producers were simply changing to other shippers.
Exporter development manager Michael Coote said a lot of fresh vegetables were not exported on ships.
“A lot of vegetable produce is quite perishable so it is required to be airfreighted to customers in export markets due to shelf life considerations,” he said.
“However, with some of the volume export commodities such as onions, potatoes and carrots that have longer shelf life, they utilise containerised sea freight into international markets.”
There were some reports of containers unable to be unloaded as many international ports were not allowing Hanjin vessels to dock in fear of not receiving payment.
“In that stranded cargo situation, hopefully growers will at least receive payment in part for that ruined produce by their marine insurance.
“We don’t think that overall the affect on our our growers would be too great, and any produced destined for Hanjin ships would’ve been diverted onto other shipping providers.”
Hanjin receivership due to over supply of containerised freighters
Hanjin is the world’s seventh largest shipping freight business in an industry that insiders say has been growing too fast for its own good.
The company has been thrown a lifeline in recent days with the state-owned Korean Bank and Korean Air Lines, its major shareholder, offering loans of around $US90 million.
That may pay wages, fuel bills and loading costs, but CEO of New South Wales Ports, Marika Calfis, said it did not address the underlying oversupply issue at play.
On September 6th, the ship Hanjin California was berthed and unloaded at Port Botany, run by NSW Ports, then arrested over unpaid fuel bills by creditor Glencore.
Ms Calfis said in many ways the demise of Hanjin shipping was emblematic of the overbuild of containerised and mega-vessels in recent years.
“There’s an oversupply of available capacity in shipping lines globally which, combined with a drop in demand (in tougher economic times) in boxed trade, hasn’t been keeping up [and] has resulted in somewhat of a price war between shipping lines,” she said.
“Those shipping lines are losing money, and the consequence of that is situations such as Hanjin going in to receivership.”
Ms Calfis said there needed to be “a total rebalance” in respect of the cost of shipping boxes across the world.
“For example, the cost to ship a container from Asia to Port Botany is cheaper than trucking the box from Port Botany 10 or 15 kilometres down the road,” she said.
Containerised grain freight from Melbourne business as usual
Emerald Grain owns and manages the Melbourne Port Terminal where it exports containerised grain.
Acting CEO David Johnson was not too concerned by the situation now, or by what might unfold.
“The container freight market is a very competitive one,” he said.
“It’s having a short term financial impact for October and November where exporters are moving their container bookings to alternative freight providers.
“We expect that’s going to be a temporary tightness in the market. At some point in time you would expect these ships to come back into circulation.”