News and Events

Bankruptcy looms for Hanjin Shipping as creditors reject latest rescue plan

October 18th, 2016
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By Mike Wackett 30/08/2016

Creditors decided today not to extend financial support to Hanjin Shipping beyond the end of its restructuring scheme on 4 September.

This leaves South Korea’s biggest shipping line with little option other than to file for court receivership.

Yesterday it appeared that Hanjin had made some progress in its negotiations with shipowners for reduced charter hire fees – a key requirement by creditors – by reaching agreement with Seaspan.

However, any deal has not so far been substantiated by Seaspan, which is owed more than $18.6m in unpaid charter fees.

In any event, the move appears to have been too little and too late to appease Hanjin’s creditors who have finally lost patience.

Led by state-owned Korea Development Bank (KDB), last week they rejected Hanjin’s revised self-rescue plan, saying there was effectively “no difference” between the proposal and the previous one.

Hanjin had proposed injecting Won400bn ($360m) by selling stock to its affiliate Korean Air and raising another Won100bn from further asset sales.

But the cash-strapped company is known to require at least Won1.3trn over the next 18 months just to pay back debt and run its business.

KDB had demanded that Hanjin Group pump in at least Won700bn, but the parent was clearly reluctant for fear of putting the whole group in peril.

South Korea’s top financial regulator, Yim Jong-yong, chairman of the Financial Services Commission (FSC), reaffirmed last week that there were no plans for the government to intervene.

He told reporters: “The government will let the company resolve its liquidity crisis on its own and handle the issue in accordance with ‘principles’ in case of failure.”

Meanwhile, in response to a suggestion made by the Korea Shipowners’ Association today, a Hanjin merger with restructuring compatriot Hyundai Merchant Marine […]

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Panama Canal aims to keep volume gains fueled by West Coast congestion

February 24th, 2015
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  • Panama Canal aims to keep volume gains fueled by West Coast congestion Panama Canal aims to keep volume gains fueled by West Coast congestion

    Panama Canal aims to keep volume gains fueled by West Coast congestion

Panama Canal aims to keep volume gains fueled by West Coast congestion
Date: Feb 23, 2015
Source: Journal of Commerce

The Panama Canal Authority is setting its sights on retaining the increase in container volumes from Asia to the U.S. East and Gulf Coast ports it gained in recent months, thanks to shippers diverting cargo from congested West Coast ports.

Even though it has not experienced any increase in the number of Panamax vessels transiting the canal during the labor strife that clogged West Coast ports, the canal agency aims to boost containership traffic by both individual carriers and by carrier alliances when it opens its new locks to post-Panamax vessel traffic next year.

After the 2002 lockout on the West Coast, when shippers diverted their cargo on Panamax ships through the Panama Canal to the East Coast, a lot of those shipments did not return to the West Coast after the contract was settled. The same thing is likely to happen even though the International Longshore and Warehouse Union and the Pacific Maritime Association have reached tentative agreement on a new contract
“I think that any changes to the carrier networks would probably stay for now,” said Doug Hayes, vice president of equity research, freight transport, at Morgan Stanley in London.

Although the Suez Canal captured all of the increase in post-Panamax container ship traffic diverted to the East Coast from Asia during recent months of West Coast port congestion, the Panama Canal saw a big increase in the number of containers loaded aboard the Panamax ships on the […]

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CN, UNIFOR REACH TENTATIVE AGREEMENT, AVOIDING LOCKOUT

February 24th, 2015
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CN, UNIFOR REACH TENTATIVE AGREEMENT, AVOIDING LOCKOUT
JOC Staff | Feb 24, 2015 9:36AM EST

Canadian National Railway late Monday night withdrew its threat to lockout 4,800 union members after the railroad reached a tentative labor agreement with Unifor.

A lockout could have hampered intermodal service as the second-largest Canadian railroad experiences a surge of volume from U.S. shippers diverting cargo through Canadian ports, namely Port Metro Vancouver and the Port of Prince Rupert, to avoid U.S. West Coast port congestion. CN had warned on Friday that it would lockout union employees involved in mechanical, intermodal, clerical and other types of work at 11 p.m. EST on Monday if an agreement wasn’t reached.

“We are very pleased that the company and union were able to find common ground on a tentative new labour contract,” CN President and CEO Claude Mongeau said in a statement. “ This settlement forecloses the prospect of a potential labour disruption that would have harmed CN’s employees, its customers and the Canadian economy.”

CN said details of the tentative agreement were being withheld until Unfor rank-and-file members voted on the deal. Unfor is expected to announce the results of its ratification vote in three weeks. It’s not clear how the tentative agreement addresses the main sticking point in negotiations that lasted eight months: CN’s refusal to pay into the union’s community fund.

“We were able to find solutions to the concerns raised by our members – this is best achieved at the bargaining table,” Unifor President Jerry Dias said in a statement.

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CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration

February 23rd, 2015
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  • CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration

    CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration

CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration
Date: Feb 20, 2015
Source: Journal of Commerce

Canadian National Railway said it will lock out 4,800 union workers, some of whom are tied to its intermodal services, on Monday night if Unifor doesn’t agree to accept binding arbitration this weekend.

Although CN said it would deploy trained management personnel to take the places of Unifor employees in the event of a lockout, intermodal service would likely suffer. The potential deterioration in intermodal service comes as the railroad experiences a surge of volume as U.S. shippers divert cargo through Canada’s Port Metro Vancouver and Port of Prince Rupert to avoid U.S. West Coast port congestion.

Canada’s largest railroad said it would lock out the union employees involved in mechanical, intermodal, clerical and other types of work at 11 p.m. EST on Monday. The Friday announcement came after Unifor this week threatened to strike over a dispute on whether the railroad should pay into its community fund. The two sides have been negotiating a contract for six months, CN said.

“Our impasse is not about charity. CN already supports many charities and is willing to support charitable causes jointly with Unifor, but our principles are clear — we are not prepared to allow financial matters related to the union itself to take precedence over the interest of our employees,” CN President and CEO Claude Mongeau said in a statement.

Government intervention isn’t needed at this time, because the two sides can reach a deal via the arbitration process, he […]

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Long recovery ahead for West Coast ports in aftermath of settlement

February 23rd, 2015
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  • Long recovery ahead for West Coast ports in aftermath of settlement Long recovery ahead for West Coast ports in aftermath of settlement

    Long recovery ahead for West Coast ports in aftermath of settlement

Long recovery ahead for West Coast ports in aftermath of settlement
Date: Feb 21, 2015
Source: Journal of Commerce

The tentative coastwide contract agreement that was reached Friday evening by the International Longshore and Warehouse Union and the Pacific Maritime Association, while most welcome, is just the beginning of a long process West Coast ports must endure to recover from the backlog of containers and vessels that have overwhelmed their operations the past four months, and to restore trust among shippers.

Industry experts agree that it will take months for Los Angeles, Long Beach, Oakland, Seattle and Tacoma — all among the 10 largest ports in the U.S. — to return to “normal” operations.

Even then, the old normal will not be good enough to accommodate the cargo surges that occur each week as vessels with capacities of as many as 14,000 20-foot containers descend upon West Coast ports. In fact, the brutal irony of the ILWU work slowdowns, and the PMA’s response of restricting night and weekend work, is that these actions compounded problems that were already occurring anyway because of the arrival of big ships operated by expanded carrier alliances.

The Port of Oakland stated Friday in a press release that it will take Oakland and other West Coast ports six to eight weeks to recover from the cargo backlog. Some industry analysts might say that is an ambitious schedule, given the magnitude of the cargo and vessel backlog at West Coast ports. Some say three months is a more realistic goal.

Furthermore, the tentative contract must […]

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PMA, ILWU Announce West Coast Waterfront Contract

February 22nd, 2015
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PMA, ILWU Announce West Coast Waterfront Contract
Date: Feb 20, 2015
Source: Pacific Maritime Association

FMCS, Cabinet Secretaries Played Key Roles SAN FRANCISCO (Feb. 20, 2015) – The Pacific Maritime Association and the International Longshore and Warehouse Union today announced a tentative agreement on a new five-year contract covering workers at all 29 West Coast ports. The deal was reached with assistance from U.S. Secretary of Labor Tom Perez and Federal Mediation and Conciliation Service Deputy Director Scot Beckenbaugh. The parties will not be releasing details of the agreement at this time. The agreement is subject to ratification by both parties.

“After more than nine months of negotiations, we are pleased to have reached an agreement that is good for workers and for the industry,” said PMA President James McKenna and ILWU President Bob McEllrath in a joint statement. “We are also pleased that our ports can now resume full operations.”

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PMA, ILWU REACH LABOR DEAL, TRUSTED SOURCES SAY

February 20th, 2015
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MARKET UPDATE
PMA, ILWU REACH LABOR DEAL, TRUSTED SOURCES SAY
Date: Feb 20, 2015
Source: Journal of Commerce

Word was spreading on Friday morning that West Coast dockworkers and employers reached an agreement around 9 p.m. on Thursday on a 5-year agreement that ends nine months of negotiations and signals a potential end to crippling West Coast port congestion.

One major forwarder on Friday was reporting the news internally based on several trusted sources that said the agreement had been reached. No details were released and the Pacific Maritime Association and International Longshore and Warehouse Union had not yet scheduled an announcement.

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PMA, ILWU quiet as West Coast ports work through backlog

February 20th, 2015
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MARKET UPDATE
PMA, ILWU quiet as West Coast ports work through backlog
Date: Feb 17, 2015
Source: Journal of Commerce

With at least 50 container ships anchored off the West Coast on Tuesday, the eyes of the international trade community were focused on San Francisco to learn if U.S. Secretary of Labor Thomas E. Perez could break the impasse in contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association.

Negotiations Tuesday continued late into the day, but neither the PMA nor the ILWU would discuss what was taking place behind closed doors.

Meanwhile, terminal operators in Seattle, Tacoma, Portland, Oakland, Los Angeles and Long Beach resumed vessel, yard and gate operations Tuesday after four days of on-again, off-again calls for labor by employers over the President’s Day weekend. The PMA since Thursday had maintained a policy of cancelling much of the work that called for overtime pay to longshoremen. The PMA said employers could no longer afford to pay longshoremen overtime wages for working at half speed.

Terminal operators were therefore working to clear out the backlog of containers that had accumulated at the ports over the weekend, and to finish working vessels that were at berth so newly-arrived vessels could be brought to berth. The Marine Exchange of Southern California reported that 22 containerships were at anchor Tuesday morning, one less than on Monday. Oakland said 19 vessels were at anchor or waiting outside of Golden Gate Bridge, and about nine vessels were at anchor outside of Tacoma.

This week could be […]

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CP strike ends after railroad, union agree to arbitration

February 17th, 2015
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  • CP strike ends after railroad, union agree to arbitration CP strike ends after railroad, union agree to arbitration

    CP strike ends after railroad, union agree to arbitration

CP strike ends after railroad, union agree to arbitration
Date: Feb 16, 2015
Source: Journal of Commerce

Canadian Pacific Railway and union locomotive engineers and conductors have agreed to enter into binding government arbitration, ending a strike that began Sunday and could have severely crippled U.S. and Canadian supply chains.

Full freight service is expected to resume Tuesday morning. The announcement, made on Monday afternoon, ends the strike of more than 3,000 Teamsters Canada Rail Conference workers that began midnight Sunday after the union and second-largest Canadian freight railroad failed to reach an agreement. The resulting reduced CP freight services would have hurt not just Canadian shippers, but also U.S. shippers that have diverted cargo away from U.S. West Coast ports through Canadian gateways, namely Port Metro Vancouver.

“This decision ensures both sides will get back to the table, and gets us back to moving Canada’s economy forward,” CP CEO E. Hunter Harrison said in a statement. “While we would have preferred a negotiated settlement, this is the right thing to do at this time.”

CP said the federal government would appoint an arbitrator, but said no other details were being released. The union didn’t issue an immediate statement, but ahead of the agreement had protested the threat of back-to-work legislation from Ottawa, saying the Harper government was favoring the railroad.

The union said talks with CP broke down over working conditions, namely CP’s refusal to honor collective agreements requiring train crews to rest after 10 straight […]

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Obama sending labor secretary to mediate ILWU-PMA dispute

February 17th, 2015
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Obama sending labor secretary to mediate ILWU-PMA dispute
Date: Feb 14, 2015
Source: Journal of Commerce

WASHINGTON, D.C. — President Obama is sending U.S. Labor Secretary Tom Perez to California to meet with International Longshore and Warehouse Union and Pacific Maritime Association negotiators to help them reach a contract as West Coast congestion nears a breaking point.

“The negotiations over the functioning of the West Coast Ports have been taking place for months with the Administration urging the parties to resolve their differences,” the White House said in a statement on Saturday. “Out of concern for the economic consequences of further delay, the President has directed his Secretary of Labor Tom Perez travel to California to meet with the parties to urge them to resolve their dispute quickly at the bargaining table.”

Perez, who is already in communication with both sides, will keep Obama updated on the status of the talks, according to the White House. Before the announcement made Saturday, the White House had balked at getting directly involved in talks and said it was confident both sides would be able to work out a deal.

But in recent weeks pressure on the Obama administration to get more involved has increased. More than a dozen lawmakers earlier this week via a resolution urged the president to “use all tools at his disposal,” including the Taft-Hartley Act, if there was a shutdown. Business groups, including the U.S. Chamber of Commerce and the National Retail Federation, have also urged the president to intervene.

Taft-Hartley allows the president to respond to […]

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