Hanjin’s bankruptcy — and what retailers can do about it

If retailers are being forced to pay excessive or unreasonable fees to get their holiday season merchandise unraveled from the complex Hanjin Shipping bankruptcy, the head of the Federal Maritime Commission says he wants to know about it.

“We want to make sure that that cargo is moving and that all parties work together,” FMC Chairman Mario Cordero said. “And we want to make sure this does not become an opportunity to gouge the American shipper.”

Cordero spoke Wednesday on a conference call with NRF member companies, one of several efforts undertaken by NRF to coordinate the retail industry’s response to the August 31 bankruptcy filing in South Korea by the world’s seventh-largest ocean carrier. NRF has also held conference calls with a leading maritime law attorney and officials from major ports and is monitoring court action and working with key federal agencies including the FMC and the Department of Commerce to minimize the impact on the nation’s retailers.

NRF will continue to hold regular conference calls for retailers as events develop.

What Should Retailers Do?

Retailers small and large alike could be affected by the Hanjin Shipping bankruptcy, even if they don’t do business directly with the company. Here are a few actions experts have recommended during conference calls held by NRF with the Federal Maritime Commission and others:

If you have cargo on a Hanjin vessel that isn’t being unloaded or moved because terminal operators, railroads, trucking companies or others are worried that they won’t get paid, reach out to those providers. You may be able to pay them the fees they would have received from Hanjin. Even if you’ve already paid Hanjin, it could get your cargo moving.

If you are paying for services Hanjin would have paid for, ask for documentation on what those fees would have been so you don’t get overcharged. And if you believe you are being gouged, report it to the Federal Maritime Commission.

If you have a contract with Hanjin, consult your attorney on how to notify Hanjin that the bankruptcy may result in lack of performance that could put it in violation of the contract.

If you have cargo in the hands of other carriers, check to be sure that your container isn’t on a Hanjin ship. Carriers sometimes transport each others’ containers.

Even if you’re a small retailer who doesn’t import merchandise directly, check with your wholesalers. If their cargo is on a Hanjin vessel, your merchandise may be delayed.

The bankruptcy has left tens of thousands of cargo containers full of holiday merchandise in limbo around the world. Some are sitting on docks in Asia where they were waiting to be loaded onto Hanjin ships. Others are aboard Hanjin vessels not allowed to dock because ports and longshoremen are worried they won’t get paid. Others already unloaded are stuck at U.S. docks because trucking companies won’t pick them up unless they are paid.

The situation is further complicated because some Hanjin containers are aboard other carriers’ ships, and some containers from other carriers are on Hanjin ships. In addition, Hanjin at least initially declined to dock some of its ships for fear of having them seized by creditors, although additional bankruptcy filings in the United States and more than 40 other countries may protect against that.

The dilemma comes in the middle of the shipping cycle for retailers’ all-important holiday shopping season. Major U.S. ports handled 1.67 million containers in August, according to NRF’s Global Port Tracker report, and are expected to handle 1.62 million in September and 1.63 million in October. While NRF hasn’t yet issued its 2016 holiday forecast, holiday spending last year totaled $632.8 billion, or about 20 percent of retail spending for the year.

“Retailers’ main concern is that there is millions of dollars worth of merchandise that needs to be on store shelves that could be impacted by this,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “It is understandable that port terminal operators, railroads, trucking companies and others don’t want to do work for Hanjin if they are concerned they won’t get paid. However, 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.”

“There are more questions than answers at this point, but retailers are working to get all issues addressed,” Gold said. “Retailers are working with all of their service providers to find ways to get their cargo moving to ensure that there is no or limited interruption in the supply of merchandise.”

Among other actions, retailers have reached out to terminal operators and others who would normally be paid by Hanjin and offered to pay those vendors’ fees directly in order to get ships unloaded or containers moved. In doing so, however, some retailers have reported difficulty in determining how much Hanjin would have paid and others say they have been quoted what appear to be excessively high prices. In addition to ports, some carriers have demanded “emergency surcharges” to take on cargo that would have gone to Hanjin.

“If your members find things that fall under that situation of being unreasonable, let us know,” Cordero said on Wednesday’s call. “We need documentation before we can do our part.”

Increased fees and surcharges imposed on short notice without FMC permission could be a violation of the federal Shipping Act, and Cordero said the commission would investigate any such action.

While the FMC does not have jurisdiction over the bankruptcy as such, it has issued guidelines how retailers and other cargo owners can report any improper action.