The parent company of South Korea's Hanjin Shipping Co. said Tuesday that it would raise and spend about $90 million to try to ease a cargo crisis at ports in Los Angeles, Long Beach and around the world caused by Hanjin's filing for bankruptcy protection.
Media reports from Seoul said Hanjin Group would raise 60 billion won, using assets that include a stake in a cargo terminal at the Port of Long Beach as collateral. Hanjin Shipping, the world's seventh-largest container carrier, owns a majority stake in Total Terminals International, which operates Long Beach's largest terminal.
An additional 40 billion won would personally come from Hanjin Group Chairman Cho Yang-Ho.
The money — which amounts to about $90 million — would be used to pay to unload cargo from ships stranded in and near ports around the world.
The goal is to "normalize" operations by Hanjin Shipping and "minimize damages on export companies," according to a statement from Hanjin Group.
Ports and terminals around the world — including Long Beach — have denied access to Hanjin ships and refused to move their cargo because of concerns that the South Korean shipping giant won't be able to pay its bills.
Hanjin Shipping accounted for about 4% of container cargo imported to the Port of Los Angeles and 12% of container cargo to the Port of Long Beach during the first six months of the year, according to Datamyne, which tracks import-export transactions in the Americas.
As of Tuesday morning, three of the company's ships were stuck at or off the ports of Los Angeles and Long Beach, according to the Marine Exchange of Southern California.
Hanjin's bankruptcy filing last week stems from a challenging environment for all shipping companies, which are dealing with overcapacity brought on by a slowdown in global trade that coincided with a massive ship-building boom.
Southern California officials are worried that Hanjin Shipping's bankruptcy could threaten local union workers' jobs and retailers' access to imported goods as the holiday season approaches.
Local members of Congress urged Secretary of Commerce Penny Sue Pritzker to join discussions with South Korea and Hanjin to resolve the crisis.
"The ships anchored outside the ports of Los Angeles, Long Beach and other West Coast ports are an immediate problem that needs to be addressed," Rep. Janice Hahn (D-San Pedro) and other local Congress members wrote in a letter Tuesday. "The ships need to be unloaded — each day that they sit there our local workers and businesses lose money."
Businesses may not have to wait much longer, however.
Paul Bingham, a trade economist with Economic Development Research Group Inc., estimated that it would be "another day or two at most" until Hanjin secures funding and bankruptcy approvals are reached in the United States that would ensure all parties at the ports get paid.
"The ships will be approved [to move] from anchor to berth, the longshoremen will get busy and the cargo will flow," he said.
An attorney representing Hanjin in its U.S. bankruptcy filing did not return an email seeking comment.
For businesses with goods stuck at sea, a resolution can't come soon enough.
Norman Krieger Inc, a Carson-based freight forwarder and customs broker, books space on shipping lines, and its clients have goods stuck "around the world," including off the coast of Long Beach, where clothing and shoes are sitting on an idled Hanjin ship, President Robert Krieger said.
Krieger said his firm has been busy helping clients book alternatives to Hanjin and preparing for the unknown time when the ships are finally unloaded.
"This is already week one and there are only some signs of a resolution," he said. "The longer it goes on, the more severe the impact will be."
Still, Krieger said only a minority of his clients are affected because of a decision he made earlier this year amid Hanjin's growing financial problems.
"We tried to move anybody we could off Hanjin," he said.
Puzzanghera reported from Washington and Khouri from Los Angeles.
3 p.m.: This article was updated with additional analysis and comment from a trade expert and Norman Krieger Inc.