Wednesday, September 7, 2016

The high seas version of an Arrow Trucking collapse

Remember 2009 when Arrow Trucking abruptly went out of business leaving 1,400 drivers stranded
around the country?

Their fuel cards were useless, and they had no instructions beyond “turn your truck in at the nearest Freightliner or International truck dealer.” Driver paychecks bounced and confusion reigned among shippers and brokers. Where the hell is my stuff? How can I get it back?

Something very similar is happening now, but on a much larger scale – this time on the high seas.

Hanjin Shipping, a South Korean container ship operator, collapsed last week, leaving about 100 ships stranded according to Fortune Magazine online. That means approximately 2,500 crew members and tons of cargo are stuck on ships with nowhere to go.

Hanjin was the seventh-largest container line in the world – just a wee bit bigger than Arrow.

It’s as if the Hanjin ships at sea had their fuel cards refused. Port operators who can’t collect fees won’t let them in. Ships in port when the banks pulled the plug can’t leave. Carriers and drayage companies that hauled Hanjin containers will probably not be paid.

Arrow drivers couldn’t hold their trucks for ransom, but many Hanjin ships are being held until fees are paid. Meanwhile, port authorities and port service providers are demanding cash to work on Hanjin ships.

You think Arrow shippers had it bad? Almost 8,300 Hanjin customers are going nuts. The stranded ships are said to be carrying 540,000 containers with $14 billion worth of cargo, much of it Christmas season merchandise – including LG televisions.

Arrow’s drivers had a very bad deal for sure, but at least they were in the U.S. when their support system vanished. They could call home, put a bus ride on a personal credit card, or hitchhike. According to Maritime Executive newsletter, many Hanjin crews at anchor or at sea have “limited options for resupply of food or fuel.”

They’re not going to starve we hope, but it’s not as if they can pull into a Petro or Love’s and order up burgers. They can’t sneak out of the harbor at night and make a run for it either.

Hanjin ships and crews are all over the world, and every country has its own rules. The American Journal of Transportation reports that in the fuss over ships, cargo, and money, little has been said about stranded crew members. Where Hanjin ships have been seized in port, no provisions have been made (or at least reported) for how crew members will be fed, housed, paid, and returned home.

On the business side, Hanjin is reportedly seeking bankruptcy protection from creditors in 43 countries. Meanwhile, unpaid creditors have already seized Hanjin ships. With Hanjin out of the picture, container rates between China and California jumped by 50 percent overnight.

What will all this mean in the U.S.? The Journal of Commerce said U.S. railroads have stopped accepting Hanjin containers for inland transportation, and for now there is no place to return empty Hanjin containers.

What will it mean for truckload fleets? Experts say the Hanjin disruption will affect freight flows across the board, so delayed freight could bunch up at customer docks during unusual peak periods. It’s speculation of course, but this could result in detention time for truckload drivers – whether or not the freight comes from a port.

Editor’s note: Yesterday U.S. Bankruptcy Judge John Sherwood on Tuesday ordered a hearing for Friday, Sept. 9. We’ll be watching the Hanjin situation unfold. Stay tuned.