Friday, September 2, 2016

Hanjin: Zero Hedge Nonsense

Like you I enjoy the occasional Tyler Durden/Zero Hedge report.  But this is all nonsense:
As reported Wednesday, after the company's bankruptcy protection, on Wednesday, terminal operators, ports, cargo handlers, truckers and others have refused to handle its cargo, for fear they won’t get paid. That is causing turmoil at U.S. ports and beyond, said shippers, importers and freight forwarders. Then as we followed up yesterday, U.S.-bound cargo has been delayed at the point of origin, and cargo-laden Hanjin ships are unable to get into U.S. ports. Worse, already delivered cargo is sitting unhandled, clogging ports and occupying containers needed elsewhere. Several Hanjin ships have been seized by creditors or barred from shipping cargo from Busan, South Korea’s main port, and vessels have been turned away from ports in the U.S., China, Canada, Spain and elsewhere.
Those "terminal operators, ports, cargo handlers, truckers and others" are all the exact same people, working within the stevedore companies.  OK, so they extort their fees up front.

Name names: If ships are lying wait off the coast we can see them real time on the web.  Name the vessels so we can see.  I can imagine Hanjin is not finding anyone to load its vessels at origin, but again, name names: which ports are clogged.  It hasn't happened.

And this:
Meanwhile, as we also reported yesterday, shipping rates have soared as freight capacity shrank overnight, and indicative rates from Busan, South Korea, to Los Angeles had risen to $2,300 a container by Thursday, up from $1,700 four days earlier. One U.S. importer said he was getting rate quotes of $2,000 a container, compared with $700 before the Hanjin news.
Well, yes, with that much capacity gone prices go up.  But Austrian Economics 101: the solution to high prices is high prices.  The overcapacity around the world will rush to Busan to get some of that largesse.  Until then, the most critical shipments, by way of in essence auction, will move first, albeit at a higher price.  I bet the high rates disappear as soon as Maersk and Cosco and Fesco position some freighters there. What, 6 days?

And this breathless non-issue:
The biggest hit may come for the $25 billion US toy industry, however, which has been sweating the Hanjin news, as it prepares for the holiday season, responsible for half its annual sales. Jeff Bergmann, managing director of the Toy Shippers Association, said his customers are fortunate that only about 20 containers are on Hanjin or affiliated vessels.
No, no "biggest hit may come," yes, only 20 containers out there "at risk," because for the dinosaurs, if the 4th quarter merchandise is not in USA by the end of the 2nd quarter, you are sunk.  There is not enough lift capacity in Asia, never was, to get all of the 4th quarter merchandise delivered in the 3rd qtr, let alone the 4th.

But forget the retailers, will someone please think of the ship crews? Hanjin ships carry crews of 15 to 25 sailors, and with the vessels unable to call at ports, the sailors could be stranded at sea for weeks or longer. “They have food and water for a couple of weeks,” said Basil Karatzas of New York-based Karatzas Marine Advisors & Co. “Beyond that, things may become very difficult because suppliers will no longer extend credit to Hanjin and everything must be paid in cash.”
So tomorrow will Zero Hedge report fears of cannibalism?  Few people realize just how plush ocean freighters are.  Elevators, libraries, plush dining, swimming pools.  I've been on them.  I suspect the millionaires who officer those vessels will get provisioned, plus take care of their crews.  These are sailors, after all.  Sheesh!
Finally, anyone hoping for a quick resolution to chaos unleashed by the Hanjin bankruptcy, should not hold their breath. While Hanjin has obtained creditor protection in Korea, and secured an injunction protecting its ships against seizure domestically, it needs to quickly file for bankruptcy abroad, especially in Europe and the US, in order to keep its ships moving.
Again, what chaos?  A couple of consultants overstating the case is your evidence?  Higher prices?  Does anyone remember the Cho Yang bankruptcy?  You won't remember this either.

In the meantime, one massive container ship (Ed.: The Hanjin Boston?) was holding 40 miles south of the San Pedro Bay port complex Thursday afternoon, while another was anchored at the Port of Long Beach and a third outside the harbor, 
Anyone who has ever flown in or out of LAX sees a dozen ships at anchor outside the harbor at any given time.  I stop by El Segundo beach for an ocean swim before I fly out of LAX, and always see ships at anchor off the cost.  Right now Maersk, OOCL and others are waiting their turn.  They don't wait long.  Get your own raw facts. Watch the ships themselves.

The LA Times article is a rehash of Zero hedge alarmism, but they did actually call someone at Port:
The Port of Oakland terminal that handles Hanjin’s cargo was continuing to “unload Hanjin ships and they’re going to deliver the loaded import containers to Hanjin customers,” port spokesman Robert Bernardo said.
Wonder why they didn't call Long Beach? Nothing amiss in LA either?

Durden does well to note the dinosaur retailers are jumping on the opportunity to demand a bail-out and  deflect attention from their ongoing demise.  That is news, well to report.

My earlier post on Hanjin is here.

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