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Samsung facing costs, delays with cargo on troubled Hanjin ships

SINGAPORE — Samsung Electronics, the world’s biggest smartphone maker, said about US$38 million (S$51.2 million) of its goods and parts were on board two vessels operated by the distressed Hanjin Shipping, which applied for bankruptcy protection last week.

SINGAPORE — Samsung Electronics, the world’s biggest smartphone maker, said about US$38 million (S$51.2 million) of its goods and parts were on board two vessels operated by the distressed Hanjin Shipping, which applied for bankruptcy protection last week.

Supporting Hanjin’s Chapter 15 US Bankruptcy Court petition, Samsung said in a court filing Tuesday that without an order protecting the shipping line against creditors, the vessels will not be able to dock, causing the South Korean electronics maker losses that may “continue to escalate so long as the cargo aboard these ships remains unloaded”.

Hanjin Shipping won a provisional ruling Tuesday, protecting its assets in the US against creditors, while the shipping line proceeds with its reorganisation in South Korea.

The collapse of Hanjin Shipping, South Korea’s biggest container shipping line, has sparked concerns the vessels will not be able to pay docking fees and handling charges, or their cargo might be seized by creditors, prompting many ports in the US, Asia and Europe to turn them away. As many as 85 Hanjin ships are stranded around 50 ports in 26 countries, according to the company.

Samsung said its visual display business division had US$24.4 million of parts and finished goods in 304 containers meant for its factory in Mexico, while its home appliance business division had products such as refrigerators, washing machines, dishwashers and microwave ovens worth US$13.5 million in 312 containers.

If the cargo cannot be unloaded immediately, Samsung will be forced to transport alternative parts by air to help meet contractual obligations, entailing “great costs”, it said. For instance, it would have to charter at least 16 planes at a cost of US$8.8 million to transport 1,469 tons of goods, it said.

“All these costs and delays will be a loss not only to Samsung, but also to major retailers in the US and, ultimately, to US consumers,” said Samsung in the filing. “It is vital to Samsung’s and US retailers’ interests to avoid major disruptions in production” particularly ahead of the holiday shopping season, it said.

When reached for comments, Samsung said it is taking measures to minimise any impact on its business, without elaborating.

US Bankruptcy Court judge John K Sherwood in Newark, New Jersey, issued an interim provisional order Tuesday on Hanjin’s request and asked for lawyers in the case to file more information before a final hearing Friday, according to minutes posted on the court’s website.

“There are innumerable parties that can arrest and levy on the debtor’s property in the United States,” said the company in its Sept 2 request.

“These parties include, but are not limited to, fuel provider, ship owners (where the debtor is a charterer), terminals, port pilots, trucking companies, repair vendors, rail companies, and container lessors.” BLOOMBERG

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