Retailers Urge Federal Action to Prevent Significant Cargo Disruptions

In a letter sent this week, the Retail Industry Leaders Association (RILA) urged action in response to the bankruptcy of Hanjin, a major South Korea based shipping company, to ensure the flow of cargo to and from the United States. Specifically, RILA asked U.S. Secretary of Commerce Penny Pritzker and Federal Maritime Commission Chairman Mario Cordero to use their powers to work with stakeholders to resolve the developing situation.

“While the situation is still developing, the prospect of harm is significant and apparent,” said RILA President Sandy Kennedy. “We urge that Department of Commerce and the Federal Maritime Commission work together with all stakeholders, including ports, cargo handlers and the South Korean government, to resolve the immediate disruption and mitigate the harms posed by the current situation.”

Hanjin Shipping, which represents approximately 7.8% of the transpacific trade volume for the U.S. market, filed for bankruptcy yesterday.

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“The impact on importers and exporters is having a ripple effect throughout the global supply chain. U.S. bound cargo is already being delayed at origin ports and Hanjin ships loaded with cargo idle unable to enter U.S. ports, containers are being detained on arrival clogging already congested ports and preventing merchandise from reaching store shelves. Further, the inability to return empty containers is causing backups and interfering with chassis availability. Finally, given that Hanjin is part of a larger shipping alliance, uncertainty about its future is effecting the ability to move cargo unassociated with Hanjin. We understand that U.S. exporters are experiencing similar disruptions, as outbound cargo is turned away for the same reasons,” noted Kennedy.

The full text of the letter is below.

September 1, 2016
The Honorable Penny Pritzker
Secretary
U.S. Department of Commerce
1401 Constitution Ave, N.W.
Washington, DC 20230

The Honorable Mario Cordero
Chairman
Federal Maritime Commission
800 North Capitol St, N.W.
Washington, DC 20573

Dear Secretary Pritzker and Chairman Cordero,

The recent bankruptcy filing of South Korean shipping company Hanjin Shipping presents an enormous challenge to U.S. shippers, the effects of which could have a substantial impact on consumers and the economy at-large.

While the situation is still developing, the prospect of harm is significant and apparent. Hanjin represents approximately 7.8% of the transpacific trade volume for the U.S. market. Given the great uncertainty about the future of Hanjin, terminal operators, ports and other cargo handlers are refusing to release cargo without assurances that payments will be made.

The impact on importers and exporters is having a ripple effect throughout the global supply chain. U.S. bound cargo is already being delayed at origin ports and Hanjin ships loaded with cargo idle unable to enter U.S. ports, containers are being detained on arrival clogging already congested ports and preventing merchandise from reaching store shelves. Further, the inability to return empty containers is causing backups and interfering with chassis availability. Finally, given that Hanjin is part of a larger shipping alliance, uncertainty about its future is effecting the ability to move cargo unassociated with Hanjin. We understand that U.S. exporters are experiencing similar disruptions, as outbound cargo is turned away for the same reasons.

We urge that Department of Commerce and the Federal Maritime Commission work together with all stakeholders, including ports, cargo handlers and the South Korean government, to resolve the immediate disruption and mitigate the harms posed by the current situation.

Thank you for your attention to this matter and we stand ready to work with you to resolve this situation.

Sincerely,

Sandra L. Kennedy
President

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