Northwest Exporters Brace for Ocean Freight Cost Increases

Sep 20, 2016
Originally published on September 23, 2016 2:21 pm

Exporters are bracing for ocean freight price increases due to the collapse of Hanjin Shipping, one of the trans-Pacific lines serving the Northwest. Meanwhile, sailors and cargo are marooned on container ships in Northwest waters.

Some of the biggest Pacific Northwest farm exports at this time of year are alfalfa and hay.

Scot Courtright runs a Moses Lake, Washington-based export company, Courtright Enterprises. He says this month's collapse of Hanjin Shipping Company set off a scramble to book containers on other lines. Rates are going up anywhere from 10 percent to nearly 40 percent.

"It certainly is a headwind," Courtright said in an interview Tuesday. "We have a kind of soft agriculture market already. All ag prices are down. Another price increase that will affect everything is just difficult to deal with too."

Hanjin ships used to call on the Port of Seattle about once per week to carry cargo to and from Japan, China and South Korea. Courtright said other lines had some spare capacity, but not enough to fully replace the suspended Hanjin service in the near term.

The marine terminals at the ports of Seattle and Tacoma operate jointly now as the Northwest Seaport Alliance. Seaport spokeswoman Tara Mattina said Hanjin partner lines K-Line, Yang Ming, Cosco and Evergreen are coming to the rescue.

"They're picking up some of the additional cargo," Mattina said Tuesday.

Two other shipping lines, Maersk and MSC, announced in recent weeks that they are adding service between Asia and the North American West Coast. For now, that new service is of limited utility to Pacific Northwest customers because it is directed to Prince Rupert, British Columbia, and Los Angeles/Long Beach.

The Yonhap and Bloomberg news wires report that Hyundai Merchant Marine has expressed interest in taking over dropped Hanjin routes as well.

Hanjin, the seventh largest container shipping company worldwide, filed for receivership on Aug. 31. That set off a cascade of disruptions as Hanjin kept some cargo-laden ships at sea so they would not be seized by creditors. In other cases, ports and tugboat companies denied moorage for fear of being stiffed.

On Monday, a South Korean bankruptcy court ordered Hanjin to sell as many of its ships as possible to pay debts, and told the shipping company to return chartered vessels back to their owners.

Hanjin used to call at the Port of Portland, but dropped that service in early 2015 because of a port labor dispute.

Three Hanjin container ships remain in limbo in Pacific Northwest waters.

The Hanjin Scarlet is marooned off Prince Rupert, British Columbia, carrying cargo destined for Seattle. Canadian authorities "arrested" the ship at the request of port operator DP World for unpaid bills. The 837-foot Hanjin Scarlet has been anchored outside Prince Rupert since Sept. 9. It has a crew of about two dozen on board.

The Hanjin Vienna has been anchored south of Victoria, B.C., since the first week of September for similar reasons. It off-loaded in Vancouver, B.C., and would normally have cast off for Japan had it not been "arrested" at the request of creditors. The 915-foot Vienna has a crew of 24 on board.

The Hanjin Marine is long overdue into Seattle from Busan, Korea. A customer update from Hanjin on Monday listed the vessel as "waiting in open sea." Marine traffic tracking websites show the 817-foot container ship idling in the ocean about 400 miles west of Canada's Vancouver Island. It is unclear what hurdles must be resolved for the ship to come into port.

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