BALTIMORE–Despite the obvious signs that South Korea's Hanjin Shipping had been struggling, especially in recent weeks, its bankruptcy filing still came as an unpleasant surprise to the shipping community — and by extension, the shippers that rely on the carrier.

For many shippers — in this particular case, retailers — the bankruptcy could not have come at a worse time. September and October are their key months for receiving product in preparation for the holiday shopping season.

Stranded Holiday Season Merchandise

“There is millions of dollars worth of merchandise now stranded at sea or in foreign ports,” Melina Cordero, director of Retail Research for CBRE Americas, told GlobeSt.com. Specifically, the bankruptcy has stranded nearly 80 ships with almost 500,000 containers offshore. Hanjin has already filed for bankruptcy protection in the US and South Korea and plans to file in another 43 or so countries to protect its cargo.

“The bankruptcy could take months at best to resolve in case but retailers cannot afford to wait and see what happens,” she said.

The ones most dependent on Hanjin for their merchandise — and as of now it is unclear how many are — are scrambling to find alternatives, either alternative shippers or the more expensive option of air freight.

Retailers Finding Alternatives Very Expensive

Even retailers lucky enough to find another shipping line to carry its merchandise will find the transport prices have risen already. CBRE notes that In the immediate aftermath of the bankruptcy, the price to ship a TEU (twenty-foot equivalent unit container) from China to the US West Coast rose from $1,100 per container to $1,700. The good news is that given the excess capacity in the shipping industry, the price increase is expected to taper off in the next 30 to 45 days as rival shippers absorb the Hanjin capacity — just as the shipping for the holiday season is ending.

None of this means that Christmas has been canceled, Cordero said — or that retail real estate will be adversely affected with mass store closures. Instead, retailers will be feeling the affects on their profit margins.

US East Coast Ports Are Safe

US ports as well can rest easy — or rather the four US ports on the East Coast that are benefiting from the Panama Canal's recent widening — can rest easy, Revathi Greenwood, director of Research and Analysis for CBRE, told GlobeSt.com.

These ports — at Baltimore, Miami, Norfolk and New York/New Jersey — have the infrastructure in place to handle the post-Panamax ships, she said. For the Port of Baltimore, specifically, the additional traffic from these ships, which now have direct access to the East Coast, translates into a 2% growth increase. “The projected long-term growth rate for the Port of Baltimore was already 4% but the Panama Canal expansion project has increased it to 6%.”

This increased business will insulate Baltimore, and its related industrial real estate, from Hanjin's bankruptcy as well as any further consolidation in the global shipping industry, she said.

Overcapacity in the shipping industry already had been a concern even before the larger post-Panamax ships were introduced, she said. Global trade has been slowing for a few years to the point where in the first half of 2016, global container throughput grew only 1.2% over 2015, while in the US loaded inbound container volume grew 3.6% year-over-year—well below the robust 7% growth rate in 2015. Something was bound to give, as Hanjin went on to illustrate.

Stranded Holiday Season Merchandise

“The bankruptcy could take months at best to resolve in case but retailers cannot afford to wait and see what happens,” she said.

Retailers Finding Alternatives Very Expensive

US East Coast Ports Are Safe

This increased business will insulate Baltimore, and its related industrial real estate, from Hanjin's bankruptcy as well as any further consolidation in the global shipping industry, she said.

Instant Insights /

Retailers Scramble to Save the Holidays After Hanjin's Bankruptcy

Related Stories

Recommended For You