With news that Korean freight giant Hanjin is going into receivership, thousands of containers full of product purchased by American companies sit idle in port. On August 30, Hanjin declared bankruptcy after creditors refused further funding to counter mounting debt.
According to a BBC report, “Hanjin’s board unanimously agreed to make the court filing at a meeting on Wednesday, a company spokesman said. It faces a cash shortage after failing to persuade key lenders to reschedule debt under a new restructuring plan.” (BBC News, “South Korean shipping giant Hanjin to enter receivership”, Aug. 31, 2016.)
With thousands of containers in limbo, it could be a depressing Christmas for American companies trying to get stock ready for the holiday rush.
“It is one of those unforeseen challenges in business that turns a little enterprise, like ours, upside down,” says Gary Gillespie, Creative Director and founder of the Kirkland, Washington based sketchbook company Leda Art Supply.
“We depend on increased sales in November and December to drive revenue goals. It stings,” he said.
Gillespie reports that his largest order yet of 6000 sketchbooks from the start up’s supplier in Shanghai is now stuck in the Port of Ningbo on the east China Sea waiting for the Korean shipping magnet to reorganize.
Launched in July 2015, the art supply company sells artist notebooks through its web site and on Amazon.com. Leda Art Supply used social media marketing to gain a foothold in the online market and soon reached page one of search results for sketchbooks in art supplies. Page one is significant because 80 percent of online shoppers purchase from page one. The Leda notebooks now often rank near the top 100 most popular art products out of tens of thousands on Amazon.
Since launching, the company has sold more than 7,200 books to artists across the country to rank among the top two percent of Amazon retailers. Leda designed the sketchbook, sourced it in Shanghai, then Amazon does all fulfillment (shipping and returns) from their many warehouses.
Leda hires a freight forwarder to take the product from the factory to the tanker ships and bring the goods to market. Once it arrives in U.S. ports, another shipping company trucks it to Amazon warehouses where the sketchbooks can be delivered to customers days after purchase.
“Our company depends on other actors in the global economy to survive. We are interconnected. We hope that Hanjin will move quickly to find a way to delivery our goods. Otherwise it will be a blue Christmas for us and other US retailers hoping for holiday sales,” he said.
Release ID: 131122