Oman, Hormuz Straits Designated as Extended Risk Zone

(World Maritime News)

Tuesday, 13 August 2019

 

Following the incidents in the Gulf of Oman, and specifically the Strait of Hormuz, over the past 12 weeks, the International Bargaining Forum (IBF) has designated the Straits as a Temporary Extended Risk Zone.

 

This means that seafarers who are subject to an attack in the zone, are entitled to a bonus and doubled death and disability compensation.

 

This follows a period of discussions by the IBF’s Warlike Operations Areas Committee over the past weeks, who have been closely monitoring the situation and the risk to shipping.

 

Speaking at the conclusion of the talks, the Joint Negotiating Group’s (JNG) Chairman Capt. Koichi Akamine said that the discussions “were never going to be easy.”

 

“After the initial attacks in the Gulf of Oman in May and June, one may feel the need to act quickly to designate a risk area. However, it is important in such events to step back and assess the real threat to shipping and the most appropriate measures to take. The JNG is confident that it has now introduced a designation which properly addresses concerns by seafarers transiting the Straits.”

 

The Strait of Hormuz is a key shipping route, not just for the oil tankers in the forefront of current media focus, but also for container ships on transit to Jebel Ali and beyond.

 

“While this is a sensitive political issue and today has only affected tankers and potentially British-flagged vessels, it was our desire that the IBF show leadership and move quickly to reflect the concerns of the seafarers transiting this region,” David Heindel, the ITF Seafarers’ Section Chair, said.

 

The new Extended Risk Zone is defined by the following coordinates but excludes three nautical miles off the main coastlines of the United Arab Emirates, Oman and Iran:

 

On the West: A line joining Ra’s-e Dastakan (26°33’N – 55°17’E) in Iran, southward to Jaztal Hamra lighthouse (25°44’N – 55°48’E), in the United Arab Emirates (the common limit with the Persian Gulf).

 

On the East: A line joining Ra’s Līmah (25°57’N – 56°28’E), in Oman, eastward to Ra’s al Kūh (25°48’N – 57°18’E), in Iran (the common limit with the Arabian Sea).

 

 

Bullish shipping analysts don’t care about the threat of trade armageddon

(AJOT)

Thursday, 08 August 2019

 

Who cares about the threat of a global trade meltdown? Not shipping analysts tracking prices for moving everything from oil to crops, it seems.

 

Across every type oil, gas, coal, iron ore and grain-carrying vessel, industry analysts surveyed by Bloomberg are expecting the rates ships earn to jump sharply next year.

 

That would be impressive given that an escalating trade war between the U.S. and China is nudging the world economy toward its first recession in a decade. The International Monetary Fund last month lowered its projections for trade growth in 2019 and 2020, having also done so in April.

 

So why do shipping analysts think the industry can withstand such a hit? One widely-held view is that there’s little of the huge fleet growth that’s dogged freight markets so often in the past. Another is that an industry switch to less-polluting fuel from January could result in fewer ships being available for charter.

 

The regulations, known widely as IMO 2020, were set out in 2016 by the International Maritime Organization, part of the UN. They were designed to try and cut emissions of sulfur oxides, a pollutant blamed for causing acid rain and linked to human health conditions including lung cancer and asthma.

 

“The first half of 2019 was bad pretty much across the board for shipping rates,” said Randy Giveans, an analyst at Jefferies LLC in Houston. “2020 is looking much better due to slowing supply growth and the positive impacts of IMO 2020.”

 

The industry’s mandated fuel upgrade could be bullish for a few reasons. Several thousand ships are going to be fitted with equipment called scrubbers to allow them to keep burning today’s cheaper product. That work is starting to ramp up and will continue well into the first half of 2020. That means fewer vessels for charter.

 

And those carriers that don’t get the equipment installed look likely to face much higher fuel costs. As such, some may find it uneconomical to continue trading and get demolished, while others could simply sail slower, according to Giveans. Both scenarios would be negative for fleet supply and bullish for freight.

 

Details Matter – “As an outsider, if you are a generalist, if you are reading the press, it’s only bearish,” said Frode Morkedal, an analyst at Clarksons Platou Securities in Oslo. “You would have to look at the details which are quite attractive. It’s a supply driven environment. Nobody has been ordering ships for a while.”

 

Along with analysts at Evercore ISI., Deutsche Bank, and Fearnley Securities, Morkedal also said IMO 2020 will be supportive of rates.

 

Whether slow fleet growth and a new fuel will really be enough to overcome a serious hit to trade and the global economy is another question. Several analysts’ central assumption is that demand could be eroded, but that there shouldn’t be a significant contraction in the amount of cargo.

 

Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker, is estimating that growth in demand for ships will largely outstrip fleet expansion next year. An exception is container shipping, where both demand and vessel supply will increase by 3.3%.

 

“With order books close to historical lows in commodities shipping we are constructive on the outlook despite the trade tensions,” said Jo Ringheim, an analyst at Arctic Securities A/S in Oslo. “We also remain upbeat for oil tankers due to increased long-haul Atlantic basin exports, a manageable order book, and the anticipated IMO 2020 impact on oil demand and vessel supply.”

 

 

Global box volume growth slows sharply

(IFW-NET.COM)

Monday, 12 August 2019

 

Latest CTS figures show global volume growth at 1.3% in the first six months of 2019 despite a strong showing on the Asia-Europe trade, as the US-Sino trade spat depresses transpacific traffic.

 

Volume growth on the major container trades slowed markedly in the first half of 2019 when compared with the previous year, with growth in June — often a strong indicator for container shipping’s July to October peak season — of just 0.9%.

 

The latest figures published by Container Trades Statistics show carried box numbers at 84m teu through the six months ending 30 June representing a 1.3% increase on the corresponding period of 2018. This compares with a 4.5% growth figure at the halfway mark last year.

 

Last year, the Far East-North America trade saw 6.6% container traffic growth, as healthy US consumer confidence and extraordinary frontloading ahead of proposed tariffs on Chinese imports in the latter stages of the year, boosting container trade – and helped offset weak Asia-Europe demand growth.

 

But this year, transpacific volumes of slightly over 9m teu for the full six months only just top last year’s total, rising by a marginal 0.2%, while volumes on the Asia-Europe trade jumped 5.2% in the first half of 2019 to 8.3m teu, with June figures up 3.8%, points to a fruitful peak season for Asia-Europe carriers in terms of volumes.

 

 

Container growth slowing as ‘volume multiplier’ falls away

(IFW-NET.COM)

Thursday, 08 August 2019

 

Alphaliner lowers growth outlook from 3.5% to 2.5%, as increased trade tensions further erode the ‘teu multiplier effect’ that has boosted box volumes for decades but declined steadily since the 2008 global financial crisis.

 

Box volumes are still set to grow this year, despite the escalating trade war between China and the US, according to forecasts from Alphaliner, which has revised its growth outlook from 3.5% down to 2.5%.

 

The downgrade follows the International Monetary Fund’s July update of its World Economic Outlook, which downgraded global gross domestic product growth from 3.3% to 3.2%, with a related decline in trade volume growth from 3.4% to 2.5%.

 

But Alphaliner said container throughput remained resilient in the second quarter of 2019, with global ports recording a 2.8% increase in volumes in the period from April to June.

 

“The preliminary growth rate was slightly above the first quarter’s rate of 2.7%, as the ongoing Sino-US trade war failed to bring down overall container volumes,” Alphaliner said.

 

Nevertheless, volume growth at Chinese ports slowed to 3.5% in the second quarter, down from 4.2% in the first quarter, Alphaliner noted.

 

North American volumes growth also slowed to 2.9% in the second quarter, down from the 4.7% growth in the previous quarter.

 

Alphaliner also warned that the “teu multiplier”, the factor by which container volumes increase more than GDP growth, was continuing to fall. Historically, carriers could rely on a teu multiplier of 3.4 during the 1990s and 2.6 in the early years of this century.

 

But since the financial crisis in 2008, that had fallen to 1.4, and could slip to parity this year.

 

“The escalating trade tensions will have a negative impact on container volumes, with the teu-to-GDP growth multiplier expected to fall to less than one in 2019,” Alphaliner said.

 

 

Alphaliner warns of tough second half for Asia-North Europe

(Splash 247)

Wednesday, 14 August 2019

 

Liners are bracing for a tough second half of the year with rates sliding across the board in recent weeks. The Shanghai Containerized Freight Index (SCFI) spot rates from China to North Europe currently stand at just $810 per teu , down 19% since the beginning of the year and 15% lower than the same time last year.

 

“Carriers have struggled to raise rates on the route this year due to the introduction of new megamax vessel capacity on the route,” Alphaliner noted in its most recent weekly report.

 

Despite HMM deciding to withdraw its Asia-Europe Express (AEX) standalone service later this month, Alphaliner warned the move may not be sufficient to stop freight rates from falling in the rest of the year, with demand expected to soften over the coming weeks.

 

The latest figures on the transpacific are also underwhelming, especially considering August is meant to be the peak season.

 

Latest freight rates for services destined to the west coast of North America declined 7.2% to $1,474 per fey. East coast freight rates fell 5% to $2,660 per feu.

 

“The combination of advanced shipments in May, a recent drop in advance shipments due to the tariff truce, and insufficient time to advance ship and beat the now-instituted tariffs all add up to surprisingly low August demand,” commented Eytan Buchman, CMO at online freight platform Freightos in a recent weekly report.

 

On the Mediterranean trade, there has been some glimmer of hope with many shipping companies announcing a peak season surcharges from tomorrow, lifting spot rates by 14.6% to $974 per teu.

 

 

Drewry: Modest Growth Expected for Global Container Port Demand

(World Maritime News)

Monday, 12 August 2019

 

Global container port demand is heading toward a modest growth and numerous uncertainties, accompanied with muted capacity expansion plans.

 

Most world regions would therefore see an increase in average terminal utilisation, shipping consultancy Drewry said in its Global Container Terminal Operators report.

 

Drewry’s container port demand forecast for the next five years is for global growth of 4.4% per annum on average, lifting world container port throughput from 784 million TEU in 2018 to 973 million TEU by 2023, an absolute increase of almost 190 million TEU.

 

The latest five-year forecast is a far cry from the heady days of the 2000s when forecasts were around 9% growth per annum until the global financial crisis of 2007-08 brought this to a shuddering halt.

 

Several locations are expected to outperform markedly the global average, most notably Middle East/South Asia and Southeast Asia/Far East.

 

Global container port capacity is projected to increase at a CAGR of around 2%, based on confirmed additions only. This is well below the projected demand growth and reflects the continued easing off from greenfield projects by investors over the last few years. As a consequence, average utilisation at the global level is forecast to increase significantly from 70% in 2018 to 79% by 2023, according to Drewry.

 

At the regional level, almost all locations are projected to see their average utilisation levels increase, the shipping consultancy noted, adding that the sharpest upward swings are expected in Greater China and Southeast Asia, with the former hitting 100% by 2023.

 

Among the top seven individual global/international terminal operators, based on their performance, PSA and Hutchison occupy first and second places respectively, with PSA’s pre-eminence due to its 20% stake in Hutchison Ports.

 

Cosco moved up to third place in 2018 from fifth in 2017 by achieving over 30% growth, boosted by the OOCL acquisition. This meant that DP World and APMT each dropped one place to fourth and fifth place respectively. China Merchants with 35 million TEU and TiL with 26.5 million TEU remained in sixth and seventh places respectively despite both recording double-digit growth in equity-adjusted volume.

 

“A premier league of seven big operators has emerged, after which the next largest player is a third of the size. Between them they accounted for nearly 40% of global throughput in 2018. Within this elite group, Cosco has moved sharply up the table in this year’s analysis,” Neil Davidson, Drewry’s senior analyst for ports and terminals, said.

 

 

Why large shipping lines should think about asset-sharing

(Splash 247)

Thursday, 15 August 2019

 

Container xChange’s CEO Dr Johannes Schlingmeier writes exclusively for Splash today.

 

In the past, companies have tried to optimise and unearth efficiency gains through value chain integration. Reason was that it is easier to communicate and optimisze within a company than with external partners. Examples from container logistics include Maersk Line acquiring Damco as part of the P&O Nedlloyd acquisition and Amazon aiming to consolidate the entire value chain from factory to last mile delivery.

 

In the literature, the explanations focus on lower transaction costs when communicating within an organisation compared to the outside and the risk of ‘hold-ups’ being more manageable if you can observe the entire value chain compared to just a small fraction.

 

Extrapolation: You can argue that these factors and risks are the only reason why we have companies at all, those are basically just a way for humans to work together and communicate efficiently. In a sense, a company is just a collection of specialists who work together on a ‘platform’ called a company.

 

Technology reduces those underlying costs and risks. Today, technology and digital platforms reduce transaction costs and remove risks. This makes the traditional company borders obsolete. We see that in the ‘gig’ economy where specialists (from highly paid professionals such as lawyers and consultants to poorly paid, uneducated ‘hands’) chose not to get a job in a company but instead offer their workforce on platforms – think of Uber, Fiverr and even Deliveroo. Interestingly, this does not quite fit into the B2B vs B2C vs C2C logic of the past but is rather P2B (Platform-to-B) or P2C: As a company or as a consumer I only need to join a platform to get access to a wide range of services without further need to search, compare or contract.

 

We see the same happening in B2B. M&A activity will not remain the only logical way to increase efficiency along the value chain and to achieve economies of scale. Instead, platforms and digital technologies allow companies (no matter how small or specialised) to work together across company borders. On successful platforms, this is powered not only by efficient online processes, but supported by platform activities that increase trust such as peer reviews, performance information or payment handling.

 

Here’s an industry perspective. A simulated large, consolidated company which operates equipment in an efficient, market-driven pool. Other examples that come to mind are platforms focused on the optimisation of hinterland intermodal moves—improving communication between container carriers, freight forwarders, and truckers. We expect this along the entire transportation value chain in the future.

 

Thinking about the future of shipping industry, we will see further deconstruction happening. Multiple ‘neutral’ platforms will link together specialised actors along the value chain. Actors on the value chain will be much more specialised than today and instead of seeing mega carriers covering the transport chain end-to-end, we’ll have actors such as equipment owner, vessel owner, vessel operator, slot marketer, agents in POL and POD, equipment tracking technology, ports, terminal, truckers, depots.

 

Here’s an example. From an economic viewpoint (and when removing transaction costs / communication barriers and holdup risks) it makes only very little sense to have ‘vessel operation’ and ‘equipment ownership’ done by the same party.

 

In the case of equipment: Managing a pool allows you to balance out company-specific imbalances and reduce empty container moves. Container leasing companies are a prime example where this already happens.

 

Of course, this does not need to be fragmented down to the individual micro-service at all stages. Thinking back to our example before, that would mean that we don’t even have companies here anymore but just individual freelancers. Such companies can then also contribute 2, 3, 4 steps but we think the underlying logic is important: Deconsolidation makes sense.

 

Additionally, there will be some clients who prefer buying from a consolidated entity instead of plugging-and-playing services on a platform. Consider a large shipper who wants to have a reliable long-term contract with stable rates and a single-point of contact – this role will still exist and also create value (as they cater to a specific demand). Here you’ll also find strong consumer / client facing brand names such as Maersk. However, the way this consolidator then provides the service will change completely from an inhouse solution to an on demand platform solution.

 

What we see in shipping is that fully integrated liners act like a “one-stop-shop” and try to offer everything even though their core business is ocean freight. Why shouldn’t forwarders or shippers bring their own containers and only book the vessel slot? When shippers bring their own boxes, containers are so-called shippers owned containers, SOC container in short. Such containers increase flexibility and create a win-win for shippers and carriers: Forwarders save demurrage charges, while carriers avoid time-consuming planning and can focus on what they’re good at: moving goods between continents and the sale of vessel slots!

 

More and more shipping companies increase their SOC activities because online platforms provide them with access to global capacity and streamline processes of booking containers separately to the vessel slot.

 

You can stop the “race to be the largest and most integrated actor”. In the future of shipping you’ll need to be super specialised and able to play multiple platforms instead. In a corporate finance viewpoint there will be no more “conglomerate cover-up”, every activity needs to be performed at par with or better than the best. Because markets will be so efficient, that customers are not willing to pay for sub-par parts of products anymore.

 

What does this all mean for you? Firms should ensure they are preparing for an eco-system future—or what “eco-systematisation” will mean for them. Specifically, they need to dedicate resources to understanding which services are available, as the landscape is evolving quickly. More and more platforms are evolving that might evolve into an eco- system services—just think of Alibaba and WeChat. They need to decide what they are really distinctive at and exit or source marginal activities. While this has always been a good idea and strategic exercise, it is becoming more important than ever (examples could be COSCO’s divestment of its shipbuilding/shipyard arm). And finally, they need to create plug and play architectures, not just in a technical sense, but also in how they contract (e.g., shorter duration). And in some cases, they may need to organize themselves into a set of discrete internal services to allow inter-operability with the external market.

 

Zapier is a really good example for pushing plug and play architectures, it basically is an online service that “connects” distinct services to provide additional user value. Easyjet is a good example for an “unbundling” of services into micro-services: You can book everything, but you don’t have to—that aligns very well with the market and is profitable in itself.

 

 

Carriers accused of creating rollovers to get shippers to pay more

(The Load Star)

Friday, 09 August 2019

 

Carriers are being accused of an abuse of power by “weaponising rollovers” to force shippers into paying higher spot rates to get their goods moved.

 

Sources told The Loadstar they were being warned “weeks in advance” of rollovers on North Europe services, claiming carriers are artificially creating rollovers to drive up rates.

 

“How have they got this space? How do they know they will have a rollover in five weeks? It is a tactic to create a roll pool,” one source said.

 

“We are seeing a massive rollover strategy, with several carriers now using the roll pool as a tool to force shippers onto the spot market to pay higher rates..

 

“There was one sailing overbooked by 2,000 teu… that’s ridiculous, and we knew if we offered an extra $500 we could get our goods moved.”

 

The source said it was indicative of an industry “short on memory”, and only “too happy” to forget the shippers that had supported it earlier in the year.

 

However, a spokesperson for Maersk denied it was participating in a “rollover strategy”, claiming it accommodated “all contracts”.

 

the spokesperson told The Loadstar: “We can’t confirm an increase in rollovers, but we acknowledge a fundamental inefficiency in the industry is uncertainty caused by overbookings.

 

“This often leads to rolling of cargo, since the overbooking compensates for the high downfall, which creates a lot of uncertainty for our customers.

 

“This is one reason why, earlier this year, we introduced Maersk Spot, an online product based on mutual commitment between the customer and Maersk.”

 

This month CMA CGM issued a customer advisory stating all its August sailings were in, or facing, possible rollover situations, OOCL has reportedly been rolling cargo on a weekly basis since the end of July and another source said ONE was warning of “pending rollovers”.

 

A source told The Loadstar: “If the rollovers are being artificially caused, there’s no point us pursuing it because of the ill-will it would cause, and the fact the carriers would no longer work with us.

 

“They have long been able to control circumstances, but I have never seen roll pools used as a strategy before.”

 

UK-based NVOCC Westbound Logistics issued a notice confirming that rollovers should be expected over the course of August, claiming “every single vessel” was overbooked across several lines. This, it said, would lead to a “100% chance of container rollings”.

 

THE Alliance has also confirmed blanked sailings: “Containers [are] being rolled every single week, and in some cases, 2-3 … adding up to three weeks delay, almost double the transit time in some cases,” it said in a statement.

 

“The situation is set to get worse, and there is unlikely anyone that will come out of the peak season unscathed, unfortunately.”

 

The operator confirmed it too had, “annoyingly”, had several containers caught up in the delays, adding that all was “far from well” in the industry.

 

Its belief that the situation was only likely to worsen echoed the view of another source, who forsaw a “pending calamity”.

 

“Eastbound blankings will have a big impact on westbound at the end of August,” the source said. “Thrown into all that, you have goods stockpiling in the UK in the run-up to Brexit; it’s going to be disastrous.”

 

 

Maersk Earnings Strengthen amid Recovery in Ocean Business

(World Maritime News)

Thursday, 15 August 2019

 

Danish conglomerate A.P. Moller – Maersk reported “solid progress” in the second quarter of 2019 as its Ocean business witnessed continued recovery.

 

Earnings before interests, tax, depreciation and amortisations (EBITDA) increased by 17% to USD 1.4 billion from USD 1.2 billion reported in the same period a year earlier. The change was attributed to an increase of USD 212 million in Ocean, driven by higher freight rates and volumes as well as strong operational efficiency.

 

Operating profit (EBIT) increased from USD 65 million to USD 416 million, reflecting an improvement in margin to 4.3%, while underlying profit was positive by USD 134 million compared to USD 15 million a year earlier.

 

Revenue grew slightly by USD 59 million and was on par with the second quarter last year at USD 9.6 billion with an increase of USD 198 million in Ocean and USD 110 million in Terminals & Towage, partly offset by revenue decrease in Manufacturing & Others mainly due to the exit from the dry container business and 30% lower revenue in the reefer segment as well as the divestment of bulk activities originally acquired from Hamburg Süd.

 

“Q2 was a quarter of solid progress. EBITDA was up 17% and cash flow improved 86% year on year, driven by continued recovery in Ocean,” Søren Skou, CEO of A.P. Moller – Maersk, said.

 

“The transformation progressed further with an improved cash return on invested capital of 6.9% and synergies of USD 1bn realised earlier than expected. Growth in revenue and gross profit in Logistics & Services still need to improve as we continue to build capabilities within logistics and services,” Skou noted.

 

A.P. Moller – Maersk reiterated its guidance still expecting earnings before interests, tax, depreciation and amortisations (EBITDA) of around USD 5 billion.

 

The organic volume growth in Ocean is still expected to be in line with the estimated average market growth of 1-3% for 2019.

 

“We reaffirm our guidance for 2019 while the macro environment continues to be subject to considerable uncertainties.”

 

 

Higher Transport Volumes Improve Hapag-Lloyd’s Earnings

(World Maritime News)

Wednesday, 07 August 2019

 

German shipping company Hapag-Lloyd has concluded the first half of the year 2019 with a significantly higher operating result than in the same period of the previous year.

 

Earnings before interest and taxes (EBIT) increased to EUR 389 million, up from EUR 91 million reported in the first half of 2018.

 

The group net result rose to EUR 146 million, against the EUR -101 million seen a year earlier, while earnings before interest, taxes, depreciation and amortisation (EBITDA) climbed to EUR 956 million from EUR 427 million year-on-year.

 

“Thanks to higher transport volumes in our core trades, good cost control and slightly better freight rates, we can look back on a good first half year. This also allowed us to redeem additional debt through the early repayment of a senior note,” Rolf Habben Jansen, Chief Executive Officer of Hapag-Lloyd, said.

 

Revenues increased in the first half year to EUR 6.2 billion from EUR 5.4 billion reported in the first six months of 2018, while transport volume rose by 2 percent to 5,966 TTEU and the average freight rate climbed by 5 percent to 1,071 USD/TEU.

 

In contrast, higher bunker prices of USD 429 per tonne had a negative impact on the result.

 

“After a solid first half of 2019, our outlook remains unchanged, even if we have to deal with more trade restrictions and see increasing geopolitical risk, which of course could impact growth. In the second half of the year, we will continue implementing our Strategy 2023 in our efforts to become the number one for quality,” Rolf Habben Jansen added.

 

 

HMM trims second quarter loss, reports revenue increase of 12.8%

(Freight Waves)

Wednesday, 14 August 2019

 

Hyundai Merchant Marine (011200.KS), South Korea’s largest container carrier, said it had an operating loss in the second quarter of 2019 of 112.9 billion won (about $93 million at the current exchange rate of about 1,215 won to the U.S. dollar), a decrease from the 199.8 billion won loss reported in the same 2018 period.

 

Revenue in the second quarter of 2019 was about 1.4  trillion won, a 12.8% increase from the 1.24 trillion won reported in the second quarter of 2018.

 

The company handled 1,157,705 TEUs of containerized cargo in the second quarter of 2019, compared to 1,154,225 TEUs in the second quarter of 2018. Hyundai is rapidly increasing the size of its fleet, ordering 20 new ships last year.

 

HMM said it expects volumes to increase in the peak season, but added that “global trade uncertainty will persist, attributed to the U.S.-China trade conflict, instability in the Middle East, Brexit and, most recently, growing political and trade concern between South Korea and Japan.”

 

The company said it was seeking to “maximize profitability through securing high-yield cargoes, optimizing fleet management and restoring freight rates.”

 

 

HMM currently shares space on ships with the 2M alliance partners Maersk and MSC, but next April will become the fourth member of THE Alliance, joining Hapag-Lloyd, Ocean Network Express and Yang Ming. It said it “expects to obtain competitive cost structure through joint operation and offer reliable services with diversification of service routes” by joining THE Alliance.

 

 

Yang Ming reports operating profit in second quarter

(Freight Waves)

Tuesday, 13 August 2019

 

Yang Ming Marine Transport Corporation reported a gross profit from operations of 1.16 billion new Taiwan dollars (or about $36.8 million U.S. at today’s exchange rate of about 31.5 NTD to 1 U.S. dollar) in the second quarter of 2019, compared to a 2.03 billion NTD loss in the same 2018 period.

 

The company’s net loss in the second quarter of this year was about 1.18 billion NTD, a sharp reduction of about 66% from the 3.73 billion NTD net loss reported in the second quarter of 2018.

 

Total operating revenue amounted to about 40.4 billion NTD in the second quarter of 2019, a 20% increase from the 33.6 billion NTD recorded in the second quarter of 2018. Revenue grew faster than cargo volumes: Yang Ming said it carried 1.35 million TEUs in the second quarter of 2019, 5% more than in the second quarter of 2018.

 

Yang Ming pointed to a report by the analyst firm Alphaliner that said the container shipping market was under pressure due to an oversupply capacity in the first half of the year. Alphaliner ranks Yang Ming as having the world’s eighth-largest containership fleet. Along with Hapag-Lloyd and Ocean Network Express (ONE), Yang Ming is a member of THE Alliance, a space-sharing agreement on major east-west container routes. Hyundai Merchant Marine is scheduled to join THE Alliance in April 2020.

 

Yang Ming said Alphaliner’s latest projection for 2019 is that global throughput will grow 2.5% while capacity is predicted to grow at a rate of 3.1%.

 

“The market demand is weaker than expected since the ongoing U.S.-China trade conflict has weighed on the global economy. In addition, the slight rise in bunker fuel prices affected Yang Ming’s operating costs.”

 

The company said the new IFRS 16 accounting standard had a negative impact on its half-year profitability by around NTD 0.6 billion ($19.37 million).

 

“Consequently, the company’s operating performance was insufficient to yield profits in the first half of 2019,” Yang Ming explained.

 

Yang Ming said it is optimizing its fleet and since last year has begun deploying “new eco-type containerships while returning some of its higher-cost chartered vessels. Through its strategic fleet deployment along with THE Alliance’s expanded partnership and future new service network, Yang Ming will continue to enhance business competitiveness and provide global customers with more excellent and comprehensive service quality.”

 

 

Evergreen reports sharp increase in second quarter gross profit

(Freight Waves)

Thursday, 15 August 2019

 

Evergreen Marine Corp. (TWSE:2603) reported a second quarter 2019 gross profit of nearly 3.7 billion New Taiwan Dollars (NTD), or about US$118.6 million, compared to about 109 million NTD in the second quarter of 2018. The company’s results were reported on the Taiwan Stock Exchange EMOPS system.

 

Evergreen had a loss of about 447.5 million NTD in the second quarter of 2019, down from a loss of 1.776 billion NTD in the second quarter of 2018.

 

Taiwan’s largest container shipping company, Evergreen also is the seventh largest by capacity in the world, according to Alphaliner.

 

Evergreen reported operating revenue of 47.1 billion NTD in the second quarter of 2019, compared to 38.3 million NTD in the second quarter of 2018.

 

The company also said that it will add 23,000-TEU containerships to its fleet through the actions of two subsidiaries, though the exact size of the fleet addition is not clear. Greencompass Marine, which is indirectly owned by Evergreen Marine, will build five to six of the ships at a cost of $725 million to $960 million (U.S.), while another subsidiary, Evergreen Marine (Hong Kong) Ltd., will charter four to five of the ships at a cost of about $599 million to $800 million, according to information posted on EMOPS.

 

 

Carriers accused of creating rollovers to get shippers to pay more

(Alpha Liner)

From Wed/07-Aug to Tue/13-Aug

 

Carriers are being accused of an abuse of power by “weaponising rollovers” to force shippers into paying higher spot rates to get their goods moved.

 

Sources told The Loadstar they were being warned “weeks in advance” of rollovers on North Europe services, claiming carriers are artificially creating rollovers to drive up rates.

 

“How have they got this space? How do they know they will have a rollover in five weeks? It is a tactic to create a roll pool,” one source said.

 

“We are seeing a massive rollover strategy, with several carriers now using the roll pool as a tool to force shippers onto the spot market to pay higher rates..

 

“There was one sailing overbooked by 2,000 teu… that’s ridiculous, and we knew if we offered an extra $500 we could get our goods moved.”

 

The source said it was indicative of an industry “short on memory”, and only “too happy” to forget the shippers that had supported it earlier in the year.

 

However, a spokesperson for Maersk denied it was participating in a “rollover strategy”, claiming it accommodated “all contracts”.

 

the spokesperson told The Loadstar: “We can’t confirm an increase in rollovers, but we acknowledge a fundamental inefficiency in the industry is uncertainty caused by overbookings.

 

“This often leads to rolling of cargo, since the overbooking compensates for the high downfall, which creates a lot of uncertainty for our customers.

 

“This is one reason why, earlier this year, we introduced Maersk Spot, an online product based on mutual commitment between the customer and Maersk.”

 

This month CMA CGM issued a customer advisory stating all its August sailings were in, or facing, possible rollover situations, OOCL has reportedly been rolling cargo on a weekly basis since the end of July and another source said ONE was warning of “pending rollovers”.

 

A source told The Loadstar: “If the rollovers are being artificially caused, there’s no point us pursuing it because of the ill-will it would cause, and the fact the carriers would no longer work with us.

 

“They have long been able to control circumstances, but I have never seen roll pools used as a strategy before.”

 

UK-based NVOCC Westbound Logistics issued a notice confirming that rollovers should be expected over the course of August, claiming “every single vessel” was overbooked across several lines. This, it said, would lead to a “100% chance of container rollings”.

 

THE Alliance has also confirmed blanked sailings: “Containers [are] being rolled every single week, and in some cases, 2-3 … adding up to three weeks delay, almost double the transit time in some cases,” it said in a statement.

 

“The situation is set to get worse, and there is unlikely anyone that will come out of the peak season unscathed, unfortunately.”

 

The operator confirmed it too had, “annoyingly”, had several containers caught up in the delays, adding that all was “far from well” in the industry.

 

Its belief that the situation was only likely to worsen echoed the view of another source, who forsaw a “pending calamity”.

 

“Eastbound blankings will have a big impact on westbound at the end of August,” the source said. “Thrown into all that, you have goods stockpiling in the UK in the run-up to Brexit; it’s going to be disastrous.”

 

The 'AVS'' service will connect Busan, Qingdao, Shanghai, Shekou, Singapore, Port Kelang (W), Chennai, Visakhapatnam, Port Kelang (W), Singapore, Busan (HMM does not participate in Manila (N) call). It turns in six weeks using six ships of 5,500 to 6,500 teu with each of the six vessel partners contributing on.

 

 

ESL to restructure its FE-ISC-ME offering

(Alpha Liner)

From Wed/07-Aug to Tue/13-Aug

 

Emirates Shipping Line (ESL) will restructure in mid-August its offering between the Far East, Indian Subcontinent and Middle East. Its existing 'Galex' service, jointly operated with KMTC, Sea Lead Shipping and Global Feeder Services (GFS) will focus on providing a dedicated and faster connection between the Far East and the Middle East by dropping its India calls as well as Singapore and eastbound Dachan Bay calls while picking up a direct call at Qingdao in Northern China. This will also affect Gold Star Line, which take slots on the SE Asia-Cochin segment.

 

Simultaneously, ESL will introduce a weekly service to directly connecting South Korea, China, the Straits, India and Pakistan that will be marketed as 'Korea China India Subcontinent service' (KCIS) by rejoining the 'Far East India Express', jointly operated by KMTC, COSCO and TS Lines that market it as 'FIX' and 'AIS' respectively. ESL will join as a vessel operating partner, bringing the 4,957 teu WIELAND in September, taking over from KMTC, her current operator.

 

Sea Lead Shipping and GFS, the two ESL ship operating partners on the 'Galex' have yet to announce their solutions to cover India.

 

ESL previous participation in this service started with the beginning of the service in June 2016 and went until July 2018 when it ceases its participation as a slotter.

 

The 'KCIS' service will also be lengthening its turnaround time from the current six weeks to seven weeks, using seven ships of 5,000-5,600 teu, offering a more generous buffer time for improved service reliability.

 

This overall restructuring will enable ESL to offer a quicker transit time between China, Korea, the Straits and Middle East while at the same time continuing to maintain twice-weekly sailings between China, the Straits and India Sub-continent adding to ESL existing 'CVIS' service, ensured through slots on 'Far East India Vietnam Express'service (FIVE), jointly operated by GSL, KMTC, Pendulum Express Line and Evergreen that advertise it as 'NIX', 'AIS3', 'FIVE' and 'CIX3' respectively.

 

The 'KCIS' will also provide ESL with direct links to Pakistan, through its Karachi gateway, with the Straits, China and Korea.

 

The two affected services details of this restructuring are as follows :

 

Ø  ‘Galex' service (revised) - Qingdao, Busan, Shanghai, Ningbo, Xiamen, Dachan Bay, Port Kelang, Khor Fakkan, Jebel Ali, Sohar, Port Kelang, Qingdao (Duration in eight weeks with eight ships of 5,000 to 8,500 teu).

 

Ø  KCIS' service (ESL newly introduced service) - Kwangyang, Busan, Ningbo, Shekou, Singapore, Port Kelang (W), Nhava Sheva, Mundra, Karachi, Port Kelang (W), Hong Kong, Qingdao, K

 

 

Jinjiang Shipping starts Taicang-Southeast Asia service

(Seatrade Global)

Thursday, 15 August 2019

 

China’s Jinjiang Shipping has launched a container shipping service for Taicang Port-Southeast Asia.

 

The company will deploy four 750 teu container vessels on the service, covering the ports of Taicang, Shanghai, Xiamen, Hong Kong and Haiphong in Vietnam.

 

The vessels will departure from Taicang each Tuesday and Saturday, and will arrive at Hong Kong in five days and Haiphong in eight days.

 

Jinjiang Shipping said the start of this new route will allow the company to optimise its coverage in Southeast Asia to meet the growing demands of the regional imports and exports.

 

Another of Jinjiang Shipping’s Taicang service is to Japan, a route that started back in 2016.

 

 

Shrinking supply brightens market outlook

(Alpha Liner)

From Wed/07-Aug to Tue/13-Aug

 

Despite being at the peak of the summer holiday season, a traditionally quieter period, the charter market remains busy, although the increasing dearth of tonnage is naturally reducing the volume of fixing. Demand is strong for most vessel types, with even the smaller sizes from 2,500 teu down to 1,000 teu seeing a rising activity.

 

It is remarkable that despite the current holiday period, the ongoing trade war between the US and China, and the multiple geopolitical tensions across the globe, demand for container shipping remains sustained. The ongoing wave of scrubber retrofits, which takes capacities out of service with tonnage needed to fill gaps, is contributing to keeping demand firm.

 

The consequence of this bullish demand is an ever shrinking availability of ships, with supply getting tight not only in the larger sizes, but also, increasingly, in the medium sizes (2,700 to 3,500 teu) and the trend could filter down to smaller ships soon.

 

This environment is buoying sentiment among owners, with the market outlook looking particularly bright for the upcoming autumn period, a traditionally busy fixing time.

 

Underlying demand remains strong in VLCS segment – Demand in the handy VLCS segment (7,500-11,000 teu) remains strong. The low volume of fixtures reported is only due to a lack of spot tonnage. Charterers needing this kind of ships are forced to either consider smaller vessels or fix on a forward basis. Among those carriers going for the latter option, ZIM has fixed two 11,000 teu units for period charters of about one year each at a rate of $43,250 per day. This rate is nearly $4,000 higher than what a sister vessel obtained back in April for a similar period. These two ships are understood to be delivered to the Israeli operator only later this autumn after their current Evergreen charters expire.

 

Activity and rates continue to rise in LCS segment – Charter rates in the LCS segment (5,300-7,499 teu) keep going up, on the back of a rising activity and a dearth of tonnage, with zero vessel available on a spot basis and only one ship expected open for employment in the next four weeks. Among the fixtures reported, the 6,598 teu high-reefer MALLECO (CSBC 6500) was fixed for a period charter of 8-10 months at $23,800 per day, and the 6,882 teu ‘widebeam’ CAPE CHRONOS (Hanjin 6900) secured an employment in Asia at $25,200 per day. These rates were, in both cases, new highs for each type of ships. Meanwhile, Alphaliner understands that several vessels of 6,300 teu are currently being negotiated for further employment at charter rates which undoubtedly will reflect the rising trend observed in this segment.

 

LCS ‘wide beam’ units are sold out – The LCS ‘wide beam’ segment (4,300-5,400 teu) is still sold out, and only one vessel is expected to come up for employment in the next four weeks. No fresh fixtures have been reported to Alphaliner, although one ship is understood to be under negotiation at a substantially higher level than the high-$16,000 seen so far.

 

Only one vessel available in classic panamax segment – Only one handy vessel of 4,250 teu is currently charter free in the classic panamax segment (4,000-5,299 teu), a remarkable turnaround when over 40 ships were at anchor in this segment waiting for a new employment in early 2019! The gradual shortage of ships has boosted charter rates, although slightly weaker figures have been observed by Alphaliner lately, conflicting with the bullish trend. This development is not entirely clear and could be due, in part, to the fact that around seven ships are expected to come up for redelivery in the next four weeks. The forthcoming closure of HMM’s AsiaEurope segment of its ‘AEX’ service, is also raising questions on the future deployment of up to seven ships of 4,700-5,000 teu.

 

Meanwhile, handy vessels of 4,250 teu are generally being fixed at around $13,000 per day, with some ships obtaining a little more, some a little less, depending on the trade and period length.

 

3,000-3,800 teu segment nearly sold outThe 3,000-3,800 teu segment is nearly sold out, with only one ship in spot position in the Atlantic. Asia is sold out. Very little tonnage is coming up for employment. This segment has lately enjoyed a rally in demand from its traditional clients and has also benefitted from the lack of larger vessels, forcing certain charterers to consider smaller ships of 3,000-3,500 teu.

 

The higher demand and the dearth of tonnage are beginning to reflect in charter rates, with one 3,461 teu ‘Hyundai 3500’ type unit fixing a period business in Asia in the mid-$10,000 per day. This rate is $1,000 higher than the latest fixture achieved in the same area on comparable tonnage. Meanwhile, the Atlantic is a little more frustrating for owners with three geared units of 3,000-3,500 teu being fixed on period charter at $9,500, a rate level that is showing no improvement on earlier fixtures of comparable tonnage.

 

Pool of spot ships receding in 2,700-2,900 teu sizes – The number of spot ships is receding in the 2,700-2,900 teu segment, with four vessels currently in search of a new employment versus seven in our last count. Three ships are open in the Atlantic, one in the Middle East while Asia is sold out. The lack of tonnage in Asia is beginning to translate into slowly firming rates in this area, with one 2,824 teu ‘Mipo 2800’ securing a period employment at $9,500 per day, up from rates of high-$8,000 seen so far. Two modern fuelefficient ‘Chittagong Max’ units of the ‘Zhejiang 2700’ type were meanwhile extended by Maersk Line for 4-6 months at $12,850 each, in continuation of a 36 month-charter agreed back in 2016 at a significantly lower $11,900 per day.

 

In the Atlantic, the higher availability of ships is making the market more challenging for owners, which is reflecting in lacklustre charter rates. Illustrating this, a ‘Mipo 2800’ was fixed for a short period employment at $9,250. This is down from the previous high-$9,000 benchmark for this type of ships.

 

Activity on the rise in 2,000-2,699 teu segment – Activity has been strongly on the rise in the last two weeks in the 2,000-2,699 teu segment, with 14 fixtures reported to Alphaliner, versus only seven in the previous fortnight. The majority of the transactions were however charter extensions, with fresh business only accounting for five enquiries. Although demand is up, it has so far

been insufficient to absorb the pool of spot ships which still counts 10 vessels, the same number as in our last count. The Atlantic remains the weak spot, with eight of the ten unemployed ships currently sitting there. The segment has still not recovered from the recent wave of service restructurings in the Atlantic, which has put a slew of high-reefer 2,500 teu units out of job. As a result, charter rates in the Atlantic are stalling. Conventional 2,500 teu tonnage remains fixable at $8,500 per day and same-sized high-reefer units can be obtained at around $9,500 per day. The situation is better in Asia, where the low supply of tonnage is beginning to reflect in higher charter rates. Illustrating this, Navios managed to fix its 2,546 teu SPECTRUM N (YZJ 2500) to Maersk Line for 6 months at $9,475, a rate that is substantially higher than the high-$8,000 that was so far the benchmark for conventional geared units in Asia.

 

Modern, fuel-efficient ‘Chittagong Max’ tonnage continues meanwhile to be fixed at premium rates, with one ‘SDARI 2100’ being extended in Asia for a short period at $12,300 per day, a rate that is stable compared to an earlier fixture of a sister vessel.

 

Business picking up in 1,500-1,900 teu segment – The volume of concluded business has picked up in the 1,500-1,900 teu segment in the past two weeks, with no fewer than 16 fixtures

reported to Alphaliner versus only eight in our last review. Nine of the 16 fixtures concerned fresh business which is good news for a segment that is still suffering from overcapacity, with nine vessels currently available for charter, five of which in the Atlantic.

 

Charter rates are globally stable, with conventional 1,700 teu tonnage getting fixed in the low-mid $8,000 in Asia, depending on the ship type. Higher-end, fuel-efficient & ‘Bangkokmax’ tonnage is meanwhile still getting fixed at premium rates. Certain designs, such as ‘Wenchong 1700 Mk IIs’’ are seeing their rates improving slightly from high-$10,000 to $11,000 per day. Of interest, an 1,809 teu ‘Hyundai 1800 Bangkokmax II’ type newbuilding secured a two yearcharter at a relatively decent $13,000 per day.

 

Activity in the Atlantic has been slow. Among the few fixtures reported, the 1,730 teu ‘B-170’ type FIONA was fixed to MSC for 11-13 months at $7,500 per day, and the 1,706 teu ‘Aker CS 1700’ EF EMIRA secured a two-week charter in the Med with MCL Feeder at $9,000 per day.

 

Conditions worsen in 1,250-1,499 teu segment – After a spell of improving activity and receding supply, conditions are again deteriorating in the 1,250-1,499 teu segment, with a falling

demand and a rise in the unemployed fleet. According to Alphaliner, eight ships are now in spot position versus four in our last count. Tonnage is again building up in the Atlantic, with five ships available for charter. Among the few fixtures reported, a 1,304 teu ‘Weihai 1300’ was extended on the Continent at $7,000 per day, a rate that is down compared to earlier fixtures of sister tonnage. In the Med, a 1,432 teu ‘YZJ 1600’ was meantime extended at $7,800, slightly up from an earlier fixture.

 

Trading environment remains challenging in 1,000-1,249 teu sizes – Despite a rise in activity over the last two weeks, the trading environment remains challenging for owners in the 1,000-1,249 teu segment. Demand is simply insufficient to absorb the redundant capacities, with 14 ships evenly split between Asia and the Atlantic currently at anchor, waiting to be fixed. Against this backdrop, charter rates are beginning to falter for conventional ships, while resisting a little better for higher-end tonnage. In Asia, a 1,221 teu ‘Peene 1100’ unit was fixed at $6,800 per day, down from $7,000+ rates seen so far. A fuel-efficient, 2-stroke engine ‘CV 1100’ meanwhile got $6,500 perday for a six-month extension and an eco ‘Kouan 1100’ obtained $7,900 for a further 6 month-employment. In the Atlantic, a 1,036 teu Ice Class 1A ‘SSW 1000’ type concluded a 4-5 month-charter at $7,700, a rate that is line with a recent fixture of a sister vessel.

 

Tonnage overhang remains substantial under 1,000 teu – The number of spot ships remains substantial under 1,000 teu with 12 vessels unemployed between 800 and 999 teu (down from 14)

and a further 12 units between 500 and 799 teu (down from 16). The majority of this tonnage is gearless and available in the Atlantic. The slight decrease in supply is the result of a rising activity in the Atlantic, with especially fresh business being concluded in the Americas, where rates are showing a slight upward trend. Elsewhere, fixtures were generally agreed at stable charter rates.

cid:image001.jpg@01D5538E.7899BB60

 

 

 

Simatech snaps up Borealis boxship

(Splash 247)

Wednesday, 08 August 2019

 

Christoph Toepfer-led Borealis Finance has completed its second containership sale this week, letting go of the 2006-built 2,824 teu Verdi.

 

The sale price is $10.675m and according to VesselsValue the buyer is UAE-based line Simatech Shipping. The online portal values the ship at $10.84m.

 

Earlier this week, Borealis sold 2005-built 2,478 teu containership Strauss to Greece’s Conbulk for a price of $8m.

 

 

Evergreen commits to eleven new 23,000 teu ships

(Splash 247)

Wednesday, 14 August 2019

 

The board at Evergreen Marine, Taiwan’s largest shipping line, has approved plans to bring in its largest ships, orders that could see the Chang family-controlled line leapfrog Ocean Network Express (ONE) and Hapag-Lloyd into fifth spot in the global liner rankings.

 

Evergreen said it is looking to add eleven 23,000 teu ships, five or six of which it will order and the remainder will be chartered in. The company has set aside $1.76bn for this significant fleet addition.

 

The new ships will add to Evergreen’s existing 1.3m teu fleet. No yards have yet been mentioned although tradition would suggest Japan’s Imabari is in poll for a good portion of the new tonnage.

 

As far as Evergreen’s existing owned tonnage goes, its largest ships are in the 12,000 teu range, but it also has a slew of much larger ships in the 20,000 teu bracket that have delivered in the last couple of years.

 

 

Massive rise in profit for port operator ICTSI

(Freight Waves)

Tuesday, 13 August 2019

 

Manila, Philippines-based international container terminal operator, ICTSI (PSE: ICT) has reported a massive increase in profit and a substantial increase in revenues for the first half of 2019.

 

ICTSI’s results are unaudited and all monetary figures are expressed in U.S. dollars.

 

Revenues, EBITDA and profits – First half 2019 revenues from port operations were US$751.8 million, a 14 percent increase on the US$661.8 million reported for the first half of 2019.

 

Earnings Before Interest Taxation Depreciation and Amortization (EBITDA) for the first half of 2019 stood at $424.4 million and were 19 percent up on the $356.1 million generated in the prior corresponding period.

 

Net income attributable to shareholders was US$128.5 million, which grew by a whopping 42 percent on the $90.2 million earned in the prior corresponding period. The company attributed the increase of improved operating income to contributions in Iraq, Australia, the Democratic Republic of Congo and, in the Philippines, Subic.

 

The good results were partially depressed by a non-recurring gain last year from an interest rate swap at a terminal in Manzanillo, Mexico. Without that interest rate swap last year the company’s increases in profits would have been even higher this year at 47 percent.

 

The company also discussed its costs and expenses. Consolidated cash expenses were up five percent to $232.0 million owing to higher volumes, increased salaries at certain terminals, I.T. costs and business development expenses. Costs were also incurred at new terminals in Lae and Motukea in Papua New Guinea.

 

ICTSI’S VOLUMES – ICTSI’s throughput of ocean shipping containers (measured in twenty foot equivalent units) in the first six months of 2019 stood at just over 5.04 million TEU, seven percent up from the 4.71 million TEU handled in the prior corresponding period.

 

The company attributed the increase in volumes to increased business at its terminals in Australia and Mexico. Also helping was an improvement in trade at Subic in the Philippines, in the Democratic Republic of the Congo and at Rijeka, Croatia. Adding a further boost to volumes were new shipping lines and services in Gdynia, Poland.

 

Enrique K. Razon, Jr., President and Chairman of ICTSI said: “ICTSI’s performance in the first half of 2019 has been very positive. The group’s focus on generating high quality earnings from our ports, ramping up activities at our newer terminals and strong cost control has enabled us to continue to deliver on our strategic objectives. Our business remains relatively unscathed by current geopolitical headwinds, but we remain vigilant and continue to monitor the situation closely.”

 

About ICTSI – ICTSI was founded in 1987 to bid for the Manila terminal concession, which handled international cargo at the Port of Manila. The Philippine Ports Authority awarded an exclusive concession to ICTSI for 25 years. That concession was later extended for another 25 years to mid-May, 2038.

 

ICTSI is involved, as an investor or an operator, in 31 terminals around the world across 18 countries. It operates 28 terminals including in Manila along with an inland box terminal at Laguna in the Philippines. It also operates two terminals in Indonesia, and one in each of China, Ecuador, Brazil, Poland, Georgia, Madagascar, Croatia, Pakistan, Mexico, Honduras, Iraq, Argentina, Colombia, the Democratic Republic of the Congo, Australia and Papua New Guinea. It also has several agreements to build ports around the world and to operate another port in Papua New Guinea.

 

 

PORT REPORT: Mega-study reveals Asia and China dominate the commercial maritime world

(Freight Waves)

Thursday, 08 August 2019

 

Ocean shippers, carriers and forwarders have long known it and now the United Nations has proved it with numbers – China and Asia utterly dominate the commercial maritime world.

 

In a massive 14-year study going back to 2006, the UN Conference on Trade and Development (UNCTAD) has ranked 1,249 ports by how well connected they are to other ports around the world.

 

Commenting on the creation of the index, UNCTAD’s director of technology and logistics, Shamika N. Sirimanne, said, “a container port’s performance is a critical factor that can determine transport costs and, by extension, trade competitiveness.”

 

She added that “efficient and well-connected container ports enabled by frequent and direct shipping services are key to minimizing trade costs and fostering sustainable development.”

 

Of the top 20 ports, 15 are in Asia and 11 are in China. Of the non-Asian ports in the top 20, two are in Europe, one is in the Middle East (Jebel Ali) and the other is in Sri Lanka (Colombo).

 

By the numbers: the top five most connected ports – Shanghai, China is the world’s most connected port with a connectivity score of 134.3. It has also been growing in its connectivity. The UN ranking is indexed to the number 100 as applied to the whole of China in 2006. Incidentally, in the first half of this year, Shanghai handled 21.5 million containers of twenty foot equivalent units (TEU), according to China’s Ministry of Transport data.

 

Singapore, right in the center of East Asia, takes the number two spot with 124.6 connectivity points. The city-state handled just over 18.0 million TEU in the first half of 2019, according to official data.

 

Korea’s Busan (referred to in the study by its old romanized name of Pusan) in the southeast region of the country, opposite Japan, was third on the list with a connectivity index of 114.5. Unfortunately, Busan does not appear to have reported its first half statistics for this year. Late in 2018 it published its 2017 data: Busan handled just under 20.5 million TEU back then.

 

Ningbo-Zhoushan in China was narrowly behind in fourth spot with a connectivity index of 114.3. Ningbo is part of the combined port complex of Ningbo-Zhoushan and it handled 13.9 million TEU in the first half of the year. Ningbo-Zhoushan is China’s busiest port by throughput. It handled 558 million metric tonnes of cargo (all kinds) in the first half of this year. A metric tonne is equivalent of 2,204.6 U.S. pounds. Ningbo-Zhoushan also handles the most “foreign” goods according to China’s Ministry of Transport with just under 254.6 million metric tonnes. That’s 45.6 percent of the total.

 

Hong Kong is the fifth most connected port in the world. It has a connectivity index of 102.8 points. Hong Kong has not yet released its 2019 half-year data. Between January to April (the latest month for which data has been released) Hong Kong handled just under 6.0 million TEU; of which 1.8 million TEU were river-borne boxes and 4.2 million were seaborne boxes.

 

Elsewhere on the list – No North American port makes an appearance until number 36 when New York/New Jersey enters the list with 49.9 points. Back in 2006 when the index began it had just under 36.1 connectivity points.

 

Asian and Oceanian (Australia, New Zealand and the South Pacific islands) countries accounted for 334 of 1,249 entries, or about 26.7 percent of all entries.

 

Given China’s dominance in the list of ports, readers may be unsurprised to learn that China dominates the top of the Asia-only list too. Chinese ports account for six of the top 10 most connected ports in Asia and 10 of the top 15 most connected ports. These ports are Shanghai, Ningbo-Zhoushan, Hong Kong, Qingdao, Xiamen, Xingang, Shekou, Yantian and Nansha. In the top 20, the non-Chinese ports are Singapore (2), Pusan/Busan (3), Port Klang (7; Malaysia); Kaohsiung (8; Taiwan); Tanjung Pelepas (14; Malaysia) and Dalian (15; China).

 

Analysts at the UNCTAD made several observations about liner connectivity in Asia and Oceania.

 

“Connectivity in Kobe and Nagoya (Japan) declined over the last decade, reflecting slower economic growth in Japan and the fact that its ports are less competitive as transhipment centres,” they said.

 

Liner connectivity in Oceania – They also pointed to the poor showing of South Pacific island nations, noting that they have some of the lowest port connectivity in the world, which helps to lock those countries into less investment and a higher cost of trade.

 

“Port Vila (Vanuatu) receives about one container ship every three days, and there are only four companies providing any regular shipping services to the country. In Kiribati, only one operator is offering regular liner shipping services, with one ship arriving about every 10 days. Many [small island developing states] are confronted with a vicious cycle where low trade volumes discourage investments that would improve maritime transport connectivity. At the same time, low connectivity also translates into more costly and less competitive trade.”

 

UNCTAD’s port Liner Shipping Connectivity Index takes into account the number of scheduled ship calls per week in the port; the deployed annual capacity (in TEU); the total deployed capacity offered at the port; the number of regular liner shipping services from and to the port; and the number of liner shipping companies that provide services from and to the port.

 

It also takes into account the average size in TEU of ships deployed by the scheduled service with the largest average vessel size and the number of other ports that are connected to the port through direct liner shipping services (i.e. regular service between two ports without trans-shipment of containers).2

 

On the mathematical side. It’s a little complicated. As UNCTAD explains: “For each component, the port’s value is divided by the maximum value for the component in 2006 and then calculate the average of the six components for the port. The port average is then again divided by the maximum value for the average in 2006 and multiplied by 100. The result is a maximum LSCI of 100 in the year 2006. This means that the index for China in 2006 is 100 and all other indices are in relation to this value.”

 

 

Hutchison Ports to build new container terminal Egypt

(Seatrade Global)

Thursday, 08 August 2019

 

Hutchinson Ports has penned a memorandum of understanding with Egypt on the building of a new container terminal in Egypt’s port of Abu Qir.

 

The new container terminal will be able to handle up to one million containers annually upon completion.

 

The MOU signing was witnessed by Egyptian president Abdel-Fattah al-Sisi.

 

The Egyptian president met with Eric Ip, managing director of Hutchison Ports Group, and Clemence Cheng, executive director of Hutchison, in Egypt’s capital Cairo on Tuesday.

 

Ip said that Hutchison Ports will be training more than 1,500 Egyptian engineers and workers for various jobs on construction of the terminal.

 

Ip added that the company’s investment in Abu Qir port is an opportunity grabbed from the improved investment climate and infrastructure development efforts by the Egyptian government.

 

Hutchison Ports currently operate two ports in Egypt – Alexandria and El Dekheila, both located on the Mediterranean Sea.

 

 

Abu Dhabi Ports: KIZAD to Offer 75 Pct of Services Free of Charge

(World Maritime News)

Wednesday, 07 August 2019

 

Abu Dhabi Ports has waived charges for over 75% of services offered by its subsidiary Khalifa Industrial Zone Abu Dhabi (KIZAD).

 

As explained, the move is in line with the Abu Dhabi Government directive to encourage further investment into the emirate.

 

Specifically, three quarters of services will be offered free of charge, while fees for a significant number of the remaining services will also be reduced and streamlined to a simpler tariff structure.

 

“We continue to support the government initiatives to build an investor-friendly environment by providing our partners and customers with the incentives they need for their businesses to thrive and grow. We are committed to Abu Dhabi’s drive to become a global gateway for businesses from all parts of the world,” Captain Mohamed Juma Al Shamisi, CEO of Abu Dhabi Ports, commented.

 

“The cost of setting up and maintaining a successful business at KIZAD is more achievable now than ever before. It is an ideal opportunity for companies of all sizes to benefit from such incentives for either growing their business or entering new markets.”

 

The exemptions are said to be aligned with Ghadan 21, the three-year, AED 50 billion (USD 13.6 billion) Development Accelerator Programme for the emirate.

 

According to Abu Dhabi Ports, the decision to waive fees also builds on the success that the port developer and operator has had in attracting investors to KIZAD since it was launched in 2010. To date, the zone has attracted more than 500 investors and more than AED 65 billion in investment across multiple sectors.

 

The new fee structure will be applicable from this month onwards.

 

Separately, Abu Dhabi Ports said that it and Jiangsu Overseas Cooperation Investment Co. Ltd. (JOCIC) have signed a five-year agreement with Industrial and Commercial Bank of China (ICBC) to make it easier and quicker for Chinese companies to do business at KIZAD.

 

Abu Dhabi Ports and KIZAD have already established with JOCIC a 2.2 square kilometer China-UAE Industrial Capacity Cooperation Demonstration Zone at KIZAD under a 50-year agreement. The Demonstration Zone forms part of the UAE’s support for China’s Belt and Road Initiative (BRI) and aims to attract more trade and investment to Abu Dhabi. The agreement also reiterates the strategic position played by the emirate to the major trade hubs along the BRI.