I N D U S T R Y N E W S
Karnataka bans iron ore exports from 10 ports
Jul 28Karnataka, a major producer and exporter of iron ore, has banned exports of the raw material from 10 ports, govt sources said.
"An order has been passed yesterday," a source in the ports department in Bangalore, who did not wish to be named, said.
Two other junior officials also said an order had been passed banning iron ore exports.
The move comes in the wake of allegations of illegal mining by companies and corruption in the govt that has the state's ruling party, the Bharatiya Janata Party, at loggerheads with the govt run by the Congress party.
Chief minister BS Yeddyurappa said, he had banned exports of the commodity, though there was no official notification on the move. "As all 10 minor ports come under state govt jurisdiction, my govt has taken the decision of banning of export," Yeddyu-rappa said.
Karnataka is the country's second largest iron ore producer. The state mined 45.94 million tonnes of the steel-making ingredient out of total Indian production of 215 million tonnes in the year to March 2010, data from Federation of Indian Mineral Industries shows.
Maritime India - New Delhi
World shipping council briefs US shippers on EU rules
Jul 28The World Shipping Council met with US based shipper and forwarder trade associations recently to explain the European Union's new customs cargo security filing requirements, which are scheduled to enter into force on Jan 1, 2011.
The new European rules will require the documentation of containerized cargo shipments that will arrive in European ports to be electronically filed with European customs authorities no later than 24 hours before vessel loading.
"All shippers and exporters,
whose goods arrive in the European Union for importation or transshipment or simply to stay on board the vessel en route to another destination, will be affected," said Chris Koch, WSC president and CEO.
The WSC decided to begin outreach efforts outside of Europe by meeting with these U.S. organizations that collectively represent thousands of businesses engaged in European commerce.
"While carriers are aware of and preparing for these new filing requirements, it is important that shippers and forwarders around the world understand that they too will have to adjust their business processes in order to ensure compliance with the new rules," Koch said.
He said all shippers and forwarders will have to make changes under these new rules, much like the process changes they initiated when the U.S. implemented its 24-Hour Rule.
Maritime India - New Delhi
Idle container ships fall to 2 pc of world fleet
Jul 28Only 2 pc of the world's container ships are idle, compared with 11.6 pc at the start of the year. The latest tally of idle ships 150 vessels with nominal capacity of 274,000 TEUs is the lowest since November 2008, when plunging volumes and rates forced carriers to pull ships out of service.
The number of idle ships is expected to continue to shrink during the annual August-September peak season but may rise again as new vessels continue to enter service and demand tapers off toward the end of the year.
There now are no idle ships with capacities of more than 5,000 TEUs, and only 22 idle vessels in the 3,000-5,000-TEU range. At the start of the year, the idle fleet stood at 1.5 million TEUs.
Only 34 carrier-controlled ships now are idle, down from a record high of 272 in April 2009. Among major carriers, only Maersk, Hanjin and Zim have appreciable idle tonnage.
Maritime India - New Delhi
Malaysian Merchant Marine starts well but could not last the storm
Jul 28Malaysian Merchant Marine Bhd (MMM) came to life in 1993, and was first introduced to the investing public when it was listed on the second board of the Kuala Lumpur Stock Exchange in 1997. The company was doing fairly well, and during the oil and gas boom in 2003, MMM was the darling of Bursa Malaysia, with many analysts forecasting stellar earnings from the company's expansion plans.
Things however took a turn for the worse about a year later when the company's long-term charter strategy caused it to miss out on the bull run in shipping rates. Long dry-docking costs also ate into margins. In came Datuk Ramesh Rajaratnam as a substantial shareholder of MMM in December 2007, after he acquired 28.7 pc, or 50.4 million shares, and 470,000 Islamic preference shares from MMM's substantial shareholder, oil and gas outfit M3nergy Bhd for some RM33.5mil.
M3nergy today still holds 20.9 million shares, or 11.9 pc of MMM. Ramesh's emergence in MMM as deputy executive chairman came with bold plans. He had said in past that he wanted to emulate Datuk Tony Fernandes, achieving in the shipping industry what Fernandes has done with AirAsia Bhd.
It's now been two years, and it appears that those plans are nothing but pipe dreams. The company is today a financially distressed company, having fallen into the Practice Note 17 category in March this year. For the nine months ended December last year, MMM's net loss widened to RM17.3 million from RM4.5 million a year earlier on the back of RM29.7 million in revenue against RM76 million previously. Malaysian Rating Agency Bhd (MARC) has been continuously downgrading MMM's bonds from its A rating since Dec 19, 2009. On April 2, MARC downgraded its rating on MMM's RM120 million Al Bai' Bithaman Ajil Islamic Debt Securities (BaIDS) to a D rating from a C rating.
This was due to MMM's failure to meet a repayment of the BaIDS on March 29. MMM announced its default in payment on March 30. When Ramesh came in December 2007, MMM had a number of sea going vessels and although it had a very heavy debt position, it also had a strong cash balance.
Ramesh came in and streamlined the group's operations by disposing non-core businesses and vessels that were either too old or those that appeared not to fit into its strategy "I attempted to go for a capital reduction exercise to clean up our balance sheet but that was voted down by the shareholders," he said. For a while, these strategies appeared to work and for the financial period ended 31 March 2009, MMM had returned to the black after several years of significant losses.
Then came the crash of the shipping sector in 2008. The Baltic Dry Index fell from about 12,000 points in late 2007 to about 700 points by May 2008. Suddenly, the demand for vessels worldwide dried up and the charter rates began to fall alarmingly.
That year, the company also sold its Mauritius-based charter brokering business MMM Ventures Ltd for US$4 million (RM13.25 million). "Our vessels that were fully employed at about $5,000 a day, were suddenly having off-hire days. When a vessel is off hire, the daily running cost of about $3,500 was still being incurred. That's RM10,000 per day per vessel," he explained.
MMM's single hull vessels that it had earmarked for sale were suddenly no longer in demand as similar capacity double-hull tankers were being offered at lower prices by many distressed sellers.
"It was not unusual to hear of vessels that were newly built at a cost of say, $20 million, that were being sold off by the building yards at $10 million to recover cash," he said.
At that time, Ramesh's strategy was to sell off its ageing fleet (vessels that were above 15 years) and with the monies raised, to buy a newer fleet.
However, with the world recession, MMM had no buyers for the old vessels and no funders for the new vessels. Hence, MMM chose to cancel or renege on those new buildings and suffer the deposit loss, which was a fraction of the real loss in write down value.
Said Ramesh: "When MARC downgraded us from A- to BB, all our funding efforts were severely scuppered. A local bank that had offered us $ 77 million in funding for new vessels ordered, retracted that offer at the last minute. That was a period when the funding market worldwide was just too spooked to move,"
Ramesh said that MMM's vessel suppliers were becoming more restrained in their credit policy and all these factors. Some of MMM's customers also defaulted on their payments as they too were faced with similar challenges. "This becames a time when ship-owners who had deep pockets could last out the storm. The smaller ones, had to consider abandoning ship or sink with it.
MMM was not an exception to these challenges. In my capacity as an interested party, I was selling my shares and assets to finance the company through these tough times. At some point, I had to stop doing this," he said. Ramesh said he has been funding the company
until a week ago, when he finally stopped.
"It is disappointing but as I've said earlier, the choice is to jump ship now or sink with it. Difficult choices are being made daily now," he said. Currently, the only revenue generating asset of the company is the MMM Ashton, a double-hull vessel which is currently deployed under a bareboat charter contract. MMM Ashton is targeted for disposal by May 2010 in order to meet MMM's debt commitment. The net realisable value of the vessel, initially estimated at around $11 million has now been revalued to $5 million for the final RM24 million payment in BaIDS. MMM has total debt obligations of some RM64 million. The company's other two ships are MMM Kingston and MMM Dayton, which have been put up for sale and have been written down to a cost of some $50,000. There have been various criticism on the company's moves.
Questions have been raised as to why the profitable MMM Ventures was sold for only $4 million, when its three vessels were being chartered out for some 13,000 per day.
There are also rumblings that all the ambitious plans were mere talk. While there were plans to acquire new vessels, none actually went through.
"MMM entered into a contract to buy a ship for $40 million in December 2008. That never happened and MMM lost its deposit of $4 million," said an observer. Furthermore, for the quarter of March 31, 2009, when MMM turned back to the black, there were no comparative figures available. This was because the group had changed its financial year from Aug 31 to March 31. The financial period was from Sept 1, 2007 to March 31, 2009, which was a 19 month period. Thus there were no applicable figures. It hard to believe that the two vessels, MMM Dayton and MMM Kingston had been written down to $50,000. "Based on its weightage and specifications, it should be worth $400,000 and $600,000 respectively."
Maritime India - New Delhi
UACC gets $280-m credit line; orders six new vessels
Jul 28United Arab Chemical Carriers (UACC), a chemical product tanker owner, has signed a $280 million (Dh1 billion) credit facility with eight international banks to expand its fleet.Waleed Al Dawood, UACC Chairman, said: "This transaction will provide sufficient cash for the first step in the company growth plan and a new building programme of modern product and chemical tankers." Al Dawood said the company has a good reputation and operates on a successful business model that helped it get a credit facility with a consortium of eight international banks during this challenging global financial situation.
"We will buy six more vessels of medium-range tankers from South Korea to meet the high demand in the region. The deliveries will take place in 2011 and 2012," he said. UACC principal shareholder includes the United Arab Shipping Co (UASC), Kanoo, Gulf International Bank and Qatar Navigation. Al Dawood said that the region's economy still relies on oil and therefore should provide all developed means and facilities to serve this segment.
According to its development plan, UACC is looking to increase its fleet with up to 25 vessels in the next five years. "We believe the size and the terms of this agreement reflect the quality of our assets, the UACC strong shareholder base, as well as our future prospects and outstanding relationships with charterers and other partners in the Arabian Gulf," he said.
Jens Groenning, UACC CEO, said: "Our modern fleet of medium-range and long-range tankers is ideal for the regional trade, and also worldwide. "With a strong shareholder base, a proximity to the growing markets in the Middle East and India, in addition to having a focus on maintaining a modern fleet, UACC is well-positioned for further growth and expansion." UACC senior vice-president of finance Ketil Ostern added: "The new facility is based on traditional ship finance principles, and will enable UACC to move into the next phase of its development plan."
Maritime India - New Delhi
Paragon enters containership trade
Jul 28Greek carrier Paragon Shipping Inc, mostly in the drybulk market, has sold one of its newbuilding Kamsarmax contracts and entered into agreements to acquire two 3,400-TEU new containerships from Germany's Howardtwerke-Deutsche Weft at EUR40 million per vessel (US$49 million). "We have taken advantage of favourable conditions in the sale and purchase markets to sell one of our Kamsarmax newbuilding contracts and also to acquire two 3,400-TEU newbuild container vessels with prompt delivery within July and August 2010," said Paragon CEO Michael Bodouroglou." "We were able to sell the Kamsarmax contract at a one-time cash profit to the company and we believe the acquisition of the container vessels were made at attractive prices at an advantageous point in the container cycle," he said. "The container market is currently at the early stages of its rebound with asset prices at attractive levels enabling us to maximise investment returns over time as freight rates recover," said Mr Bodouroglou.
"We are seeking employment for these vessels and we shall continue to focus on fixed-rate period charter employment, a strategy that has been profitable for Paragon and its shareholders," he said. "We intend to continue seeking accretive acquisitions in the container and drybulk sectors. Aiming to maximise shareholder value, we will explore all options for our drybulk and container fleet."
Maritime India - New Delhi
Kochi port cargo handling rises 23 pc in first quarter
Jul 28The Cochin Port Trust has registered a growth rate of 23.1 pc in cargo handling during April-June 2010 compared to the corresponding period last year. The statistics released by the Indian Ports Association (IPA), which assessed the performance of various Indian ports, pointed out that Kochi has made an increase of 8,26,282 tonnes in its cargo handling compared to the same period last year. In April-June 2009, the port had handled 36,55,974 tonnes of cargo which increased to 44,82,256 tonnes during the same period in 2010. According to IPA data, the general growth rate of various ports at the national level is 1.92 pc. There is also a considerable increase in the number of containers handled at the port.
The number has increased from 72,122 TEUs last year to 84,545 TEUs this year, a growth of 17 pc. The port also registered a considerable increase in the handling of liquid cargo, including crude, petrol and lubricants. The cargo handling increased from 24,43,028 tonnes last year to 31,65,504 tonnes this year, an increase of 30 pc.The import through the port also increased in the same period. The cement import, which was 7,590 tonnes last year rose to 61,663 tonnes this year.
The timber import went up from 8,476 tonnes in April-June 2009 to 12,958 in the same period this year.However, the traditional import of sulphur, urea for the public sector FACT has shown a declining trend in the quarter whereas construction materials such as timber and cement registered a growth. The import of sulphur during the first three months of this year is only 27,000 tonnes against 53,000 tonnes in the corresponding period whereas urea import was nil during the period.
Maritime India - Kochi
ICTT Vallarpadam - A boon to Indian exporters
Jul 28The International Container Transshipment Terminal (ICTT) in Cochin is becoming a reality soon. The close proximity of the Cochin Port to the east-west trade routes gives her a geographic advantage over other Indian ports.
Despite such a locational advantage the potential of the port is yet to be fully leveraged. In an era of containerisation, this resulted in the emergence of transshipment hubs like Colombo and Salalah, leading to additional handling and higher transportation costs which made Indian goods less competitive overseas compared to China, Vietnam and South East Asian countries.
The commissioning of the ICTT and the consequent calls of mother vessels to it will make Indian goods cheaper by avoiding a foreign transshipment location. The trade can now choose from road, rail, coastal and inland waterways - an inter-modal transport mix best suited to their requirement of cost and time. The ICTT will have a draft of 14.5 meters which will, with the latest generations of STS cranes in support, facilitate the handling of the largest container vessels afloat on date. The productivity at the ICTT will compare with the best in the world with the deployment of the new generation cranes.
The ICTT will provide varied opportunities for entrepreneurship. They are related to development of Container Freight Station (CFS), Inland Container Depot (ICD) water transportation (Ro-Ro, etc.), road transportation, warehousing/logistics centres and private rail transportation. While a CFS is in the immediate vicinity of the port, an ICD is a 'dry port' located in the hinterland. The cargo is 'worked' in the CFS or ICD.
Maritime India - New Delhi
India's perishable goods import at Rs 17,400-cr in FY10
Jul 28India imported over Rs 17,400 crore worth perishable goods such as meat, edible oils and fruits in 2009-10 fiscal, Parliament was informed. The total import of perishable goods such as meat, fruits, vegetable oil and other items in the country stood at Rs 17,419.33 crore in 2009-10 fiscal, Minister of State for Commerce and Industry Jyotiraditya M Scindia said while responding to a written query in Lok Sabha. The minister said there has been no import of rice and wheat during 2009-10 fiscal for central pool stocks on government account.
Maritime India - New Delhi
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