I N D U S T R Y N E W S
Ocean carriers upbeat as they move to re-build business
Jul 26Ocean liners are considering moves to reduce debt, rebuild their service networks and regain financial stability amid growing demand and rising freight rates. Banks and credit markets have started saying they will loosen credit and financing for the industry as expectations mount that the container shipping will make a strong comeback.
"It seems that all of the major liner companies will come out of this unscathed following some major restructuring and recapita-lisation and are really reaping the rewards of tight ship and box supply," said Loli Wu, managing director and head of Americas transportation infrastructure at Bank of America Merrill Lynch.
The industry's ability to raise new capital is based on predictions that the balance between vessel supply and demand will support continued price increases. Increased demand, vessel order delays and slow-steaming of ships has been absorbing surplus capacity faster than expected, "leading to signs that demand growth will exceed capacity during the next several years," the report said. Some shipowners and operators are said to be approaching equity markets in various ways to reduce the debt that accumulated last year. Carriers used various methods to raise US$13 billion in financial help last year, by one estimate, to provide needed cash during a year in which container carriers lost an aggregate $15 billion.
Maritime India - New Delhi
China's port volume ranked No 1 worldwide for 7th year
Jul 26China's port throughput has increased to 7.66 billion tonnes from 10 million tonnes when the nation was founded in 1949, while its mega ports grew to 20 from 16 in 2008, China's port cargo volume has ranked No 1 worldwide for seven years in a row, said a statement from China's Transport Ministry. The ministry said that China's annual port capacity growth reaches 500 million tonnes, equivalent to Shanghai's port. Container throughput of ports in China grows at a speed of 30 pc annually in the past 10 years.
Eight Chinese ports are in the world's top 20, and half of the world's top 10 are from China such as Shanghai (first place), Shenzhen (fourth place), Guangzhou (seventh place), Ningpo-Zhoushan (eighth place) and Qingdao (10th place). Port efficiency and turnaround times have been greatly improved. Vessels' average tonnage when arriving at port is now twice as much as before, but vessel's time for staying at port is one tenth as long as it was in the mid-1980s and the cost of shipping one tonne of cargo is 20 pc lower than it was 30 years ago.
Maritime India - New Delhi
Greeks buy German box ships as Germany bails out Greece
Jul 26Greek shipowners are said to be using the financial crisis facing German shipowners to boost their presence in the container shipping industry.
They have recently been buying containerships either directly from struggling owners or from shipyards, and most of the deals are said to involve German owners. The Greeks own about 17 pc of the world's ships, but only about 5 pc of the containerships. "Shipowners in Germany, the key country behind the European Union's bail-out of Greece, are suffering from exposure to the crisis-hit container shipping sector. Germany's public has also become reluctant to invest in KG funds, the traditional means of raising funds for ship purchases, after many have run into financial trouble," the report said.Michael Bodouroglou, Paragon Shipping's chairman, was quoted as saying: "Financially healthy companies would rather hold on to the assets than sell at historically low values. It is well known that especially the German market has financial problems because they bought at historically high values."
Maritime India - New Delhi
Cabinet note on SCI sell-off shortly
Jul 26The Shipping Ministry is reportedly working on a Cabinet note on the proposed 10 pc divestment in Shipping Corporation of India. "The process is on (preparation of Cabinet note)," a shipping ministry official said. The govt proposes to disinvest up to 10 pc of its stake in SCI through a follow-on public offer in the current financial year. However, the quantum of fresh equity to be raised by the company has not been worked out yet. The Centre currently holds 80.12 pc in SCI, while over 10 pc is held by LIC. The remaining 3.15 pc is with the public. SCI is likely to utilise the proceeds from the follow-on offer for further acquisitions. SCI at present owns 76 ships of 5.1 million DWT and has interests in all segments of shipping trade. In addition, it mans and manages 60 vessels of 0.2 million tonnes DWT-- which is the total weight of the ship including the cargo, crew, fuel etc.
SCI stake sale is part of the govt's plans to raise up to Rs 40,000 crore this fiscal through divestment.
Maritime India - New Delhi
India, US attempts to block Chinese investments will dampen bilateral trade climate
Jul 26Accusing India and the US of following protectionist policies, China recently said any attempt to politicise outbound investments by Chinese firms or "abuse" investment protection tools to protect domestic industries would hurt bilateral ties. Naming India and the US among other countries, the Chinese Commerce Ministry spokesman Yao Jian said that such abuse will sour trade and investment relations with China, as well as dampen the confidence of the country's outbound direct investment (ODI).
Apparently pointing to media reports that India had blacklisted 25 Chinese telecommunications providers over security concerns and banned Indian operators from Chinese purchases, Jian said there should be no misuse of trade protectionist measure in the name of national security.
"On the one hand, Chinese enterprises are encouraged to actively adjust themselves to the changing environment overseas, but on the other hand, we strongly call for some individual nations and regions not to abuse trade and investment measures against China, citing national security excuses," Yao said.
"We don't think it is appropriate for them to politicise common commercial investment cases, which will hurt bilateral relations with China," he said. China's ODI surged 24 pc from a year earlier, to $ 55.18 billion during the first six months this year, according to new figures.
The investment mainly went to sectors such as mining, commercial services, manufacturing, wholesale and retail.
It also said that the US Congressional Steel Caucus wrote to Treasury Secretary Timothy Geithner last month asking the Obama administration to obstruct the $ 175 million investment proposal by Anshan Iron and Steel Group Corporation, China's leading steel producer, in a US rebar facility.
"The financial crisis has provided Chinese enterprises with a nice opportunity to expand and invest overseas, at a comparatively lower price," ministry spokesperson Yao said.
On the criticism about restrictions on FDI in China, he said, "Loopholes do exist with China's FDI policies, but it is undeniable that the Chinese government is much willing to listen to suggestions from all sources and we are also trying to improve the environment," Yo said.
"I don't think there is any other country that could create a better environment for foreign businesses than China.
Maritime India - New Delhi
Tata NYK targets growth through fleet expansion, diversification
Jul 26Tata NYK Shipping Pte Ltd, a 50:50 joint venture between Tata Steel and Japan's NYK Line, has expanded its fleet size - from one ship in 2007 to 11. Only one of these vessels is owned by the company while the others have been acquired on charter.
The vessels are of different types such as Supramax (45,000 dwt to 60,000 dwt), Panamax (65,000 dwt to 80,000 dwt ) and Capesize (150,000 dwt and above), adding diversity in terms of cargo carrying capacity.
The company, which is primarily engaged in transportation of dry bulk and break-bulk cargoes including coal, iron ore, bauxite and steel products, mainly for the Tata Group, posted 52 pc growth in cargo throughput in 2009-10 to 6.79 mlt, up from 4.48 mt in 2008-09. Consequently, the revenue earning was up 40 pc to Rs 352 crore (Rs 250 crore). However, the company suffered a net loss of Rs 3 crore during the year under review compared to a net profit of Rs 1 crore in 2008-09, according to Tata Steel's annual report for 2009-10.
Maritime India - Kolkata
Scrapping of older vessels could be the antidote to shipping industry's demise
Jul 26The negative territory in which the dry bulk market has entered lately has a lot of interpretations, but one thing's for certain. Demand at the moment isn't enough to sustain the global fleet, with similar patterns observed in other market segments as well, like the tanker market. According to a special monthly report by Golden Destiny, a Piraeus-based shipbroking and service providing company, during May, a total of 100 demolition agreements were reported. They included an aggregate of 2.188.415 tons, which was 20.5 pc higher than the previous month. Still, as the report notes, tankers and liners held the biggest share of the demolition market in terms of volume of transactions, as tankers represented 20 pc of the market and liners an additional 29 pc. By contrast, just 12 dry bulk carriers were scrapped in May, totaling just 546,896 tons. During the same month of last year, the numbers were almost double with 24 vessels sold for scrap, bearing a capacity of 1,152,203 tons.
This development, coupled with seasonal cargo trends and an increase of newbuilding deliveries come to explain the recent downfall of the Baltic Dry Index, which has fallen below the 2,000 point mark to 1801 on Jul 22, when by the end of May it had surpassed 4,200 points.
Of course, as Golden Destiny points out, in May 2009, the demolition activity was standing at almost similar levels in terms of number of transactions, with 104 vessels sold to scrap yards. Even so, "the total deadweight scrapped was almost one million tons more equaling to a total deadweight of 3.334.666 tons. Bulk carriers and containers were in the first rankings with bulk carriers holding 23 pc of the demolition market and containers 20 pc. In the other sectors, Reefer, Ro-Ro/Pax and Special projects, the demolition activity has been kept at almost steady to positive levels with no signs of significant falls" the report said.
Accumulatively from the beginning of 2010 and until the end of May, 427 vessels were reported to have been headed to the scrap yards equaling to a total deadweight of 13.088.459 tons with tankers and liners being in the front holding 30.2 pc and 23.6 pc of the demolition market respectively in terms of number of transactions. During the same five months of 2009 the equivalent numbers were 408 vessels with a total deadweight of 12.608.740 tons with bulk carriers holding 32.3 pc, liners 24 pc, containers 15.4 pc and tankers only 10.7 pc of the demolition market in terms of number of transactions. "At the end of May 2008 just 91 vessels reported for scrap since the beginning of the year equaling to a total deadweight of 3.011.126 tons with only one vessel reported for scrap in the bulk carrier sector as the BDI was standing at 11,440 points. Bulk carrier's demolition activity reached record levels during the first five months of 2009 when 132 vessels reported for scrap of 5.871.760 tons total deadweight" Golden Destiny's report says.
Of course, various developments have also affected the demolition market. For example, the Bangladeshi shipbreaking industry has entered a period of crisis, with scrapping at Chittagong, one of the world's busiest sites, to be at a virtual standstill after the decision of High Court to close down the import of ships containing hazardous material for recycling. The result was a three week strike causing the entirely shut down of the Bangladesh market with scrap rates dropping to their lowest levels since the beginning of the year.
According to Golden Destiny, "demo countries are offering 310-$350/ldt for dry and $350-$400/ldt for wet cargo with India being the only market offering the highest demo prices while China's dreadfully low levels remain far beyond interest. The scrap rates of May 2010 despite their fall are holding firm in comparison with the levels of 2009 when demo countries were offering $220-$240/ldt for dry and $250-$275/ldt for wet cargo with Bangladesh market showing sings of weakness and India with Pakistan offering expectations of increases in demo prices. However, scrap levels are far below from the highs of May 2008 when India, Bangladesh and Pakistan were offering 610-$650/ldt for dry and $670-$725/ldt for wet cargo, while China's low offering demo prices $370/ldt for dry and $425/ldt for wet cargo remind today's demo prices" concluded the report.
Maritime India - New Delhi
Sri Lankan port expands space for freight
Jul 26The Sri Lanka Ports Authority (SLPA) is providing more space at its main container terminal for freight to ease congestion, according to SLPA managing director Nihal Keppetipola. Container volumes at Colombo port were now growing at 25 percent compared with last year when volumes fell owing to recession.
"We're also expanding the Jaya Container Terminal (JCT) yard outskirts for full container load stacking with modern equipment which will ease the current congestion. " The JCT is the biggest container terminal in Colombo port which is a hub for containerised cargoes transhipped to and from the Indian sub-continent. Colombo port volumes have been rising rapidly in recent months with the revival in trade as big economies emerge from recession.
The rapid growth in cargo volumes as well as problems with transporting boxes between terminals, aging cranes and bad weather had created congestion at the JCT in recent weeks, prompting complaints from shipping lines and shippers. Keppetipola said that because of the increase in the transhipment trade more ships are calling Colombo.
Port development projects under way includes providing up to 5,000 acres of land for logistics purposes and free zone activities around the new Hambantota port that is being built on the southern coast, Keppetipola said.
"This is in addition to the 5,000 acres available around Trincomalee port which will be converted to an industrial park." The Hambantota and Colombo port logistics areas will be with connected by rail and road links, he said
New port projects under way at Colombo as well as in southern Hambantota and eastern Trincomalee will also provide large amounts of land for logistics, he said.
The SLPA is developing a 22-acre area of land adjacent to Colombo port as a "cargo village" where all logistics operations will take place, including multi-country consolidation, warehousing, stuffing and destuffing, customs inspection and banking.
Maritime India - New Delhi
TSA unlikely to meet August air cargo screening deadline
Jul 26The US Government Accountability Office (GAO) has raised doubts that the Transportation Security Administration will be able to achieve its goal of scanning all air cargo carried on board domestic aircraft by August 3. Speaking before the House Homeland Security Committee, Steve Lord, GAO Director of homeland security and justice issues, said that TSA lacked a contingency plan to initiate if it does not reach the deadline set by Congress three years ago. On the other hand, the GAO said TSA has made significant progress, including creation of the Certified Cargo Screening programme, and growth in the volume of air cargo that is screened. But in a May 10 report TSA had only reached the 75 pc mark in screening, leading to GAO's doubts that it would meet the deadline, the report said.
The GAO also found that TSA is testing screening technologies, and increased its force of sniffing dogs. However, TSA still has to find the technology to screen containerised cargo that moves on wide-body aircraft. TSA will not meet the August 3 deadline for screening all air cargo arriving from overseas, according to GAO. The government watchdog estimated that 55 pc of inbound cargo will be screened by August, but GAO admitted that the 100 pc mark will require more years of international negotiations.
The report added that John Sammon, who directs TSA's air cargo, said he resisted GAO's recommendation for a contingency plan. He was cited as saying that having a fallback plan will signal to the industry that TSA is not serious about the August 3 deadline.
Maritime India - New Delhi
COAC committee calls for repeal of 100 pc cargo screening
Jul 26The US Advisory Committee on Commercial Operations of Customs and Border Protection has called for repeal of laws requiring 100 pc scanning of ocean freight and 100 pc screening of air cargo. The group, made up of representatives of the trade and transportation sector, said the Department of Homeland Security should shift its supply chain security focus to place more emphasis on air and land transportation security and ensure that minimum security criteria for the Customs-Trade Partnership Against
Terrorism and similar programmes adapt to changing threats in the supply chain. The recommendations were included in comments to the DHS policy branch, which is drafting a new national strategy for global supply chain security. Earl Agron, director of security for APL and head of the COAC committee that drafted the report, said that the 100 pc requirements laid down by congress in 2007 "should be re-evaluated in favour of risk based measures that target high risk shipments".
"The 100 pc question is a perpetual splinter in our finger, a royal pain, especially when we are in front of our global trading partners or any other international forum," said Mr Agron.
Maritime India - New Delhi
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