Amid growing losses in its container division, A.P Moller-Maersk CEO Nils Smedegaard Andersen has extended his medical leave another two months to the end of March, following heart surgery in late December.
Chairman Michael Pram Rasmussen said Andersen's absence will not delay their fourth quarter report on February 27 and will not affect the group's investment programs. Trond Westlie, Maersk's chief financial officer, will present fourth quarter results.
The company's November's quarterly profits were hit by weak freight rates after its container division dipped into the red due to overcapacity and high fuel costs.
Shares in the Danish company yesterday fell 0.8 percent to 39,940 Danish crowns ($7,022.33 USD) per share.
Neptune Orient Lines, the sixth largest container shipping company in the world, announced its revenue per container dropped 14 percent in the six weeks leading up to December 30 due to lower trade rates.
The Singapore company reports the average revenue fell to $2,265 per FEU during that period, down from $2,647 year on year.
China bars big ships from ports, Vale readies Philippine base
China will not allow large ships that exceed approved capacities to dock at its ports, according to the Ministry of Transport. This announcement dashes the hopes of Brazilian mining company Vale of sending its iron-ore-carrying mega-ships to its top market in China.
Vale, which has the world's largest dry bulk ships in its fleet, is readying an alternative iron ore distribution base in the Philippines. The mining company has 35 Valemaxes, each weighing in at 400,000 deadweight tons, to help reduce shipping costs to China and allow it to compete with Australian competition BHP Billiton and Riot Tinto.
China used to assess the large ships on a ship-by-ship basis, but said it has stopped receiving the huge vessels due to the severe downturn in the shipping industry, which has hurt domestic shipping, and maritime safety issues.
Vale's 388,000-ton Berge Everest was the first and only Valemax allowed into China, calling at Dalian Port in late December to unload iron ore that has not yet been sold.
Strong protest from the China Shipowners Association has kept further ships from docking at China's ports. The association thinks the fleet will give Vale an unfair advantage on both the shipping and iron ore markets at China's expense.
Vale built a transshipment hub in the Philippines to ensure its mega ships, each costing around $110 million, remain in use.
The Port of Antwerp said Monday's national strike in protest of Belgium's austerity measures, brought by the country's three major unions, will cost the port 1 million euros ($1.3 million) per hour in lost "added value."
Most of the port terminals are closed, traffic is disrupted, and dockworkers stopped working at 6:00 a.m. Monday. A port spokeswoman cited damage to the port's international reputation in addition to the lost revenue.
Public transportation, including domestic and international rail service, also ceased as workers protested government reforms in pensions and spending cuts.
The coast guards and navies of the Arab countries in the Gulf Cooperation Council are planning contingencies if Iran attempts to shut the Strait of Hormuz, the world's most important energy shipping lane.
The GCC members, including Saudi Arabia, Bahrain, the United Arab Emirates (UAE), Qatar and Kuwait depend on the strait to export oil and gas. Oil tanker flows through the Strait of Hormuz are estimated at around 16 million barrels a day. GCC countries also count on the shipping lane to import food.
The chief of the Kuwaiti Coast Guard said the GCC has plans to act as a body if Iran moves to close the strait in protest over Western sanctions aimed to kill its nuclear program. Details were not disclosed.
The Republican's $260 billion transportation bill - the American Energy and Infrastructure Jobs Act - was introduced in the House on Tuesday to repair the nation's surface infrastructure, including a five-year reauthorization of federal surface transportation legislation and the removal of barriers to domestic energy production. Republicans say it will create private sector jobs by lowering restrictions to energy production and giving more power to the states to set spending priorities.
Democrats, who will soon introduce their own bipartisan transportation bill in the Senate, say H.R. 7 is a GOP present to the oil companies and reject provisions that would include new off-shore drilling and oil exploration in the Arctic National Wildlife Refuge.
Republicans and Democrats have bowed to public pressure on this issue, keeping both versions of the transportation bill free of earmarks.
Proponents of the House bill include the American Association of Port Authorities (AAPA), which announced Tuesday its support of the bill's measures, including "a freight mobility subtitle, a waterborne transportation title that will use the federal Harbor Maintenance Tax for its intended purpose, program consolidation and streamlining project delivery."
On Feb. 1, the port industry will be providing testimony to the House Ways and Means Committee on maritime tax provisions to be included in the surface transportation bill.
"AAPA looks forward to working with Congress on timely passage of a final bill that includes strong maritime and freight provisions," said AAPA President Kurt Nagle in a statement.
For the second year in a row, the Port of New Orleans set a record for container volumes, up 11.6 percent compared to 2010 and up 46 percent from two years ago, according to port officials.
The Napoleon Avenue Container Terminal handled the equivalent of 476,413 TEUs in 2011. The terminal added two new container gantry cranes and more than four acres to its yard last year.
In December 2011, the U.S. Department of Transportation awarded a $16.7 million federal grant to the port to build a 12-acre freight rail yard to exploit New Orleans' access to six Class One railroads. The port added a sixth shipping line and a new Latin American container service last year..
Dubai World ports operator, DP World Ltd, forecast their 2011 gross profits to be in accordance with expectations after it saw a 10 percent rise in container volumes.
The word's fourth largest port operator handled 54.7 million TEUs at its ports in 2011 compared with 49.6 million TEUs in 2010.
DP World, which operates 60 terminals globally, is expanding its business in China, India and the Middle East, seeking to up capacity to 100 million TEUs by 2020.
EU ship insurance market affected by Iran oil sanctions
European Union sanctions against Iran's oil business are hurting London's marine insurance business since tankers that do business with Iran must look outside the EU to insure themselves outside of Europe.
The ban, which will take force in July, forbids Iranian oil imports from coming into the EU, and forbids EU insurance companies from indemnifying ships carrying Iran oil. Insurance rivals in Iran, Asia or Russia will pick up the business, and EU commercial insurance companies will suffer from a loss of tanker fleet premiums and migration to other markets.
London currently leads the world in marine insurance, handling 17 percent of the $8.5 billion market for hull and machinery cover, which protects vessels against physical damage, according to the International Union of Marine Insurers (IUMI). It also controls 8 percent of the $13 billion cargo insurance market, in third place behind Germany t 9 percent and Japan at 14.6 percent.
WikiLeaks may move servers offshore to come under maritime law
The investor's of Julian Assange's WikiLeaks are in the process of purchasing a boat to move its servers offshore to avoid U.S. prosecution.
WikiLeaks backers, according to sources in the hacker industry, are working on the logistics of relocating the servers to international waters and the jurisdiction of maritime law.
One possible location is the Principality of Sealand, which is an old, World War II anti-aircraft platform in the North Sea off the coast of England. Due to a 1968 ruling that the platform is not in the jurisdiction of the U.K., Sealand's owner, Major Paddy Roy Bates has declared it a sovereign state, claiming it's a constitutional monarchy. His 59-year-old son calls himself "Prince Michael."
U.S. public policy insiders say moving the servers won't help WikiLeaks avoid prosecution unless the people who work at WikiLeaks also move to international waters, since it's people who are prosecuted, not data.
However, that statement is at odds with the recent MegaUpload.com arrests. The Department of Justice said it had jurisdiction because some of MegaUpload's data existed on Virginia-based servers. Yet if jurisdiction is determined by people, not data location, how did the arrests go down?
A Virginia grand jury in Virginia is investigating WikiLeaks and other jurisdictions may be investigating specific aspects of the group's activities. U.S. Army Pvt. Bradley Manning is currently on trial for leaking classified military documents and videos to WikiLeaks.
Assange, facing extradition by Sweden on sexual assault charges that he denies, announced last week that he would be hosting his own talk show.
Container carriers set schedule reliability record
Container fleet reliability hit new heights in 4Q 2011, with an average on-time record of 69 percent across all trades, according to Drewry's new Schedule Reliability Insight report.
Schedule reliability improved 6 percentage points from 3Q 2011, which means it has improved steadily for three consecutive quarters.
Maersk Line remained the most reliable of the "Top 20" carriers across all the trades, according to Drewry. Hanjin Shipping came in second place and Cosco Container Lines came in third place.
The Drewry report also measured reliability by vessel size and operator for the first time. Hanjin and Maersk ranked in the top in the vessel operator-only rankings, with on-time percentages of 91 percent and 90% percent, respectively.
Transportation bills and national freight policy
HR 7, the transportation bill put forward by the House Transportation and Infrastructure Committee this week, has garnered recognition by some industry groups over what they feel is legislation that addresses a national freight policy.
According to the Coalition for America's Gateways and Trade Corridors, two other bills introduced last fall in the Senate, from the Environment and Public Works Committee and the Committee on Commerce, Science and Transportation, also call for the development of a national freight policy in sections that cover surface transportation authorization.
"Both Chambers have recognized the importance of benchmarking, system preservation, and forward planning in our nation's goods movement system," said Leslie Blakey, executive director of the Coalition for America's Gateways and Trade Corridors.
The Senate EPW Committee's bill, MAP-21, mandates the development of a strategic national freight plan, as well as a freight-specific funding program. The Commerce Committee bill would establish a multimodal, merit-based grant program specific to freight and calls for the establishment of an Office of Freight Planning and Development within the US Department of Transportation to coordinate between offices and lessen regulatory red tape.
Galveston's Cernak to lead Port Everglades
Steven Cernak, port director and chief executive officer for Port of Galveston, has been selected as the new chief executive/port director of Broward County's Port Everglades Department, according an announcement released by Broward County Administrator Bertha Henry. Cernak is replacing Phillip C. Allen, who will retire in February after leading Port Everglades since 2006.
"Mr. Cernak has big shoes to fill, but his experience as a port director and background in seaport engineering will be valuable assets to continue moving Port Everglades' expansion projects in the right direction," Henry said in a statement.
Cernak has served as the Port Director and CEO for the Port of Galveston, TX, since 1999. During this time period, the Port of Galveston doubled its revenues and became the top home cruise port in the Gulf of Mexico.
Among many accomplishments, in 2008 Cernak proactively responded to severe damage from Hurricane Ike so that cargo operations were able to resume in just eight days. He also negotiated with the U.S. Army Corps of Engineers to deepen Galveston Channel from 40 feet and 45 feet and secured federal funding for maintenance and new construction dredging to complete the project. In the cruise sector, Cernak negotiated public/private development agreements with Royal Caribbean Cruise Line and Carnival Corporation to build two new cruise terminals.
Prior to moving to Texas, Cernak was the manager of port development for The Port Authority of New York and New Jersey. He also held engineering positions with several private engineering firms in New Jersey. Cernak has a degree in civil engineering from Colorado State University and an M.B.A. from Dowling College in Oakdale, NY.
Already one of the busiest cruise ports worldwide, Port Everglades is also one of the nation's leading container ports. Port Everglades is also South Florida's main seaport for receiving petroleum products including gasoline, jet fuel and alternative fuels. The total value of economic activity at Port Everglades is approximately $14 billion.
Responding to 66 deaths in the last 15 months, the London-based International Association of Dry Cargo Shipowners, or Intercargo, announced Wednesday that it has drawn up guidelines for loading cargos of nickel ore, calling the trade the deadliest of seaborne dry commodities. An Intercargo official said the deaths were avoidable.
The ore is at risk of liquefying if it contains too much moisture, which can make ships unstable and cause them to capsize. Liquefied nickel-ore cargoes accounted for all of the 44 deaths among dry-bulk sailors in the final nine weeks of 2010, a June report from Intercargo showed.
Intercargo's four-page guide on safe loading of the ore warns of the dangers of false or inaccurate declarations at loading ports to address a lack of education, noting these cargoes are loaded at archipelago regions from relatively primitive areas that don't have quays and sheds like traditional ports, and often have no tarpaulins to keep things dry.
On Wednesday, treasure hunter Greg Brooks of Maine said he located the wreck of a British merchant ship that was torpedoed by a German U-boat off Cape Cod during World War II. He said the vessel was carrying a load of platinum bars now worth more than $3 billion, which, if true, would be one of the richest sunken treasures ever found.
Today Maersk Inc. of the A.P. Moller-Maersk Group announced that it will sell its subsidiary, Maersk Equipment Services Company, Inc., doing business as Direct ChassisLink, Inc., to a private investment firm, Littlejohn & Co., LLC.
The transaction should be completed by March of 2012, subject to approvals and satisfaction of closing conditions, and will not affect the Group's result for 2012, according to the statement.
DCLI rents chassis to drayage companies and steamship lines in the U.S. and owns or leases approximately 66,000 chassis in 129 locations located on or near key ports and other intermodal centers.
"We have been pleased with the business levels, the profitability and the quality of management at DCLI. It is, however, a provider of chassis, and it does not fit in our long-term strategic focus," stated J. Russell Bruner, Chairman and CEO of Maersk Inc.
"The sale will allow the Group to reallocate resources to the strategic focus areas within shipping, energy and related activities."
"Due to its leadership position, DCLI is uniquely positioned to service the strict requirements of ocean carriers, dray operators and railroads and is a critical link in the nation's intermodal network," said Edmund J. Feeley, Littlejohn managing director.
"We look forward to supporting DCLI's management team to grow the business organically and target strategic acquisitions that will further expand its national network."
Friday, February 3, 2012
Commodity shipping plunges to 25-year low
Industry overcapacity and lowered demand has caused commodity-shipping costs to plunge to its lowest in 25 years.
The Baltic Dry Index, a measure of costs across four vessel sizes, declined 2.6 percent to 662 points Wednesday, according to the Baltic Exchange. The gauge fell 61 percent this year and has currently hit its lowest point since August 1986. Rates for Capesize vessels, the largest iron ore and coal carriers, dropped 84 percent since mid-December.
According to shipbroker giant Clarkson PC, the drop in rates is obscuring gains in global trade. Clarkson predicts record cargoes of everything from iron ore to oil this year. The International Monetary Fund expects a 3.3 percent annual gain in world trade in 2012 as economies recover from the recession.
The fleet of drybulk carriers will expand 14 percent this year, compared to a 3 percent gain in maritime volumes of minerals and grains, according to Clarkson.
Vessels are going slower and dropping anchor to manage the oversupply. Capesize vessel speeds averaged 9.24 knots in the week ended Jan. 29, the slowest since records started in May 2008, according to Bloomberg data.
There are 2,077 dry-bulk vessels at anchor, from a record fleet of 7,933, according to the data. That includes 310 Capesize ships anchored from the fleet of 1,203, nine fewer than the record 318 on Jan. 19. Panamaxes, the largest vessels to navigate the Panama Canal, dropped 4.2 percent to a three-year low of $5,515. Supramax vessels declined 2.8 percent to $6,657 and Handysizes, the smallest ships in the index, slid 2.4 percent to $5,853.
Industry overcapacity and lowered demand has caused commodity-shipping costs to plunge to its lowest in 25 years.
The Baltic Dry Index, a measure of costs across four vessel sizes, declined 2.6 percent to 662 points Wednesday, according to the Baltic Exchange. The gauge fell 61 percent this year and has currently hit its lowest point since August 1986. Rates for Capesize vessels, the largest iron ore and coal carriers, dropped 84 percent since mid-December.
According to shipbroker giant Clarkson PC, the drop in rates is obscuring gains in global trade. Clarkson predicts record cargoes of everything from iron ore to oil this year. The International Monetary Fund expects a 3.3 percent annual gain in world trade in 2012 as economies recover from the recession.
The fleet of drybulk carriers will expand 14 percent this year, compared to a 3 percent gain in maritime volumes of minerals and grains, according to Clarkson.
Vessels are going slower and dropping anchor to manage the oversupply. Capesize vessel speeds averaged 9.24 knots in the week ended Jan. 29, the slowest since records started in May 2008, according to Bloomberg data.
There are 2,077 dry-bulk vessels at anchor, from a record fleet of 7,933, according to the data. That includes 310 Capesize ships anchored from the fleet of 1,203, nine fewer than the record 318 on Jan. 19. Panamaxes, the largest vessels to navigate the Panama Canal, dropped 4.2 percent to a three-year low of $5,515. Supramax vessels declined 2.8 percent to $6,657 and Handysizes, the smallest ships in the index, slid 2.4 percent to $5,853.
Ukranian grain shipments stalled due to Iran embargo
Grain shipments from the Ukraine are no longer being booked due to payment difficulties following EU sanctions on Iran because of its nuclear program.
400,000 tons of grain from Russia and the Ukraine is sitting on 10 ships stranded outside of Iran ports because the EU sanctions have caused payment problems and trade disruption.
Last week the EU, in an expansion of sanctions, agreed to freeze the assets of the Iranian central bank.
Commercial companies will not load Iranian ships or any cargo going to Iran due to the EU sanctions.
Transportation bill raises big rig safety concerns
Tractor-trailer rigs as long as a 747 could be coming to a road near you. The new House transportation bill, H.R. 7, allows for much bigger rigs, which is alarming opponents across the aisle and at the AAA Auto Club.
The American Energy and Infrastructure Jobs Act is a $260 billion, five-year surface transportation and energy bill put forward by the House on Tuesday.
The legislation has two controversial provisions. One allows heavier tractor-trailer trucks on highways, increasing the federal weight limit from 80,000 pounds to 97,000 pounds, and in some cases, 126,000-pound trucks travel our highways. The second provision allows the longest rigs, comprised of two or three trailer strung together, to be 100 feet - 10 feet longer than previous restrictions.
2010 traffic statistics show that truck crash fatalities increased by 9 percent to 3,675. Opponents of the new truck size provisions are concerned that bigger trucks take longer to stop, accident damage tends to be more serious, and weightier trucks are harder on crumbling roads and bridges.
The Coalition for Transportation Productivity, a transportation advocacy organization, asserts the heavier trucks would pose no additional safety issues as long as they were required to have a sixth axle.
The owners of the MV Rabaul Queen, a 22-year-old Japanese ferry that sank in rough seas Thursday morning, announced Friday that of 350 passengers and 12 crew, 246 people have been rescued.
One maritime official said about 100 people may have been trapped inside the 155-foot ferry when the ship was hit by three large waves and sank in waters almost a kilometer deep. Most people aboard were students. He said the 155-foot (47-meter) ferry sank in 3,300-foot (one-kilometer) deep water, making it difficult to determine whether bodies were trapped inside. The vessel went down while it was on the way from Kimbe on the island of New Britain to the coastal city of Lae.
A National Weather Service representative told Papua New Guinea's Post-Courier newspaper that shipping companies had been warned to keep ships docked due to strong winds.
