China's trade surplus soars
Chinese officials said policies to reduce their nation's enormous trade surplus need time to show results, as new figures showed the surplus continuing to widen in the first two months of 2007.
China's exports of goods in February jumped 52% from a year earlier to $82.10bn, while imports grew just 13% to $58.34bn, according to customs figures released Mar 12. That left a surplus for the month of $23.76bn.
Central bank Governor Zhou Xiaochuan said the government is taking a long-term approach to the problem by trying to boost domestic consumption and increase imports, while also encouraging more growth in the service sector rather than export-driven manufacturing.
The Chinese yuan has also been rising at a faster pace against the dollar in recent months, and Zhou appeared to acknowledge that authorities are doing this in order to address the trade imbalance. The yuan is up about 0.8% against the dollar since Jan 1, and has risen about 6.8% since its peg was dropped in July 2005.
"Policies to adjust the structure of the economy may take a longer time to show results, but they are very important, and are the main focus of policy," Zhou said. "As a supporting policy, exchange-rate policy can play a definite role through the lever of prices, and can adjust the balance between imports and exports."Several ended up between the capsized ship and the shore. Verbeke said retrieving them will take a few days
China Chang Jiang to raise CNY1.2bn for oil tankers
China Chang Jiang National Shipping Group plans to raise CNY1.2bn ($155mn) to build oil seven 40,000-dwt tankers to transport crude and oil products.
It also plans to list all of its offshore oil shipping assets domestically to raise more than 60% of the CNY1.2bn. The assets consist of 34 operational tankers and 16 tankers under construction.
The company plans to inject its offshore assets into its listed unit Nanjing Water Transport Industry Co. (600087.SH).
It will raise the remaining 40% from special investment institutions, it said, without elaborating.
Roughly 90% of the average 3.17mn barrels a day of crude oil imported into China comes by sea, and China's reliance on imported oil is expected to rise to 50% in 2010, from 44% in 2005.
Philippine ICTSI to pay CNY389.1mn stake in Chinese port operator
International Container Terminal Services Inc (ICTSI) will pay CNY389.1mn for its acquisition of a 60% stake in Yantai Gangtong Container Terminal Co Ltd, which manages the Yantai Gangtong port in the eastern Chinese province of Shandong.
The transaction, which was announced in January without the financial details, has been approved by Chinese regulators, the port operator told the Philippine stock exchange.
"ICTSI has paid the first payment of CNY116.7mn in accordance with the agreement," it said.
ICTSI will fund the acquisition with internally generated funds and from the proceeds of a private placement of up to 300mn ICTSI shares, which was disclosed Mar 8.
ICTSI previously said it had signed a joint venture agreement with Yantai Port Group Co Ltd and SDIC Communications Co, which agreed to keep 20% each of Yantai Gangtong Container Terminal.
ICTSI operates container terminals in Manila, Poland, Brazil, Madagascar, Indonesia, Japan and Syria.
Malaysia to set up ports commission
The Malaysian government is setting up the Malaysia Ports Commission (MPC) to bring all federal port authorities under one umbrella.
This will also pave the way for funds from all local ports to be channeled into strategic development projects, according to Transport Minister Datuk Seri Chan Kong Choy.
At present, this is not possible as the port authorities act independently.
Chan said the process of forming the commission was currently at the final stage.
"We would have the ports commission," he told reporters after representing Deputy Prime Minister Datuk Seri Najib Tun Razak at officiating the National Maritime Conference on Mar 8.
Through the formation of MPC, several port authorities such as Klang Port Authority (KPA) and others in locations such as Johor, Penang, Sabah and Pahang will come under the commission.
Currently, they are under the direct purview of the Transport Ministry.
Con-way executive supports border pilot program
The president of Con-way Freight-Southern told a US Senate subcommittee Mar 9 that he supports an initiative announced last month aimed at expanding cross-border trucking operations with Mexico.
Appearing on behalf of the American Trucking Associations, James P. (Phil) Worthington said that the North American Free Trade Agreement (NAFTA) has increased U.S.-Mexico trade by more than 400%, while strict cross-border trucking regulations have meant delays and inefficiencies for motor carriers forced to transfer loads from one country to a neutral loading point before they can enter the destination country.
"This process results in extra trucks on the road, congestion, delays and 'over handling' of shipments, which invariably leads to increased costs,” Worthington said. "The new trucking provisions will eliminate a cumbersome, outdated and costly system of moving freight across the border and replace it with an efficient, transparent and safe cross-border trucking process.”
South Carolina, Georgia agree on new cargo terminal
The governors of South Carolina and Georgia Mar 12 announced that the two states will jointly build a massive marine cargo terminal on the Savannah River.
The estimated $500mn-plus project will be owned, developed and operated by a new independent agency, similar to the Ports Authority of New York and New Jersey, and will compete for shipping business with both Charleston and Savannah.
South Carolina Gov. Mark Sanford and Georgia Gov. Sonny Perdue said a port on the 1,800-acre site, which is 12 miles closer to the open sea than the Port of Savannah, has been a long time coming.
Sanford said the two states shared a common issue and the "time to act is now" if South Carolina and Georgia are going to maintain a competitive advantage in the East Coast pecking order.
"If we come together we can win, frankly, on both sides of the Savannah River," Sanford said.
Under the agreement, the governors will appoint a task force, which within six months will formulate specific details of how the project will proceed. Further, the agreement must be approved by the two states' legislatures and ratified by Congress.
A timeline of when the port might open was not immediately clear.
California LNG facility on hold
BHP Billiton Ltd. (BHP.AU) has pushed back the start date for its planned $800mn liquefied natural gas import terminal in the US and analysts say the future of the project remains uncertain.
The Cabrillo Port terminal off the coast of Oxnard would allow BHP to import Australian LNG into California, but community opposition has been strong with Hollywood heavyweights leading the campaign.
The approval process has also been slow and the final environmental report handed down on the project at the weekend said Cabrillo still poses several "significant and unavoidable" risks.
BHP still hopes to win final environmental approval for Cabrillo by the end of 2007, but a spokeswoman said the company is no longer targeting first gas by 2010.
"By the time that we have all the permits and approvals that we need, it would take about five years so we are looking at first gas around 2012, 2013," she said.
Intel heads to China
China's economic planning agency Mar 13 said the government has approved a $2.5bn chip plant to be built by Intel Corp. (INTC) in the northeastern city of Dalian.
The National Development and Reform Commission said the plant will make chips with circuits as fine as 90 nanometers using silicon wafers 12-in in diameter, adding that the plant's production capacity will be 52,000 wafers a month.
Analysts said building a plant in China would help Intel to cut costs by moving closer to its clients and would be a major step in China's efforts to develop its semiconductor sector.
Electronics makers, like contract manufacturer Quanta Computer Inc. (2382.TW), move their plants to China to take advantage of the country's fast-growing consumer market, particularly for personal computers and mobile phones, and lower labor costs.
Intel's investment would also come as Beijing encourages industries and companies to develop and use higher-end technologies, and as Intel continues to joust with rival Advanced Micro Devices Inc. (AMD) for market share.
Byron Wu, Shanghai-based director of China research at US market research firm iSuppli Corp. the plant would help Intel cut logistics costs amid competition with AMD and get closer to its customers, if it goes ahead.
Yamato offers paid-for goods shipment
The Yamato Holdings Co. (TSE:9064) group, which provides parcel delivery service, in April plans to start offering an international distribution service that will allow shippers to receive immediate payment for goods.
The Yamato group will purchase goods from suppliers and collect payments from recipients, with subsidiary Yamato Logistics Co. playing a leading role.
Other group companies will bring their experience to bear as well. For example, finance unit Fine Credit Co. will screen recipients' credit to reduce the risk of defaulting on payments. The group will also offer such services as preparation of export documents and packing.
The service will first be offered to autoparts makers in Japan. It will mark a departure from the traditional division of roles, under which trading houses provide trade finance functions and distribution companies handle shipping.
Because Yamato will purchase goods from customer firms at the time of shipping, this helps them reduce inventory and thus improve capital efficiency.
In April, Yamato's major rival Nippon Express Co. (TSE:9062) plans to launch a similar service.
South Korean shippers enjoy higher freight rates
South Korean shipping companies such as Hanjin Shipping Co. (KSE:000700) are enjoying rising freight rates amid strong cargo demand and a fall in fuel prices.
According to the Howe Robinson Container Index (HRCI), a measure of the container shipping rate, gained 12.8% to 1,140.4 on March 2. The index was established on July 7, 1997 with a base of 1,000.
The Baltic Dry Index (BDI), a yardstick of dry bulk shipping rates that is seen as a good indicator of future economic growth and production, has risen 6.4% this year to 4,766 on March 2, they said. The BDI was set up January 4, 1985 with a base index of 1,000.
Ji Hun-seok, an analyst at NH Securities Co. said container shipping has risen 10% annually since 2002, while the supply of container ships is tight.
Shipping rates may continue to rise largely due to an increase in global trade and partly because of booming demand for raw materials from Chinese steelmakers, analysts said.
China Merchants in port deal
China Merchants Holdings (International), a leading mainland port operator, plans to invest directly along with others in the CNY4bn second-phase development of Dachan Bay container port in western Shenzhen in a deal to be finalised by the end of the year.
China Merchants chairman Fu Yuning, who forecast 15% compound annual growth for mainland container throughput until 2010, announced the move on the sidelines of an industry conference in Hong Kong on Mar 13.
He declined to give further details.
The investment aimed to alleviate any negative impact the new facility would have on the company's existing ports in western Shenzhen, analysts said.
Dachan Bay is a greenfield port with potential for better logistics facilities than other western Shenzhen terminals and could put great pressure on ports in Shekou, Mawan and Chiwan, in which China Merchants has majority stakes.
China Merchants, which invested indirectly in the CNY7bn first phase of Dachan Bay through subsidiary Modern Terminals, is pursuing a strategy of gaining control of as many of its port projects as possible as the country's booming economy drives demand for capacity.
TNT acquires Hoau in China
TNT NV (0906.AE) said it has completed the acquisition of Hoau, the leading freight and parcels delivery company in China. Last week the government of the People's Republic of China approved the transaction.
Parties agreed not to disclose any further financial information.
"The acquisition of Hoau is a significant milestone for TNT. It will help us achieve our ambition to build the no. 1 distribution network in China by giving us comprehensive road coverage. The move is at the core of our strategic focus on integrated domestic and international networks. This will also enable us to link China with our Asian Road Network," said Peter Bakker, CEO of TNT.
"We are very pleased with the acquisition of Hoau. Hoau's network gives us a clear competitive advantage in China by improving distribution flow for our customers and strengthening TNT's growth," said Michael Drake, Managing Director of TNT Greater China.
Established in 1995, Hoau's network includes 1,100 depots, 3,000 vehicles and 56 hubs in China covering all major and second-tier cities. Hoau currently has 12,000 employees.
Japan’s Jan revised indus output down
The Japanese government Mar 14 revised industrial output data for January to show a worse performance in production than it initially reported about two weeks ago.
Industrial production fell 1.7% on month, compared with a preliminary 1.5% drop, the Ministry of Economy, Trade and Industry said. Shipments, however, decreased 0.2%, improving 0.1 percentage point from the initial data.
The result confirmed the first decline in production in four months, suggesting Japan's economic growth may lose some steam in coming months.
But the government said in the preliminary report that it was a temporary slip due to seasonal factors, and that it expects production to pick up in March.
Inventories, meanwhile, fell 1.0%, compared with a preliminary 0.9% drop.
View statistics here.
US wine exports, 95% Californian, jump 30% to $876mn in 2006
US wine exports, 95% from California, totaled $876mn and 404.5 million liters in 2006, an increase of 30% in value and 4.0% in volume compared to 2005. In Europe, where the US ships more than half of its sales abroad, exports surged 48% by value. Wine exports to Canada grew 29% by value.
"The dramatic sales growth in 2006 must be placed in perspective as it follows a decrease in 2005 compared to the 2004 shipments," stated Joseph Rollo, Director of the Wine Institute International Department.
"Nonetheless,” he said, “the long-term trend of California wine exports shows steady expansion in all major markets and growth in new, undeveloped markets. The 2006 number represents a 59% increase in exports by value in the last decade."
Hoffa calls on Bush to ensure US highway safety
The International Brotherhood of Teamsters General President Jim Hoffa Mar 14 called on President George Bush to demand answers from the Mexican government about the growing safety and security concerns of Mexican truck operators preparing to enter the United States.
The Teamsters said the Bush administration is moving forward with a “reckless plan” to open the border to unsafe Mexican trucks despite alarms sounded by his own Transportation Department’s Inspector General.
The union said the Mexican government has “continually failed” to meet the truck safety and driver training requirements of the North American Free Trade Agreement.
It said Bush is meeting with Mexican President Felipe Calderon but the “overzealous pilot program to open the border to these unsafe Mexican trucks” is not even on his public agenda.
“President Bush must show he is not asleep at the wheel when it comes to safety on our highways,” Hoffa said.
“It would be irresponsible for our president to visit Mexico without demanding important answers to the numerous security concerns raised by our government and others about unsafe Mexican trucks operating on our roads.”
Container traffic increasing slowly
Container traffic woke from its usual Feb lull this month and while industry experts forecast another record shipping season with little port congestion, they also warn of another flat peak season this fall.
Paul Bingham, an economist at the research and consulting firm Global Insight, thinks inbound container volumes will increase this year by 8.3%, just slightly off the nearly 10% growth the sector witnessed in 2006.
Bingham blamed the deceleration of inbound container activity on higher interest rates, cutbacks in automobile production and the slowdown in new home building and remodeling.
Although containers from Asia mostly carry consumer items such as garments and electronics, they also carry more durable goods such as auto parts and building materials bound for home improvement stores like Home Depot.
According to a monthly port tracking report Bingham produces for the National Retail Federation, ports surveyed nationwide handled 1.26mn TEUs of container traffic in Jan 2007. That number is down 0.35% from Dec 2006, but ahead of the 1.17mn TEUs handled in Feb 2007. Ports are expected to handle 1.29mn TEUs in Mar 2007, Bingham said.
Canada’s Pacific gateway straining
Canada’s Senate Committee on Transport and Communications was told that the country's Pacific gateway is currently creaking under the strains of growth, during hearings the week of Mar 11 in Vancouver.
The Deltaport container terminal, for example, was put into "meltdown mode" Nov 10, with a backlog of freight that still hasn't been cleared because railways haven't been able to deliver enough rail cars to handle the freight.
Morley Strachan, vice-president of operations at TSI Terminal Systems Inc., Deltaport's operator, said both CN and CP railways did not appear to have contingencies in place to help catch up from Nov 2006’s bad weather that interfered with freight shipments.
Now ships headed to Deltaport face 5-7 day delays for unloading due to the backlog, and vessels going to TSI's Vanterm terminal on Burrard Inlet are hitting 2-3 day delays.
Strachan said the railways have assured shippers that they have enough container rail cars to handle Vancouver's trade, but they often don't see enough of them to handle the traffic terminals receive.
The committee is scheduled to be in Prince Rupert Mar 15 and will hold further hearings seeking direction on how to improve Canada's containerized trade in Halifax and Ottawa before reporting back to the Senate in the fall.
Strong bulk ship ops help buoy Mitsui OSK earnings
Mitsui OSK Lines Ltd's (MOL’s) fairly strong performance has been underpinned by its bulk ship operations. The marine transport company projects a group pretax profit of 175bn yen for the year to Mar 2007, largely unchanged from year-earlier levels.
This contrasts sharply with Nippon Yusen KK and Kawasaki Kisen Kaisha Ltd, whose operations are slumping due to a slow recovery in cargo fees for container ships and rising fuel costs.
In a recent interview with The Nikkei, MOL President Akimitsu Ashida predicted that strong demand for bulk ships will continue for several years to come as China's iron ore imports grow.
Ashida said his firm’s container ship operations are projected to generate 3bn yen in pretax profit this fiscal year, down 92% on the year. But it aims to make more than 20bn yen in profit next fiscal year, 6.7 times the projected profit for this term, since a fee increase is expected to help turn around the business.
He said tanker fees have fallen due to unseasonably warm winter this fiscal year, but that such warm winters are unlikely every year.
View MOL research on bry bulk rates.
View MOL research on tanker rates.
MOL's LNG carrier crew training earns SIGTTO certification
Mitsui OSK Lines, Ltd Mar 14 announced that the LNG Carrier Standard Training Course implemented at the MOL Kakio Institute has been certified for compliance with the LNG carrier crew ability standards advocated by the Society of International Gas Tanker & Terminal Operations Ltd. (SIGTTO).
Det Norske Veritas (DNV) issued the certification after a two-day audit Jan 18-19. MOL's LNG Carrier Crew Training Program and the training using a loading/discharging simulator were carefully examined and were certified as meeting DNV's "Learning Program" criteria on Mar 7. The firm’s overseas training centers and instructors were certified and registered at the same time.
At the end of Mar 2007, MOL instructors responsible for LNG carrier crew training at overseas training centers will gather at the MOL Kakio Institute to take the training program.
Currently, MOL operates 58 LNG carriers, and allocates crew for 26 of these ships. (About 750 seafarers serve onboard the MOL LNG fleet.) In 2010, the company will expand its fleet to 80 operated vessels and provide crew for 47 of them (about 1,300 seafarers).
Dubai Ports World to invest $2 billion in India operations
Dubai-based marine terminal operator Dubai Ports World (DP World) will invest $2bn in its India operations, company officials said.
DP World operates five container terminals in the country and manages an estimated 40% of the country's container terminal operations.
These include Chennai and Vishakapatnam on the east coast and Kochi, Mundhra and JNPT on the west coast.
DP World owns the terminals at Kochi and Vishakapatnam while the Mundhra, JNPT and Chennai container terminals were acquired with P&O last year.
DP World gained control of three terminals in India last year through its $6.8bn acquisition of UK ports operator Peninsular & Oriental.
Raj said the huge investments undertaken by DP World have made turnaround of Chennai container terminal possible in such a short time.
"Before we took over, the terminal was witnessing a growth rate of 9% per annum. But now it is clocking 22-23%," he said.
Dubai World in ports, shipping talks with Russia
Dubai World, owner of Dubai Ports World, is in talks with Russian authorities over investing in the country's shipping, ports and logistics sectors, a joint press release said Mar 15, and it may include a joint venture special economic zone on the outskirts of Moscow.
Dubai World Chief Executive Jamal Majid Bin Thaniah said after a meeting with Russia's Transport Minister Igor Levitin that it "would explore fresh investment opportunities in Russia, especially in the marine services and special economic zones sectors.”
Levitin invited Dubai World "to seriously consider the investment potential in Russia," adding "we wish to see Dubai World companies such as DP World and Jafza (the Jebel Ali Free Zone) represented prominently on Russia's industrial map."
Dubai Ports World, a unit of Dubai World, is owned by the government of Dubai and caused political uproar in the US last year after attempting to acquire control of several US ports operations.
Chinese data push copper prices
Copper soared to its highest price of the year, lifted by strong Chinese economic and copper-import data, along with declining global inventories, analysts said.
The nearby March copper contract rose 16.30 cents to settle at $2.9850 a pound on the Comex division of the New York Mercantile Exchange.
Most-active May rose 16.20 cents to $2.9880 and peaked at $2.9930 in an electronic trade shortly after the pit close, its highest level since Dec 19.
"I think the most impressive thing to look at today is the 18.5% Chinese industrial-production growth rate for the months of Jan and Feb," said Bill O'Neill, one of the principals with LOGIC Advisors.
Several analysts cited as supportive a report showing that China imported 174,093 metric tons of refined and anode copper and copper alloy in Feb 2007.
Imports for the first two months of the year hit 321,743 tons, up 112.9% from a year ago.
Stocks of copper stored in London Metal Exchange warehouses fell 1,625 metric tons Mar 14, leaving them at 196,125 metric tons. This is down 9.2% from 216,050 on Feb 12.
Several analysts cited technical chart-based buying that was triggered when the Comex May copper contract broke through the previous high for the year of $2.90, which was set Feb 26.
Fire destroys railroad trestle near Sacramento
A 300-foot stretch of an elevated railroad trestle caught fire and partially collapsed the evening of Mar 15, sending a dramatic wall of thick, black smoke thousands of feet into the air.
The blaze forced Amtrak to halt a westbound train from Reno to Sacramento, said George Elsmore, railroad operations and safety program manager for the California Public Utilities Commission. He said the fire also was likely to disrupt freight traffic throughout the northern part of the state.
The trestle, which keeps trains elevated above local roads and a wetlands area, could be seen buckling under the intense heat and partially collapsed after sunset. No train was involved in the fire, Union Pacific Corp. spokesman James Barnes said, and there were no reports of injuries.
The trestle supports a key rail artery leading into Sacramento. Officials reported that several Amtrak trains were scheduled to travel through that section of track and were being stopped.
Fire officials had not determined how the blaze started. The trestle, made out of wood that was treated in an oily substance to preserve it, fueled an intense fire that could be seen from more than 50 miles away.
Richmond Pacific runs low-emission train
The Richmond Pacific Railroad on Mar 14 rolled out a rebuilt "cleaner and greener" locomotive that has been outfitted with low-emission devices.
About 100 people, including elected officials, representatives from air-quality agencies and industrial executives, turned out at the Florida Avenue Rail Yard to celebrate the locomotive. After a few short speeches, attendees boarded two first-class California Zephyr passenger cars, hired specially for the event, to take a tour of the Richmond Pacific's 11-mile line.
The $200,000 retrofit equipped 43-year-old locomotive No. 2285 with devices that will prevent an estimated 10 tons of nitrogen oxide emissions in the next 20 years. Nitrogen oxides have a variety of negative effects on human health and are particularly harmful to the respiratory system. The rebuilt engine also will help reduce emissions of particulate matter, which can also cause human respiratory problems.
The Bay Area Air Quality Management District helped the railroad fund the retrofit with a $148,000 grant.
Richmond Pacific already has begun the process to retrofit its three other locomotives.
Richmond Pacific Railroad, with 17 customers, is a short-line railroad that operates only in Richmond.