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Summary for April 15 - April 19:
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Monday, April 15, 2013 Top StoryDrewry: Vessel overcapacity mitigation primary issue for carriers in 2013
The shipping industry reduced headhaul capacity 2012 by 1.6 percent in the three major East-West trade routes, offsetting the arrival of new vessels, and also used slow steaming at a higher rate. By the end of April, Drewry predicts that year-on-year capacity on the three core East-West trade lanes will rise by 1 percent. In the second quarter, capacity on the headhaul will rise by 10.2 percent on the Asia-North Europe route, the report says, and by 5.5 percent on the trans-Pacific route. More than 40 ships of 10,000-TEU capacity and above are scheduled for delivery this year, and Drewry reports that shipping lines will find it more and more difficult to manage capacity without flooding the market and tipping the delicate supply-demand balance. "Missed sailings between October and February may have lifted average load factors in the East-West trades by between 2 percent and 5 percent, but there is no evidence that this improves the success of GRI attempts over any sustained period of time," said Neil Dekker, Drewry's head of container research. "The supply-side pressures caused by new deliveries could force carriers to take more drastic measures such as suspension of whole strings. For now, the lines' strategy seems to be one of damage limitation on a very short-term basis before the next wave of ships is delivered." Evergreen's new CPS2 trans-Pacific service in May and MSC's new stand-alone service on the Asia-East Coast South America trade route this month will add to "a very challenging operating environment." The average capacity of ships across the major North-South trades increased by 9.1 percent in 2012 to just under 4,000 TEUs. More 8,000-TEU vessels are being utilized on the Asia-East Coast South America trade route, with cargo growth only expected to be 3-4 percent in 2013. Carriers will find it harder to shore up falling spot market rates in 2013, Drewry forecasts. Although the mid-March Asia-North Europe GRI was successful at first, with increases of over $300 per-FEU, most gains were lost by the end of the first week. Maersk goes for high yield reefer cargoFranck Dedenis, the new head of Maersk India, was quick to respond when some Indian seafood exporters' alleged that shipping lines have unilaterally hiked freight rates on reefer containers. "We are not here to cannibalize on our customers' profit margins. But we've got to ensure a minimum return on our investments to remain in the market long-term as a reliable supply chain partner," Dedenis said. Shipping lines increased reefer container rates by $1,500 in January on all major routes. Seafood exporters complain that the increase was too high and done unilaterally, without regards to destination. The rates now range from $3,000 to $3,500 per-TEU to the Indian-Europe sector, according to a shipping agency official. According to shipping lines, reefer rates were too low to be profitable and even after the rate hike, rates are still at 2005 levels. "There has always been a perception that reefers are more profitable. But the fact is that cost of a reefer container is 3.5 times more than that of a dry container," said Dedenis. He went on to say the rate hike was not a unilateral decision, and that Maersk discussed the increase, applicable to customers across countries, three to four months in advance. Maersk, the global leader in container shipping, has invested over $2 billion on reefers in the last two years. "Today we have the largest fleet of 230,000 reefers. If we put all of them together, they would go all across Australia — more than 3500 kms," Dedenis said. "Through the general rate increase, we are only trying to bring the rates up to the level we can meet our costs. We have no control over the market. What we are trying to do is to control our costs," said Santhosh Kumar Singh, head of trade and marketing, Maersk Line India. Based on industry estimates, Maersk has a 16 per cent market share of the container trade in India, carrying more than 700,000 FEUs in and out of India annually. For more of the Hindu Business Line story: thehindubusinessline.com Evergreen Marine and CMA CGM to start new joint Red Sea serviceEvergreen Marine Corp. said it will partner with CMA CGM Group to launch a new shipping route near the southern end of the Red Sea and tap into markets there. The South Red Sea Service, connects Southeast Asia, the Indian subcontinent, and countries near the Red Sea, the statement said. The new loop will offer a convenient link to landlocked Ethiopia via the East African country of Djibouti. The new route, to begin May 2, will be served by five 2,200-TEU vessels - three operated by Evergreen Marine and two by CMA CGM. The new service's port rotation will be as follows: Port Klang, Malaysia; Tanjung Pelepas, Malaysia; Colombo; Djibouti; Aden, Yemen; Jeddah; Port Sudan, Sudan; and back to Djibouti, Colombo and Port Klang. Egypt discovers ancient port, hieroglyphicsA French and Egyptian team of explorers has discovered at 4,500-year-old Red Sea port, according to Egypt's state minister of antiquities. Minister Mohammed Ibrahim said the port, dating back to Great Pyramid builder King Cheops of the Fourth Dynasty of the Old Kingdom, was discovered 110 miles south of Suez. The archeologists also found hieroglyphic papyri, considered the oldest ever found in Egypt, which reveal details about port workers and their daily lives. For more of the Washington Post story: washingtonpost.com 5 dead and up to 60 missing after boat sinks off IndonesiaAt least five people are dead and up to 60 are missing after a boat capsized off of Indonesia. An Indonesian search-and-rescue official said they were still trying to determine what happened amid conflicting reports about the incident, which may have happened as early as Wednesday morning. The ship was apparently headed to the Australian territory of Christmas Island, which is a popular port for boats carrying asylum seekers. There was uncertainty as about whether one or two boats were involved in the incident, with contradictory accounts from Indonesian and Australian maritime agencies. One of the 14 known survivors of the sinking boat, 29-year-old Habibullah Hashimi from Afghanistan, reportedly said he saw at least five of his fellow passengers drown before fishermen rescued him from the sea off West Java. For more of The New York Times story: nytimes.com
Wednesday, April 17, 2013 Top StoryHong Kong dockers in week three of strike refuse wage offer
Approximately 450 workers, primarily crane operators and stevedores, walked out on March 28, seeking higher wages and better working conditions at the port. The strike has caused shipping lines, including Evergreen Marine, to reroute cargo through the port of Shenzhen, and has cost the Hong Kong port millions of dollars. The port workers are “extremely disappointed” by the low offer, said Wong Yu-loy of the Union of Hong Kong Dockers. HIT contract workers were offered a 7 percent raise, according to a statement by HIT. Workers had asked for a 23 percent pay hike. Their current hourly wage is $7, which is less than they were paid in 1995, according to the union. Workers took a pay cut in 2003 during the SARS outbreak. Hong Kong government arbitrators are helping to broker a deal between workers and employers, according to Labour Secretary Matthew Cheung. HIT is operated by Hutchison Port Holdings Trust, owned primarily by Li’s company Hutchison Whampoa. Hutchison Port and partner Cosco Pacific are responsible for half the capacity at Hong Kong, the third busiest container port in the world. In Australia, where Hutchison is constructing container terminals, the company agreed to pay longshoremen $80,000 a year, according to Joe Deakin, assistant Branch Secretary at Maritime Union of Australia. For more of the Bloomberg story: businessweek.com Supreme Court hears arguments against Port of Los Angeles clean truck programSupreme Court justices seemed receptive yesterday to the American Trucking Association’s argument against the Clean Truck Program at the Port of Los Angeles, according to E&E Publishing, a publication covering environment and energy issues. The Clean Truck Program, begun in 2008, has cut diesel particulate emissions from trucks by more than 50 percent at Los Angeles, the largest port in the U.S. ATA lawyers are arguing that the1994 federal law that deregulated the trucking industry prohibits the Clean Truck program, which requires trucks to meet certain conditions before getting access to the port. Conservative justices seemed to agree with that argument Tuesday, saying that the exemption to the law sought by the port, which claims it is a "market participant,” does not exist. "There are exemptions to preemption," Justice Antonin Scalia said. "That's not one of them." The conservative justices appeared specifically concerned that the program carried criminal penalties. Justice Anthony Kennedy, typically considered the court's swing vote, raised worries about when "criminal penalties are attached to a breach of the contract." For more of the E&E Publishing article: eenews.net March cargo volumes slowed at L.A-Long Beach ports due to Chinese New Year shipping lullMarch cargo volumes at the Ports of Los Angeles and Long Beach were down in March on slowed demand from Asian countries, since many factories were closed in observance of the 15-day Chinese New Year celebration. March cargo at the Port of Los Angeles was down 22.6 percent year-over-year, according to port data. L.A. imports dropped 28.7 percent to 231,396 TEUs compared to March 2012, and the port’s exports decreased by 17.9 percent to 154,428 TEUs. The Port of Long Beach handled 5.4 percent more cargo in March year-over-year at 486,699 TEUs. March exports at Long Beach were up 7.9 percent to 156,212 TEUs, with imports down 0.5 percent to 224,913 TEUs compared to last year. "It definitely slows goods movement in Asia when the lunar new year is going on," said Port of Long Beach spokesman Lee Peterson, adding that he expects the port to return to growth mode in the coming months. For more of the Press-Telegram story: presstelegram.com Manufacturing growth slows in New York-New JerseyMarch cargo volumes at the Ports of Los Angeles and Long Beach were down in March on slowed demand from Asian countries, since many factories were closed in observance of the 15-day Chinese New Year celebration. March cargo at the Port of Los Angeles was down 22.6 percent year-over-year, according to port data. L.A. imports dropped 28.7 percent to 231,396 TEUs compared to March 2012, and the port’s exports decreased by 17.9 percent to 154,428 TEUs. The Port of Long Beach handled 5.4 percent more cargo in March year-over-year at 486,699 TEUs. March exports at Long Beach were up 7.9 percent to 156,212 TEUs, with imports down 0.5 percent to 224,913 TEUs compared to last year. "It definitely slows goods movement in Asia when the lunar new year is going on," said Port of Long Beach spokesman Lee Peterson, adding that he expects the port to return to growth mode in the coming months. For more of the Press-Telegram story: presstelegram.com Boat with cargo of protected species meat hits coral reefA Chinese boat that ran into a coral reef in the Philippines last week was carrying more than 22,000 pounds of meat from a protected species, the pangolin or scaly anteater. The vessel hit an atoll at the Tubbataha National Marine Park on Palawan island. Four hundred boxes, each containing 25 to 30 kilograms of frozen pangolins, were discovered during a second inspection of the boat Saturday, according to Coast Guard Lt. Cmdr. Armand Balilo. The boat's 12 Chinese crewmen are being detained on charges of poaching and attempted bribery, said Adelina Villena, the marine park's lawyer. For more of the Boston Herald story: bostonherald.com CorrectionThe April 11th issue of Cargo Business Newswire covered an East Bay Express story published on April 10, which mistakenly attributed some details regarding the first phase of the Oakland Army Base development project to the second phase. To clarify, Phase I of the project, currently in process, includes infrastructure and rail construction, a bulk marine terminal, truck parking and service areas, one million square feet of new warehouses, and a new recycling center.
Thursday, April 18, 2013 Top StoryGeorgia and South Carolina make a tentative deal to allow deepening of Savannah River
Georgia wants to deepen 30 miles of the Savannah River channel in time for the completion of the Panama Canal expansion in 2015, when supersized post-Panamax vessels will come to call. The deal would settle the conflict between Georgia and South Carolina, which shares the river and operates the Port of Charleston, a competitor for container traffic. It would also settle lawsuits with three groups represented by the Southern Environmental Law Center. The proposed settlement states that Georgia would pay more than $25 million for extra conservation efforts and sign over 2,000 acres of marsh land to South Carolina. It also gives environmental agencies the chance to renege on the deal if a test run of special equipment designed to replenish oxygen in the river doesn't work. "This settlement will bring to an end the immediate dispute between Georgia and South Carolina and allow the Corps to proceed," said Jamie McCurry, government relations officer for the GPA, to board members prior to the deal vote. Dean Moss, chairman of the Savannah River Maritime Commission, said the South Carolina state agency also agreed to sign the settlement. The deal still needs to be approved by the Army Corps and environmental groups before it can receive final approval by a federal judge. For more of the Business Week story: businessweek.com U.S. overtakes China as Japan's top export marketJapanese customs figures released this week showed the U.S. edged ahead of China as Japan's largest export market. U.S.-bound Japan exports jumped 10.4 percent year-over-year to $116 billion. Exports to China, formerly Japan's top export destination because of its role as the country's largest offshore manufacturing base, plunged 9.1 percent. Exports of vehicles and machinery are credited for the shift in trade. Japan's exports of transport equipment, including vehicles and parts, to the U.S. rose 17 percent last fiscal year, while shipments of machinery rose 24 percent and electrical equipment increased 15 percent. For more of the Globe and Mail story: theglobeandmail.com U.S. factory production down in MarchU.S. factory production fell in March, contrary to expectations. Output at factories fell 0.1 percent, according to Federal Reserve data, compared to the 0.1 percent increase reportedly predicted by economists surveyed by Bloomberg. Companies are limiting inventories on worries the U.S. economy will slow due to federal cuts. Manufacturing, which accounts for approximately 12 percent of the economy, was curbed by lower production in March of metals, computers, electrical equipment and furniture. Auto production had a stronger showing, with the output of motor vehicles and parts increasing by 2.9 percent after a 2 percent gain in February. "The details look pretty weak, but that came after strength in February," said James O'Sullivan, chief U.S. economist at High Frequency Economics, the second-best industrial production forecaster over the past two years, according to data compiled by Bloomberg. "Manufacturing will certainly continue to grow." For more of the Bloomberg story: bloomberg.com Hampton Roads container traffic up for 14th straight monthMarch cargo volume at Virginia's Hampton Roads port was up for the 14th consecutive month. Container movement at Hampton Roads increased to 179,518 TEUs, a 7.7 percent jump compared to March 2012, according to the Virginia Port Authority. For the fiscal year begun July 1, container traffic is up 11.5 year-over-year. Compared to last year's figures, break bulk cargo at the port dropped 21.7 percent, to 25,064 tons. For more of the Virginia-Pilot story: hamptonroads.com NY-NJ Port Authority officers go to Boston to repay support received after 9/11Police officers from the Port Authority of New York and New Jersey are down in Boston, giving back a little of the support they received from Boston officers at Ground Zero after 9/11. "Boston PD was there, which is one reason we were in such a hurry to get up here. We've been down the same road," said Port Authority Police Officer Ray Butler in a phone interview, calling in from the streets of Boston where he and other members of the Port Authority Policemen's Benevolent Association had set up a mobile canteen to provide food, coffee or just a place to sit for police and others working at the scene of Monday's bombings. "What we're doing here is a smaller scale of what was offered to us down there," said Officer Brett Porigow, a PBA trustee. For more of the Star-Ledger story: nj.com Submit Your Press |
Ever changing service and schedule changes are becoming routine for container carriers battling to keep the spot market profitable during a time of weak global demand, according to Drewry's latest Container Forecast report.
Three weeks in, hundreds of striking Hong Kong dockworkers took their protest outside Li Ka-shing’s Cheung Kong Center headquarters in the city’s business district after rejecting a pay raise offer aimed to end the conflict. Many chanted slogans against billionaire Li, known as “Asia’s richest man,” whose company is the largest shareholder of HongKong International Terminals.
Georgia Port Authority officials and the Savannah River Maritime Commission of South Carolina made a deal Wednesday to settle lawsuits between the two states that had delayed a $652 million project to deepen the Port of Savannah shipping channel. Other parties must accept the compromise before it will be binding.