Cargo Business Newswire ArchivesSummary for May 9 through May 13, 2016:
Monday, May 9, 2016
Creditors approve Hanjin Shipping debt restructuring plan
Creditors of Hanjin Shipping accepted the carrier's debt restructuring plan Wednesday.
Under the joint debt-restructuring plan, Hanjin Shipping will be given a three-month grace period on its payment of interest and principal on loans from three main creditors that include Nonghyup Bank and Woori Bank. The suspension of payment may be extended by an extra month.
The decision, however, will only be effective as long as all of the company's other business partners, including private lenders and owners of ships chartered by Hanjin, also remain committed to the self-rescue plan.
"The creditors decided to start the process of joint debt-restructuring as requested by Hanjin Shipping on April 25," they said in a statement released by the state-run Korea Development Bank, the main creditor of Hanjin.
"The debt-restructuring process is a plan based on the condition that all parties with an interest (charter ship owners and private moneylenders) take part in the process and maintain their alliance, and the self-rescue plan will be terminated should any of these conditions not be met," it added.
The task of persuading such other parties to join and support the process apparently falls on the shipping company itself, as the creditors had previously demanded the company renegotiate its terms of charter with ship owners, citing what the government has also called excessive and unnecessarily high costs.
The government earlier pointed out that South Korean shipping companies were paying as much as five times higher than the market average for their chartered ships.
A supervising agency will be named to oversee the process, the creditors said.
Datamyne report ranks U.S. ports by 2015 import volume
Market intelligence firm Datamyne recently released its annual U.S. Port Report — ranking the top 20 U.S. ports by 2015 import volume and profiling each port with statistics on mix and value of imports, leading importers and carriers, and gains or losses over 2014.
"We designed the report as a handy reference for port authorities, carriers, logistic providers, importer and shippers – indeed, anyone with an interest in U.S. ports of entry for oceangoing imports," says Datamyne CEO Brendan R. McCahill.
"This year's report reflects volume losses at the West Coast ports during the 2015 labor disputes and slowdowns," McCahill continues, "and reveals which ports may have reaped the benefits in higher inbound volumes."
Datamyne ranked the top ten ports as follows (2015 import volumes):
Port of Los Angeles (4,135,746 TEUS)
Port of Long Beach (3,541,284 TEUs)
Ports of New York and New Jersey (3,243,562 TEUs)
Port of Savannah (1,624,215 TEUs)
Port of Norfolk (1,050,775 TEUs)
Port of Tacoma (872,340 TEUs)
Port of Houston (840,444 TEUs)
Port of Charleston (836,040 TEUs)
Port of Oakland (823,922 TEUs)
Port of Seattle (485,784 TEUs)
The old Port of Port Royal property has been transferred from the State Ports Authority after five failed attempts in the last decade to sell the property.
The Beaufort Gazette reported the 317-acre tract was transferred on April 22 to the General Services Division of the Department of Administration.
The winning bid must be for at least 80 percent of the property's appraised value.
The property was once the site of a small port that began operation in 1958 but has been vacant for a decade.
The SPA will receive the proceeds of the land sale after expenses tied to the deal are paid. It plans to put the money in its capital expense fund, a spokeswoman said. The agency has a month to hire an appraiser. One month after an appraisal is completed the property will be listed for public auction.
Matson Inc., Hawaii's largest shipping company, reported net income of $18.1 million, or 41 cents per diluted share, for the first quarter, down from $25 million, or 57 cents per diluted share, during the same period last year.
The decline was attributed to weakened demand from China, Matson said Wednesday.
"Our core businesses performed largely as expected in the first quarter, with operating results declining year-over-year in the absence of last year's extraordinarily strong demand for our China service," Matt Cox, Matson's president and CEO, said in a statement. "Market conditions in the China trade have deteriorated further in 2016 as international ocean carriers have continued to lower rates in an attempt to attract cargo in this heavily over-supplied trade lane."
The shipping company saw its container volume in China decline 18.1 percent from the same quarter a year ago. Matson said it "expects increasingly challenging market conditions in the transpacific trade."
However, Cox said despite the "challenging dynamics in China," the company has "solid fundamentals and performance" in its other markets. Matson saw its ocean transportation revenue increase $60.6 million or 19.8 percent year over year. However, its operating income for ocean transportation dropped 24.8 percent to $10.9 million.
Matson's Hawaii service grew 8.4 percent in volume year over year and the company expects continued growth in the market. Meanwhile in Alaska and Guam, Matson faces slightly more challenging markets and so anticipates modest lower container volumes.
Overall the shipping company expects its ocean transportation operating income to be 15 to 20 percent lower than the $187.8 million achieved in 2015, the company said in an investor presentation on Wednesday.
A CSX freight train derailed in Northeast Washington D.C. early Sunday, spilling hazardous chemicals along a busy rail corridor. The wreck stranded some residents away from their homes, forced a Metro station to close and backed-up traffic as emergency workers tried to contain the leaks and clear the wreckage.
Officials said 14 rail cars of the 175-car train left the tracks. A rail engineer and a conductor had been aboard the train but were accounted for, authorities said. No evacuations were ordered, and no one was injured.
The cause of the wreck is under investigation, and the Federal Railroad Administration was at the scene Sunday.
The derailment, about 70 cars into the train, spilled half the liquid contents of a 15,500- gallon tanker containing sodium hydroxide, D.C. Fire and EMS Deputy Chief John Donnelly said. The liquid spilled onto the tracks and seeped into the ground below it.
Officials said there were no air- or water-quality issues at the scene.
Last week the U.S. Coast Guard announced its approval for U.S. ports to verify the weight of containers on behalf of the shipper to comply with the Safety of Life at Sea (SOLAS) regulations that are effective July 1, and the South Carolina Ports Authority (SCPA) has said it will provide this weight to the shipper or exporter.
"It has been our position all along that we have employed a best practice in safely loading ships in our port for the last 20 years due to our weighing of all export containers," said Jim Newsome, SCPA president and CEO. "We applaud the Coast Guard for recognizing this in its recent Declaration of Equivalency to the International Maritime Organization on the SOLAS regulations."
All scales used to weigh export containers at SCPA's North Charleston and Wando Welch terminals will be certified annually by the South Carolina Department of Agriculture, the competent certification authority in the State of South Carolina. The port's current scales were certified in January, 2016.
Once a timely request from an export shipper is received, the port says it will provide the shipper the estimated gross weight of the container and cargo derived in the following way:
Gross weight of tractor (including estimate of fuel weight), container, chassis and cargo will be determined by weighing the entire unit on the scale.
Deduction will be made for weight of tractor and fuel as provided by the truck driver to the interchange clerk along with the posted tare weight of the chassis.
After these deductions, the gross weight of the container and cargo will be provided to the shipper. This is the same weight that will be provided directly to the shipping line.
While this approach conforms with the methodology outlined by the IMO Maritime Safety Committee in its "Guidelines Regarding the Verified Gross Mass of a Container Carrying Cargo" published June 9, 2014, in providing this weight, SCPA does not certify its accuracy. Rather, it makes its best efforts to ensure the provision of an accurate weight using the methodology above.
It is the clear responsibility of the shipper to provide the required weight certification to the shipping line as specified in the SOLAS regulations.
The export shipper shall pay a fee of $25 per container weighed. Billing and payment arrangements must be made prior to the provision of such services.
The methodology for providing this weighing service is specifically detailed below.
SCPA will utilize the following YMS Weighing Process for Loaded Export Containers:
The Motor Carrier enters the perimeter security gate.
The Motor Carrier arrives at the Inbound Interchange.
The Tractor, Chassis, Container (and contents), and any accessories (i.e. genset) are weighed to establish the gross weight.
The computer system, automatically subtracts the tare weight of the container, chassis, and then the estimated weight of the genset and tractor.
At that this point, the estimated cargo weight is calculated.
Depending of the Ocean Carriers' request, SCPA will EDI either the content weight or the gross weight of the loaded container.
Also, SCPA will share the requested weights with the stevedores electronic Container Gross Weight.
JaxPort grows Asian container volume by 16 percent
During the first six months of fiscal year 2016, JaxPort recorded 16 percent growth in Asian container shipments year-over-year, moving 157,689 TEUs compared to 135,429 TEUs in FY2015. JAXPORT's fiscal year runs Oct. 1 through Sept. 30.
JaxPort reports the Asian container trade is the fastest growing segment of its container cargo business, accounting for 33 percent of the business in the first six months of FY2016, up from 31 percent the same period in FY2015 and just 7 percent in FY2014.
JAXPORT offers direct trade with Asian ports through both the Panama and Suez Canals and currently 13 of the 17 global ocean carriers serving the Asia-U.S. trade lane offer service through JAXPORT.
Two major harbor improvement projects currently underway, including the project to deepen the Jacksonville shipping channel to 47 feet, will accommodate the largest container ships calling on U.S. East Coast container terminals.
The Florida port continues to invest in major growth projects including a new on-dock rail facility opening summer 2016, new 100-gauge container cranes to be operational at Blount Island in the fall and ongoing upgrades to terminal berths, docks and rail.
CBRE: More imports shift to East and Gulf Coast ports
The balance of seaborne-cargo delivery in the U.S. shifted further east in the last year, with East Coast seaports making gains against their West Coast counterparts, according to CBRE Group's second-annual North American Seaports and Logistics Index.
According to the index, the Port of Long Beach took the top spot from its Southern California neighbor, the Port of Los Angeles, due mostly to the arrival of a new Asian shipping line in Long Beach. However, most of those on the rise in the top 10 are East and Gulf Coast seaports.
"Companies today are facing monumental supply chain pressures due to changing consumer behavior and a need to balance cost and service while keeping their business safe from interruption," said Adam Mullen, occupier and supply chain leader in CBRE's Industrial & Logistics division, the Americas. "Recent shifts in port volumes as companies strain to determine their best global shipping routes underscore that global commerce is in a race – an arms race of sorts – to build better, even more efficient supply chains."
The renewed momentum for eastern ports can be attributed, in part, to some shippers shifting cargo east in response to last year's labor trouble at primary West Coast ports. Cargo traffic at western ports was slowed for months before the longshoreman unions and port management came to a resolution in March 2015.
CBRE said the West Coast labor disruption indirectly contributed to two East Coast ports and one Gulf Coast port climbing in the CBRE rankings, with the Port of New York and New Jersey climbing one spot to No. 2 overall, the Port of Savannah ascending two spots to No. 4 and the Port of Houston leaping five spots to No. 5.
Meanwhile, on the West Coast, the Port of Los Angeles, which posted an atypical slow year, fell two spots to No. 3 in the CBRE index, and the Ports of Seattle and Tacoma fell two spots to No. 6. The Port of Oakland, hindered in the rankings by a mix of factors including a decline in container-shipping volumes and the eventual closure in early 2016 of a terminal, tumbled five spots to No. 10.
West Coast ports accounted for 52 percent of all TEU volume last year in North America, down from 54 percent in 2014 and 57 percent in 2010.
Shippers have little choice but to accept rising railroad freight rates
All major North American railroads pushed through rate increases earlier this year even as freight fell the most since 2009. Limited competition and favorable regulations provide pricing power – the envy of truckers and maritime shippers – that's helped them reverse a share slide despite tumbling oil, coal and intermodal shipments, according to Bloomberg News.
Rail companies "benefit from the market power that they wield, which is different from other modes of transportation," said Mark Levin, an analyst with BB&T Capital Markets. "In many cases, customers have to take the price that's offered when they don't have any other options."
Railroads defend their actions, noting that freight rates remain about 40 percent lower than before the current regulations were enacted in 1980 to save the industry, which was teetering on bankruptcy. The new rules sparked investments that have topped $600 billion in the last 35 years and improved service and safety on a rail system where the tracks were so shoddy trains would tip over while not even moving.
"By and large, most of our customers feel they're getting good value," Mike Ward, chief executive officer of CSX Corp., which operates in the east. "You'll find that it's a fairly small vocal minority that has those concerns."
Freight tariffs jumped 27 percent after adjusting for inflation in the 11 years ending in 2013, ending an era of declining prices that began in 1980, according to a study by the Transportation Research Board.
In the first quarter of this year, CSX boosted average freight prices 3.1 percent while its carloads tumbled 5.1 percent. Union Pacific Corp., the largest publicly traded railroad, raised rates by 2.5 percent even as cargo sank 8.4 percent.
The ability to increase prices even as shipments decline has bolstered railroad earnings and helped mitigate the drop in their shares, said David Vernon, an analyst with Sanford C. Bernstein.
A Standard & Poor's index tracking the four largest publicly-traded U.S. railroads has climbed 26 percent since hitting a three-year low on Jan. 25, more than doubling the return of the S&P 500.
Cargo ship and fishing ship collide, leaving 2 dead and 17 missing
A collision between a fishing boat and a cargo ship in the East China Sea has left 17 missing and two dead, according to Chinese state media.
The Lu Rong Yu collided with a Maltese freighter at 3:40 a.m. (Beijing time), according to state broadcaster China Central Television.
Passing ships rescued two additional passengers who later died, the report said, adding that search and rescue operations were ongoing.
China has detained 20 crew from the freighter Catalina, a 40,485-ton bulk carrier, the state-run China National Radio said in a brief report.
The crew, including the ship's captain, are "under investigation" by border and maritime authorities after being detained at the eastern port city of Ningbo.
The cargo ship, which was under a Maltese flag, left the scene, according to China Radio International.
China National Radio did not state the nationalities of the detained crew members.
The Wall Street Journal reports that French shipping giant CMA CGM SA will no longer run the vessel Benjamin Franklin — the largest container ship to ever call at U.S. ports — between Asia and the West Coast. The megaship was replaced with a smaller vessel, the Leo, less than five months into its service on the trans-Pacific route, according to BlueWater Reporting, which tracks ocean sailing schedules.
A spokesman for CMA CGM confirmed in an email that the carrier decided to postpone the deployment of megaships to the U.S. West Coast. According to documents on CMA CGM's website, the Benjamin Franklin is now running a route between Asia and Europe, where larger ships are more commonly used.
When it was deployed late last year, CMA CGM founder and CEO Jacques Saadé said that the company was so confident in the U.S. economy and the demand for freight capacity that the carrier planned to launch six more vessels of the same size on its trans-Pacific "Pearl River Express" route.
It soon became clear the extra capacity wasn't needed on the Trans-Pacific lane, where a glut of shipping capacity has driven freight rates to record lows. The decision, which CMA CGM disclosed in April, also came as the company arranged a new capacity-sharing alliance with China's Cosco Group and other rivals. Some analysts speculated that CMA CGM's partners weren't interested in adding a fleet of giant ships to the already well-serviced trans-Pacific route.
Today, seven ships operate the Pearl River Express service between South China and California, all of which — including Leo — now offer a maximum capacity of about 11,400 TEUs.
For more of The Wall Street Journal story: www.wsj.com
BNSF profits down 25 percent in first quarter on weak coal demand
First-quarter net income at BNSF Railway declined to $784 million from $1.05 billion a year earlier, according to a regulatory filing Friday.
Berkshire Hathaway's overall net income climbed 8.2 percent to $5.59 billion as investment gains outweighed the slump at the railroad and insurance operations. That figure was disclosed April 30 when Warren Buffett released a brief summary of results at his annual meeting in Omaha, Nebraska.
Buffett bought BNSF in 2010, and the railroad immediately became one of Berkshire's top sources of earnings. Profit gained for years, in part because of improved exploration techniques for oil that was near the railroad's tracks in North Dakota. More recently, BNSF has been cutting staff after low oil prices and a nationwide shift away from coal have depressed demand for shipping.
"It's a terrific and valuable asset, and it will earn a lot of money this year, but it won't earn as much money as it earned last year," Buffett said of the railroad at the April 30 meeting. "All of the major railroads were down significantly in the first quarter and probably will continue to be down, almost certainly will continue to be down the balance of the year."
PSA International creates venture capital division
Singapore-based port operator PSA International has set up a venture capital arm, PSA unboXed, with an initial fund size of $14.66 million to invest in startups.
PSA said it would seek to invest in companies developing logistics solutions, including robotics and automation in container and cargo handling operations.
"Through PSA unboXed, we want to encourage creative ideas that can improve and revamp logistics technology, increase port productivity and enhance the integration, security and performance across the constituents of global supply chain logistics," Group Chief Executive Tan Chong Meng said in a statement.
PSA counts itself among the world's largest port groups, with involvement in around 40 terminals in 16 countries.
Concern about China's problem with fake trade invoices worsens
China's problem with fake trade invoices appears to be getting worse, according to Bloomberg News.
Imports from Hong Kong surged a record 204 percent last month, according to data released Sunday, shining a spotlight on a channel used to get capital out of the country. While the value at $2.1 billion is relatively small, the suspected use of phantom goods to secure hard currency shows concern persisting among Chinese savers and companies that the yuan will weaken.
Speculation that China's trade channels are being manipulated is widespread among economists. They say the spike in April follows similar patterns in recent months that point to companies using trade channels to pay for goods far in excess of their value or even that don't exist at all.
"As long as there is an expectation of yuan depreciation against the dollar, there will be a massive outflow of funds," said Iris Pang, Hong Kong-based senior economist for greater China at Natixis Asia. "As long as channels under the capital account are still semi-closed, trade will remain a shadow channel for fund outflows."
While China is enforcing strict rules on moving capital offshore after an estimated $1 trillion left last year, those seeking to evade limits can disguise money flows as payment for goods exported or imported to foreign countries or territories, especially Hong Kong.
"These fake imports are quite apparent," said Kevin Lai, chief economist for Asia excluding Japan at Daiwa Capital Markets in Hong Kong, citing the size of the increase in April.
Over-invoicing for goods gives a company or individual the opportunity to skirt capital controls and shift money offshore. Authorities have responded to evidence of the activity by clamping down on the myriad of illicit channels used, from curbing purchases of overseas insurance products to stopping friends and family members from pooling their $50,000-a-year quotas to get large sums of money out.
Even though overall capital outflows have eased sharply in recent months, a fresh flare-up remains a threat. One trigger could be a strengthening in the dollar as the Federal Reserve prepares to increase interest rates, said Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp.
Cruise ship crashes into gangway at Baltimore port
The Carnival Pride cruise ship struck a gangway as the ship was docking in Baltimore on Sunday morning, sending the gangway crashing down on three parked vehicles.
Some passengers said they felt a thud as the bow of the ship struck the gangway but they weren't sure what it was. No one was injured in the incident and the pickup trucks that were crushed were unoccupied, officials said.
Some on the cruise, which was returning from an eight-day trip to the Bahamas, said they weren't too concerned about the incident after learning no one was hurt.
"Accidents happen," said Esther Smith, of Wellsville, Pa. She and her husband, Eric Smith, were celebrating her 50th birthday on the cruise.
"The fact that no one got hurt changed the whole mood of it," Eric Smith said.
No one was using the gangway, which is used by passengers to get on and off the ship, when the ship made contact with it, said Jennifer De La Cruz, a Carnival spokeswoman. The pickup trucks belonged to cruise employees.
The incident caused minor damage to the ship, but De La Cruz said it planned to depart on time Sunday afternoon for another cruise. Passengers getting on and off the ship will use a crew gangway at the pier level.
Featured Story: Intermodal Sector Rolls with Rapid Change
By William DiBenedetto, CBN Feature Editor
The importance of intermodal rail and trucking to the supply chain is becoming even more apparent, due to the current economic environment, the rise of the megaships, technology advances and the pending — but still somewhat uncertain — impact of the Panama Canal expansion in June.
Railroads such as BNSF, UP and CSX are making major infrastructure investments, and 3PLs are working with customers to help prepare for changing shipping patterns and timetables. It's a question of step up now, or fall behind.
"We are in a period of rapid change," says Jean Francois Arvis, senior economist of trade and competiveness at The World Bank. "Macroeconomic volatility and shifts in trade patterns will result in the rebalancing of global logistics and trade. In addition, structural changes in terms of workforce demographics and technological innovation will determine the shape and the speed of change within logistics."
"As trucking infrastructure decays and public and private organizations continue to invest in intermodal facilities, rail is quickly becoming the preferred means of transport for both commercial and industrial goods," writes Jim Clewlow, chief investment officer at CenterPoint Properties, in the SIOR Pulse Blog. He says traditional truck shipping, though still crucial for last-mile delivery, "simply doesn't accommodate or align with modern supply chain challenges, including growing highway congestion, the ongoing truck driver shortage and organizations' elevated focus on sustainability."
Thus businesses are turning to the advantages and synergies presented by intermodal shipping and intermodal-adjacent real estate. In 2015, the U.S. moved more than 300,000 TEUs per week, on average, across domestic and international activity, Clewlow writes. Chicago, home to many railroad-operated intermodal yards and industrial parks — including BNSF, CSXT, CN, Norfolk Southern, and UP to name but a few — moved 7.5 million containers in 2014, up 27 percent from 2009. "This phenomenon is far from unique to the Midwest. Between 60 and 70 percent of imports that arrive at the Port of Tacoma move directly onto rail, providing rapid market access across the country," he says.
The logistics, transportation and real estate communities will have to deal with a handful of intermodal-related changes in the coming months, from new retail distribution models and emerging storage needs to the diversification of intermodal users.
In his blog post, Clewlow cites three major shifts:
• The rise of "hub and spoke" models:
"As online and brick-and-mortar retailers recognize the inherent advantages of intermodal transport, they're beginning to converge around a common distribution model. Driven in part by the e-commerce boom (and consumers' growing expectations for same and next day delivery), businesses today face pressure to reach population segments across the country while keeping expenses down. To accomplish both goals, cargo owners are strategically developing regional distribution centers near intermodal hubs along with smaller 'spokes' to serve individual markets."
• Increasing demand for storage:
Businesses are also seeing the need for additional storage space near major markets and intermodal hubs. "In 2016, more cargo owners will be on prowl for additional, potentially built-to-suit, storage centers. Unsurprisingly, properties adjacent to or integrated within existing intermodal yards may be in especially high demand. In the last year and a half, we've already seen major logistics providers including Quala and California Multimodal develop their own storage facilities at intermodal centers in Savannah and Joliet, respectively."
• Diversification:
While intermodal has always been a staple for retail businesses and international manufacturing, Clewlow predicts the next year or so could bring an influx of new sectors into the fold. Supply chain flexibility is becoming a "top priority" for leading export industries such as the plastics, agriculture and machinery sectors. "The tight rail, inland and coastal port integration that intermodal offers is a invaluable benefit for businesses that need to ship bulk and perishable cargo fast." Tenants in these niche sectors are likely to bring a new set of facility needs when developing and leasing intermodal-proximate industrial space, so paradigms and pain points will inevitably emerge. "Unchained from traditional supply chain constraints and expenses, businesses have room to experiment with alternative distribution models and nontraditional industrial locations."
Meanwhile, the CenterPoint executive says cargo owners will "tinker with their intermodal efforts over the next year, focusing specifically on improving flexibility, mitigating costs and providing superior customer service."
Curtis Spencer, president of IMS Worldwide, touched on many of the same "change agents" in a recent report for Area Development Magazine. He says railroads are "looking for ways to aggregate services into inland 'hubs' where they can operate more efficiently and service a greater number of clients." What is emerging from the desire for efficiencies by railroads are logistics hubs, sites where the rail carrier's intermodal services "intersect with logistics distribution services."
Large ships at mega ports "create huge volume spikes in cargo to be moved inland or to be moved to import/regional distribution sites near port," Spencer continues. Consequently, carriers are looking into aggregating their services to inland or port load centers in key markets where it makes economic and distribution sense. In conjunction with that, railroads are finding ways operate more efficiently by creating a parallel policy of aggregating demand in key markets. In fact, rail carriers now seek to change the model for delivery of goods by "aggregating all rail-served goods into single or multiple logistics parks in their markets, which is similar to how they concentrate intermodal delivery to a single ramp," he says.
Spencer forecasts that competition and collaboration between U.S. East Coast and West Coast rail carriers, emerging corridors for rapid rail services, and the environmental desire to displace trucks with short- and long-haul rail are all up-and-coming trends in the industry.
He explains that all-water routes to the U.S. East Coast and the promise of greater lift capacity after the Panama Canal expansion opens "provide the traditional East Coast carriers with new mid-country reach on a competitive platform with U.S. West Coast and land-bridge service to mid-country markets."
New corridors — Heartland and Crescent/Norfolk Southern, Triangle/CSX, and Meridian Speedway/Kansas City Southern/ Norfolk Southern — provide both north-south and east-west collaboration and track-sharing in order to reduce truck traffic, provide expedited service, and reduce pollution and congestion at the ports and at inland destinations, he adds.
Further, Union Pacific and Norfolk Southern have strengthened their collaborative efforts and the BNSF and CSX are doing the same.
In short, the intermodal industry is changing fast, creating new models and partnerships as it rolls with the changes, answering the call for faster, more consistent transit and distribution channels in ways that will better serve its customers.
Next: Can technology, mergers and "convenience logistics" boost intermodal and trucking?
Hyundai Merchant Marine seeks charter discounts on debt revamp
Hyundai Merchant Marine Co. fell the most in three weeks in Seoul trading on uncertainty over whether South Korea's second-biggest container carrier would obtain deep discounts for rates on leased vessels in its negotiations with ship owners.
The company, battling losses caused by a slump in the industry, is seeking lower rates as part of conditions for a debt revamp plan agreed upon by lenders. Talks with ship owners are progressing well, said Lee Jun Ki, a spokesman at Hyundai Merchant. Main creditor Korea Development Bank has said Hyundai Merchant also needs to get its bondholders on board for the restructuring.
Shares of Hyundai Merchant dropped 7.6 percent to close at 12,850 won in Seoul, the biggest drop since April 18. The stock, the worst performer on the benchmark Kospi index Tuesday, resumed trading Monday after being suspended April 20 on the company's plan to cut 86 percent of its capital.
"It's uncertain whether the company could get large discounts in charter costs, or less than what it wants," Um Kyung A, an analyst at Shinyoung Securities Co. in Seoul, said by phone. "Even if they succeed in the negotiations, it would put pressure on shipping rates and eventually lead to a drop in its earnings."
Hyundai Merchant is in talks with 22 ship owners. It paid 975.8 billion won ($833 million) in charter fees last year for 83 vessels leased.
Under the debt-overhaul plan in March, creditors agreed to extend maturity on loans for three months. Korea Development Bank said May 4 that the shipping company is in talks to reach agreements on the charter rates by mid-May. Support from creditors will be dropped if the two conditions aren't met, the bank has said.
Hyundai Merchant is scheduled to hold a meeting with its bondholders on May 31 and June 1, it said in a regulatory filing Monday.
"We are making all efforts to reach agreements within the deadline schedule given by the creditors," Hyundai Merchant's Lee said.
Diversified Port Holdings buys Liberty Terminals in Savannah
Jacksonville-based Diversified Port Holdings, parent company to Seaonus and Portus, has acquired Liberty Terminals, based in Savannah with additional operations in Charleston, S.C., which will now operate as Seaonus Stevedoring-Savannah LLC.
Liberty Terminals is a breakbulk and bulk stevedore company, with 24 acres on a private terminal in Savannah. The facility has a 144,000-square-foot warehouse serviced by CSX Corp. rail.
Liberty also has 750 feet of berth space in Charleston, serviced by CSX and Norfolk Southern.
DPH will be meeting with customers and stakeholders to ensure a smooth transition, and said that the merger brings together two companies with similar visions and core competencies.
"We are excited to work with the current staff," said James Dillman, DPH CEO, in a statement. "Liberty's customers will continue to receive the same high-quality service and dependability to which they are accustomed, but begin enjoying the depth and experience of the entire DPH team."
Shares of Chinese shipping companies, which the country reorganized by merging several of them into two large entities, surged in late trading Tuesday in Shanghai and Hong Kong.
China Cosco Holdings Co., the container shipping unit of the newly formed China Cosco Shipping Corp., jumped as much as 9.9 percent in Shanghai and 4.7 percent in Hong Kong trading. China Shipping Container Lines Co. rose by the 10 percent daily limit in Shanghai and China Shipping Development Co. jumped as much as 8.6 percent.
In December, China reshaped its shipping industry by announcing a plan to reorganize the two major groups with combined revenue of more than $40 billion. China Ocean Shipping Group and China Shipping Group will consolidate operations, the State Council's State-owned Assets Supervision and Administration Commission said then.
China is overhauling inefficient state-run companies to bolster an economy headed for its slowest growth in 25 years. The plan seeks to shrink industries plagued by overcapacity while creating globally competitive businesses in high-value fields such as aerospace and advanced rail technology.
Two European-owned container ships have collided in the East China Sea. One severely damaged vessel has been abandoned by its crew after a fire broke out on board, the Denmark-based Maersk Line said on Monday.
Maersk said its ship, the Safmarine Meru, collided with the German-owned Northern Jasper off the eastern Chinese coast port of Ningbo while heading there from Qingdao further north. It had fewer than 400 full containers on board when the collision took place early on Sunday about 120 nautical miles off the coast. The 22-strong crew quickly abandoned the ship, which is now afloat and anchored near the accident site.
"It is too early to comment on the circumstances surrounding the collision and fire," Maersk Line said in a statement.
For more of the South China Morning News story: www.scmp.com
Creditors of Hanjin Shipping accepted the carrier's debt restructuring plan Wednesday.
Last week the U.S. Coast Guard announced its approval for U.S. ports to verify the weight of containers on behalf of the shipper to comply with the Safety of Life at Sea (SOLAS) regulations that are effective July 1, and the South Carolina Ports Authority (SCPA) has said it will provide this weight to the shipper or exporter.
Photo credit: ©Port of Long Beach
By William DiBenedetto, CBN Feature Editor