Monday, July 26, 2010
What future is Baltic Dry Index signaling?
For most of the past two decades the main measure of shipping costs has been used as a guide to what is happening to world trade. So the fact that the Baltic Dry Index—which measures the rates charged for chartering the giant ships that carry coal, iron ore and grain—has fallen by almost 60% in its longest streak of consecutive declines for nine years (34 days running as of July 14th) has won attention.
Add in the fact that China’s imports of iron ore and coal fell in June by 9% and 8% respectively, and the Baltic Dry seems to be signaling trouble ahead.
Such ships cost $48,000 a day to charter in late May; they are now down to around $18,000 a day.
There are growing doubts, however, about what the Baltic Dry is actually signaling. The confusion is whether the index is saying more about the supply of ships than the demand for their cargoes.
Other freight indicators are less negative than the Baltic Dry. Container-shipping rates are holding pretty steady as companies decide to accept a lull in traffic rather than cut rates to stimulate demand. And according to the International Air Transport Association, an airline grouping, air freight is booming, up by 34% in May on a year-on-year basis.
But air freight measures trade in high-value finished goods, whereas bulk ships reflect demand for the raw materials of which they are made. If there is more to its decline than supply-side distortions, the Baltic Dry could yet be a grim warning of what is to come.
For the full story: www.economist.com
Credit Suisse: China’s infrastructure push a “time bomb”
China's infrastructure rush is akin to America's subprime credit crisis and is a ticking economic time bomb, broker Credit Suisse says.
The broker warns that the sheer amount of money that Chinese banks have lent local government infrastructure investment vehicles and the nation's surging wage growth could undermine its stellar economic performance, which would have flow-on effects worldwide.
Credit Suisse chief economist for Asia, Dong Tao, says a squeeze in infrastructure investment is leading lead to a "drastic" inventory correction in China's steel industry.
China's 8,800 local government infrastructure investment vehicles (UDICs) build the country's railways, subways, highways, hydro dams and airports but represent the biggest financial time bomb Mr Tao says he has seen in 16 years.
The UDICs are largely off-balance sheet and are plagued with excessive leverage, illiquid assets, and land-based valuations, making them China's version of the US subprime crisis, he said.
For the full story: news.smh.com.au
Investment firms seek to raise up to $1.3 bil for Mexico’s infrastructure
Prudential Financial Inc.’s Mexican unit and three other investment companies will seek to raise as much as 16.3 billion pesos ($1.28 billion) by the end of September from the government and pension funds.
The four trusts will use the money to finance real estate and transportation infrastructure projects in Mexico. Alonso Garcia Tames, chief executive officer of the development bank known as Banobras, and Federico Patino, head of the national infrastructure fund known as Fonadin, spoke to reporters about the new round of securities’ sales on July 23.
The offerings will be the second this year under a plan Mexican President Felipe Calderon introduced last year. Calderon wants to increase private financing of road, bridge and real estate projects by tapping the 1.28 trillion pesos held by the nation’s pension funds.
For the full story: www.bloomberg.com
Chrysler inks logistics center deal at Shanghai port
Chrysler Group China Sales Ltd, a subsidiary of Chrysler LLC, the third-largest automaker in the U.S., recently inked a deal with Shanghai Tongsheng Logistics Park Investment and Development Co Ltd, to jointly establish a logistics center in Yangshan Port, Shanghai, sources reported.
The move is one of Chrysler's efforts to transfer its auto parts transshipment center from Singapore to mainland China.
The new facility will mainly serve as Chrysler's Asia-Pacific logistics center, as its auto sales keep booming in the Chinese market.
Upon the completion of the construction, the center will greatly simplify customs clearance procedures, and offer Chrysler's Chinese dealers and customers more efficient services and products.
For the story source: www.chinaknowledge.com
Search on for sunken 19th century ship that discovered last leg of Northwest Passage
For the first time, Ottawa is trying to find a sunken 19th-century ship that helped discover the final leg of the Northwest Passage.
In January 1850, the HMS Investigator set sail from Britain under the command of Capt. Robert McClure.
He was on a mission to rescue Sir John Franklin, a renowned British explorer whose recent 129-man expedition had vanished while searching for a potentially lucrative trade route to connect the Atlantic and Pacific Oceans.
The Investigator entered Arctic waters from the west after traveling around the southern tip of South America. Like Franklin's expedition, the ship then became trapped in ice and the crew was forced to eventually abandon it. (The expedition was later miraculously rescued.)
McClure never discovered what befell Franklin, but he was credited with stumbling on the last uncharted section of the Northwest Passage -- which by then had eluded British explorers for 300 years.
Now, archaeologists with the federal government are trying to locate the historical vessel. It's believed to have sunk near the western edge of the Canadian Arctic archipelago.
-CTV News (Canada)
For the full story: www.ctv.ca
Tuesday, July 27, 2010
Hasbro comfortable with inventory; concerned over tight capacity
Hasbro Inc. (HAS) said it's comfortable with the current inventory levels of its retail customers, but that tight shipping capacity and shortages of shipping containers are concerns.
Chief Operating Officer David Hargreaves said during a conference call Monday that the toy maker has arranged additional containers and is encouraging retailers to take inventory "earlier rather than later to avoid problems."
Retailers import a lot of their own private-label products and nontoy items, and they seem to understand the situation, Hargreaves said. As a result, he doesn't expect it to be a "material issue."
Meanwhile, Hasbro executives said they are comfortable with the inventories of their retail customers and said several input costs appear to have peaked. Resin and paperboard costs have actually fallen from first-quarter levels, they said.
Hargreaves said Hasbro's shipments into retail are lower year-to-date, but that sell-through at retailers is up.
For the full story (sub required): online.wsj.com
Paccar posts better than-expected profit, sales
Paccar reported sharply higher sales and profit for the quarter ended June 30, as higher freight volumes increased demand for trucks and spare parts.
The Bellevue-based truck maker earned $99.6 million, or 27 cents a share, in the fiscal second quarter, almost quadruple its second-quarter 2009 profit of $26.5 million, or 7 cents a share.
Revenue from Paccar's truck-sales and finance wings totaled $2.46 billion, a third higher than in the same quarter last year. Both sales and profit beat Wall Street expectations.
Sales of trucks and parts rose by nearly 39 percent compared with the second quarter of 2009. Though financial-services revenue actually fell by 3 percent, that unit posted a higher operating profit thanks to lower interest costs.
Revenue growth was strongest outside Europe and North America, though that is Paccar's smallest geographic segment. In the United States and Canada, which together account for nearly half the company's revenue, business grew by 27.3 percent in the second quarter.
For the full story: seattletimes.nwsource.com
For-hire truck tonnage slipped 1.4 percent in June
For-hire truck tonnage in the U.S. dropped 1.4 percent in June, according to the American Trucking Association.
May's tonnage was adjusted to a 0.1% decline, and combined with June’s slip, mared the first back-to-back contractions since March and April 2009, the ATA reported.
Year-over-year, June’s tonnage was up 7.6 percent, and May was 7.7 percent higher than the same period a year earlier.
Year-to-date, tonnage is up 6.6 percent compared to the same period in 2009, the ATA said.
Tuesday, July 27, 2010
Crowley transports emergency housing units to Haiti
Jacksonville-based Crowley Maritime announced it has been transporting emergency housing units for Steel Elements International, LLC to homeless families in earthquake-shattered Port-au-Prince, Haiti.
The units are shipped in twenty-foot containers packaged as building sets and are assembled by trained Haitians and humanitarian aid workers, the shipping company said.
Crowley's logistics group said it has managed the transportation of 68 of what is planned to be a total of 300 containers for Steel Elements.
The temporary structures are to replace tents, and measure 10 feet by 20 feet.
The dwellings are hurricane, fire, and earthquake resistant, according to the manufacturer, and are being delivered to various aid organizations.
Lufthansa cargo plane crashes at Saudi airport
A Lufthansa cargo plane crashed at the Saudi capital's international airport on Tuesday but there were no casualties, the airline and the kingdom's civil aviation authority said.
The two pilots exited the plane using emergency escape slides, Lufthansa Cargo said in a statement. There were no other crew members on board the aircraft.
The MD-11 freighter carrying an 80-tonne load crashed at 1138 local time as it was arriving in Riyadh, Lufthansa Cargo said. The aircraft, which has been heavily damaged, was on its way from Frankfurt to Hong Kong via Riyadh and Sharjah.
Europe's biggest cargo carrier said it was sending a team of experts to Riyadh to help investigate the cause of the crash.
An airport official told Reuters the plane veered off a runway on landing.
Security cordoned off the crash site. Al Arabiya television earlier reported the cargo plane had split in half.
For the full story: www.reuters.com
Wednesday, July 28, 2010
Houston port selling $300 mil in debt amid BP oil spill disaster
The Port of Houston Authority, whose Gulf Coast facilities are the second-busiest in the U.S. by total tonnage, is selling $300 million in debt as BP Plc’s oil spill threatens the region’s economy.
The worst spill in U.S. history, which closed fishing grounds and beaches, and cut offshore drilling by half, may cost communities on the Gulf of Mexico $22.7 billion in revenue over the next three years, the U.S. Travel Association estimated yesterday. Oil leaked for three months after the April 20 explosion on the Deepwater Horizon rig that killed 11.
The port authority’s bonds, which carry top ratings from Moody’s Investors Service and Standard & Poor’s, are backed “without legal limitation as to rate or amount” by taxes from Harris County, the third most-populous in the U.S., according to a Moody’s report. Those ratings may be threatened if long-term effects from the spill reduce revenue, Moody’s analyst Michelle Smithen said in a phone interview from Dallas.
For the full story: www.bloomberg.com
C.H. Robinson betters forecast
Third-party logistics provider C.H. Robinson Worldwide posted better-than-expected quarterly profit as volumes picked up, but transportation margins continued to weigh.
Margins at CH Robinson, which last year handled 7.5 million shipments and clocked revenue of $7.6 billion, continue to remain at the low end of their historical range.
CH Robinson's second-quarter net income was $97.2 million, or 59 cents a share, compared with $92.3 million, or 54 cents a share, a year ago.
Revenue rose 27 percent to $2.45 billion.
Analysts were expecting earnings of 55 cents a share on revenue of $2.32 billion, according to Thomson Reuters I/B/E/S.
Transportation revenue jumped 32 percent to $1.96 billion.
For the full story: www.reuters.com
DP World’s port business up 16 percent for H1
Dubai World's global port operator said Tuesday business jumped 16 percent in the first half of the year as the shipping industry showed signs of life following a severe slump caused by the global downturn.
Cargo volumes were up most sharply at ports DP World manages in Asia, Australia and parts of Europe, the port firm said. The company is the world's fourth-largest seaport operator, with a strong focus on the developing world.
The company said it handled the equivalent of 23.7 million standard 20-foot (6-meter) shipping containers between January and June. That is up from 20.4 million in the first half of last year.
DP World is one of Dubai's more profitable state-controlled businesses. It operates 50 cargo terminals on six continents, including the Middle East's largest in Dubai.
It is part of the city-state's struggling Dubai World conglomerate, but is exempt from that company's $23.5 billion restructuring effort.
For the full story: www.businessweek.com
U.S. reported to drop fraud charges on Kuwaiti logistics firm
Kuwaiti logistics firm Agility, facing U.S. fraud charges over military supply contracts, said the government wants to dismiss the indictment against one of its subsidiaries.
"The United States Attorney's Office in Atlanta moved to dismiss the indictment against Holdings, an Agility subsidiary," the firm said in a statement to the Dubai bourse on Wednesday.
In April, Agility DGS Holdings Inc, which is Agility's U.S. subsidiary, pleaded not guilty to the sealed indictment.
Agility, formerly Public Warehousing Co. K.S.C. (PWC), is in talks with U.S. authorities over accusations it defrauded the military in the Middle East on multibillion-dollar supply contracts spanning 41 months.
Agility's shares were suspended from trading on the Kuwaiti bourse on Wednesday pending news clarification, the bourse said.
For the full story: www.reuters.com
Friday, July 30, 2010
Matson adds second China-U.S. string
Oakland, Calif.-based Matson Navigation Company announced it is adding a second string of vessels to its China – Long Beach Express.
Matson had once been known primarily for its Hawaii-Guam-U.S. West Coast domestics ship services before it launched into the China shipping market in 2006 with its initial CLX service.
The company said the added service would begin operations in mid-August and be in “full deployment” by early October of this year.
Port calls in the new service will include Hong Kong, Shenzhen and Shanghai to Long Beach. Matson currently offers a weekly service from Xiamen, Ningbo and Shanghai to Long Beach.
“Matson will offer twice weekly departures from Shanghai, distinguished by its 10-day transit time, the fastest in the trans-Pacific trade,” the company said in a statement.
“Matson’s expanded service is a direct response to the exceptionally positive support we’ve received from customers utilizing our CLX service,” said Dave Hoppes, senior vice president, ocean services.
“The addition of the dynamic markets of Hong Kong and Shenzhen will allow us to offer our customers premium service from southern and central China,” Hoppes said.
Baltic Exchange moves to stimulate freight derivative trading
In a move designed to stimulate freight derivative trading, the Baltic Exchange announced it would be calculating its Tanker Time-Charter Equivalent Assessments (TCEs) based on bunker prices, which are in line with the bunker swaps market.
As of August 2, 2010, the Exchange said the basis for TCE conversions on its various routes would be Rotterdam 380 cst, Rotterdam 380 cst max 1 percent sulphur, or Singapore 380 cst.
Diesel or gasoil requirements would not be taken into consideration and the parameters of the Baltic Exchange calculations have been amended accordingly, it said.
Bunker prices will continue to be provided by Bunkerworld and published on www.balticexchange.com.
The Baltic Exchange said its TCE calculations were previously based on a range of bunker prices including Aruba, Augusta, Fujairah, Philadelphia and Wilhelmshaven.
Federal judge halts Oahu-Wash. St. trash shipment
A federal judge's order has delayed shipment of Oahu's municipal trash to a landfill in Washington state for at least a month.
U.S. District Judge Edward Shea in Spokane, Wash., granted a temporary restraining order yesterday to halt the shipments, pending a hearing on a preliminary injunction on Aug. 30.
Shea said there were serious questions about whether the U.S. Department of Agriculture adequately assessed the environmental impacts of container shipments through Hawaiian Waste Systems LLC. The lawsuit was brought by the Yakama Nation, environmental groups and Washington state residents, arguing that an environmental impact statement should be prepared for the project.
The tribal council said the department also failed to meaningfully consult with it, as required under a treaty with the federal government.
The city, awaiting the completion of a waste-to-energy expansion, entered into an agreement in September with Hawaiian Waste Systems to ship up to 100,000 tons of municipal solid waste off-island.
For the full story: www.staradvertiser.com
Port of Seattle launches online drayage registry
The Port of Seattle announced the launch of its online Drayage Truck Registry for its 1,500 or so truckers to register on by the end of this year.
The online registry is part of the port’s clean truck initiative, which requires 1994 or newer truck engines. The port said trucking companies and independent owner-operators must enter the vehicle’s VIN, license plate, make, model, and contact information.
If the trucker is compliant, the driver or company is issued a “Green Gateway” sticker that identifies their vehicle as “being clean” and able to enter a port terminal, where the port said that by January 1, 2011, the sticker requirements would be enforced.
The port said over 200 truckers have registered online thus far.
Mystery shrouds damage to Japanese tanker
Shipping officials said Thursday that they were examining the hull of a Japanese oil tanker that was mysteriously damaged this week as it traversed a strategically vital waterway between Iran and the Arabian Peninsula. The ship’s owner has said that it may have been attacked.
With the tanker docked in the United Arab Emirates, the owner, Mitsui O.S.K. Lines and port officials puzzled over what had shattered windows on the vessel, knocked off a lifeboat and punched a dent into its hull. The damage was apparently inflicted early Wednesday morning in the Strait of Hormuz, a passageway for shipping much of the world’s oil from the Middle East.
Mitsui officials said that crew members on the ship, the M. Star, had seen a flash and heard an explosion. They also dismissed earlier speculation by officials in Iran and Oman that the damage had been caused by a “freak wave.”
American military officials were dubious of Mitsui’s contention that the tanker had been attacked, saying that the photographs showed that damage more consistent with a collision of some kind, perhaps with a dock or another ship. But the Mitsui officials reported no collisions.
For the full story: www.nytimes.com