Cargo Business Newswire ArchivesSummary for August 17 through August 21, 2015:
Monday, August 17, 2015
Maersk to defend market share
A.P. Moller-Maersk said it plans to defend and maybe expand its top position in container shipping, according to its chief executive.
The group's results on Thursday showed that container shipping division Maersk Line gained market share in the second quarter. In the first quarter, it had lost share because it did not engage in a price war, analysts said.
"We want Maersk Line to grow at least with the market to defend its market-leading position. It is a signal to the industry that we aim to keep our position as industry leader," Chief Executive Nils Andersen told reporters.
In the past, Maersk Line has always sought to maintain a market share of around 15 percent, but now is looking to increase it, capitalizing on its low costs.
Maersk Line controls around one-fifth of all containers transported between Asia and Northern Europe. It was not hit as hard as competitors by low spot freight rates because it reduced its unit costs by 13.1 percent, benefiting from lower fuel prices and a weaker US dollar.
Andersen said China’s decision to devalue the currency was good news for the group because it would benefit Chinese exporters shipping goods around the world.
The group revised its expectations for global demand for maritime container transportation to increase by 2-4 percent from its previous forecast of 3-5 percent.
Group net profit halved to $1.1 billion in the quarter, but the decline was not as bad as forecast thanks to an improvement in the oil business and a stronger than expected result from Maersk Line.
Container volumes were up at the Port of Long Beach in July, with an 18.4 percent year-over-year increase, making July a record month in the port’s 104-year history.
The Port’s terminals moved 690,244 TEUs in July, an increase of 18.4 percent compared to July 2014. Imports jumped to 345,912 TEUs, a 16.2 percent increase from last July. Exports increased an impressive 15.9 percent to 143,875 TEUs despite the stronger U.S. dollar, which has made U.S. exports relatively expensive overseas.
"These exceptional results are great news for Long Beach and the nation’s economy," said Port Chief Executive Officer Jon Slangerup. "We’ve worked closely with all of our stakeholders to prepare for our peak season, which is off to a great start with very strong back-to-school shipments and our best export month in a year. We applaud our partners for their role in these impressive results."
Through the first seven months of 2015, Long Beach said its cargo numbers are edging higher, with total cargo up 2.8 percent compared to the same period last year, imports are up 1.4 percent and exports are down 10.9 percent.
Asia-N. Europe spot rates drop 10 percent
Asia to Northern Europe container shipping rates dropped by 10.1 percent to $975 per-TEU in the week ended on Friday, according to the Shanghai Containerized Freight Index showed.
It was the fourth straight week with falling spot rates on the route. Container freight rates increased in 13 weeks in 2014 but fell in 39 weeks.
Maersk Line, the global market leader with nearly 600 containers, was one of the few container shipping companies to make a profit in the first six month of 2014.
Last week, Maersk Line said it would raise Asia-Europe freight rates by $800 per TEU with effect from Jan 15.
The Danish shipping company controls around one fifth of all transported containers from Asia to Europe.
Chinese official defends fire department after Tianjin blasts
A senior Chinese official defended fire fighters who initially sprayed water on a fire in a warehouse in northeast China where toxic chemicals were stored, a response experts said could have contributed to the two huge blasts that killed 54 people.
Massive explosions hit the busy port in Tianjin city on Wednesday night. In addition to the fatalities, about 700 people were injured, 71 seriously.
Smoke from fires still burning on Friday rose from the explosion site amid the piles crumpled shipping containers, thousands of torched cars and port buildings that were burned down.
Rescuers pulled one survivor from the wreckage, according to a city official. Media reports identified him as a firefighter.
The warehouse was storing ammonium nitrate, potassium nitrate and calcium carbide at the time of the blasts, according to police. The official Xinhua news agency has said several containers in the warehouse caught fire before the explosions.
Germany’s Danube blocked after cargo ship runs aground
Shipping on the Danube river was blocked in Germany after a cargo vessel ran aground because of low water levels, a police spokesman said.
Cargo is being removed from the Romanian ship that ran aground near Niederalteich in Bavaria, a Bavarian police spokesman said.
Work on the vessel could last until Thursday, he said.
It was unclear whether the Danube would be immediately reopened to shipping as low water on the Isar, an adjoining river, has resulted in faster currents washing gravel into the Danube which is also hindering shipping and is currently being cleared by a dredger, the spokesman said.
Tianjin port explosions result in insurance losses of up to $1.5B
Two explosions in the Chinese port of Tianjin resulted in more than 100 fatalities could generate total insurance losses of $1 billion to $1.5 billion, Credit Suisse analysts said citing initial estimates from Chinese media.
On Aug. 12, blasts decimated a large industrial area in Tianjin.
Insurance companies including Zurich Insurance Group and Allianz SE said they had received claims from clients that had been affected by the disaster but couldn’t yet give details of the potential losses.
"It is still very early to determine the level of insured losses, but the event is likely to be large with initial insured loss estimates of $1-$1.5 billion and a large number of insurance companies affected," said analyst Arjan van Veen in a note to Reuters, in which he compiled estimates from a range of Chinese media reports.
Credit Suisse said those affected would be mostly Chinese insurance companies as well as international groups that either insure multi-nationals or provide re-insurance coverage.
Hyundai Motor Co (005380.KS), one of many carmakers operating facilities in Tianjin, has already said 4,000 of its cars were parked in the area and damaged by the blast, for a loss the note said was equivalent to $136 million.
Port Vancouver USA rail project to help Washington State trade
The Port of Vancouver launched a $30 million rail project last week that will help facilitate the movement of trains and the flow of goods from regional businesses, as well as ensuring that Washington state remains competitive in the global market.
Known as the trench, the project is a key part of the port’s $275 million West Vancouver Freight Access project (WVFA), which helps reduce regional rail congestion by up to 40 percent, ensuring businesses along the West Coast and between Portland, Oregon, and Chicago can move products from source to market.
The $8 million trench eliminates conflicts between trains entering the port and triples the port’s rail capacity, allowing tenants to efficiently move products.
The ribbon cutting featured port officials, U.S. Sen. Maria Cantwell, and representatives from the offices of U.S. Sen. Patty Murray, U.S. Rep. Jaime Herrera Beutler and Gov. Jay Inlsee, along with a crowd of 100 stakeholders from local communities and businesses.
"Everyone speaking today and many in the audience played a huge part in realizing this project, from Sen. Cantwell’s support of freight to Sen. Murray’s hard work on the TIGER grant program, and all those who provided funding for this project," said port CEO Todd Coleman. "We thank you for helping keep the Port of Vancouver, our region and our state competitive."
Sen. Cantwell stressed how critical freight projects like WVFA are to the efficient movement of goods, helping Washington state businesses remain competitive as markets change and trade is increasingly globalized.
The entire WVFA is expected to be complete in 2017.
Port of Long Beach gets $3.4M grant for security
The Federal Emergency Management Agency has awarded $3.4 million in grant funding to the Port of Long Beach Security Division for ongoing projects.
The grants will enhance port security systems such as physical security equipment and monitoring and detection systems, including the Virtual Port System, and improve the resiliency of port security systems, according to a port press release.
"Protecting workers and the community, as well as ensuring business continuity, are top priorities at the Port of Long Beach," said Lori Ann Guzmán, president of the Long Beach Board of Harbor Commissioners. "FEMA’s grant money will help us carry out important security projects and enhance our abilities to work with our security partners at the port."
FEMA, part of the U.S. Department of Homeland Security, offers the grants for port security initiatives, and recipients like the Port of Long Beach must provide at least 25 percent of the cost of the project.
The Long Beach Harbor Department’s Security Division partners with local, state and federal law enforcement and security and emergency-response agencies including the Long Beach Police and Fire departments, FBI, U.S. Customs and Border Protection and the U.S. Coast Guard.
Panama Canal to impose temporary draft restrictions
Due to drought, the Panama Canal Authority (ACP) has issued shipping advisory that sets a draft restriction for the canal due to a drought caused by the El Niño weather system.
Effective 8 September, the maximum draft will be cut to 39ft, which may affect up to 20 percent of the canal’s traffic. A similar restriction was imposed for the same reason in 1998.
These temporary measures are due to an anticipated climatic variability event related to El Niño, which changes the pattern of rainfall in many regions of the planet. In this case, it has triggered a drought in the Canal Watershed, causing the water levels of Gatun and Alhajuela Lakes to fall substantially below their average for this time of year.
Given the information available, the Panama Canal said it anticipates that the draft may be further restricted to 38.5 feet starting September 16, 2015.
Indonesian navy seizes illegal fish from Thai cargo ship
A 2,000-ton refrigerated cargo ship allegedly loaded with slave-caught fish was seized by Indonesia’s navy last week.
The Silver Sea 2 was and escorted about 80 miles to a naval base in Sabang on the Indonesian archipelago’s northwestern tip, according to Colonel Sujatmiko, the regional naval chief.
A satellite beacon signal was used to trace the ship’s path from Papua New Guinea waters, where it was also being sought, into neighboring Indonesia. The navy then spent a week trying to catch it.
"I’m so overwhelmed with happiness," said the fisheries minister, Susi Pudjiastuti. "It was almost impossible but we did it."
Drewry: COSCO/CSCL merger could damage carrier competition
China may merge China COSCO and CSCL and, as a result, cause a domino effect on existing carrier alliances and further carrier mergers in Asia damaging to industry competition, according to the latest issue of Container Insight from Drewry Maritime Research.
Shares in China COSCO, China Shipping Development and China Shipping Container Lines were suspended from trading on Monday, August 10, after news reports that China is preparing to merge the two state-owned shipping entities.
Drewry says it seems COSCO and CSCL are part of a broader effort to consolidate China’s state-owned enterprises. Leading executives from the companies are reportedly working on a preliminary plan to be released before the year is out.
In the container market, COSCO and CSCL are in sixth and seventh place respectively in the rankings of carriers by operated TEUs. Based on today’s fleet the combined entity would comfortably move into fourth place with a total fleet in excess of 1.5 million TEUs, giving a world share of around 8 percent.
Analysts say the rationale for a merger is entirely sound from a financial viewpoint and calls into question why China has persisted with the two-carrier strategy for so long. It makes little sense to have two state-controlled carriers competing fiercely against one another and against non-Chinese carriers in the same markets.
What will happen to the carrier alliances these two lines participate in on the East-West trades? COSCO is a long-standing member of the CKYHE Alliance alongside K Line (Japan), Yang Ming (Taiwan), Hanjin (South Korea) and Evergreen (Taiwan); while CSCL is a part of the Ocean Three consortium alongside CMA CGM (France) and UASC (Qatar) that was set-up at the start of this year.
Depending on which alliance wins or loses its Chinese member, the Ocean Three alliance and the CKYHE alliance will decline to a market share of just 13 percent or rise to a market share of 28 percent.
If and when the merger occurs, other Asian countries may be forced to consider similar consolidation of their shipping lines, Drewry says. Only the Taiwan carriers (Evergreen, Yang Ming and Wan Hai) have returned an operating profit ($1.2 billion) over the past five years, whereas the three Japanese lines (MOL, NYK and K Line) have lost approximately $550 million and the South Koreans (Hanjin and HMM) nearly $400 million. Although none of them match the $900 million combined deficit of COSCO and CSCL.
In conclusion, Drewry says a merger between COSCO and CSCL makes sense for China, but the ramifications for the container shipping industry could be far-reaching.
Port of L.A. cargo volume down in July
Container volumes at the Port of Los Angeles dropped 2.5 percent in July year-over-year.
The nation’s largest container port handled a total of 699,127 TEUs in July, compared with 717,407 a year ago.
Imports decreased 3.5 percent to 350,627 TEUs, while exports fell 16.4 percent to 136,402 TEUs. Combined, total loaded imports and exports dropped 7.5 percent to 487,029 TEUs.
Factoring in empties, which increased 11.2 percent, overall July volumes decreased 2.5 percent.
For the first seven months of the year, volumes reached 4.6 million TEUs, decreased 3.5 percent year-over-year.
A settlement has been reached with Japanese shipping giant Mitsui O.S.K. Lines, in a major class-action antitrust lawsuit filed by individual consumers and auto, truck and equipment dealerships against more than a dozen global companies accused of artificially driving up shipping costs, according to a statement from Burns Charest law firm (representing the plaintiff).
This marks the second significant settlement in the Vehicle Carrier Services Antitrust Litigation following an agreement reached last month with another Japanese shipping giant, Kawasaki Kisen Kaisha, known as K-Line. While the financial terms of both settlements remain confidential, they are expected to become public in documents seeking court approval, the statement said.
"This is an important day for American consumers," says Dallas attorney Warren T. Burns of Burns Charest LLP, who servers as interim co-lead counsel for the end-payor plaintiffs. "This is the second major settlement in a month, demonstrating the strength of our clients’ claims. This should send a strong signal to the remaining defendants that it is time to resolve this case."
Last month, the defendants asked U. S. District Judge Esther Salas of Newark to dismiss the lawsuit by arguing that the 1984 Shipping Act pre-empts state antitrust laws that protect indirect purchasers against price-fixing, according to the firm. Mr. Burns argued on behalf of all indirect purchasers that state antitrust laws complement the Shipping Act, and that Congress did not intend to bar such state claims.
The statement notes that additional defendants, among others, include Nippon Yusen Kabushiki Kaisha (NYK Line) of Japan and Chilean-based CSAV, both of which previously pled guilty to participating in the conspiracy that is still being investigated by the federal government.
G6 Alliance voids 4 Asia-Europe sailings
Members of the G6 Alliance have announced additional four void sailings within their Asia-Europe services in response to changes in demand.
The following void sailings are planned for the subsequent services and weeks:
- Loop 6 service in week 40 (westbound ETA Kaohsiung, 01 October 2015): Kaohsiung will be added as a westbound call, while Jebel Ali will be inserted on the eastbound leg of Loop 7. The westbound Colombo and Xiamen calls will be added into Loop 4.
- Loop 7 service in week 41 (westbound ETA Qingdao 05 October 2015): Qingdao will be added to Loop 4 on the westbound leg in the corresponding week, while Gdansk, Gothenburg and Antwerp calls will be covered by Loop 5 on the eastbound direction during the same timeframe.
- Loop 4 service in week 42 (westbound ETA Ningbo 16 October 2015): The westbound Le Havre call will be covered by Loop 6 in the respective week.
- Loop 5 service in week 43 (westbound ETA Kwangyang 23 October 2015): The westbound Kwangyang and Pusan calls will be added in other loops in the respective week.
The G6 Alliance continues to offer a variety of services between Asia and Europe covering all major port pairs with weekly sailings, and to make further service adjustments where necessary.
The G6 Alliance members are: APL, Hapag-Lloyd, Hyundai Merchant Marine, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Orient Overseas Container Line.
Ship catches fire at entrance to Suez Canal
A cargo ship was allegedly set ablaze Friday at Port Tawfik, the southern entrance of the Suez Canal, in the first incident to take place since the Aug. 6 launch of the canal’s expansion.
Rescue teams from Suez Canal Authority and Red Sea Ports Authority put out the fire and rescued the 13-member crew (six Egyptians and seven Indians), RSPA said.
The accident did not affect the navigation at the entrance of the Suez Canal, the authority said.
The Om el-Kheir was heading to Cambodia and had been docked at the berth since mid-April due to a delay in transporting licenses, according to Abdel Rahim Mustafa, the SCA spokesperson.
The big growth spurt in cargo volumes that some East Coast ports have been experiencing seems to be slowing as the specter of the West Coast port labor conflict recedes, according to The Wall Street Journal.
Growth in container volumes at the Port of Savannah slowed to 10.3 percent year-over-year in July, compared with 23.2 percent in June. Container volumes fell 2 percent to 324,242 TEUs, from June to July at the port, mainly due to a fall-off in exports. Import growth is slowing as well. Loaded containers of imported goods passing through the Port of Savannah grew by 16.4 percent in July, year-over-year. That rate fell from 38.8 percent in June and an average of 33.9 percent for the first six months of the year.
At the Port of Virginia, year-over-year volume grew 8.8 percent in July, compared with 14.5 percent in June and a monthly average of 10.3 percent since the beginning of the year, according to port statistics.
Labor strife slowed or stopped work at several West Coast ports starting late last year before employers and the dockworkers’ union agreed to a new contract in late February. Not all West Coast ports have fully recovered: inbound container volume at the Port of Los Angeles fell 3.5 percent year-over-year in July.
The West Coast delays led to cargo being rerouted to East Coast ports by many retailers, including Wal-Mart and Lowe’s, for a change many predicted to be permanent.
"I think some people got carried away on how much volume was permanently shifting away from the West Coast," said Walter Kemmsies, chief economist at Moffatt & Nichol, to the WSJ. "Very little of what shifted away is going to stay permanently on the East Coast."
Kemmsies forecasts that East Coast port volume growth will slow to between 5 percent and 8 percent, based on his broader forecast of economic expansion.
Toyota and other carmakers divert shipments from Tianjin
Toyota Motor Corp and other global carmakers are looking to divert shipments to Shanghai and other ports from Tianjin after the devastating explosions last week disrupted operations indefinitely at China's largest auto import hub.
Access has been restricted to areas affected by the Aug. 12 blasts at a hazardous chemicals warehouse that killed at least 114 people. Automakers are struggling to reach lots and warehouses to assess damage and clear thousands of charred cars to make facilities usable, though the port continues to operate.
On Wednesday, Renault and Subaru maker Fuji Heavy Industries said they would re-route imports to Shanghai, while Hyundai Motor Co said it would send further shipments to Shanghai and Guangzhou.
Toyota may divert imports to Shanghai and Dalian, which have enough capacity to prevent any significant logistical problems, a Beijing-based executive said.
Toyota suspended its two final assembly lines near Tianjin port this week, partly to assess damages. It made 432,340 cars at the plants in 2014, and is likely to lose 2,200 a day due to the tragedy, said researcher IHS Automotive.
French logistics giant Geodis to buy Tennessee 3PL OHL
Logistics giant Geodis, France’s largest shipping and transport company, has entered an agreement to buy third party logistics company OHL.
Media reports suggested last week that the deal was nearing $800 million to buy the Brentwood, TN, company, but the final purchase price was not disclosed.
With more than 8,000 employees and $1.3 billion in annual revenues, OHL is one of the largest third-party logistics companies in the U.S. With more than 120 distribution centers in North America, the company has more than 36 million square feet of flexible warehouse space.
OHL specializes in the apparel, healthcare, electronics, food and beverage and consumer goods sectors with integrated global supply chain management and import and export consulting among its services. Starbucks, Apple, Red Bull and General Motors are among the company's clients.
Geodis has 30,000 employees worldwide, more than 120,000 customers, a fleet of 10,000 trucks and roughly $7.5 billion of annual revenue. Europe's fourth-largest supply chain operator, owned by SNCF Logistics, operates in more than 67 countries. Geodis specializes in supply chain optimization, freight forwarding, contract logistics, distribution and express and road transportation.
Evergreen logistics unit badly damaged in Tianjin explosion
An Evergreen Group logistics subsidiary has been badly damaged by the fatal explosions in the northern China port city of Tianjin.
Evergreen reports its logistics unit, Kingtrans International Logistics, suffered extensive damages from the explosions that took place a week ago in the Tianjin Binhai New Area near the Tianjin port.
The group said that since the Tianjin logistics unit is located only 500 meters from the center of the explosions, the blasts have dealt a big blow to its subsidiary.
Thirteen Kingtrans employees were injured, and two of them suffered serious but not life-threatening injuries, the group said.
Media reported the explosions have caused massive logistical hurdles in the port city to get cargo to go through. The blasts killed at least 85 people, with more than 700 injured.
Evergreen said that as the port area has been closed by Tianjin authorities for investigations into the cause of the blasts and no personnel of Kingtrans are allowed to enter, it is hard at this moment to assess the financial losses of the subsidiary resulting from the incident.
Alarming levels of sodium cyanide found in Tianjin blast area
Potentially dangerous levels of sodium cyanide have been found at wastewater monitoring stations in the port city of Tianjin almost five days after a series of fatal explosions claimed at least 114 lives and triggered intense criticism of the Chinese government.
Bao Jingling, the chief engineer from Tianjin’s environmental protection bureau, said excessive levels of the toxic chemical had been detected in surface wastewater at the blast site. The highest levels detected were 27 times acceptable limits.
Exposure to sodium cyanide, a white powder with a variety of industrial uses, can be "rapidly fatal," according to the U.S. Centers for Disease Control and Prevention.
He Shushan, Tianjin’s deputy mayor, said "all sodium cyanide within 3km of the blast zone would be collected and neutralized before Monday evening."
China’s Prime Minister Li Keqiang vowed to identify and punish those responsible for the tragedy.