Daewoo: Fuel-efficient mega-ships to weather volatile economy
The chief executive of the third largest shipyard in the world, South Korea’s Daewoo Shipbuilding & Marine Engineering Co., said the next generation of fuel-efficient mega-containerships it is building would help both the shipyard offset a slowdown in orders, and shipowners lower costs.
“Large ships will help shipowners reduce costs, creating a new segment that may be less influenced by how the world economy performs,” Chief Executive Officer Nam Sang Tae said on Monday in Seoul as reported by Businessweek.
Daewoo is building twenty 18,000-TEU containerships for Denmark’s A.P. Moeller-Maersk A/S.
The huge vessels will reportedly burn 35 less fuel per container compared to a 13,000-TEU ship.
Bunker fuel has reportedly risen almost 30 percent this year, trading at $655.50 per ton, according to Bloomberg data.
The big three shipyards in the world, Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo, could end up with $30 billion worth of more sophisticated, mega-ship orders over the next few years, helping to offset the rising tide of lower-cost ships being built in China, according to James Yoon, an analyst for BNP Paribas SA.
CMA CGM H1 profit plummets 72 percent; revenue, volume is up
France’s CMA CGM, the third largest container-shipping firm in the world, posted a 72 percent drop in net profit for the first half of 2011 at $237 million, compared to $887 million for the same period a year ago.
The shipping line also reported revenue of $7.3 billion, up 8 percent, and 9 percent more containerized volume at 4.8 million TEUs.
By market sector, CMA CGM posted business increases in the trans-Pacific, up 11 percent; trans-Atlantic, up 6 percent; and South American-Caribbean up 5 percent; helping offset losses in the Asia-Europe and Mediterranean trades, it said in a statement.
“Our first-half performance was very satisfactory, both operationally and in regard to the strength of our balance sheet,” said Rodolphe Saadé, the shipping group’s chief executive officer.
“We drove faster growth in freight volumes than the competition, while demonstrating the effectiveness of our strategy by raising nearly a billion dollars from leading international institutional investors,” Saadé said.
“Although the current global economic situation calls for caution, we remain confident in our ability to further strengthen our positions thanks, in particular, to our modern, efficient fleet and the quality of our extremely professional teams, which enable us to take a calm view of both the medium and the long term,” he said.
During the first half of 2011, CMA CGM Group sold an equity stake by issuing $500 million in equity notes to the Yildirim Group that raised an aggregate $945 million through two bond issues in dollars and Euros.
CMA CGM Group said it would continue to develop “strategic positions in emerging markets, with a focus on Russia and India.”
The shipping line said it would also expand in Latin America, in anticipation of the late 2014 opening of the Panama Canal’s third set of locks for post-Panamax ships. The company said its new trans-shipment hub in Kingston “will be ideally located to capitalize on the new opportunities.”
Pentagon pays over $720 mil for container detention
The Pentagon has paid over $720 million in container detention fees for shipping containers not returned on time since 2001, according to a USA Today report.
The steel shipping containers were used by troops in Iraq and Afghanistan for a variety of uses, including storage, shelter and building materials.
Each late fee could reportedly reach as much as $2,200 per container.
"When a container is not returned in a timely manner, carriers miss the opportunity to serve a customer," said Kevin Speers, a spokesman for the shipping company Maersk Line Ltd.
"Detention fees are a common incentive to prompt the on-time return of containers, similar to late-fees on a car or movie rental," Speers said.
Crowley Maritime announced its 689-foot-long Vision/650-10, the last of 10 articulated tug-barges (ATBs), has been delivered by V.T. Halter Marine of Pascougla, Miss.
The ATB with 185,000-barrel capacity will transport petroleum products between U.S. West Coast ports, Crowley said in a statement.
"This class has a long history of safe petroleum transportation and offers compelling economics and exceptional performance," said Crowley's Rob Grune, senior vice president and general manager, petroleum services.
Update on ships seized by Somali pirates
The following is courtesy of Reuters.
Somali pirates have freed a Greek-operated oil products tanker and its crew after holding them hostage for nearly 10 months, the vessel's manager said.
The MT Polar, a Liberian-owned Panama-flagged 72,825-tonne tanker was seized 580 miles east of Socotra last October with a crew of 24.
Here are details of ships still held by Somali pirates:
SOCOTRA 1: Seized on Dec. 25, 2009, in the Gulf of Aden. The Yemeni-owned ship had six Yemeni crew.
ICEBERG 1: Seized on March 29, 2010. Roll-on roll-off vessel captured 10 miles (16 km) from Aden. Crew of 24.
Three Thai fishing vessels -- PRANTALAY 11, 12 and 14 -- hijacked on April 17-18. Total of 77 crew. Prantalay 12 remains in captivity. Prantalay 11 and 14 were freed by the Indian navy.
OLIB G: Seized on Sept. 8. Maltese-flagged merchant vessel with 18 crew -- 15 Georgians, three Turks.
CHOIZIL: Seized on Oct. 26. South African-owned yacht hijacked after leaving Dar es Salaam. European Union anti-piracy task force rescued one South African but two other crew members were taken ashore and held as hostages.
ALBEDO: Seized on Nov. 26. Malaysian-owned cargo vessel was taken 900 miles off Somalia as it headed for Mombasa from UAE. Crew of 23 from Pakistan, Bangladesh, Sri Lanka and Iran.
PANAMA: Seized on Dec. 10. Liberian-flagged container ship en route from Tanzania to Beira. Crew of 23 from Myanmar.
ORNA: Seized on Dec. 20. The Panama-flagged bulk cargo vessel, 27,915 dwt, owned by the United Arab Emirates, was seized 400 miles northeast of the Seychelles.
SHIUH FU NO 1: Seized Dec. 25. Somali pirates appeared to have seized the Taiwanese-owned fishing vessel near the northeast tip of Madagascar in the Indian Ocean. The vessel had a crew of 26 Taiwanese, Chinese and Vietnamese nationals.
BLIDA: Seized on Jan. 1, 2011. The 20,586-tonne Algerian-flagged bulk carrier was seized about 150 miles southeast of Salalah, Oman. The ship, with 27 crew from Algeria, Ukraine and the Philippines, was heading to Dar es Salaam, Tanzania, from Salalah with a cargo of clinker.
HOANG SON SUN: Seized on Jan. 19. The 22,835-tonne bulk carrier, which is Mongolian flagged and Vietnamese-owned and has a crew of 24 Vietnamese nationals, was seized about 520 nautical miles southeast of the port of Muscat.
SAVINA CAYLYN: Seized on Feb. 8. The 104,255-dwt tanker, Italian-flagged and owned, was on passage to Malaysia from Sudan when it was attacked 670 miles east of Socotra Island. It had five Italians and 17 Indians on board.
ALFARDOUS: Seized on Feb. 13. The Yemeni fishing vessel was believed to have been seized close to Socotra Island in the Gulf of Aden and has a crew of eight.
DOVER: Seized on Feb. 28. It was taken about 260 nautical miles northeast of Salalah in Oman. The Panamanian flagged, Greek owned vessel was on its way to Saleef in Yemen from Port Quasim, Pakistan, when it was attacked. The crew consists of three Romanians, one Russian and 19 Filipinos.
SINAR KINDUS: Seized on March 16. The Indonesian flagged and owned bulk cargo carrier was taken approximately 320 miles northeast of Socotra in the Somali Basin. The ship, with 20 crew, was quickly used to launch further attacks.
ROSALIA D'AMATO: Seized on April 21. The Italian-owned bulk carrier was captured 350 miles (560 km) off the coast of Oman. The 74,500 tonne bulk carrier was on its way to Bandar Imam Khomeini in Iran from Brazil with a cargo of soya. The 21 crew consisted of six Italians and 15 Filipinos.
GEMINI: Seized on April 30. The Singapore-flagged chemical tanker was seized off the Tanzanian coast, 115 miles east of Zanzibar. The 29,871 dwt vessel carried 28,000 tonnes of crude palm oil from Kuala Tanjung in Indonesia to Mombasa. The 25 crew consist of four from South Korea, 13 from Indonesia, three from Myanmar and five from China.
FAIRCHEM BOGEY: Seized on Aug. 20. The empty chemical oil tanker with its 21 crew was seized south of Salalah port in the Gulf of Oman. The 52,455 dwt Marshall Islands flagged tanker is managed by Mumbai-based Anglo-Eastern Ship Management.
COSCO bulk charter dispute could impact industry’s credit rating
China’s biggest shipping group, COSCO, is engaged in a dispute over withheld charter payments for capesize bulk vessels that were long-term-chartered for as much as $80,000 per day in 2008, prompting industry-wide speculation that credit rating agency Moody’s could downgrade the entire dry bulk shipping sector as a result.
At least three bulkers chartered to COSCO have been seized at ports around the world for non-payment, in a marketplace where day rates have plummeted since 1998 to $16,716 for the largest capesize type of vessel, according to a report in the Financial Times.
At a recent press conference, COSCO claimed there is nothing unusual about the withheld charter payments, however four are chartered to the Athens-and-New York-based holding company, Navios Maritime, whose chief financial officer and director, George Achniotis, responded with: “If you have a contract, you have to honor the contract. We haven’t seen it from anyone else.”
Greek shipowner, George Economou, chief executive of Dryships, has seized at least one chartered vessel from COSCO, with 18 such ships chartered to the Chinese shipping company.
“We are still in ongoing discussions,” with COSCO over back payments he told the FT.
Meanwhile, Moody’s reportedly said in its weekly credit market report that a downward trend in re-negotiated contract charter rates could have a negative impact for dry bulk shipowners.
“Charter rates are currently much lower than they were in 2008 and renegotiation of contracts could set a precedent that spurs other Chinese shipping companies to seek more favorable terms in their existing agreements.”
Fedex Freight announced it would now serve three more markets in Mexico.
The LTL subsidiary of FedEx Corp. said it has new service centers in Toluca, Puebla and Veracruz, reportedly reducing transit times by an average of 50 percent for customers shipping in the southeast region of Mexico. Fedex Freight claims shippers also have the option of extended pick-up times in these locations in addition to Villahermosa.
The three service centers commenced operations on Aug. 1, 2011. FedEx Freight’s LTL freight services in Mexico are through an alliance with Auto Lineas America (ALA), via a network of 15 service centers.
APM Terminals to sell 25 percent stake in Xiamen facility
APM Terminals, the terminal operations arm of Danish shipping giant A.P. Moller-Maersk, has reportedly agreed to sell a 25 percent stake in Xiamen Songyu Container Terminal, according to a Reuters report.
The terminal has been a joint venture between APM and Xiamen Port Holding Group.
APM Terminals, which currently holds a 50-percent stake in the venture, did not offer any financial details of the deal.
Shipping impacted by storm approaching eastern China
Tropical storm Nanmadol is reportedly approaching Eastern China's Fujian Province; causing the cancelation of flights and suspending service by shipping lines, according to China’s state media organization, Xinhua.
Nanmadol was reportedly just over 18 miles from the city of Jinjiang in Fujian with winds at 52 miles per hour near its center at 4 p.m. on Tuesday.
Nanmadol was downgraded from a typhoon to a tropical storm around on Monday, and was forecast to make landfall in the southern region of Fujian Tuesday night.
There were reportedly several 6.5-foot cracks discovered Tuesday morning along a 1,300-foot section of the seawall along Jinjiang's coast in the village of Weitou, which is only 328 feet from the seawall, according to the Reuters report.
Quanzhou municipal authorities have reportedly organized more than 41,000 people into rescue teams to prepare for potential emergencies, the Xinhua report said.
At Xiaquan village in the neighboring Zhejiang Province, 28 kindergarten students and teachers were trapped by flooding at their school due to the heavy rains that slammed the area on Tuesday morning.
Rescuers carried the children and teachers on their backs through the waist-deep water to safety, the report said.
Slowed trade growth since 2009 has resulted in the longest stagnant period in the history
of Asia-to-Europe container shipping. Business rose 4.2 percent in the second quarter,
the lowest since the end of 2009 for the second busiest container route in the world.
The seasonal European import increase for the holidays may be weaker this year due to
worries about slowed economies and unemployment.
While container trade is projected to expand by 4 to 6 percent, fleet capacity will grow by
15 percent, according to Morgan Stanley. A.P. Moeller-Maersk, number one in container
shipping, is expected to show a 25 percent drop in net income this year.
Container carriers are cutting services and suspending ships from trading to increase rates
and lower capacity. Some lower the speed of ships to make the trips longer and reduce
Trade this year on the Asia-Europe route will expand 5.1 percent, as opposed to the
projected 6.2 percent.
China Merchants’ reported net income went up to HK $3.9 billion from HK$1.93 billion
year on year. The increase was due to a 27 percent rise in container cargo, and from
HK1.37 billion ($176 million) of profit from its stake in Shanghai International Port Co.
Maersk Line will restart its cargo service to Libya on Sept 8. The container shipping giant
said for the first time since February 2011, it will call at the east Libyan port of Benghazi.
Because of civil unrest in Libya, Maersk stopped its shipments on February 22. The resumption of shipping services to the country is key to normalizing trade and bringing in needed humanitarian aid. Approximately 50,000 have been killed since Libya’s uprising
to overthrow Muammar Gaddafi six months ago.
The Port of Long Beach has made a deal to buy a 27-story building in downtown Long
Beach for its headquarters. The port announced they are buying the 573,000-sq-ft One
World Trade Center building for $130 million, with another $30 million in moving and
associated costs. The money to fund the building is derived from leases with shipping
A dead body was discovered in a load of coal on the South Side of Chicago. As a load
of coal was emptied at the KCBX terminal, a body was the last thing to fall out of the
container. The container was loaded in Montana on Aug. 18.
President Barack Obama called on Congress Wednesday to quickly renew the Surface Transportation Bill, legislation to improve and maintain U.S. highways that expires the end of this month. Top officials from the Chamber of Commerce and the AFL-CIO joined the President during his remarks.
Obama said failure to renew the bill will result in the loss of up to 1 million jobs, and that a delay of even ten days will result in losing $1 billion of highway funding. Congressional Democrats and Republicans are fiercely divided on the infrastructure bill extension, due to disagreements about its length and cost.
The cost of iron-ore hauling capsize vessels has risen to a half-year high on bets that there is a growing shortage of such ships in the Atlantic Ocean.
According to the Baltic Exchange, the cost to hire one of the ships rose 18 percent, the highest since December. Forward freight agreements, which speculate on dry bulk fleet rates, rose 13 percent on Thursday to $17,125 a day for October to December contracts. Transatlantic rates rose 28 percent to $20,500.
One trader said that since most of the fleet is in the Pacific Ocean, there are fewer capsize vessels to carry iron ore from Brazil and Colombia to Europe and Asia, and newer ships are less likely to be sent out on the Atlantic route due to rising fuel costs.
Rentals costs for approximately 40 percent of the dry bulk fleet, or 1,237 capesize vessels, went up 43 percent in the past year.
Dry bulk ships account for 39 percent of world trade, according to Genco Shipping and Trading, Ltd.
COSCO, China’s top shipping firm, is consolidating its three freight units into one company, due to a slow economy. The downturn caused the company to stop payment to ship owners this week, a move that hurts its standing in the industry. The contracts were signed during the 2008 market peak, and the company is seeking to renegotiate terms.
COSCO Bulk Carrier, COSCO Hong Kong Shipping and Qingdao Ocean Shipping are in the midst of consolidation, but the company did not divulge information on where the blended company will be headquartered or its new management structure. COSCO is the largest dry bulk company in the world, with 400 vessels operating through the three freight units.
A Port of Long Beach Harbor Commissioners committee on Monday approved a 20-year lease with Toyota, pending final board approval next month. The $240 million lease, requiring Toyota to implement pollution reduction and energy-efficient measures, means that POLB will remain a major hub for the Japanese automaker through 2028.
The U.S. Energy Department in August shipped nuclear waste by truck, using a new type of shipping container. Said to be safer and more efficient, the Trupact III is reinforced with inner and outer steel plates and polyurethane foam. The prototypes were safety tested by dropping them from 30 feet in the air.
The materials, which included transuranic wastes such as equipment, clothes and soil tainted with plutonium, were shipped from Savannah River Nuclear Solutions to New Mexico. The boxes will be permanently buried more than 2,000 feet below the surface in caverns carved by from salt formations.
Early August container traffic reports from the Port of Long Beach indicate another drop, after a 1.2 percent reduction in July, according to POLB port director. The seasonal holiday sales surge does not look promising, as retailers hold back orders due to perceived consumer doubts about the economy.
Shipping giant A.P. Moeller Maersk A/S and other container lines have delayed applying the seasonal surcharge to Asia-U.S. shipments, unable to find sufficient cargo to fill the growing fleets. Usually surcharges start in July or early August.
The Port of Los Angeles saw a drop of 3.17 percent in inbound July containers. One economist said retailers and manufacturers are being very cautious after being “spooked” by the federal debt limit debate last month.
There is an expectation of a rush on cargo at the end of the year. The National Retail Federation projects a 10 percent rise in container volumes at major U.S. ports in September, and an 8 percent rise in October.
Obama jobs plan to include infrastructure innovation
Although the White House is being secretive regarding President Obama’s jobs speech at Thursday’s joint Congressional session, a midsession review of the economy from the Office of Management and Budget gives some indication of its direction. It seems certain that Obama will push beyond his original ideas of an infrastructure bank, free trade deals and patent reform in the high profile speech.
The review refers to new measures the President will propose to boost job growth in the short term, including tax cuts to the middle class, innovative infrastructure ideas to put people back to work, and measures targeted at the long term unemployed and other specific sectors that can deliver jobs, such as the construction industry.
Global Logistics Properties Ltd, the overseas logistics arm of the Government of Singapore Investment Corp, will raise warehouse rents in Japan due to a shortage of modern storage and distribution space. The company anticipates raising rents by 5 to 10 percent.
Since the March earthquake destroyed up to 46,000 business properties, there is a shortage of buildings with ramps that can store freight.
Global Logistic partnered with the Canada Pension Plan Investment Board to invest $500 million over three years to develop storage and distribution facilities in the Tokyo and Osaka regions of Japan.
Approximately 275,000 gallons of heavy fuel spilled into the Mobile River on Thursday, shutting down the shipping channel. A tank ruptured from a barge on a Blakely Island terminal. Clean up is underway. The spill caused a disruption of shipping traffic, with two docked ships unable to leave the port.
International Maritime Bureau lists five piracy prone areas
The International Maritime Bureau named the shorelines of five African countries as a high risk for vessels and ships, due to violent, aggressive pirate attacks that employ weaponry such as grenade launchers. The high-risk countries are Nigeria, Benin, Guinea, Cameroon and Somalia. Automatic weapon-wielding criminals are increasingly targeting oil and chemical tankers.
In the first six months of 2011, there were 266 pirate attacks in global seas, according to the IMB Piracy Reporting Centre. 60 percent of the attackers were Somali pirates, who were holding 20 vessels and 420 crew, as of June 30.