Containership charter owner Seaspan has been labeled "an attractive play" for investors due to its expanding fleet and long-term lease contracts despite shares that are down 40 percent from an April high that has coincided with depressed freight rates amid fears of a global slowdown in trade.
According to a report in the stock investor publication Barron's, Seaspan's current roster of 65 "young" box ships "are fully leased to major shipping lines at fixed rates" at a remaining average time of seven years, with a yield of 5.8 percent.
The article forecasts a possible rebound in the Hong Kong-based company's stock in two years from the current $12.94 per share to $18.
Containerships are in better supply-chain balance compared to other shipping fleet types, according to
Douglas Mavrinac, director of the maritime group at global investment bank, Jeffries.
Seaspan has financed its expansion with $3.0 billion worth of debt as of the end of June with sales and earnings before interest, taxes, depreciation and amortization forecast to hit $409 million this year, climbing to $514 million in 2012, the article said.
Seaspan's net income is forecast at $64.7 million, or $1.08 a share.
Long-term containership demand has grown at an average annual rate of 9 percent, with the exception of the global recession year of 2009.
The Barron's article does point to it what says is "one potential risk" with Seaspan's top customer, China Ocean Shipping Company, accounting for 52 percent of the charterer's sales.
However, Michael Webber, a shipping analyst for Wells Fargo thinks the long-term partnership is a positive.
"While counterparty risk in the sector continues to rise, we continue to view COSCO as a preferred customer," he said.
North America's truck freight rose 3.2 percent in September
Spot market trucking freight rose 3.2 percent in North America in September over August and 45 percent over the same period last year according to TransCore's freight index.
September was the highest same-month spot market for freight availability since the aftermath of Hurricane Katrina, according to TransCore.
National average rates increased 2.3 percent for dry vans compared to August and 3.9 percent compared to September 2010, excluding fuel surcharge, the report said.
Reefer van rates were up 1.3 percent over August, and 2.1 percent compared to September 2010.
The freight index listed flatbed rates as "stable" with a 0.6 percent increase compared to August, and a 10.2 percent year-over-year gain due to high demand.
CSX moves in on Norfolk Southern's market share at East Coast ports
Eastern Class One railroad Norfolk Southern Corp. has enjoyed the majority of market share for containerized rail freight moving in and out of the Virginia Port Authority's Hampton Roads complex, however, as the Virginia-Pilot reports, a new contract between NS' rail competitor CSX and the world's biggest container-shipping line, Maersk, could alter that landscape along the East Coast.
The new CSX-Maersk deal reportedly means most of the intermodal cargo handled at the latter's APM Terminals facility at Hampton Roads will be carried by the Jacksonville-based rail carrier, in addition to other East Coast APMT locations.
"The premise is more competition at the port and a growing pie," said Ryan D. Houfek, assistant vice president, sales for CSX Transportation. "It really kind of gets us out of the gate here and makes CSX a real force in the Port of Virginia," he told the Virginian-Pilot.
Norfolk Southern's intermodal business was reportedly over $1 billion in sales in the first half of 2011.
"We can still handle traffic going into APMT from other ocean carriers," said Robin Chapman, a spokesman for Norfolk Southern.
"When you have both Class 1 railroads calling at your port, it really helps us," said Joe Harris, spokesman with the VPA.
Norfolk Southern continues to handle most of the rail freight through Norfolk International Terminals, the other major container-handling facility at the VPA, and until CSX's impending National Gateway double-stack rail corridor is activated, its new service for Maersk in Virginia will offer five single-stack trains a week between Portsmouth and Northwest Ohio, the Pilot reported.
Crowley Maritime Corp. announced it has streamlined the Customs brokerage services of Crowley and its subsidiary Customized Brokers Inc. to operate out of a joint office in Miami under Vice President Nelly Yunta.
Crowley said in a statement that Chris Bustamante, manager, customs compliance and consulting, would now report to Yunta in Miami.
MSC willing to help with New Zealand ship cleanup
Senior managers for Mediterranean Shipping Company, the charterer of the containership Rena that ran aground on the Astrolabe Reef at the Port of Tauranga on October 5 spilling an estimated 350 tons of oil to date, have reportedly told New Zealand's transport minister, that the Geneva-based shipping company is willing to provide assistance in clean-up that has thus far reached a cost of $3.5 million and is rising.
While MSC has reportedly taken responsibility for the containers that have fallen overboard from the grounded ship, the shipping line claims the liability for the cost of the cleanup is on the shoulders of the owners of the Rena, Greece's Costamare Shipping.
Phil Abraham, MSC's general manager in New Zealand, was reported to have told Transport Minister Stephen Joyce that MSC is willing to assist in cleanup.
Joyce reportedly questions to what extent MSC might be liable in the incident.
The container-shipping industry could reportedly be in for five years of over-capacity as more new ships are scheduled to hit the waves, exceeding demand forecasts.
Containerized capacity could outpace demand by as much as 10 percent in the next three years without much forecasted improvement for the following two years, Neil Dekker of Drewry Shipping Consultants told Bloomberg.
The two biggest global shipping tradelanes - trans-Pacific and Asia-Europe - are approximately at 85 percent capacity, according to Drewry's statistics.
"Freight rates are very low," Dekker said. "It would be logical to lay up vessels, but that's not really happening."
As major global economies, especially in debt-challenged Europe, struggle down a path of slow growth, freight rates have reportedly dropped a staggering 70 percent since the peak of 2010 with the increase of tonnage from major shipping lines like Denmark's A.P. Moeller-Maersk.
"The market outlook is pretty bleak," said Ross Porter, a fund manager at Norway's Skagen A/S that holds about 10,000 shares in Maersk.
"Given the overcapacity that's built up in the market, a few years will be required to consolidate the situation," Porter told Bloomberg.
Drewry's Container Forecaster report forecasts container-shipping capacity to grow by 29 percent by the end of 2013 with demand rising as low as 19 percent.
Capacity in the container market will rise 29 percent in the three years ending in 2013, according to data from London- based Drewry's quarterly Container Forecaster report. Demand will grow by as little as 19 percent in the period, it said.
As the European Union attempts to avert default by Greece among other debt-challenged countries there, a recent Danske Market container index revealed an average freight rate of $650 per-TEU compared to $2,100 per-TEU 18 months ago.
Ocean carriers have $57 billion worth of containership orders on the books equating to 4.5 million TEUs being added to the current 15.2 million TEUs, over the next four years, according to an estimate compiled by Paris-based shipping industry consultancy Alphaliner.
Maersk CEO Eivind Kolding believes demand will catch up to vessel capacity in a year according to an interview broadcast on Danish TV.
"In the long-term I see Maersk coming out as the relative winner," he said. "They have the financial strength to weather this cycle, which a lot of their competitors don't."
Earnings per share increased 19 percent for CSX Corp's third quarter, a record for the Jacksonville-based Class One rail carrier.
CSX reported operating income of $878 million and net earnings of $464 million, or 43 percents per share, compared to $414 million, or 36 cents per share for the third quarter of last year, the company announced.
"Even as the economy moderated, CSX delivered strong financial results while investing in additional resources to strengthen customer service," said Michael J. Ward, chairman, president and chief executive officer in a statement.
Fuel cost recovery helped the railroad's revenue in improve 11 percent over the previous year to close to $3 billion, CSX reported.
The New York State Department of Environmental Conservation, however, passed legislation that required all seagoing vessels that transit through the U.S. portion of the Seaway to install ballast water treatment systems onboard that sterilize that water by 100 times the international norms by midnight on Aug. 1, 2013 - and 1,000 times one year later.
Canadian shipping industry up in arms over NY state ballast water regulations
The state of New York is reportedly up against the Canadian shipping industry in addition to being at odds with the U.S. federal government, Coast Guard and Environmental Protection Agency, due to an impending requirement for ships entering the U.S. side of the St. Lawrence Seaway to have advanced ballast water treatment systems on board.
Gerry Carter, chief executive of Montreal-based CSL told the Montreal Gazette that the new ballast water standard is "just ludicrous," and that the technology for these required systems "doesn't exist anywhere in the world."
The New York State Department of Environmental Conservation was able to get legislation passed that will require all commercial vessels transiting the Seaway there will need to install ballast water treatment systems that sterilize the water by 100 times current international standards by August 1, 2013, and by 1,000 times the following year.
The industry that is engaged in that shipping lane, including the Canadian St. Lawrence Seaway Management Corp. and the U.S. St. Lawrence Seaway Development Corp, have said the stricter New York ballast treatment standards would cost 72,000 Canadian and U.S. jobs and $8.5 billion in business.
Presently, ships that transit through the Seaway are required to exchange ballast water at sea where the salinity of seawater reportedly destroys 99.93 percent of the zooplankton that could be a menace to the Great Lakes' ecosystem.
The regulators in New York differed with the opinion that the technologies they will require are not presently doable.
"The Department has ... determined that ballast water treatment technology capable of meeting the discharge criteria ... has been developed. ... Furthermore, the Department has determined that ballast water treatment technology continues to advance rapidly ... and that (extensions offered in some cases) will provide adequate time for the installation of a ballast water treatment system ... to meet New York's water quality standards," according to a statement released in February of this year by the Department of Environmental Conservation.
South Carolina's breakbulk tonnage surges almost 80 percent
Breakbulk and ro-ro tonnage at the South Carolina State Ports Authority surged close to 80 percent at 234,232 tons for the first fiscal quarter of 2012, largely due to volumes handled at its newly Columbus Street Terminal - a $23 million project, the port announced.
The Columbus Street facility's first phase improvements to the storage yard and rail infrastructure enhancements were completed in March, the port said in a statement.
That facility's non-containerized cargo handling totaled 362,952 tons, a six-fold increase compared to 52,781 tons handled for the same period last year, the port said.
Charleston's container business increased in September, totaling 125,032 TEUs, up 8.9 percent from August and 17.6 percent over the same month last year. First quarter container volume at the port for the quarter was essentially level over the same quarter in 2011 at 353,368 TEUs, the strongest quarter for the port since fourth-quarter 2008.
The first major phase of the project to improve the storage yard and enhance rail infrastructure was finished in March. In those seven months, Columbus Street Terminal's non-container cargo totaled 362,952 tons, a six-fold increase from 52,781 tons last year. The facility's vehicle count for the seven-month period totaled 112,161 autos, compared to 58,856 in the port during the same period in 2010.
Pirates attack more vessels but take fewer of them
Piracy on the high seas for the first nine months of 2011 hit a record 352 vessels attacked, up from 289 such attacks for the same period in 2009, but fewer ships were commandeered, according to a report by the International Maritime Bureau.
Pirates, primarily those originating from the African state of Somalia, seized 24 ships compared to 35 for the same period last year, the IMB reported.
"Somali pirates are finding it harder to hijack ships and get the ransom they ask for. The navies deserve to be complimented on their excellent work: they are a vital force in deterring and disrupting pirate activity." said IMB Director Pottengal Mukundan in a statement.
Friday, October 21, 2011
Top Story
Foye the new face of NY-NJ port authority
A new face will be out in front, and on top, of the biggest port authority on the East Coast.
On Thursday, the Port of New York and New Jersey's board of commissioners confirmed Patrick J. Foye on the recommendation of New York Governor Andrew Cuomo, to be the next executive director of the bi-state agency.
Foy had been serving as Gov. Cuomo's deputy secretary of economic development, and now replaces Executive Director Christopher Ward, who leaves the port's top post at the end of this month.
Previous to his economic development post, Foye was the deputy county executive for Nassau County Executive Edward Mangano, and had served as a board member of the Metropolitan Transportation Authority, representing Nassau County.
Foye steps in on the heels of other developments passed by the PANYNJ commission on Thursday, including the authorization for the first phase development of an intermodal container transfer facility at the Greenville Yard-Port Authority Marine Terminal.
Virginia port to replace two-thirds of police force with private security guards
The Virginia Port Authority reportedly plans to slash its own police force by June of 2012; replacing them with private, contracted security guards.
The cutting of 45 of the 71 staff police officers would save the port between $1 million and $2 million per year, said port spokesman, Joe Harris.
The port said it would make the staff adjustments through a mix of early retirement and layoffs.
The Association of American reported what it termed "mixed results" for weekly freight rail traffic, with 303,363 U.S. railroad carloads for the week ending Oct. 15, 2011, a flat volume compared with the same week last year.
Intermodal rail volume was up 3 percent for the week at 244,389 trailers and containers.
Eleven of the 20 carload commodity groups posted increases from the comparable week in 2010, including: metallic ores, up 28.1 percent; metals and products, up 18 percent, and petroleum products, up 17.2 percent, the AAR reported.
Grain was down 14.8 percent, and waste and nonferrous scrap was down 9.5 percent, the report said.
Weekly carload volume on Eastern railroads was up 0.4 percent compared with the same week last year and out west was down 0.2 percent compared with the same week in 2010.
For the first 41 weeks of 2011, U.S. railroads reported cumulative volume of 11,935,013 carloads, up 1.7 percent from the same point last year, and 9,367,614 trailers and containers, up 5.3 percent from last year, according to the AAR report.
Combined North American rail volume for the first 41 weeks of 2011 on 13 reporting U.S., Canadian and Mexican railroads totaled 15,603,255 carloads, up 2.1 percent compared with the same point last year, and 11,681,084 trailers and containers, up 5.1 percent compared with last year, the AAR said.
Better weather prods momentum for Rena salvage
Improved weather conditions have opened up a window for the salvage operation of the containership stuck on a reef 25km off the Port of Tauranga, New Zealand.
A total of 171 tons of oil have reportedly been removed from a 772-ton-capacity tank onboard the stricken vessel as of today.
"Their focus now is on getting that flow happening more quickly. They have a range of options they will be testing to speed up the process they will be working through these over the next 24 to 48 hours," MNZ Salvage unit Manager Bruce Anderson in an AAP report.
"The oil is very difficult to work with and is flowing very slowly at present. However, the team will be doing everything they can to get it moving faster.
We have fine weather forecast until Wednesday so we are taking advantage of the good weather while we can," he said.
Several hundred tons of oil has spilled into the ocean and onto beaches since October 5, with 827 tons of waste reportedly recovered to date.
A big marijuana bust valued at $7.6 million was reportedly made at the Port of Miami by U.S. Customs and Border Protection officials - the biggest such haul by CBP there in over two years.
The 3,837 pounds of marijuana was detected in a shipping container after a routine search of a ship arrival from Australia that was headed to Colombia, according CBP spokeswoman Norma Morfa.
The vessel had made a reported stopover in Kingston, Jamaica where Customs officials claim the container of marijuana was loaded.
The pot was packed between magnetite, an iron oxide, the Miami Herald reported.
"They're always trying to come up with different ways of bringing in contraband," Morfa said. "This was one of the times when I guess they weren't that smart. It was easy to find ... it wasn't actually hidden."
No arrests have been reported to date as the investigation continues.
