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LONDON: April 14, 2016. APM Terminals CEO Kim Fejfer has called for a “shake-up” and more infrastructure investment among port operators in order to contribute to the efficiency of shipping lines.

Noting the need for change has been more pronounced in the past two years than in the past twenty, he said changes in ocean shipping require not only investment and increased efficiency at the individual port level, but port configurations need to adapt to cope with current trade flows, increased ship sizes, and demands for the lowest possible cost.

Article APM Los AngelesSpeaking at a liner shipping conference in London, Fejfer said ports must find a way to cope with the cascading of large vessels into smaller trade lanes; the liner industry consolidation that is reshaping port call selection and frequency; and the demand by shipping lines for lower prices and better efficiency to protect their thin margins.

“In the past we handled 13,000 TEU vessels. Now we handle vessels 50 percent larger - and you need to be ready to handle these 20,000 TEU ships in all your ports or watch the business move elsewhere,” he declared.

Acknowledging that the lowest cost operator now wins the business, he said a decade ago a large terminal with a 900 meter quay could handle three or more vessels simultaneously; now with vessels of 400 meters in length, the same terminal with a reinforced quayside, larger STS cranes and deeper depth can only accommodate two ultra-large vessels at once to handle the same number of container moves.

“Now there is a need for more yard space, larger gates and more manning to handle the volume peaks in the terminal infrastructure. These result in additional costs to the terminal operator that the shipping lines are not ready to pay for,” he added.

“In today’s competitive environment, we need to become more standardized across our global portfolios, apply more technology to our terminal processes, use our scale, use more flexibility with our labor and partner with customers to get to the next level of efficiency in the industry,” said Fejfer.

Noting the ports of Los Angeles and Long Beach have 15 different container terminals, he suggested the various alliances that call at the ports are creating cost and waste in transfers: “If port operators are to contribute to the efficiency of shipping lines we have to drive rationalization, consolidation and segmentation. There will be clear winners and losers in the coming years,” he assured his audience.

HAMBURG: March 23, 2016. Hapag-Lloyd has reported a net profit of €114 million on revenue of €8.8 billion for 2015 – a turnaround from a loss of €604 million on revenue of €6.8 billion the previous year.

Reflecting a full year's integration with CSAV's container business, volumes rose 25.3 percent to 7.4 million TEUs, while expenses per TEU fell 20.1 percent US$1,089 as a result of a drop in bunker price from US$575 to $312 per tonne.

Hapag-Lloyd 2016Commenting on the results Hapag-Lloyd CEO Rolf Habben Jansen said: "2015 was a very good year for Hapag-Lloyd. We delivered on what we promised, our business is better positioned than before the CSAV merger, and for the first time since 2010 we have a positive result – and we are very delighted by this."

Habben Jansen said his company wanted to remain a "top five player" in the future and had set some ambitious cost-cutting and revenue improvement targets to ensure this: "We've worked hard for this success by quickly integrating CSAV's container business and by exploiting the synergies, as well as with the OCTAVE cost-cutting and efficiency program, which will make a total earnings contribution of US$600 million [in] 2016."

Noting industry results in the last quarter of 2015 are not sustainable, he said there "needs to be a recovery of the freight rates" which he expects sometime this year as a result of capacity becoming more in line with demand.

Commenting on recent liner consolidations, including his own company, he said it has led to a new mixture of alliances: "It's a good thing. The market needs stability," adding that it would be 2-3 months before the industry would see any "clarity".

Anticipating a modest recovery in the market and a "normal peak season" coupled with the gains from cost reductions and efficiency projects, Hapag-Lloyd expects a "moderate" increase of EBITDA and a "clearly" increasing EBIT in 2016 compared to last year's €831 million and €366 million respectively.

BREMERHAVEN: March 02, 2016. Project freight forwarder Bertling has completed the loading aboard a multipurpose heavylift vessel the largest gas turbine ever manufactured by Siemens.

Rickmers HamburgThe shipment, together with a generator, will be delivered to a gas power plant in Hamitabat near Lüleburgaz in northwest Turkey, due for completion in the Summer of 2017.

The 485-tonne gas turbine, together with a 465-tonne Siemens generator, was loaded from a barge to Rickmers-Linie's Rickmers Hamburg – the first time the 30,000dwt multipurpose heavy lift vessel had called at Bremerhaven, where Clasen Rickmers founded the Rickmers Group in 1834.

The load is the first of four shipments and will be discharged in the port of Tekirdag, southwest of Istanbul. Rickmers-Linie's specialized vessels will make three more calls at Bremerhaven to load cargo for this project.

Dirk Gindl, Rickmers-Linie general manager Sales Germany commented: "Due to the weight of the cargo and for us the historic background of the location, this was not just like any other port call. Of course, no loading operation is ever exactly like another and it is never a routine," he added.

Rickmers-Linie specializes in the global transportation of break bulk, heavy lift and project cargo by sea. The maritime group manages a fleet of more than 130 vessels.

HAMBURG: February 09, 2016. Hapag-Lloyd says last year it experienced a 46 percent rise in the number of suspicious shipments and a 65 percent increase in wrongly declared dangerous goods compared to 2014.

The carrier’s ‘Watchdog’ security software was able to identify 4,314 incorrectly declared dangerous goods shipments - compared to 2,620 the previous year - and over 236,000 suspicious bookings, an increase from 162,000 in 2014.

Ken Rohlmann, head of the dangerous goods department at Hapag-Lloyd said the rise was due to the volume of cargo shipped by the company following its merger with CSAV’s container business. “Secondly, there was a sharp rise in Watchdog findings following the devastating dangerous goods explosion in the port of Tianjin in mid-August,” he explained.

NileDutch AHapag-Lloyd is a founding member of the Cargo Incident Notification System Network (CINSNET) made up of 10 major liner-shipping companies that account for around two-thirds of all global container traffic. The network enables its members to share information on incidents relating to dangerous goods.

Rohlmann said the Watchdog software has provoked growing interest from Customs, port authorities, police and other shipping companies. In September last year Hapag-Lloyd and Maersk Line agreed to cooperate in the tracking of dangerous goods with Maersk saying it wanted to implement a process similar to Watchdog.

"Experience, know-how and secure processes are crucial for a safe transport of dangerous goods," declared Anthony Firmin, COO of Hapag-Lloyd. "We are very happy that we were approached by other shipping lines to learn more about our Watchdog program. The cooperation with Maersk Line is a very important step forward for increased safety and security of our entire industry," he added.

In a related move,Hapag-Lloyd has acquired two 3,500-TEU ships, and will lease two more, from NileDutch (right) for use in shallow-draft ports in South America. The purchase price was not disclosed.

The wide-beam design of the ships that were built last year combine a comparatively high slot capacity with a lower draught. “For Hapag-Lloyd, these state-of-the-art and highly efficient vessels represent an important enhancement of the fleet,” explained Firmin.

The company said four more wide-beam ships with ice navigating capability and capacity for 2,700 TEU are being chartered for services between the Mediterranean and Montreal and will replace existing, older tonnage.

maersk-line-2COPENHAGEN: In a bid to cut costs, Maersk Line is to reduce the number of its employees from 23,000 to 17,000 over the next two years and has cancelled options for six 19,630 TEU vessels and two 3,600 TEU feeders.

The company said lower market demand has prompted the move that will include a reduction in the cost of annual sales, general and administration by US$250 million by the end of 2017 with US$150 million savings projected next year.

The company will also postpone a decision on options for eight 14,000 TEU vessels in response "to both the short term and long term market outlook", and reduce network capacity in Q4 2015 and throughout 2016.

In the past two months Maersk began cancelling four services (ME5, AE9, AE3 and TA4) and plans to cut a further 35 sailings by the end of this year in a bid to defend its market position.

"We are on a journey to transform Maersk Line. We will make the organization leaner and simpler. We want to improve our customer experience digitally and at the same time work as efficiently as possible," said CEO Søren Skou.

"We are fewer people today than a year ago. We will be fewer next year and the following year. These decisions are not taken lightly, but they are necessary steps to transform our industry," he added.

GENEVA: January 22, 2016. MSC Rail, part of the Mediterranean Shipping Company (MSC), has completed the acquisition of Portuguese rail freight operator CP Carga for €53 million.

MSC HobartAccording to Giuseppe Prudente, head of logistics at MSC: "We have now the chance to put our strategic plan in action, to drive the company towards a bright future and develop it into a major player in the Iberian Peninsula in the coming years. The acquisition and the related investments demonstrate MSC’s unwavering commitment to Portugal and the development of its logistics sector.”

Carlos Vasconcelos, MSC Portugal managing director, said the company’s investment is part of a long-term development plan that will turn CP Carga into a leading Iberian rail freight operator. 

The Portuguese Competition Authority approved the purchase in December 2015, three months after the initial sale and purchase contract was signed in Lisbon, following a public tender for the sale of the rail company. MSC has acquired 95 percent of the CP Carga with the remaining five percent offered to employees.

Following the lifting of sanctions, MSC has resumed vessel operations to Iran, three years after services were suspended. The company said its 9,400 TEU MSC Domitille’s call at the southern Iran port of Shahid Rajei (Bandar Abbas) at the end of December paved the way for resuming business with the country. The vessel operates on MSCs New Falcon service between Asia and the Middle East, with transit times of 21 days from Shanghai to Shahid Rajei.

 

NEW YORK: The Port Authority of New York and New Jersey has approved construction of a ship-to-rail facility at Global Container Terminals' (GCT) Bayonne facility. The project completes the agency's $600 million initiative to provide its marine terminals with direct rail access.

Open in 2018, the new facility will have an initial capacity of 125,000 container ship-to-rail lifts a year.

GCT Bayonne (right) is the closest container terminal to the New York/New Jersey harbor entrance, reducing transit time by two hours each way and is the only one able to service post-Panamax vessels.

bayonne-terminalThe port agency said the project is contingent on funding provided by its cargo facility charge, a per-container fee shipped through New York and New Jersey to cover the costs of road, rail and security infrastructure projects.

"As the most populated region in the country, it's essential that we provide the necessary infrastructure to move freight in the most efficient and environmentally friendly way," said Port Authority vice chairman Scott Rechler. "This critical investment will help take tens of thousands of truck trips off our roads and reduce congestion and harmful emissions throughout our region."

The agency said ocean cargo volumes are up 12 percent year-on-year for the first eight months of 2015.

Meanwhile it has authorized US$125 million to upgrade a runway that handles nearly 50 percent of all landings at JFK, including the addition of a new high-speed taxiway to help reduce airport delays. The work will close the runway for 90 days in 2017.

"With over 53 million passengers in 2014, JFK is the busiest international airport in the country," added Rechler. "These investments will help reduce ground delays at the airport, as well provide for critical safety and state of good repair projects that are essential to maintaining JFK's role as the gateway to the United States and the region."

WASHINGTON, DC: January 13, 2016. The U.S. Federal Maritime Commission (FMC) has received a class action complaint from Cargo Agents, Inc., International Transport Management, Corp., RCL Agencies, Inc. and others, claiming ocean car carriers have violated provisions of the 1984 Shipping Act by conspiring to fix prices on services to and from the United States.

The companies cited in the FMC complaint include: NYK Line, Mitsui O.S.K, World Logistics Service, “K” Line America, Eukor Car Carriers, Wallenius Wilhelmsen Logistics Americas, CSAV Agency, Hoegh Autoliners, Alliance Navigation (Autotrans) and Nissan Motor Car Carrier.

ULSAN UKORThe freight agents allege the carriers ‘‘conspired to allocate customers and markets, to rig bids, to restrict supply, and otherwise to raise, fix, stabilize, or maintain prices for Vehicle Carrier Services for shipment to and from the United States, pursuant to agreements between and among them that were not filed with the Federal Maritime Commission . . . and that otherwise violated the Shipping Act and regulations promulgated thereunder.’’

Cargo Agents Inc. and its peers say they want the FMC to investigate their complaint and after due process find the carriers have violated the relevant parts of the Shipping Act; pay the agents appropriate damages and costs “up to double their proven actual injury” and agree to “cease and desist” from such alleged practices in the future.

FMC secretary Karen Gregory said the filing had been assigned to an administrative law judge with the expectation of an initial decision by January 6, 2017 and a final decision by July 20, 2017.

Last year the U.S. Department of Justice fined Nippon Yusen Kabushiki Kaisha (NYK Line) US$59.4 million for price-fixing car carrying services to and from the United States. Earlier, CSAV had been fined US$8.9 million and K-Line US$67.7 million for similar behavior.

In December 2015, China’s National Development and Reform Commission (NRDC) fined Eukor Car Carriers, one of the companies mentioned in the current FMC complaint, US$44 million for “causing restriction on competition in the Chinese market”.

Commenting on the decision, president and CEO of Eukor Craig Jasienski said: “This is a regrettable and unfortunate situation. We are a proponent of fair and open competition and must adhere to the applicable laws in our operation. We have taken the investigation very seriously and cooperated fully with the NDRC throughout the process. We are glad to see the investigation come to an end, so we can move forward, and continue our investment and operation in the Chinese market to achieve success. We will do everything possible to avoid similar situations going forward.”

COPENHAGEN: The AP Moller-Maersk group has adjusted its 2015 profit forecast from US$4.0 billion to US$3.4 billion as a result of falling freight rates and overcapacity.

Maersk Line is expecting a US$600 million fall in profits to US$1.6 billion by the end of the year.

"It is regrettable that we have to adjust our expectations for the 2015 result. All of our business units delivered a positive result in the third quarter, despite difficult conditions across our industries," said group CEO Nils Andersen.

maersk-mc-kinney-moller-triple-eThe group's preliminary Q3 result was US$778 million compared to US$1,5 billion in 2014 with an underlying result (net profit) of US$662 million (US$1.3 billion).

For the first nine months of 2015, Maersk expects a preliminary result of US$3.4 billion (US$5 billion) with an underlying result of US$3.08 billion compared to US$3.7 billion year-on-year.

The company said it achieved an average freight rate of US$2,163 per 40ft-equivalent (FFE) compared to US$2,679 in Q3 2014 while carrying 2.43 million FFE – slightly down from 2.40 million FFE in the comparable period.

Andersen said the container shipping market is now worse than expected: "Maersk Line has over the years taken steps to ensure a cost effective and resilient operation, but the current deterioration in the container shipping market is impacting also our business."

Confirming the Maersk advisory, Drewry Maritime Research said the biggest risk to competition within the industry comes from the sustained low freight rates that produce extremely thin profit margins and are forcing carriers out of markets.

Drewry noted that some lines no longer want to be "global carriers" and over 20 have exited various trades since 2010: "Most of these were either providers of one or two ships on a joint service or merely slot charterers - therefore doing little to net capacity deployed - but the rise in trade exits has intensified this year as more carriers have decided to get out with no prospect of higher freight rates on the horizon," it added.

MARSEILLE: November 22, 2015. CMA CGM has confirmed it is in "exclusive discussions" with Neptune Orient Lines (NOL) about a possible merger.

APL TemasekThe company says it has until December 07 to negotiate with Lentor Investments, a subsidiary of NOL owner Singapore sovereign wealth fund Temasek Holdings. Earlier this month the Maersk Group had also expressed interest in NOL.

In a statement, CMA CGM said: "Should these discussions lead to an agreement, such a combination would contribute to the consolidation of the container shipping industry, at a time when scale is more critical than ever.

"It would further reinforce CMA CGM as a global force in container shipping, leveraging the strong geographic and operational complementarity of both groups.

"No agreement has yet been reached and no assurance can be given that these discussions will lead to a definitive agreement."

At the end of last month NOL reported a 41 percent drop in revenue for Q3 to US$1.2 billion and a 26 percent fall in revenue for the first nine months to US$4.7 billion. The net loss increased to US$96 million from a loss of US$23 million in 3Q 2014. The group posted a third quarter 2015 EBIT loss  of US$66 million - an increase from US$21 million in the same quarter last year.

"The absence of the traditional third quarter peak season in Europe and North America led to severe freight rates erosion in major trade lanes. We continued to make good progress in managing costs. Unfortunately, this was more than offset by weak global demand and huge contraction in freight rates," said NOL Group president and CEO Ng Yat Chung. "NOL will continue to drive cost excellence and yield optimisation. The group's balance sheet has strengthened and we will invest when the conditions are right."

LONDON: The International Chamber of Shipping (ICS) says CO2 emissions from international shipping now represent 2.2 percent of the world's total compared to 2.8 percent in 2007 – a reduction of more than 10 percent despite an increase in maritime trade.

CO2 emissions comparisonBecause shipping is already the most carbon efficient mode of transport, and becoming more efficient all the time according to the ICS, if additional cargo can be moved by sea, rather than by air or truck, it will lead to further reductions in the world's total CO2 emissions.

To encourage this, the ICS says the industry's preference is for a global fuel levy, rather than emissions trading or alternatives "using arbitrary and theoretical metrics". The Chamber thinks the latter would distort shipping markets and have a negative impact on the efficiency of global sea trade.

Commenting on the latest emission figures, ICS secretary general Peter Hinchliffe said: "These are genuine reductions through fuel efficiency, without the need for complex virtual measures such as carbon offsets.

"With bigger ships, better engines and smarter speed management, the industry is confident of a 50 percent CO2 reduction by 2050 when the entire world fleet will comprise super fuel-efficient ships, many using clean fuels such as LNG," he added.

In 2013 the UN International Maritime Organization (IMO) set a mandatory target for all ships built from 2025 (including those in developing nations) to be 30 percent more efficient than those built in the 2000s. This applies to over 95 percent of the world merchant fleet.

"The entire world fleet is about 20 percent more efficient than in 2005. With the support of the shipping industry, [The] IMO has already achieved a great deal and is the only forum that can deliver further significant CO2 reductions from international shipping," said Hinchliffe.

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