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Strike Aviation Group

Strike Aviation Group


Ai Logistics Network


HAMBURG: Hapag-Lloyd has reported a €603.7 million net loss for 2014 on revenue of €6.8 billion. EBITDA was €98.9 million, down from €389.1 million the previous year and the operating result fell from €67.2 million to minus €112.1 million during the 12-month period.

The company said its 2014 transport volume grew by 7.5 percent to 5.9 million TEUs while the average freight rate per TEU dropped 3.2 percent year-on-year to $1,434. The net loss was attributed to the one-off costs of acquiring and integrating CSAV's container liner shipping activities and an impairment recognized for a portfolio of old ships.

CSAV cochrane"In terms of results, 2014 was undoubtedly an extremely disappointing year. At the same time, however, the successful merger with CSAV also made it a highly significant, ground-breaking year for Hapag-Lloyd. We are now much more competitive and fit for the future, to which we are looking with optimism," said CEO Rolf Habben Jansen.

With the merger expected to produce annual savings of "at least" $300 million, Habben Jansen said the company is negotiating with several shipyards and will be announcing orders for new ships "over the coming weeks".

Noting the integration of CSAV's container business was on schedule, he said raising Hapag Lloyd's capital structure to €4.2 billion and a liquidity reserve of €920 million had enabled the launch of many joint projects from which the group expects a "substantial improvement" in earnings this year.

As the largest single shareholder in Hapag-Lloyd following the merger, CSAV has exercised its right to appoint its own CFO and replaced Hapag-Lloyd's Peter Ganz with Nicolas Burr, the former CFO of CSAV. "We owe Peter Ganz a great debt of gratitude – in a situation that has not been easy for him – not only for seeing the merger of Hapag-Lloyd and CSAV through to the closing, but also for being willing to complete the annual financial statements," commented Michael Behrendt, chairman of the group's supervisory board.

Together with Hamburg Süd and CMA CGM, Hapag-Lloyd will be contributing 20 vessels, including CSAV's seven new 9,300 TEU ships, to new services between Asia and Latin America from July this year.

LONDON: Ocean carriers lost US$150 million in the fourth quarter of 2014 as a result of the U.S. West Coast port labor dispute according to Drewry Maritime Research.

"Annualized that would equate to US$600 million, which to put things in perspective would buy 60 gantry cranes or build a two million TEU per annum capacity terminal from scratch," the company adds.

MatsonWith 23 containerships still waiting for a berth at Los Angeles/Long Beach by the end of February, Drewry says carriers should be more open about the time and costs associated with clearing the backlog - particularly as many customers think the issue has now been resolved.

In addition to the waiting time for ships at anchor, additional carrier costs are expected to include more chartered ships to maintain a service; extended time in port working the vessel; quay side rent increases; demurrage charges not collected from shippers; exports not loaded and therefore no backhaul revenue; empty boxes not re-positioned; and missed port calls.

Drewry notes that despite the general congestion chaos in the last quarter of 2014, Matson was one carrier that was largely unaffected. "It may well be that [it] has struck the winning formula for these exceptional circumstances –being constant and predictable to make life easier for terminals. By operating a reliable and independent service they are untroubled by the demands or operational weaknesses of service partners.

"In addition, Matson's ship sizes have remained the same (averaging 2,800 TEU) whereas its bigger competitors have dramatically upgraded; causing peaks the terminals have struggled to cope with," it explains.

Drewry estimates the average vessel turnaround at the Los Angeles port complex during the fourth quarter was 5.25 days – double the time since last August. APL was one of the least affected while OOCL, CSCL, NYK and Hanjin were particularly hit – possibly because of their larger size.

NYK car imageWASHINGTON, DC: The U.S. Department of Justice (DoJ) has sentenced an NYK Line general manager to 15 months in prison and fined him US$20,000 for his involvement in a conspiracy to fix prices for roll-on, roll-off services to and from the United States.

Susumu Tanaka, who was a manager, deputy general manager and then general manager in NYK's car carrier division, has pleaded guilty to allocating customers and routes, bid rigging and fixing prices between April 2004 and September 2012.

"Today's sentence is another step toward [in] bringing to justice the perpetrators of this long-running cartel and restoring competition to the ocean shipping industry," said Bill Baer, assistant attorney general for the DoJ's Antitrust Division. "But this investigation is far from over. We are continuing our efforts to hold accountable the companies and executives who seek to maximize profits through illegal, anticompetitive means."

Tanaka's sentence is the third against an individual in the ongoing investigation and the first against an NYK employee. So far, three corporations have agreed to plead guilty and pay criminal fines totaling more than US$136 million - including US$59.4 million by NYK.

In February last year Compañía Sud Americana de Vapores S.A. (CSAV), a Chilean corporation, was fined US$8.9 million for price-fixing similar services. This was followed in September with the prosecution of Kawasaki Kisen Kaisha Ltd. (K-Line) that agreed to plead guilty and pay a US$67.7 million criminal fine for its involvement in the conspiracy.

Last month NYK announced its first non-stop RORO service for finished cars from Acapulco, Mexico via Port Hueneme in California to Yokohama, Nagoya, Pyeongtaek (South Korea), Xingang and Shanghai.

MELBOURNE: DP World, which reported handling 60 million TEUs in 2014 – an 8.9 percent year-on-year increase – is facing a 750 percent rent hike for its stevedoring services at the port of Melbourne's West Swanson container facility.

According to reports, the Port of Melbourne Corporation informed DP World of the rent rise in December 2014 as a precursor to eventual port privatization by the Victoria state government for an estimated US$4.3 billion.

Port of MelburneDP World Australia CEO Paul Scurrah said in a statement: "This will directly threaten jobs at the port and indirectly threaten jobs in the supply chain. We are disappointed with what's being proposed; we will challenge it, not just for ourselves, but to minimize the impact on importers and exporters in Victoria, and we remain concerned that a short-term focus may create a long-term negative impact on the Victorian economy, and we are calling on the Victorian government to review the approach taken by the Port of Melbourne corporation."

The Australian Logistics Council (ALC) has also expressed concern at the rent increases: "If Melbourne (right) is to maintain its claim of being Australia's freight and logistics capital, then the focus needs to be on the efficiency of the entire supply chain", said Michael Kilgariff, ALC managing director.

Saying the ALC is "generally supportive" of plans to sell a long-term lease to the highest bidder to fund improvements in the state's infrastructure, Kilgariff added: "Any proposed rental increase, particularly of this magnitude, must be visible and transparent, and we are concerned that proposed new rents at the port of Melbourne appear to be linked to rents allegedly paid by new entrants to the stevedore market."

Acknowledging last year's winning bid by International Container Terminal Services and Anglo Ports for stevedoring services at Melbourne's third international container terminal, Kilgariff said the price paid by the company should not impact legacy operators: "This matter highlights the need for the logistics industry to be engaged in all consultations with government on the future lease of the port of Melbourne, including arrangements for pricing, lease structure and proposed regulatory frameworks," he declared.

Traxens CEO Michel FallahMARSEILLE: CMA CGM has increased its investment in Traxens – an IT company providing real-time data solutions for the shipping line's container fleet.

After three years research and development, the company has begun installing CMA CGM containers with tracking devices to provide real-time data on their positioning, temperature, physical condition, possible theft of the TEU as well as external air pollution and internal condition of the cargo.

According to Traxens founder and CEO Michel Fallah (right), his '4Trax' technology is able to penetrate several layers of containers by relying on automatic radio meshing to send the secure status information including Customs clearance data throughout the logistics chain.

He says by 2017, 12 percent of the CMA CGM container pool will be equipped with tracking devices to provide data collection from any point worldwide.

Elie Zeenny, senior vice president Group IT Systems for the container line commented: "With this technology, CMA CGM brings the shipping industry into a new era. In a world where information is key, we are taking a significant step ahead. We will now be able to collect data in real-time, which is equally important to us and to our clients. Containers are becoming 'connected devices.'"

Acknowledging additional investment by CAAP Création (Crédit Agricole Group) and S.C.R. Provençale et Corse (BPPC Group) Fallah said: "'We are very grateful to CMA CGM for supporting us and bringing their expertise from the very beginning of the Traxens adventure. It allowed us to develop a high-valued and unique solution that is attractive to all transport companies and to reunite a group of solid and active shareholders which includes the investment arms of large national banks."

TOKYO: Mitsui O.S.K. Lines (MOL) has ordered four ultra large (ULCV) 20,000 TEU containerships from Samsung Heavy Industries and signed an MOU with Shoei Kisen Kaisha for the long-term charter of two more. All six vessels will be launched and delivered in 2017 for services between Asia and Europe.

Drewry Maritime Research says with container ship owners carrying US$80 billion in debt, only those with healthy balance sheets will be able to finance this new round of ULCV newbuilds while the remainder will have to rely on long-term charters.

MOL container shipNoting the third-quarter of 2014 was the most profitable for the container industry since the same period two years earlier, Drewry thinks the sector has a "long way to go" to recover its financial health.

"Record losses in the past five years and constrained operating cash flows have seen the industry pile on excessive debt, not only to finance their order books but also to raise expensive short-term capital to finance their working capital needs.

Meanwhile, the operating cash flow has remained extremely weak since the onset of the global financial crisis, barring 2010 when the carriers enjoyed the fruits of an unprecedented demand surge, led by restocking, " said the research company.

Drewry thinks publicly listed carriers "need to get their houses in order before it is too late", and cites the example of NOL having to sell APL Logistics - a core asset - to remain viable.

With the industry's capital structure skewed towards debt as equity financing remains scarce, Drewry says current levels of debt will damage the industry's long-term profitability and the absence of dividends will put a serious strain on shareholder confidence in the future.

LOS ANGELES: The Pacific Maritime Association (PMA) has begun a halt to weekend loading or unloading of vessels at 29 U.S. West Coast ports.

"After three months of union slowdowns, it makes no sense to pay extra for less work," said PMA spokesman Wade Gates, "especially if there is no end in sight to the union's actions which needlessly brought West Coast ports to the brink of gridlock."

The PMA said vessel operations are scheduled to resume on February 09, 2015 while yard operations moving processed containers for truck and rail delivery will continue at terminal operators' discretion.

The move follows a final offer earlier this week to 20,000 members of the International Longshore and Warehouse Union (ILWU) to settle a labor dispute that has caused severe port congestion over the past six months.

The PMA says its "all in" five-year contract offer will provide full-time ILWU workers - who it says already earn an average of US$147,000 a year - with a 14 percent pay increase over the next five years; 100 percent employer-paid health care coverage up to $35,000 per annum; and an 11.1 percent increase in their individual pension ceiling to $88,800 per year.

longbeachAfter "months of contract talks" the PMA says it agreed to ILWU demands for no change in members' health benefits as well as control over maintenance and repair of truck chassis that move containers around ports.

On the same day as the final offer, ILWU president Robert McEllrath responded to the PMA saying: "We're this close. We've dropped almost all of our remaining issues to help get this settled - and the few issues that remain can be easily resolved."

McEllrath urged the Federal mediator to keep both sides talking until an agreement is finalized: "If the PMA closes the ports, the public will suffer and corporate greed will prevail," he said. Referring to the ports owners he added: "These foreign-owned companies make billions of dollars and pay their executives millions to do their bidding."

The ILWU says it has pledged to keep West Coast ports open "despite the massive, employer-caused congestion crisis that has delayed shipping for most of 2014". The PMA view is that the ILWU slowdown - which it claims is prohibited by contract - has severely impacted operations at Tacoma, Seattle, Oakland, Los Angeles and Long Beach.

"The deteriorating situation on the docks is in nobody's long-term interest," said PMA president Jim McKenna. "I hope the ILWU leadership will give very serious consideration to this contract offer, which I believe respects their members and gives us a clear path to conclude these talks. We owe it to workers and businesses across the nation to resolve our differences and get our ports moving again."

Responding to the weekend port suspension McEllrath said:"What the ILWU heard yesterday is a man who makes about one million dollars a year telling the working class that we have more than our share. Intensifying the rhetoric at this stage of bargaining, when we are just a few issues from reaching an agreement, is totally unnecessary and counterproductive."


COPENHAGEN: The A.P. Møller-Maersk group has reported a net profit of US$5.2 billion on revenue of $47.56 billion for 2014 – up from US$3.8 billion and US$47.38 billion respectively in the previous 12 months.

The result included a US$2.8 billion gain from the sale of its majority share in the Dansk Supermarked Group partly offset by net impairments of US$3.0 billion, including US$1.7 billion on Brazilian oil assets.

Maersk container docksideThe group's underlying profit – equal to the result of continuing business minus net assets sales and impairments - increased 33 percent to US$4.5 billion compared to the previous 12 months, and the return on invested capital rose from 8.2 percent to 11.0 percent.

Maersk Line increased its net profit from US$1.5 billion to US$2.3 billion due to stronger than expected volumes, lower unit costs and bunker prices, only partially offset by lower freight rates.

While Maersk Oil and Maersk Drilling both finished the year with net profits, APM Shipping Services, which includes the Damco logistics arm, produced a loss of US$230m – up from a US$85 million loss in 2013.

Damco losses totaled US$293 million in 2014, adding to the previous year's loss of US$111 million, on similar revenues of US$3.2 billion. While supply chain management volumes grew 11 percent, airfreight traffic fell 16 percent and ocean volumes dropped six percent as margins in all three segments continued to fall throughout the year. The company cites the launch of a new IT operating platform that proved more complex and therefore more costly than originally planned. As a result, overhead costs remained higher than anticipated although "the restructuring initiatives are expected to strengthen commercial competitiveness and get Damco back to profitable growth in 2015."

Maersk 2015 guidance presumptionsThis year the group expects an underlying profit "slightly below" US$4 billion - excluding the proposed sale of a 20.5 percent stake in Danske Bank to A.P. Møller Holding, a subsidiary of the A.P. Møller Foundation.

Ane Uggla, chairman of A.P Møller Holding and the A.P. Møller Foundation said: "By acquiring shares in Danske Bank we reinforce the historic relations that have existed since the late 1920s. It is the foundation's intention over time to own 20 percent of Danske Bank. In doing so we wish to preserve Danske Bank's close and longstanding ties to Denmark and provide our support to the [future] positive development in both A.P. Møller-Mærsk and Danske Bank."

Maersk Line is expected to produce an underlying profit of over US$2.2 billion in 2015 from improved unit costs via the 2M Alliance as demand for ocean containers increases "3-5 percent" during the year. The group adds that this forecast "is subject to considerable uncertainty, not least due to developments in the global economy, the container freight rates and the oil price".

SOHAR, Oman: Sohar Port and Freezone reports a 58 percent increase in TEU traffic following the closure of Muscat's container handling facility.

CEO Andre Toet said break bulk cargo has risen 51 percent and the port handled 122,000 cars in the past 12 months cars following a deal with distributor Saud Bahwan Group to store Toyota and Lexus vehicles in the Freezone. The facility is already used by Suhail Bahwan Automotive to store Nissan and BMW vehicles and OTE to land Hyundai cars. Toet expects Sohar to handle 200,000 vehicles this year.

Sohar port CEO Andre ToetToet also announced Sohar has signed a contract with Dubai-based Centre Point Logistics (CPL), to take 50,000 sq.mt. In the Freezone for the expansion of its logistics, warehousing, and storage facilities.

CPL chairman Saleh Saeed Lootah said: "With our local and regional growth and changing dynamics of UAE logistics and supply chain market, there has arisen a more challenging business environment that needs 'out-of-the-box' thinking in order to provide more tailored solutions that meet the changing needs of customers."

Commenting on a contract with Sohar Flour Mills and the construction of a new facility with a 500 tonne daily capacity, Toet said the port can become an important conduit for food manufacturers to reach Middle East markets at a fraction of the current cost.

"Growing populations and a 90 percent dependence on food imports is a perfect recipe for growth; the value of regional food markets will hit US$53 billion in 2020. This offers great returns for the industry, but it is also increasing the region's food bill. Part of the challenge is operating costs in big cities, and our aim is to harness our location, connectivity, and rates to cut the cost of putting food on tables," he explained.

"On top of not having to pay the additional costs of passing through the Strait of Hormuz, land and energy rates at Sohar are very competitive when compared with other ports and distribution centres across the region. Oman's Free Trade Agreements with the U.S. and Singapore also offer potential costs savings that are not so readily available in some other parts of the region, especially its FTA with the US," he added.

With the construction of a grain storage facility, a sugar refinery, two manufacturing plants for packaging materials and the flour mill, Toet said Sohar aims to be Oman's premier facility for importing food products for the country and the wider GCC region.

LONG BEACH: Following months of negotiations the Pacific Maritime Association, representing 29 U.S. West Coast ports, has reached a "tentative" five-year agreement with the International Longshore and Warehouse Union (ILWU).

The deal was reached following last week's intervention by U.S. secretary of Labor Tom Perez who threatened to invite the two sides to Washington if they couldn't resolve a remaining issue involving arbitration.

port of long beach 1"After more than nine months of negotiations, we are pleased to have reached an agreement that is good for workers and for the industry," said PMA president James McKenna and ILWU president Bob McEllrath in a joint statement. "We are also pleased that our ports can now resume full operations."

At the beginning of February the PMA offered the ILWU's 20,000 members a 14 percent wage increase over five years, free health care up to $35,000 a year, an increase in their pension ceiling to $88,800 a year, and a guaranteed 40-hour paid working week. According to the PMA, the ILWU then demanded the right to fire any independent arbitrator who rules against them at the end of each contract period. The PMA responded by suspending premium-pay weekend and holiday vessel operations.

Commenting on the apparent impasse between the two sides, Perez tweeted: "Both parties had an obligation to resolve this matter quickly because too many innocent people and businesses were suffering. If it weren't for the last issue, it would have been solved earlier. But both sides in [the] dispute committed to solving [the] problem and did it."

The PMA and ILWU have declined to give details of their new agreement that has yet to be ratified by the port owners and ILWU members.

However Port of Long Beach chief executive Jon Slangerup stated: "The Port of Long Beach welcomes the tentative contract agreement announced today and is especially grateful to president Obama, Labor secretary Thomas Perez and federal mediator Scot Beckenbaugh whose leadership and direct involvement were key in reaching this pact. We thank the ILWU and PMA and look forward to everyone getting back to business as usual starting immediately. We know that the marine terminal operators, longshore workers, truckers, railroads and others will be extremely busy as they work to clear out the massive backlog of cargo at all of the West Coast ports, including Long Beach. All of us will be working together to make this happen as soon as possible, but once again, we are extremely pleased with today's news.

"We are pleased that an agreement has been reached," added Chris Lytle, the port of Oakland's executive director. "Now it's time for all sides to pull together and get cargo moving with the speed our importers and exporters need."

LONDON: Every service in the container trades from Asia to Europe is now controlled by one of four alliances says Drewry Maritime Research.

The 2M pairing of Maersk/MSC leads with 31 percent of the effective weekly capacity, followed by the CKYHE and G6, both with 24 percent, and finally Ocean Three on 21 percent.

The Drewry definition of "effective" is nominal capacity (the average size of ships per service) minus deductions for deadweight and high-cube limitations and then again for out-of-scope cargoes.

2M Maersk MSCDespite a reduction of ships from 245 to 232 compared to December, the research company notes the available capacity has only dropped one percent to 218,500 TEU per week as a result of using larger vessels.

Collectively the four alliances provide 74 weekly voyages from 10 Mainland China ports every week to North Europe. The 2M carriers lead with 27 departures per week, followed by Ocean Three (18), CKYHE (17) and 12 for the G6.

At the other end, there are now 84 weekly arrivals in North Europe from China and other points in Asia. Rotterdam has the highest number of arrivals at 18 followed by Hamburg on 17. Between them they receive 41 percent of all the calls from Asia. The UK has 19 calls split between Felixstowe (11) and Southampton (8), giving it a second-best 23 percent share of all calls into North Europe.

Drewry says fears of alliance dominance and reduced choice for importers and exporters are misplaced: "For example, there are 14 weekly services from Shanghai to Rotterdam, the two busiest ports in the trade. That means shippers can call upon 16 carriers (not to mention non-alliance slot charterers) to get the most competitive freight rate quotes." And with more ULCVs providing three new weekly services from mid-2015, the research company says shippers will have even more choice and the possibility of lower freight rates.

Drewry says the G6 alliance, with the weakest port coverage and transit times coupled with a lack of big ships, will lose market share and lose ground on slot costs this year: "Being in such an obviously weaker position risks them having to become price-takers in order to fill their assets. It is therefore unsurprising that the likes of MOL and OOCL have been heavily linked with new orders for 20,000 TEU ships. The six lines will hope they have not fallen too far behind by the time those ships are delivered," it adds.

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