WASHINGTON, D.C.: The U.S. Federal Maritime Commission (FMC) has approved the proposed P3 capacity sharing agreement between A. P. Moller-Maersk, CMA CGM and MSC Mediterranean Shipping Company.
Following a review, the FMC said the P3 can "share vessels and engage in related cooperative operating activities in the trades between the U.S. and Asia, North Europe, and the Mediterranean effective March 24, 2014."
The FMC has authorized the initial use of 130 vessels with capacities ranging from 4,000 to 12,250 TEUs with the option to operate up to 180 ships each with a capacity of up to 19,200 TEUs. The P3 members are also permitted to add and withdraw capacity based on the introduction of new vessels - but only Maersk Line's U.S.-flag ships operated within the P3 network will be allowed to carry cargo normally reserved for such vessels.
In its ruling, the commission determined the agreement "is not likely at this time, b
y a reduction in competition, to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service under section 6(g) of the Shipping Act." Noting that the companies might "unreasonably reduce services or unreasonably raise rates" the FMC will require the P3 to provide reports as part of "close" monitoring process.
FMC chairman Mario Cordero commented: "The commission's action on the P3 agreement takes into account the comprehensive, competitive analysis conducted by the FMC staff and comments received from shippers and other stakeholders. While the agreement is expected to produce operational efficiencies for the benefit of the U.S. consumer, the new reporting requirements specifically tailored to this agreement's unique authority will ensure we have timely and relevant information to act quickly should it be necessary."
His view was not shared by Richard Lidinsky, one of the five FMC commissioners, who in January "stopped the clock" by calling for more information on a submission by the G6 Alliance - made up of American President Lines, Hapag Lloyd, Hyundai Merchant Marine Company, Mitsui O.S.K. Lines, NYK and OOCL. The G6 wants to operate 180-220 ships with a maximum capacity of 14,000 TEUs between Europe, the Mediterranean and the U.S. Gulf and East Coasts.
The P3 decision follows submissions by the Global Shippers' Forum (GSF) to the FMC and European Commission worried the alliance might restrict competition or collude on rates. Chris Welsh, secretary-general of the GSF commented: "The GSF has made a formal legal submission to the European Commission on behalf of shippers from all over the world. The major fear is the market impact that the P3 agreement would have. If the P3 were to proceed in its current form, the structure of container shipping markets serving EU and global trades would be fundamentally changed, including the possibility of eliminating effective competition."
Speaking to GSF members prior to the ruling, FMC commissioner William Doyle acknowledged their concerns and said they had been helpful for the FMC in evaluating the P3 filing.
WASHINGTON, D.C.: The Carbon War Room (CWR) - co-founded by Sir Richard Branson to advance a low-carbon economy - and the University College London (UCL) Energy Institute, have launched a programme to help implement new carbon reduction technology.
Dubbed the Shipping Innovation Fast-Tracker (ShIFT), the two organisations plan to match companies that are ready to take their product to market with shipowners and investors.
According to the CWR, clean technologies have been available in the shipping industry for many years and have the potential to deliver more than 10 percent fuel and emissions savings. However, they remain sub-scale or even un-used due to a few key market barriers such as access to capital, lack of information, hidden costs, and risks that are associated with new clean technologies.
To address these barriers, ShIFT will match innovative technology companies, shipowners, operators and investors to boost the profile of low-carbon opportunities and promote investment in the industry.
"I am excited by the very real prospect of ships that are propelled and powered by wind, air bubble systems, and other ground-breaking technologies," said Peter Boyd, CWR's chief operating officer. "While we are focused on how to scale more mature technologies like propeller boss cap fins and Mewis (power saving) ducts through greater access to capital, these technologies offering double-digit savings have the potential to deliver significant gains, which can only be achieved with greater transparency and collaboration."
Boyd said ShIFT's emphasis will be on commercial application of already-proven technology such as a mechanical sail for cargo ships by Bermuda-based Magnuss Ltd. The company's vertically-variable ocean sail system (pictured left) is projected to reduce fuel savings 20-35 percent by enabling a ship's main engine to be throttled back while still maintaining voyage speed. The Magnuss patented technology is now approved by Lloyd's Register.
[The] "UCL Energy Institute is dedicated to generating new knowledge that can help solve society's climate change-related challenges, and a crucial part of that involves working with partners in order to implement that knowledge," added Dr. Tristan Smith of the UCL Energy Institute. "This project, which builds on our existing strong relationship with Carbon War Room, is an exciting application of our research to shipping's substantial de-carbonization challenge."
HONGKONG: Orient Overseas (International) Limited, trading as OOCL, has reported a net profit of US$47 million in 2013 – down from US$295 million the previous year.
Gross revenue fell year-on-year from US$6.45 billion to US$6.23 billion due to what the company describes as an "operating environment characterized by muted demand and over-capacity."
Despite acknowledging a market imbalance due to a 5.7 percent increase in overall supply and a 4.2 percent rise in demand, OOCL took delivery of eight 13,208 TEU 'Mega' class new-build vessels and two 8,888 TEU 'SX' class new-build vessels during the year – representing net additional capacity of over 496,000 TEUs.
Group chairman C C Tung commented: "Seaborne trade growth for the liner industry was subdued in 2013. Freight levels were disappointing, especially during the first half of the year. During the second half of the year, both physical cargo movement and sentiment improved, resulting in a slightly better freight market. Although container shipping demand growth in 2013 was lower than earlier forecasts, capacity supply growth was also lower than forecasts which helped contribute to a much needed recovery in rates, albeit mild, during the second half of the year."
Tung said new deliveries last year increased overall market capacity nearly 1.4 million TEUs and their deployment on Asia-Europe routes had a knock-on effect on the trans-Pacific and resulted in considerable excess capacity intra-Asia and on Australasia trades.
Despite a forecast of more over-capacity in 2014, Tung expects a rise in global demand as a result of U.S. growth, the Eurozone recovery on more solid ground, and the continued economic expansion in China and Japan. "Indeed, such development should mean improved outlook for the Transpacific, Asia Europe and intra-Asia trades and more positive results for the industry as a whole," he added.
With an EBIT of US$72 million last year compared to US$3 million in 2012, Tung said OOCL's logistics business, particularly in the areas of international supply chain and import/export services, "will become a meaningful contributor to the group over the long term."
The company claims its Port of Long Beach middle harbour redevelopment project, due for final completion in 2019, will be the most competitive, efficient and environmentally friendly container facility in North America. As of December last year, the shipping group had liquid assets of US$2.4 billion and a net debt to equity ratio of 0.25 – up 13 percent year-on-year.
COPENHAGEN: The AP Moller-Maersk Group has reported a six percent drop in net profits to US$3.77 billion for 2013 on revenues of US$47.4 billion – down four percent year-on-year.
Group CEO Nils Andersen said the company was pleased with profit development during the year with Maersk Line "strengthening profitability despite challenging shipping markets".
Despite a 3.4 percen
t drop in revenue to US$26.2 billion, Maersk Line profits rose to US$1.5 billion from US$461 million in 2012. Traffic volumes rose 4.1 percent in 2013 as freight rates fell 7.2 percent overall. The company cites network optimisation and lower bunker prices for the improved performance.
Fleet capacity increased by 0.2 percent to total 2.6 million TEUs as the company reduced its charter fleet by 27 ships; terminated the leases on a further 14 and took delivery of four Tripe E container vessels. An additional 16 Triple E ships are due for delivery by 2015.
Maersk Line says last year saw increased attention to sustainability performance from its customers with large customers representing 19 percent of transported volumes requesting tailored sustainability information as part of their business relationship with the company.
In a direct link to lowering costs, Maersk reports a 34 percent drop in average CO2 emission per container kilometre since 2007. Last year the company reduced emissions by a further 12 percent year-on-year due to network and speed optimisation; technical upgrading of vessels; change of behaviour and the deployment of new and more efficient vessels, such as the Triple-E.
AP Moller-Maersk expects Maersk Line to produce a similar profit in 2014 due in part to cost reductions and an overall rise in seaborne traffic of 4-5 percent. However market overcapacity will continue to depress rates, says the company.
Despite the good news from Maersk, the group reports its logistics arm Damco produced a significant loss of US$111 million in 2013 compared to a profit of US$55 million the previous year. The company cites a one-time restructuring cost aimed at "simplifying and consolidating its operational structure" with benefits to gradually show from the second half of 2014.
Revenue for 2013 fell a modest one percent to US$3.2 billion year-on-year partly as a result of reduced government-related project cargo that also contributed to the slowdown in airfreight volumes. Damco says its supply chain management business grew 13 percent, airfreight traffic rose eight percent and ocean volumes declined one percent compared to 2012.
SAN FRANCISCO: Logistics members of the Clean Cargo Working Group (CCWG) can now use an online collaborative platform to access reliable Sustainability scorecards on their partners' performance.
The CCWG, an initiative of the San Francisco-based Business for Social Responsibility (BSR), has partnered with platform-provider EcoVadis to standardize sustainability reporting requests for the sea freight supply chain.
EcoVadis will now align its environmental assessment questionnaires for sea carriers with Clean Cargo's environmental performance survey framework.
Angie Farrag, associate director for BSR's Transport & Logistics Practice claimed the new tie-up underlines Clean Cargo's position as the industry standard for ocean container emissions collection and reporting as well as a commitment to support the "deeper integration of environmental performance criteria into business decision making processes".
The new partnership will allow EcoVadis Fortune 100 customers to have access to more reliable data from an expanded base of carriers. At the same time it will enable 18 ocean carriers and 17 forwarders and shippers to avoid duplication of effort by leveraging one common environmental reporting framework.
Commenting on the tie-up, Laura Taal, Heineken's Sustainable Procurement manager said robust and transparent metrics are key to being able to measure a reduction in the company's distribution CO2 footprint. "As a long-standing member of Clean Cargo and EcoVadis we are pleased to see two leading initiatives in sustainable supply chains converging, as this will facilitate integration of sustainability metrics in our Sea Freight procurement decisions more easily."
Julien Topenot, group environment director for CMA-CGM added: ""We've seen in the past years a significant increase of customers' requests related to Sustainability. Convergence of those [sic] two leading standards where CMA CGM Group has been a member for years will benefit the whole shipping industry through improved efficiency and clarity to our customers on our sustainability performance."
The CCGW includes 16 of the world's largest container carriers representing 60 percent of ocean capacity. Forwarder members include Damco. BDP and DB Schenker. Shippers include Walmart, M&S, Nike and Ikea. Since 2008 they have collectively offset 50 million tons of CO2 and since 2009 decreased their average emissions 16 percent.
According to the World Economic Forum, agriculture amounts to half of Kenyan GDP and employs 75 percent of the country's workforce. It wouldn't have happened without logistics.
Thanks to Maersk, during the past four years the Kenyan avocado industry has been able to increase its transit times from 10 to 40 days to reach premium European markets via Mombasa while avoiding fast ripening.
Beth Wanjiku Ihomba, a Maersk Line sales executive explains: "The world market has opened up to us thanks to Maersk Line's reefers. Ten days used to be the limit. Now we can carry the fruit for 25 days to Europe, and even 40 days to Russia. During July's peak season each container will be carrying up to 100,000 avocados. Without those reefers we would be doing something else," adds Peter Nderu, a director and partner at Keitt Exports in Nairobi.
In the next decade new avocado fields are expected to more than double Kenya's current production and small-scale farmers will be the main driver.
Ihomba adds: "We want to be first wherever avocados are grown. We tie up everything with the exporters, we partner with farmers, and we help with the technology. What we realised is when you begin with someone when they are just starting up, they stay with you forever."
In June last year, she arranged the first five reefers with avocados from Moshi in Northen Tanzania. "If Tanzania comes on board, we would be doing two seasons, and believe me, we could easily more than double our volumes and hit 2,000 reefers."
LONDON: The Sustainable Shipping Initiative (SSI), formed in 2010 by 19 shipping companies and NGOs Forum for the Future and WWF, recently released its first progress report on its goal of a sustainable and profitable shipping industry by 2040.
Jonathon Porritt, founder director of the Forum for the Future, which has been facilitating the SSI, said: “The achievements of the individuals and organisations involved … have been impressive. The findings that have been reported and the tangible results that have been accomplished in the areas of ship financing, ship recycling, energy technology and sustainability benchmarking have taken us a way towards our carefully formulated sustainability vision.
“The efforts have highlighted the range of challenges and barriers to sustainability and ways to overcome by more openness and collaboration. We call on more organisations to become members of the SSI and join our mission.”
Helle Gleie, SSI director added: “Following the progress achieved since the creation of the initial ‘Case for Action’ the SSI and its members felt that there was an urgent need to map out the strategy for the next phase of our journey towards a sustainable industry. From new vessel types, and new financial models to propulsion through kites and bacteria-based fuels, it is clear that the maritime sector is driving innovation and our new tools and recommendations for future action will accelerate this even further.”
Examples of sustainable business practices by SSI members so far, include Maersk achieving its CO2 targets several years ahead of schedule and replacing these with even more ambitious targets for 2020; the China Navigation Company (CNCo) insisting on industry-leading health, safety and environmental standards in the ship-breaking yards it uses; customers AkzoNobel, Unilever, Rio Tinto and Cargill have incorporated ship efficiency performance criteria into their chartering and procurement decisions; Namura, Daewoo Shipbuilding & Marine Engineering (DSME) and UMing are developing ambitious energy- saving designs and technologies for new ships; and Wärtsilä is doing the same, plus driving innovations of natural gas in shipping.
SSI says it is the first time the shipping industry has joined forces on such a cooperative global scale to tackle major sustainable issues. The group says its collaborative approach enables members to share their knowledge and “scale up actions beyond the usual ‘one-off’ approach, accelerating the rate of change within the industry.”
