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( Lloyd’s List, by Max Tingyao Lin ) THE world’s three largest container carriers were about to form something never seen before in modern shipping history from a size perspective: a gigantic network that could control more than one-third of main deepsea trades and save billion dollars in operating costs.
Having received approvals from US and European Union competition officials, the P3 alliance was waiting to hear a positive response in China. A final nod was widely expected by local industry officials.
But the grand project turned into ashes on June 17, the day when it was rejected by China’s Ministry of Commerce under the Anti-Monopoly Law.
After the ruling, Maersk Line and Mediterranean Shipping Co didn’t request an administrative review, launch administrative proceedings or revise the original proposal, which they were entitled to do. Instead, P3 was immediately terminated, and the top two players formed the 2M alliance in early July after dropping CMA CGM.
“We did everything we could to get P3 approved until the last day. After the MofCom decision, we regrouped with our partners,” Maersk spokesman Michael Storgaard told Lloyd’s List. “MSC had come to the same conclusion we had in terms of possible alternatives, and we agreed to proceed on that basis.”
In the new network, Maersk and MSC have scaled down their ambition and walked the Chinese regulatory line to the point where rejection would be an unprecedented ruling in the country.
MofCom stated it prohibited P3 because the network’s market share in Asia-Europe trade at 46.7% would simply be too strong, and also because the three lines’ co-operation was much tighter than traditional alliances as they would jointly set up a limited liabilities partnership as an independent network operator.
The new proposal directly addresses MofCom’s two main concerns. The new network will consist of 185 ships totalling 2.1m teu on 21 strings, significantly smaller than P3’s 255 vessels with 2.6m teu on 29 loops. The two carriers also scrap the joint network operator idea and opt for a more traditional co-ordination committee to monitor 2M’s daily operation.
The Anti-Monopoly Law
Maersk has described 2M as a standard vessel sharing agreement, without the jointly-owned LLP. The spokesman said that “2M will allow us to realise cost savings while addressing regulatory concerns”.
The two carriers have submitted the 2M proposal only to the Ministry of Transport in China this time, having reckoned the agreement does not fall under the scope of the Anti-Monopoly Law.
“Maersk and MSC believe that 2M is not a ‘merger’ for anti-monopoly purposes,” commented Clyde & Co’s Shanghai-based partner Michael Cripps, an expert in China’s corporate laws.
Under the Chinese anti-competition regulatory regime, MofCom deals with mergers, the National Development and Reform Commission focuses on cartel behaviour, and the State Administration for Industry & Commerce looks into government-initiated monopoly.
On the other hand, the MoT only asks carriers to put all types of operational agreements — like P3 and 2M — into the ministry’s registry, based on China’s Regulations on International Maritime Transportation.
In practice, the MoT has sometimes questioned VSA participants on rates and operational matters during the so-called “Bei-An” procedure but never rejected them outright.
“If the MoT halts the Bei-An process of any VSA, that VSA won’t come into effect. It has not done so since the regulations are in place, though,” China Shipowners’ Association vice-chairman Zhang Shouguo said.
A successful Bei-An without much noise from the MoT would give a great boost to 2M, which aims to come on stream from early 2015 for 10 years.
“The Chinese authorities have so far not had any issues with VSAs,” said Norton Rose Fulbright’s Hong Kong-based partner Marc Waha, a specialist in antitrust regulations. “It will be difficult for them to intervene since they have never intervened against VSAs.”
The ministry still has some power to rein in monopoly under the regulations. It can launch joint investigations with other regulatory bodies upon seeing possible detriment to competition, particularly when a carrier or an alliance has a market share above 30% on any trade route linked to a Chinese port for over a year.
“The MoT is not an anti-competition body itself, so it will need to co-ordinate with the NDRC and the SAIC to carry out the probe,” said Lucas Feng, an associate of Chinese law firm Wang Jing & Co.
Possible complainers
When finding any behaviour harmful to fair competition during the investigation, the ministry can terminate the alliance or order it to revise its operation.
This competition clause, while never invoked, allows the MoT to probe on its own initiative or requests of interested parties.
Among possible complainers, China Shippers’ Association — which opposed P3 — has called on regulators to put the new alliance under heavy scrutiny. Chinese shipowners have adopted a wait-and-see attitude.
“Based on what we know now, essentially 2M doesn’t seem much different from other alliances,” Mr Zhang said.
“But we will see whether the joint network operating firm is really scrapped, as the three members already invested large resources in it earlier; and whether 2M carriers have any other additional agreements among themselves [that could affect market shares].”
According to Lloyd’s List Intelligence data, 2M’s market share in Asia-Europe trade still reaches 36%. But the alliance only carries 12% of total volumes in transpacific trade, much lower than market-leading network G6’s 35%.
Stated political goal
However, China’s Anti-Monopoly Law has a stated political goal of promoting “social public interest” and “a healthy development of the socialist market economy,” which could prompt the MoT to hand out an unprecedented ruling regardless of actual figures.
European Maritime Law Organisation secretary-general August Braakman pointed out that Beijing takes into consideration the financial difficulties state-owned carriers are in when forming its attitudes towards competition cases, as it views competition regulations as a tool for conducting industrial policy.
On many trading routes, Cosco Group and China Shipping Group — the two Chinese state conglomerates — participate in VSAs that directly compete with 2M for cargoes.
“I have little doubt that these considerations... have played a role in the rejection of P3 and will play a role in the assessment of 2M,” Mr Braakman said. “This attitude may induce them to conclude that also 2M is contrary to Chinese industrial policy.”
If 2M is rejected, Maersk and MSC might serve themselves better by launching a public relations war, instead of arguing about differentiated treatments in courts.
“Logically speaking, it’s not reasonable to use others’ illegal behaviour, if there is any, to justify one’s own illegal behavior,” Mr Feng said. “But if such differentiated treatments are widely reported and in particular, compared with how Chinese firms are treated, the authorities may feel some pressure and that might benefit defendants.”
That said, any escalation of the case by Maersk and MSC to foreign courts or the World Trade Organisation is unlikely, as both carriers see China as an essential market.
“I just cannot see them raise it far up and turn very aggressive,” Mr Waha said.
CHINA Central Television said the 2M alliance could resulted in price increases for Chinese consumers and pose great challenges to Chinese shipping lines in a rare report about shipping from the state broadcaster earlier this week.
During a morning news programme, CCTV aired a five-minute report to explore on how the vessel sharing agreement between Maersk Line and Mediterranean Shipping Co could affect China, and offered a negative view.
“Maersk and MSC will control the largest market shares in Asia-Europe and transatlantic trades. As their market shares grow, they will have a bigger say in the market, and China’s exporters and importers will have weaker bargaining power,” the report said.
Shang Ming, the Ministry of Commerce’s Anti-monopoly bureau chief, told CCTV the alliance could therefore have indirect impact on Chinese consumers as prices of goods are partly determined by transport costs.
“If there is any monopoly behavior, the monopolist may eventually set the prices at its will. And if the prices increase, consumers would be hit,” Mr Shang said.
CCTV also reported 2M would present “great challenges” to Chinese shipping lines, which underperformed when compared to their foreign rivals in developed countries.
“Chinese-controlled fleet carries less than one-third of total exports from China,” China Shipowners’ Association Zhang Shouguo told CCTV.
Citing figures from Mr Zhang, the report said China’s trade deficit in shipping services exceeds deficit in the whole service sector.
While not directly representing official view, CCTV is one of the most influential propaganda arms in China and plays an important role in forming public opinions.
Targeting the Chinese general public as its audience, the broadcaster rarely reports on container shipping but its past negative coverage of Volkswagen and Apple has forced the multinational companies to recall their products or offer public apologies.
The world’s two largest box carriers were to form the P3 Network with CMA CGM, the No 3 player, but terminated the plan last month after MofCom prohibited such an alliance for anti-competition reasons.
According to MofCom, P3 was rejected because the network’s 46.7% market share in Asia-Europe trade was too large, and their planned limited liabilities partnership as an independent network operating firm makes them too “close-knit” compared to other alliances.
Maersk and MSC now plan to form the smaller 2M alliance without the jointly-owned operator, and decide not to submit the proposal to MofCom after deeming the new VSA not under the scope of China’s Anti-Monopoly Law.
Like P3, the two has still filed the agreement to the transport ministry based on Chinese maritime regulations, though.
Hamburg Süd to acquire Chile’s CCNI
GERMAN shipping line Hamburg Süd has signed a preliminary deal to acquire the container activities of Chilean shipping line CCNI in a move that will create the world’s twelfth largest carrier.
In an announcement released late Friday afternoon, Hamburg Süd the acquisition would enable it to strengthen its liner network to and from South America by integrating the CCNI liner services.
“Merging the dedicated and experienced workforce of CCNI and Hamburg Süd will help to create an even stronger organisation that will provide a first-class service to the customers of both companies,” it added.
The deal is subject to due diligence, execution of a sale and purchase agreement and approval by the relevant authorities.
The acquisition is scheduled to be completed by December 31 of this year and also includes the general agency functions of CCNI.
No details of the transaction were released by the two shipping lines.
According to Lloyd’s List Intelligence, the amalgamation of the two carriers will create the world’s twelfth largest shipping line with a fleet of 113 ships representing 508,610 teu of capacity.
Currently, Hamburg Süd is ranked number thirteen in the world while CCNI is in 42nd position.
Lloyd’s List Intelligence shows that both carriers have plans to expand their fleets. The German carrier has five vessels representing 36,600 teu on order, while CCNI has three vessels with a total capacity of 27,000 teu on its orderbook.
The acquisition follows hot on the heels of news of another German carrier’s merger with a Chilean shipping line.
This development will see Hapag-Lloyd’s and CSAV come together to create the world’s fourth-largest shipping line and will improve the new entity’s presence on the north-south trades.
The Hamburg Süd and CCNI deal could be seen as a direct response to the Hapag-Lloyd CSAV merger.
Hamburg Süd has a history of expanding through acquisition.
In 2007, it acquired Costa Container Lines. IN 2006, it took over Fesco Ocean Management Limited services between Australia/New Zealand, Asia and North America. In 2005, it took over Spanish carrier Ybarra Sud.
Last year, Hamburg Süd saw revenues decline by 3.9% year on year in 2013 as overcapacity hit freight rates and it expects more of the same this year.
The privately-owned German ocean carrier group, which only reveals basic details in its results, said its revenues slipped to ?5.3bn ($7.3bn) and its liner volumes increased by 1% on-year to reach 3.3m teu.
It blamed the revenue decline on weak freight rates and the devaluation of the US dollar against the euro by around 4%.
OOCL reports load factors up, revenues per teu down
ORIENT Overseas Container Line has reported increases in revenues, volumes and load factors during the second quarter of the year, but these improvements were not enough to reverse declines in its revenues per container.
OOCL, the container shipping arm of Orient Overseas (International) Ltd, recorded an 11.2% year-on-year increase in volumes to 1.5m teu, while revenues increased by 6.8% on a year ago to $1.5bn.
The star performing trade lane in terms of growth was Asia-Europe, where second-quarter volumes climbed by 22.1% on last year to 254,067 teu and revenues increased 24.4% to $305m.
It was also the only OOCL trade lane where revenues grew by a faster rate than volumes.
In contrast, the transatlantic trade lane was its worst-performing route with volumes down by just over 1% year on year to 100,775 teu and revenues slipping 2.1% to $154m.
The transpacific trade benefited from a 12.7% uplift in second-quarter volumes to 336,940 teu and intra-Asia/Australasia liftings increased 9.1% compared with last year, to 761,411 teu.
As a result of revenues growing slower than volumes, the shipping line’s average revenue per teu dropped by 4% compared with the second quarter of last year.
On the other hand, vessel load factors for the period increased by 6.5% on last year.
MEDITERRANEAN Shipping Co’s containership fleet has expanded by 62% in terms of slot capacity over the past five years, the fastest increase of any global carrier.
Not far behind was CMA CGM, with 56% growth over the same period, according to new analysis from Clarkson Research.
Maersk, which retains its number one status despite slightly slower capacity growth, nevertheless has seen the size of its fleet rise by 35% since July 2009 to 2.7m teu.
That leaves it ahead of MSC, which now operates a fleet of 2.5m teu, and CMA CGM, which is in third place with 1.6m teu.
The growth of the top three has added to concentration in the container shipping sector, with the trio now responsible for a combined fleet of 6.8m teu or 38% of the total.
That share is up from 36% in July 2009.
The three carriers’ combined fleets have grown almost 50% over the past five years, according to Clarksons’ latest Container Intelligence Monthly.
“Even without P3, they remain the biggest fish in the sea,” the broker said.
Overall, the containership industry is the most consolidated part of the major volume sectors of shipping, according to Clarksons.
At the start of July 2014, the world’s top 10 container lines operated a fleet of 11.6m teu, equivalent to 66% of total fully cellular capacity of 17.6m teu.
These carriers have been responsible for deploying more than 75% of total additional capacity since July 2009, when their share of total capacity was 62%.
As a result, the combined deployed fleets of the top 10 carriers have expanded by 48% over the last five years, compared with growth among smaller lines of 25%, Clarksons estimates.
In addition to the top three, other carriers are going for growth, namely Germany’s Hapag-Lloyd which is merging with Chile’s CSAV to form what will be the fourth-largest line in the world.
Meanwhile, expansion of both the G6 Alliance and the CKYHE group of carriers “demonstrates another trend in increased co-operation”.
Compared to many other shipping sectors, containership operations are relatively consolidated, says Clarkson Research.
“ Despite the collapse of P3, the big three carriers together have a significant and expanding market share. In addition, across the liner sector, operators continue to pursue closer ties through mergers and alliance building.”
Iran shipping sanctions could go by year-end
THE way is now open for European Union sanctions against Iran to be lifted by the end of the year, with the US following suit in due course, according to a top lawyer specialising in the issue.
The move could open the way for Islamic Republic of Iran Shipping Lines and NITC to return to unrestricted international trading, and allow insurers to insure oil exports from the country and to provide protection and indemnity cover to Iranian vessels.
Simon Kushner, chief executive of W Legal, spoke to Lloyd’s List after NITC’s recent success in the European Union General Court, which annulled EU sanctions against the company on the grounds that Brussels had no evidence that the tanker firm had provided financial support to the Iranian government.
However, the restrictions remain in place pending a possible appeal by the EU.
What happens next depends on political progress at talks in Vienna between the so-called G5+1 group — the US, UK, France, Germany, Russia and China — and the Iranian administration over Tehran’s nuclear programme, which Iran insists is for civilian purposes only.
“I’m personally hopeful that by the end of November 2014, the G5+1 will have reached a solution to the nuclear issues that are being discussed and I would anticipate as a result, many entities will be almost immediately delisted,” Mr Kushner said.
“The EU are capable of implementing that almost overnight if they so choose, but the US political system means that it will be significantly more difficult, and take a longer time, to implement what they want to implement.”
The precedent is probably the easing of sanctions against Burma just over two years ago where, once the issues at stake were resolved, EU sanctions were lifted with alacrity, but the US took longer.
Mr Kushner believes that if a deal is reached, that will open the door for insurers to become involved very quickly in insuring vessels carrying crude oil from Iran and possibly providing insurance to IRISL, providing that the carrier is taken off the list of sanctioned entities.
“My strong feeling is that if there is a real breakthrough, we will see the easing of both types of sanctions, which will likely include shipping companies.
“I can’t guarantee it will happen, but if it does happen, it will happen quickly. It is certainly capable of happening quickly.”
The Wall Street Journal recently reported that IRISL is negotiating a $300m order for 10 82,000 dwt bulk carriers with Singapore-listed Chinese shipbuilder Yangzijiang Shipbuilding Holdings, likely to be used to import iron ore and export copper. Delivery could come in 2017.
”Banks that will be involved in the financing are looking into the order to make sure that no sanctions are violated since it involves an Iranian entity. But chances are that if there is agreement on the price, the financing will go through,” the WSJ quoted an unnamed source to have said.
Given the oversupply of tonnage in both the wet and dry segments, the return of two substantial fleets to world trading is likely to have a detrimental impact on the supply and demand balance.
Maersk joins August GRI as price push gathers pace
MAERSK Line has joined the growing list of Asia-Europe carriers to announce a general rate increase for August as shipping lines look to reverse the downward trend of freight rates on the key trade route.
The world’s largest shipping line plans to increase its rates by $450 per teu between Asia and Europe from August 1, following carriers including CMA CGM, Hamburg-Sud and K Line, who have already confirmed GRIs for the start of next month of $550, of $1,000 and of $750.
Vale reports record iron ore production in second quarter
GOOD weather and a surge in activity at a new plant drove record iron ore production for Brazilian mining giant Vale during the second quarter.
In its quarterly statement, the miner reported production levels of 79.5m tonnes of iron ore during the April – June period.
This compared with 70.6m tonnes during the second quarter of 2013 – a 12.6% difference.
“The good operational performance was supported by better weather conditions and the ramp-ups of the Plant-2 in Carajás (the world’s largest iron ore mine) and the new Conceição Itabiritos plant (in South East Brazil,” the company reported.
In total Vale produced 150.5m tonnes during the first half of 2014, 15.1m tonnes higher than in the first half of 2013.
This was despite Goldman Sachs reporting the likelihood of an iron ore glut deepening during the next four years.
Vale also reported an increase in iron ore pellet production, reaching 9.95m tonnes in the second quarter compared with 9.9m tonnes in the first quarter and 9.7m tonnes during the second quarter of last year.
Coal production reached 2.2m tonnes, 23.8% higher than in the first quarter of 2014, but down 7% on the second quarter of 2013.
Copper production was 81,000 tonnes during the quarter, down on the first quarter (88,400 tonnes) and the second quarter of 2013 (91,300 tonnes).
Nickel production was 61,700 tonnes during the quarter, 8.6% lower than the year quarter before.
Meanwhile Vale New Caledonia is reportedly increasing production after environmental problems back in May when an acidic solution leaked into a river. The incident led to riots with damage to vehicles, equipment and buildings.
Operations resumed in mid-to-late June.
Capesize market stalls despite lower iron ore prices feeding China demand
A REPORT by analysts Goldman Sachs may give food for thought to owners and charterers of capesize vessels.
The banking giant takes a keen interest in the minerals and commodities market and its prognosis points to troubled waters ahead.
Goldman analysts have said they are “bearish on iron ore”, despite minerals giants BHP Billiton and Vale reporting production increases of late.
“We have consistently argued that the shift to structural oversupply in 2014 would see falling seaborne prices drive the closure of small, high-cost Chinese mines in coastal provinces but the cost-support provided would be limited because the scale of production cuts in China is likely to surprise on the downside,” Goldman reported.
“The recent price declines for both imported and domestic material already provide sufficient pressure for marginal Chinese supply to close, and we believe the scale of the surplus in 2015 will also put high-cost seaborne producers at risk.”
Analysts who spoke with Lloyd’s List said this trend may, in fact, help shipowners, as ore demand remained strong.
Banchero Costa research analyst Ralph Leszczynski said extra production capacity and the addition of smaller players such as Fortescue and Atlas had impacted the market.
“The result is that now a lot of new export capacity is coming on the market, and probably in excess of what is actually needed,” he said. “And this is putting downward pressure on iron ore prices.”
Mr Leszczynski said miners had claimed lower prices were due to a slowdown in Chinese demand.
“This is nonsense,” he said. “Demand is still as strong as it was five years ago, it’s just that they now have much more competition on the ore export side.
“For shipping and capesizes this is actually very positive. Because at lower prices they are effectively undercutting Chinese domestic miners.”
Mr Leszczynski said about half of the iron ore used by Chinese steel mills is locally mined, but this is of poor quality and the mines remain inefficient.
Trading low
Whatever the outlook, recent trading has been quiet with the Baltic Capesize Index at 1191 on July 22, the lowest level for more than a year.
On the C5 Western Australia/China route, trading resumed at $7.65 and battled its way north to just short of $7.9 before falling back to $7.8.
Braemar Seascope reported a major charterer on the route booking at least eight vessels around that price for late July and early August.
But a Singapore broker said the C5 increase was fairly slight. “All three majors were in the market [on Wednesday] so that helped a little bit.
“But normally when the three majors are in the market it’s enough to push up the market quite a lot.”
For C3 route between Tubarao and Qingdao, the week started at just under $18.6, dipped to $18.4 then recovered slightly to $18.5. According to Braemar, a price of $18 per tonne was fixed for a Brazil to China voyage for dates between August 10 -August 20, equating to about $9,000 a day.
On the C7 route from Bolivar to Rotterdam, the week started at $8.06 and sulked to $7.98, a long way short from when owners commanded prices of more than $10.2 only a month ago.
On the C15, trading began at just above $12 and battled its way up to $12.17, still well short of a month ago when rates were about $13.5.
The Singapore broker noted a lot of tonnage on the market.
“You’re basically going to have to see a significant push in one of the routes to see anything change in the market.”
An Australian broker was even more grim, talking of the “excess availability of ships”.
“At present the capesize freight rates are close to 18-month lows or so. “It’s dreadful and there does not seem to be any pick up in the near future,” he said.
“Even if China and Japan keep up their pace of iron ore imports, there will still be an excess of ships and the shipping market freight rates are likely to remain low well into next year.”
SUEZMAX crude tanker United Kalavryta, carrying its controversial cargo of Iraqi Kurdistan crude, is scheduled to arrive in the US at around 20.00 hrs on Saturday, according to Lloyd’s List Intelligence vessel tracking.
The 2005-built, 159,156 dwt tanker, beneficially owned by Greece’s Gregory Callimanopulos Group, is carrying crude from Iraq’s autonomous Kurdistan region, which Baghdad officials say has no right to sell oil independently, according to oil industry experts.
Vessel tracking data from Lloyd’s List Intelligence shows the tanker left the Turkish port of Ceyhan on June 23, having spent a day at the port.
Ceyhan is home to the Kirkuk-Ceyhan pipeline, which pumps northern Iraqi crude to the port for export on tankers.
That pipeline has been out of action due to sabotage by militants in the current conflict ravaging the country.
The Kurds have taken control of Kirkuk and are now enabling Kurdish oil to be pumped through a new pipeline to Ceyhan, according to oil industry analysts.
Baghdad is reported by the international media to have condemned the sale and transport of the oil.
Washington has reportedly advised US firms not to buy the oil, fearing sales of Kurdish oil will fracture the country further, but has stopped short of placing outright bans on purchases by US companies.
No details have yet emerged of who has bought the oil or if it will end up in the US, or be moved elsewhere.
As things stand, the Lloyd’s List Intelligence data shows that the 1m barrels of oil are heading to Galveston in the US Gulf.
The controversial cargo comes amid concerns over Iraqi oil production and exports due to the conflict.
Exports from the southern part of the country, the main export area, have not yet been affected, though some non-essential oil company staff have been evacuated.
The concerns have been that the fighting could spread and escalate, potentially disrupting oil exports on tankers from southern Iraq.
Exports from the north have all but dried up due to the sabotage of the Kirkuk-Ceyhan pipeline.
Iraq’s overall exports in June were 2.7m barrels per day, higher than 2.5m bpd in the previous month, helped by those southern exports, according to Lloyd’s List Intelligence data.
The cargo of Kurdish crude is said to be the fifth sent out, but only one has been delivered, reported by international media to have been discharged into an Israeli terminal.
Trading power, Dutch, well placed to pursue Russia sanctions
( Reuters ) The seafaring Netherlands prides itself on being a trading nation, reluctant to let politics get in the way of a good deal.
But since the downing, allegedly by Moscow-backed rebels in eastern Ukraine, of Malaysian Airlines flight MH17 with the loss of 193 Dutch lives, a growing Dutch chorus has called for the country to use its trade power to hit Russia in the wallet.
Dozens of Russian firms have chosen to incorporate in the Netherlands to save money on tax, taking advantage of an extensive network of double taxation treaties.
The country is also one of Russia's largest trade partners. Rotterdam, the world's fourth largest port, is a major distribution hub for fossil fuels and minerals and was the single largest destination for Russian exports in 2013, importing $70 billion of goods excluding gas, according to the United Nations and the World Trade Organisation.
Crude oil accounted for $22 billion of the total, followed by coal and metal ores. Much of it was re-exported, either raw or after refining or processing - Rotterdam is the entry point for a big slice of imports to Germany, Europe's largest economy.
"The trade in mineral fuels is very important in the trade relationship between the Netherlands and Russia and that dominates," said Marjolijn Jaarsma of the national statistics agency Statistics Netherlands. "Almost two thirds of that is for re-export," she said. "It's the Rotterdam effect."
That suggests the Dutch economy is less dependent on Russian imports than the trade figures indicate.
According to a report last year by U.N. agency UNCTAD, the Netherlands was one of the top three jurisdictions, along with Cyprus and the British Virgin Islands, for the "round-tripping" of Russian investment money.
Under that technique, money that looks like foreign investment abroad is sent to a low-tax offshore financial center and then comes straight home, giving the owner legal protection against expropriation or arbitrary acts by government. A
n opinion poll published on Wednesday in the daily De Telegraaf said 78 percent of the Dutch want punitive sanctions taken against Russia even if it harms the Dutch economy.
Once the world's greatest maritime power at the center of a 17th century trading empire that spanned the globe, the Netherlands may be minded to turn its back on centuries of tradition and put politics before trade.
"Nobody, absolutely nobody gets the better of us," Foreign Minister Frans Timmermans wrote in a Facebook post on Wednesday, shortly before the first bodies from the crash arrived back in the Netherlands. O
ne Moscow-based financial source said the Netherlands was popular for structuring Russian offshore investments. "I would expect there are very significant investments going through the Netherlands," the source said, speaking on condition of anonymity.
"There will be a push to look at this… (but) people (will also be) thinking about the business implications - they may lose jobs if Russian investment pulls out," the source said.
Dutch Prime Minister Mark Rutte has said all options "whether political, economic or financial" are on the table. Lawmakers are taking an increasingly hard line, with several opposition politicians saying targeting Russian offshore companies should be a priority of Dutch policy.
Several plan to raise the issue in a parliamentary committee meeting on Friday.
Others say it would be wise to wait with sanctions until the bodies of victims are safely returned and investigations are out of the way. "If Russia's complicity or responsibility is proven beyond doubt, every measure, whether economic, trade-related, personal or related to the delivery of weapons should be considered," said Sjoerd Sjoerdsma, foreign affairs spokesman for the liberal D66 party, which according to polls would win an election today.
Bram van Ojik, parliamentary leader of the Green party, said the government should make a priority of targeting "mailbox companies" - postal addresses with no permanent employees acting as a front for a much larger business located abroad.
"There are thousands of mailbox companies here in the Netherlands and some of their businesses are pretty shady anyway," he said.
A hint of the scale of the capital flows generated by such companies comes from the foreign direct investment figures published by the Central Bank of Russia (CBR). Flows to and from the Netherlands are among the most volatile, and in some years orders of magnitude larger than flows to much larger economies like France or the United States.
In 2012, the net FDI outflow from Russia to the Netherlands reached $2.6 billion. In 2013, flows were reversed, with a net $3.5 billion flowing from the Netherlands to Russia. The equivalent figures for France were a $1.4 billion outflow in 2012 and a $449 million outflow in 2013. Net Russian FDI outflows to the United States were just $688 million in 2012 and $763 million in 2013.
But some politicians cautioned against acting in haste, even putting aside the harm sanctions could cause the Dutch economy.
"Not all the bodies are home yet," said Harry van Bommel, foreign affairs spokesman for the left-wing Socialist Party.
"There has to be cooperation first of all with recovery of the bodies," he said.
"It would be an irresponsible disturbance of this process if now, at this stage, sanctions were introduced." Source :
Russia starts reinforcing naval fleet in Crimea
( Channel News Asia ) Russia announced Wednesday (July 23) that it had begun expanding and modernising its Black Sea fleet based in Crimea with new ships and submarines just months after annexing the peninsula from Ukraine.
"Today we have started forming a powerful Black Sea fleet with an absolutely different level of air service, coastal missile and artillery troops and marines," said Alexander Vitko, the Black Sea fleet commander, in a message to servicemen. "We are preparing bases and crews to serve on new ships and submarines." Vitko said the modernisation of the fleet "lays the foundation for the future of the fleet, both in the short term and looking far ahead."
Russia's Black Sea fleet had a base at the historic port city of Sevastopol in Crimea under an agreement with Ukraine before Russia annexed the peninsula in March. President Vladimir Putin said at a meeting with the national security council Tuesday that Russia will bolster its defences to counter the creeping influence of NATO close to its borders. "It is necessary to implement all of the country's defence measures fully and promptly, including of course in Crimea and Sevastopol, where we have to de facto create military infrastructure from scratch," he said. Putin attended a naval parade there on May 9 Victory Day this year, when thousands crowded the harbour to watch war ships carry out manoeuvres. Defence Minister Sergei Shoigu said in May that Russia's only warm-water fleet would get new ships and submarines this year. Russia earlier this month announced plans to develop Sevastopol up to 2030, including building a power station to reduce its dependence on electricity from Ukraine. It has also announced an ambitious project to build a bridge connecting Crimea to southern Russia.
EUROPE’s fourth-largest ocean freight forwarder has continued to report high-single-digit percentage volume growth during the second quarter of the year.
The Swiss forwarder reported volume growth of 9% on-year during the three-month period to reach 402,000 teu.
This follows on from a 6% increase during the first three months of the year and it is ahead of an estimated market growth rate of 3%.
The world’s largest ocean freight forwarder, Kuehne+Nagel, reported an 8% volume increase during the second quarter.
Panalpina has set itself a target of growing by a 1.5 multiple on benchmark global ocean freight volumes in 2014, meaning it is ahead of where it hopes to be.
In terms of revenues, its ocean freight division saw second-quarter net forwarding revenues decline by 1.7% on the previous year to SFr699m ($773.7m).
Gross profit for the period slipped to SFr123.9m from SFr124.7m during second-quarter 2013 and earnings before interest and tax declined 73% on-year to SFr3.2m.
It said profits were hit by currency translations and added that freight rates remained volatile.
Chief executive Peter Ulber said: “There is still a lot of work to be done in terms of profitability, especially in ocean freight, where — expectedly — it will take some time to make it to calmer waters.
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