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( LL ) THE next battle between container shipping lines will be their ability to demonstrate commercial excellence and product differentiation.
Speakers at Containerisation International’s Global Liner Shipping Asia Conference told delegates that shipping lines needed to develop a deeper understanding of customers’ businesses and not simply talk about price.
United Arab Shipping Co vice-president and global head of marketing and sales Eric Williams said the traditional view of the container shipping market was that alliances and the need to reduce costs had resulted in lower reliability and commoditised service offerings.
However, he said that there was also a more progressive view of the industry with carriers looking to gain a deeper understanding of their customers’ business and help them throughout their entire supply chain.
Carriers that were able to do so and develop solutions that benefited their customers would be able to charge a premium even for low-value commodities, he said.
“Do we as an industry have a willingness to change?” he asked. “Will it be the same old approach of trying to win the same old business on the lowest price, or is there a new way where we work with customers and find solutions for their business and at the same time get paid a fair amount for that?”
While much of this service differentiation would come through closer customer relationships, customers also required access to vessel space, particularly in the peak season, good levels of service and improved reliability.
Mr Williams’ views were echoed by Maersk Line chief executive Asia Pacific region Lars Mikael Jensen.
“We think the next battle between carriers will be around our ability to actually develop commercial excellence and online possibilities that will make life easier and smoother for everybody,” he said.
“The lines have now pretty much said that they have all gone into groupings where they are going to work with each other to provide the basic products.
“So from that perspective it’s the same thing — it’s the ticket to the dance. It’s what you then do afterwards that will decide who you are going to dance with.”
Mr Jensen identified several areas where Maersk Line was attempting to differentiate itself from other carriers.
These included individualising services to customer needs, educating staff and expanding the customer relationship beyond the sales people and across different teams, improving online solutions and tailoring its KPIs to individual customers as well as across the company.
However, he added that while developing the softer side of the business was important, the “basic stuff”, such as a continued drive to create cost-efficient and reliable services, would continue to be important.
In a question and answer session, one delegate from a large European shipper said that he did not believe that the industry was commoditised and said he would pay for additional services.
However, he said that shippers wanted to get the product that they had bought, a link he said was broken across a multitude of carriers.
Mr Williams and Mr Jensen said that improving consistency of service and process throughout the organisation was key to ensuring this did not happen.
They both also agreed that the education and training of staff on the ground was another way to improve the issue
( LL ) MAERSK Line and Mediterranean Shipping Co did not dwell too long on the disappointment of China’s antitrust authority, MofCom, deciding to block their P3 alliance in mid-June; within a matter of weeks they had jettisoned the third member, CMA CGM, and launched a more traditional vessel-pooling arrangement, 2M. But have Maersk and MSC fully addressed the regulatory issues in their haste?
MofCom essentially blocked P3 because it considered the parties’ share of capacity on the Asia-Europe trade (46.7%) would significantly outstrip their rivals and substantially increase their control of the market, with the next largest competitor having less than 10.9% of capacity.
Another key factor was that P3 involved much closer co-operation than traditional shipping alliances, with collaboration on operational procedures, slot sales and service suspension decisions, as well as cost-sharing.
MofCom came to a different conclusion than the US Federal Maritime Commission and the European Commission, both of which cleared P3 — although the FMC was assessing competition on US trades where P3 would have had a lesser presence. And whereas MofCom had to clear or prohibit P3 within a fixed timeline under China’s merger control rules, the European Commission was working under a different procedural framework under its broader competition rules that allowed it to choose not to formally investigate P3 immediately, but instead “wait and see” and intervene later only if it thought necessary.
Having not intervened against P3, FMC and European Commission approval of the less-integrated 2M, with its smaller market presence, seems a formality. China’s regulators might also be expected to have fewer concerns than before, but this is not certain.
Unlike most jurisdictions, China’s merger control rules capture not only “structural” joint ventures akin to a merger, but also looser shipping joint ventures. P3 needed Chinese merger control clearance before it could be implemented, but fell for review under general competition rules in most jurisdictions. Maersk and MSC are confident that 2M is a sufficiently informal joint venture to fall outside Chinese merger control altogether, notably because P3’s proposed jointly-owned LLP structure has been abandoned.
The new proposal has therefore not been filed with MofCom for merger clearance but, like other traditional vessel-sharing arrangements, has had to be filed with China’s Ministry of Transport. The Chinese authorities have not so far prohibited any such vessel-sharing arrangement, suggesting it will be difficult for them to prohibit 2M unless they take the view that there are elements of the 2M proposal that stray beyond the norm.
However, despite the absence of CMA CGM, 2M’s capacity share on the Asia-Europe trade is reportedly still 36% — above the 30% threshold at which China’s MoT can decide to investigate harm to competition, and higher than other arrangements it will have considered. Thus, even if 2M falls outside Chinese merger control, the Chinese can still investigate on competition grounds.
Whether such an investigation is launched remains to be seen. However, China’s state broadcaster has suggested 2M poses “great challenges” to China’s state-owned shipping lines and could raise prices for consumers. Indeed, MofCom’s outright prohibition of P3 raised suspicion of a desire to protect Chinese competitors. This will be fuelled for many if China’s authorities decide to investigate 2M, not least because a 36% share is not considered high in competition analysis in most markets.
From a business perspective, it is clear global competition regulation of shipping could improve. The differing procedural frameworks, timelines and outcomes of the US, EU and Chinese regulatory reviews of P3 — and the current regulatory uncertainty for 2M — highlight the smaller challenges many clearly benign shipping joint ventures face on a regular basis. But global politics means there will be no single global regulator and so navigating the ever-more complex and costly regulatory seas will remain a challenge for owners and operators alike.
( LL ) PRIVATE and state-backed container shipping lines are at an advantage over listed rivals because of their ability to order vessels counter-cyclically.
Consultant Mercator International partner Jesper Kjaedegaard told delegates at Containerisation International’s Global Liner Shipping Asia Conference that shipping lines that ordered new vessels at the bottom of the market benefited from lower prices and delivery as the market has returned to the top.
He said private shipping lines, or those run as though they are private, such as Maersk Line, have more control over when ships are ordered and thus have an advantage.
“In our industry we have a string of listed companies that are no longer in existence,” Mr Kjaedegaard said.
“The advantage of being a private company in this business is that you can go out and order assets when the chips are down.
“If you, as a chief executive, need to convince a board to order ships when you are losing money, you are unlikely to get a good response but if you try when you are making money you will get a positive response.
“However, those ships will be delivered in two or three years when the market has turned again.”
Mr Kjaedegaard’s comments were echoed by Drewry Equity Research director Rahul Kapoor who said shipping companies have struggled to raise equity.
“I would totally agree that shipping companies shouldn’t be listed,” he said. “It is a highly cyclical business and highly capital-intensive and nowadays investors are driven more by short-term returns of three to five years not five to 10 years.
“They are not able to raise any equity because equity investors are absent in shipping. It’s driven by debt, by banks, by bonds.”
Having state backing is an advantage, Mr Kjaedegaard said: these companies find it easier to raise money, including through convertible bonds, even when struggling, as state owners are less at risk of default
( LL ) BANKS will remain cautious when it comes to box lines’ earning potential because of concerns about overcapacity in the market.
DVB Bank vice-president container, car carrier, intermodal and ferry group Lei Shi told Containerisation International’s Global Liner Shipping Asia Conference that, based on today’s orderbook, the market could recover towards the end of 2016, when vessel deliveries are expected to slow.
Despite this, he said, banks still view earnings potential cautiously because further orders are likely to be placed for delivery in 2016.
He said the CKYH and G6 Alliances would probably place further vessel orders to match the tonnage that the 2M and Ocean Three tie-ups will field.
Although newbuilding prices have increased this year, he said, yards still have slots open for 2016, creating downward pressure on prices that could attract further orders.
“So all in all, the banks will maintain a very cautious view on the earnings potential, as well as the asset value,” he said.
He said banks, when reviewing a vessel owner looking to fund vessel purchases, consider downside risk, as opposed to upside potential.
In other words, they examine whether a carrier has the liquidity potential to pay down loans, as opposed to how much profit it could make from the vessel it hoped to order.
This will be based on several factors, which could be spilt into a review of the vessel to be financed and the client seeking the loan.
On the asset side, banks examine whether the ship is of a size that will remain relevant to the market and whether the vessel will offer sufficient fuel efficiency to compete in today’s market.
When reviewing the client, banks consider the company’s ability to find employment for a vessel, which is critical when there is oversupply, visibility of earnings and whether the carrier is state-backed, which reduces the risk of default.
BRUSSELS has given the go-ahead to the proposed merger of container lines Compañia Sud Americana de Vapores of Chile and the German carrier Hapag-Lloyd.
The two carriers signed a business combination agreement in April but have been waiting for approval from the regulatory authorities.
In August the US Department of Justice approved the proposed merger.
Together the carriers will create the world’s fourth-largest container shipping company, with a combined fleet of some 200 vessels transporting 7.5m teu a year.
Their combined turnover is estimated at some ?9bn ($11.6bn) a year.
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· ( Commentarty by Michael Rainsford , LL ) THE Asia-Europe trade lane is displaying a stark resemblance to Groundhog Day.
· Carriers have been locked into a seemingly perpetual loop of rising and falling rates, peppered with overcapacity to push rates lower, and GRIs to act as a temporary buoyancy aid. The nightmare of unforgiving repetition ensues.
The P3 was a chance to break this loop, but that ship has sailed.
The new exit is the trillion dollar question for the container industry. Maersk Line has taken us one step closer to this solution, braving the stance that long-term contracts have lost their value and more focus will be placed on the spot market.
We should all take a moment and appreciate how colossal this advance is.
This is a brave and heroic move by the Danish line. Maersk’s execution of this strategy and the subsequent response from the rest of the market will be critical to embracing this change and improving the industry for all.
Container shipping may be about to have its finest hour.
It will not be an easy ride, however.
The container industry has had its thumb firmly on the self-destruct button for six years and the party-line rhetoric has reduced the industry to a constant playground squabble of price discussions.
It continues to astound me that leading senior executives, not knowing where rates will be next week, took the strategic decision to make the game all about price.
SHIPPING lines could improve profitability by increasing the level of sophistication of their revenue management programmes, according to one consultant.
Speaking at Containerisation International’s Global Liner Shipping Asia Conference, Seabury Group executive director Gert-Jan Jansen said shipping lines needed to better understand the implications of every container move across the entire network and not just look at which box generates the highest rate.
When vessel space is limited, this will allow companies to select to carry containers from origins that have the most positive impact on overall company profitability.
“How do you account for the repositioning costs of empty containers? How do you look at transhipment costs? How granular and detailed are you able to do these calculations and assessments?” he said.
“You have to understand all the network implications of a certain choice and I think that is something that can be done with a slightly bigger sophistication.”
However, Mr Jansen said revenue management was not simply a case of creating a piece of software or a spreadsheet that could make these calculations.
It would require a mental and cultural change throughout the organisation. For instance, if sales people were given bonuses based on the revenues they generated or trade lane profitability, they might still favour selling space to the highest paying box as opposed to the one that had the most positive impact on overall company profitability.
“When we are thinking of revenue management I see a lot of over-investment in IT and under-investment in training, process improvements and getting people to understand how it is,” he added.
( LL ) THE ports of Los Angeles and Long Beach are trialling a new initiative to speed up cargo handling and to reduce truck turnaround times.
PierPass, a not-for-profit company created by the Californian ports’ terminal operators, has introduced the Free-Flow programme, to address congestion, air quality and security and other problems.
Free-Flow allows for bulk delivery of containers belonging to the same cargo owner, trucking firm or logistics company to the port’s marine terminals.
PierPass president and chief executive Bruce Wargo said the programme is necessary to deal with increased levels of cargo arriving on ever-larger vessels.
“Doing the same things incrementally faster won’t solve congestion pressures,” said Mr Wargo.
“How congested would LAX or JFK be if every taxi came for one specific person rather than picking up the first in line?
“That’s how the current container cargo system works.”
Free-Flow begins when an individual vessel is unloaded and all containers belonging to a particular owner are piled into separate stacks.
When all the containers are in place, the cargo owner commands trucks to stream into the terminal via a special lane, each truck taking its turn to collect containers from the stack.
To date, both Long Beach and Los Angeles have stacked containers unloaded from vessels in the order in which they come off the ship.
Trucks then have to wait for the terminals’ cranes to dig out the container they require from a stack that can be four or five containers high and up to six boxes deep.
The new system allows larger retailers that often have 80 containers on a single vessel to arrange the free flow of their cargo with the terminal.
Trucking or logistics companies can also consolidate groups of containers from several cargo owners.
During the trial period, PierPass will work with participating terminals, trucking and logistics firms to monitor the impact on the flow of cargo and the costs and to find out which methods and resources are required for the programme to run smoothly.
Small test runs conducted thus far have produced varied results, according to PierPass. However, early indications suggest that turnaround times could be cut from 45 minutes to just 11 minutes.
PierPass also noted that even for truckers not taking part in the programme, as the process will free space in the rubber-tyred gantry lanes.
“While free-flow isn’t a silver bullet to fix all congestion issues, we believe it can significantly benefit port users,” said Mr. Wargo.
If successful, the programme will become a permanent part of day-to-day operations in both Long Beach and Los Angeles, and could account for as much as 30% of total cargo moves, PierPass said.
Rio Tinto sees 125Mt of iron-ore capacity being cut in 2014
Reuters - World no.2 iron-ore miner Rio Tinto expects other miners worldwide to cut 125-million tonnes of iron-ore capacity in 2014, roughly equal to the amount of new supply expected to come on stream from Australia and Brazil.
Iron-ore prices have plunged 38% to five-year lows this year, largely due to a glut of low-cost ore from top producers, Brazil's Vale, Rio Tinto, BHP Billiton and Fortescue Metals Group.
The price plunge has been deeper and quicker than expected, and miners large and small have been predicting that high cost producers, mostly in China, would be forced to cut output in response to weaker prices.
"I think there's already some evidence, certainly in China, Indonesia, Iran, South Africa and Australia, we are seeing some more marginal players make decisions to take capacity off," CE Sam Walsh told Reuters on the sidelines of an event in Washington showcasing the company's pink diamonds.
"We are expecting that through this year 125-million tonnes of capacity will come off in response to lower prices," he said, adding that 85-million tonnes have already been cut, in line with expectations. A cut of 125-million tonnes would be equivalent to nearly 10% of forecast global trade in iron-ore for this year, and roughly equal to the 132-million tonnes of new supply forecast to come from Australia and Brazil in 2014.
Just this week, fledgling Australian producer Western Desert Resources, operating at a rate of 3-million tonnes a year, called in administrators as it was unable to work out a debt repayment schedule with its lenders.
UBS estimated at current prices junior Australian miners Gindalbie Metals, Grange Resources Ltd and Atlas Iron Ltd were loss-making.
Investors say the key question is how much production high-cost Chinese miners will cut, and some are not as confident as the mining companies that high-cost output will be cut rapidly.
"All I do know is the big producers continue to expand production. To the hopes that some people have that it's going to displace high-cost Chinese domestic production - good luck," said Tim Schroeders, a resources portfolio manager at Pengana Capital.
Vale hub to ship first cargo
Vale has re-exported the first iron ore cargo from its new Teluk Rubiah transshipment facility in Malaysia.
The Brazilian iron ore mining behemoth’s 179,000-dwt Ore Pantanal (built 2010) arrived 18 August to load the 176,000-tonne cargo as part of a commissioning process for the new terminal, Vale said today.
Vessel tracking data from Seasure Shipping’s VesselsValue.com show the capsize bulker is now anchored in
China’s Bohai Bay with nearby Tianjin set as its intended destination.
Commercial operations at Teluk Rubiah are set to begin at the end of September.
The Rio de Janeiro-based company built Teluk Rubiah as part of an effort to overcome challenges facing its fleet of Valemax very large ore carriers (VLOCs), which have struggled to deliver cargoes directly to the Chinese ports they were built to serve.
“Teluk Rubiah represents an advance in Vale’s strategy to establish closer ties with the Asian market and to be capable of offering products that meet demand,” Vale said.
The first phase of the terminal, which is located at Lumut in peninsular Malaysia, has the capacity to move 30 million tonnes per year, but expansion is planned. Construction began in 2011.
Vale currently transships cargoes from Valemaxes at an offshore facility in Subic Bay, Philippines.
( Dry cargo - Eric Martin in Stamford - 09 September 2014, 15:41 GMT)
Offshore Oil Drilling Market to Suffer through 2015
( Posted by Michelle Howard, Reuters - Wednesday, September 10, 2014 )
A sluggish offshore drilling market could deteriorate further next year due to weak demand and a flood of new vessels, even though a few places such as Mexico and Brazil remain promising for exploration, industry executives said on Wednesday.
Rig rates have fallen sharply over the past 18 months as oil companies cut capital spending, saving cash for dividends, just as dozens of brand new offshore rigs ordered during the boom times hit the seas, creating overcapacity.
"The market is going to be bad this year, it is going to be worse next year, then it will be stabilising," Rune Magnus Lundetrae, chief financial officer (CFO) of Seadrill, the world's biggest driller by market capitalisation, said on the sidelines of an industry conference.
Day rates for the most advanced ultra-deepwater rigs peaked around $650,000 last year and are now down in a
range of $375,000-$500,000, though contracting activity by oil firms has slowed to a trickle, making it hard to establish the actual market rate, executives said.
"It is going to be a very challenging market place for the next 12-18 months," Transocean CFO Esa Ikäheimonen told Reuters. "People will retire some of the older assets and typically deepwater and midwater assets will be going."
"You will probably see day rates lower than what I indicated in the ($375,000-$500,000 per day) range," Ikäheimonen added. "But you might see day rates that are higher ... To me that is the average level where I think the deals will be done."
Orders for new ultra-deepwater rigs equal around 50 percent of the existing fleet and analysts estimate around a
third of the new vessels that will come during the next three to four years still have no drilling contracts.
Seadrill's Lundetrae said the market could need another 24 months to bottom out, though for older assets rates were
already near the bottom and he expected older vessels to be idled.
Offshore drillers have been among the worst performing shares this year, with Transocean's stock down 25 percent in the past year, underperforming a 7.6 percent rise in the S&P 500 index.
Seadrill, whose newer rigs are in greater demand, is down 14 percent, while Ensco is off 18 percent.
Rates for jack up-type rigs, which are used in shallow water and stand on their legs on the sea bed, have also fallen, though not as much as deepwater floaters, with executives predicting rates around $160,000 per day,
down from rates around $225,000 at the peak.
"The jack-up market is not showing a drop-off in demand, actually it is showing an increase," Carl Trowell, the chief executive of Ensco said. "It will drive out some older rigs. We are confident about the jack-up market."
While drilling in the North Sea, Africa and the Gulf of Mexico could slow, places such as Mexico and Brazil could
pick up some of the slack.
"There are three hot spots right now, and Mexico is one of them," Gustavo Hernandez Garcia, the exploration chief of Pemex said, adding that Brazil and South East Asia were the others. "We definitely need to increase our capacity," he added. "We need to increase our jack up capacity to about 70 from 60 during the next couple of years to keep the level of activity."
IRAN’s expansion of land-based storage capacity at its main crude export terminal in Kharg Island could reduce its floating storage volumes over the coming months, freeing its very large crude carriers to haul cargoes, according to the International Energy Agency.
This is not necessarily a development that benefits VLCC owners, already competing in a crowded market.
“The Iranian tankers are better used for storing or doing the odd trade as always,” said a London-based tanker expert who preferred to stay anonymous.
Hampered by restrictions on exports, which have recently been relaxed, Iranian VLCCs have been used for floating storage, or occasionally to trade.
The concern for the VLCC market is that the Iranian fleet — the largest VLCC fleet in the world at 37 vessels — will return to a market already oversupplied with vessels.
Although the Iranian fleet will probably stick to domestic cargoes, these cargoes could have soaked up some of the excess tonnage already competing for work in the Middle East Gulf.
The market needs fewer ships to sustain higher freight rates paid to owners, most industry observers say.
VLCC earnings on the main Middle East Gulf to Asia spot market trade are down at around $13,700 per day, although a pick-up is expected in the fourth quarter as importers replenish stocks for winter.
Lloyd’s List invited NITC to comment on its vessels being freed up to ship cargoes and how this could impact the VLCC market.
Storage capacity
It is now inevitable that more of Iran’s fleet will be freed to trade crude.
Four 1m barrel tanks have been built, increasing total storage capacity at Kharg Island to 28m barrels; its capacity stood at 7m barrels in 2000, according to the Paris-based IEA. Originally to be completed at the end of 2013, these storage tanks are understood to be operational, the energy watchdog said in its monthly oil report released on Thursday.
Kharg Island plays a key role in Iranian crude exports: during the first quarter, its shipments averaged 900,000 bpd, or more than 80% of total Iranian crude exports.
However, deliveries from Kharg are still far lower than levels pre-2012, when it regularly shipped more than 2m bpd.
Sanctions imposed in 2012 over Iran’s nuclear programme forced Tehran to store more of its oil on its tankers when its land-based storage was full.
Expansion of land-based storage has significantly reduced the amount stored on tankers.
According to the IEA, Iranian floating storage was 22m barrels at the end of August, far lower than its peak of nearly 50m barrels in mid-2012.
A VLCC holds 2m barrels, so 22m barrels equates to 11 VLCCs, compared with 25 VLCCs for 50m barrels.
Now, further land-based storage expansion is planned.
Infrastructure
Earlier this year, Iran said it had doubled the budget for energy storage infrastructure projects, with the aim of commissioning a further 10 storage facilities by the end of 2015 which will have a combined capacity of 7m barrels, the IEA noted.
In the medium term, Iran is reported to be planning to diversify its crude exports away from Kharg by building a new crude and gas export hub on Jask Island, outside the Straits of Hormuz in the Sea of Oman.
Although only at the planning stage, the $2.5bn project will reportedly include a tank with a capacity of around 20m barrels, according to the IEA.
Iran claims the terminal could be up and running by the end of the decade.
“By increasing land-based capacity Iran can gradually increase production,” said the tanker expert.
The VLCC market will, no doubt, be watching Iranian developments closely.
ARAB Maritime Petroleum Transport Co has chartered out one of its product tankers to haul Middle Eastern naphtha to Japan at one of the highest spot rates this year.
The Cairo-based company chartered out its 2008-built, 112,521 dwt product tanker Alburaq to Saudi Aramco at the rate of W120, according to the latest fixture data.
The vessel will carry 75,000 tonnes of Middle Eastern naphtha to Japan on September 15.
The rate of W120 is one of the highest levels this year for that particular route on that ship size.
The highest level reached on the Baltic Exchange’s index of the route was W119.78 on August 26, which is an average taken from brokers submitting rates for the route.
That rate of W119.78 equated to earnings of $23,136 per day, according to Baltic Exchange data.
WITH bids due by the end of next month to build and charter nine liquefied natural gas carriers for Gail (India), Delhi’s stipulation that a third of the vessels must be built in India is sewing uncertainty about the strength of owners’ responses.
Lloyd’s List understands that representatives of some 20 LNG carrier owners are said to have attended meetings organised by Gail.
One executive said on condition of anonymity: “We are all following it with interest and I think there is a common hope that at the end of the day the government will back down on the requirement for Indian yards to be involved.
“But frankly I don’t see that happening yet. I don’t know what is going to happen because there is a great reluctance among just about everybody to enter into this project and commit to building in India.”
Owners have been invited to tender for three sets of three vessels, with the requirement for one from each set to be constructed at an Indian shipyard.
No Indian yard has experience building LNG carriers and almost all lack facilities to do so. However three have been qualified to participate in the process; Pipavav, Larsen & Toubro and Cochin Shipyard.
The Indian yards have been asked to submit details of a technical alliance with an experienced overseas builder of LNG carriers by October 1.
Thereafter owners are expected to submit their bids, including the India-built vessels, by October 30 together with a bid bond of more than $1m.
The project, which has been much delayed, envisages signing long-term charters with the successful owners by the end of first-quarter 2015.
That schedule appears challenging, and Gail will be conscious that it is running out of time as tonnage is required to start shipping the 5.8m tonnes of LNG that it has agreed to buy annually from the US.
The first vessels are required in the second half of 2017 and the India-built vessels have been given a six-year lead time.
Reflecting this, Gail is offering 20-year charters for the overseas-built carriers, while India-built tonnage will be hired for 17 years. The size can be from 150,000 cu m to 180,000 cu m.
“A lot of people are paying attention but I think a lot of the players are hoping that they run out of time and the [Indian building] requirement is dropped and they then come back to the market for new or existing ships without that requirement,” said the shipowning source.
“But I don’t see a lot of evidence of that now. To be fair they are only doing a version of how other shipbuilding nations first got into the LNG sector,” he said.
“I presume at the end of the day that an Indian yard will be able to build an LNG carrier but the uncertainty is going to make it very difficult to get financing. Owners are uncomfortable.”
Gail has the option to take an ownership stake of up to 10% in vessels and Shipping Corporation of India can opt for a stake of up to 26%.
Tax surprise for foreign shipowners in China
( TradeWinds ) A new Chinese tax on time-charter hire could give shipowners a shock and put tax withholding duties in the hands of their customers.
Shipping lawyers and market players in China are scrambling for information about the new obligations of charterers, shipowners, brokers and agents under a hastily introduced new regime that imposes taxes of up to 25% on transportation income in international trade. Most foreign shipowners will face a rate of 10% of net hire income if properly declared. But foreign owners with foreign representative offices in China will be paying the full 25% of net hire.
Owners who do not declare expenses properly will be assessed a notional “profit margin” of no less than 15% by the government and then their total income —times that assessed margin— will be taxed at the appropriate rate, according to Guangzhou-based lawyers from the Wang Jing & Co law firm.
The rules came into force on 1 August, just a month after they had been published.
As a result, shipowners with tonnage now in China or China-bound have sailed into tax liabilities they could have known nothing about.
Lawyers in China have had short notice to study the rules and query the authorities about interpretations and enforcement. Clarifications have not yet been issued on several key points.
Most clearly and immediately affected are non-Chinese owners doing business with Chinese charterers and shippers. Chinese shipowners pay value added tax (VAT) when doing business with domestic customers and, thus, are not affected. As for non-Chinese shipowners delivering goods to Chinese ports on behalf of non-Chinese customers, whether they are affected is one of several areas the tax authorities have yet to shed light upon.
The move brings both uncertainties and increased costs, and puts charterers —or other unspecified “tax withholding agents” designated by the owner—in the position of tax collectors, charged with withholding a percentage of income until the tax bill is worked out and then remitting it to revenue officials.
“The first problem is that when foreign owners are dealing with Chinese charterers, it is highly likely that the charterers will impose surcharges to cover withheld taxes,” said Chen Xiangyong of Wang Jing & Co.
Chen and colleague Winston Wang ( WangWeisheng ) have flagged the issue with a note on the Baltic Exchange
website and say they have been flooded by calls from owners, protection-and-indemnity (P&I) clubs and other
lawyers.
Numerous brokers and owners consulted by TradeWinds were unaware of the new tax regime this week or
had received queries from clients or partners.
Chen and collaborating English lawyers are now drafting clauses designed to shift the burden for the increased cost to the charterer and urging clients to insist on these in charter parties. But the result will depend on negotiations.
Another step Chen is encouraging for some is the registration of ships under the flag of states that have mutual tax treaties with the People’s Republic of China.
If widely followed, that advice could see tonnage fleeing to Greece, Cyprus and Singapore.
Chen is also advising clients to inform local tax authorities when trading in China and to give full information about income and expenses. However, given the unsettled questions of interpretation, collection and enforcement of the tax, the tax burden from current calls in Chinese ports may go undetermined for some time.
It remains unclear whether Chinese authorities will demand tax retroactively but Chen feels the authorities will be
pragmatic. “At least there is such a risk,” he told TradeWinds. “But the real practice in China is that the law can be
there but the way to enforce it is still subject to negotiation.”
Also unanswered is how chartering chains will be treated— whether only the last subcharter or all the charters up to head owner will be taxed. Chen says it is also a good question whether brokers may be required to collect taxes when charterers are not present in China.
“If the broker is based in China, it is likely he could have an obligation to collect,” he said. But the big question is about
whether the tax applies when both shipowner and charterer are outside China —and, in that case, how China will enforce the rule and collect the tax.
“To my mind, that is the most important unresolved issue,” said Chen.
Meanwhile, the new rules do clear up at least one question from earlier attempts to collect tax on charter hire.
Previously, voyage charters were treated as service income but the rules were ambiguous as to whether time
charters were service income or leasing income —the latter taxed at a higher rate —and not covered by bilateral
tax treaties. Some local authorities had taken the latter view and imposed the higher rate.
Now it has been made explicit that both voyage charter and time-charter hire are transport service income under Chinese law. ( By Bob Rust Beijing - 29 Aug 2014 )
German lessons required
Germany’s hard hit shipping industry needs to educate shipping investors more about risk if it wants to fill the funding gap left by the collapse of the KG market – which could continue for another two decades–according to ER Capital Holding CEO Jochen Klosges.
Delivering the keynote speech at the opening of the Ship Finance Forum at SMM in Hamburg he said there are alternatives to KG funding available if owners adopt the right approach.
He cited institutional investors, private equity, initial public offerings (IPOs), retail investors alongside specialist and semi specialist investors as possible sources to step in as the collapse of KG shipping funds continues.
“Germany has been used to cheap equity from KG’s and now we need to establish something else,” he said.
Although Hamburg is not regarded as a financial centre, he suggested it should not be handicapped, pointing out that Greek owners had managed to attract adequate finance even from Piraeus.
He said shipping, despite having a poor reputation in Germany, could still be attractive to institutional investors as
part of a broad portfolio of investments. “(German) shipping companies have a choice and they must take it proactively,” he said. “It needs long term investors and is in a position to be one part of a diversified portfolio for institution investors but they (owners) have to explain the risk.”
He encouraged shipowners to make a clear the distinction between shipping and other products in an investor’s portfolio, which typically might be made up of real estate and bonds. “We have to establish a governance structure that thinks about the client’s risk,” he suggested, and “enter into an intensive dialogue with the client about the risk and return profile”, he added.
Dr Klaus Stoltenberg, global head of ship finance coverage at Deutsche Bank, pointed out German banks are still finding it difficult to invest in shipping. He explained the results of stress test audits on bank’s shipping exposure are likely to mean lower investment levels in the sector.
He explained that banks had also changed the focus of key performance indicators on funding from return on equity to net margins, making shipping appear a less attractive investment compared to other business sectors.
Banks are now “walking” owners who come looking for investment to the capital markets, he said “because they no longer want the long term risk”.
Stoltenberg said banks attempting to return to the ship finance market were also finding strong competition from state backed exports banks, citing Japanese funding as an example.
Lloyd Fonds’ chief executive Dr Torsten Teichert said he believed retail investors would return to shipping despite the KG crisis of the last decade. However, he said they are more likely to reappear as a shareholder in publically quoted shipping companies.
Dr Karsten Liebing, managing partner at Hammonia Reederei agreed. “In the capital market products are cheaper and more transparent,” he said.
China-based Winland’s bulker, Rui Lee, arrested
Winland Shipping has seen one of its bulkers arrested by Singapore’s admiralty sheriff, latest court documents show. The Hong Kong-flagged 56,928-dwt Rui Lee (built 2011) was detained on Wednesday morning on the orders of lawyers from Oon & Bazu.
AIS data shows the ship presently moored off the east coast of Singapore in position 01° 28.96’N, 103° 95.38’E.
The exact details as to why the ship has been arrested remain unclear, but it is likely to be related to outstanding payments for services.
In February this year Bombay High Court arrested the supramax after Singapore’s Seabridge Bunkering Pte
filed a lawsuit over unpaid dues for bunkers supplied to a ship owned by a sister company. The ship was later released after the vessel’s owner and the Singaporean company reached an out-of-court settlement and the owner paid $49,184 to the bunker supplier. Seabridge is said to have supplied bunkers to the 1,020-dwt Feng Ping (built 1996), owned by China-based DalianWinland group last year. The shipowner paid 30% but failed to settle the balance. The Singaporean
company claimed in its affidavit that Winland Shipping created the two separate subsidiaries to confuse its creditors and avoid paying its outstanding dues.
( Dry cargo - DaleWainwright - 11 September 2014, 03:39 GMT )
ER SCHIFFAHRT’s $30m investment in retrofitting and improving the container-mile performance of 13 of its containerships has netted the German shipmanager
a $400m fuel saving.
As fuel costs rise, there has been pressure on owners and operators to invest in improving the performance of fairly young containerships built for an era of high-speed service to be more competitive with fuel-efficient newbuildings.
The investment of a little over $2m per vessel has delivered fuel saving of 15% with pay-back time of eight months, says ER Schiffahrt chief executive Hermann Klein. He told Lloyd’s List at a meeting during this year’s SMM at the company office that major adjustments on a fleet of vessels of around 13,100 teu are nearing completion.
The major works were done when the vessels were taken into scheduled dockings.
Dr Klein, who earlier this year called for a new relationship between owners and charterers, also said there was much more interest by owners and charterers to engage in fuel-saving discussions.
The work included fitting new propellers and bulbous bows, and the now-accepted measures of derating engines and installing turbocharger cut-outs and improved hull coatings.
Additional work included efforts to improve the container capacity of the vessel.
Installing additional strengthening allows the vessels to load more cargo to a deeper draught. The vessels now have a nominal capacity of 13,700 teu.
Route-specific container stowage allows the shipmanager to increase the vessels’ cargo capacity on certain routes
Time pressure building around ballast water management
( By Gary Howard from Hamburg ) Time is running low for shipowners to act on ballast water management as the Ballast
Water Management Convention (BWMC) could possibly be ratified within the next 12 months, yet installations of the system have dropped as owners continue to delay purchasing decisions.
The US Coast Guard's (USCG) rules on ballast water management are already in place, although the lack of a type
approved system from the USCG and the wait for the BWMC to be ratified continues to leave owners inactive on the
pricey decision of which system to install.
Session moderator Katherina Stanzel, managing director of Intertanko, confirmed that many within the industry now believe that ratification is a possbility within 12 months, although that it is far from a certainty. Debra DiCianna, senior environmental solutions consultant at ABS told delegates at the global maritime environmental congress (gmec) that the financial burden on a ship for the installation of a system ranges from $50,000 up to $5m, with the added ongoing cost of running the equipment thereafter.
Assessing industry preparedness, DiCianna revealed that around 15% of vessels with keel laying dates in 2011 and
2012 were equipped with ballast water treatment systems, but that number has fallen.
"What we've found out from
interactions with shipowners over the past 18 months, and you can probably find out from the vendors on the show
floor, is that in the past year the number of purchases of ballast water systems has drastically declined.
Newbuilds,
where they previously would choose systems, they are now reserving space for the systems to return to the decision at
a later time."
In a poll of the audience, it was clear that they believed that the industry was not sufficiently preparing for ballast
water regulation, with only 21% beliving that sufficient preparations are being made.
While shipowners wait for the implementation of the BWMC and a type approved system from the US Coast Guard, Jurrien Baretta, business development manager, Goltens Green Technologies shed light on the multiple-stage process of retrofitting a system on a vessel and the timescales involved; a factor that will prove crucial should shipowners rush to shipyards ahead of the BWMC implementation date.
The task of fitting systems amongst the existing piping and ventilation on board a ship is a complex process, often
involving the rerouting of existing systems and allowing considerations for "invisible space" that needs to be kept
clear for access to the equipment for maintenance. "It's not just making space for the treatment system, there are also
challenges like pump requirements. Ballast pumps tend to have high capacity, but there is not a lot of pressure.
Sometimes you cannot place the BWMS near the pump, it has to be above it and that might require a pump upgrade,"
Baretta told delegates.
It takes months to get from the initial ship visit and laser scanning of available spaces to commissioning a system, it
can optimistically be achieved within four to five months, but most projects take around a year.
There was a dash of
irony within the presentation of Lothar Schillak, marine biologist and senior marine expert at SGS, who was presenting a solution for rapid onboard testing of ballast water.
The time it takes to gather a sample of ballast water for testing after it has past through the organism-killing machine is extended by the necessity to reduce the flow rate at which the sample is taken to prevent killing any viable organisms within the sample.
A CEMENT carrier built at the Scheepswerf Ferus Smit yard in the Netherlands will be fitted with a six-cylinder dual-fuel engine, becoming the world’s first dual-fuel bulk vessel
It was ordered last month by JT Cement, a joint venture between Swedish entity Erik Thun and Norwegian company KG Jebsen Cement.
Releasing the news at SMM in Hamburg Wärtsilä, which will supply the engine and fuel system, said the order demonstrates growing interest by owners in using liquefied natural gas as a marine fuel.
The vessel will operate in the north European emission-control area, where permissible sulphur limits in fuels will drop to 0.1% at the end of the year.
As LNG has virtually no sulphur content, vessels using it as a fuel are more likely to be compliant.
“The arguments in favour of gas fuel are so strong that it is no surprise that more and more vessel types are adopting its use,” said Wärtsilä Ship Power vice-president four-stroke sales Lars Anderson.
The cement carrier is scheduled for delivery before the end of 2015 and a second vessel could be built as part of the series.
GERMAN carrier Rickmers-Linie supports impending sulphur regulations but warns that they will drive up the cost of marine fuel.
Chief executive Ulrich Ulrichs noted that stricter rulings are good for the environment and for our health, but warned that demand for already expensive low-sulphur fuels will “inevitably mean an increase in bunker costs”.
The new rulings must be enforced properly to ensure an even playing field across the industry, he said.
“We firmly encourage industry players and associations to comply with, and authorities to ensure enforcement of, the new regulations,” he said.
Regulations governing the ECAs in North America, the North Sea, the English Channel and the Baltic Sea come into effect at the start of 2015.
The new laws will require vessels operating in these ECAs to use fuel with a sulphur content of just 0.1%, compared to the 1% today.
Even stricter laws will be enforced outside the ECAs come 2020, when the maximum content of sulphur in marine fuels will be cut from 3.5% to 0.5%.
However, this date could be pushed back, pending a review by the International Maritime Organization scheduled for 2018.
Responding to forthcoming regulations in the ECAs, Mr Ulrichs said Rickmers-Linie is implementing a low-sulphur fuel surcharge on shipments arriving or departing from ports within the ECA on or after January 1, 2015.
Rickmers-Linie will notify its customers once it has calculated a fair price for the surcharge.
Earlier this year, Maersk Line, the world’s largest shipping line, said that to cover some $250m of costs incurred by the new legislation, it may charge customers $50-$150 per 40-ft container to and from ports in the ECAs.
Nicaragua Canal construction to begin in December with port, says official
The construction of the 287km-interoceanic canal through Nicaragua should begin in December with the
construction of a port on the Pacific coast, Temaco Talavera, president of the National Universities Council,
who serves as a spokesman for the government's Canal Technical Advisory Commission, told local media.
The port would be located at Britto, in the Rivas department on the Pacific coast and “would create all the necessary
work to move forward," he said,
In June of last year, a parliament controlled by President Daniel Ortega and his Sandinista National Liberation Front approved the project with scarcely a debate.
They handed a 100-year concession controlling a vast area of Nicaragua to Chinese magnate Wang Jing, giving him broad powers as he and his newly formed Hong Kong Nicaragua Canal Development Investment Co. (HKND) build and manage the 286km-waterway.
The Canal would be three times the length of the Panama Canal with a channel draught of 22m, the locks having 466
m length, being 64 m in width and its cost is estimated at $40B\bn although most experts consider the cost largely
under estimated.
The project would include two ports, an airport, an artificial lake, two locks, a resort, an area of free trade, roads and cement and steel, according to the Chinese firm HKND Group, concessionaire of the project.
Three months away from the planned start date of construction, there are still no international tenders called neither
for the port nor for any infrastructure works or information released about land expropriations required along the canal.
Panama President Juan Carlos Varela during an official visit to Spain said that he did not see the “economic viability”
of the project.
Panama Canal expansion is well advanced and should begin operations in 2016.
( LL ) BROMMAhas relocated two of its most senior management staff to Singapore as it looks to shift the base of its commercial activities to the city-state to focus on the Asian market.
“Already today more containers are handled in Asia compared to the rest of the world combined and the Asian market will continue to grow significantly faster,” said Bromma president Per-Anders Holström, who has made the move along with financial director Christopher Thiele.
Bromma said that it chose Singapore because the city state is as one of the world’s major container hubs and boasts an excellent business climate. The company will now look to hire a number of local employees with experience of operating within the Asian market to support the move.
Mr Holström emphasised that the company would continue to invest and support its business operations outside Asia.
Following the move, the global management team of Bromma, whose spreaders are present at 97 of the 100 top container ports according to this year’s list compiled by Containerisation International, will be split equally between its headquarters in Stockholm and its new location in Singapore. The managing director will remain at the company’s production plant in Malaysia.
The Swedish manufacturer also announced new orders for its spreader units this week, including those from Egypt’s Suez Canal Container Terminal and Kalibura Port in Indonesia, ordering eight and 10 yard spreaders respectively.
In addition, the company also reported a hike in orders from ports and terminals in South America as the region gears up for the opening of the expanded Panama Canal.
LADOL and Samsung to invest $300m in building of Egina deepwater facility in Nigeria
( Business Day ) Following the resolution to settle the long-stretched business conflict between both companies, Samsung Heavy Industries Nigeria Limited, a subsidiary of Samsung Heavy Industries Korea, has finally formed a joint venture company with Lagos Deep Offshore Logistics Base (LADOL) to develop a deepwater facility in the country. The joint venture company called SHI-MCI FZE is expected to build a $3 billion Egina FPSO integration and FABRICATION facility at LADOL Free Zone in Lagos for Total Upstream Nigeria Limited, operator of the block, and the Nigerian National Petroleum Company (NNPC).
A letter announcing the joint venture, jointly signed by Ks Lee, managing director, SHI Nigeria, and Amy Jadesimi, managing director of LADOL, and seen by Business Day, stated that Samsung, which is expected to make investment in the development of SaNTA training academy with LADOL for breeding of human capacity required to drive the project, would also be the Engineering, Procurement and Construction (EPC) contractor for the Egina FPSO project.
The letter disclosed that Samsung and LADOL were expected to jointly invest the sum of $300 million in the development of the new facility in LADOL FTZ, noting that the joint venture was an example of the impact the Local Content Act of 2010 was having on the oil and gas sector.
It further applauded Diezani Alison-Madueke, minister of petroleum resources, for making the joint venture possible. The facility will have a storage capacity of 2.3 million barrels and a targeted production capacity of 200,000 barrels per day which, analysts say, would be one of the largest FPSO facilities in the world.
Jadesimi, who confirmed to Business Day that both companies had settled their differences out of court, said the facility would be a huge local content milestone for Nigeria and was expected to create an estimated 50,000 direct and indirect JOBS in Nigeria over the next few years.
“The essence of the facility is to ensure that large vessels including FPSOs are integrated (partially constructed and assembled) onshore in Nigeria.
And building this facility will significantly increase the sizes of fabrication, engineering, procurement training, design and raw material such as steel markets in Nigeria,” Jadesimi said, adding that construction of the facility, which had already begun in LADOL Free Zone, was expected to take a period of 18 months.
“Once completed, the facility will have the capacity to fabricate about 1,000 tonnes per month and capable of integrating all the FPSO facilities that are
expected to be built in Nigeria in the next decade,” she said
The LADOL boss further noted that billions of dollars currently being exported abroad to fabricate and integrate FPSO would be domesticated in Nigeria, while billions of dollars in new revenue would be earned from market expansion. This increase in capacity would position Nigeria to become West Africa’s hub as well as generate the sustainable long-term GDP growth required for Nigeria to become one of the world’s leading economies in line with Vision 2020:20
It would be recalled that the project, which ought to have started in 2013, was stalled by litigation by LADOL over the alleged intention of Samsung to short-change and replace the local logistics company with another.
Both companies finally agreed to settle the dispute out of court so as to progress with the execution of the project.
Case: Zero tolerance towards MIR 162 GM grain cargo in China
( Skuld ) In the month of August 2014, 75 containers, totaling 1,313.3 tons of genetically modified (GM) yellow corn originated from the United States have been rejected and shipped back under the full instruction of the local PRC customs officer. In addition to this quantity, about 1.4 million metric tons of US corn shipments have been rejected by China since mid-November 2013.
The background
According to the latest public notice promulgated in 2012 by Ministry of Agriculture of P. R. China, a total of 19 GM agricultural products have been approved for imports and 8 of them are corn. But "Agrisure Viptera" (Coded MIR 162) - a strain of corn developed for insect resistance - is not in the list.
The manufacturer has submitted applications to the Chinese government for approval of MIR 162 several times since 2010 and although MIR 162 has been approved by most major markets including US and European Union, the application is still under Chinese government's review.Link to the previous advice on the PRC approach to GM cargoes may be found on the right hand side.
The legal position
The Regulations on Administration of Agricultural Genetically Modified Organisms Safety states the following provisions (freely translated):
Article 33
Any company outside the territory of China that exports to the People's Republic of China agricultural genetically modified organisms to be used as raw materials for processing shall make an application to the competent agricultural administrative department of the State Council; for those meeting the following conditions and passing the safety evaluation, the competent agricultural administrative department of the State Council shall issue a safety certificate of agricultural genetically modified organisms.
Article 34
When introducing agricultural genetically modified organisms from outside the territory of the People's Republic of China or exporting agricultural genetically modified organisms to the People's Republic of China, the introducing unit or the company outside the territory of China shall make a declaration for inspection and quarantine to the exit-entry inspection and quarantine agency at the port on the strength of the safety certificate of agricultural genetically modified organisms issued by the competent agricultural administrative department of the State Council and the relevant documents of approval. Only for those passing the quarantine an application may be made to the Customs for going through relevant formalities.
Article 38
Agricultural genetically modified organisms that are imported without a safety certificate of agricultural genetically modified organisms issued by the competent agricultural administrative department of the State Council and the relevant documents of approval, or not conforming to the certificate or the documents of approval, shall be rejected or destroyed. Where agricultural genetically modified organisms to be imported are not labeled as required, the goods cannot enter the territory of China until being re-labeled.
As Chinese government has yet to approve MIR 162, theoretically it is not possible to get the "safety certificate of agricultural genetically modified organisms" as required by Article 33.Until the official approval is in place exporters and importers take the risk of whether or not the Chinese government will approve MIR 162 before their shipment arrives in China.
Practical issues and possible disputes
In other cases, as MIR 162 corn has been widely planted in US, it can happen that small amount of MIR 162 corns are mixed up with non-MIR 162 corn at some stage during the transportation or storage. As China adopts zero tolerance attitude toward MIR 162 GM cargos, even if only trace levels of MIR 162 were detected, those shipments will be detained or even rejected.
This may cause the following consequences to parties involved, including potential disputes involving:
1.demurrage/ detention
2.additional freight costs
3.trans-shipment or diversion costs
4.cargo claims, particularly deterioration due to long voyages
5.detention or even arrest of the ship
Loss prevention advice
In order to prevent shipowners and charterers from suffering losses due to the shipper / voyage charterers' loading MIR 162 cargos, the following loss prevention advices are recommended:
1.Require the shipper/ voyage charterers to provide GMO certificates prior to loading.
2.Get cargo samples tested well in advance prior to the vessel's arrival at the discharge port.
3.Put a warranty clause in the charterparty regarding the GMO content, so that there is a clear contractual responsibility for all consequences if traces of MIR 162 are found in the cargo at the discharge port.
Should a member's vessel find it is delayed or under investigation in a Chinese port due to traces of MIR 162 in the cargo, members are urged to contact the Association as soon as possible for further assistance
Piracy and pestilence haunt seafarers
( Business Times ) While Singapore is a well-ordered, peaceful, safe and healthy place, those involved in the shipping industry know all too well that the same cannot be said for many other parts of the world. The shipping industry has always had to cope with regional conflicts and tensions; over the past couple of decades, it has also had to accept that piracy has returned as one of the perils facing the merchant seafarer.Piracy takes place uncomfortably close to Singapore's shores.
Consolidation ― the inevitable result of ever-larger ships, analyst predicts
( JOC ) Container lines in coming years will continue to order larger ships and switch membership in vessel-sharing alliances in a desperate game of survival that will inevitably lead to further consolidation, industry analyst Lars Jensen said Tuesday.
( JOC ) APL has announced a steep increase in its congestion surcharges imposed earlier on import containers handled at the Indian ports of Jawaharlal Nehru (Nhava Sheva) and Pipavav...
( JOC ) The early 2016 date for the opening of the expanded Panama Canal was endorsed this week by the president of Panama.
SLOVAK Maroš Šefčovič has been named as European commissioner in charge of the Directorate General for Transport and Space, as the former
DG for Mobility and Transport has been renamed. The move will put a centre-left politician from a landlocked country in charge of European Union shipping
policy.Mr Šefčovič, a lawyer and diplomat by profession, replaces Siim Kallas
( JOC ) The ECT Delta terminal at Rotterdam says that congestion problems that has led to diversion of a weekly G6 service to Antwerp since August have been resolved, but one carrier that uses the terminal isn’t willing to go that far.
Remembering maritime heroes on 9/11
( MarineLog ) The maritime industry played a major role in the evacuation of more than 500,000 New Yorkers—the Coast Guard originally estimated that there were about 1 million evacuees—that day who had no other way to get home except by ferry, excursion boat, tug and even private recreational boats.
US trucking major Hub Group switches to company drivers in California, citing ‘legal climate’
( JOC Transport ) Hub Group is converting 350 owner-operators in Southern California to company employees, citing changes in the “California legal environment” and the need to manage its business “for the long-term.” That decision closely followed a U.S. federal appeals court ruling that as many as 2,300 FedEx Ground drivers in the Golden State and Oregon were employees, not independent contractors, under state law. Meanwhile, the Teamsters union is pressing claims of misclassification and wage theft against SoCal drayage companies. These are all signs the drayage driver may be the hottest “commodity” moving through the gates of U.S. ports
Drayage driver shortage could threaten intermodal growth, analyst says
( JOC Transport ) The so-called truck driver shortage largely has benefited intermodal rail — until now. Trucking’s increasing difficulty finding drivers to pilot big rigs has helped shift freight to intermodal containers, but it could also threaten future intermodal growth.
FRANBO Lines, a Kaohsiung-based handysize bulker owner, has unveiled a plan to raise nearly $T130m ($4.3m) via an initial public offering to fund fleet expansion.
In the first shipping IPO on Taiwan Stock Exchange in nearly four years, the company is to issue 12m shares to employees and public investors at a floor price of $T10.8 per share.
Franbo, which owns seven handysize bulkers, will use the money to expand its fleet to 15 vessels within five years, among other resources.
( JOC ) China reported a record trade surplus in August, as imports unexpectedly fell amid a "mild" domestic slowdown while exports shot up on stronger global demand.
( JOC ) Cargo theft is about to enter its busiest season, and motor carriers, in particular, are advised to be on guard.
( JOC ) The chief of Hamburg port police says security at European ports needs a boost and is calling for greater cooperation among northern European port authorities.
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