Maersk profits tipped to beat forecast
( LL ) THE Maersk “party is far from over” with profits expected to accelerate over the coming year, according to Macquarie Equities Research.
Macquarie said it expected AP Moller-Maersk to report profits of $4.8bn for full-year 2014, ahead of the shipping giant’s forecasted underlying result of $4.5bn.
If it were to hit the figure projected by Macquarie it would represent a 26% year-on-year increase in profits.
Macquarie expects Maersk to report a profit of $6.3bn by 2016 following delivery of the remaining Triple-E vessels, drillships and jack-up rigs and the “likely” approval of 2M.
“AP Moller-Maersk shares have rallied by 20% in the last month, but the party is far from over,” it said.
The outlook for Maersk’s container shipping business was also positive.
It said: “We expect Maersk Line profit to accelerate in the second half of 2014 driven by seasonal volume benefits and incremental cost savings following delivery of the 12th Triple-E vessel last week, which enabled the AE10 service to be fully fitted out with these ships, enabling a step-change for unit costs.”
As a result it has raised Maersk Line’s estimated 2014 net operating profit after tax from $1.9bn to $2.1bn.
And if the 2M alliance is approved by US regulators, profit after tax is forecast to reach $3bn by 2016, but even without this approval Macquarie expects an increase to $2.6bn.
Meanwhile, the analyst said drilling was a positive factor for an investment case, not a negative.
“Drilling remains a concern for investors, given softer market dynamics and the fact that two ultra-deepwater drill ships to be delivered by end-October, worth $650m each, remain uncontracted.
“Yet we see drilling as a positive from an investment perspective. Even if the two ships do not find charters, we see upside to 2014 estimated net operating profit after tax consensus of $424m due to two drillships delivered during May/June transitioning from earnings dilutive in the first half to accretive in the second half.”
Macquarie expected profit after tax for drilling to reach $529m in 2014.
It said there were a number of reasons to expect the shipping line’s share price to increase, including the potential sale of Höegh Autoliners, an acceleration in Triple-E cost savings from next year, US Federal Maritime Commission approval of 2M by the end of this year, earnings beating guidance and the potential for an increase in dividend per share.
With these factors in mind, it questioned “what there is not to like about AP Moller-Maersk at the current share price”.
While Maersk’s share price has being doing well of late, it has declined at certain points for non-market related reasons — for instance, when rumours emerged that the P3 Network might be banned and also when it issued cautious guidance for the year.
Delays for 2M Launch Rumoured
( Ship & Bunker News Team ) Jensen said China's rejection of P3 may have encouraged the FMC to speak out Maersk Line and Mediterranean Shipping Co. (MSC) planned to meet with regulators from the U.S. Federal Maritime Commission (FMC) last Friday to address possible delays in the launch of their 2M container shipping alliance, the Wall Street Journal reports.
"There are some worries that the scheduled launch early next year may be delayed as some at the Federal Maritime Commission [in the U.S.] are not that keen on such mega-alliances," said one person involved in the matter.
"So the two partners want to address those concerns early on.
"The alliance, which would move about a third of all cargo on the busiest trade routes, was developed after Chinese regulators denied approval to the larger P3 alliance, which would also have included CMA CGM.
"I can't see how the FMC can turn down the 2M as it is smaller than the P3," said Lars Jensen, chief executive of Copenhagen-based SeaIntel Maritime Analysis.
"But the Chinese rejection has given a bigger voice to those at the FMC who have second thoughts about these tie-ups and the 2M wants to clear the air.”
FMC member William P. Doyle said recently that he would consult with Chinese regulators about possible concerns with the alliance, even as Maersk Line CEO Søren Skou said 2M is operationally ready to launch.
Unifeeder unveils sulphur surcharge
( LL ) UNIFEEDER has become the latest shipping line to announce plans for a sulphur emission control area surcharge to offset the cost of using more-expensive fuel.
The shortsea and feeder operator has announced that to meet the cost of using more expensive fuel with a lower sulphur content it will introduce an emission control area surcharge of ?65 ($84) per loaded container for all its shortsea clients.
The ?65 charge will come into effect on January 1
China thermal coal curbs will have little impact on seaborne imports
( LL ) THE fine print of China’s new restrictions on coal quality reveals little impact on seaborne imports, according to New York-based commodities research firm Doyle Trading Consultants.
“The new standards are not as strict as the preliminary reports, and will be applied to both domestic supplies and imported thermal coal,” writes DTC analyst Stephen Doyle. “Coking coal appears to be exempt from these regulations.”
The restrictions, which are provisional, will take effect at the beginning of next year, seeking to reduce China’s severe air-quality problem.
Restrictions vary according to location in China, but the most severe terms will halt the sale of coal with ash content greater than 16% and sulphur content higher than 1% in the Yangtze River Basin, the Beijing-Tianjin-Tangshan metropolitan region, and the Pearl River Delta.
Broadly, the rules require commercial coal to have less than 1.5% sulphur content for lignite and less than 3% for other types of coal.
For ash content, the limits will be less than 30% for lignite and 40% for other types.
Some analysts in Australia have speculated that the restrictions will dampen the nation’s estimated annual exports of 49m tonnes of thermal coal a year.
Others have suggested that Indonesia, a major exporter of thermal coal, will also be hit by the restrictions.
Mr Doyle does not “expect a big impact on the seaborne market”, arguing that virtually all imported coal can meet the China government’s broad specifications,.
“The lowest grade of Indonesia lignite should have no problem meeting the ash and sulphur restrictions.”
The new rules apparently target low-quality domestic coal, typically sold by “street vendors, mom-and-pop businesses, small industry and homes”.
The new rules are also designed to limit overland long-haul delivery of low-grade domestic coal.
New ethane carrier formed as JV in Singapore
( MarineLog ) Jaccar Holdings of Luxemburg and Hartmann Group of Leer, Germany, have established a joint venture for the commercial management of ethane carriers.
The new company — United Ethane Carriers or UEC — will be based in Singapore. Its purpose is to develop the ethane business, focusing on marketing, branding and commercial management of ethane carriers internationally.
UEC's opening project is five Eco Star 85K-vessels These ethane-fueled VLEC-carriers will have a capacity of 85,000 cu.m each, and will be employed on a long term time charter with an undisclosed party. They will thus be substantially larger than the three Eco Star 36K design 36,000 cu.m ethane carriers ordered earlier this year by Norway's Ocean Yield ASA for charter to the Hartmann Group
"These vessels will be the largest ethane carriers yet constructed, but it is not only the size, but the technical innovations present in this design that will make these ships a real breakthrough for the industry," said Torsten Schramm, DNV GL Maritime’s COO for Division Germany, Middle East & Asia.
DNV GL noted that the cargo tanks of these five new vessels include another world first – the use of the innovative Star-Tri-Lobe tanks. These consist of three cylinders combined into one. Due to better utilization of the space in the cargo holds, this results in higher efficiency and allows an increase in cargo capacity of nearly 30% over similarly sized vessels with conventional tanks, reducing shipping costs through greater economies of scale.
Evergas (a Jaccar Holdings company) and GasChem Services (a Hartmann Group company) will continue to serve their client relationships independently of the new United Ethane Carriers joint venture.
Russia’s first Arctic project unaffected by sanctions
( RT ) Newly sanctioned Gazprom Neft plans to continue offshore oil extraction in its Prirazlomnoye Arctic field as planned, and will reach peak oil production by 2021, First Deputy CEO Vadim Yakovlev said. Prirazlomnoye is Russia's first offshore Arctic field, and with 72 million tons of recoverable oil, will be a key source for future hydrocarbon production and development in Russia. Already 100 million barrels of the new ARCO Arctic blend have been extracted from the site, which began production in April 2014.
The fresh round of sanctions by the US and EU intend to freeze Russia’s big Arctic and Siberia shale oil ambitions by barring foreign oil companies from supplying any technology or equipment for joint ventures in deep water, offshore, or shale projects.The production platform located in the Pechora Sea in Arctic waters will produce 110,000 barrels per day by 2021, despite Western sanctions.
"At the moment, we don't think that this will affect our long-term plans,” Vadim Yakovlev, told reporters Friday, just before the sanctions were published.If sanctions continue, the company may seek other options for extracting oil from the field.“If events follow the worst case scenario, we are working at options to buy (equipment) from alternative sources or producing it with Russian or Asian companies,” said Yakovlev.Yakovlev said the company would not change its long-term goal of producing 100 million tons of oil equivalents by 2020.
Finance Ministry to decide on removing IRON ORE import duty: Steel Ministry
( Economic Timnes ) Finance Ministry will take a call on withdrawing import duty of IRON ORE in the face of falling domestic supplies that
is forcing steel makers to buy the raw material from overseas market, a Steel Ministry official said.
JSW Steel is resorting to imports of around 0.5 million tonnes (MT) a month following the paucity of iron ore in domestic market. Others like Tata Steel, which never had any crunch to run its Jamshedpur plant due to iron ore shortage, may also follow suit after its Noamundi mine in Jharkhand was recently closed by the state.
"We understand the situation. We have already written to the Finance Ministry to bring the import duty on iron ore down to zero. It is for them to take a call on the issue," a senior Steel Ministry official said.
In a memorandum to Commerce Minister Nirmala Sitharaman, industry body Assocham had recently said the drop in domestic iron ore production was forcing steel industry to import iron ore from international markets. Assocham also suggested that the government may consider reducing import duty on iron ore to zero from the current levy of 2.5%.
India's iron ore production has come down to an all-time low of 144 MT in FY'14 from the peak level of 218 MT in FY'10. The production is expected to drop further to a level of 90-95 MT in current fiscal.
Miners' body FIMI also estimated that the country might end up importing around 15 MT of iron ore in current fiscal and become a net importer with just 8-9 MT exports.
Domestic iron ore availability has been the most prized advantage of the steel makers in India.
The paucity of supply and consequent imports might mar the prospect of many firms, hitting the prospect of having 300 MT capacities by 2025 from around 100 MT now.
The lower price of the key steel-making input, which has fallen to its five-year low in recent times to around $ 83 a tonne, might provide some cushion to domestic steel makers, but infrastructure bottlenecks, however, is a drag.
Kolkata Port Trust can proceed with royalty based stevedoring tender, says Calcutta High Court
( Economic Timnes ) Kolkata Port Trust (KoPT) was granted respite by Calcutta High Court which allowed it to move ahead with
the tendering process to select stevedoring agent for Haldia Dock that aims to boost revenue generation for the port.
The tender for shore handling services for the dry bulk cargo handling at Haldia was on hold after the HC order in August had restrained the port from proceeding further with the tendering process.
The Calcutta High Court division bench dated September four order had said the KoPT board would be free to proceed with the already initiated tender process making necessary amendments to the terms and conditions and taking other steps including extension of time or to initiate fresh tender process.
"But these all shall not entitle the appellants to debar the respondents (read existing cargo handlers) from undertaking and performing the services they have been performing in the manner they are performing them today till the disposal of the writ petition," the division bench comprising Justice Jayanta Kumar Biswas and Justice Ishan Chandra Das had said.
Ripley & Co Stevedoring and a few other cargo handlers had moved court against the KoPT tender of July 21 that sought to select stevedoring agent for Haldia docks who would pay the highest royalty based on bidding process.
The tender had set a maximum cargo-handling rate of Rs 119.48 per tonne (ceiling rate) and a minimum royalty of Rs
13 a tonne (floor rate).
KoPT is the first major port in the country to introduce royalty based stevedoring licensing policy based on Shipping
ministry direction.
The ministry took steps after allegations that KoPT had lost hundreds of crores of rupees over years by not levying any charge or royalty from certain stevedoring services offered by private agents in Haldia.
KoPT chairman could not be reached for his reaction. But, KoPT spokesperson said port will now move ahead in
accordance to the order.
Ripley & Co declined to comment on the matter.
Visakhapatnam to get Rs 30k‐cr port project
( Economic Timnes ) Visakhapatnam Port Trust (VPT) and Gangavaram Port are likely to face competition as a project to set up a third port is on the anvil in Visakhapatnam district.
According to industry sources, KSR Maritime Projects is looking at establishing a port capable of handling around 100 million tonnes of cargo around Nakkapalle area at an estimated investment of nearly Rs 30,000 crore. The port project is expected to be developed in four phases, as per the documents submitted to the ministry of environment and forests.isakhapatnam Port Trust (VPT) and Gangavaram Port are likely to face competition as a project to set up a third port is on the anvil in Visakhapatnam district.
India-Myanmar ferry service to start next month: Nitin Gadkari
( India Times ) The proposed ferry service between India and Myanmar will commence next month that will facilitate cargo and passenger movement between the two countries. Minister for Road Transport, Highways and Shipping Nitin Gadkari today said the service will begin in October this year.
The proposed cargo ferry service will connect the two countries through Chennai and Yangon (Myanmar).
It will open a sea route and strengthen economic ties for land-based trade worth about billions of dollars.
State-run Shipping Corporation of India is likely to deploy a 1,200 TEU (twenty feet equivalent unit) vessel, which will connect the ports of
Colombo, Chennai, Krishnapatnam and Yangon.
Ministry of Shipping has also formalised a coastal shipping arrangement in 2014 which would boost the coastal movement of vessels between the two countries.
Addressing media persons at a conference marking 100 days of the Narendra Modi led NDA government in office, the Minister said the shipping sector can increase the country's GDP by 2 per cent.
The sector can also create tourism and employment opportunities, he said. Special plan is in the works for the Mumbai Port Trust, the minister said but did not elaborate the proposed plan.
India’s domestic building of LNG ships & dredgers to push "Make in India"
( India Times ) In an initiative to push the agenda of "Make in India", the government has decided that Cochin Shipyard will invest Rs 1,200 crore for facilities to make liquefied natural gas (LNG) carrier ships.
Two more such vessels will be made in other shipyards.
"This will be the first-of-its-kind to be made in India. Each of these LNG carrier ships will cost approximately Rs 1,500 crore," shipping and road transport minister Nitin Gadkari said.
These vessels can be used by the Gas Authority of India Ltd (GAIL).
Gadkari said the Cochin Shipyard will also undertake building of dredgers for Paradip port and Dredging Corporation of India in collaboration with foreign players. The first dredger would be around Rs 500 crore.
In another move to promote shipping industry, the ministry will come out with a comprehensive shipbuilding scheme to encourage Indian shipyards to bag such orders and to meet domestic needs.
Highlighting the achievements of his ministry after 100 days of Narendra Modi government, Gadkari said India's waterways could contribute at least 2% cent to the country's GDP and a revolution is waiting happen in the next few years in this sector.
"We give subsidy to the polluting roadways and impose surcharges on the non-polluting water transport... developing the waterways is our top priority," he said.
He said the government was planning to introduce sea-planes, water buses, hovercrafts and floating hotels and restaurants to connect coastal towns.
On the issue of sensitive Ram Sethu (Adam's Bridge) Gadkari said there is no question of breaking it and his ministry will take it to the Cabinet in the next one month.
African Development Bank Approved 150Million USD for Nigeria’s Lekki Port
(The Maritime Hub ) The Board of Directors of the African Development Bank Group (AfDB) held its first regular meeting since the Bank returned to its statutory headquarters in Abidjan on Monday, September 8, and approved a combined USD 256 million for the financing of investments in Nigeria and Ethiopia as well as a multinational projects preparation facility.
The biggest investment approved is a USD 150 million senior loan to Lekki Port LFTZ Enterprise for the construction of a Greenfield seaport in the Lagos Free Trade Zone, 60 kilometres east of Lagos.
The project follows a 45-year concession granted to Lekki Port LFTZ Enterprise (LPLE), the Special Purpose Vehicle, by the Nigerian Ports Authority (NPA) under a build, own, operate and transfer scheme. It involves construction of port infrastructure such as breakwaters, quays, approach channels, dredging of the basin as well as captive utilities such as water and power.
On completion, the port would handle 2.5 million 20-foot equivalent units (TEUs), 16.7 million tonnes (MT) of liquid cargo and 4.5 MT of dry bulk. Construction is expected to start in January 2015 with the container terminal operations expected to start in December 2018.
Kaohsiung port upgrades to handle larger boxships
( Seatrade Global ) Taiwan’s main seaport Kaohsiung has made progress with upgrading works that are expected to boost container handling capacity and operational efficiency, according to Taiwan International Ports Corporation (TIPC).
The port of Kaohsiung is in the process of deepening of draughts for wharves at container terminals 3 and 4, and upgrading works at wharf 115 are expected to be completed ahead of schedule before the end of this month.
“Once finished, the upgraded wharf number 115 will measure 917m in length, 16.5m in depth and be able to concurrently accommodate two 14,000 teu super containerships,” TIPC said in a statement. “Two of the wharves, 116 and 117, have already been completed and are currently in use by Evergreen Marine,” TIPC said, adding that the three wharves would raise the port’s handling capacity and efficiency. After the upgrading works at wharf 115 are completed, the wharf will be handed over to Evergreen for operating authority. Starting in October, the shipowner will install five newly purchased gantry cranes at the wharf.
Evergreen has designated wharves 116 and 117 since June this year for 14,000 teu containerships operated by the company itself and its CKYH partners running regular routes to Europe, replacing the previous limit of 8,500 teu boxships.“Current improvements have effectively raised the cargo handling capacity of wharves 115-117 from 1.5m teu to at least 1.8m teu per year,” TIPC said.
Russia’s Global Ports’ profit surges 30 percent on acquisition, weak ruble
( JOC ) Global Ports, Russia’s largest container terminal operator, reported a jump of 30 percent in profit for the first half of 2014, as favorable ruble-dollar exchange rate movements offset a drop in cargo volumes.
Panama Canal boss expects to test new locks with real ships within 12 months
( Asian Shipper ) REAL ship testing of the Panama Canal's new locks will begin within a year, said the waterways chief Jorge Quijano, Reuters reports
"We hope to start a series of tests with the locks next year in the month of July or August," said Mr Quijano after overseeing the arrival of four new gates for the locks from Italy.
The 100-year-old canal is in the midst of a massive expansion that will more than double the size of the ships using the facility, from 4,500-TEU to 13,000-TEU capacity. The expansion, which involves building a third set of locks in the 80-kilometres long waterway, was first scheduled to be completed this year, but has been delayed several times and is now is scheduled to open in January 2016.
Panama Canal expansion project gets cash injection
( JOC ) A $400 million loan necessary to complete the $5.3 billion Panama Canal expansion project has been received by the engineering consortium responsible for widening the canal, according to the Panama Canal Authority’s lead administrator, Channel News Asia reported.
NY/NJ Bayonne Bridge raising is delayed six months
( JOC ) Last winter’s harsh weather has caused a six-month delay in completion of a project to raise the Bayonne Bridge’s clearance to allow passage by larger container ships at the Port of New York and New Jersey.