Global Port Volume Heads for a Six-Year High

The Port of Rotterdam was its throughput rise 9.3 percent in the first half to 6.6 million TEU.
Source: www.joc.com

The solid increase in container volume being reported by the world’s carriers in the first half of 2017 was mirrored by global port throughput that is on track for its strongest year since 2011.

Container throughput at 250 ports around the world grew by an estimated 6.7 percent in the first half, according to a survey by Alphaliner. The container shipping analyst said it expected global throughput growth to reach a six-year high of 6 percent year on year.

Alphaliner’s report and forecast mirrors the outlook Drewry gave last week. The London-based analyst said volume in the first half rose 6.6 percent, after surveying 150 ports, and said growth is building to the fastest pace in six years.

The port strength follows increasing year-on-year container volume transported by carriers in the first half. Hong Kong-listed OOCL volume was up almost 7 percent, and Maersk Line carried 2 percent more volume in the first half.

Container Trades Statistics data reveal that Asia-Europe volume for the first six months grew by 2.7 percent to 4 million TEU, although some individual routes on the trade showed far stronger growth. China to the East Mediterranean/Black Sea, for instance, was up 12.6 percent.

On the trans-Pacific, US imports in August could reach record levels. Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, forecasts that August will be the busiest month ever, with imports predicted to rise 2.1 percent from August 2016. IHS Markit Senior Economist Mario Moreno recently upgraded his growth projection for US containerized imports in 2017, to 6.6 percent from 6.1 percent earlier.

The strength of the container shipping market was reflected in the world’s 20 largest container ports, where only two ports — both in Malaysia — recorded negative growth in the first half. Port Klang was down 3.1 percent and Tanjung Pelepas was 4 percent down compared with the first half of 2016.

Leading the Alphaliner table was the world’s busiest container port, Shanghai, that saw throughput in the first six months of 2017 shoot up just shy of 10 percent to 19.6 million TEU. Singapore was up 6.4 percent to 16.1 million TEU, with Shenzhen third at 11.8 million TEU.

The 250 ports in Alphaliner’s survey have a combined annual throughput of more than 550 million TEU. Total volume growth powered ahead in the second quarter to reach 7.4 percent, ahead of the 5.9 percent recorded in the first quarter of this year.

Positive growth was recorded across all regions in the first six months of the year, led by South Asia ports that recorded the strongest growth rate of 9.3 percent, while the Middle East region lagged behind the rest of the world, growing by only 3.1 percent. Among the main regions, China and the US ports posted the highest first-half growth rates of 8.4 percent and 8.2 percent, respectively.

Among the top 30 ports, notable gainers in the first half include Ningbo (14.4 percent), Guangzhou (11.7 percent), Hong Kong (10.5 percent), Shanghai (9.6 percent), Rotterdam (9.3 percent), and Laem Chabang (8.2 percent). However, this was partly offset by declining volumes at several main ports, including Algeciras (-9.4 percent), Lianyungang (- 7.2 percent), Bremerhaven (-4 percent), and Tanjung Pelepas (-4 percent).

Alphaliner said the port growth momentum was expected to continue in the second half, with the latest data for July also showing very strong figures. This view was supported by Maersk Line Chief Commercial Officer Vincent Clerc, who said the global market environment was recovering.

“We are seeing increasing demand across all trades, and the fact that we can hold on to our guidance of a $1 billion profit improvement this year on the loss of 2016 is a sign that the fundamentals of the industry are good,” he told JOC.com.

“The second quarter was the first hardcore evidence of a rebalancing of supply and demand. There is much stronger demand and the order book is at its lowest level in a decade.”

CC Tung, chairman of Orient Overseas Container Line parent Orient Overseas (International) Limited, highlighted the better supply-demand balance during his group’s interim results, pointing out that scrapping was ongoing and owners were holding back on new ship orders.

“This steady improvement in the supply-demand balance is not a sign of a booming market – we are far from that,” he said. “However, it does mean that for the first time since the onset of the global financial crisis, the supply-demand balance is not worsening year on year. This is a significant shift, and if it holds, then the industry will at least have the chance to start to absorb some of the excess capacity that exists.”

Indian Dockworkers Again Threaten Strike Over Port Reforms

The reform of India’s port administration system has been a contentious issue for years.
Source: www.joc.com

Labor federations representing dockworkers at Indian major, or public, ports have revived their call for a nationwide indefinite strike from Aug. 18 after months-long negotiations with government authorities broke down amid differences over issues tied to port management changes under way.

“The discriminatory actions of the authorities have been increasing and curtailing the fundamental rights of the port workers,” a nine-member labor group said in a joint statement.

Union representatives and officials from the chief labor commissioner have had several rounds of negotiations after an April 19 strike notice was put on hold following preliminary talks with the Indian Ports Association.

The standoff is centered around new government legislation meant to transform all major ports into independent companies with greater operational and financial autonomy, especially the power to adjust pricing to better compete with private rivals, a move workers fear would result in port privatization.

“The Major Port Authorities Bill 2016 recently placed before the parliament for replacing the Major Port Trust Act 1963 will definitely pave the way for total privatization of the government ports, which will adversely affect not only port and dock workers but also be detrimental to the interest of the country at large,” the statement said.

Unions have been pushing for a commitment from the Ministry of Shipping on three core demands — protection of jobs and benefits for existing and retired employees, inclusion of labor nominees on the ‘Major Port Authorities Board,’ and continued union representation on the administrative board of each port — when the new port system comes into force.

“Since the authorities are going ahead ignoring the genuine grievances of the workers, the [labor] federations are constrained to resort to an industrial action,” the joint statement said.

The renewed strike threat comes at a time when the government is feverishly working to increase productivity at major ports through infrastructure upgrades, automation, and other ease-of-doing-business measures to cut logistics costs that currently hover between 14 percent and 18 percent of gross domestic product.

Roughly 70 percent of India’s containerized trade moves through major ports, so seamless operations are critical to New Delhi’s plan to double exports by 2020. A 6.2 percent year-over-year throughput increase at major ports in the April-to-June period indicates steady growth in the country’s global trade activity.

Truck travel times that have long been a major drag on supply chain efficiency are also improving rapidly with the Goods and Services Tax regime that took effect July 1, with trucks already traveling an extra 100 miles per day.

Maersk Line Expects $1B 2017 Profit Gain Despite Cyber Attack

Maersk Line delivered a profit of $338 million for the second quarter.
Source: www.joc.com

Maersk Line has warned that the financial impact of the late-June cyber attack on Maersk Line could reach $300 million, but such is the strength of the market that the carrier has maintained its expectations of a $1 billion improvement in full-year profit over the loss recorded in 2016.

The carrier has left the expectation unchanged because of improvements in freight rates and increasing volumes, with global demand for seaborne container transportation expected to increase by close to 4 percent in 2017. A 4 percent growth in demand in the second quarter drove Maersk Line to a profit of $339 million as nominal supply grew just 1.4 percent. The container shipping industry as a whole is likely to turn a profit of $5 billion this year as a result of higher rates and volume, which is growing at the fastest rate in six years, according to maritime analyst Drewry.

Maersk was forced to defensively shut down all its IT and communications following the June 27 NotPetya malware attack, impacting container-related businesses Maersk Line, APM Terminals, and Damco. Joint Maersk Group and Maersk Line CEO Soren Skou estimated that the attack had lost the company 70,000 FEU over two weeks in July as the carrier struggled to operate with no communications. He said the financial impact would be between $200 million and $300 million, but this would be felt mainly in the third quarter, stemming from lost volumes during the incident as well as extraordinary costs in IT and operations.

A look at the freight rate per 40-foot container tells the story of Maersk Line’s improving financials. The average rate rose 21 percent between April and June to $2,086 per FEU, and while total volume during those three months was only up by 1.6 percent, 2.7 million containers benefited from the higher rate levels. However, total unit cost were negatively impacted by a 61 percent increase in the bunker price.

Skou said all trades were profitable in the second quarter and although volume grew at below 2 percent, the focus of the carrier was on improving profitability rather than growing market share that dominated previous quarters.

He added that when Hamburg Sud is added to the group in the fourth quarter as planned, it will see the carrier come out of 2017 with a significant increase in market share. So far 12 jurisdictions have given regulatory approval for the takeover, although China’s approval is still outstanding.

Maersk Line took delivery of two out of 11 second generation Triple-E’s ordered in 2015 and recycled four vessels. By the end of June, Maersk Line had 25 vessels in its order book totalling 347,000 TEU for delivery in 2017 and 2018 consisting of nine 20,600 TEU second generation Triple-E, nine 15,200 TEU vessels and seven 3,600 TEU ice-class vessels for the intra-European market.

The carrier’s total order book corresponds to 9.9 percent of current fleet compared with an industry order book of around 13.1 percent, according to Alphaliner.

Skou said the global container fleet capacity stood at 20.6 million TEU at the end of the second quarter, an increase of 1.4 percent compared with the same quarter last year. However, adjusting for the decline in the idle fleet from 4.6 percent to 2.6 percent of global nominal capacity, the offered capacity grew in line with container demand growth at around 4 percent.

Container demand continued to outgrow the global container fleet in the second quarter, contributing to the improved market as freight rates out of China increased by 31 percent compared with the second quarter of 2016, according to the China Composite Freight Index (CCFI).

A total of 332,000 TEU (40 vessels) were delivered and 86,000 TEU (36 vessels) were scrapped between April and June. The modest number of scrapped vessels followed high scrapping rates in the preceding quarters. No new vessels above 10,000 TEU were ordered.

Maersk Group reported a loss of $264 million as it was negatively impacted by post-tax impairments of $732 million primarily relating to lower asset valuations in Maersk Tankers and a few commercially challenged terminals in APM Terminals. Group revenue increased by $743 million to $9.6 billion with liner revenue up $1 billion, an increase of 21 percent.

Port of Long Beach Sets New High-Water Mark for Container Traffic

The 720,310 TEUs that moved through Long Beach’s terminals last month surpassed the previous record of 703,652 TEUs set in August 2015, according to recent data from the Southern California port. The number of containers the Port of Long Beach moved in July was an all-time monthly high for the Southern California seaport.

Source: www.americanshipper.com

 The peak season shipping is resulting record monthly container volumes to the Port of Long Beach. In July, the Southern California port handled a total of 720,310 TEUs of containerized cargo, the most that have ever moved through Long Beach’s terminals in a single month, surpassing the previous high mark of 703,652, set in August 2015.

“These numbers are great for Long Beach and good news for the economy,” Port of Long Beach Executive Director Mario Cordero said in a prepared statement. Including last month’s record volumes, cargo traffic has increased for five consecutive months in Long Beach, and in six of the first seven months of 2017, according to port figures. Volume is up 6.4 percent for the calendar year compared to 2016.

“Given the unprecedented change in the industry, we are pleased to see shippers choosing Long Beach,” Harbor Commission President Lou Anne Bynum said. The number of overall container shipments through Long Beach was 13.1 percent higher in July compared to the same month in 2016, according to port data. Imports jumped 16.3 percent to 378,820 TEUs, which was also an all-time monthly record.

Additionally, the recent wave of imports helped bring the empty containers moved through the POLB up 27.7 percent to 215,394 TEUs.

The news wasn’t all good, however. Exports slipped by double digits last month, falling 11.7 percent to 126,098 TEUs.

For the fiscal year to date, Long Beach has handled 5.7 million TEUs through the first 10 months of FY 2017, a 1.4 percent increase from the prior fiscal year. The port’s fiscal runs from October through September.

For the calendar year, Long Beach moved 4.1 million TEUs through July, a 6.4 percent jump from the same seven months last year. By comparison, the adjoining Port of Los Angeles, the only North American seaport busier than Long Beach, also saw record monthly volumes in July, handling 796,804 TEUs last month. For the calendar year to date, Los Angeles has seen 5.3 million TEUs, a 9.5 percent jump over 2016’s numbers, according to port data.

Last month’s increased container numbers for both Southern California seaports come during the start of peak shipping period, when overseas manufacturers send goods to U.S. retailers so that they may build up inventories ahead of the back-to-school and holiday shopping seasons.

Global Container Volume Gain Forecast at Fastest Clip in Six Years

Cranes at ports around the world have been lifting more containers than last year.
Source: www.joc.com

Shipping analyst Drewry will be radically reassessing its volume forecast for this year and 2018 as world container throughput heads for its fastest growth in six years.

The vast majority of that growth is coming from the major east-west trades where volumes are up sharply on the first half of 2016. The year-over-year comparisons are favourable, and data from PIERS, a sister product of JOC.com, CTS, and Datamar show that overall, the east-west trades are up 5.6 percent on the first six months of 2016.

Asia-Mediterranean routes led the recovery with volume up just shy of 10 percent, with Asia-North Europe container volume up 4 percent compared with the first half of 2016. Demand in the first half of last year was very weak, which makes the comparison so favorable, but even so, Drewry said there is little doubt that the final-year figure for 2017 would eclipse anything seen in the past two years.

“All of the available container traffic datasets for this year point towards a much faster-growing environment than was previously forecast,” the analyst said. “The surge in container handling has been evident since the back end of 2016, and as it has gathered momentum we were forced into a fairly radical reassessment of our forecast for both this year and the next.”

Drewry said it expected the second half of the year to deliver similar volumes as the first half, although because of the tougher comparisons the growth rate might not be quite as strong. How much of a lift there will be in the traditional third-quarter peak-season was debatable as volumes have smoothed out significantly in the past few years, with the surge of online shopping spreading buying patterns more evenly through the year.

Port statistics Drewry compiled from a sample of nearly 150 sites around the world indicated that container handling grew by 6.6 percent in the first six months of the year, and deep-sea and regional trade numbers were showing similar progress.

“World port throughput growth was barely a thing in either 2015 or 2016, and if the current rate for the first half 2017 as suggested by our sample ports holds true for the remainder of the year, it will have been the fastest growing year since 2011,” Drewry noted.

Looking at a sample of major trades, the analyst said all of the routes with the exception of Europe-Middle East made contributions. Five trades — Intra-Asia, Asia-West Coast of North America, Asia-Mediterranean, Asia-East Coast of North America, and Asia-North Europe — were responsible for over three-quarters of the additional volume.

“As expectations brighten, more companies are now willing to build up stocks and call upon the services of shipping lines, having let them dwindle during more bearish times,” Drewry said. “As well as greater business and consumer confidence, there have been recovery plays in a number of economies whose prosperity is tied to the price of oil, while the easing of sanctions in Russia and Iran has also added to the container pot.”

Earlier this year, Drewry predicted that the container shipping industry would close the year with an operating profit of around $1.5 billion, driven by higher freight rates and rapidly growing cargo demand. Drewry in July upgraded that forecast to $5 billion as a result of the uptick in pricing and demand through the first half of this year.

Although the rising demand comes at a good time for carriers taking delivery of large new vessels, another container shipping analyst, Alphaliner, said the steady flow of ultra-large vessels into service on Asia-Europe at the rate of one a week would continue to put pressure on the supply-demand balance.

During the first six months of this year, 26 ships of more than 14,000 TEU were delivered, according to Alphaliner, and a further dozen newbuildings of this size were expected to join the container shipping fleet at a rate of at least one per week before the annual low season begins in October.