Asia-Europe Spot Rates Still Under Pressure and Carriers Eye More Blanked Voyages

Hong Kong

Source: www.theloadstar.co.uk

Container spot rates from Asia to North Europe have fallen for the fifth consecutive week.

Today’s Shanghai Containerized Freight Index (SCFI) reports a further erosion, of 2.7% to $714 per teu, for North Europe. This compares with around $950 at the beginning of August.

Carriers on the route were unable to “stop the rot” with their FAK (freight all kinds) hikes during the August and September peak season and will be concerned about further rate slippage as the industry enters the traditional slack season.

This begins next week with the Chinese Golden Week holidays. Demand for the immediate period following is said by carriers to be “weak”.

For Mediterranean ports, spot rates slipped 2.4% to $692 per teu. And online freight marketplace platform Freightos told The Loadstartoday its reading for early October was “consistently flat” rates from Asia as a whole.

Based on the reduced cargo prospects, carriers have announced that they will blank at least 14 sailings for Europe immediately after the Chinese holiday; but in order to prop up rates the blanking programme may need to be extended, or even loops temporarily suspended.

Aggravated by a number of factories being shut during the peak season by Chinese environmental regulators, spot rates came under renewed pressure at a time when they would normally be strong.

Alphaliner said that there was “a clear sign that rate cutting is starting to take hold again”, although Drewry disagreed and said there was “no rate war at the moment”, despite price levels softening.

Indeed, carriers could see all their good work of the first three quarters ruined by sub-economic rates in the final three months of the year. And continually softening spot rates in the next few weeks will have a negative impact on 2018 contract negotiations.

No doubt with this in mind, several carriers serving the route have announced FAK rate hikes for 15 October.

Meanwhile forwarders The Loadstar has spoken to recently have expressed concern about renewed rate volatility on the trade – not least because of the possibility that their customers could be targeted by rivals that have obtained budget rates from carriers, although these do not come with guarantees of shipment when space is tight.

UK-based forwarder Westbound Shipping Services explained that there was now a two-tier system of rates quoted by carriers: “budget” and “VIP”.

“In most cases, we are seeing differences of $200-$300 on these choices,” said Westbound.

It claims that when space becomes tight on vessels departing Chinese ports, loading of “budget” containers becomes “a lottery” and some boxes already on board have been discharged to the quay to make way for “VIP” contract cargo.

Meanwhile, a similar picture is emerging for the transpacific, with rates coming under pressure and carriers endeavouring to stem the tide with blanking programmes.

This week the SCFI recorded a second week of losses for the US west and east coasts. For the former, rates declined by 4.7% to $1,414 per 40ft, while for east coast ports there was a drop of 5.4% to $1,991 per 40ft.

At the beginning of August, spot rates for the US west coast stood at around $1,680 and for the east coast around $2,680.

Hapag-Lloyd Initiates Capital Increase Following UASC Merger

Image result for Hapag-Lloyd initiates capital increase following UASC merger

The capital increase, which is expected to amount to $414 million, will be used to reduce debt, the German ocean carrier said in a statement Thursday.

Source: www.americanshipper.com

Following the Hapag-Lloyd’d merger with ASC, finalized in May, the German ocean carrier will carry out a capital increase via a new share issue that is expected to bring in 352 million euros (U.S. $414 million), the company said in a statement Thursday.

The funds will be mostly used to reduce debt, with the remainder going towards general corporate purposes, Hapag-Lloyd stated.

“Following the successful merger with UASC, we will use the capital increase to strengthen our capital structure and to use the proceeds to reduce the leverage of the company. This enables us to focus on enhancing our strategic and operating objectives,” Hapag-Lloyd CEO Rolf Habben Jansen said of the move.

The company’s share capital of 164,042,940 euros will increase by 11,717,353 euros to a total of 175,760,293 euros. The ocean liner will issue 11,717,353 new, no-par shares in exchange for cash while maintaining the shareholders’ subscription rights, Hapag-Lloyd said.

“The proportionate amount of the share capital attributable to each new share is EUR 1.00. The new shares became eligible for dividends on 1 January 2017 and shall be offered to all shareholders at a subscription price of EUR 30.00 and a ratio of 14:1 per share,” Hapag-Lloyd said.

The subscription period for the shareholders is expected to start on Oct. 2 and end two weeks later on Oct. 16.

According to Hapag-Lloyd, the capital increase is backed by primary shareholders CSAV Germany Container Holding GmbH, Kuehne Maritime GmbH, Qatar Holding Germany GmbH and The Public Investment Fund of the Kingdom of Saudi Arabia.

In August, Hapag-Lloyd announced a $55 million net loss for the first half of 2017. The carrier noted that the loss was part of the “one-off effects related to the UASC transaction.”

Ocean Carriers Increasingly Targeting Better Paying Reefer Containers

HLAG_Press_Valparaiso_Express-1

Source: www.theloadstar.co.uk

Container lines will “accelerate their assault” on the seaborne reefer market, but their aspirations could result in equipment shortages, according to Drewry.

In its latest edition of the Reefer Shipping Market Review and Forecast, the shipping consultant predicts that, by 2021, the perishable reefer cargo modal split will have increased to around 85% carried on container-ships, compared with 79% in 2016.

Thus, Drewry estimates that dedicated reefer vessels will see their percentage of the market shrink from 21% last year to 15% by 2021 – not least due to a continually reducing global fleet.

The review also notes the recent cooperation between Seatrade, the world’s largest specialised conventional reefer operator, and CMA CGM, which along with French independent container line Marfret, will launch a 13-vessel joint service next month linking Australasia and French Polynesia, with Europe and the US east coast.

It is one of the first instances of cooperation between the two sectors and Drewry says “it remains to be seen whether this sets a trend for the industry”.

Hitherto, specialist reefer carriers have set their fast transit-no transhipment credentials against the slow-steaming containerships that frequently tranship boxes and are tagged with a reputation for tardy schedule integrity. Nevertheless, the ultra-large container vessels often have empty slots and can offer shippers of reefer cargo substantial discounts on quotes by specialist operators, as has been the case with heavylift and project cargo in the past few years.

And for the container lines, the big attraction is the significant improvement in freight rates they can command for reefer traffic, compared with commoditised rates for standard 20ft and 40ft boxes, underpinned by the much greater value of the cargo.

Drewry highlights the resilience of the reefer market to “adverse economic, commercial and even climatic conditions”, which it says has been evidenced again by the increase in the perishable reefer trade last year, which it forecast to grow further this year.

It recently included pharmaceuticals, cut flowers and confectionery in its reefer cargo calculations, which added some 3.3m tonnes of seaborne cargo to its 2016 assessment. By 2021, it says, seaborne reefer cargo will exceed 134m tonnes, increasing by an average of 2.8% a year.

However, Drewry is warning of a potential lack of reefer equipment, which has resulted in shortages in both Europe and Brazil in the second quarter this year, holding back growth in the sector for the container carriers.

It said: “Although carrier consolidation may result in an improvement in container utilisation and efficiency, the lack of container equipment orders placed in 2017 is a concern.”

Last week, The Loadstar reported that Hapag-Lloyd had placed an order for 7,700 new reefer containers, of which 1,000 will be equipped with “controlled atmosphere” technology,  which slows the ripening of fruit and vegetables enabling them to be transported for longer periods.

Panama Canal Expansion Helps Boost Business at U.S. Gulf, East Coast Ports

Image result for Panama Canal expansion

Just over one year after the opening of the expanded third lane of the Panama Canal, officials at U.S. Gulf and East Coast ports say the expansion is just one factor contributing to surging container volumes. 
Source: www.americanshipper.com

During the 10 years between when the Panama Canal expansion was first proposed by Panamanian President Martín Torrijos in 2006 and when it was finally inaugurated in 2016, the prevailing thought among some in the maritime shipping industry was that the project, once completed, had the potential to disrupt the chain of goods flowing from Asia to ports on the West Coast of North America.

But in the 15-plus months since the canal’s new set of locks opened in April 2016, results on the East Coast appear to be mixed. Some ports are saying that they’re benefitting from the new lane of traffic that the canal has added, but others say that it’s still too early to tell, or that although business is increasing, there’s no indication that the Panama Canal expansion is the reason why.

Southeast, Gulf Gateways. Among those saying that the canal and the improved route are helping bring in more business is the Georgia Ports Authority (GPA).
“The Port of Savannah is moving more cargo than ever before,” Georgia Ports Authority Communications Manager Edward Fulford told American Shipper. “Savannah’s containerized trade increased by 9.7 percent during the first quarter of calendar year 2017. In fact, Savannah is the third fastest growing major port in the world, achieving a 7 percent rate of growth over 10 years—more than double the next fastest growing port.

“Since the opening of the [expanded] canal, the Port of Savannah is receiving larger vessels and completing larger cargo exchanges, even on the now ‘mid-sized’ vessels in the 8,000- and 9,000-TEU range,” Fulford said. “Since June 2016, the average size of the vessels calling at the Port of Savannah has increased by nearly 20 percent.” Whereas 2,000 container moves per ship was once considered a high-volume exchange for Savannah, in July the port had six vessels moving 4,000 or more containers each, Fulford said.

About 100 miles up the coast, the South Carolina Ports Authority (SCPA), which runs the Port of Charleston, a five-terminal seaport that handles cargo containers as well as motor vehicles, non-containerized goods and bulk cargo, says that it too has reaped the benefits of the expansion project.

“As a result of the Panama Canal expansion, several weekly vessel services have been upsized with big ships,” port spokeswoman Erin Dhand told American Shipper. “Bigger ships have resulted in strong volumes for the ports authority,” she said, which set a fiscal year (July 2016-June 2017) record in 2017 with 2.14 million TEUs.

Charleston offers “strong connectivity” to international markets, Dhand said, with 24 weekly container services sporting vessels with capacity for 5,500 TEUs and up.

Loaded TEU volumes for the port’s Asia trade increased 26 percent from fiscal year 2016 (549,797 TEUs) to fiscal 2017 (695,149 TEUs), according to Dhand.

Another port that has seen a boom over the past year is Port Manatee, which also happens to be the closest U.S. deepwater seaport to the expanded Panama Canal.

Manatee, located in the eastern Gulf of Mexico at the entrance to Tampa Bay in northern Manatee County, Fla., said it has seen its overall tonnage, including containers, bulk and general cargoes, rise substantially over the past year.

For the 10-month period from Oct. 1, 2016, through July 31, 2017, Port Manatee moved a total of 6.4 million tons of ocean freight, up 17 percent from the comparable period a year earlier and putting the port well on pace to eclipse its FY 2016 total of 6.8 million tons. The port also handled 32,907 TEUs of containerized cargo, significantly more than its previous full-year record of 30,431 TEUs, which was set during the fiscal year ended Sept. 30, 2010.

But does the port’s relatively close proximity to the Panama Canal (3,873 miles) deserve the credit for Manatee’s traffic boom? Maybe not.

Port officials actually attribute the big increase in part to an ongoing transition from breakbulk shipping to containers by longtime tenant Del Monte Fresh Produce for its imports of Central American pineapples and bananas. Another contributing factor, according to the port, was the continuing success of World Direct Shipping’s weekly service, which has brought refrigerated produce from Mexico since November 2014.

Mid-Atlantic Anchorage. Further up the coast, the Maryland Port Administration (MPA) tells American Shipper the Port of Baltimore has definitely benefitted from the canal’s expansion.

“We have seen a 10 percent jump in our container business over the past year,” said MPA spokesman Richard Scher. “That is a much higher increase than we normally see.

“We expect to see continued increases in containers,” he added. “Baltimore is one of only four East Coast ports with the necessary infrastructure to accommodate some of the largest containerships in the world.”

In the last year, Baltimore has also been recognized as the most efficient U.S. container port—71 moves per hour per berth— and as the fourth-fastest growing U.S. port, according to the port administration.

“As the closest East Coast port to the Midwest, cargo leaving the Port of Baltimore can reach two-thirds of our nation’s population within a 24-hour drive,” Scher said.

At the nearby Port of Virginia, multiple factors led to a record-breaking fiscal year 2017 in which overall TEU volumes were up 7.3 percent compared with FY 2016 and rail volume—measured in total containers—rose 11 percent.

“Our success is the result of a number of equally-weighed factors, and the Panama Canal is among them,” spokesman Joe Harris told American Shipper.

According to Harris, factors driving the Port of Virginia’s growth include increasing traffic via both the Panama and Suez canals; the realignment of major ocean carrier alliances; more cargo being routed to the East Coast; increasing cargo velocity across its terminals; and the fact that Virginia is a deepwater port with no overhead obstructions.

But there’s no disputing that the expansion project has also played a role.

“The Panama Canal’s new locks have had and will continue to have a positive effect on trade at the Port of Virginia and the U.S. East Coast going forward,” Harris acknowledged.

Northeast Neighbors. PhilaPort, which until earlier this year was known as the Port of Philadelphia, isn’t a large player in Asian trades, but says that it has seen large increases in volumes from the West Coast of South America.

PhilaPort has seen larger ships and more cargo from the West Coast of South America thanks to the canal expansion.

“We are the largest port for Peruvian and Chilean shipments,” PhilaPort spokesman Sean E. Mahoney told American Shipper. “We have had double digit growth since 2011.”

Asked if there’s a known link between the increase and the opening of the expanded Panama Canal, Mahoney said PhilaPort has seen “larger ships” and “more cargo,” but that the total number of vessels calling Philadelphia has dipped slightly over the past year, since the larger ships can carry more cargo, thus eliminating the need for some calls.

Much further north, at the Port of Halifax in the Canadian province of Nova Scotia, a growth cycle is occurring, with new and expanded services contributing. Container throughput in 2016 increased 15 percent year-over-year, and that increase has continued into 2017, with 17 percent growth in the first half of the year, according to port data.

“The expanded Panama Canal is one of the factors resulting in larger vessels calling the East Coast of North America,” Halifax Port Authority spokesman Lane Farguson told American Shipper. Other factors, he said, include the raising of the Bayonne Bridge in New York, and the general trend toward larger carrier vessel sharing agreements, two of which have services calling at the Port of Halifax—the OCEAN Alliance, and THE Alliance.

“The Port of Halifax is among the small number of container ports along the East Coast of North America that can berth and service vessels over 10,000 TEUs; the first vessel of this size called on Halifax earlier this year,” Farguson said.

And at one of Canada’s other major seaports, the Port of Montreal, business is also on the upswing. Traffic growth in the emerging Asia markets is said to have accounted for 23 percent of the port’s international trade in 2016, representing a 35 percent increase over the previous year. And in the first half of 2017, Asian markets represented over 26 percent of the port’s international trade. Growth has also been seen in other emerging markets, like the Middle East and Latin America, according to Port of Montreal officials.

The Port of Montreal says the expansion of the canal has played little or no part in its upswing in traffic over the past year.

Even so, the port has said that the expansion of the Panama Canal is believed to have played little to no part in its success over the past year.

“The Port of Montreal (PoM) growth for Middle East, Indian sub-continent and Asian markets is more due to our transshipment connections through the Mediterranean and North Europe via the Suez Canal,” port Vice President of Growth and Development Tony Boemi said. “The Panama Canal new expansion has not affected the PoM as for the short term.”

And at North America’s busiest East Coast seaport, the Port Authority of New York and New Jersey (PANYNJ) says that through July 2017, the port’s cargo traffic is up about 6 percent over 2016 and is on pace to set a yearly record. More than half of the freight that arrives at the port is from Asia, according to data.

However, if you think that the port authority is thanking the Panama Canal for the increased throughput, think again.

“At this point is impossible to link any increases to the opening of the canal,” PANYNJ spokeswoman Lenis Rodrigues told American Shipper. “Even before the canal opened the port was experiencing a noticeable difference in freight movement.”

Container traffic at the Port of New York and New Jersey has increased at an average rate of 4 percent annually since 1998, according to Rodrigues. “The [current growth] projection is for a pace very similar to what the port has seen historically,” she said.

Bulk cargo, while not growing at the same pace as container traffic, is still projected to increase about 1 to 2 percent, Rodrigues said.

The Port Authority of New York & New Jersey is examining ways to more efficiently accommodate all the freight the port currently handles.

Infrastructure Catch-Up. Whether or not individual ports attribute their recent successes to the expansion of the Panama Canal, all say they are engaged in infrastructure projects aimed at either attracting more container and/or bulk cargo traffic, or accommodating already increased traffic.

Montreal, for instance, is in the midst of the second phase of its new $197 million Viau container terminal project, under which the port’s annual handling capacity is being increased from 1.5 million TEUs to 2.1 million TEUs.

The first of two phases was inaugurated last November, adding 350,000 TEUs to the port’s capacity, while the second phase is expected to be completed over the next few years. The facility is operated by Termont Montreal Inc., which has been operating the port’s Maisonneuve terminal since 1987. Ocean carrier Mediterranean Shipping Co. (MSC) is also a major partner in the project.

At the Port of Halifax, where the canal’s expansion has been credited with larger vessel visiting the area, spokesman Farguson said that infrastructure planning is “well underway as we look at ways in which we can expand or develop the necessary pier length required to berth and service two vessels over 10,000 TEUs simultaneously.

“In partnership with key stakeholders, we are exploring various options to fully understand what is possible and how it can be developed in an efficient, cost effective manner,” he said.

The South Carolina Ports Authority says it’s adding capacity at the Port of Charleston via its new Hugh K. Leatherman Terminal, with phase I expected to be operational by mid-2020.

“We are modernizing our current facilities to accommodate big ships as well, including a two-year project to upgrade the structural support of the wharf and fendering system at SCPA’s busiest container terminal, the Wando Welch,” Dhand said.

Charleston is currently the deepest harbor in the Southeast region at minus 45 feet of depth, and construction on a 52-foot deepening project is expected to begin this fall. When complete, Charleston will sport the deepest harbor on the East Coast, capable of handling 14,000-TEU vessels with no tidal restriction.

The Port of Charleston is currently the deepest harbor in the Southeast United States. This fall, it begins a deepening project that could bring in more and larger container vessels.

The Port of Savannah is currently involved in the deepening of the Savannah River channel, a project that the port says is critically important to its global competitiveness, as a deeper river would allow 14,000-TEU vessels to call Savannah with greater scheduling flexibility.

“These massive vessels provide lower container slot prices, reducing the cost of importing and exporting goods,” Fulford said.

The portion of the project that will deepen the outer harbor to 49 feet at low tide (56 feet at high tide), which officially got underway in September 2015, is now 60 percent complete. Deepening the inner harbor to 47 feet (54 feet at high tide) will be covered under a separate contract. The entire project is expected to be finished by late 2021.

During FY 2017, GPA completed a six-acre extension of its dockside container yard, adding storage space for an additional 2,850 TEUs. And last December, it also broke ground on the Appalachian Regional Port in Northwest Georgia.

Additionally, the GPA has started the design phase of its so-called “mega-mail” facility, which will double the Garden City Terminal’s rail lift capacity to 1 million containers annually.

At the Port of Baltimore, the Maryland Port Administration recently acquired 71 acres of land adjacent to the Seagirt container terminal, with the additional land expected to be used to accommodate “cargo opportunities,” including containers, Scher said.

The Port of Virginia is currently engaged in a $670 million expansion of its two primary container terminals.

“Our projects will expand the port’s existing annual container throughput capacity by 40 percent, or 1 million containers, and will be complete by 2020,” Harris said. “We are closely watching the changes in the industry and believe the Port of Virginia is well-positioned to leverage the assets it has today and those coming online in the next three years to capture more and more cargo—both imports and exports.

“There are a number of factors driving overall growth that will drive cargo growth at the Port of Virginia,” he said. “The growth will come from new cargo owners within our existing markets; those investing in East Coast distribution centers; those seeking to take advantage of a port that is within a day’s drive of two-thirds of the nation’s population; those that are planning long-term and want assurance that the port they use will grow in parallel with their needs.”

At the Port of New York and New Jersey, the aforementioned raising of the Bayonne Bridge roadbed from 155 feet to 215 feet above mean high waters has been a boon for the port, since it provides increased clearance to accommodate New Panamax-class ships. The new navigational clearance, which was officially completed in June, now allows vessels of 160.7 feet in beam, 49.8 meters in draft, and with cargo capacity of up to 18,000 TEUs to sail beneath the bridge. Additional work on the bridge is expected to continue through mid-2019.

PANYNJ says it’s also working on a port Master Plan that would project the needs of the port over the next 30-40 years, as well as examine more efficient ways to accommodate all the freight the port currently handles.

A $300 million expansion project is also currently underway at PhilaPort. Expected to be completed in 2020, the project will double the port’s container capacity, as well as improve import and export efficiency, according to officials.

“We have room to grow,” Mahoney said.

West Coast Connection. When the Panama Canal was gearing up to open its expanded third lane to vessel traffic, there was no small amount speculation around the industry that any gains seen by Gulf and East Coast ports would come at the expense of their West Coast counterparts.

But although the Central American waterway’s expansion has noticeably helped some East Coast ports, it is not believed to have hurt many West Coast ports. In fact, most of the major ones seem to be doing better than ever.

The two adjoining ports of Los Angeles and Long Beach, the largest and busiest in North America, each reported in July that their container volumes for the first half of the year were up significantly from the same six-month period in 2016—8.4 percent at Los Angeles and 5.1 percent at Long Beach.

Meanwhile, at the Port of Vancouver in British Columbia, Canada, not only were TEU volumes up 9.6 percent year-over-year for the first half of 2017, overall cargo throughput—including bulk cargo—rose 4 percent as well.

And at the ports of Seattle and Tacoma, which jointly operate their marine terminals under the Northwest Seaport Alliance, cargo volumes rose 5 percent compared with the first half of 2016.

So, although the Panama Canal expansion project was touted as a gateway for increased containerized traffic to the U.S. East Coast from Asia, it seems to have only partially lived up to the promises of its proponents. That said, there are still many years ahead in which the project could fully realize that potential.

Ports Closed, Cargo Delayed as Hurricane Maria Causes Widespread Destruction in Puerto Rico

Image result for hurricane maria

Ports in the eastern Caribbean island are under condition ZULU, with San Juan closed indefinitely due to lack of power and telecommunications, as Hurricane Maria makes her way northwest.

Source: www.americanshipper.com

 Hurricane Maria has caused widespread devastation the island of Puerto Rico after making landfall in the U.S. territory just weeks after Hurricane Irma skirted the coast, causing service disruptions for shippers throughout the Caribbean.

Puerto Rico’s power grid is completely offline, with widespread flooding and mudslides a major issue for rescue and clean-up operations after the storm.

The U.S. Coast Guard has declared port condition Zulu for the territory, meaning no vessels may enter or transit within these ports without permission of the Coast Guard, all vessel movements are prohibited and all ship-to-shore crane operations are also banned.

One of the government’s primary goals, however, is to open ports in order to receive aid shipments.

Crowley, a Jacksonville, Fla.-based ocean carrier, has announced that its offices, terminals and operations in Puerto Rico, St. Thomas, St. Croix, St. Maarten and Rio Haina are closed.

“Safety is Crowley’s No. 1 core value, and as such, we are taking all appropriate steps to ensure the safety of personnel, including our mariners, all of our vessels, facilities and your cargo,” Crowley said in a customer advisory. “We are coordinating with our vessels to review their routes and plans to keep them well clear of the storm.

“At this time, we are experiencing disruptions beyond our control with many of our services,” the carrier said, adding that its “terminals, warehouse and offices are closed until the storm’s impact has been assessed and safe resumption of operations can be determined.” Delays can be expected at other Caribbean terminals; however Haiti, Cuba and Jamaican ports are currently operating normally, Crowley said.

Tropical Shipping has also announced delays for its services to the Caribbean, with tentative arrivals for delayed cargo due this weekend in St. Kitts, Nevis, St. Maarten and St. Thomas

King Ocean, another Caribbean shipping company, has announced delays for cargo destined for eastern Caribbean ports.

The company also said it is providing free shipping of relief items to government agencies for the people impacted by Hurricanes Maria and Irma. The shipping line is accepting a maximum of two pallets or 100 cubic feet of cargo per shipper until Wednesday, Sept. 27.