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UASC appoints new leadership team

United Arab Shipping Company (UASC) has announced two key board appointments. Dr. Nabeel Al-Amudi is the new chairman and H.E. Sheikh Ali bin Jassim bin Mohammad Al-Thani is vice chairman. They will together take responsibility for spearheading UASC’s ambitious global expansion plans and the company’s efforts to cement its position as both the market leader in the Middle East and as an emerging global carrier.

Dr. Al-Amudi is currently the president of the Saudi Ports Authority, having previously held several managerial and leadership positions in Saudi Aramco and its various subsidiaries. During his tenure at Saudi Aramco, Dr. Al-Amudi assisted in starting up the Ras Tanura Refinery Expansion Project and was also involved in setting up the Rabigh Development Project and the Saudi Aramco Total Refinery Project.

H.E. Sheikh Ali Al-Thani, currently the chairman of Qatar Navigation, Milaha, started his career at the Ministry of Finance in Qatar as a financial analyst in the Investment Bureau. Since his appointment to Milaha in 2009, Sheikh Ali Al-Thani has overseen the development of the organisation to form a multi-faceted shipping, maritime services and logistics company.

UASC is confident that Dr. Al-Amudi’s and Sheikh Al-Thani’s experience and track record in leading complex and large organisations will be crucial as the company moves forward with its expansion plans, which include the delivery of a fleet of 18,800teu container vessels, and the establishment of alliances with other leading carriers.

 

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Herbilan Shipping launches first feeder service

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For the first time in the Sri Lankan shipping industry a private enterprise is set to launch a feeder service linking Sri Lanka with India and Myanmar.
The mentor behind this project, Herbie De Silva said that he saw that Sri Lanka is losing considerable amount of transshipment cargo destined to Middle East Europe, Africa US East Coast and Europe due to non availability of dedicated feeder connecting Yangon-Colombo.
Presently there are approximately 42 vessels operating between Singapore/port Klang to Yangon
Herbilan Shipping Pvt. Ltd, will be the pioneers to commence this services targeting the peak season of Myanmar exports. The total investment for the project would be US$ 4.5 million and the parent company would make the investment.
“We are going to help Port Of Colombo to Increase the Transshipment cargo volume,” he said.

Ivan De Almeida and Herbie De Silva in Colombo
Picture by Saliya Rupasinghe
He said that in addition to saving to the country the service would also open up a untapped market in Myanmar thus enabling Sri Lankans to look at trading opportunities in growing Myanmar. “Myanmar also offers some of the world’s best grains and Sri Lankan enterprises could look at this segment as well.”
The company has already finalized the charter of a vessel and would be renaming as M V HERBILAN SUCCESS for this operation. The vessel has a capacity of 1,158 TEU’s and would sail with 16 crew members on their 14 day journey linking the round trip. The vessel could also accommodate Reefer Cargo as Myanmar export more reefer cargo.
This service will commence effective from September 1, 2015.
“We would set sail from Colombo to Vizag India pick up transshipment cargo (Kolkata Nagpur, Raipur, Gunthur) and then sail to Yangon.
He said that in two months time they would make this a weekly fixed day schedule service.
He said that he left Colombo over 23 years ago to China for studies and then started up business with another Chinese partner who owns one of the biggest constructing companies in China.
“The Chinese company is also eagerly looking at opportunities in Sri Lanka in the construction field.” He said that they obtained Board of Investment approval for this operation. Meanwhile Ivan De Almeida, Chief Executive Officer thanked BOI Chairman, Upul Jayasuriya for personally, talking to some of the BOI officials and clearing unwanted and uncalled for ‘red tape’ which at times was very discouraging. “These issues could have being cleared in a few hours but some BOI officials took time.”
– See more at: http://www.dailynews.lk/?q=business/herbilan-shipping-launches-first-feeder-service#sthash.q3prujF1.dpuf

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HLPFI’s Wednesday Wire

According to a report by the Financial Times, the world’s big energy groups have shelved USD200 bn of spending on new projects in yet another round of cost-cutting as oil prices continue to fall.

The Iranian sanctions development coupled with OPEC’s refusal to cut production has begun to weigh heavily on the commodity’s price once again. But Iran’s situation looks likely to provide more positive opportunities than negative for the heavy transport sector in the long term, with around USD185 bn of oil and gas investments expected by 2020.

The project logistics industry also looks set to benefit from other developments around the world. Kenya’s promise, for example, was thrust into the limelight last week after US president Barack Obama visited the country and discussed its economic and political progress, despite the major threat that corruption, terrorism and ethnic division still pose to the African nation’s prosperity.

At the same time, GE confirmed USD2.5 bn of orders from sub-Saharan Africa, and it expects to seek financing for African projects worth at least USD1.5 bn annually as it expands its footprint in a region.

The African Development Bank suggested that economic growth across Africa is set to accelerate to 5 percent in 2016 from an estimated 4.5 percent during 2015, when foreign direct investment will rise to USD73.5 billion. Such opportunity will be welcome relief to those transport providers active on the continent.

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HONG Kong’s OOCL saw revenue from its Asia-Europe services collapse by 28% in the second quarter

HONG Kong’s OOCL saw revenue from its Asia-Europe services collapse by 28% in the second quarter, the first indication of just how badly container lines have been hit by the freight rate rout.

The Hong Kong line disclosed that total liftings were down 2.1% in the April-June period, while turnover fell 9.3%.

The most eye-catching figure was the plunge in revenue in the Asia-Europe trades, where volumes shrank 12%.

In the coming weeks, other major carriers will report their mid-year results, with NOL figures due out on Thursday, providing further insight into the impact of the price war.

After a very brief respite at the start of the month when another round of general rate increases took effect, spot prices on major trades have fallen back again.

The Asia-Europe trades remain the most vulnerable to supply and demand imbalances, with the Shanghai Containerised Freight Index highlighting the severe weakness on this particular trade.

The China-north Europe component lost almost 23% in seven days, or $118 per teu, sliding to just $400.

This was the third consecutive weekly drop from the brief spike of $879 at the start of the month after rates had collapsed to as low as $205 in late June.

Rates on the China-Mediterranean trades also remain under severe pressure, declining by 24% to $402 per teu over the week.

Drewry’s weekly Shanghai-Rotterdam freight index paints an equally bleak picture, with rates now half of what they were at the start of the year and 12 months ago.

The  index “continued its downward trajectory, losing 15% or $173 per 40 ft from last week to reach $1,000 per 40 ft,” said Drewry. “Blank sailings, even during the peak season on this trade, failed to stop the rate rot. Although the pace of decrease slowed down, we expect rates to continue falling next week in the run-up to GRIs that are being announced for August 1.”

As Clarksons points out in its latest Container Intelligence Monthly, “the container capable fleet is projected to grow 6.5% in 2015, with the very large boxship sectors set to receive the majority of capacity growth”. This robust supply expansion “has contributed to a challenging supply-demand balance in the freight market so far this year, with freight rates down heavily from end-2014”.

In the the Asia-Europe trades, where box volumes fell in the first half of the year compared with the same period of 2014, “key liner alliances have announced capacity cuts in an attempt to lift freight rates from record low levels”.

While overall container capable capacity growth is expected to slow to 4.6% in 2016, deliveries of high-capacity ships will remain rapid, which could continue to exert supply pressure, warns Clarksons.

The struggle to achieve utilisation levels that would be sufficient to stabilise freight rates explains why carriers are eyeing Iran as sanctions are lifted.

A number of carriers are reported to be drawing up plans to resume Iranian services, with 2M partners Maersk Line and Mediterranean Shipping Co telling Lloyd’s List that they saw considerable business potential in the region, although no final decisions on service offerings have been made yet.

On the Pacific, the Drewry/Cleartrade Hong Kong-Los Angeles World Container Index fell almost 7% over the week to $1,156 per loaded 40ft container. Earlier in the year, rates on this route were above $2,000, while a year ago they were hovering around $1,800.

The latest drop represents a new post-2009 low, following last week’s slump.

The SCFI’s Shanghai-US west coast component was 4.4% lower at $1,123 per feu, with rates to the east coast dropping 3.7% to $2,538 per feu.

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Supply-demand imbalance worsens with 171,000 teu delivered in June

The containership industry appears to be continuing on its merry path to self-destruction as it continues to order more vessels than the supply and demand equation requires.

Another 171,000 teu were added to the fleet in June, at the same time as spot rates on all the major trade lanes hit record lows as lack of demand combined with competitive forces that saw lines take rates so low they were all but paying to move containers on behalf of shippers.

While July GRIs have offered some sign of relief, the outlook still looks grim.

To counter this, the large alliances are reducing capacity, particularly on the main lane east-west route between Asia and Europe. Maersk and MSC are using smaller vessels, Ocean Three has combined services and the G6 alliance is voiding sailings to take capacity out of the market.

Which begs the question: why order more ships when they can’t even use the ones they already have?

The answers lie in the individual lines’ requirement to create efficiencies and replace older, less flexible tonnage with new vessels that can reduce slot costs. But unless these run fully loaded, the efficiencies do not exist; and with so many ships and so little demand, they do not run fully loaded. It’s a vicious circle that will not end well. Industry observers are already forecasting that most lines will make a loss this year.

In the past month, Cosco has been rumoured to be joining the ordering spree, with a report, still unconfirmed at the time of going to press, that the company is close to closing a deal for nine 20,000 teu boxships, with an option for four more, at three Chinese shipyards: Shanghai Waigaoqiao Shipbuilding, Nantong Cosco KHI Ship Engineering and Dalian Shipbuilding.

Maersk Broker said each vessel was priced at around $150m, and scheduled for delivery in the second half of 2017.

This follows close on the heels of Maersk Line’s confirmation in May of a deal for up to 17 vessels of 19,630 teu at Daewoo Shipbuilding & Marine Engineering, which it followed up just as CI was going to press with signing of a deal with Hyundai Heavy Industries for nine 14,000 teu containerships.

The new vessels will take over their place on the conveyor belt of ship launches that has seen Marit Maersk, the last of its 18,270 teu first-generation Triple-E vessels, delivered. Maersk has a $15bn budget for new vessels, upgrades and equipment over the next few years and is showing no signs of letting up. Its orderbook already stands at 500,000 teu, excluding options, or 16% of its current fleet.

Other deliveries in June included MSC Zoe, which joins sisterships MSC Oscar and MSC Oliver as the largest capacity ships in service, for now.

In total, over 138,000 teu of capacity was delivered in June, spread across 10 vessels, none of which were below 9,000 teu.

At the other end of the vessel lifecycle, only four vessels, comprising just 5,300 teu, went to scrap. While only two vessels were scrapped in May, at least they comprised slightly more capacity, at 6,400 teu.

This month, the largest vessel demolished was only 2,800 teu and was over 25 years old. The youngest vessel taken out of service permanently in June was 21 years old.

Levels of scrapping like this will do nothing to reduce the fleet capacity overload.

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Logistic Leads the Way on e-AWB Implementation

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Air Cargo May Become Short-term Solution for Some Shippers Soon

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Looking back at 2014

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