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China’s Yangshan port set to boost capacity with seven new berths

China’s Yangshan deepwater port in Shanghai is set to expand its annual throughput handling capacity with the addition of seven new berths in December, reports said.

The seven new berths, costing RMB12.8bn ($2bn) to build, will add 4m teu of capacity a year, with plans to further expand the capacity to 6.3m teu a year. The new berths will officially come on stream on 10 December this year, according to an official with Shanghai International Port Group (SIPG), cited by South China Morning Post.

Shanghai port, which houses the Yangshan deepwater port, is already the world’s busiest container port with an annual throughput of 37.13m teu in 2016.

“Shanghai is determined to stay ahead of the competition in terms of port development. Authorities and operators have been prioritising technologies and management to enhance the port of Shanghai’s international status,” Xiao Yingjie, president of the Merchant Marine College at the Shanghai Maritime University, was quoted as saying.

Yangshan harbour is equipped with some of the most technologically advanced cranes, lifts and carriers with the ability to swiftly load, discharge and tranship cargoes. As many as 130 automated guided vehicles (AGVs) will be deployed at the port.

Shanghai port first overtook Singapore in 2010 to become the busiest container port in the world. Most of the port’s activity served domestic trade and commerce, with only around 7.2% of the traffic is categorised as international transhipment.

In 2016, Shanghai municipality set a target for the port to achieve 15% for international transhipment by 2040.

China-based research house Shanghai International Shipping Institute (SISI) highlighted that container transhipment will help to boost throughput at ports, even though it cannot generate direct economic benefits. It added that transhipment ports will need to adopt price competitive approach and offer favourable rates to international transhipment containers, which is what Shanghai port is doing.

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Yang Ming to sell 8,795 used dry containers

Taiwan’s Yang Ming Marine Transport Corp has put 8,795 used units of dry containers up for sale, potentially raising sales proceeds of up to $245,700.

The dry containers are a mix of 20-equivalent units, 40-equivalent units and 40-high cube units, manufactured between 1991 to 2003.

The bid prices have been set at $171,000 to acquire 5,812 container units in Asia, $41,400 for 1,709 units in Europe, $33,300 for 1,247 units in the Americas, and $245,700 for all 8,795 containers in all regions.

The bid is scheduled to be held on 26 September.

Meanwhile, Taipei-listed Yang Ming has also recently priced a 500m shares offer to raise up to TWD5bn ($170m), with the funds going toward repaying bank borrowings and strengthening its balance sheet.

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Westports expansion seen needing up to $2.3bn

Fresh from an endorsement by the government with the granting of approval for capacity expansion, Malaysian port operator Westports Holdings is expected to invest up to MYR10bn ($2.3bn) to double its capacity.

Westports is reportedly considering debt capital market options such as sukuk and other forms of borrowing to finance the expansion as well as using internally-generated funds, local media reported.

Westports said in a stock market announcement that it had secured approval-in-principle from the Malaysian government for the expansion of its container terminal facilities.

The development of CT10 to CT19 will enable it to handle up to 30m teu a year by 2040 and will ensure that Port Klang keeps up with the planned consolidation and expansion of Singapore’s ports in Tuas as well as maintaining its lead against other planned terminals in Indonesia.

The proposed expansion of an additional 10 terminals is an extension of Westports’ current CT1 to CT9 development. The first phase of the development will be undertaken from 2019 to 2024.

“While the terms and conditions for Westports’ expansion are to be further discussed with the government, the plan could cost the port operator as much as MYR10bn,” a source was quoted as saying, adding that the cost for the first phase of CT10 to CT19 development is targeted at MYR2bn.

Westports ceo Ruben Emir Gnanalingam said the expansion would further strengthen Port Klang as the pre-eminent port for the nation’s gateway trade as well as a transhipment hub in the region.

“The approval also reflects the government’s commitment to prioritise Port Klang as the load centre of Malaysia,” he noted.

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Milaha launching new Qatar – Pakistan container service

In its third new service announcement in as many weeks Milaha is launching a container service between Qatar and Pakistan.

The new Pakistan Qatar Express Service (PQX) will be weekly with a transit time of four days between Port Hamad in Qatar and Karachi, Pakistan. It will be operated by two 1,700 teu capacity vessels.

It will also add a second Mundra, India call for Milaha with the service calling Mesaieed – Mundra – Karachi – Hamad – Mesaieed. The first vessel will depart Port Karachi on 7 September.

“We have been vigorously ramping up our operations between Qatar and key Asian markets in response to growing demand from traders, importers, and exporters on both sides,” said Abdulrahman Essa Al-Mannai, president and ceo of Milaha.

Our new PQX service will cater mainly to perishable products and other food stuff, and will increase options for customers in Pakistan and India to access Qatar and other Arabian Gulf markets.

Services connecting Qatar to the region have been hit by sanctions from a number of neighbouring nations. In recent weeks Milaha has also launched a new Qatar – Kuwait feeder service and a Qatar – Turkey reefer service.

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Will placing all its eggs in the container shipping basket pay off for Maersk?

If you were to choose a core business based on performance over the last decade container shipping would be unlikely to top the list.

But that is where AP Moller – Maersk is headed as it its strategy to make Transport and Logistics its core business with its energy related businesses being sold or spun off becomes a reality.

The plan went from theory to execution on Monday with the announcement that French oil company Total would be acquiring Maersk Oil for $7.45bn in a combined equity and debt deal.

With “solutions” being sought for Maersk’s tanker, OSV and drilling rig businesses by end 2018 the Danish giant is set to become solely focused on containers and logistics.

The focus on a single business area is something that appeals to investors and analysts, at least when that business is doing well, and it does enable the company to invest in scale in an individual sector, as Maersk is doing with its $4bn purchase of Hamburg Sud.

However, when container shipping is down, as it all too frequently is, there will be no other business to even potentially prop up the overall result. There is little sign the cycle of short booms in profitability followed by much longer brutal freight rate wars is about to end. The market is no way near enough consolidated for that. Even with the acquisition of Hamburg Sud Maersk Line, as the largest player, will only have an 18.6% global market share by capacity.

Maersk is placing its bets on digisation of the container shipping process to differentiate itself in the marketplace and drive out yet more cost. Unfortunately it may not provide that much in the way of differentiation with its competitors such as CMA CGM doing the same thing, and the ability of container lines to give away any cost savings straight to customers really should be the stuff of legend.

There is also the spectre of disruption and non-shipping player simply coming in and reinventing the process – Amazon being the obvious suspect – although at the moment the worried glances over the shoulder are coming more from the freight forwarding and third party logistics sectors.

The cynic might also note that Maersk’s exit from various energy shipping related sectors have not been exactly well timed. The Danish giant exited the dry bulk shipping industry in 2002 a year before the biggest boom on record for the sector, and more recently sold its VLCC fleet at the start of 2015 just as that market was about to enjoy its best two year period since the global financial crisis. It has also exited the LNG shipping sector, one which many see a bright future for given the push for clean energy.

Granted all things oil and offshore business related are not performing well at the moment, and peak oil may not be far off, but the growth in global energy demand is also unrelenting. There is a lot to point to this being close to the bottom of the cycle and some brighter times on the horizon as the market and costs rebalance.

It should be noted that Maersk does remain an investor in the energy sector with the Maersk Oil deal taking a 3.75% stake in Total through the $4.95bn share element of the transaction. Should the oil market the value of this investment should also rise. But that is all Maersk will now be the oil industry an investor, not an active participant that can take wider advantages of that upside.

Now of course there is the fear that the oil industry – and related sectors – are set to face a major disruption given the rapid rise of clean and green energy.

The electric car, little more than a novelty a few years ago, is rapidly gaining traction and automobile manufacturers are investing heavily in battery-powered vehicles. The recent Economist cover Death of the Internal Combustion Engine illustrated the rapid change that is taking place with the obvious parallels of how the motor car replaced the horse at the beginning of the 20th century.

If you take the more extreme “transport as a service” model, that we covered back in late May, where people switch from owning cars to hailing driverless electric vehicles enmasse, and that could be extremely bad news for both the oil industry and tanker shipping.

Should disruption take place on this scale Maersk’s decision to exit the oil related energy sectors of its business would, in hindsight, look very wise indeed.

However, that still leaves the question of making long term, sustainable returns from a business with container shipping at its core, something that has proved elusive to even the brightest minds in the industry over the last two decades.

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Fujairah Terminals welcomes first vessel

Fujairah Terminals, managed by Abu Dhabi Ports, has welcomed its first vessel.

The container feeder vessel Dubai Alliance, operated by Star Feeders, was the first to arrive at the terminal following the signing of a 35-year concession agreement between the Port of Fujairah and Abu Dhabi Ports in June this year.

The concession grants Abu Dhabi Ports exclusive rights to develop port infrastructure and undertake operations for containers, general cargo, ro-ro vessels and cruise ships. Fujairah Terminals was established and took over management of the terminals on 1 August.

“We are marking the beginning of a new era for both Abu Dhabi Ports and the Port of Fujairah under the new management of Fujairah Terminals,” said Mohamed Juma Al Shamisi, ceo of Abu Dhabi Ports.

“The investment in port infrastructure will go a long way to strengthening development and operation of ports and terminals across the UAE and its contribution to the growth of a diversified, knowledge-based economy highlighting Fujairah’s strategic role in the UAE’s maritime and trade growth.”

Fujairah Terminals general manager, Naser AlBusaeedi said: “Using our experience and best practices gained from managing and running major ports like Zayed and Khalifa Ports, we intend to bring these valuable learnings to Fujairah Terminals and use existing commercial and business synergies to increase our value offering to our customers and simultaneously boost efficient trade”.

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Hutchison Ports in Basra port management deal

Hong Kong-based global port operator Hutchison Ports is making inroads into the Middle East market  with a deal to manage the Port of Basra in Iraq.

The deal will see Hutchison team up with NAWAH Port Management (NPM), the port management arm of the Pritzker Family Business Interests vehicle NAWAH (North America Western Asia Holdings).

Hutchison has agreed to manage existing and future operations at Port of Basra in southern Iraq. NPM, was launched in partnership with Basra’s Moosawi family in 2012 to establish a modern container berth at the port.

Hutchison will assume oversight of day-to-day commercial and operational activities at NPM, operating under the name of Hutchison Ports Basra.

NPM’s terminal is along the Shatt Al Arab waterway in Iraq. It services the shipping needs for a full spectrum of customers across Iraq – from large, multinational companies to local Iraqi merchants.

“We view NPM’s operations at the Port of Basra as an integral piece of our expanding Middle East strategy and are excited about the opportunities this partnership creates,” said Andy Tsoi, Hutchison Ports’ Middle East and Africa md.  “We believe strongly in the growth story of Basra, Iraq, and the Middle East as a whole and are delighted to have the opportunity to participate in and support the growth of the business over the long term.”

NPM ceo Eric Clark said: “Hutchison Ports has an exceptional team and a proven track record of delivering value to its customers, employees and the regions in which it invests.  We are delighted for the opportunity to partner with one of the leaders in the industry – a company which shares our vision of NPM as both a unique maritime asset in southern Iraq as well as strategic platform in the epicenter of one of the fastest growing regions in the world.”

Advisors on the deal were Eversheds for Hutchison Ports and Latham & Watkins for the PFBI. No deal value was disclosed.   

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CMA CGM inks LoI with Chinese yards to build world’s largest containerships

CMA CGM has signed Letters of Intent (LoI) with two Chinese shipyards to build the world’s largest containerships yet at 22,000 teu in capacity.

Shanghai Waigaoqiao Shipbuilding Co confirmed that it had Hudong Zhonghua Shipbuilding had received LoI’s from CMA CGM to build nine 22,000 teu containerships, China daily reported.

At 22,000 teu in capacity the vessels would top the largest currently either in service or order, which are 21,413 teu in capacity and owned by Orient Overseas Container Line (OOCL).

The largest containerships currently in CMA CGM’s fleet are 18,000 teu in capacity.

With the CMA CGM order is subject from board approvals from both sides before firm contracts are signed.

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MMC in talks to buy stake in Sabah Ports

MMC Corp continues to expand its ports empire in Malaysia, confirming an earlier news report that it was in talks on acquiring a stake in Sabah Ports from Suria Capital Holdings.

“We wish to clarify that the discussion between MMC Corp and Suria Capital Holdings with regards to the proposed acquisition of a stake in Sabah Ports by MMC Port Holdings, a wholly-owned unit of MMC, has taken place,” the group said in a stock market announcement.

“However, as at to-date, the board of directors of MMC Corp has yet to make any firm decision in relation to the same,” it added.MMC Corp’s ports portfolio includes Port of Tanjung Pelepas and Northport in the south and middle of Peninsula Malaysia respectively.

Earlier this year, MMC Corp had entered into an agreement to buy up the whole of Penang Port, in the northern part of the peninsular. Suria Holdings controls all the major ports in Sabah to the east of Peninsula Malaysia.

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Singapore sees July container volumes up 12.1%

Singapore port’s container throughout in July has risen by 12.1% year-on-year to reach 2.88m teu, according to preliminary estimates from the Maritime and Port Authority of Singapore (MPA).

Last month’s thoughput exceeded volumes of 2.57m teu registered in July 2016, figures from MPA showed.

On a month-on-month comparison, July volumes increased by 2.1% compared to 2.82m teu posted in June this year.

From January to July 2017, the port of Singapore moved a total throughput of 19.02m, an improvement of 7.2% compared to 17.75m teu in the same period of last year.

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