Overseas news:Air France to change its fuel surcharge structureAir France Cargo will change its fuel surcharge structure as from the 1st September, incorporating partially cost into the basic freight rate for many shipments.Furthermore, the new structure will involve he use of the US dollar as the base currency and variable charging varying according to the distance of the flight. A new system of zones will be implemented with different levels of surcharge depending upon the type of flight, intercontinental flights of more than nine hours, those between 4 to 9 hours and short hauls, which take less than four hours. As from the 1st September, the current fuel surcharge of $ 1.30 per kilo will be fully applied as surcharge on intercontinental routes, converted into 80% surcharge and 20% freight rate on medium range flights while on short haul routes, it will be divided 50% into fuel surcharge and 50% in freight rate. China to build one of its largest rail hubsInvestments totaling US$ 146 million will be injected over the next 18 months into the Chengdu Railway container hub to convert it into one of China’s largest hubs. The new developments will provide the hub with a handling capacity of 15 million tons by year 2020 and the project also includes the construction of a 22 km long bridge.Railway links will be established with the deep-sea container facilities at Shanghai, Shenzhen, Qingdao, Tianjin and Ningbo. The ministry of railways of China intends to build 18 container hubs. Maersk will raise its tariffs out of EuropeMaersk Line will, as from the 1st October, raise its rates for containers moving out of Europe. The increase will be of a minimum of US $ 118 per TEU for services going to Australia and New Zealand.The rate restoration is attributed to two factors: the rise of operating costs by 15% and the overall drop in tariffs by US $ 350 on average for a container of 40 feet over the last two years. According to Maersk Line, a programme to restore rates is required to ensure the route can support longer-term development, which is in the interest of both customers and Maersk Line. UPS plans to enter a 10-year agreement with DHLUnited Parcel Service (UPS) Chief Executive Scott Davis said to financial analysts in the United States that his company was "making good progress" towards concluding a 10-year agreement with DHL to haul its express, deferred and international packages by air within the United States, as well as between the United States, Canada and Mexico. The U.S. market is dominated by UPS and FedEx.UPS has posted revenues of $ 13 billion for the quarter of 2008, a 6.7 percent growth as compared to $12.2 billion during the second quarter of 2007. Although its international segment increased from $2.5 to $2.95 billion, profitability was negatively impacted by rising fuel costs and declining U.S. import volumes. Market analysts strongly believe that next year, UPS would benefit from the DHL agreement although fuel prices remain a major concern. According to them, high fuel prices could permanently destroy demand in favour of lower priced and less profitably deferred and ground services. Road services between China and five Southeast Asia countriesAn international express courier operator has started the only scheduled road services between China and five Southeast Asia countries. It links China with over 125 cities across 5 000 km in Vietnam, Thailand, Singapore, Malaysia, and Laos.The road network tariffs will be up to 30% lower than air freight and three times faster than sea services, a winning formula in the current times of high fuel prices. Furthermore, the distribution service of the courier operator includes door-to-door, day-definite delivery supported by a real-time GPS tracking system. The trucks move according to a pre-set schedule, arriving at hubs and depots in time for the parcels to be unloaded, sorted, and shipped again or delivered locally. Trade between China and ASEAN countries are expected to reach US$250 billion up from US$160 billion in 2006, with the Free Trade Area which will be implemented in 2010. Maersk orders 18 vessels for African marketsMaersk Line has placed an order for 18 vessels of 4 500 TEUs with Hyundai shipping yard of South Korea.Michel Deleuran, head of network and product at Maersk Line, told the press that over 80 000 TEUs of slot capacity will be injected to support the increasing business in the trades between sub-Saharan Africa and Northern/ Southern Americas, Europe and Asia. The vessels are expected to be delivered between 2011 and 2012. According to industry analysts, specialised vessels are required for Africa which thus limit the possibility of using ships that are currently on other routes. Maersk Line holds a 25% market share in sub-Saharan Africa with an average export growth of 7% while on the import side, the annual increase is around 11%. Fines to several airlines for cargo price-fixingAccording to the Justice Department of the United States, Air France-KLM and several other air carriers have agreed to pay fines amounting to a total of $504 million to settle air cargo price-fixing charges.Air France-KLM will pay $350 million and the remainder by the other airlines (Cathay Pacific, Martinair and Scandinavian airline SAS. Intensive investigations had been initiated since 2001 by the US Justice Department on the air cargo industry. It was found that these airlines each engaged in a conspiracy to suppress and eliminate competition by fixing the cargo rates charged to customers for international air shipments. The prices of consumer goods, electronic products and medicines carried by these airlines, were affected. In January 2008, Qantas Airways agreed to pay a $61 million fine for cargo price-fixing and in May, company Japan Airlines was sentenced to a $110 million fine for similar price-fixing. Increasing concerns about the safety of container vesselsAccording to the British Broadcasting Corporation, last year, the container shipping industry grew by 14% and there are currently 10.9 million boxes loaded on vessels around the world.However, Stephen Meyer, head of the Maritime Accident Investigation Branch (MAIB) of the United Kingdom, said that "whilst there is no safety standard, and companies are in cut-throat competition with each other, then corners will be cut and safety will be compromised." He added that the hazardous contents of containers are not always reported, ships are frequently overloaded and the development in the design of ships has not kept up with the growth of the vessels themselves. Stephen Meyer carried out the investigation on the beaching of the container ship Napoli off the British coast last year. Built in 1991, that vessel had a capacity of 6000 containers. The Napoli was one thousand tonnes above its recommended weight limit. Although it was only 2% over that threshold, it could have contributed to the structural failure of the ship due to the heavy storms at the time, pointed out Meyer. The MAIB report attributed the problem to a "lack of buckling strength in the engine room region". After which, more than 1 500 similar vessels had been inspected and 12 were found to require strengthening work "to bring them up to acceptable safety standards." Furthermore, Richard Meade, news editor of Lloyds List, the daily newspaper of UK shipping industry, also expressed his concerns. "The booming nature of the industry means that the ships are being run as hard as possible," he says. "Time is of an essence, these ships are going at full pelt across the world. There are questions over whether corners are being cut." Lufthansa rises its fuel surchargesThe airfreight division of Lufthansa plans to increase fuel surcharges imposed on customers to 1.20 euros per kilogram from 1.15 euros as from June 23.The public relations office of the German air carrier said to the press that "in recent weeks, crude oil and kerosene prices have continued to rise ... In response to this development, Lufthansa is adjusting its fuel surcharges on its flights." Lufthansa last reviewed upwardly its fuel surcharges on May 14. Lufthansa expected its fuel bill to reach 5.7 billion euros this year from 3.9 billion in 2007. In April, Lufthansa estimated its 2008 fuel costs would be 5.26 billion euros and worked out a series of scenarios from 4.88 billion euros with oil at $89 a barrel to as much as 5.71 billion euros at $134. According to aviation analysts, airlines could be scrapping unprofitable routes especially in their long-haul network to cut losses. The International Air Transport Association (IATA) pointed out that the global airline industry was on the path to record as much as $6.1 billion losses this year as carriers are facing rising fuel prices. The turnover of third-party logistics providers on the upThird-party logistics providers are increasing their turnover despite economic slow down in the United States as firms cut down their operational costs by outsourcing their supply chain management.Companies such as C.H. Robinson Worldwide Inc., which provide transportation and warehousing services to manufacturers and retailers, are trading their shares at lifetime highs. During the last quarter, C.H. Robinson Worldwide gross revenue grew by 23 percent due to the increasing freight volume it handled. The third-party logistics providers, some of them not owning any carrier, buy in bulk air, ocean, rail or road capacity and manage shipments in a cost-effective way. They are less exposed to rising oil prices since that most trucking companies put their fuel surcharge after a long time since they are bound by contracts. According to the American Trucking Association, during the first three months of 2008, 935 trucking firms went bankrupt following the continued hike in fuel prices. "Even though the economy is slowing, we still have some long-term trends that give us the opportunity to grow our business," said C.H. Robinson Chief Executive Officer, John Wiehoff to the press. He added that opportunities arise when companies look beyond the shores to tap low-cost markets for meeting their production and manufacturing needs. Fuel surcharges to be applied on road transport in FranceAn amendment to a bill of law in France makes provision for the state to impose fines which can amount up to 15 000 euros, to shippers if they do not pay the surcharge due to increases in fuel, road tax and toll gate fees.The current legislation enables hauliers to pass on to their customers the fuel rises. However, due to the lack of a penalty clause, several shippers have refused to settle the surcharge. The penalty clause could be implemented by the end of June in France. Customers will then have to pay the haulage surcharges. In the United Kingdom, the Freight Transport Association is asking more than the current 2 pence per litre cut in fuel tax. They fear that the rising fuel costs might lead to financial losses as fuel costs represent over a third of the running expenses of a truck and haulage margins are only between 2 or 3%. The UK hauliers have asked for an immediate reduction in diesel duty of 25 pence per litre to cover the expected price hikes in the coming weeks. IATA reports on airfreight growthThe International Air Transport Association (IATA), which represents 240 airlines operating 94 percent of all international passenger and cargo flights, has noted that during the first four months of 2008, demand for cross-border air shipments was up 3.4 percent compared with the same period of 2007 but a much slower growth rate than in the past years."The impact of skyrocketing oil prices and weaker economies has made its way to traffic growth," said IATA President Giovanni Bisignani. "Combine slowing growth with skyrocketing oil prices, and the industry outlook is grim at best," Bisignani added. "There has been a step change downwards." A.P. Moller-Maersk nearly tripled its net profit in first quarterThe Danish conglomerate A.P. Moller-Maersk which is involved in the production of oil and in container shipping vessels Maersk, has stated to the press that its net profit nearly tripled during the first quarter of 2008 due to higher oil prices and higher container freight rates.The volume of its container operations rose by 4 percent while rates increased by 5 percent, excluding the bunker adjustment factor, on crucial routes from Asia to Europe. Net profit increased to $1.1 billion from $390 million during the same period last year. The conglomerate is expecting to achieve this year sales of about $60 billion and net profit to the tune of $3.6 billion to 4 billion. The A.P. Moller group exploits oil fields in the North Sea, Qatar, Algeria and Kazakhstan. The growing oil prices had a favourable impact on profits but eroded to a certain extent the profits from the shipping business since that these increases could not be passed on quickly to freight users. The container shipping unit has recorded a loss of $47 million due to the rising fuel prices and also, the costs related to restructuring of Maersk. Its Chief Executive, N. Andersen said that restoring profitability to Maersk Line remained its top priority. New Aviation Duty on air cargo from UKAirfreight moving out of the United Kingdom could be hit by a new tax next year, the Government Aviation Duty. This new scheme based on the maximum take-off weight of each plane, may replace the current air passenger duty.According to analysts, if implemented, the airfreight rates will increase up to 20 p per kg. The Freight Transport Association (FTA) of the United Kingdom has already submitted to the UK Treasury Department, a study that shows that unless freight is exempted, the new tax would increase costs and reduce the competitiveness of exports from their country. The consultations with the different parties are expected to be finalised in the coming weeks. Furthermore, although the Aviation Duty would apply on outbound flights, it is feared that airline companies might extend charges on inbound services too. “All such a duty will achieve is to increase costs to shippers and air operators for direct UK air services, encouraging them to transfer goods by road to continental airports and then, fly them from there”, pointed out the FTA Head of global supply chain policy, Christopher Snelling. Indian construction firm launches logistics companyOne of the biggest construction companies in India, Gammon India, has launched a logistics company to serve the growing retail market of that country. During the first year, 3 billion Indian rupees will be invested in 10 to 12 locations, handling the entire supply chain from the farm to the end-consumer. Cold warehouses would also be set up.Gammon India is primarily involved in the execution of contracts for the design and construction of power stations, aqueducts, dams and industrial as well as marine structures such as harbours and container freight terminals. KPI for more accurate paperworkThe European Shipping Council (ESC) has produced a first draft of Key Performance Indicators (KPI)to help shippers and shipping companies reduce errors when preparing documents.Such errors lead to additional costs to be incurred by the shipping lines in checking invoices and transport documents before submitting a revised version. According to the ESC, cargo is damaged due to inappropriate handling and stowing owing to inaccurate paperwork. Delays can also be caused as a result of insufficient information about the cargo. Eight new container vessels for Cosco HoldingsCosco Holdings Co. Ltd, China’s leading shipping conglomerate, has expressed its intention to increase its capital expenditure this year by 37 percent to 23.3 billion yuans ($3.34 billion) so as to invest in new vessels and in port infrastructure.It plans to order eight container ships having a capacity of carrying 13,350 TEUs each and 17 dry bulk cargo ships. The new vessels will cost around $ 2.3 billion. Last year, Cosco Holdings net profits grew by 135% and 17 billion yuans were spent in capital expenditure. NOL wishes to merge with Hapag-LloydSingapore-based container shipping company, Neptune Orient Lines is looking into the opportunity of a merger with German container liner Hapag-Lloyd so as to expand its network.Hapag Lloyd's holding company, the German group TUI which is also involved in tourism, wants to sell the shipping company since it has never been able to achieve its target of making Hapag-Lloyd becoming the world's fifth-biggest container shipping group. A merger between Hapag-Lloyd and NOL would create synergies as NOL is strongly positioned on trans-Pacific routes, while Hapag-Lloyd services mainly trans-Atlantic and Asia-Europe routes. However, since that NOL major shareholder is a state-owned fund of Singapore, analysts predict that it would be unlikely that Germany biggest shipping group falls into foreign hands. Furthermore, A.P. Moeller Maersk of Danemark, CMA CGM of France and a Korean shipping company are also interested in Hapag-Lloyd. New cargo terminal to be constructed in Hong KongThe third air carrier of Asia, Cathay Pacific, has won a tender for the development and operational aspects of a new cargo terminal in Hong Kong.This project will require investments totalling HK$4.8 billion (US $618 million) and the construction works are expected to be completed by 2011. The agreement between Cathay Pacific and the airport will last twenty years. The new airport terminal will have a capacity of 2.6 million tons a year. Drop in freight rates from Asia to EuropeBoth air and ocean freight rates from Asia have dropped at the beginning of this year as a result of increased capacity and reduced consumer demand.Adhoc freight tariffs decreased from southern China to Europe during February and early last month, to Rmb 10-12 per kg (US $ 1.25 to 1.51), well below the Rmb 18-20 per kg (US $ 2.26 to 2.51) that were applied during the equivalent periods in 2007. The economic recession in the United States coupled to the appreciation of the Chinese currency have led to a fall in purchase orders. A spokesman from a freight forwarder in China expects the weak market to persist until August which will mark the beginning of the autumn and winter peak season. Kuehne + Nagel plans to expand its network in EuropeSwiss-based logistics multinational Kuehne + Nagel targets an annual turnover of 5 billion Swiss francs by 2010 in the road and rail unit. Furthermore, the firm plans to expand its network in the western and southern parts of Europe, through acquisitions in France, Italy and Spain.Klaus-Michael Kuehne, Chairman of the group, said that he expected an easing of growth rates this year due to weaker economic growth in the United States but added that booming emerging markets might support global growth. In 2007, invoiced turnover of Kuehne + Nagel grew by 15.3 percent over a year to reach 21 billion Swiss francs. Alitalia reduces its flights to Malpensa as second hubAlitalia intends to cut down its flights to Malpensa airport located in the North of Italy. Malpensa is Italy's biggest handler with an annual traffic of more than 400 000 tons of air cargo. The Italian air carrier uses the airport as a second hub.By halving its daily flights in the near future to 170 and opting for Rome, Alitalia intends to reduce the 200 million euros it currently loses a year. Moreover, a study initiated by the Chamber of Commerce of Milan, estimated that Alitalia’s move could cost Italy nearly 11 billion euros up to 2015 and 7 500 jobs. But the slots of Alitalia are coveted by British low-cost airline EasyJet which plans to make Malpensa its biggest base in continental Europe next year. The end of falling rates for dry bulk cargo?The Chief Executives of the world’s four major dry bulk carriers: DryShips Inc., Star Bulk Carriers Corporation, TBS International and Quintana Maritime said at an international forum held at the end of February, that demand for dry bulk shipments from China and other emerging economies, will offset dropping freight rates.In 2007, tariffs of dry bulk freight rocketed to record highs, attaining $200,000 for fully loaded vessels due to strong demand from China. However, since November of last year, the Baltic Exchange's chief sea freight index for dry commodities, which monitors major trade routes for coal, iron ore, cement and food commodities such as grain and sugar, plummeted by 47 percent. Furthermore, dry bulk freight rates are influenced by fears of recession in the United States and price negotiations of China for the importation of iron ore. New company to transport iron to ChinaChina is an emerging market and one of its main trading groups, Baosteel which imported last year nearly 34 million tons of iron ore, has entered into a joint-venture in Hong-Kong with China Shipping to form a marine firm.The new shipping company will be owned at 51 percent by China Shipping, holding company of China Shipping Development Co while will hold the remainder. The joint venture will use six cargo vessels with a total freight capacity of more than 1.5 million tons. A capacity that is expected to be doubled by the end of 2015. Emirates SkyCargo enters agreement with Dubai customsEmirates SkyCargo has entered into an agreement with the customs authorities of Dubai to increase the electronic exchange of information so as to facilitate the inbound and outbound movements of cargo at Dubai.Importers and exporters will be able to carry out about 50 customs transactions electronically. |