Overseas news:Severe congestion at the port of Nhava Sheva in IndiaDue to severe congestion at the port of Nhava Sheva in India, shipping company Maersk Line has applied as from this week, on all containers imported into India, a surcharge of 60 US dollars per 20 feet container and of 120 US dollars per 40 feet container on all shipments that do not require tariff-filing with the United States Federal Maritime Commission (FMC).Moreover, as from the 16th August, this congestion surcharge will be applied on all shipments that require tariff-filling. Nhava Sheva is facing congestion as the number of containers piling up there has gone beyond the capacity of the port terminals. Furthermore, Maersk Line and CMA CGM are diverting traffic from the port to mitigate the delays. Maersk Line is using the North India’s inland container depots via nearby Pipavav. The French shipping company CMA CGM is diverting containers with the agreement of customers to the port of Mundra situated in the north of Nhava Sheva on the west coast. Containers are burning on Charlotte Maersk130 containers are still burning on the foredeck of Charlotte Maersk, a vessel of 8 200 TEU. The blaze broke last Wednesday while it was heading to Salalah, Oman after it left Port Klang, Malaysia. One week after the fire continued despite four firefighting tug boats and two Malaysian Coast Guard vessels on the spot.A spokesman from Maersk Line said that: “the temperatures are very high, nearly 1000 degrees Celsius and it is impossible for firefighters to approach before additional cooling has taken place.” “This is one of the reasons why the fire extinguishing takes time and why it is difficult to estimate when the fire will be extinguished.” The shipping line added that it will discharge the remaining containers when it will be safe to do so and ensured that it would be carried out with a minimum of delay to the customers’ cargo. CMA-CGM will increase its container tariffsDue to the increasing volume of trade and lack of capacity on several routes, the shipping company CMA CGM will introduce a new rate restoration and a surcharge programme.As from the 13th July, a general rate increase of € 150 (US$ 190) per TEU will be implemented on cargo moving from Northern Europe to the Caribbean, with the exception of French West Indies and Guyana, Central America and the west coast South America. As from the 14th July, an increase of $250 per 20 feet dry container and $400 per 40 feet dry and 40 feet high-cube container, will be applied on the route between North-west India and Pakistan to Europe and the Mediterranean. At the beginning of August, there will be a rise of $250 per TEU on cargo moving from Asia to West Africa. In addition, as from the 15th July, CMA CGM will introduce a peak season surcharge (PSS) of $200 per 20 feet dry container and $400 per 40 feet dry and high-cube container, from South and East India to Europe and the Mediterranean. A peak season surcharge of $200 per TEU will be effective as from the 1st August on the trade lane between Asia and Northern Europe. Asian shippers complain about high container tariffsThe Chairman of the Asian Shippers’ Council, John Lu has voiced the feeling of its members that Asian governments should do more to protect shippers’ interests from ‘cartel’ action of shipping lines.He told the press that “freight rates have been going up artificially for so many months and shippers are suffering higher and higher costs. This is because of the cartel actions of shipping lines rather than market forces.” According to data from the firm of consultants Drewry, in June, spot container tariffs for transpacific shipping services have increased by more than 180% during the last 12 months. In addition, shipping lines have imposed high peak season surcharges on both the transpacific and Asia-Europe trades. According to the Chairman of the Asian Shippers’ Council, actual shipping capacity is still in oversupply but lay-ups and slow-steaming are creating an artificial shortage. “It’s obvious that it is collective action but it’s hard to prove.” John Lu praised the US Federal Maritime Commission (FMC) for having investigated into liner trade equipment and vessel capacity. He asked governments of Asian countries to take action. “Shippers are very pleased about the FMC’s investigation. Outside the United States and Europe, there is no protection for shippers.” Container repositioning surchargeDue to the shortage of containers in Asia, at least two of the leading shipping companies want to introduce an equipment repositioning surcharge.Freight forwarders in China are complaining about the lack of 20 feet boxes especially in northern China due the rise by about 23% of trade between Asia and Europe since the beginning of this year while carriers were expecting a single digit growth six months ago. Furthermore, with vessels using slow-steaming, there are more containers on the oceans than inland on westbound but also eastbound trades. Capacity is also tight since carriers had stopped investing in the production of containers since the severe economic downturn of 2009. With the peak season approaching, shippers will have to plan their supply chain or else, they may have to pay premium rates on ad hoc shipments. India’s Nhava Sheva port hit by severe congestionThe French shipping line CMA CGM is diverting containers with its customer’s approval, away from the congested port of Nhava Sheva to the port of Mundra which is found on the north of Nhava Sheva.The congestion is due to the high number of imported boxes stuck at Nhava Sheva’s terminals: JNPCT, NSICT and GTI. According to CMA CGM’s Line Manager for Europe and Indian Subcontinent, Christophe de La Ferrière, “this is due to poor evacuation of the imports containers towards the various inland container depots. Furthermore, productivity at the terminals is also impacted by delays in docking/sailing the vessels due to shortage of pilots in Nhava Sheva. Transit times to final destination for import containers are affected. It is also sometimes causing delays, mainly for containers coming by rail from inland origins.” On its part, Maersk Line has diverted its traffic to and from north India’s inland container depots via Pipavav to ease the congestion and provide better transit times. The carrier expressed concerns that with the monsoon and peak seasons approaching, the situation will take some time to return to normal. Container space tight on the Asia to Europe routesFreight forwarders expect that the volume of containers on the Asia to Europe trade route to be high during the next three months and are finding space on board vessels tight.The Senior Vice President of shipping line CMA CGM, Nicolas Sartini said to the press that the industry might be faced with a shortage of container boxes. “In terms of container availability, we are starting to see the impact of slow-steaming. It takes more time to bring back the equipment to Asia from Europe and the US, on any trade. Secondly, because of the difficulty in accessing credit for financing, there was a lack of container ordering in 2009, and also this year.” “The lines are faced with very strong demand and difficulty in getting efficient equipment in time." Due to the increased traffic, shipping lines will introduce new rates in July and peak-season surcharges. CMA CGM will implement a rise in rates during the third quarter on the Asia-Europe trade lanes of US $ 250 per TEU as well as a peak season surcharge of $ 200 per TEU with two weeks’ notice. A logistics hub to be constructed in ChinaThe Australian Goodman Group intends to set up a new logistics hub covering a surface area of 5 square km in the suburbs of Beijing.The project is expected to be completed within seven years. The Goodman Group, a property developer, has already invested in four logistic centres in Shanghai and the Yangtze Delta region, through Goodman China Logistics Holding fund in which the Goodman Group holds 80% stakes with the Canadian pension fund CPPIB. Shipping lines prepare themselves for the European peak seasonShipping lines are preparing themselves for the peak season due to start in July and they will increase capacity by putting more vessels in service but also, will raise their rates.According to analysts, the fleet of idle container ships has fallen from a peak of 1.5 million TEU to 549 000 TEU during the last six months since shipping companies are launching new services ahead of summer in Europe. Furthermore, as from 1st July, CMA CGM will introduce a peak season surcharge of 250 US dollars per TEU on the trade route between Asia and Northern Europe and a general rate increase of 200 US dollars per TEU. The various carriers are awaiting the delivery of 30 new vessels, offering a total capacity of 270 000 TEU. Several will join existing services or be put in service on new routes. Freight forwarders have noted a contraction in the availability of space on board container-carrying ships and expect capacity to remain tight during the months of July to September. Shipping lines prepare themselves for the European peak seasonShipping lines are preparing themselves for the peak season due to start in July and they will increase capacity by putting more vessels in service but also, will raise their rates.According to analysts, the fleet of idle container ships has fallen from a peak of 1.5 million TEU to 549 000 TEU during the last six months since shipping companies are launching new services ahead of summer in Europe. Furthermore, as from 1st July, CMA CGM will introduce a peak season surcharge of 250 US dollars per TEU on the trade route between Asia and Northern Europe and a general rate increase of 200 US dollars per TEU. The various carriers are awaiting the delivery of 30 new vessels, offering a total capacity of 270 000 TEU. Several will join existing services or be put in service on new routes. Freight forwarders have noted a contraction in the availability of space on board container-carrying ships and expect capacity to remain tight during the months of July to September. $1 billion invested at Kochi port in IndiaPort terminal operator DP World will invest 1 billion US dollars to make the southern port of Cochin, recently renamed Kochi, the first port in India having the infrastructure to handle the world’s largest container ships especially the 13,000-container ships that service the Asia to Europe trade routes.According to the Managing Director of DP World for the Indian sub-continent, Anil Singh, the objective behind the move is aimed at reducing the strong market share of the neighbouring port of Colombo on the sub-continent’s shipping trade with Europe. The port of Kochi will initially have a capacity of 1 million TEU a year and an additional 3 million TEU during the next five years. DP World has agreed to reduce the port fees which are more than 8 times higher than at Colombo. Currently, many Indian importers and exporters ferry their goods to and from Sri Lanka, Singapore or Dubai since that the new-generation container ships are unable to berth at India’s ports. South Africa’s ports hit by strikesPort operations at Richard’s Bay, Durban and Cape Town have been severely hit this week by strikes undertaken by employees of the South African state-controlled port operator Transnet, bringing the major ports to a standstill.About 85 percent of Transnet's 54 000 workers represented by their two trade-unions have rejected an11% salary rise and insist on a 15 percent rise. Transnet warned the trade unions that “acceding to demands for an across-the-board increase of 15%, which is three times the inflation rate, would not only fuel wage inflation, it will drive up our operating costs and force Transnet to either raise the prices it charges its customers and/or even consider cutting jobs.” The world’s largest airport will open in DubaiThe Al Maktoum International Airport is due to start its cargo operations on 27 June and begin to receive its first passenger traffic by the end of March 2011. It is located in the Jebel Ali area which has the largest port in the region.It has required investments of US$10 billion and will ultimately have six runways. The first stage of the airport development will comprise a single A380-compatible runway and a cargo terminal having a capacity to handle 250,000 tonnes a year. When the airport will be fully operational, the capacity will expand to 600,000 tonnes a year. In addition, a dedicated road link to Jebel Ali port is planned. “Dubai will no longer be a single-airport city,” told the airport CEO, Paul Griffiths. However, Emirates airlines has no intention to operate any scheduled service at Al Maktoum International Airport this year. Freight tariffs on the Asia-Europe route soarFreight tariffs on the Asia-Europe route are inflated by airlines, complain representatives of shippers due to backlogs in China and the Far East. Moreover, available capacity is allocated to the highest bidder without taking into account rates agreed in contracts.Nicolette van der Jagt, secretary general of the European Shippers’ Council, said that Asia to Europe ad hoc air freight rates have gone up to 400%. Furthermore, sea and air freight at Shanghai are currently suffering delays due to the Expo 2010 which will start on Saturday 1st May. Customs clearances and declarations are strictly monitored, with some shipments being released 24 hours later than usual. In addition, backlogs need to be cleared. “It’s really hard to find a trucker to take a container at the moment, and haulage rates are up by about 40%”, said Paul Tsui, the chairman of the Hong Kong Association of Freight Forwarding and Logistics. Sunny Ho of the Hong Kong Shippers’ Council added that delays and disruptions to cargo movements at Shanghai would cause a knock-on effect for Hong Kong and other Chinese gateways. Indications of sustained economic recoveryPort terminals in Singapore handled 10.4% more containers during the month of March compared to the month of February. In addition, the traffic was 10% higher than one year ago, indicating that the world’s busiest container port is recovering.Most containers at Singapore’s port are transhipped between the East and the West, especially to the European Union and the United States. The cargo movement is considered as a barometer of world trade. Furthermore, in Taiwan, the shipbuilder CSBC Corp is awaiting an order from shipping line Evergreen Marine for 12 new vessels each of a capacity of 8 000 TEUs. If the tender is accepted, the first new ship may be delivered in the second half of year 2013. Evergreen Marine is taking advantage of a sustained pick-up in demand throughout the world. Freight tariffs between China and EuropeAir cargo spot rates from China to Europe were around US $ 3.70/kg this week compared to a peak of $ 5/kg in the weeks preceding the Chinese New Year in mid-February.In the case of transportation by sea, there has also been a drop in tariffs due to lower demand and additional capacity following the introduction of vessels that were remaining idle. Spot rates from Shanghai had gone down to $1 917 per TEU from a peak of $2 164 in early March. “We usually see a drop in rates of around 10% at this time of the year, but rates are still high, historically,” told to the press the director of the Hong Kong Shippers’ Council, Sunny Ho. However, according to analysts, demand will pick up as from the second half of the year in the traditional build-up to the peak summer season in Europe. Container congestion at the South ports of IndiaIndia’s ports are suffering from huge congestion. An estimated 20,000 to 35,000 containers are in waiting in the arc between the South ports of Nhava Sheva to Tuticorin to be exported.Shipping company Maersk no longer calls at Tuticorin. In addition, it has reduced its service at Nhava Sheva. CMA CGM also lowered its capacity from India. Since that the handling capacity out of India’s ports lies between 10 000 and 12 000 TEU, the backlog may require about three weeks to be cleared. The shipping lines are looking for the payment of a premium, about $ 150 to $ 200 per TEU from India to northern Europe. Analysts expect that even if additional capacity is added on these routes, freight tariffs would not fall. A new maritime security agency for UKThe British economy is highly dependent on its ports as more than 90 % of all freight by tonnage enter or leave the United Kingdom by sea, stressed the British Ports Association.With the rise of piracy off the Horn of Africa and the terrorist events in Mumbai in 2008 which have shown the capacity of terrorists to exploit the sea, the British government plans to create by the end of 2010, a new maritime security agency to spot and eliminate any threat to its ports and shipping industry. Geopolitical analysts fear that that the spread of piracy off Africa may encourage armed groups to increasingly use the sea to spread terror, especially if counter-terrorism measures on land improve. Evergreen Marine expects return to profitabilityEvergreen Marine, the world’s fourth largest shipping company, is on the way to be profitable again during 2010 as container volumes are picking up with the global economic recovery.A spokesman from the Taiwanese carrier, Nieh Kuo-wei explained to the press that “the surging demand to replenish depleted inventory has led to several rounds of successful rate increases and substantially improves the profit outlook of the container shipping industry." Evergreen was severely hit last year by the excess cargo capacity on board ships and the economic downturn. During the second quarter of 2009, it reported a net loss of 1.976 billion Taiwanese dollars and 2.58 billion Taiwanese dollars during the third quarter. Towards greener container vesselsShipping company A.P. Moller Maersk has pledged to reduce the CO2 output of its vessels by 20% by year 2017.The big container carrying ships can each emit over 150 000 tons of CO2 during a year, 5 000 tons of sulphur coming from the heavy fuel oil they burn and other particulates that can be harmful to population living along the coastlines and near ports. As a result, ecological movements are strongly pushing for a carbon tax on shipping. Not long ago, even in 2007, the shipping companies were placing orders for huge and highly polluting container ships sometimes over 1 000 feet long, worth around $ 100 million dollars. Maersk operates a fleet of over 500 vessels, varying in size from the small ones with a capacity of a little over 1 000 containers to the Maersk Emma which can carry about 15 000 containers. The company is currently experimenting with a biofuel blend. Analysts estimate that 12% of the world's shipping fleet is now idled. 7-10% addition of tonnage expected in the global container shippingThe annual financial report of A.P. Moller - Maersk Group has been issued this week. Revenue during the year 2009 dropped substantially to 48 522 million US dollars from 61 211million US dollars in 2008.The Group Chief Executive Officer, Nils S. Andersen stated that “the loss is significant, but 2009 was an extraordinary year with historically low rates and low demand. We managed to limit the loss by saving around 2 billion US dollars and we will continue to strengthen our competitiveness even further. We expect to return to modest profits in 2010." The freight rates of A.P. Moller - Maersk Group container activities were, on average, 28% lower than in 2008. According to the Chief Executive Officer of A.P. Moller - Maersk Group, for 2010, 7-10% addition of tonnage is expected in the global container shipping market. Cargo volumes are expected to increase by 3-5% in 2010 compared to 2009 and freight rates also will rise. “This will lead to a significant improvement in results if the level of vessels taken out of service is sustained. However, rates are not expected to lead to an acceptable return in 2010”, he added. India’s rail freight tariffs cut down for food grains and keroseneIndian railways have cut freight rates for the transport of food grains and kerosene by 100 rupees per wagon.However, this measure is not expected to bring down prices but it will contribute to price moderation said analysts. Since the beginning of this year, prices of food items have increased by 18 percent, the fastest pace in 11 years, triggering protests from opposition parties resulting in parliament to shut down on Tuesday 23 February and pushing the government to act. Grain producers of India will increasingly use rail transportation instead of lorries as petroleum companies in India are awaiting the decision of the authorities of the country to review the price of fuel. The government of India is expected to cut subsidy bills that may raise fuel prices by about 10 percent. Following India’s budget decisions, private operators are now able to invest in rail infrastructure and run special freight trains. India’s rail freight tariffs cut down for food grains and keroseneIndian railways have cut freight rates for the transport of food grains and kerosene by 100 rupees per wagon.However, this measure is not expected to bring down prices but it will contribute to price moderation said analysts. Since the beginning of this year, prices of food items have increased by 18 percent, the fastest pace in 11 years, triggering protests from opposition parties resulting in parliament to shut down on Tuesday 23 February and pushing the government to act. Grain producers of India will increasingly use rail transportation instead of lorries as petroleum companies in India are awaiting the decision of the authorities of the country to review the price of fuel. The government of India is expected to cut subsidy bills that may raise fuel prices by about 10 percent. Following India’s budget decisions, private operators are now able to invest in rail infrastructure and run special freight trains. Stricter rules in the US for lithium batteries shipmentsThe Department of Transportation of the United States will introduce stricter rules on the shipments of lithium batteries especially by air. For freight forwarders, the number of packages would be affected and higher costs incurred by consumers and industries.Between March 1991 and September 2009, a total of 109 incidents have been reported all over the world, involving batteries that exploded, caught fire, or emitted smoke. These incidents resulted in 51 injuries and one death. Many came from the disaster of August 1999, in which one passenger died, 13 suffered critical injuries, and 14 had minor injuries, when a Taiwanese passenger jet exploded while landing. A subsequent investigation determined that gasoline from a leaky canister ignited sparks from a nearby 12-volt motorcycle battery. Cargo planes, not passenger jets, were involved in a majority of incidents (60%). Shipping lines under fire in PhilippinesThe Philippines International Sea Freight Forwarders Association (Pisfa) has accused shipping lines of forcing “unmitigated and unwarranted” charges onto shippers based in the Philippines.The president of the association, Nelson Mendoza, stated that the container seal fees and an “imbalance” charge on imports were the worst among the additional charges imposed by vessels in addition to container cleaning and seaway bill fees, detention penalties on cancelled bookings, demurrage and detention fees for cargo coming from North America and Asia. Nelson Mendoza added that these extra costs were passed on to traders by the freight forwarders, resulting in a negative impact on the competitiveness of products exported from the Philippines and pushing up the cost of imports The Philippines International Sea Freight Forwarders Association has requested an investigation on the shipping lines charges to be undertaken by the national Chamber of Commerce. Global demand for cargo space on ships increasesThe international firm of consultants AXS Alphaliner has pointed out that as demand for the transportation of cargo is growing, shipping lines are starting to return into service vessels that were laid up last year during the world economic crisis.The latest figures of AXS Alphaliner show that the fleet of idle container ships has decreased by 142 000 TEUs last month, from 581 ships at the beginning of year 2010 to 532 at the end of January. However, vessels that are not in active service still represent 10.4% of the total fleet. According to the analysts whose firm is located in Paris, “The outlook for the liner market has improved considerably over the last 12 months as both volume and rate increases appear to be resilient.” “There has been increasing optimism among operators, with a stronger-than-expected surge in demand in the period to mid-February.” Expected container tariff$ 2 000 per TEU between Asia and Europe:Extrapolation of the container rate index measured by Danske Bank, show that container trade from Asia to Europe is expected to reach US$ 2 000 per TEU in two months time.According to Danske Bank, shipping lines have the upper hand. “Many participants in our container index expect rates to hit $1 937 per TEU two months ahead, as carriers plan to take out more capacity following the Chinese New Year which will be celebrated on the 14th February.” “One participant complained that carriers currently have 18 different surcharges - including peak-season surcharges, even though we are way past the peak season.” Danske Bank has defined rate as the charge for a 20 feet dry container, including all surcharges except terminal handling charges, from the ports of Shanghai, Ningbo or Shenzhen to the European ports of Antwerp, Zeebrugge, Rotterdam, Bremerhaven or Hamburg. Japan Airlines filed for court-protected bankruptcyJapan Airlines (JAL) filed for court-protected bankruptcy and applied to the state-owned Enterprise Turnaround Initiative Corporation (ETIC) of Japan to obtain support for restructuring.ETIC and the Development Bank of Japan will provide JAL funds to the tune of 1 trillion yen ($11 billion) so as to keep the air carrier flying. Japan Airlines shareholders will be wiped out and creditors will forgo 730 billion yen in debt, with banks waiving 350 billion yen in loans, as part of the deal with the fund. Japan Airlines suffered a heavy drop in sales especially for international flights and cargo service. Its debts exceeded $25 billion. "JAL lacked strong governance and was unable to keep up with changing times," ETIC Executive Director Akitoshi Nakamura told at a news conference. Moreover, the air carrier will slash a third of its jobs, about 15 700 jobs and unprofitable routes to survive volatile fuel costs. Maersk Line reviews tariffs from North Europe to South AsiaThe Danish shipping company Maersk Line has announced that its dry cargo tariffs will be increased as from February 15 on the routes from North Europe and the Mediterranean to the Middle East and South Asia."The trading conditions for the carriers operating in these markets are still subject to unacceptable rate levels and the situation is unsustainable in the longer term," said a spokesman from the container shipping company. Rates of 20 feet containers will be raised by $100 and by $ 200 on 40 feet boxes. Last week, Maersk reviewed upwardly its rates on container shipping in the other direction from Asia and the Middle East to Europe. Freight tariffs on the rise between Asia and EuropeShipping line MSC will introduce as from the 1st February a new bunker surcharge on westbound exports from Asia.A charge of 505 US dollars per TEU will be levied on cargo originating from Asia and transported by MSC vessels to destinations in the Red Sea, Mediterranean, Black Sea, northern Africa, northern Europe, Scandinavia and Baltic regions. Furthermore, the Taiwanese company Evergreen has announced that it will increase its rates on the routes between the Far East/Indian sub-continent to Europe and the Mediterranean. The tariffs will rise by 250 US dollars per TEU as from the beginning of February. The price reviews are applicable on all cargo and commodities, including temperature-controlled and reefer freight. Mitsui O.S.K. Lines forecasts decrease in ordinary incomeAkimitsu Ashida, president of Japanese shipping company Mitsui O.S.K. Lines Ltd, forecasts a large decrease estimated at ¥10 billion in ordinary income for the financial year ending 31st March 2010.He attributes this decline to a series of adverse factors namely the Yen's appreciation, the high prices for bunker oil in addition to a large downturn in car carrier sea borne trade and a drop in the tanker markets. To support its business activities, Mitsui OSK Lines issued bonds worth 20 billion Yens last month. These corporate bonds will come to maturity in seven years. Last May, it also raised funds totalling 50 billion Yens through 5-year and 10-year bonds. CMA CGM undertakes financial restructuringFrench shipping line CMA CGM has obtained a loan of US $ 500 million from a group of banks for its debt restructuring.This loan will help the third largest ship carrier to be in a better position to negotiate with Korean shipbuilders the cancellation of orders and deferred delivery of new vessels. A capital increase is also planned for the second half of 2010 with the entry of new investors in CMA CGM. Furthermore, an Extraordinary Shareholders Meeting was held on the 23rd December to implement a new Board of Directors chaired by Jacques Saadé. Philippe Soulié will be appointed as Chief Executive Officer while Farid Salem, Rodolphe Saadé and Jean-Yves Schapiro will join CMA CGM as Chief Operating Officers. According to Jacques Saadé, Chairman of the Executive Board of CMA CGM, “With this agreement, our financial partners are sending a strong message and affirming their confidence in the Group. Our strategy to return to profitable growth is therefore proven to be valid. With the arrival of Philippe Soulié as CEO and experienced and independent Board Members, the Group now has the resources as well as a strong team in place to build on this new dynamic". Scanning of all containers moving to the US postponed to 2014The United States government has decided to delay by 2 years to year 2014, the implementation of the scanning of all containers entering its territory.Mauritius has already initiated action to comply by these future regulations. According to analysts, this postponement is due to several factors. The Department of Homeland Security (DHS) of the United States underestimated the extent of the task as well as the costs both to the US government and those of foreign countries. Furthermore, the current screening technology has a limited ability to penetrate dense cargo in containers. On their part, senior DHS and Customs and Border Protection officials acknowledged that most foreign ports would not be able to meet the initial target of July 2012 to scan all cargo moving to the United States. Several freight forwarders fear that implementing the requirements may slow down the movement of goods to the United States in the future and drive up costs. The port of Marseille freezes its tariffs next yearThe French port of Marseille is one of the latest European ports to announce that it will freeze its tariffs next year so as to help customers in a strained economic context and to enhance the competitiveness of the port. They hope that such a move will trigger a return to economic growth in 2010.The rates for all cargo including container, oil and bulk, will remain unchanged. Furthermore, rental charges for warehouses and yards will remain unchanged in 2010 and access to the port of Marseille rail network which is charged 31 euros per train, will be offered free. The ports of Antwerp, Rotterdam and Helsinki have all decided either to freeze or reduce port rates next year. Hamburg may also take similar measures. Evergreen increases its ratesThe Taiwanese shipping line Evergreen has announced that it will undertake rate restorations on three different trade lanes.Its rates on services from the Far East, including Japan, and the Indian Sub-Continent to Europe and the Mediterranean, will increase by US$300 as from the 1st January 2010. Moreover, tariffs from its Far East to Middle East services will rise by $75 per TEU on the 15th December and by $ 100 per TEU from the Far East to the Red Sea, Sri Lanka, Pakistan and Bangladesh. Evergreen added that the new rates would apply to all cargo and commodities, including reefers and special equipment. Indian Ocean is dangerous for shipping lines according to IIFThe International Transport Workers’ Federation (ITF) has warned shipping lines not to send their vessels through areas in the Indian Ocean affected by piracy due to the risks to seafarers.ITF maritime coordinator Steve Cotton said that “there are countries actively fighting piracy and there are owners training and supporting their crews to resist it. Then, there are others who are shirking responsibility and as good as accepting its steadily growing menace, which has now brought us to the point where one of the world’s great trading routes is now almost too dangerous to pass through.” "We have reached a dire situation where pirates act virtually unmolested, even if intercepted, with virtual impunity from arrest. It calls into question the very legality of continuing to send ships through much of the Indian Ocean.” “It is therefore imperative that not only must protective escorts be used but that flag states immediately decide on the protective measures that they must recommend for the ships that are flying their flag and that those ships’ operators comply with them.” Steve Cotton also invited the world’s largest ship registers to start providing vessels to patrol the Indian Ocean. CMA CGM to get its breakeven pointThe French shipping company CMA CGM expects to get back to its breakeven point by December due to the combined effects of its cost-cutting efforts and a rebound in both rates and container volumes.The cost saving measures of the Marseille-based carriers included the closing of secondary lines to concentrate volumes on the main lines, an increase in strategic shipping partnerships, redelivery of chartered ships, reduced logistics expenses and port expenditures and optimization of capacity to match transport demand. A spokesman from CMA CGM said to the press that its Asia-north Europe services, which account for almost quarter of its volumes, returned to profitability in October and its other routes are expected to reach breakeven point by the end of this year. In addition, the French shipping line will extend its super-eco speed program across all ships on ocean-going services to reduce fuel consumption and costs. Gatwick airport has been soldBAA which operates several 7 airports in the United Kingdom including Heathrow, Gatwick and Standsted in London, will sell Gatwick airport to an entity controlled by Global Infrastructure Partners, which also owns London City Airport and the port of Great Yarmouth.Out of the agreed selling price of £ 1.51 billion, payment of £ 55 million will depend on future traffic performance. The sale of Gatwick airport follows the UK Competition Commission investigation on airports. The commission came to the conclusion that BAA held a dominant position in airports in the United Kingdom that was damaging to competition and ordered it to sell Gatwick and Stansted airports as well as either Glasgow or Edinburgh airports. It is worth to note that BAA which is owned by a consortium led by Grupo Ferrovial of Spain, will now focus on improving Heathrow and its other airports. Imports from India expected to rise next yearNext year, imports of Mauritius from India may grow substantially with the introduction of a uniform national sales tax in that country.A new country-wide goods and services tax (GST) will be applied as from 1st April 2010. Legislators are currently studying the different tariff models. The different national, state and local taxes make distribution systems in India difficult and costly. Currently, a central sales tax (CST) is levied on the inter-state sale transactions of goods. Vijay Kelkar, chairman of the Finance Commission of India said that an effective GST would push up the country’s growth rate by an additional 2-2.5% and drive exports 10-14%, by eliminating barriers to trade. Furthermore, freight forwarders expect that more modern warehouses will be erected, helping drive international trade. A.P. Moller-Maersk launched bonds to raise fundsThe Danish shipping group A.P. Moller-Maersk launched last Friday an issue of euro bonds as part of the strategy to diversity its financing.This move constitutes the first of A.P. Moller-Maersk in the international capital market. The bonds which will mature in 5 years have attracted 750 million euros (US $1.13 billion). "With this transaction, we have taken the first step to include debt capital markets as a funding source for the Group with a view to diversify our sources of financing," said to the press, Maersk's head of finance Jan Kjaervik Proceeds will be used for general purposes and repayment of funds drawn on revolving bank facilities. The bonds which will be repayable in 2014 were placed with a coupon of 4.875 percent. Reduced capacity on shipping linesShipping line Evergreen has announced an increase in its freight rate of US $200 per TEU on its services from the Far East and Indian sub-continent to north Europe and the Mediterranean.The new tariffs will be applied as from 1 November on all cargoes and commodities. According to Evergreen, “present stronger space demands have come on the heels of reduced capacity announced for the fourth quarter of 2009, resulting in limited space availability.The increase will help restore financial losses and ensure continued quality service to Evergreen Line customers.” On the transatlantic side, the New World Alliance (NWA) – comprising shipping companies APL, Hyundai, MOL and Maersk will reduce their carriers’ capacity on these routes by around 30%. The TA3 service of Maersk between the east coast of the United States and Europe, on which APL and Hyundai charter slots, will be suspended in December. Sea-air shipments via Dubai pick upIn Dubai, sea-air shipments to Europe via the Middle East are beginning to pick up. Freight forwarders are turning back to the combined mode of transportation of sea-air to maintain the stock levels of their customers but also to control costs due to rising air freight tariffs following the removal of capacity resulting in less space available in the belly of planes on the Asia-Europe trade lanes.As a result, sea-air is gaining popularity. Peter Sedgley, the senior Vice President of cargo commercial operations of Emirates SkyCargo said that sea-air volumes via Dubai are expected to start gaining strength in the third week of October. "The concept of sea-air transport leverages the perceived reduced costs of sea freight against the speed of air freight. As such, it is not just driven by rates but it is a planned tool for continuous replenishment within the supply chain." TNT positions itself in Asia Pacific to seize forthcoming growthExpress delivery company TNT believes that the time is right to expand in the Asia Pacific due to encouraging recovery signs in the air freight market.TNT has started to use Hong Kong as its South China hub for its direct service to and from the TNT European hub located in Liege, Belgium. The direct service is ensured by a Boeing 747-400 freighter three times a week. "Customers will continue to grow. We think it's a good time to expand because that's in line with our strategy. We don't think that we should be waiting until late next year when the market has supposedly fully recovered from the crisis," said the regional managing director of TNT for Asia Pacific, James McCormac. Shipping lines look for short-term gains in AsiaShipping lines in Asia are sacrificing long-term customer relationships for short-term gains, complained a spokesman of Hong Kong Freight Forwarding and Logistics companies. He said that due to the withdrawal of many vessels from service, freight rates have increased from US$ 200 per TEU to $ 1 200 per TEU all inclusive on the Asia to Europe routes in the last 6 months.According to him, some sea carriers are leaving booked containers in the ports across Asia for an additional week or more despite service contracts, to take advantage of a shipper willing to pay a higher rate. Such short-term strategies by carriers prevent buyers from planning ahead as the shipping costs become unpredictable. Analysts fear that shipping companies may cut Asia to Europe capacity by 20% after the alliance between Coscon, K Line, Yang Ming and Hanjin carriers. However, this surge may be seasonal and temporary as European warehouses were low, needing replenishment. Shipping lines look for short-term gains in AsiaShipping lines in Asia are sacrificing long-term customer relationships for short-term gains, complained a spokesman of Hong Kong Freight Forwarding and Logistics companies. He said that due to the withdrawal of many vessels from service, freight rates have increased from US$ 200 per TEU to $ 1 200 per TEU all inclusive on the Asia to Europe routes in the last 6 months.According to him, some sea carriers are leaving booked containers in the ports across Asia for an additional week or more despite service contracts, to take advantage of a shipper willing to pay a higher rate. Such short-term strategies by carriers prevent buyers from planning ahead as the shipping costs become unpredictable. Analysts fear that shipping companies may cut Asia to Europe capacity by 20% after the alliance between Coscon, K Line, Yang Ming and Hanjin carriers. However, this surge may be seasonal and temporary as European warehouses were low, needing replenishment. Rail transportation project for freight in FranceThe French government projects to invest more than 7 billion euros to develop its rail freight network over the next 10 years. The funds will come from the French state but also from the railway infrastructure authority RFF and the state operator SNCF.The project named ‘Rail Freight of the Future’ will contribute to increase the share of rail of non-road transport from 14% to 25% by year 2022. The project aims at promoting combined transportation with more containers switching to rail, developing rapid rail links between airports, improving rail infrastructure to and from French ports and encouraging the setting up of local rail freight operators. In addition, several environmental benefits will be reaped including the reduction of more than 2 million truck trips on the roads of France per year and a fall of the CO2 emitted by the lorries by at least 2 million tons. Shipping companies expect their conditions to worsenAround 90 percent of the world's traded goods by volume are transported by sea. A survey carried out by law firm Norton Rose among 153 shipping companies throughout the world, indicates that these companies expect their conditions to worsen at least during the next 12 months due to the reluctance of banks to lend.63 percent of them predicted widespread bank enforcement of troubled shipping loans. In its report, Chris Hobbs, partner of firm Norton Ross pointed out that "unfortunately, major bank enforcements would appear to be inevitable as owners continue to struggle with the high finance costs of their assets in a collapsed market." He added that "we are likely to see tougher action from the banks starting in the last quarter of 2009, and I would expect that to last for a period of around a year before it eases off." The survey showed that nearly 80 percent of the shipping companies believed that lending would not return to pre-crisis level in the next three years. In addition, the oversupply of ships may enhance the financial pressure. According to the survey, the value of ships will continue to drop with 33 percent of the shipping companies expecting the lowest point to be reached in only six months. "In current market conditions many companies will struggle to survive without some material change," concluded the report. Airfreight growth back next yearReferring to worldwide cargo traffic, the regional director of cargo marketing of Boeing, Jim Edgar said at the Asian Aerospace Expo in Hong Kong that "this year, we are anticipating a deeper decline and it will be the first time in history that we will have two years of decline back to back".Air companies uploaded 11.3 percent less cargo last month compared to a year earlier. "The decline is slowing ... things are improving and we are hopeful, but there is a way to go yet," he added. Jim Edgar expects global air cargo traffic to return to growth next year, with the United States and China paving the way, especially when the global economy benefits fully the generous stimulus packages from governments. According to analysts, airfreight is a leading indicator of the health of world trade and air cargo growth typically precedes economic growth by a period of 3 to 6 months. New container terminal in South Africa as from OctoberA new deepwater container terminal will be operational in South Africa as from October 2009. Several shipping lines have expressed their interest to call at the new Ngqura Container Terminal whose construction was initiated to relieve neighbouring Port Elizabeth from congestion before recession started to hit the freight industry.South African state operator Transnet Port Terminals will manage Ngqura Container Terminal. The new terminal will have a capacity of 800 000 TEUs and two berths. Furthermore, its 16.5 metres draught will enable it to accommodate new generation container vessels carrying up to 9 000 TEUs.It will also be linked by rail to the rich Gauteng province, which contributes 33% to the economy of South Africa. Transnet is marketing the terminal as a transhipment hub for traffic from African markets as well as the east coasts of the USA and of South America. Net profits of A.P. Moller-Maersk decreaseDanish shipping group A.P. Moller-Maersk which owns Maersk Line and Safmarine, has reported a slightly higher than expected net losses for the first six months of 2009. A similar trend is expected for the second half of this year.From January to June 2009, the losses amount to 3.02 billion Danish crowns ($577.4 million) compared to profits of 11.98 billion crowns during the same period last year. The shipping group has been hit by the global economic crisis. Freight rates of the group’s container shipping activities were 30 percent lower while volumes dropped by 7 percent, with respect to the first semester of 2008. A spokesman from Maersk said that "the outlook for the remainder of 2009 is subject to considerable uncertainty, not least due to the development in the global economy." Average freight rates, including bunker fuel surcharges, are expected to remain at the same level up to December 2009. Maersk wants to take over insolvent competitorsThe Chief Executive of shipping company Maersk Line, Nils Andersen said to a German magazine WirtschaftsWoche that his group intends to take over insolvent competitors or individual freighters considering that such by adopting such a strategy, they will achieve the cheapest options to expand during the current economic crisis.The Chief Executive of the Danish shipping group A.P. Moller-Maersk, added that the conglomerate will spend about 6.5 billion euros (US $9.28 billion) this year and plans to invest in special freighter vessels for Africa and South America. A percentage will also be invested in the development of new and existing harbours such as the container terminal they manage in Nigeria. However, the group is considering selling its passenger and car ferry business. Freight Forwarders in the US switch to sea freightFreight Forwarders in the United States specialised in perishable products, pharmaceuticals and high-tech goods are redesigning their supply chains to use increasingly sea freight. By the end of this year, the airfreight industry may lose up to more than a third of its traditional business due to this shift in the mode of transportation.“The shift to ocean freight has been substantial and due to the cost pressure, many former users of air freight such as high-tech and telecom have adapted their supply chains accordingly. So we do not believe this freight will come back to a great extent to air”, said Robert Frei, head of corporate airfreight at Panalpina. However, according to Mark Mohr, manager for product development and speciality sales at Continental Airlines, “with consumer demand being highly volatile, it would seem to indicate more frequent ad hoc air moves when inventory levels weaken. Ocean shipping requires a pretty predictable level of inventory management. Once consumer demand picks up, the uncontrollable nature of fuel costs is going to force companies to move operations closer to end-user markets as the costs will destroy any advantage that the lower cost, long distance modes currently enjoy.” New maritime liability regime to be introducedA new maritime liability regime known as the Rotterdam Rules will be introduced in the near future.These new regulations, the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, had been adopted by the general assembly of the United Nations last year and will come into force as soon as 20 countries will ratify the legislation. The Rotterdam Rules will replace the Hamburg and Hague Visby compensation regimes for the international carriage of cargo and will supersede the trade legislation of any country. Shipping lines, commercial associations and the United States shipper organisation, the National Industrial Transportation League, have expressed their support for the new maritime liability regime. However, Europe’s freight forwarding association, Clecat and the European Shippers Council are strongly against it as sea freight is governed by different rules in different countries. It is worth to note that in airfreight, all aspects are covered by the Montreal Convention. Aggressive restructuring plan for UK Widdowson GroupThe British logistics group Widdowson has initiated an aggressive restructuring plan after the Leicestershire group recorded a 500 000 pounds Sterling loss for its last financial year.Widdowson has renegotiated contracts with may of its suppliers and is now pushing for the development of niche operations and added-value services such as pick and pack, pallet storage and inspection, repair services of around 2 million pallets each year. Its Chief Financial Officer, Arnaud Arhainx said that the first problem was to work out an ideal size for the group, to maintain service level and flexibility. “My role was to audit the business and rebuild the budget. We could cut more but if we did, we would start affecting the service level”, he pointed out. “We have the flexibility to take work on without spending a penny more.” Road and rail haulier has won Tesco transportation contract in the UKBritish road and rail haulier Stobart Group has won this week a contract to work with the biggest retailer of the United Kingdom, Tesco.The contract worth about 25 million pounds a year, involves the transportation of Tesco's non-food products as from the coming August. The goods coming by sea and rail will be centralized at Stobart distribution centre in Middlesbrough before their onward distribution to regional distribution centres and Tesco's stores throughout England. Furthermore, the Chief executive of the Stobart group, Andrew Tinkler said that the transport and logistics group has entered into talks with the owner of Network Rail to find redundant land or line where it could build freight terminals. The first target is the Midlands Main Line. Stobart plans to shift ten per cent of its freight to rail by next year. Maersk magnate offers himself his 8th yacht for his birthdayThe Danish shipping magnate and owner of A.P. Moller-Maersk Group, Mc-Kinney Moller has offered himself a sailing yacht of 82 feet long for his 96th birthday this week.The boat built in Finland, has cost him US$ 11 million. Unlike his seven previous yachts, he has christened it “klem” which means “hug” in Danish language but according to his relatives, the word ‘klem’ is formed by the first initials of the names of his daughters Kristen and Leise as well as that of his late wife Emma Maersk. Mc-Kinney Moller retired as chairman of the Maersk Line in 2003. Evergreen to scrap a sixth of its fleetThe world's fourth-largest container line, Evergreen Marine will remove a sixth of its fleet of 180 ships during the next four years due to the lack of clear signs of economic recovery.The company Evergreen which is based in Taiwan plans to dismantle 31 old cargo vessels when they will reach retirement age and to sell them as scrap metal. "The shipping industry is facing severe challenges because of the global financial crisis," said an official of Evergreen to the press. "Our chairman said this year would be the most difficult year for the industry because there is an oversupply of ships since the crisis struck. Basically, companies constructed too many ships in 2007 and 2008." Evergreen recorded a loss of US $83 million during the first three months of this year, following a steep decline in demand on long-haul routes. Analysts expect the company to still be in the red in the second quarter. Freight tariffs on the rise due to piracyAccording to marine insurance brokers, insurance companies are charging between 0.05 percent to 0.175 percent of the value of a container vessel that moves through the Gulf of Aden, In may of last year, the insurance rate was between zero and 0.05 percent.Piracy has flourished recently off the busy Gulf of Aden used by nearly 20,000 ships but also in Indian Ocean shipping lanes. A container shipping line said that it has introduced a surcharge on all cargo transiting through that region to cover additional costs including crew risk compensation. "The cost of keeping global trade routes open could result in a growing 'piracy tax' that will be felt by a wider range of businesses and consumers, already battered by the effects of recession," said insurance company Lloyd's. Some shippers are already avoiding the Gulf of Aden and going around the Cape of Good Hope. However, this deviation adds as much as three weeks to transit times and increases transport costs. A.P. Moller-Maersk said some of its vessels with low freeboard, the distance between a ship's railings and the water, and low speed are re-routed around the Cape. UK freight forwarders review their work practicesFreight forwarders in the United Kingdom are adjusting their work practices following a court judgment last month against Uniserve following the theft of a pallet at its warehouse in Manchester.Uniserve was found fully liable for the theft of a 300 kg pallet of goods, which was delivered by error to a client at its warehouse in Manchester instead of the airport in Manchester! Uniserve was ordered to pay the 375 000 pounds Sterling claim and the costs of the court case which has lasted over six years, totaling more than 1.4 million pounds Sterling. Although the freight forwarder operating under limited liability terms and conditions, it was found uninsured with unlimited liability as a result of a supply chain error caused by a third party. Susan Maloney, the director of another British freight forwarder SBS Worldwide, said, “you can see how easily something like this can happen in a busy warehouse, where things can turn up without much documentation.” CMA CGM will review its freight rates from Asia to EuropeAs from the 1st July, shipping line CMA CGM will increase its freight rates in the Asia-Europe trade.The new tariffs will be applicable to all cargo and commodities that are transported westbound from Asia to Europe. A quantum of 300 US dollars per TEU has been set. Moreover, as from the same date, CMA CGM will invoice separately the BAF (Bunker Adjustment Factor) from the freight rate. The BAF on the Asia to Europe trade will be reviewed from 281 US dollars per TEU to 333 US dollars per TEU to reflect the evolution of oil on the international market. In addition, a PSS (Peak Season Surcharge) may also be applied on the same trade as from beginning of August. Cathay Pacific CEO says air cargo business is stabilisingThe International Air Transport Association (IATA) has nearly doubled its forecast for losses of air carriers in 2009. An estimated amount of $9 billion is at stake.Giovanni Bisignani, IATA Director General, said at the organisation's annual meeting in Kuala Lumpur, Malaysia, "our industry is in survival mode. I am a realist. I don't see facts to support optimism. This is the most difficult situation the industry has faced." According to IATA, air cargo demand has fallen by nearly 22 percent in April. It is the fifth consecutive month that a decrease of more than 20 percent is reported. Demand for air cargo has decreased dramatically as retailers have reduced their orders of new stock. However, the Chief Executive Officer of Cathay Pacific Airways said that its cargo business is stabilising. However, the pickup will depend on the return of demand from major Western economies. "On the cargo side, things have stopped getting worse," he added. Hong Kong's air carrier has recorded a 24 percent fall in revenue derived from passenger and cargo during the first three months of 2009. Cathay Pacific Airways has cut capacity, asked its personnel to take unpaid leave, and has agreed with aircraft manufacturer Boeing to delay deliveries of two 777-300ER planes by a year to 2010. IATA sources said that although new plane design offered more capacity and precious savings in fuel costs, however, many airlines postpone deliveries due to a shortage of financing for final payments. Mitsui looks to consolidate its container division with an allyJapanese shipping company Mitsui O.S.K. Lines Ltd plans to consolidate its container division with that of another company so as to turn around the loss-making business. Not only the container tariffs are unprofitable as a result of oversupply, the number of containers transported has curbing down.The senior managing executive officer of Mitsui O.S.K., Kenichi Yonetani, said that there would be more benefits in consolidating the business with that of a foreign ally than a Japanese rival such as Nippon Yusen KK or Kawasaki Kisen Kaisha, as there would be no overlap of facilities. Mitsui O.S.K. expects a loss of 20 billion yen in the container division for the financial year ending in March 2010. During the previous financial year, it recorded a loss of 21.3 billion yen loss. However, on the commodity market, the shipping line has been able to avoid plummeting rates through long-term contracts. Furthermore, the strong demand from China for iron ore, has contributed to increase the average daily charter rate of capesize bulkers from $18 000 on April to $93 000 at the beginning of this month of June. "If the average rate stays above $50,000 throughout the year, that would have a positive impact on our earnings," added K. Yonetani. Even if the charter rate falls to $25 500, Mitsui O.S.K. will be able to achieve a group pre-tax profit of 80 billion yen ($ 833 million) for the financial year to March 2010. Container rates on the riseMaersk Line and CMA-CGM have announced that their container tariffs would be upwardly revised on several routes.The rates of Maersk Line on southbound services from northern Europe to North Africa, east as well as west Mediterranean, have been increased by US$ 100 per TEU. Furthermore, as from the 1st June, westbound services of Maersk Line from Asia to the Mediterranean, North Africa and the Adriatic, will go up $ 250 per TEU. Concerning French carrier CGM CMA, its rates will also be increased as from the 1st June on its services from Asia to the Mediterranean, Black Sea and Adriatic by $ 200 per TEU and a further $ 200 on 1st July. Eastbound services will rise by $ 150 per 20 feet container as from the 1st July. Maersk said that the rate increases were necessary to continue to operate our services with the high level of reliability our customers have come to expect. A.P. Moller-Maersk records higher than expected net lossShipping group A.P. Moller-Maersk has recorded a higher than expected net loss of 2.13 billion crowns ($390 million) for the first three months of this year. During the corresponding period last year, a profit of 5.03 billion crowns was generated.The Danish group has not reported a net loss since World War Two and it has already warned investors that the full year 2009 might also result in a deficit. The downturn is attributable to the fall in global trade and freight rates. Maersk Line transported 14 percent fewer containers in the first quarter of 2009 compared to 2008 while freight rates had dropped by an average of 24 percent. Between Asia and Europe, the world's biggest trade route, its rates had been reduced by 44 percent. "The increase in new ship tonnage caused the situation to deteriorate and the container activities realised a negative and unsatisfactory result for the first quarter of 2009," said a spokesman from Maersk. Besides shipping, A.P. Moller-Maersk group pumps oil from the North Sea, Qatar, Algeria and Kazakhstan. According to analysts, the container market may recover this year, due to the economic stimulus packages that implemented all over the world and to decreasing overcapacity. |