Overseas news: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 ($390 million) for the first three months of this year. During the corresponding period last year, a profit of 5.03 billion crowns was generated.The Danish group has not reported a net loss since World War Two and it has already warned investors that the full year 2009 might also result in a deficit. The downturn is attributable to the fall in global trade and freight rates. Maersk Line transported 14 percent fewer containers in the first quarter of 2009 compared to 2008 while freight rates had dropped by an average of 24 percent. Between Asia and Europe, the world's biggest trade route, its rates had been reduced by 44 percent. "The increase in new ship tonnage caused the situation to deteriorate and the container activities realised a negative and unsatisfactory result for the first quarter of 2009," said a spokesman from Maersk. Besides shipping, A.P. Moller-Maersk group pumps oil from the North Sea, Qatar, Algeria and Kazakhstan. According to analysts, the container market may recover this year, due to the economic stimulus packages that implemented all over the world and to decreasing overcapacity. OOCL will introduce a ‘container seal fee’The forthcoming introduction of a fee by Orient Overseas Container Line (OOCL) for its container seal, has triggered waves of protest. The chairman of the Shenzhen Shippers’ association, Toaln Lam, said that the additional charge was “unjusified” at a time when shippers are struggling financially.As from the 13th May, OOCL will apply a 25 Rmb ($ 3 US$) charge per seal on all its containers originating from the ports of Hong Kong, Macau as well as from several provinces of China including Guangdong, Guangxi, Guizhou, Hainan and Yunnan. Shippers’ associations do not understand why OOCL has to charge for a seal which helps protect the carrier from liability of the container’s content. The director of the Hong Kong Shippers’ Council, Sunny Ho found that OOCL is unfairly trageting South China exporters which are already faced with the problem of higher terminal handling charges than in other regions of China. He added that OOCL imposes a fee without providing a new service or adding value. “We will be protesting against local authorities about these ruthless actions designed simply to raise extra finance.” Niche markets are growingOn the international front, logistics providers are looking to expand into niche sectors such as pharmaceuticals that appear to be more resilient to the global economic crisis.Demand is growing for pharmaceutical products due to the ageing population needing increasing availability and affordability of drugs. However, this market is highly regulated. Healthcare makes up 15 to 20% of the business of NYK Logistics in the United Kingdom. The freight forwarder imports the medicines from outside the European Union, from India, China, South America and other sources, to its 16 250 square metres, temperature-controlled high-security site in Northampton. According to the head of pharmaceuticals at NYK Logistics, “We don’t see the same peaks and troughs you see in other areas and it can be expensive, although that depends on whether you are trying to offer a full range of services or just warehousing, But the barrier to entry is meeting regulations set down by the Medicines & Healthcare Regulatory Authority, which are quite strict.” Ports operators face overcapacity and increasing competitionThe Ports operator, PSA which manages port operations across the world, fear that the container trade which has hit the bottom due to the economic slump, may lead to overcapacity and increasing competition between the ports before the global trade volumes pick up.Kuah Boon Wee, Southeast Asia Chief Executive of PSA International, stated at a shipping conference in Singapore that he is “quietly confident that physical trade in terms of containers has actually bottomed... and the trend moving ahead is likely to be positive." He added that some ports in the region, including those in Indonesia, southern China, the Straits of Malacca and North Asia, are in "structural overcapacity". Furthermore, the drop in container trade due to the global financial crisis has had a negative impact on port operators and shipping companies such as Singapore's Neptune Orient Lines to reduce capacity and axe jobs. "Competition is likely to increase in the short-term. The drop in ports is across the board -- it's endemic -- it will take time to improve," added Kuah. "Global trade will rebound, and I think it will probably rebound with more Asian characteristics -- we are going to have to rely more on Asian-centric demand." On his part, Jesper Praestensgaard, the Asia Pacific Chief Executive of Maersk Line, stated during the conference that the current recession would drive consolidation in the industry, but he did not see it happening right now as companies are focusing on their own financial health. Somali pirates threaten international tradeThe increasing number of hijackings by Somali pirates on container vessels and pleasure ships in the strategic trade routes off the Northern East coast of Africa, threaten international trade despite intervention by European naval forces.Nearly 20 000 ships use the Gulf of Aden each year, heading to and from the Suez Canal. The Gulf of Aden and Suez Canal are the main trade routes for dry commodities and containerised cargo between Asia, Europe and the United Sates. The major shipping operators, which carry 90 percent of the world's traded goods, are considering bypassing both the Gulf of Aden and Suez Canal. According to analysts, the alternative trade route, round Cape of Good Hope of South Africa, would add three weeks or more to the trip, increasing the cost of goods. Last week, there had been 25 attacks on vessels off the east coast of Somalia resulting in seven hijackings this year. In 2008, there had been 293 incidents of piracy against ships worldwide. These attacks have brought a Combined Task Force into action. This multinational unit is based in Djibouti and has helped several vessels attacked by pirates. The coalition and other navies are communicating with each other and sharing information on patrolling the area. Lufthansa Cargo reduces freight capacityLufthansa Cargo has grounded around 20% of its air freight capacity to adjust to dropping market volumes.It has reduced services on its previously high-frequency routes to and from Asia, the United States and Africa. Africa remains the most stable market, followed by South America. “Everywhere where there is automotive and high-tech, has been affected”, stated Lufthansa Cargo Chief Executive Officer, Carsten Spohr. However, he said that high-value cargo, pharmaceuticals and temperature sensitive products, are more stable. Furthermore, Lufthansa Cargo sister airline based in China, Jade Cargo International, is in quest of new markets due to the rapid fall in demand for air freight capacity from China to Europe. It has just started a China-India-Africa service using one of its six B 747-400 freighters to tap the traffic flows of machinery from China to Africa, as well as pharmaceutical goods from India to African countries. Somali pirates near SeychellesSomali pirates hijacked near one of Seychelles’ islands, an oceanographic research vessel named the Indian Ocean Explorer, this week. A few weeks ago, pirates seized the yacht Serenity with three persons on board. The Seychelles government believes that the seven crew members of the Indian Ocean Explorer are safe and that the vessel is heading towards Somalia.After European warships have been sent off the coast of Somalia to protect container vessels and other ships taking the busy maritime lane linking Asia and Europe, the Somalian pirates have moved to the remote waters of the north of Madagascar and near the Seychelles. They look for ransoms and usually release the ship and its crew once they have been paid. The Seychelles government said that it "will act within the limits of what we can do, and within the limits of all international assistance that can be mobilised, to try to secure the release of all these people on board the Indian Ocean Explorer and the ones taken some time back on the Serenity." International news-The Freight Transport Association of the United Kingdom has published a guide about the use of rail freight in that country. Moreover, nine railway groups have asked members of the European Parliament to vote on the 31st March in favour of intermodal freight priority on several stretches of the rail track in Europe where road traffic is at a high density.-The textile manufacturer Mango has selected British freight forwarder Lloyd Fraser to take charge of all its logistics in the United Kingdom. Lloyd Fraser will handle the sorting and consolidation of clothes before distributing them to the 30 stores belonging to the Mango network throughout the United Kingdom. -The government of Hong Kong is looking for land to lease so as to store the empty containers that have built up due to falling cargo movement. At the neighbouring port of Yantian in Shenzen, 400 000 boxes are piled up. A.P. Moller-Maersk to reduce costs by $ 1 billionThe Chief Executive of Danish shipping group A.P. Moller-Maersk, Nils S. Andersen said that in addition to cuts already announced, it plans to reduce costs by $1 billion this year.“The world has changed, and we have to adjust to the new global reality. We cannot go on doing business as we have done until now," stated N.S Andersen in the company employee magazine, the Maersk Post. A.P. Moller-Maersk will be affected this year by low oil prices, overcapacity and loss-making freight rates on some routes. "Given the current market conditions, this means we have to reduce investments and improve cash management," added Andersen. "We need a cost-leadership mentality. Not being cost-competitive, benchmarked against the best competitors, means we risk our company's long term survival." Maersk Line slashed its workforce by about 3,000 last year. "When the year is over we want to be able to say: Maersk Line outperformed competitors, improved profitability and has satisfied customers while continuing to grow its market share," concluded Andersen. Changes at Deutsche PostGerman company Deutsche Post has devised a new strategy for DHL in view of the economic slowdown especially as the express delivery sector is expected to face a bleak couple of years.In a new restructuring move, Deutsche Post will bundle its freight, supply chain and express delivery businesses under the DHL brand and change the name of the group into Deutsche Post DHL. According to financial analysts, the previous changes undertaken by Deutsche Post during the last months, disappointed shareholders. Its share price has dropped around two-thirds in the past 12 months. Deutsche Post tried during several months to fix problems at the DHL express unit in the United States before giving up and closing it down, slashing a total of 14,900 jobs. The decision has hurt talks which had been going on for months for airfreight cooperation with rival UPS. Analysts are of opinion that this strategy may enable Deutsche Post to yield higher dividends yields as it has reduced its exposure in the U.S. express delivery market, where it had for five years not been able to win market shares against U.S. rivals UPS and FedEx. Changes in rates between Asia and Latin AmericaShipping company Maersk Line has decided to restore its tariffs on the routes from Asia to Latin America as from the 1st April.According to a spokesperson of Maersk Line, “It is a fact that carriers operating in the markets between Asia and Latin America have experienced unacceptable rate levels which are unsustainable for the rest of 2009.” Between 300 and 500 US dollars will be added on each 20 feet container. On its part, the French sea carrier CMA CGM will, as from the 26th of this month, rationalize its SEAS service, which it operates in partnership with China Shipping, Maruba and K Line. The SEAS 1 and SEAS 2 loops will be merged into one single string, which will be serviced by ten 2 800 – 4000 TEU vessels. The new rotation will call at Qingdao – Pusan – Shanghai – Ningbo - Chiwan – Port Kelang – Rio de Janeiro – Santos – Buenos Aires – Montevideo – Rio Grande – Paranagua – Sao Francisco Do Sul – Santos – Durban (Eastbound) – Port Kelang – Hong Kong – Qingdao Furthermore, Xiamen and Hong Kong (Westbound) will be connected by feeder vessels. “On the Asia – Latin America trade, November to June is traditionally a slack season. In order to adjust to the current economic situation and to better adapt its offer to the market demand, CMA CGM Group together with its partners has decided to reduce capacity by 35% by merging its two SEAS services while deploying larger ships and improving cost efficiency”, explained Jean-Yves Duval, Deputy Vice-President. Both shipping lines said that the changes aim at providing their customers with a reliable and quality service. Shipping lines plan to increase their tariffs between Asia and EuropeA few shipping lines are planning to increase their container rates as they find them unsustainable at current levels.Japanese company MOL stated to the press that it intends to review upwardly its eastbound and westbound tariffs on the trade between Asia and Europe. Its westbound rates would be increased by 300 US dollars per TEU in April and by 200 US dollars on the leg between Asia and Europe. A spokesman from MOL explained that “various measures undertaken by carriers until now, like void voyages, merger of loops, cancellation of services and slow-steaming, cannot be viable answers to increasingly sophisticated supply chain demands. The economic downturn needs utmost attention by the service providers and further service disruptions would not serve the supply chains.” Hapag-Lloyd expressed its wish to increase its rates on all routes. The shipping line said that it was looking to rise as from April; its Asia-Europe rates as freight tariffs had reached a level that no longer covered costs complained Hapag-Lloyd. On its part, CGM-CMA has frozen its rates and has “not yet decided on any increase.” Lighter air cargo boxes introducedLufthansa Cargo and ULD lessor Jettainer have introduced on the market one thousand lighter air cargo containers on a test basis in view of reducing operational costs. The new boxes are 15% lighter than the conventional LD-3 airfreight container, which weighs about 80 kg.The trial will cover Lufthansa’s global network up to September/ October of this year. The managing director of Jettainer, Alexander Plumacher pointed out:“International aviation has used conventional aluminum containers for the transport of cargo and baggage for many decades. With the new lightweight containers made of composite materials, the global airline industry can reckon to deliver annual fuel savings in the upper double-digit million range.” On his part, the German airline cargo operations director, Karl-Heinz Kopfie explained that every kilogram less weight on its aircraft saves kerosene and lowers costs. The tests will also focus on the repair frequency of the containers and whether the reduction in idle time due to repairs will have an incidence on the overall quantity of containers required. Shipping lines adopt new strategies against falling ratesOn the Asia-Europe trading routes, the tariffs have dropped to an all-time low of 350 US dollars per TEU, including bunker adjustment factor and currency adjustment factor. Analysts firm Dewry expects volumes on these routes to decrease by about 4% this year.Shipping lines have elaborated strategies to face the falling freight rates. They are adjusting capacity by restructuring services, slow steaming which has the advantage of decreasing fuel consumption and laying up ships. In addition, shipping lines are off-chartering ships and calling at other ports to help absorb capacity. However, if bunker fuel price continues to fall, slow steaming would no longer be efficient. Moreover, the end of the conference system in October of last year may be another factor that will make future freight rises difficult. Shipping lines find that the current rate levels on the Asia-Europe routes as unsustainable in the long run considering the low utilisation rate of vessels, around 83%. Indonesia will launch on line licensingFreight forwarders will benefit from shorter procedures both for import and export with Indonesia in the coming months as the new on line licensing system is rolled out.The National Single Window (NSW) will be a centralized electronic system for licensed importers and exporters, designed to remove bureaucracy and tackle corruption. The Finance minister of Indonesia said that importers would deal directly with the NSW team rather than having to pay illegal fees to port officials. Currently, according to the World Bank Ease of Doing Business index, importers in Indonesia must wait an average of 27 days and spend US $ 660 per container for customs clearance, port documents and handling procedures. Global container traffic declinesThe Chief Executive of A.P. Moller-Maersk, Nils S Andersen told the press that the shipping industry was unlikely to recover before the end of 2010. He added that his company does not plan to buy smaller rivals.He termed freight rates as near the bottom after a sharp fall during the last months. Shares of Maersk have fallen around 18 percent during the last three months and about 36 percent over the last year as recession fears grow. Maersk will remove eight container vessels from service while the world's number two and three container shippers namely Mediterranean Shipping Co and CMA CGM, have stopped several routes linking Europe and Asia. The seventh biggest player in the industry, Neptune Orient Lines of Singapore, has already announced that it would cut 9% of its workforce, about 1 000 jobs due to the falling demand for goods. Shipping lines are also calling at more ports directly to reduce feeder costs. In the United States, cargo traffic at the major ports has fallen for 17 straight months. "We don't expect a significant increase in traffic at the ports until retail sales return to normal levels, and even then retailers will be careful not to over-stock," said Jonathan Gold of the National Retail Federation. Port activity is a key economic indicator because it reflects consumption and trade. Container volume at the U.S. ports may fall 5.6 percent in the first three months of 2009, according to Port Tracker. Freight Forwarders in Hong Kong hit by recessionFreight forwarders in Asia are making cutbacks and streamlining operations due to the drop in demand for export.According to Walther Nahr, chairman of the ‘Hong Kong Association of Freight Forwarding and Logistics’, “ this is affecting everybody in forwarding and logistics very seriously. There has been a dramatic change over six moths. Lots of companies have been making redundancies and most have introduced an employment stop.” Fortunately, none of the members of the ‘Hong Kong Association of Freight Forwarding and Logistics’ have been forced to close. Pressure is also growing on barge and feeder operators linking the smaller ports of China with Hong Kong. It is estimated that 25 000 factories in the Guangdong region in Southern China, have closed during the last months and almost 5 000 toy manufacturers, impacting negatively on freight forwarders’ export volumes. Walther Nahr also pointed out that freight rates from leading Asian ports to north Europe have come “closer to $ 100” while the rate in May of last year stood at $ 1 500 per TEU. Nahr added that the Hong Kong and Chinese governments were taking initiatives to free up credit facilities for exporters. “We were affected earlier than everyone else so we’ll recover first. Eventually, the shelves will be empty and people will have to obtain certain things so retailers will start to restock. This could be in the second half of the year.” Panalpina wants to acquire freight forwarding firmsPanalpina, one of the world’s largest freight forwarders, will go forward with its acquisition plans during the next 12 months despite the current economic slowdown.A spokesman of the company said that financing any acquisition would be "no problem at all" as it had practically no debt. It also had a strong minority shareholder that would back such an acquisition. "We are constantly monitoring the market for acquisitions, but there are no specific companies on the monitor or any acquisitions in the pipeline, " he added. "Panalpina’s policy is not to look for huge acquisitions or mergers. We are only looking for companies that could benefit from a takeover and could benefit us - either in terms of geography, areas of the world where we need strengthening, or in a field of expertise.” Expansion would probably be in the direction of Asia and Eastern Europe. Many opportunities may arise as some under-capitalised or highly indebted companies may face difficulties. In the past, Panalpina bought competing firms with the strategic objective of eliminating them or of increasing critical size. With the current economic situation, there is potential for a lot of companies to get in trouble and becoming likely targets at cheap prices. The challenge for Panalpina will be its ability to raise funds. Sharp drop in global air freight trafficLatest statistics from IATA, the International Air Transport Association, showed that international air freight traffic fell by 13.5 percent in November 2008 although airlines had cut flight numbers by 1 % in anticipation of falling demand.IATA has gathered data from 240 air carriers representing 94 percent of international traffic. Domestic flights are excluded from that analysis. Airlines in the Asia-Pacific area which usually accounts for nearly 45% of global air freight, recorded the sharpest drop in cargo traffic, a 16.9% fall. Carriers in North America, including those operating in the United States, Canada and Mexico, encountered a decrease of 14.4% of cargo movement. On the other hand, the cargo business of Europe’s air companies fell by 11% since their main markets (Asia and North Atlantic) are suffering from the economic downturn. "The 13.5 percent drop in international cargo is shocking," said Giovanni Bisignani, Director General of IATA. "The industry is back in intensive care. Improved efficiency everywhere will be the theme for 2009," he added. CGM-CMA introduces piracy risk surchargeShipping line CMA-CGM has introduced a piracy risk surcharge for containers on its vessels transiting off the coasts of Somalia and Kenya. A surcharge of 25 US dollars per TEU is applied since the 1st January (Bills of lading date) on all containers crossing the area.This measure will contribute to cover the increase in insurance premiums of the container ships. The surcharge comes in addition to any short-term or long-term rate agreement. CMA-CGM has taken all steps to ensure security of its vessels sailing through this piracy hotspot. The container ships will be crossing the Gulf of Aden at higher speed and as far as possible, be part of the convoys protected by American and European warships. EurovignetteEuropean Union transport ministers have not reached an agreement on the emission and congestion charges. Divergence emerged among the different ministers as whether their country is a victim or a beneficiary of road freight growth.The Eurovignette proposal aims at encouraging member states to set up a charging system to improve the efficiency and environmental performance of road freight transport. The objectives are to push land transport operators in Europe to have recourse to cleaner vehicles, opt for less congested routes and optimise the loading of their lorries. Forwarding association Clecat said that freight transport should not be penalised as 90% of road congestion and emissions originated from passenger vehicles in Europe. Shipping companies consider diverting vessels away from SomaliaShipping line MOL intends to divert its vessels on the route rounding the Cape of Good Hope to avoid escalating piracy off the east coast of Africa and the Gulf of Aden.Furthermore, CMA-CGM and MSC have stated to the press that they would also use that route if the number of incidents involving hijacking of cargo vessels increases near Somalia. In the meantime, MOL has trained its crew to face attacks from pirates while CMA-CGM will double the salary of its ships’ crews while transiting the Gulf of Aden. Exports from China slow downChina’s largest ports operator, China Merchants Holdings plans to cut down its expansion projects due to the slowdown of the global economy which will have a negative impact on the growth rate of its strategic southern Chinese market next year.The Chairman of China Merchants Holdings, Fu Yuning stated to the press that his organization which derives 70 percent of its revenue from ports of the Southern part of China, will expansion plans following expected slowing of throughput growth at terminals in Hong Kong and Shenzhen. Exports have fallen sharply due to the prevalence of low value-added goods manufactured in that region. Furthermore, Danish shipping A.P. Moller-Maersk has slashed container freight rates from Asia to the West Coast of the United States by nearly a quarter from US $ 1 700 to US $ 1 300 for a 40 ft container. "Container shipping rates have come down substantially as demand is very weak and exporters are in deep water," said Sunny Ho, executive director of Hong Kong Shippers Council. Furthermore, Maersk said that it would remove eight vessels out of service by May or June of next year due to poor market conditions. Jebel Ali port has increased its demurrage feesDemurrage rates at Jebel Ali in the United Arab Emirates, have risen by as much as 166% in order to decongest that port. The new tariffs are applied since last month on all imports of full containers.However, containers can still be stored free of charge at the port for five days. Between the 6th and 10th day, daily rates have increased from Dh 30 (US$ 8.20) to Dh 80 for a 20 feet box and for longer containers, from Dh 60 to Dh 160. Small enterprises fear that these corrective actions may erode their profit margins especially as warehouses are limited within Dubai. The port of Jebel Ali suffers from unloading backlogs after throughput grew by 16% compared to the third quarter of the last year. Screening required for air cargo moving to the United StatesThe General Manager of the ‘Transportation Security Administration’ (TSA) of the United States, Ed Kelly said that the US Congress has asked him to apply the rules requiring 100% screening or inspection on international inbound air cargo.The US members of Congress who drafted the 9-11 Commission Act, have told the TSA to change its interpretation of the legislation and that it should not only apply to shipments uplifted in the United States. Ed Kelly added that airlines would be directed to provide the US customs with advanced manifest data. He has set a 50% target for screening international inbound shipments by February 2009 and is confident to achieve that level thanks to the mutual recognition of foreign air cargo security programmes. Roshan Joshi, senior manager for security at Singapore Airlines Cargo, stated that "we have only very recently found out that this is applicable for inbound cargo to the US.” Kuwait logistics firm in quest of acquisitionsA logistics firm from Kuwait, Agility has unveiled its strategy to acquire freight forwarders throughout the world as asset prices are going down due to the world economic crisis.Agility is the largest logistics firm by market value in the Gulf and is expected to achieve its revenue target of $7 billion for 2008 despite the slow-down of the global economy. The company wants to reduce its reliance on troop supply contracts with the U.S. government and is trying to seize opportunities arising from markets in the Middle East, Asia, and Africa. Agility which has expanded in China and Chad this year, could use its cash and receivables which will amount to about $1.5 billion, to acquire other firms. Recent acquisitions include a Chinese freight forwarder for up to $30.6 million and raising its stake in a Danish freight forwarder to 100 percent from 29 percent. "There is a lot of growth left in Africa," said its director, Tarek Sultan. "We haven't really seen the beginning. In our core business, wherever you look there is opportunity." "The opportunities out there may be better given valuations and given the pessimism in the market. So we are going to continue to be aggressive in our core business but at the same time we need to be cautious," he said. "To the extent that there is a slowdown, the logistics industry, in the last five years, has been done much better," he said. "This sector is about adding value to companies' cost structure." New rule for containers to the USAccording to the British International Freight Association, all laden containers to the United States must bear a high-security seal meeting the ISO standard ISO/ PAS 17712.This new rule is also applicable to containers transshipped in the United States with a third country as final destination. The seal must meet standards for strength and durability and have a unique identification number. Furthermore, shippers have the legal duty of transmitting all seal numbers to the US Customs Border Protection Service through the vessel automated manifest system, 24 hours before cargo is loaded on a vessel at a foreign port. The British International Freight Association stated that failure to comply with the new rule could result in a significant fine to forwarders and shippers. Companies with light assets perform betterAlthough freight volumes are declining in the United States, non-asset based logistics companies like J.C. Robinson, have well positioned themselves in the current credit crunch.Its balance sheet does not suffer from long-term debt, the company has managed to achieve a low capital expenditure, which avoids it the need to raise capital as American Citigroup analyst, Matthew Troy told the press. He pointed out that the key strength of the cost models of J.C. Robinson is its ability to grow revenue during economic recovery and expand margins during periods of economic downturn. Logistics companies that have light assets, buy cargo capacity from rail, road and ship operators, reselling them to customers without having to incur the fixed costs, a model that contrasts with asset-based companies like those in trucking. Cross-border airfreight declineThe International Air Transport Association (IATA) has forecasted that airlines would lose $5.2 billion in 2008 due to declining demand and financing problems, which have overtaken lower oil prices.According to Giovanni Bisignani, head of the group which represents 230 air companies, “although the price of crude oil has fallen more than 50 percent from its peak above $147 a barrel in July, many airlines are still suffering because they had hedged themselves against fuel prices at higher levels.” He added that although over 30 airlines have suspended operations or closed down last year, 20 more air carriers are currently on the "watch list" of IATA because of their fragile financial situation. Furthermore, several carriers could face difficulties in finding financing for planes next year, especially as many of the big banks have scaled back credit to that industry. Cross-border airfreight, an indicator of the health of world trade, dropped heavily by 7.7 percent in September 2008 compared to the corresponding month in 2007. Asia-Pacific carriers also reported a 10.6 percent year-on-year fall in airfreight, while European air cargo traffic curbed down by 6.8 percent. Giovanni Bisignani predicted that the worst is likely still to come, owing to the intensification of the global financial crisis during the recent weeks. Port congestion in DubaiSince the closure of Port Rashid terminal last April, there has been a major rise in volume of cargo at the other port of Dubai, Jebel Ali.Due to the combined effects of high volumes and port congestion, shippers are encountering lengthy delays, reaching up to 15 days especially during the past month. These delays are also having a negative impact on Dubai’s sea-air traffic. Freight forwarders experience difficulties to plan when incoming containers would be released and thus, can no longer book in advance space on air carriers. Hapag-Lloyd to be sold to a group of investorsGerman company TUI announced this week that the selling of its Hapag-Lloyd container shipping unit including its debts for 4.45 billion euros, to a group of investors based in Hamburg. Hapag-Lloyd stands out as the world's fifth-largest container shipping company.However, TUI will be a shareholder of the new company as it plans to acquire one-third of its shares for 700 million euros. "Despite an adverse environment, the price we have achieved for container shipping reflects its fair value even under normal market conditions," said TUI Chief Executive, Michael Frenzel to the press. "Selling only two thirds of Hapag-Lloyd has made this price possible. In addition, our entrepreneurial stake will offer us the opportunity to benefit from the future earnings potential," he added. Singapore's Neptune Orient Lines Ltd moved out of the race to acquire Hapag-Lloyd last week. TUI expects that the sale would create opportunities to further expand the group remaining tourism business. TUI owns 51 percent of TUI Travel Plc, Europe's biggest travel company, and is considering purchasing the remaining stake with the proceeds of the sale. Slowdown in container tradeThe growing financial crisis and falling commodity prices are hammering sea freight costs. Furthermore, despite forthcoming end of year festivities, demand for shipping may face a downturn due to the global slowdown.The Baltic Exchange's chief sea freight index, a price gauge of major export routes for resources excluding oil, has gone down to a record low since more than two years. Analysts attribute the fall of the Baltic index to lower steel demand from China, slow global coal demand and growing fleet supply as fewer vessels are scrapped. Container shipping is curbing down especially on the key routes from Asia to Europe. "There's a considerable slowdown in container trades for manufactured goods to Europe and the United States from Asia," told Philip Damas, director of research at Drewry's ship consultancy in London. He added that container trade growth has fallen to its lowest level ever from Asia to the United States this year, and was at a 15-year low from Asia to Europe. The risks of a crisisThe maritime industry has condemned governments and naval forces for failing to protect merchant shipping from acts of piracy off Somalia and in the strategic Gulf of Aden.Trade bodies asked governments to push their military vessels to make use of force to stop the crisis. The hijacking of Ukrainian-owned ship carrying tanks and arms by Somalian pirates, triggered the reaction of the U.S. Fifth Fleet based in Bahrain which sent warships towards the coast of Somalia where two other merchant ships, the Captain Stefanos and the Centauri, are also anchored. "Ships, which are the lifeblood of the global economy, are seemingly out of sight and out of mind," said the trade bodies including the International Chamber of Shipping in a press release. More than 90 percent of the world's traded goods by volume are carried by sea. "This apparent indifference to the lives of merchant seafarers and the consequences for society at large is simply unacceptable," they said. The present situation may lead to a replica of the early 1970s when the Suez Canal was closed and merchant shipping was diverted round the Cape of Good Hope. The re-routing had a negative impact on international trade, increasing transport and inventory costs. Overcapacity on the routes between Asia and EuropeA high-ranked executive of shipping company Neptune Orient Lines (NOL) stated to the press that there was severe overcapacity on the routes between Asia and Europe. He asked sea carriers to reduce their services and even, return some of their container vessels to charterers.During a conference in the Chinese city of Tianjin, Dan Ryan, president for China region of NOL’s container shipping arm, APL said that "the current situation in Asia-Europe is far worse than during the last cyclical downturn." APL, the world's seventh largest container shipper, provides container shipping services and intermodal operations supported by information technology (IT) and e-commerce. Dan Ryan added that demand growth and utilisation levels in Asia-Europe routes were contracting, and the industry would not be able to absorb the high numbers of very large container ships that will be put in service. However, the APL official felt more optimistic about prospects of transpacific routes. He termed the continued growth in the Intra-Asia trades as a bright spot for container shipping and explained that it illustrated the growing wealth in many Asian nations as well as the impact of the dynamic Middle Eastern markets. Lufthansa ambitions to be Europe’s biggest carrierThe German air carrier Lufthansa is planning to takeover Scandinavian airline SAS with the objective of extending its network and benefiting of synergies that would make it Europe's largest air company by cargo uplifted.According to statistics of the International Air Transport Association, in 2007, Air France KLM topped the list of Europe's largest airlines in scheduled freight tons carried. CARRIER FREIGHT (thousand tons) Air France KLM 1,445 Lufthansa 1,433 British Airways 687 Iberia 232 Alitalia 231 Virgin Atlantic 209 Turkish Airlines 174 DHL will pay US $260 million in severance and benefitsExpress courier carrier DHL which belongs to Deutsche Post AG, stated to the press that it will pay US $260 million in severance and benefits to employees who will lose their job following the forthcoming restructuring of its operations in the United States.DHL is expected to enter an agreement with United Parcel Service (UPS) so that in the near future, UPS air lifts DHL packages within the United States and between the U.S., Canada and Mexico. DHL ground network and air transportation will be shifted from the two current service providers, ABX Air and ASTAR Air Cargo. According to analysts, the volume of air express parcels has declined during the recent years while costs have soared. It is estimated that the U.S. operations of DHL are losing $5 million a day although since 2003, DHL has invested some $5 billion in its U.S. operations to compete with UPS and FedEx. DHL Express Global Chief Executive Officer, John Mullen told a committee of U.S. House of Representatives that the proposed agreement with UPS would not involve a merger or any transfer of assets and would not violate U.S. antitrust laws. NOL aims at becoming third largest shipping companySingaporean Neptune Orient Lines (NOL) plans to take over German shipping company Hapag-Lloyd that is twice its size for US $ 7 billion with the strategic objective of creating the world's third-biggest container shipping firm.However, in Berlin, hundreds of Hapag-Lloyd workers expressed their discontent outside the Embassy of Singapore against the cross-border swoop. Furthermore, a day later, the German government passed a law to protect firms of that country from foreign predators. In a letter to his customers, Ronald Widdows, Chief Executive of NOL, said that the merger would be good for the industry, spreading the combined group's footprint across Asian, European and trans-Atlantic routes. NOL, which is owned by Singapore fund Temasek Holdings, acquired U.S. container shipping group APL in 1997. However, according to shipping analysts, APL is highly dependent on the U.S. West Coast. Growth in trade between Asia and AfricaTrade between Asia and Africa is increasing due to accelerating Chinese and Indian investments in Africa and the growth of African countries Gross Domestic Product by an average of 6%.A decade ago, trade was dominant on the Europe-Africa route while today, trade between the Far East and Africa account for 35% of container movements to Africa. Port Terminal concession deals have been entered in Senegal, Ivory Coast, Ghana, Nigeria, Cameroon and Angola by APM Terminals, Bolloré and DP World. The natural resources and trading opportunities in Africa have enabled concessions, which have resulted in major improvements in port infrastructure. However, according to a recent World Bank study on trade facilitation, inefficiency in most African countries customs systems severely affects cross-border trade. In terms of delays, customs procedures slow down cargo movements by an average of ten days in Africa compared with around 5 at East Asian ports and two in European countries. Border crossings and unofficial checkpoints still strangle African trade. New Zealand ports suffer tough competitionThe ports of Auckland and Tauranga in New Zealand are suffering from declining ship calls since the major cargo lines consolidate their services at regional hubs.The port of Auckland is looking at the possibility of buying the container business of nearby rival port of Tauranga to curb tough competition from Australian ports. Merger talks between the two broke down last July. However, the head of the Port of Tauranga said in a statement to the press, it still believed a merger between the two ports would be good sense, but stressed that a "rough and ready" calculation suggested its container business was worth more than the offer of Port of Auckland. Furthermore, the project of creating a port that would handling about two-thirds of New Zealand's cargo and worth about $1.14 billion, was turned down after Port of Auckland pulled out. During the last financial year ending June 30, the port of Auckland reported a 67% drop in net profit. 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. |