Felixstowe Dockers

Felixstowe Dockers

Wednesday, 17 September 2014

Maersk gets thumbs-up from financial analysts, even without the 2M benefits

Macquarie Research estimates that Maersk Line’s proposed vessel-sharing agreement (VSA) with MSC could contribute $400m a year to the carrier’s net operating profit after tax (NOPAT) by the 2016 financial year, pushing the carrier’s overall profit to a staggering $3bn.
Although the proposed VSA between the world’s two biggest container lines is equivalent to 80% of the capacity pledged by the vetoed P3, the number of vessels deployed will be just 70% of those stemmed for the P3 network, suggesting that the 2M will provide higher unit cost savings than could have been achieved by its ill-fated predecessor.
Indeed, during AP Møller Maersk’s first-half interim results presentation, group chief executive Nils Andersen said that unlike the more complex P3 co-operation – which included CMA CGM and would have boasted a UK-based operations centre – 2M benefits would come exclusively from fuel efficiency and network streamlining, but be “very close” to the overall gain envisaged from the P3.
In its bullish investor note on AP Møller Maersk, headed Onwards and Upwards, Macquarie’s outlook for its container sector is equally positive, notwithstanding the co-operation with MSC.
It said: “We expect Maersk Line profit to accelerate in H2 14, driven by seasonal volume benefits and incremental cost savings following delivery of the twelfth Triple-E vessel last week, which enabled the AE10 service to be fully fitted out with these ships, enabling a step change for unit costs.”
As a result, the analyst has raised its estimate this year for Maersk Line to a NOPAT of $2bn and for 2015 to $2.4bn.
Rather conservatively however, given that the 2M is slated to commence early next year, it is only for the 2016 fiscal year that it includes a contribution from 2M savings.
Meanwhile, Drewry’s Equity Research investor note on APMM has also revised its estimate on the group’s profitability in line with the company’s $4.5bn outlook and raised its share price value significantly.
Like Macquarie, Drewry focuses on Maersk Line as the main driver of the group’s success. It says that the carrier will be the “key beneficiary as growth in global trade volume regains momentum and freight rates recover year-on-year”.
Noting that “cost optimisation has driven profitability”, Drewry says that the major cost savings programme initiated at Maersk Line in early 2012, following a $500m loss the previous year, was the beginning of the reversal in the container line’s fortunes.
It said: “Costs continued to move southwards in Q2 14 when profits increased 25% year-on-year to $547m on a 4.4% reduction in unit costs… bunker consumption was down 7.2% in the quarter because of slow steaming and the introduction of giant Triple-E vessels that consume 15% less fuel than older ships.”
And with an EBIT margin at more than 5% above the industry average Drewry says this all points “to a very good year for Maersk”.
Nevertheless, the analyst has a mixed view on APMM’s $1bn share buy-back programme, despite the positive response from the market, saying that the excess cash could have been used to retire some of the firm’s bond debts thereby helping to secure a higher credit rating and thus reducing the cost of future borrowing.
Having just successfully launched and priced its inaugural US bond offering, including $750m and $500m bonds at coupon prices of 2.55% and 3.75% respectively, Maersk would no doubt argue that the ticket price on its bonds is not high, and indeed the envy of most of its peers

Maersk top executives rush to meeting

Maersk top executives rush to meeting

Top executives from Maersk Line and MSC, which have entered into the vessel-sharing agreement called 2M, was reported to be heading to the United States for an urgent meeting with the American maritime administrations, the Federal Maritime Commission (FMC). FMC's approval of 2M is dragging out.
Usually there is a processing time of 45 days, but in the case of 2M, the American authorities apparently asses that further information is needed. That means that the approval can be delayed for several weeks, epn.dk writes, quoting Ritzau Finance.

The two companies hope that it will help if they take part in a meeting with the American authorities to find out what questions they might have. 

Sources close to the FMC have said that there are very good chances that FMC approves 2M, because concerning the P3 alliance, there was only one member of the commission who voted against the approval.

The two companies vessel sharing agreement includes 185 vessels on 21 routes with a total capacity of 2.1 million TEUs. Sources estimate that it is the size of the vessel-sharing agreement that is causing the American authorities to add additional conditions.

Source: epn.dk

2M Founders Warned to Tread Lightly

The shipping alliance between the two shipping giants Maersk Line and Mediterranean Shipping Co., dubbed the 2M, complies with Chinese rules and is operationally ready to launch, according to Maersk Line CEO Søren Skou, cited by the Shipping Watch.

“We’ve submitted our application and have thus fulfilled the requirements, but the Chinese regulators can of course at any given moment launch a study of the agreement,” Skou said.
“But we do believe that our VSA is fully comparable to other collaborations of similar scope.”
However, the 2M alliance might be facing an extended review period in the United States of America, as the U.S. Federal Maritime Commission examines details of the alliance that were submitted last week.
The Commission will likely ask for additional information during the review which relate to the time-frame of the tie-up and the vessels’ size.
The 45-day process might be stopped while Commissioner William Doyle submits the questions to the shipping companies about their proposed agreement.
Without the announced interruption, 2M could have been approved in the US on October 11, which according to industry experts is looking more and more unrealistic. The regulations state that once the 45-day process is stopped, it can not be continued, but rather a new 45-day review period starts.
The 2M alliance will also be featured on the agenda of the upcoming annual US-China maritime-agreement consultation in Shanghai in November, where the US representatives hope to learn of China’s outlook on the proposed alliance, as well as to find out more about the review process.
Last week AP Moller-Maersk chief executive Nils Andersen stated that the 2M partners ”did not need antitrust clearance in China,” on the basis that the new agreement is nothing like the rejected P3 alliance.
U.S. Federal Maritime Commissioner Richard Lidinsky reportedly said in an interview to the Journal of Commerce that ”Maersk Line and Mediterranean Shipping Co. appear to have the same confidence that Chinese regulators will approve their “2M” vessel-sharing agreement as they did before China’s rejection of the P3 Network.”
“It’s deja vu all over again,” said Lidinsky.
“It’s like they didn’t learn anything in dealing with China; you have to deal with the government with respect.”

Video: Bulk carrier hits container ship and sinks a boat while berthing

A CCTV footage has caught a berthing accident in Santa Marta, Colombia. According to the video, it occurred on October 10, 2013.
The bulk carrier Albion Bay hit Stadt Emden while trying to berth. The container ship was moored at the port. In addition, while maneuvering, the bow of Albion Bay hit a pilot boat tied up to the pier. The damaged it enough to sink.
Albion Bay (MO number 9496989 and MMSI 372361000) was built in 2011 and is registered in Panama. The vessel has a deadweight of 58,755 DWT. Owner of the bulk carrier is K Line Bulk Shipping UK Ltd.
Stadt Emden (IMO number 9234379 and MMSI 304422000) was built in 2002 and is registered in Antigua&Barbuda. The deadweight of the container ship is 12,895 DWT.

Tuesday, 16 September 2014

London Gateway: Is it a 'white elephant'?

For several years the threat of London Gateway loomed large over the Port of Felixstowe. As the largest container port in the country with over 40% of the share of the container market Felixstowe was thought to be particularly vulnerable to the Dubai-financed London Gateway.

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Many predicted job cuts at the Port of Felixstowe with a concomitant impact on other businesses and the wider economic health of Suffolk.
With almost a year elapsed since London Gateway opened the outcome appears rather less disastrous.
Dubai Ports World, the owners of London Gateway, are good at PR. They need to be. Opening a new port and enormous distribution park on a contaminated site costs a lot of money. £1billion by the time it's finished according to some experts. To recoup that investment new customers need to be coming on fast. These new customers have to be persuaded to leave other ports (shipping lines) or set up brand new distribution arrangements (retailers and logistics companies) with the inherent risk and cost this implies.
London Gateway's PR is second to none but it is increasingly apparent that no player in the UK market is taking the message without a big pinch of salt. Logistics, retail and shipping companies prise reliability of service above all else.

Shipping lines want efficient and cost-effective ports close to the major seaways in order that their ships schedules are disrupted minimally. Importers want to know that their just-in-time goods will arrive, well, just in time. Certainty is prized by all. That's why the PR operation is so slick. Dubai Ports understand their customers (they operate many ports around the world) and know how loath to change and take on risk their potential customers are.
London Gateway promised a nirvana. A port close to the shipping lanes and close to London. Perfect? Well putting aside friction of change is appears not.
To date London Gateway has failed to take a service from the Port of Felixstowe. In fact this author understands that the Port of Felixstowe's throughput continues to rise. That's no surprise to anyone locally who can see the giant, 400m, megaships now calling at the Port's improved facilities. The majority of services London Gateway has attracted are from what was once its own port - The Port of Tilbury. This is no surprise given that Tilbury is further up the Thames and therefore less attractive to shipping lines. These lines were using Tilbury as a cheap option as opposed to the premium option at Felixstowe. Gateway must be offering bargain-basement rates simply to buy shipping lines in and see some return on investment and something for their workforce to do.
On the distribution park side things aren't much better. Marks and Spencer pulled out of a deal to build a distribution centre in May and it is rumoured Tesco have done likewise. Other than operators such a ProLogis who have to be at Gateway there is little good news for the south Essex port.
At present it is estimated (because all ports guard their statistics) that Gateway is moving less than 1 million containers per year through phase 1 of its development and the majority of those are cheap boxes formerly moving through Tilbury. In terms of the capital employed, reckoned to be £600m so far, that is simply not enough traffic to pay back a reasonable return - in fact any return - let alone match the opportunity cost of a better investment of the same money elsewhere.

Of course all new businesses have their initial issues but with new ports confidence is key. They need bags of it and momentum and signs of progress. Those signs of progress have stalled, momentum is stalled and therefore confidence is low.
Meanwhile the Port of Felixstowe has raised its game. Once thought of as 'the best of a bad bunch' its productivity levels have soared after many years spent on process, training, equipment and systems designed to see a step-change in its ability to serve customers. That step-change has happened and whilst shipping lines will always want more they are not grumbling the way they used to.
So what does the future hold? Well long-term growth rates in containerised traffic used to be 7% per annum. That has tailed off somewhat in recent years - you can't put much more in containers that isn't already in containers - but there is still growth of perhaps 4% there.
Increasingly it is looking unlikely that London Gateway will be able to poach even one of the major services from the Port of Felixstowe. Its early days, and no-one at the Port of Felixstowe is complacent, but the Port of Felixstowe, whilst no doubt coming under rates pressure, will continue to grow as will London Gateway. But Gateway taking Felixstowe's lunch? Not a chance and DP World may well have a white elephant on their hands.

Andrew is Cultural Editor of IpswichSpy.com

Monday, 15 September 2014 13:32 posted by MarkLing

For all Suffolk's sake we all hope that you are right and that Port of Felixstowe will continue to see off the threat. However, DP World are no mugs, so what is for sure is that PofF cannot be complacent and neither can Suffolk's leaders.

Where I have some insight is that I was that I worked at the very heart of two giant liner companies for nearly 20 years. Cost benefit studies of European port rotation was a regular occurrence. The UK by geographic location was first or last port of call. Often, the study would also be to evaluate whether a direct port of call was necessary at all, and if there were cost benefits to tranship/feeder via Rotterdam into UK local ports (thankfully this was never cost effective). The reason for Felixstowe's unrivalled success versus Southampton & Liverpool was its geographic location opposite Rotterdam. It’s a while since I did these studies and for different size ships. However, the variable costs on vessel lease or charter for a 12,000-18,000 TEU vessel; and bunkers were substantial. So, as you can imagine an extra 1.5-2.00 days sailing and bunker time can add significantly to a single vessel/voyage. Times that by a vessel per week, it could be perhaps be $10,000,000 over a year on one service loop (times possibly 3-5 loops per week).

Thamesport was never a serious threat because it never had the economies of scale versus Felixstowe, and it was south of the river Thames (restricted by the bridge). London Gateway is a different beast, same scale and economies as Felixstowe. North of the river. It can offer transport into the mega midland warehouses in 2 and a half hours; and 140 miles, with 135 miles of it on three lane motorways. Felixstowe to the mega midland warehouses is approx. 20 -30 minutes longer. And approx. 40 miles roundtrip further. 165 miles with only 9 miles on motorway, and 156 miles on a increasingly very congested A14 (with bottle necks at the Orwell Bridge, Cambridge, Huntingdon, A6). With a vessel discharging some 4000-5000 containers a time, these small minutes and miles add up. Could be as high as 160,000 miles per vessel/voyage, so this starts to seriously negate Felixstowe's edge. If you then take the 40 extra miles x 4000 containers per vessel/voyage = 160,000 miles (x miles per litre at £1.15 per litre) could be as much as $8,500,000 per loop. So you can start to see that Felixstowe's advantage over DP World's London Gateway is slim - and in the balance.

A clear highway really will play a significant factor in which port (Felixstowe or London Gateway), ocean carriers chose in future. A blockage on the Orwell Bridge, a lack of investment on the A14, a lack of understanding on the significance could easily cost ten thousand or more Suffolk jobs!

Yet, the Port Of Felixstowe is the only major European container port not connected by/or close to motorway. It has a single track rail line. These issues were less important when Felixstowe had no serious geographical rival, but that has changed and the pendulum could swing away from it. In short an Ipswich Northern bypass, plus upgrades at Cambridge, Huntingdon and the A14-M6-M1 junction are absolutely necessary.

The timing of a concerted bid for a Northern bypass is critical, because the transport industry paper Lloyds List confims that: "The government is tripling funding on the road network over the next eight years with more than £24 billion to be spent on upgrading and improving the network until 2021. Roads Minister Robert Goodwill has today called on Britain’s road building companies to get ready for a massive increase in work ahead of the biggest investment in the road network since the 1970s".

Suffolk County Council has been negligent in its response. YET AGAIN no money, and no leadership from Suffolk County Council. NOT even a request for money to conduct a feasibility study !!! The fact is that if we don’t put in an expression of interest it will be 50 years before we see an upgrade to the !4 at Ipswich, or a Northern bypass. If we DO start to review now, it will still take 10-15 years. Can we really afford not to begin the process ?!!

With 4m TEUS of freight, an ever growing Ipswich and Northern Fringe the whole route via Ipswich will be gridlocked in 20 years. Those villages north of Ipswich campaigning against a Northern Bypass will be exactly the same ones screaming for a northern bypass once Northern fringe is complete !!

Pentalver Secures the Latest Container Shipping Option for Secure Freight Transport

New Design Box Makes it an Unlikely Target for Villains 

EUROPE – Pentalver is to become the first company in Northern Europe to offer the innovative door-lessCakeBoxx shipping containers. The boxes, which offer secure, cost-effective and damage-resistant container options for the global shipping and transportation market, are ISO-compliant and fit seamlessly into all multimodal processes, including stacking, storage, terminal transfers and ship, rail and truck haulage whilst offering probably the most secure option for containerised freight. Group Container Sales Manager at Pentalver, Sam Baggley, said:
“CakeBoxx intermodal shipping containers offer significant advantages to shippers, particularly in terms of enhanced security, side loading efficiencies and streamlined inspections at ports. Pentalver welcomes the opportunity to lead the way with CakeBoxx in the UK as they introduce this unique design.”
CakeBoxx is a long-awaited answer to a market segment that has not had many different options when it comes to protecting against cargo theft, as in the manufacturer’s own words, ‘Cakeboxx makes it tough for bad guys to get in’. The freight container also offers an option for shippers and trans loaders that for decades have had to load irregular shaped cargoes through the door end of a traditional container. Daine Eisold, CEO of Virginia, US-based CakeBoxx Technologies, said:
“Now that CakeBoxx is in the UK and European marketplace, establishing relationships with recognised market leaders is our top priority. Our goal is to offer our customers an innovative, money-saving product combined with best-in-class customer service.

“At CakeBoxx we think in terms of solutions, not just product sales. Pentalver was an easy choice for us to make. They are not only the most capable and most well-respected container depot operator in the country, they are a ‘thought-leader’ in the industry. Working with Sam Baggley and his outstanding team is truly an honour for us and we couldn’t be more excited to call Pentalver our partner.”
The ‘lid’ is raised and lowered by all standard container-handling equipment commonly used at ports, manufacturing plants, construction sites and cargo loading facilities. The CakeBoxx container product line includes:
• CakeBoxx Standard – standard 20’ and 40’ CakeBoxx models for dry cargo.
• FreshBoxx – an insulated version of the CakeBoxx that maintains the temperature of temperature sensitive cargos for up to 72 hours without costly mechanical refrigeration equipment.
• ShortBoxx – a half-height CakeBoxx that can be double-stacked in the same space as a traditional container, making it ideal for shipping heavy and drum cargo.
• CustomBoxx - the unique, doorless design of the CakeBoxx makes it highly customisable to meet unique, user-defined shipping and storage needs

The loading process is best illustrated by our photograph which shows 1) on the left a long length being stowed by a standard fork truck. The load is swung in at the door and the pushed into the body of the container. 2) On the right the ‘lid’ has been removed by the fork truck prior to loading. The load in place on the container floor the load is secured and the top of the container reinstalled making it impervious to interference.

Monday, 15 September 2014

Container cargo volume at ports to increase up

Volumes of handled cargo at container ports are expected to accelerate considerably on annual level, according to UK-based shipping consultants Drewry.

Volumes of handled cargo at container ports are expected to accelerate considerably on annual level, according to UK-based shipping consultants Drewry.

By 2018, the world’s container ports are forecast to handle more than 840 million teu a year, which is  double the 2004 throughput figure of 363m teu, Drewry said in their 11th  Global Container Terminal Operators Annual Review and Forecast report.

As explained by Drewry, the volume growth accompanied by profit it brings is attracting aggressive new players to enter the container terminal-operator business.

Overall , growth rates are expected to average an annual 5.6% in the five years to 2018, compared with 3.4% in 2013.

Drewry added that will boost average terminal utilisation from 67% today to 75% in 2018.

The growth trend is attributed to the introduction of “ever-bigger ships, expansion of shipping-line alliances, financial pressures on shipping lines, rapidly emerging international terminal operators and owners, financial investor churn, as well as the gathering pace of terminal automation.”

Africa and Greater China are forecast to see the biggest growth trend.

There were slight changes in the composition of the top five terminal players, with regard to their equity teu throughput. According to Drewry,  PSA has remained at the top, by virtue of its scale and 20% stake in Hutchison Port Holdings which follows in the second place. APM Terminals is third, followed by DP World.

” By 2018 HPH and APM Terminals are expected to be vying closely for the top spot in terms of capacity deployed. Most portfolio expansion will be through greenfield or brownfield terminals in emerging markets, led by APM Terminals, International Container Terminal Services, HPH and DP World,” forecasts Drewry.

Asia once again dominates port top spots

When it comes to ports, Asia is king. Asian ports were once again strong performers overall in the 2013 list of top container ports, accounting for the nine of the top ten ranking ports and almost half (26) of the top 50 slots, according to a new report.
The JOC’s annual report on the Top 50 World Container Ports, shows the Middle East’s largest container port, DP World’s Jebel Ali in Dubai, ranked ninth, was the only container port to break up the Asian monopoly.

With the exception of one port, the top 50 looks the same as last year, with the only new entrant being Malta Freeport in Marsaxlokk, Malta. The port’s container volume rose 8.3% to 2.8m TEUs in 2013.
Commenting on the results, JOC research editor Marsh Salisbury said: “For the first six years of The Journal of Commerce global container ports ranking, Hong Kong was king.

“When Singapore toppled Hong Kong in 2005, it began a five-year run at the top for the Southeast Asian giant. And now another juggernaut, Shanghai, has enjoyed a four-year run as the world’s largest container port on the JOC ranking, now in its 15th year.
“The common thread? Asia is king, even if stalwarts such as Hong Kong, which slipped to fourth place last year in part because of a 40-day dockworker strike at five terminals, have retreated a bit.
“The list of the world’s top 50 container ports offers a glimpse of trading and sourcing patterns, as well as the role infrastructure plays in port productivity and competitiveness.”
Source: GT Global Traders