No comment from NOL on reported Hapag Lloyd discussions
Further consolidation in the global container-shipping sector has reportedly been in the wind as vessel over-capacity is forecast to continue exceeding cargo demand, and Singapore's Neptune Orient Lines Ltd. is reported to be in discussions to acquire the shares from one of the parents of Germany's Hapag-Lloyd shipping line.
Neptune Orient has been in talks with Germany's travel industry giant TUI to acquire its 38 percent stake in Hapag-Lloyd, according to a recent report by German media outlet Die Welt.
Southeast Asia's major liner group reportedly e-mailed Bloomberg News that it doesn't comment on market speculation.
NOL halted its shares on Singapore's stock exchange pending an announcement, Bloomberg reported.
"It has been widely known since 2008 that we are looking to sell our shares, and we are evaluating all options," TUI spokesman Mario Koepers told Bloomberg on Dec. 3.
NOL was reported to have made a play for the controlling interest in Hapag-Lloyd in 2008, but was beaten to the punch by German investment group Albert Ballin GmbH.
TUI's Chief Financial Officer Horst Baier said in November that the travel conglomerate would exercise its option for Ballin to buy out its remaining shares on January 2.
Europe's shipper council concerned over power landing in hands of fewer big container lines
On the heels of last week's announcement that the second and third largest container-shipping firms in the world have formed an alliance on several, major global tradelanes, prompted a response of concern from Europe's highest-profile shipper lobby.
"When such amalgamation involves two of the top three, the concerns of shippers are bound to be heightened even more," said Nicolette van der Jagt, secretary-general of the European Shippers' Council in a Financial Times report.
Shippers will opt for more carrier choices over pricing and service levels and prices, she said.
The number two container-shipping group, France's CMA CGM, and number three, Mediterranean Shipping Company, announced their signficant tradelane alliance amid news that Malaysia's MISC shipping line is exiting the container-hauling market while Chile's CSAV, South Korea's Hanjin and Israel's Zim are reportedly trying to raise funding to keep their respective shipping businesses afloat.
A former senior executive of a container-shipping line told the FT that smaller lines are being "sucked along" in the battle of the giants over market share.
The former executive reportedly said rates are at n un-stainable level; especially in the Asia-Europe trades.
"The rates are just mind-bogglingly stupid," the former executive said.
Cyber-Monday extended throughout the week at close to $6 bil spent online
Online shoppers in the U.S. kept the momentum Cyber-Monday's record-breaking day going through the end of the week with almost $6 billion in "e-tail" purchases.
Cyber Monday hit a record $1.25 billion in sales as the following Tuesday-Wednesday went over $1 billion per day with free shipping playing an important role in the big online shopper turnout, according to retail research firm ComScore.
For the holiday season-to-date, $18.7 billion has been spent online; a 15-percent increase compared the same period last year, ComScore reported.
Sixty-three percent of about 1,000 online shoppers surveyed by ComScore said offers of free shipping factored into their desire to cyber-purchase holiday gifts.
Editorial: Teamsters lawsuit could threaten 12,000 U.S. NAFTA jobs
The following editorial is courtesy of the San Antonio Express:
After 14 years of U.S. delays in implementing a cross-border trucking provision of the North American Free Trade Agreement, Mexico exercised its internationally recognized right to impose retaliatory tariffs on U.S. goods in 2009. The punitive tariffs eventually covered 99 categories of U.S. exports with an annual value of $2.4 billion.
After months of intense negotiations, the Obama administration finally worked out an agreement for a test program on cross-border trucking that began in October.
In return, Mexico lifted the tariffs, a move that Texas A&M University's Center for North American Studies estimates will restore 12,000 American jobs.
That's a good deal all around. An end to tariffs. More American jobs. The United States complies with the provisions of a trade agreement with one of its most important trading partners, via an agreement that Congress approved.
The reciprocal trucking provision allows U.S. long-haul truckers to operate in Mexico. Mexican truckers who participate in the program must comply with all applicable U.S. laws and regulations, including those related to safety, registration and taxation.
During a brief period in which the Bush administration was able to implement a test program before a Democratic-controlled Congress pulled the plug on funding, long-haul trucks crossed the border 45,000 times without any major incident.
Yet only one month into this test, the Teamsters Union has filed suit in federal court to stop it. In a press release, Teamsters General President Jim Hoffa called the Obama program "an attack on American truckers and warehouse workers, an attack on border security and an attack on our environment."
He forgot to mention motherhood and apple pie.
Curiously, the same concerns don't apply to Canada, with which the United States has had a long-term-trucking agreement since 1982. But a three-year test limited to no more than 100 carriers from Mexico is a matter of national security.
The Teamsters and other opponents have done an excellent job of whipping up anti-Mexican hysteria with wild accusations about safety, pollution and security, none of them based on the facts of the actual test programs.
The only American workers being hurt are the 12,000 whose jobs would once again be jeopardized if the Teamsters' legal gambit succeeds, the test program is halted and Mexico re-imposes tariffs.
Port of Oakland calls planned Occupy shutdown "a bad idea" (incl. video link)
The Port of Oakland's board of commissioners ran an open letter to its community in the Oakland Tribune newspaper on Sunday calling the plan by the local Occupy Wall Street movement to cause a shutdown of cargo activities on December 12 "a bad idea."
"Another shutdown will only make things worse--diverting cargo, tax revenue, and jobs to other
communities. It will hurt working people and harm our community," the letter said.
The Northern California port authority's night shift was effectively shut down by thousands of Occupy protestors on Nov. 2, and now Occupy movements in major West Coast port cities say they will attempt to shut down their local container ports on Dec 12.
Video, blog links: Occupy The Port movement makes its case for planned West/Gulf Coast ports shutdown
Links to video and blog by Occupy The Port movement organizers making their case for why they plan to attempt shutting down major West Coast ports, and the Port of Houston on the Gulf Coast, on December 12.
After distribution divorce: Kraft competing with Starbucks
Kraft Foods Inc. started shipping bags of its premium Gevalia coffee to U.S. retailers this week in direct competition with its former distribution partner, Starbucks.
After a messy divorce earlier this year between the two firms when Starbucks moved to take control of its own distribution, Kraft announced its new Gevalia brand would replace Starbucks and would be made available for sale through retailers.
Gevalia is a coffee brand that originally sprouted from Sweden that Kraft had been selling in the U.S. as a mail order offering.
"We have high hopes and ambitions of growing this very rapidly and becoming a force in the premium-coffee segment," said Robert Mortati, Kraft's senior marketing director for premium coffee.
Kraft says it will initially offer seven varieties of the 12-ounce bags of Gevalia at a retail price of $8.99 – a dollar lower, on average than Starbucks’ average price for the same type of product.
Kraft reportedly faces a challenge replacing the well-known Starbucks brand with the lesser-known Gevalia in the $4.5 billion annual packaged coffee market (excluding Wal-Mart and related club stores).
On the heels of last week’s announcement of a new, significant operational partnership between two of the top three container-shipping lines in the world - France’s CMA CGM and Switzerland-based Mediterranean Shipping Line – is today’s news of a reorganization of the two liners’ services in the Asia-North Europe trades that the carriers said would be effective by early April 2012.
CMA CGM said in a statement that its Asia-North Europe network would consist of the following loops:
New FAL 1 Service operated by CMA CGM with 11 vessels of 13,800 – 14,000 TEUs with a port rotation of: Ningbo, Shanghai, Nansha, Hong Kong, Chiwan, Yantian, Vung Tau, Southampton, Hamburg, Bremerhaven, Rotterdam, Zeebrugge, Le Havre, Malta, Korfakkan, Port Kelang, Singapore, Yantian, Ningbo.
FAL 2 service remains unchanged.
New FAL 3 Service operated by CMA CGM with 11 vessels of 11,400 TEUs with a port rotation of: Xingang, Pusan, Qingdao, Shanghai, Xiamen, Singapore, Port Kelang, Tangiers, Le Havre, Hamburg, Bremerhaven, Antwerp, Zeebrugge, Beirut, Jeddah, Port Kelang, Singapore, Xingang.
FAL 6 Service operated by MSC with 11 vessels of 14,000 TEUs with a port rotation of: Dalian, Xingang, Kwang Yang, Pusan, Qingdao, Ningbo, Shanghai, Singapore, Port Kelang, Felixstowe, Zeebrugge, Antwerp, Rotterdam, Southampton, Valencia, Jebel Ali, Singapore, Hong Kong, Dalian.
FAL 7 Service operated by MSC with 11 vessels of 14,000 TEUs with a port rotation of: Ningbo, Shanghai, Xiamen, Chiwan, Yantian, Sines, Le Havre, Rotterdam, Antwerp, Felixstowe, Gioia Tauro, Singapore, Chiwan, Xiamen, Ningbo.
FAL 9 Service operated jointly by CMA CGM and MSC with 9 vessels of 9,500 TEUs - 5 operated by CMA CGM and 4 by MSC). The carriers said the port rotation would be: Shanghai, Ningbo, Hong Kong, Chiwan, Yantian, Singapore, Port Kelang, Gioia Tauro, Malta, Tangiers, Port Kelang, Singapore, Vung Tau, Shanghai. The shipping line partners said the FAL 9 service is set up to serve “Med Hubs” for “out of scope” cargoes and is part of the Asia-North Europe Network.
CMA CGM said its existing agreement with Maersk Line on the Asia-Med trade would remain unchanged.
Vancouver, Wash port to launch construction on $11.3 mil rail overpass
The Port of Vancouver, Wash is going to launch construction of a 1,000-foot-long, $11.3 million overpass later this month as part of a $150 million freight access expansion project that is expected to be complete by 2017.
"Cargo traffic will use the overpass, so movements of the trains and vehicles at the same time won't interrupt each other. As we increase our rail capacity, we're also looking to increase our road capacity," said port spokeswoman Theresa Wagner as reported by the Oregonian.
Eighty percent of the overpass’ construction cost is being funded by the U.S. Department of Transportation.
The slowdown in global shipping trade means “freight rates will be under pressure for years to come,” hence the need for larger container vessels, especially in the Asia-Europe market, according to a top executive with the second largest ocean carrier in the world.
“Economies of scale are essential,” said Diego Aponte, vice president of Mediterranean Shipping Company in a phone interview with Businessweek.
That scale tipped last week as MSC announced a significant vessel—and-space-sharing partnership with France’s CMA CGM, the third largest global container carrier.
“Volume growth is there, but it will never be explosive like it used to be in 2007,” Aponti said.
According to the Shanghai Shipping Exchange, freight rates from Shanghai to Northwest Europe dropped 64 percent this year.
The container-shipping sector could lose up to $3 billion this year, according to Drewry Shipping Consultants.
Shanghai Shipping Exchange to expand derivatives market
The Shanghai Shipping Exchange reportedly plans to expand its shipping derivatives market in the next few years as the city of Shanghai moves towards its goal of further entrenching itself as a global hub of finance and shipping.
Fang Xinghai, director of the financial office of the Shanghai government, told an industry conference that the city is planning to launch new freight indexes.
This week, the Exchange launched its China (Coastal) Bulk Coal Freight Index and earlier this year it unveiled container freight derivatives based on freight rates to North America.
Singapore's global container-shipping group Neptune Orient Lines said earlier this week that it was not making a bid for Germany’s Hapag-Lloyd AG shipping line.
"NOL wishes to state that currently, it is not making another bid for a stake in Hapag-Lloyd," NOL said said in a stock market filing.
A few days earlier, German media outlet Die Welt that NOL had resumed discussions from a few years earlier over acquiring the shares in Hapag-Lloyd from one of the parent companies – Germany’s travel giant TUI.
Norfolk Southern to invest over $60 mil to expand Pennsylvania intermodal facility
Norfolk Southern Corp. has announced it will invest $60.5 million over the next two years to expand its Rutherford intermodal facility in Dauphin County, Pennsylvania.
The railroad said it plans to add four loading and unloading rail spurs, four support lines, 406 trailer spaces in its staging areas, and adding approximately 50 percent yard capacity that would allow for 350,000 intermodal lifts per year.
Norfolk Southern said it would also add 48 full-time employees at its rail yard in Swatara Township.
The U.S. Surface Transportation Board reportedly wants to audit the Canadian National Railway’s operations in November and December on the heels of a derailment of 22 rail cars carrying hazardous chemicals in a Chicago suburb on November 3.
U.S. Senator Dick Durbin (D-Ill., reportedly supports the audit that would scrutinize the CN’s progress in making rail and grade-crossing improvements that are supposed to help prevent derailments, according to a report by the Chicago Sun-Times.
Canadian National took over the tracks from the Elgin, Joliet and Eastern Railway in early 2009 and subsequently said it would increase its rail traffic through the Chicago area from six to 28 trains per day.
This would mark the second STB audit of Canadian National’s operations since January 2009 that resulted in a first-ever fine by the regulatory body of $250,000 fine on the railroad last year
over what it said was underreporting by CN on over 1,400 blocked rail crossings, according to the Sun-Times report.
Report: U.S., China, India oppose shipping fuel tax
The U.S., China and India reportedly oppose a proposed levy on shipping fuel to help fund developing nations’ efforts to deal with climate change.
In order to raise up to $100 billion by 2020 to aid developing nations in the adaption of climate change and emissions reduction, the United Nations has been presented with a draft document at the current climate treaty talks in Durban, South Africa that includes a proposal that such funds could, in part, be sourced from an extra “carbon” fee on bunker fuel.
Greenpeace’s Martin Kaiser, the environmental group’s director of international climate politics, said in an interview that the U.S. and the BASIC group of countries that includes China, India, South Africa and Brazil are pushing for such funds to be sourced from national budgets instead of a bunker fuel tax on private industry.
“There’s a broad alliance saying it has to come from national budgets rather than from reliable mechanism but given the financial crisis and the budgetary crisis of many industrialized countries, the only way to fill up the green climate fund is through [the ship fuel tax],” Kaiser said.
At the outset of the Durban climate summit, a joint statement was released by the International Chamber of Shipping, Oxfam and the World Wildlife Fund, calling on delegates to the Climate Change Conference: “to give the International Maritime Organization (IMO) clear guidance on continuing its work on reducing shipping emissions through the development of market based measures.”
Oxfam and the WWF have said a $25 per ton carbon fee on bunker fuel could aid in the effort by industrialized nations to raise the $100 billion by 2020 with $25 billion of that goal coming from the shipping industry.
“Putting a charge on carbon in the global shipping sector can have huge benefits in meeting our climate change objectives," said Tim Gore, Oxfam’s climate change policy advisor.
“With around 3 percent of the world's total emissions, full participation of the shipping sector will help greatly towards keeping global warming below the 2°C target agreed by governments,” he said.
The Secretary General of the International Chamber of Shipping, Peter Hinchliffe, praised his environmental cohorts’ willingness to work through the IMO on a market-based approach.
"The shipping industry welcomes the recognition by these important actors from the environment and development fields that it is in the best interests of both the environment and developing nations for shipping to be regulated via our industry regulator, the International Maritime Organization, with the same rules for carbon reduction applying to all internationally trading ships, but in a manner which respects the principles of the UN climate convention," he said.
The three organizations admitted “there are some differences over the detail of such an approach,” but jointly urged the governments meeting in Durban to offer guidance and “assist the speedy completion of the IMO's work” and not to focus on “technical details for shipping.”
"If governments decide that shipping should contribute to the UNFCCC 'Green Climate Fund', the industry can probably support this in principle as long as the details are agreed at the IMO, with the industry's clear preference for a Market Based Mechanism being a compensation fund linked to the fuel consumption of ships, rather than an emissions trading scheme," said Hinchliffe.
Wash State congressman proposes national freight fund
A national freight fund that would be financed by fees levied on the shipping industry was proposed this week by U.S. Congressman Adam Smith (D-Wash).
The bill, H.R. 3607, calls for the creation of a new freight fee that would be collected by taxing the fair market value of transporting goods by ground within the U.S. The funds collected would be dedicated to a National Freight Mobility Infrastructure Fund, and subsequently invested in the nation’s freight system.
The funds would be available only for freight projects and distributed on a competitive basis.
“Without strategic corridor investments to expand capacity and increase efficiency, U.S. productivity and global competitiveness will suffer, costs will increase and investment will lag. We applaud Congressman Smith’s efforts to make this vision of strategic freight mobility a reality,” said Port of Tacoma Commissioner Don Meyer in a statement.
Charleston lawmakers to meet over Savannah dredging permit amid environmental protests
Environmental groups in the states of South Carolina and Georgia are reportedly appealing a controversial water quality permit that the former state granted the latter, and lawmakers in Charleston, S.C. have announced they are going to meet over the divisive issue.
The Southern Environmental Law Center filed an appeal to South Carolina’s Administrative Law Court on behalf of conservation groups that include Savannah Riverkeeper, South Carolina Coastal Conservation League and the South Carolina Wildlife Federation.
The appeal contends South Carolina’s Department of Health and Environmental Control should not have approved the permit that help clears the way to deepen the Savannah River’s shipping channel from 42 to 48 feet to be ready for post-Panamax ships expected to start calling after the Panama Canal widens in late 2014.
The river’s deepening project has thus far been a 12-year journey when the U.S. Army Corps of Engineers initiated its study of the project.
Both Georgia's and neighboring South Carolina's container ports are vying for cargo from Asia amid a time of scant federal harbor deepening funds and a history of fierce competition between the two.
Last year, the Army Corps said the dredging project's environmental issues of de-oxygenated water, impact to habitat, and saltwater intrusion, could be dealt with, however, South Carolina has joint oversight of the Savannah River and its Department of Health and Environmental Control recently denied the water quality permit needed to move the Georgia port's deepening forward.
The most recent agreement reached means either the Army Corps, if federal funds are available, or the state of Georgia, will be on the hook for an additional $1.2 million per year for the next 50 years to pay for oxygen being pumped into the river.
Some of South Carolina’s state lawmakers are reportedly not happy about DHEC’s permit approval, arguing that the decision offers Georgia a competitive advantage and that it jeopardizes plans to develop a bi-state container port in Jasper County that is 14 miles closer to the Atlantic Ocean.