T P Chí Containerisation Informa - Ci - 201406 PDF

www.containershipping.
com JUNE 2014

Data Hub: Load Factors ..............................08
Data Hub: World Fleet Update ...............10
Trade Routes: Intra-Europe ......................14
Ports: Hamburg .............................................35
DELPHIS: FEEDER
FORTUNES IN FLUX
P42
CONFERENCE
DUBAI: NEWS FROM
GLOBAL LINER 2014
P48
CARRIERS
GLOBAL GATEWAYS:
TOP PORTS ANALYSIS
P18
MORE INSIGHT PORTS
THE
PERSONAL
TOUCH
ATLANTIC CONTAINER LINE
PRESIDENT AND
CHIEF EXECUTIVE
THE
ANDREW ABBOTT
INTERVIEW
Fl or i da East Coast Rai l way ( FEC) and Por t Evergl ades have j oi ned f orces t o
boost your speed and eff i ci ency t o mar ket wi t h pi er-t o-r amp i nt er modal ser vi ce
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Por t Devel opment , at 305-889-5586.
TAKE THE FASTER TRACK TO MARKET
OPENS IN JULY
Rail
June 2014
BY the time this edition of Containerisation International hits
readers desks we will worryingly be almost halfway through
the year.
Looking back over the past six months, a lot has been going
on, but in terms of concrete developments it feels like not a lot
has actually changed.
Maersk Line, Mediterranean Shipping Co and CMA CGM still
havent launched their P3 Network, Maersk Line is still the most
profitable shipping line in the industry, Hapag-Lloyd still hasnt
completed a merger although the deal with CSAV is as
good as done freight rates are still volatile, Hamburg is still
waiting to find out if it can dredge the Elbe, Zim is still working
on its restructuring I could go on.
At the same time, there has been a lot going on behind the
scenes, with alliance shipping lines preparing their networks
for the formation of the three global groupings by breaking
relationships with old partners. There has been a lot of
negotiating with regulatory authorities over the alliances, talks
over restructuring deals have progressed and merger deals
have also moved forward.
There has also been a continuation of trends; ships keep
getting bigger and shipping keeps getting cheaper, something
that is necessary if production sites are to be based far away
from the final market.
This all means that there is a lot on the horizon for the final
six months of the year, so perhaps when we look back on
2014, it will be seen as a year of real change for container
shipping.
Damian Brett, editor
Editor-in-chief Containers Janet Porter
(+44 (0) 20 7017 4617) janet.porter@informa.com
Editor Damian Brett
(+44 (0) 20 7017 5754) damian.brett@informa.com
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Incorporating
www.containershipping.com JUNE2014
Data Hub: LoadFactors..............................08
Data Hub: WorldFleet Update...............10
TradeRoutes: Intra-Europe......................14
Ports: Hamburg.............................................35
DELPHIS: FEEDER
FORTUNESINFLUX
P42
CONFERENCE
DUBAI: NEWSFROM
GLOBALLINER2014
P48
CARRIERS
GLOBALGATEWAYS:
TOPPORTSANALYSIS
P18
MOREINSIGHT PORTS
THE
PERSONAL
TOUCH
ATLANTIC CONTAINER LINE
PRESIDENT AND
CHIEF EXECUTIVE
THE
ANDREW ABBOTT
INTERVIEW
an informa business
Audited by ABC.
Total circulation 10,017
Jan Dec 2011
Containerisation International is published monthly by
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Looking back on the rst six months of 2014
PREPARING FOR
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JUNE 2014
www.containershipping.com CONTAINERISATION INTERNATIONAL 01
NO LONGER TICKING
THE BOXES
Panamax vessels have limits on their
popularity
P16
June 2014
GLOBAL GATEWAYS
Asia continues to dominate the port scene,
but strong growth in Africa and the Panama
Canal expansion are opening up new
opportunities
P18
DATA HUB
TRADE STATISTICS
Encouraging signs for the whole industry as
the gap between supply and demand falls
again, but will it last?
P04
DATA HUB
LOAD FACTORS
Looking at the likely vessel utilisation rates
for key American trade lanes
P08
DATA HUB
WORLD FLEET UPDATE
Capacity boost as more larger vessels
are delivered and smaller ships are
removed
P10
TRADE ROUTE
INTELLIGENCE
Ups and downs on the intra-Europe trades
as volumes grow rapidly but freight rates
continue to decline
P14
18
At this stage, I
see a fairly stable
situation
DATA HUB
PORTS DATA HUB
02 CONTAINERISATION INTERNATIONAL www.containershipping.com
CONTENTS / JUNE 2014
P32
ANDREW ABBOTT
VIEW FROM THE BRIDGE
June 2014
ARABIAN HEIGHTS
DP World will open a 4m teu terminal at
Jebel Ali later this year as other ports in the
region look to capitalise on market growth
P28
PORTRAIT OF A
SHIPPING MAN
Atlantic Container Line president and chief
executive Andrew Abbotts story paints a
picture of stability and continuity against a
turbulent backdrop
P32
NEWS ROUNDUP
Zim nalises restructuring deal
P36
US postpones 100% container scanning
P38
Q1 results round-up
P39
EASTERN PROMISE
The headlines from the latest Global Liner
Shipping Conference, held in Dubai
P48
SULPHUR CAP
CREATES NEW RISKS
MARPOL Annex IV requirement means cost
ramications for carriers, shippers and port
authorities, says Derik Andreoli of Mercator
International
P56
CYBERSECURITY
RISKS IN SHIPPING
Shipping lines in paticular need to
take more notice of the threat of
cyber criminals, say Lars Jensen of
CyberKeel
P60
CONFERENCE
C
M
Y
CM
MY
CY
CMY
K
01662_CI_185X130_HR.pdf 2 2013/10/30 3:34 PM
GUEST COLUMNIST
QUALITY DATA
ESSENTIAL
The data provision services of shipping
lines are increasing in importance, but is
the accuracy of that data up to scratch?
P41
FEEDERSHIP
FORTUNES IN FLUX
Delphis managing director Alexander
Saverys on the challenges faced by shortsea
operators
P42
HAMBURG AWAITS
DREDGING DECISION
The leading German port has started the
year strongly, but congestion issues mean
dredging the River Elbe has become a
hot topic
P45
BOX WORLD BRIEFING
EQUIPMENT
CARRIERS
PORTS
VIEW FROM THE BRIDGE
GUEST COLUMNIST
PORTS
www.containershipping.com CONTAINERISATION INTERNATIONAL 03
ISSUE 5/VOL 47
04 CONTAINERISATION INTERNATIONAL www.containershipping.com June 2014
DATA HUB
TRADE STATISTICS
SUPPLY/DEMAND INDICATORS
FOR CONTAINER SHIPPING
DATA PROVIDED BY:
AT A global level, based upon trade data
available in mid-May MDS Transmodal
estimates that total underlying maritime
container volume (excluding intra-regional
trade) grew by 4.4% in 2013 as compared
with a year earlier.
For the first quarter of 2014, MDS
Transmodal estimates a growth of around 6%
compared to the same quarter last year.
Similar results for the first three months of
2014 have been announced by Maersk Line.
In its interim report for the first quarter of
2014, the shipping line indicates an annual
increase of more than 7% in the global
market for containers. The encouraging
performances in trade trends have been
accompanied by positive performance in
the level of utilisation, with the company
reporting a growth of some 2% in the first
quarter of 2014 compared to 12 months ago.
The vessel utilisation improvements as well as
further savings in operating costs have led to
an increase in profit, despite the decrease in
the average market freight rates.
MDST estimates an overall improvement in
the level of utilisation in the last quarter for the
industry as a whole. As shown in graph A, the
gap between supply and demand in the
first quarter of 2014 is estimated to have
reached a level of 8 points (2006 Q1 =
100), down from 23 in the previous quarter.
However, this level is unlikely to persist for the
rest of the year. If on the one hand, demand
is expected to grow by 4-5% in 2014, on
the other hand supply is expected to rise at a
much higher rate.
ENCOURAGING SIGNS
FOR WHOLE INDUSTRY
Asia to North America East coast South America to east coast North America
Leading indicators: headhaul from Asia 000 teu. Italics = projected
Commodity 2012 2013 2014 2015
89 Miscellaneous Manufactures 1,316 1,378 1,432 1,554
77 Electrical Machinery 1,057 1,068 1,154 1,334
75 Office Machines & Adp Equipment 1,049 1,085 1,096 1,235
82 Furniture 1,021 1,130 1,194 1,267
62 Rubber Manufactures 981 1,050 1,123 1,145
Overall headhaul index 100 105 104 109
Overall backhaul index 100 108 116 124
Leading indicators: headhaul from ECSA 000 teu. Italics = projected
Commodity 2012 2013 2014 2015
05 Vegetables & Fruit, Nuts 54 48 42 42
66 Mineral Manufactures 50 61 58 60
27 Crude Fertilisers & Minerals 44 48 45 45
07 Tea/Coffee/Cocoa/Spices 40 43 55 55
71 Power Generating Machinery 32 28 25 24
Asia to North America (000 teu)
Asia includes NE and SE Asia
EC South America to EC North America (000 teu)
EC South America includes Brazil, Argentina, Paraguay and Uruguay
13,148 504
6,869 313
13,757
4.6%
528
4.8%
7,400
7.7%
346
10.5%
13,668
-0.6%
599
13.4%
7,963
7.6%
351
1.4%
14,294
4.6%
617
3%
8,484
6.5%
379
8%
2012 2012 2013 2013 2014 2014 2015 2015
North America to Asia (000 teu)
North America includes US, Canada, Mexico, Puerto Rico and Greenland
EC North America to EC South America (000 teu)
EC North America includes US, Canada, Mexico (east coast), Puerto Rico and Greenland
Underlying eastbound trade grew by 5% in 2013 but is estimated to
fall by 1% in 2014.
Underlying westbound trade grew by 8% in 2013 and is estimated
to do the same in 2014.
Of the leading headhaul commodities, all show steady growth.
Annual headhaul growth from 2014 to 2017 is forecast at 3%.
Service capacity (eastbound) in the second quarter of 2014 is
expected to remain stable compared to the second quarter of 2013.
Y-o-Y in the second quarter of 2014, estimated utilisation is
expected to decrease marginally, but freight rates and profits are
expected to increase.
Underlying northbound trade grew by 5% in 2013 and is estimated
to grow a further 13% in 2014.
Underlying southbound trade grew by 11% in 2013 but is
estimated to grow by only 1% in 2014.
Of the leading head-haul commodities, none display sustained
growth.
Service capacity (northbound) in the second quarter of 2014 is
expected to be 2% below the second quarter of 2013.
Y-o-Y in the second quarter of 2014, freight rates are expected to
increase marginally, but utilisation and profits are expected to decrease.
2012
2012
2013
2013
2014
2014
2015
2015
The gap between supply and demand has fallen again, but will it last?
Notwithstanding the advantages to be derived from 8,500 teu ships emphasised
by some shipping lines, considering the flexibility these vessels can guarantee, the
orderbook is, not surprisingly, comprised mainly of ships larger than 10,000 teu.
Overall, newbuildings are expected to increase fleet capacity by 23%, with ships
larger than 10,000 teu projected to increase by 78%.
As more of the larger ships come on-stream it is inevitable that rates will remain
depressed. After the upturn following the general rate increase witnessed in April,
freight rates have carried on falling and on May 25 the comprehensive index of the
Shanghai Containerised Freight Index saw a 4% decline compared with the previous
week, with the components to the US west coast and US east coast losing 3% and
1% respectively.
However, the economies of scale the new larger ships offer in terms of fuel
economy are so powerful that carriers with these vessels will be able to ride out the
inevitable depression in rates over the short-term.
For this edition, MDS Transmodals main focus is on American trade lanes. Overall
imports into North America from the first quarter of 2014 compared to the same
quarter in 2013 are estimated to have increased by some 6.5%, while for the
second quarter of 2014 MDS Transmodal estimates a year-on-year rate of less than
3%.
In so far as the individual trade lanes covered in this edition are concerned,
underlying growth in trade from Asia to North America is estimated to have risen by
North Europe to east coast South America Asia to east coast South America
North Europe to EC South America (000 teu)
North Europe includes northern Europe, Scandinavia and the Baltic
Asia to EC South America (000 teu)
500 1,796
587 992
521
4.2%
1,927
7.3%
574
-2.2%
973
-1.9%
507
-2.7%
2,107
9.3%
502
-12.5%
955
-1.8%
542
6.9%
2,272
7.8%
523
4.2%
1,022
7%
2012
2012
2013
2013
2014
2014
2015
2015
EC South America to north Europe (000 teu)
EC South America to Asia (000 teu)
Underlying northbound trade fell by 2% in 2013 and is estimated to
fall by 12% in 2014.
Underlying southbound trade grew by 4% in 2013 but is estimated
to fall in 2014 by 3%.
Of the leading head-haul commodities, meat, fruit & veg and tobacco
show growth.
Annual headhaul growth from 2014 to 2017 is forecast to be 4%.
Service capacity (northbound) in the second quarter of 2014 is
Y-o-Y in the second quarter of 2014, estimated utilisation, freight
rates and profits are expected to decline.
Underlying eastbound trade grew by 7% in 2013 and is estimated to
grow by 9% in 2014.
Underlying westbound trade fell by 2% in 2013 and is estimated to
fall another 2% in 2014.
Of the leading headhaul commodities, all are showing growth.
Service capacity (southbound) in the second quarter of
2014 is expected to be 2% above the second quarter of
2013.
Y-o-Y in the second quarter of 2014, estimated utilisation, freight
rates and profits are expected to decline.
2012 2012 2013 2013 2014 2014 2015 2015
* Excludes intra-regional trade. ** Forecast. On the basis of trade data available in mid-April
the consultancy projects the following changes in underlying demand along the main trade lanes
for loaded containers for the forthcoming 12 months (4Q 2013 3Q 2014 as compared with the
previous 12 months). For explanatory notes that define how data has been organised please see
www.boxtradeintelligence.co.uk.
2011-
2012
2012-
2013
2013-
2017**
North America to Europe -6% +4% +4.5%
North America to Asia +5% +8% +5.4%
Asia to Europe -3% +3% +3.9%
Asia to North America +6% +5% +2.8%
Europe to Asia 0% +2% +5.2%
Europe to North America +6% +6% +4.2%
North America exports * +2% +5% +4.8%
North America imports * +6% +4% +3.1%
Asia Exports * +3% +5% +3.8%
Asia Imports * +7% +4% +5.1%
Europe & Med Exports * 4% +4% +5.2%
Europe & Med Imports * -2% +3% +3.9%
Intra Asia +6% +4% +3.9%
Intra Europe +4% +7% +4.8%
Global overview +5% +4% +4.3%
Leading indicators: headhaul from ECSA 000 teu. Italics = projected
Commodity 2012 2013 2014 2015
01 Meat & Meat Preparations 92 92 87 89
05 Vegetables & Fruit, Nuts 73 78 55 58
07 Tea/Coffee/Cocoa/Spices 52 58 66 67
27 Crude Fertilisers & Minerals 51 48 28 28
12 Tobacco & Manufactures 46 44 17 19
Commodity 2012 2013 2014 2015
65 Textiles & Made-Up Articles 161 167 188 200
83 Travel Goods & Handbags 150 159 184 199
62 Rubber Manufactures 143 165 163 177
76 Telecom & Recording Equipment 142 148 201 211
89 Miscellaneous Manufactures 140 140 151 162
Underlying unitised annual trade growth rates
www.containershipping.com CONTAINERISATION INTERNATIONAL 05 June 2014
DATA HUB
TRADE STATISTICS
DATA HUB
TRADE STATISTICS
4.6% in 2013. For 2014, MDST forecasts a decrease of 1%. Positive
results are expected thereafter. Electrical machinery and office
machines are amongst the principal commodities exported eastbound.
Trade from the east coast of South America to east coast North
America is estimated to have increased by 5% in 2013 with a further
increase forecast for 2014 (13%). Mineral manufactures are the main
commodities exported northbound.
Trade from the east coast of South America to northern Europe
is estimated to have fallen by 2.2% in 2013 and is not expected to
recover until 2015.
Trade from Asia to the east coast of South America is estimated to
have grown by some 7% in 2013 and the growth rates are expected to
be positive for the near future.
Trade between Asia and West and Central Africa is estimated to have
grown by more than 12% in 2013 and growth rates are expected to
remain in the double digits in 2014 (10%). Growth is led by rubber,
mineral and metal manufactures.
Finally, trade between north Europe and West and Central Africa is
estimated to have risen by circa 2% in 2013 and is forecast to grow by
higher rates in the following years. Growth is being led by foodstuffs.
Asia to West and Central Africa North Europe to West and Central Africa
Asia to W&C Africa (000 teu)
North Europe to W&C Africa (000 teu)
North Europe includes northern Europe, Scandinavia and the Baltic
1,261
567
889 205
1,412
12%
578
1.9%
909
2.2%
208
1.5%
1,547
9.6%
640
10.7%
942
3.6%
196
-5.8%
1,682
8.7%
686
7.2%
999
6.1%
204
4.1%
2012 2012 2013 2013 2014 2014 2015 2015
W&C Africa to Asia (000 teu)
W&C Afica includes Cameroon, Cape Verde, Angola, Congo (Rep), Congo (Dem Rep), Gabon, Sao
Tome, Icory Coast, CAR, Niger, Nigeria, Liberia, Mail, Eq Guinea, Burkina, Ghana, Togo, Benin & Chad
W&C Africa to north Europe (000 teu)
W&C Afica includes Cameroon, Cape Verde, Angola, Congo (Rep), Congo (Dem Rep), Gabon, Sao
Tome, Icory Coast, CAR, Niger, Nigeria, Liberia, Mail, Eq Guinea, Burkina, Ghana, Togo, Benin & Chad
Overall westbound trade grew by 12% in 2013 and is estimated to
grow by 10% in 2014.
Underlying eastbound trade grew by 2% in 2013 and is estimated
to grow by 4% in 2014.
Of the leading headhaul commodities, all show some growth.
Service capacity (southbound) in the second quarter of 2014 is
Y-o-Y in the second quarter of 2014, utilisation, profits and freight
rates are expected to decrease.
Overall southbound trade grew by 2% in 2013 and is estimated to
rise by 11% in 2014.
Underlying northbound trade grew by 2% in 2013 but is estimated
to fall by 6% in 2014.
Of the leading headhaul commodities, miscellaneous food products
show the most growth.
Service capacity (soutbound) in the second quarter of 2014 is
expected to be 14% above the second quarter of 2013.
Y-o-Y in the second quarter of 2014, utilisation, profits and freight
rates are expected to decrease.
2012
2012
2013
2013
2014
2014
2015
2015
This data is provided by Box Trade Intelligence in collaboration with MDS Transmodal.
Much more detail is available directly from BTI (www.boxtradeintelligence.co.uk),
including tonnages and estimated teu at the country x country x 3,000 commodities level,
individual ship deployment and estimated revenue, profit, rates and utilisation at the
tradelane and individual ship level.
Commodity 2012 2013 2014 2015
66 Mineral Manufactures 143 169 169 191
89 Miscellaneous Manufactures 104 114 131 145
65 Textiles & Made-Up Articles 87 95 98 106
62 Rubber Manufactures 81 98 113 123
69 Metal Manufactures - Other 79 92 96 104
Leading indicators: headhaul from N Europe 000 teu. Italics = projected
Commodity 2012 2013 2014 2015
03 Fish & Fish Preparations 60 50 55 58
26 Textile Fibres 44 46 49 52
11 Beverages 33 34 41 44
01 Meat & Meat Preparations 33 36 37 40
09 Miscellaneous Food Products 32 35 40 44
Supply - based on actual data Demand - based on actual data
Demand seasonally adj
60
80
100
120
140
160
180
2
0
0
7
Q
1
2
0
0
8
Q
1
2
0
0
9
Q
1
2
0
1
0
Q
1
2
0
1
1
Q
1
2
0
1
2
Q
1
2
0
1
3
Q
1
2014 Q1
Supply Index=164
2013 Q1 - 2014 Q1
% change quarter on quarter
Supply=0.7%
Demand=5.7%
2014 Q1
Demand Index=156
2
0
1
4
Q
1
2
0
0
6
Q
1
Graph A: Global supply v demand and seasonally adjusted
demand index 2006 (Q1=100)
Kalmar DRF450-60S5M
Reachstacker
Year 2010
Capacity 45T
5 High Telescopic
Linde C4531TL
Reachstacker
NEW
Capacity 45T
5 High Telescopic
Hyster RS46-36CH
Reachstacker
Year 2007
Capacity 46T
5 High Telescopic
SMV SL25 ECA
Empty Container
handler
Year 2000
Capacity 8T
9800 mm Duplex
Kalmar DCE 80-45E7
Empty Container
handler
Year 2005
Capacity 8T
7 High Stacking
Kalmar DCF100-45E7
Empty Container
handler
Year 2007
Capacity 10T
6+2 High Stacking
Kalmar DCD200-12LB
Heavy Forklift
Year 2006
Capacity 20T
4500 mm Duplex
Kalmar DCD250-12LB
Heavy Forklift
Year 2008
Capacity 25T
3500 mm Full Freelift
Kalmar DCD320-12
Heavy Forklift
Year 2001
Capacity 32T
3900 mm Full Freelift
Terex TFC45R
Reachstacker
Year 1999
Capacity 45T
5 High Telescopic
Terex TFC45HC
Reachstacker
Year 2007
Capacity 45T
5 High Telescopic
Kalmar DRS4527-S5
Reachstacker
Year 2005
Capacity 45T
5 High Telescopic
Kalmar DCE120-12
Heavy Forklift
Year 2007
Capacity 12T
5000 mm Duplex
Kalmar DCE150-6
Heavy Forklift
Year 2008
Capacity 15T
4000 mm Duplex
Kalmar DCG160-12
Heavy Forklift
NEW
Capacity 16T
4500 mm Duplex
Linde H460
Heavy Forklift
NEW
Capacity 46T
Duplex
SMV SL37-1200A
Heavy Forklift
Year 2005
Capacity 37T
4000 mm Duplex
Terberg YT182
Tow Tractor
Year 2008
Capacity 35T
June 2014 8 CONTAINERISATION INTERNATIONAL www.containershipping.com
DATA HUB
LOAD FACTORS
TRANSATLANTIC TROUBLE?
Ups and downs on some of the main American trade lanes following the impact of
alliance-related service adjustments, reports Damian Brett
East coast North America to east coast South America
MDS Transmodal is
expecting volumes
to increase by 1.4%
in 2014, while in the
second quarter carriers
began to remove
capacity from the trade
lane. For the full year,
capacity is not expected
to increase.
Year-on-year
improvements in vessel
utilisation levels are expected to start taking place in the second half of the year
as volume growth outstrips supply growth.
This will result in higher utilisation levels compared with a year earlier in the
third and fourth quarters of this year and the first quarter of 2015.
However, this is the backhaul leg of the trade lane, meaning that utilisation
levels will remain weak despite the improvements.
2
Mediterranean to east coast North America
Shipping lines operating services from the Mediterranean
to North America are facing up to a difficult year as carriers
struggle to correct an overcapacity situation.
The latest Load Factor forecast shows that utilisation levels
will fail to exceed 80% at any point in 2014, peaking at 77%
during the fourth quarter.
The levels are largely a repeat of last year, when capacity
additions outstripped demand growth.
Carriers are being more careful this year, but are still
increasing capacity slightly ahead of demand; volumes are
forecast to grow by around 4% this year while capacity
additions are expected to equate to a 4.7% increase.
Over the last quarter, MSC has deployed larger ships in both its east coast and Gulf coast loops, adding around
800 teu per week to the market. Gaps in the G6, Evergreen and MOL SVS service have also been filled.
As a result, capacity has increased by 2.5% in the second quarter compared with the first quarter.
East coast South America to east coast North America
Strong demand growth is expected to result in
improved vessel utilisation levels on services
from South America to North America.
MDS Transmodal is expecting volumes to
increase by as much 13.2% this year, while
capacity additions are expected to be flat.
This means load factors will shoot up as
high as 91% during the third quarter, a huge
improvement on the 85% recorded for the
same period in 2013.
With regards to capacity changes since
the last Load Factor forecast for this trade
lane, Hamburg Sd has added larger ships to its UCLA service, but Mediterranean Shipping Co
has cut vessel sizes on its loop and gaps are being left in another service.
This has resulted in a reduction in capacity on the trade lane of about 1.8% since the last
forecast.
1
3
2
1
5
Mediterranean to east coast North America
0
20%
40%
60%
80%
100%
Q115 Q414 Q314 Q214 Q114 Q413 Q313 Q213 Q113
average utilisation rates
East coast South America to east coast North America
0
20%
40%
60%
80%
100%
Q115 Q414 Q314 Q214 Q114 Q413 Q313 Q213 Q113
East coast North America to east coast South America
0
20%
40%
60%
80%
100%
Q115 Q414 Q314 Q214 Q114 Q413 Q313 Q213 Q113
3
June 2014 www.containershipping.com CONTAINERISATION INTERNATIONAL 9
OUR METHODOLOGY: The freight rate forecasts shown in the tables are mainly based on projections of estimated average vessel utilisation in each trade lane, combined
with other relevant circumstances. The fuller the ship, the more likely rates will rise and vice versa. Cargo forecasts are based on the latest information from all sources available to
Containerisation Internationals editorial team. These will always be conservative, and only take account of normal seasonal variations. Fleet capacity information is derived from
Lloyds List Intelligence. Current shipboard capacity in each route is estimated by deducting space lost for broken stows and wayport cargo from the operating capacity offered on
every vessel in that tradelane. This is projected forward by estimating where newbuilds are likely to be deployed, as well as where replaced vessels are likely to be cascaded into.
Average vessel utilisation is simply one divided by the other. It should be noted, therefore, that the resulting freight rate trends only reflect what should theoretically happen if ocean
carriers continue acting according to form. They do not take into account dramatic changes in strategy, such as mass lay-ups, service consolidation and more hub and spoke operations.
East coast North America to North Europe
While an alliance service shake-up is apparently limiting
capacity increases on the trade lane, low demand growth is also
expected.
The first quarter figures released by CTS show that volumes
from North America to North Europe declined by 2.5% year on
year during the first three months of 2014. However, the situation
is expected to improve as the year progresses and growth of just
over 2% is forecast. This compares with estimated supply growth
of around 3%.
With
demand
increasing
more slowly
than supply,
utilisation
levels are
expected to
be slightly
behind last
years level.
DATA HUB
FREIGHT FORECASTER
NEXT EDITION: EUROPE
DATA HUB
LOAD FACTORS
North Europe to east coast North America
The service
shake-up as carriers
align themselves
into three major
alliances is
beginning to take
effect on the
transatlantic trade
lane.
The G6 shipping
lines are starting
to roll out their
co-operation and CMA CGM and MSC are getting closer ahead of the
P3 launch.
The G6 carriers have cut one string the New World Alliances
AEE loop but have enlarged two others to compensate. The GMX,
renamed the AX2, will use ships with an average capacity of 4,300 teu,
compared with the current 3,100 teu. And the ATX, which is renamed
the AX1, will deploy 8,600 teu vessels, compared with the current
5,900 teu.
While this equates to a reduction in capacity for the G6 carriers, they
have stopped selling space to Maersk Line and CMA CGM, meaning in
real terms they have access to more capacity.
In turn, CMA CGM is now buying space from MSC, which has
upgraded its east coast service to vessels of 5,800 teu. It also has slot
agreements with Maersk Line.
This means capacity on the trade lane has increased by 1.7% as the
second quarter progressed. For the full year, capacity is expected to
increase by about 3.1% compared with demand growth projections of
around 4.5%. As a result, load factors are expected to remain strong.
6
East coast North America to Mediterranean
If the situation is expected to be tough for
shipping lines in the headhaul direction of a
trade lane, it is likely to be even worse in the
backhaul direction.
Capacity additions of 4.7% on the trade
lane are being exaggerated by volume
declines on services from North America to the
Mediterranean. During the first quarter of the
year, Container Trades Statistics figures showed
a year-on-year volume decline of 0.1%, while
MDS Transmodal has projected a drop of 7.3%
for the full year.
Utilisation levels for 2014 peaked during the first quarter at a lowly 66%.
There is hope of an improvement next year though, with MDS Transmodal projecting volume
growth of 9%.
4
6
North Europe to east coast North America
0
20%
40%
60%
80%
100%
Q115 Q414 Q314 Q214 Q114 Q413 Q313 Q213 Q113
East coast North America to Mediterranean
0
20%
40%
60%
80%
100%
Q115 Q414 Q314 Q214 Q114 Q413 Q313 Q213 Q113
East coast North America to North Europe
0
20%
40%
60%
80%
100%
Q115 Q414 Q314 Q214 Q114 Q413 Q313 Q213 Q113
KEY: Green (84% and above): Carriers should be able to protect rates or even improve prices, unless the market has hit the top or sentiment dictates otherwise. Grey (80%-83%):
Freight rates should be fairly steady compared with the previous quarter unless market sentiment dictates otherwise. Red (79% and below): Carriers are likely to have a tough time
improving rates and prices could well decline compared with the previous quarter, unless the market has hit the bottom or sentiment dictates otherwise.
4
5
CAPACITY BOOST
FOR BOXSHIP FLEET
More larger vessels are delivered, while smaller ones are removed, reports James Baker
Teu Size range In service April 2014 On Order 2014 On Order 2015 On Order 2016+ Total vessels
on order
Total teu
on order
No Teu No Teu No Teu No Teu
0-499 325 89,983 2 251 2 210 - - 4 510
500-999 724 546,602 5 3,847 2 1,481 1 540 8 5,868
1,000-2,999 1,859 3,364,759 45 79,362 66 129,450 30 59,788 141 268,600
3,000-4,999 923 3,817,016 23 96,788 11 42,700 9 34,600 43 174,088
5,000-7,499 614 3,704,506 24 132,400 10 62,200 - - 34 194,600
7,500-9,999 350 3,007,298 29 256,908 58 524,628 25 231,648 112 1,013,184
10,000-12,999 70 778,468 13 137,686 17 178,362 11 112,020 41 428,068
13,000-15,999 141 1,910,307 10 134,850 23 323,850 25 352,500 58 811,200
16,000+ 11 194,220 10 178,950 31 556,910 1 18,800 42 754,660
Total 5,017 17,413,159 161 1,021,042 220 1,819,791 102 809,896 483 3,650,778
World Cellular Fleet May 2014 (excluding newbuild postponements and cancellations under negotiation)
The latest vessel in Maersk
Lines Triple-E fleet, Marstal
Maersk, was the largest ship
delivered in May.
Photo: Maersk Line
THE total world containership
fleet reached 5,017 vessels
comprising 17.4m teu at the
end of May. The number of
vessels was unchanged from
the end of April, but capacity
rose by nearly 100,000 teu
from 17.3m teu.
The boost in capacity can
be attributed to the delivery
of larger vessels as smaller
ones were removed from
the fleet. These included the
latest of Maersk Lines Triple-E
vessels, Marstal Maersk. Five
other vessels of over 10,000
teu, with a combined carrying
capacity of 61,000 teu,
were delivered during May,
according to the latest figures
from Lloyds List Intelligence.
In total, nearly 130,000 teu
was added to the global fleet
during the month.
This was offset by scrapping
that removed 29,000 teu
from the fleet, the majority
of which represented
panamax and smaller vessels.
Hanjin Shipping followed its
scrapping in April of
three post-panamaxes, all
Source: Lloyds List Intelligence
DATA HUB
WORLD FLEET UPDATE
of which were less than 20
years old, with another similar
vessel in May, the 1996-built,
5,302 teu Hanjin Washington,
which went to breakers in
Alang.
The number of new vessels
ordered during May was
greatly subdued, down to just
five units, four sub-panamaxes
and one handymax. This
compares with 27 vessels
SSA Mexico
operates the Only Specialized Container
Terminal at the Port of
Manzanillo
Which is the most efficient and
the best equipped in Mexico.
Progreso Acapulco Cozumel Veracruz
Tel. (314) 3311000 Manzanillo.
Tel. (55) 54828200 Mexico City.
www. s s a me x i c o . c o m
DATA HUB
WORLD FLEET UPDATE
Vessels laid-up Week ending June 1, 2014
Notes: Lloyds List Intelligence monitors reported and AIS movements of commercial vessels worldwide. This extract identies vessels with no recorded
movement in the past 25 days.
Inactive teu
size range
Owner operator Chartered in /unknown Total % total fleet
No of ships Teu No of ships Teu No of ships Teu
0-499 18 6,267 81 18,517 99 24,784 27.5%
500-999 13 8,131 49 35,527 62 43,658 8.0%
1,000-2,999 17 26,171 45 78,747 62 104,918 3.1%
3,000-4,999 8 32,557 15 64,474 23 97,031 2.5%
5,000-7,499 1 5,552 4 25,096 5 30,648 0.8%
7,500-9,999 - - - - - - -
10,000-12,999 - - - - - - -
13,000+ - - - - - - -
Total 57 78,678 194 222,361 251 301,039 1.7%
Vessels delivered May 2014
Vessel name Shipyard Teu Reefer
plugs
DWT Knots Beneficial owner Operator Deployment
Marstal Maersk Daewoo Shipbuilding & Marine
Engineering
18,270 600 164,397 23 A.P. Moller-Maersk Maersk Line Asia-Europe
APL Sentosa Hyundai Samho Heavy Industries 13,892 1,200 150,166 23.2 Neptune Orient
Lines
APL Limited Asia-Europe
Thalassa Avra Hyundai Heavy Industries 13,806 800 152,344 23 N.S. Lemos Evergreen Asia-Europe
COSCO Italy Nantong COSCO KHI Ship
Engineering
13,386 1,008 156,610 24.3 COSCO COSCO Asia-Europe
CSCL Autumn Hudong-Zhonghua Shipbuilding 10,000 112,000 China Shipping China Shipping
Container Lines
Transpacific
Hanjin Jungil Jiangsu Yangzi Xinfu Shipbuilding 10,000 115,304 Washington Marine Hanjin Shipping Asia-Europe
Cap San Maleas Hyundai Heavy Industries 9,700 1,600 110,000 N.S. Lemos Hamburg Sd Asia-Africa
MSC Amalfi Jiangnan Shipyard 9,403 1,000 112,359 22.2 Costamare MSC Asia-South America
CMA CGM Danube Dalian No.2 9,200 112,000 CIMC CMA CGM
Ever Liberal Samsung Shipbuilding & Heavy
Industries
8,452 942 104,409 24.5 Evergreen Evergreen Asia-Europe
Australia Shanghai Shipyard Company 3,646 400 47,000 22.7 Leonhardt &
Blumberg
Noble Matar Guangzhou Wenchong Shipyard 3,421 540 44,700 22.3 Schoeller Holdings Gold Star Line Middle East
Gulf/Indian
Subcontinent-Asia
Nordtiger Zhejiang Ouhua Shipbuilding 1,700 23,500 Reederei Nord
Taipei Trader Jiangsu Yangzijiang Shipyard 1,102 220 13,750 Lomar Shipping &
Management
Mild Chorus Shanghai Jiangnan Changxing
Shipbuilding
1,100 13,294 Moon Keung
Shipping
Shanghai Jinjiang
Shipping
Xin Ming Zhou 20 Yangfan Group 1,100 12,598 19 Ningbo Port Group Ningbo Ocean
Shipping
Sunny Cosmos Hyundai Mipo Dockyard 1,000 12,229 DAT Maritime
Company
Lagarfoss Rongcheng Shenfei Shipbuilding 875 230 12,000 18.3 Eimskip Eimskip
ordered in April, including 17
of over 10,000 teu.
During the remainder of this
year, a further 161 vessels,
comprising 1m teu of capacity,
are due to be delivered. The
total number of ships on
order at yards now stands at
483, according to Lloyds List
Intelligence. This represents
21% of the current total fleet.
One of the biggest
turnarounds last month has
been the fall in the capacity
of tonnage in lay-up. While
the number of inactive vessels
dropped by only three to
57 during May, the amount
of capacity of the vessels in
lay-up fell by over 25%
from 412,000 teu to 301,000
teu.
The percentage of the total
laid-up capacity by the end
of May had fallen to 1.7%, a
figure not seen since last years
peak season in September.
The big surprise here,
however, was the drop in the
number of idle panamaxes.
At the end of April, 38 vessels
comprising 160,000 teu were
laid up, but a month later
this had fallen to 23 vessels
comprising 97,000 teu.
Only four vessels in the
panamax sector were sent
for scrap during May, so the
remainder coming out of
lay-up have re-entered service.
According to Alphaliner, the
main demand for panamaxes
is now coming from the Asia-
West Africa trades, where
gearless vessels are taking
over from smaller geared
sub-panamaxes. Six of the 11
services from Asia to West
Africa are now using vessels of
over 4,000 teu, Alphaliner said.
The until recently unloved
panamax charter market
has also showed signs of
improvement. Braemar
Seascope has reported
panamaxes being fixed at over
$10,000 per day, up from rates
of only $7,000 per day a few
weeks ago.
DATA HUB
WORLD FLEET UPDATE
Valuations for post-panamax, panamax and handymax container vessels
Note: All values in $m
Age Capacity (teu) May 22,
2014 ($m)
April 22,
2014 ($m)
Monthly change
($m)
May 22,
2013 ($m)
Yearly change
($m)
0 4,250 28.3 33.1 -4.8 36.0 -7.7
5 4,250 20.1 22.8 -2.7 25.2 -5.1
10 4,000 12.8 13.2 -0.4 15.4 -2.6
15 4,000 9.9 9.6 0.3 9.5 0.4
20 3,750 9.3 9.0 0.3 8.1 1.2
25 3,750 9.3 9.1 0.2 8.4 0.9
Panamax Source: Vesselsvalue.com
2014 ($m)
April 22,
2014 ($m)
Monthly change
($m)
May 22,
2013 ($m)
Yearly change
($m)
0 1,400 17.7 16.7 1.0 20.0 -2.3
5 1,400 12.6 12.2 0.4 13.6 -1.0
10 1,400 8.1 8.3 -0.2 8.2 -0.1
15 1,400 4.8 5.2 -0.4 4.6 0.2
20 1,400 3.8 3.7 0.1 3.3 0.5
25 1,400 3.8 3.7 0.1 3.4 0.4
Handymax Source: Vesselsvalue.com
Current and historical values for tankers, bulkers and containers.
Daily updated sales lists, vessel specications and ownership
information.
Data exports, valuation certicates, interactive charts and
automated alerts
2014 ($m)
April 22,
2014 ($m)
Monthly change
($m)
May 22,
2013 ($m)
Yearly change
($m)
0 7,000 66.0 64.1 1.9 58.8 7.2
5 7,000 47.9 47.6 0.3 41.2 6.7
10 6,500 31.0 29.6 1.4 24.8 6.2
15 5,500 16.9 14.9 2.0 15.4 1.5
20 4,500 10.3 10.0 0.3 9.0 1.3
Post-panamax Source: Vesselsvalue.com
Vessel name Teu DWT Speed (knots) Config Year built Price ($m) Purchaser
Vega Topaz 834 11,400 15 Gearless 1999 2.4 China
Leo Authority 1,560 24,336 18.5 Gearless 1997 4.5 China
Merkur Beach 1,706 22,996 19 Geared 1996 3.5 Greece
SC Qingdao 4,250 50,500 24.5 Gearless 2001 11 S.Korea
SC Tianjin 4,250 50,500 24.5 Gearless 2001 11 S.Korea
SC Rotterdam 4,250 50,500 24.5 Gearless 2002 11 S.Korea
Vessels sale and purchase May 2014
Notes: C=cellular; GL=gearless; G=geared; NC=non-cellular; MPP=multipurpose; U/D=undisclosed Source: Braemar Seascope
Vessels demolished May 2014
Vessel name Built Teu Broken date Broken place Shipbreakers Previous Beneficial owner
Hanjin Washington 1996 5,302 16-May-14 Alang Indian Breakers Hanjin Shipping
Duka 1992 4,651 16-May-14 Alang Indian Breakers Danaos Corporation
Messologi 1991 4,437 25-May-14 Alang Indian Breakers Danaos Corporation
Mytilini 1991 4,437 20-May-14 Alang Indian Breakers Danaos Corporation
Hanjin Valencia 1998 4,024 15-May-14 Alang Indian Breakers Hanjin Shipping
Hammonia Caspium 1995 2,959 15-May-14 Alang Indian Breakers Hansa Mare Reederei
Ranee 1995 1,613 03-May-14 Alang Indian Breakers Fiesta Key Private
Kota Wirawan 1991 1,160 13-May-14 Alang Indian Breakers Pacific International Lines
Tone 1979 462 20-May-14 Klaipeda Lithuanian Breakers Per Storesletten Rederi
Egy Group 1990 303 20-May-14 Aliaga Turkish Breakers Mahoney Shipping & Marine Services
DATA HUB
INTRA-European container volumes have
been regularly increasing by double-digit
levels over the past year-and-a-half, but this
has not translated into freight rate increases.
The latest figures from Container Trades
Statistics show that in the first quarter of
2014 intra-European volumes have leapt by
more than 17.4% on the same period last
year to 1.37m teu.
The fastest growing of the sub-routes that
make up this trade lane was Mediterranean-
Mediterranean, which recorded a 25%
increase year on year to 573,362 teu.
The overall intra-Europe increase was
most strongly felt in March, when volumes
reached 515,000 teu compared with
424,900 teu a year earlier.
And this isnt a new trend limited to 2014;
total volumes for the full-year 2013 were
11.15% ahead of 2012 at 4.7m teu, with
double-digit increases coming in all but four
months of the year.
There were also increases in 2012
although not to the same extent with
volumes reaching 4.2m teu, representing a
rise of 4.6% compared with the year before.
However, 2012 wasnt such a
straightforward year, with volume decreases
in January, March and August.
Volume increases have not translated into
increasing freight rates, though. The CTS price
index, which uses the average rate for 2008
as a base level of 100, shows that freight rates
were lower in January and February than they
were 12 months earlier, while in March prices
were just below the year-ago level.
Prices in 2013 spent much of the year below
the 2012 level and rates remain less than the
2008 average, though ahead of 2011 levels.
The average monthly index level for 2014
stood at 81.3 at the end of March, while
the average for 2013 was 82.3 and 2012
recorded a monthly average of 84.3.
While volumes are growing rapidly, freight rates continue to decline and new
fuel emission targets in the ECA are causing concern, writes Damian Brett
UPS AND DOWNS ON THE
INTRAEUROPE TRADE
European operators, one of the main
developments facing them is
the introduction of stricter sulphur
regulations for the North Sea and Baltic
Sea.
From January 1 2015, shipping lines
operating in the two seas will be expected to
use fuel with a sulphur content of just 0.1%
compared with the current level of 1%.
If shipping lines are to meet the
stricter regulations they have three
options; run engines that can use liquefied
natural gas, use cleaner distillate fuel,
or install exhaust-gas cleaning systems
(scrubbers).
A recent survey carried out by Lloyds List
revealed that 48% of respondents planned
to use more expensive distillate fuel,
reasoning that the additional costs would be
factored into freight and charter costs.
The price difference between the two
types of fuel represents an increase per
tonne of up to 50%.
The use of natural gas was favoured by
22% of respondents and scrubber systems
were preferred by 17%.
DATA HUB
TRADE ROUTES
Author of analyst Dynamars Intra-North
Europe Container Trade report, Darron
Wadey, says it is not easy to pin down a
singular cause for the freight rate decline.
He says that the fall in fuel prices may
have played a part, not only reducing the
overall rate as bunker costs have also
come down, but also by increasing the
competitiveness of road transport over
ocean transport.
He adds that while intra-Europe is viewed
as a single trade lane, it is in fact a series of
trade lanes and while one may have a good
year, another may struggle.
Mr Wadey points out that a number
of operators Swan, TransAtlanic, UCI
Intermodal and Delta Shipping have
reduced or stopped running shipping line
routes in the last 15 months.
This could be an indicator of problems on
certain lanes, although others have stepped
in to fill the gaps these cutbacks have left.
Sulphur conundrum
While supply, demand and freight rates
will always be a primary concern for intra-
Figure 1: Intra-Europe Freight Rate Index
Source: Container Trades Statistics Source: Container Trades Statistics
INTRA-EUROPE FREIGHT RATE INDEX
0
20
40
60
80
100
Jan Feb Jan Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014 2013 2012 2011
2008 quarterly average = 100
*2008 quarterly average = 100
TRADE ROUTE INTELLIGENCE
DATA HUB
TRADE ROUTES
At present, most lines appear to be
adopting a watch-and-wait approach to the
stricter regulations, though there have been
some developments.
In early May, Containerships said it would
become the first European shortsea box
operator to use liquefied natural gas-fuelled
ships.
It plans to charter two 1,400 teu dual-fuel
boxships that burn conventional marine
diesel oil and liquefied natural gas, ordered
by owner and technical manager GNS
Shipping/Nordic Hamburg and due to be
delivered in 2016.
Containerships will thus be the first
shortsea container operator in Europe to run
ships on LNG, the box line said.
The new containerships will offer
the most efficient and environmentally
friendly option for transporting containers
by sea, and will not just meet but exceed
environmental standards in the sulphur
emission-control area.
DFDS intends to close its freight and
passenger route between Esbjerg and the
UK in September as it prepares for a year-
end increase in operational costs when new
sulphur emission regulations come into
force.
The Copenhagen-listed operator has long
warned of the impact of internationally
agreed emission regulations.
DFDS is one of the frontrunners in using
scrubber technologies and will be installing
the systems, at a cost of about DKr750m
($138.9m), on up to 21 of its vessels.
However, the work will not be complete
until 2017.
Unfair advantage
Danish owners have also expressed
concerns about the poor enforcement of
the new sulphur rules and the low penalties
that those breaking the rules will be subject
to, with concerns that some owners will
ignore the regulation to gain a commercial
advantage.
A study recently released by SeaIntel
Maritime Analysis revealed the advantages
that carriers ignoring the regulation could
gain.
The report found that fines differ from an
insignificant 2,000 to 45,000, with some
countries confirming that penalties will be
the equivalent of the financial advantage of
using non-compliant fuel.
SeaIntel analysis revealed that a 4,500
teu vessel sailing at 16 knots from the
beginning of the English Channel to
Hamburg using 1% sulphur fuel, instead
of using the mandated 0.1% sulphur fuel,
will save 12,000 on that leg of the voyage,
which is up to six times higher than the
German fine level.
The Polish fines, which are among
the highest in north Europe, will match
the savings for a trip from the English
Channel to Gdansk and back and
assumes that the vessel gets caught every
time.
Mr Wadey points out that the
corporate social responsibility policies
of shippers may be a deterring factor for
shipping lines considering breaking the
rules.
Source: Container Trades Statistics
INTRA-EUROPE VOLUMES (TEU)
0
100,000
200,000
300,000
400,000
500,000
600,000
Jan Feb Jan Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014 2013 2012 2011
Figure 2: Intra-Europe volumes (teu)
Source: Container Trades Statistics
PENALTIES FOR NON ECA SOx COMPLIANCE
Countries that will charge a penalty
Source: SeaIntel
Equal to the cost advantage the carrier had on that voyage Denmark
To be established when the rst case goes to court Sweden
2,000 - 5,000 ($2,759 - $6,898) Germany
Declined to comment Netherlands
Up to 50,000 ($82,616)
Up to 45,000 ($62,087)
UK
To be established when the rst case goes to court Finland
Poland
Up to 2,000 ($2,759) Estonia
Start at 10,000 ($13,797) Norway
1,500 ($2,069) plus the price of taken proper fuel on board Lithuania
Countries yet to state penalties
ECA area
Country Penalty
ECA limits: January 1 2015, maximum sulphur in fuel drops
from 1.0% to 0.1%. Other possible permissions are to use
LNG fuel or abatement technology with high sulphur
content fuels providing SOx emissions are below 0.1%
DATA HUB
FOR carriers it makes economic sense
to use the largest ship possible for a
route.
This means that panamax boxships will
be in less demand on routes transiting the
Panama Canal once the waterway has been
widened and ships of up to 13,000 teu can
pass through.
By 2015 the transpacific and transatlantic
routes will use ships between 5,000 teu and
13,000 teu. Ships exceeding 13,000 teu will
be the mainstay for the Asia-Europe trade
route, where ports have the infrastructure to
handle these ships.
It is expected that by 2015, panamax
boxships will only be deployed on
secondary routes between the ports with
the right infrastructure.
Panamax vessels have limits on their popularity, writes Sarah Bennett
NO LONGER
TICKING THE
BOXES
panamax fleet and is also likely to see
increased demolitions or lay-up.
This is due to larger ships sized around
10,000 teu having preference over smaller
ships on the main trades crossing the
Atlantic and Pacific oceans once the Panama
Canal expansion and projects to improve
port accessibility are complete.
Furthermore, shipowners that only have
one size of ship in their fleets are at risk of
having vessels with limited deployment
opportunities.
There is an end in sight.
It is believed port infrastructure cannot
handle ships with more than 22,000 teu,
and even if it could, it would be quicker to
load and unload two 10,000 teu ships rather
than one 20,000 teu ship.
Photo: Ralf Broskvar/Shutterstock.com
DATA HUB
SPECIAL REPORT
According to Lloyds List Intelligence
analysis, the fleet is forecast to grow 11%
by 2015, when containership capacity is
expected to reach 19m teu from 17m teu at
the end of 2013.
As part of this overall trend, panamax
boxships are likely to be prime demolition
candidates as they face fewer deployment
opportunities once the Panama Canal
widening project is complete and the influx
of larger containerships is cascaded onto
the main trade routes.
Already, some in the industry
have started to act, with panamax boxships
either being sent for scrapping or being
returned to their owners.
The fleet sized between 5,000 teu and
8,000 teu is in a similar position to the
TRADE ROUTE INTELLIGENCE
DATA HUB
SPECIAL REPORT
-6%
-7%
-13%
1%
25%
33%
27%
87%
13%
Intra-regional
Transpacic/
Transatlantic
Asia-Europe
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
N
o
m
i
n
a
l

t
e
u

c
a
p
a
c
i
t
y

(
T
h
o
u
s
a
n
d
s
)
Note: 2015 bar labels are % growth since 2013
2015
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f
5%
10%
15%
20%
25%
30%
35%
0
2%
4%
6%
8%
10%
2010 2011 2012 2013 2014f
0
5
10
15
20
25
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f 2015f
0-499 500-999 1,000-2,999 3,000-4,999 5,000-7,499
7,500-9,999 10,000-12,999 13,000-15,999 16,000+
N
o
m
i
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Intra-regional
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500
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1,500
2,000
2,500
3,000
3,500
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2013

SHORT-TERM FUTURE: CAPACITY BY SIZE PANAMAXES AS A PROPORTION OF TOTAL FLEET CAPACITY
PROPORTION OF TOTAL FLEET SCRAPPED
TOTAL FLEET CAPACITY
THE PANAMAX FLEET
HALF of the worlds container volumes
are handled in Asian ports and Neil
Davidson, senior analyst, ports & terminals
at Drewry, predicts that the proportion will
be close to two-thirds by 2020.
Increasingly Asia is becoming the
centre of the critical mass of container
trade and, within that, Chinese ports will
be increasingly important. Already 30% of
world container trade is handled in Chinese
ports and that is clearly going to go up.
Shanghai is going to maintain its
dominant position certainly in the near
future. It is going to add capacity and
it has to add capacity in large lumps,
because even 3% growth is an awful lot
of teu. It is the sheer scale of ports like
Shanghai and Singapore that really make
you stop and think.
There are fears that China is not
only slowing but is heading towards its
own credit crunch, as Dean Davison,
principal consultant at Ocean Shipping
Consultants, points out. In the past few
years, China has seen massive expansion
and it is probably going to be more of
the same. But the cynics among us might
ask: how long can this carry on?
In the top 10 Asian ports, Hong Kong
stands out for losing volumes.
Hong Kong faces strong competition
from the Shenzhen ports, which are
lower cost, says Drewrys Mr Davidson.
Hong Kong has always been a port
with extremely expensive land and an
extremely high quality, high-cost port to
use. Shenzhen has lower land and labour
costs, therefore lower tariffs.
But it is also the migration of
manufacturing from south China to north
China because labour in the south is
becoming expensive compared to the
north, so manufacturing is moving north
and the Bohai ports are benefiting.
Hong Kong faces similar challenges
to ports in other regions of the world
bigger ships, bigger alliances, how
do you accommodate the needs of the
alliances when you have fragmented
capacity? A huge amount of boxes
already have to be trucked between
terminals in Hong Kong the port
would benefit from some consolidation
and reorganisation of terminal
ownership, to create more contiguous
GLOBAL
GATEWAYS
SPECIAL REPORT/GLOBAL GATEWAYS
PORTS
Top 10 Asian ports 2013
Country Port 2013 teu 2013 % +/- 2013 teu +/- 2012 teu
China Shanghai 33,639,500 3.4% 1,110,500 32,529,000
Singapore Singapore 32,578,300 2.9% 928,900 31,649,400
China Shenzhen 23,278,000 1.5% 337,870 22,940,130
China Hong Kong 22,288,000 -3.6% -829,000 23,117,000
South Korea Busan 17,680,000 3.8% 639,433 17,040,567
China Ningbo 16,770,000 7.0% 1,100,000 15,670,000
China Qingdao 15,520,000 7.0% 1,017,000 14,503,000
China Guangzhou 15,300,000 3.8% 556,400 14,743,600
China Tianjin 13,000,000 5.7% 700,000 12,300,000
Malaysia Port Klang 10,350,409 3.5% 348,914 10,001,495
Total 200,404,209 3.0% 5,910,017 194,494,192
Source: Port authorities, terminal operators
ASIA
Asia continues to dominate the box port scene, but strong
growth in Africa and the Panama Canal expansion are
opening up new opportunities, reports Felicity Landon
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PORTS
quay lines and reduce the problem of
alliances having to call at more than one
terminal, or of inter-terminal transfers.
When planned port rotations of the P3
alliance of Maersk Line, Mediterranean
Shipping Co and CMA CGM were
revealed, it was the Port of Tanjung
Pelepas that appeared to be a big
winner, selected as the main hub for the
Asia-North Europe trade, while Singapore
has been named as the hub for Asia-
Mediterranean trade. Malaysias Port
Klang will largely lose out.
It remains to be seen what effect that
has on Port Klangs transhipment ability,
but it is a big gateway port the main
entry port for Malaysia, and that is not
going to change, says Mr Davidson.
HAMBURG bucked the trend in 2013,
chalking up a 4.6% increase in container
throughput. While this could partly be
put down to a recovery in container
traffic with Asia, the main reason for the
increase was a growth in transhipment
services into the North Sea and Baltic
region, which were 10% higher.
However, while the chatter continues
over alliances and their port choices,
Hamburg is proof of one important
phenomenon. I think we all get very tied
up with shipping lines and alliances and
ship sizes and if we are not careful, we
forget about the cargo. Because what it is
really about is cargo where is it, where
does it want to go, and if you are in the right
place to serve a particular market, then at
the end of the day I believe the cargo will
decide, says Drewrys Neil Davidson.
That is why the big ships are still
going into places like Hamburg and
Antwerp because these ports are
major cargo generation centres and you
cant afford not to call in at ports like
these. So even if it is more difficult to get
in with your big ship, if you have to wait
for a tidal window or have to schedule
it so it isnt at full draught or whatever
it happens to be, that is what you do
because the cargo is king.
Maasvlakte 2, Rotterdams deepwater
expansion, is on the way, with APM
Terminals and DP World both preparing
to open their new container terminals
later this year. Although the P3 schedules
appear to favour Antwerp over Rotterdam,
Mr Davidson says: You have to imagine
that Rotterdam will benefit at some stage
from putting in this capacity, because
it should be very attractive location-
wise and because of the quality of the
facilities. Brand new, very deep water, big
cranes it ticks all the boxes.
Meanwhile, Antwerps announcement
that Mediterranean Shipping Co is
to consolidate all its activities in the
Deurganck dock, moving out of the
Delwaide dock, adds to the interest. The
Deurganck dock is already used by the
other members of the P3 alliance but
the move is also important because MSC is
running out of space at its existing terminal.
In the UK, meanwhile, Mr Davidson
says: It is a straight fight between
London Gateway and Felixstowe, with
Southampton also interesting, having
just opened its new berth.
Netherlands Rotterdam 11,621,249 -2.1% -244,667 11,865,916
Germany Hamburg 9,300,000 4.6% 408,440 8,891,560
Belgium Antwerp 8,578,269 -0.7% -56,900 8,635,169
Germany Bremen/Bremerhaven 5,809,455 -4.7% -286,318 6,095,773
UK Felixstowe* 3,700,000 0.0% 0 3,700,000
Total 17,208,684 -0.4% -76,400 17,285,084
NORTH EUROPE
Top 5 North European ports
Source: Port authorities, terminal operators *Estimated
London Gateway
is facing a
fight with
Felixstowe and
Southampton in
the UK.
Hamburg
increased
container
throughput by
4.6% in 2013.
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PORTS
Ocean Shipping Consultants principal
consultant Dean Davison says: DP World
is committed to making London Gateway
work. But at the same time, Felixstowe
has done very well they have moved
with the times and developed the
facilities to keep pace with the ships. And
Southampton is still in there fighting.
AS THE North American economy
finally comes out of recession and
with some organic growth back in the
market the interesting story will be
how that growth is shared among the
different ports going forward, says Neil
Davidson, Drewrys senior analyst, ports
& terminals.
Ports such as Tacoma and Seattle are
facing difficulties in accommodating
the alliances and big ships. How do you
accommodate the nature of the business
coming when you are fragmented
with relatively small terminals and are
two ports next door to each other but
operating independently? he asks.
Along the coast, the suggestion that Los
Angeles and Long Beach should merge
has come up once again. The ports
quite rapidly said no. Yet they are even
closer physically it is really just one
port with an imaginary line. The number
of terminals, fragmented capacity and
shipping line shares make it complicated.
Its interesting that New York/New Jersey
managed to merge effectively years ago
it was quite forward-thinking.
As well as the challenges of terminal
capacity and ownership in US ports,
theres the underlying question of the
Panama Canal, still quite a bit of an
unknown, says Mr Davidson.
We still dont know what the tolls
will be through the new expanded
canal. How much it will cost to get a ship
through is a big part of the calculation to
decide whether to call west or east coast.
We still dont know what the upcoming
tariffs will be on the railroads out of Los
Angeles/Long Beach that will have a
big impact on how much traffic decides
to go into the canal rather than into the
west coast and on to rail.
Although Californias ports serve a
massive local market, about 50% of the
imports they handle go beyond the state
and into the US Midwest. Obviously
its all Asia imports mainly the usual
consumer goods, says Dean Davison,
principal consultant at Ocean Shipping
Consultants.
Going out, its overwhelmingly
empties. There is a lot of talk about
getting more grains and forest products
to go out from anywhere up the West
coast even Vancouver. A lot of
transloading facilities are being built for
these sorts of exports, but the volumes
in comparison to those coming in are
small, and that is the trend on the whole
west coast of North America.
NORTH AMERICA
Top 10 Ports in the North American Free Trade Agreement: Canada, US and Mexico
US Los Angeles 7,868,579 -2.6% -209,135 8,077,714
US Long Beach 6,730,573 11.3% 684,911 6,045,662
US New York/New Jersey* 5,490,000 -0.7% -39,909 5,529,909
US Savannah 3,033,618 2.3% 67,405 2,966,213
Canada Vancouver* 2,825,000 4.1% 111,840 2,713,160
US Oakland 2,346,528 0.1% 2,136 2,344,392
US Virginia (Hampton
Roads)
2,223,532 5.6% 117,646 2,105,886
Mexico Manzanillo 2,136,157 7.2% 143,981 1,992,176
US Houston 1,950,071 0.8% 15,226 1,934,845
US Tacoma 1,891,570 10.5% 180,280 1,711,290
Total 36,495,628 3.0% 1,074,381 35,421,247
Ports such as Seattle
are facing difficulties in
accommodating larger
vessels.
PORTS
Looking at North America as a whole, the
growth has been in Suez services to the US
east coast, says Mr Davidson especially
into Virginia. With the bigger ships
cascading down from the east-west routes,
Suez is an option to deploy them. However,
the big story with North American ports is
still the question of landside connectivity
and congestion; truck and rail is an issue
that wont go away.
WINNERS and losers are easily made in
the Africa-Mediterranean league table,
which is characterised by transhipment
hubs and the promise of better if
elusive things to come in Africa.
Basically, all the transhipment hubs
are competing; Valencia and Barcelona
act primarily as import/export ports but,
because the ships go in anyway, the
shipping lines decide they might as well
put transhipment boxes through as well,
says Dean Davison, principal consultant
at Ocean Shipping Consultants.
I think you can put North Africa with
the Mediterranean but as for Africa
generally, it is the same old story. Masses
of potential, masses of interest in certain
places, but an apparent inertia in making
it happen. The inland infrastructure has
got better in some places but it still not
good enough. You can develop a good
port with great facilities and big cranes,
etc., but the minute the container gets to
the gate, the inland infrastructure is just
not up to scratch.
Once you get the big terminal
operators involved, they will help finance,
develop and operate efficient terminals
but all they can do is exert pressure or
influence on the governments involved
to develop the inland infrastructure, and
that is going to be the hold-up.
Among the big private investment
announcements recently, a consortium
led by APM Terminals signed an
agreement with the Ivory Coast
government for the construction and
operation of a new terminal at the Port
of Abidjan; the consortium plans to
invest a total of $600m over the 21-year
concession term, including more than
$400m in the first five years.
The Philippines-based ports group,
ICTSI, meanwhile, has sold a 25% stake
in its proposed container terminal
at Lekki, Nigeria, to CMA Terminals,
part of the CMA CGM group, leading
to headlines about the continuing
scramble for Africa.
In East Africa, OSC has been doing
some analysis which leads Mr Davison to
say: Mozambique, for example, is a good
port that can be developed and serve a
wide area but it isnt going to be easy.
Regarding East and West Africa,
you sort of feel that in 15 years time
you might still be having the same
conversation. Operators know the
potential is there it is whether people
have the appetite for more difficult
challenges. Yes, emerging regions is
where the growth is going to be, but you
have to get over the pain of dealing with
this part of the world.
Marine consultant Richard Clarke
says: Africa is interesting because it
is so politically sensitive. Countries go
up and down. But it is also so critically
dependent on its inland transport
links. Probably the future is going to be
dictated by whos got good railway lines.
Its interesting that Tanzanias railways
are just being revived if they are not,
their ports are going to die.
I did some work in Ghana recently
you just cant get containers out of the
AFRICAMEDITERRANEAN
Selected North Africa-Mediterranean ports 2013
Spain Algeciras 4,336,459 5.5% 224,610 4,111,849
Spain Valencia 4,327,838 -3.2% -152,597 4,469,754
Egypt Port Said 3,900,000 7.4% 268,835 3,631,165
Turkey Ambrali (Istanbul) 3,405,800 9.9% 308,336 3,097,464
Greece Piraeus 3,164,000 15.7% 429,986 2,734,014
Italy Gioia Tauro 3,087,000 13.4% 365,896 2,721,104
South Africa Durban 2,632,513 2.5% 64,389 2,568,124
Malta Maarsaxlokk 2,750,000 8.3% 211,920 2,538,080
Morocco Tanger Med 2,500,000 31.6% 600,000 1,900,000
Italy Genoa 1,988,013 -3.7% -76,793 2,064,806
Total 32,091,623 7.6% 2,244,582 29,836,360
Source: Port authorities, terminal operators *Estimated **Fiscal year
A consortium led by APM Terminals has signed an agreement for the construction and operation of a
new terminal at the Port of Abidjan.
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DISTANCE LEARNING
PORTS
place because the railways are decayed
to the point where they are not usable
and the road system is just thousands of
miles of dirt road. Building ports is easy,
its the other bit thats hard.
SANTOS leads the pack in Latin
America, reporting an estimated 7.2%
increase in volumes in 2013 and the
new capacity created by DP Worlds
Embraport and the APM Terminals/TIL
Brasil Terminal Portuario has provided
plenty of room for more.
These new big terminals will hit
existing terminals at Santos because
cargo will move to a certain extent
but Santos has been short of capacity
for so many years, and it is now looking
at a more comfortable position which
may allow it to do more transhipment
for Brazil and maybe even further
south to Uruguay and Argentina, says
Neil Davidson, senior analyst, ports &
terminals at Drewry.
Further south, meanwhile, ICTSIs new
container terminal in La Plata, downriver
of Buenos Aires, is another interesting
development and one to watch. Buenos
Aires itself has severe draught restrictions
but, having said that, it didnt stop a
10,000 teu ship from squeezing in.
The big question regarding this
region is the impact of the expanded
Panama Canal when it does eventually
open.
Nobody really knows what it is going
to do now because the biggest ships it
will be able to take cant get into most of
the east coast US ports. Most arent deep
enough historically US dredging is done
by Federal engineers but now there is no
money, so it isnt happening and no one
wants to pay for it, says marine consultant
Richard Clarke. If there are going to be
beneficiaries, it will be Kingston and
Freeport Bahamas, with the big ships
transhipping from there. I believe Kingston
in particular must have a really rosy future.
But at the same time, people are
scrambling to invest in ports in Panama
at either end of the canal.
Dean Davison, principal consultant
at Ocean Shipping Consultants, says: I
have always thought of the Caribbean
as the most competitive transhipment
market and the big ships coming through
the canal and invariably going up the
US east coast can pick and choose their
transhipment hub.
Yes, the expansion of the canal will be a
game changer, says Mr Davison. The US
is talking about lets get ready for 2015.
But assuming it is finished and open, you
are not suddenly going to go from 5,500
to 12,000 teu they are not going to be
queuing up at a minute past midnight to
use the canal. It will be a gradual process.
He is surprised by the drop in volumes
at Cartagena, which primarily serves
Colombias import/export markets but,
because of its location, is also well
suited for transhipment.
Cartagena has a very commercially
aware management team and is
expanding and building better facilities.
Selected Caribbean and Latin American ports 2013
Brazil Santos* 3,400,000 7.2% 228,315 3,171,685
Panama Balboa 3,063,579 -5.8% -187,560 3,251,139
Panama Manzanillo MIT 2,025,904 -1.6% -33,860 2,059,764
Colombia Cartagena 1,865,233 -7.9% -159,488 2,024,721
Peru Callao 1,855,019 2.1% 37,356 1,817,663
Argentina Buenos Aires* including
Exolgan
1,730,000 4.5% 74,000 1,656,000
Jamaica Kingston 1,703,949 -8.2% -151,476 1,855,425
Ecuador Guayaquil* 1,565,000 8.0% 116,313 1,448,687
Total 17,208,684 -0.4% -76,400 17,285,084
LATIN AMERICA
Santos reported a
7.2% increase in
volumes in 2013.
LATER this year, DP World will inaugurate
a new container terminal at its Jebel Ali
facility.
The opening of a new terminal may not
normally garner too many column inches,
but when it is considered that the facility
will have a capacity of 4m teu, it perhaps
deserves slightly more coverage.
To put the size of this terminal in
context, it offers more than twice the
capacity of the first phase of DP Worlds
London Gateway port and if the Dubai
development was to reach full capacity on
opening, it would be safely in the worlds
top 40 container ports in Containerisation
Internationals annual Top 100 Ports report.
The opening of Container Terminal 3
follows hot on the heels of the expansion of
Jebel Alis Container Terminal 2 by 1m teu
last year.
In total, these two developments will
bring Jebel Alis total annual container
capacity to 19m teu an increase of
more than 35% in the space of just over a
year.
But with the Middle East still in recovery
mode after the global financial crisis, is
now the right time to be opening a new
terminal?
DP World non-executive director and
vice chairman Jamal Majid Bin Thaniah feels
there is sustainable growth in the region,
which will support the increase in capacity
at the transhipment hub.
There are a lot of projects announced in
the Middle East, particularly in Dubai, the
UAE, Qatar, Bahrain and Kuwait, he says.
There is also the relaxation of Iran
sanctions and this has given confidence to
investors.
This region requires a fast development
to meet certain deadlines, the Qatar World
Cup the Expo 2020, the development of the
satellite cities its all announced and will
result in a serious development like we saw
in 2008.
At the moment you see a relaxation and
a better political atmosphere. You will see
the easier movement of investment into the
region.
Mr Bin Thaniah adds that there are also
large infrastructure projects in Africa where
the Chinese government continues to
invest heavily.
Lessons learned
The vice chairmans confidence certainly
seems to be reflected in the growth figures
reported by the port in the first quarter of
the year.
During the period, the operators UAE
volumes largely generated by Jebel
Ali increased by 17.5% year on year to
3.6m teu.
This follows on from growth of 2.7% for
the whole of 2013 over 2012 as volumes
reached 13.6m teu.
If growth were to continue at the current
level for the rest of the year, throughput
would just about break the 16m teu mark,
although this does include the volumes
processed at the Fujairah Container
Terminal.
The number of projects currently being
developed in the Middle East did prompt
one port contact to wonder whether the
region, and Dubai in particular, was in the
process of creating another real estate
bubble, ripe to burst.
Yet, Mr Bin Thaniah feels the lessons of
the financial crisis have been learned.
The debt surrounding the emirate is
DP World will open a 4m teu terminal at Jebel Ali later this year as other ports in
the region look to capitalise on the growth in the market, reports Damian Brett
ARABIAN
HEIGHTS
MIDDLE EAST/JEBEL ALI
PORTS
The opening of
Container Terminal
3 follows the
expansion of Jebel
Alis Container
Terminal 2 by 1m
teu last year.
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now structured totally different. It is now
restructured on long-term maturity, which has
given the emirate the ability to move forward
faster with its ambitions and its project.
The country cannot afford it [another
bubble], the companies cannot afford it,
neither the financial institutions, nor the
banks.
All of them are putting their rules and
governance in place to mitigate another crisis.
I believe that the growth we have now
is real growth based on the pain and the
blood on the floor that we have seen over
the last five years. I doubt whether any
party would accept any growth that could
bring a surprise.
Regional competition
Another threat to Jebel Alis dominance
in the Middle East comes through the
addition of new terminals hoping to attract
transhipment traffic.
In January, Saudi Arabias newest
container gateway, King Abdullah Port on
the Red Sea, handled its first export cargo
when 54 containers of polymer material
heading for Singapore were processed.
The multipurpose 2.7m teu port, with
ro-ro, automotive, bulk, general cargo and
container terminals, was built by Ports
Development Co, a joint venture between
the Saudi Binladin Group and Emaar
Economic City.
EEC is the mastermind of King Abdullah
Economic City, a $50bn development
project covering 168m square miles,
developed over three phases, with
completion earmarked for 2020.
Elsewhere, the Saudi Arabian government
has been pressing ahead with a number
of highly significant infrastructure projects
as it has sought to ensure sufficient
cargo-handling capacity is available for
the nations burgeoning petro-chemical
exports.
There are also plans to build a second
terminal at Dammam that will double that
ports capacity to at least 3.6m teu when it
opens in 2015. Saudis Commercial Port of
Jubail also has hub port ambitions.
Further up the Gulf, Kuwait is developing
a megaport complex known as Port
Mubarak Al Kabir on Bubiyan Island,
although the project is moving slowly.
Irans Shahid Rajaee, formerly known
as Bandar Abbas, also has ambitions of
WE TAKE THE PORT TO THE
HHLA_AZ_CI_420x150_ENG_DRUCK.indd 1
PORTS
CONTAINERISATION
INTERNATIONAL
TOP 100 PORTS 2013
See how Middle Eastern ports fare globally
with our interactive Top 100 Ports tool at
www.lloydslist.com/containers
becoming a regional hub port and in
December officially held the opening for its
second container terminal.
The new terminal has a 1km quay, 10
quay cranes and a 16 m depth alongside. It
brings the ports total container capacity to
4.8m teu.
The lifting of sanctions against Iran
should help stem the volume decline the
port experienced last year.
SoharPort and Freezone also has
growth ambitions. It is in the process of
doubling box capacity to 1.5m teu as its
Oman International Container Terminal is
expanded.
The port handles around 200,000 teu per
year, but commercial operations at Muscat
port are being closed, with the 350,000 teu
of traffic transferring to Sohar in the process.
Mr Bin Thaniah feels these developments
will in fact aide Jebel Ali in growing further.
We have realised something; most of
the ports surrounding Jebel Ali rely on the
efficiency of Jebel Ali, he says.
In the past we have seen ships leave
Jebel Ali with export transhipment cargo
but then come back with the same cargo
because of capacity issues at the terminals
surrounding Jebel Ali.
We realised that any improvement in
these ports will complement our operation
because we will have more turnaround of
ships and cargo.
Terminal impact
At the recent Containerisation International
Global Liner Middle East and India,
Chemical Management Resources
managing director Leslie McCune also
questioned what the impact of these new
terminal developments would be.
In response, DP World UAE region senior
vice president and managing director
Mohammed Al Muallem said there was
more to a hub than just a port.
Im happy to hear that everybody wants
to be a hub because it brings competition
and we are a people that love competition,
he said.
It is not just the port, it is the whole
system, the whole system that makes it a
hub. Over the last 40 years the work that
has gone in to establish Dubai as hub has
worked and the port is part of it, so is the
airport, which is one of the leading airports.
The trading community thrives on the
government support in making business as
easy as possible.
If they want to develop as a hub, they
need to develop a complete system to
make it happen.
He said that its growth was also down
to the fact that its import and export cargo
accounted for a high proportion of the
13.6m teu throughput.
This was down to the infrastructure
projects but also the trading community
that had been established in Dubai and
growth in tourism.
From the shipping lines perspective,
you need to ask if there is enough demand
to move elsewhere, he said.
Our shipping line colleagues tell us they
will go where the cargo is being generated
or it is being imported.
AD
Warsaw, Munich, Prague, Krems ... No matter which
particular European economic area is the final desti nation
we take the port to the hinterland. Hamburger Hafen und
Logistik AG has highly efficient container terminals and
power ful transport systems that connect the northern
German seaports with the emerging economic regions in
Central and Eastern Europe reliably and eco-efficiently.
www.hhla.de
GROWING TOGETHER.
HINTERLAND.
02.05.14 17:17
PORTS
THE VIEW FROM THE BRIDGE
INSIGHT FROM THE CSUITE /ANDREW ABBOTT
IN AN inherently turbulent industry, Atlantic
Container Line has had a more chequered
history than most ocean carriers.
Yet despite many changes in ownership
since the transatlatlantic specialist was set
up almost 50 years ago by a consortium
of five major European shipowners, senior
management has remained remarkably
stable. So too has ACLs core business,
with the line continuing to focus on the
same trade lane that it has from the very
beginning.
At the helm now is Andrew Abbott, who
undoubtedly knows the Atlantic trades
better than anyone, having joined ACL in
1977.
Apart from brief spells with Waterman
Steamship Corp and Orient Overseas
Container Line between 1979 and 1983,
he has remained with ACL ever since, taking
over from Olav Rakkenes as president and
chief executive in 2003.
Many of his senior staff have also worked
for ACL for many years, providing stability
and continuity that is rare in shipping these
days, but which undoubtedly helps to foster
customer loyalty.
Although based in New Jersey, where ACL
is headquartered, Mr Abbott criss-crosses the
Atlantic frequently, making a point of visiting
all the lines key accounts on a regular basis.
Indeed, that is one of ACLs perceived
strengths; establishing close relationships
with clients, whether they be shippers of
containerised or ro-ro cargo.
The same goes for partner lines. ACL
negotiated the industrys first slot charter
arrangement with Hapag-Lloyd way back
in 1986 when vessel-sharing agreements,
PORTRAIT OF A
SHIPPING MAN
Atlantic Container Line president and chief executive Andrew Abbotts
story paints a picture of stability and continuity against the turbulent
backdrop of the container shipping industry, writes Janet Porter
alliances and consortia were an unknown
quantity. The following year, ACLs five G3
ships were lengthened to accommodate the
German carriers extra space requirements.
The partnership with Hapag-Lloyd continues
to this day, with the pending amalgamation
of CSAVs container business not expected to
have any impact on this long-standing swap
deal. The pair exchange 550 teu of space per
week on each others ships.
We have an excellent relationship with
Hapag-Lloyd they treat us like their best
customer, we get flawless service from them,
and we treat them the same way, says Mr
Abbott.
The line also has a partnership with
vehicle specialist WalleniusWilhelmsen,
which goes back many years. The
Scandinavian operator charters all the space
on the car decks of ACLs ships between
North America and northern Europe.
Swedens Wallenius was one of ACLs
original founder shareholders.
Influencing change
ACL has always punched above its weight,
both in terms of industry leadership and
profile.
Although ranked by Lloyds List
Intelligence at number 81 in the world
in terms of container capacity on its five
multipurpose ships, ACL was at the forefront
of the long-running battle with the European
Commission over the legality of the Trans-
Atlantic Conference Agreement, with the
combative Mr Rakkenes leading the fight.
That bruising encounter persuaded Mr
Abbott to make sure ACL never gets caught
up in such regulatory conflict again, even
quitting the former European Liner Affairs
Association, a Brussels lobby group, some
years ago rather than belong to an industry
organisation and risk another antitrust
investigation. But he has not shrunk from
pressing for regulatory reform.
As one of the very few Americans in
charge of an international shipping line, and
one that happens to be headquartered in
the US, he has tried to use his positon to
influence change in Washington.
He continues to push for the elimination
of contract and tariff filing in the US, and
has had several meetings with the Federal
Maritime Commission on the subject,
although with little obvious support from
other carriers or major shippers.
Nobody has ever told me of one single
benefit of the filing process, yet nobody
wants to bother to change it. It is a total
waste of taxpayer dollars that hurts American
exporters. But it doesnt go away, Mr Abbott
grumbles.
However, the wheels of government turn
slowly, so I am unlikely to see any progress
on this during my lifetime, he candidly
acknowledges.
He has given up on efforts to have the
protectionist Jones Act repealed, though,
with too many vested interests involved.
On another matter, and one which directly
affected ACL, Mr Abbott decided to more or
less take the law into his own hands a few
years ago because of frustration over the
reluctance of authorities in several European
countries to intervene when stowaways
were found.
With their car ramps and regular sailings
to North America, ACLs ships are more
ANDREW Abbott began his maritime career in New York with
Atlantic Container Line in 1977. Between 1979 and 1983, he held
management positions at Waterman Steamship Corporation and
Orient Overseas Container Line.
He returned to ACL in 1983, working in the US and UK. He
assumed his current position of president and chief executive in
January of 2003 when he succeeded Olav Rakkenes.
Mr Abbott has a degree from Georgetown University and
studied economics at the Universitaet Heidelberg, West Germany,
and the Humboldt Universitaet, East Germany. He has an MBA
from Columbia University in New York, and is a member of the
board of the Georgetown University School of Foreign Service.
PATH TO THE TOP
vulnerable than most to stowaways, but
following one particularly unpleasant
incident when crewmembers were
threatened by a group of men trying to
reach Canada illegally, Mr Abbott had some
containers converted to temporary cells to
detain any stowaways found onboard.
But the problem persists, with a pair found
hidden inside cargo earlier this year. They
were handed over to the Liverpool police,
who have been more helpful in trying to
tackle the problem of stowaways than their
mainland European counterparts who prefer
to turn a blind eye.
Firm focus
Now owned by Italian ro-ro- specialist
Grimaldi, ACL has been able to broaden
its global reach through the network of its
parent company, but nevertheless remains
firmly focused on the Atlantic where it hopes
to escape any major upheavals created by
the mega-alliances taking shape.
But its powerful owner, with annual
turnover of 2.3bn ($3.1bn) and a fleet in
excess of 120 ships, proved a great asset
when ACL placed its newbuilding order in
mid-2012, taking advantage of attractively
low prices.
The five largest ro-ro/containerships ever
built are due to enter service next year,
with the first scheduled for delivery in May,
replacing the G3 vessels that are now 30
years old, albeit with an excellent safety
record. These will either be scrapped or sold
to the military, not to a potential competitor.
The newbuilding contract was won by state-
owned Shanghai-based Hudong-Zhonghua,
which beat of stiff competition from other
yards in both China and South Korea.
The price has not been revealed, but the
company said at the time the order was
placed that it would finance up to 40% of
the contract from its own cash resources
and, as a profitable operator, expects to
have no problems raising funds for the
final downpayments. The ships incorporate
same, he thinks. That may reflect the fact that
the Atlantic is basically a flat trade, with little
underlying growth, and so is of less interest
to the global players than the Asia-Europe or
transpacific trades. In such a small market as
the North Atlantic, it makes no sense to deploy
the very biggest ships now entering service.
So at this stage, I see a fairly stable
situation, he says.
Down the road, who knows, but for now,
everything looks as if it is staying basically
the same.
Neither does Mr Abbott anticipate much
of an impact on the Atlantic trades of the
enlarged Panama Canal, with end-to-end
ACL has been able to
broaden its global
reach through the
network of parent
company Grimaldi,
but remains firmly
focused on the
Atlantic trades.
1965 ACL set up as a consortium by
ve major European shipowners to
operate multipurpose ships in the
transatlantic trades
1984-85 Five newly constructed
third-generation ro-ro/containerships, the
largest of their kind in the world with
2,160 teu capacity, enter service
1986 Hapag-Lloyd and ACL sign the rst
ever space-sharing and charter agreement.
The G3 vessels are lengthened to 292 m,
increasing capacity to 3,100 teu
1989-90 ACLs original consortium
ownership is dissolved. Transatlantic,
a member of Swedens Bilspedition
Group, acquires 100% of ACL
1994 A public oering for ACL
by Bilspedition is successful
and the company is listed on
the Oslo Stock Exchange
A BRIEF HISTORY OF ACL
many radical new design features, and will
look more like a conventional containership
because of the new configuration and
location of the ro-ro decks.
They will have a capacity of 3,800 teu,
plus 764 ro-ro units and 1,307 cars. The
footprint is almost the same as the existing
ships but container capacity will more than
double, while ro-ro unit space will be 45%
larger than for the G3 ships.
Although the ships will be built in Asia,
European manufacturers are supplying much
of the equipment, including the engines and
ramps, for ease of subsequent repairs and
maintenance.
The final port schedule for the new ships
has not been decided yet, with ACL keen to
add a southern US call to take advantage
of the big forest product market and large
number of European cars and yachts
shipped to that region.
That may mean dropping one of its
existing calls, but Mr Abbott recently
confirmed that ACL would continue to serve
Liverpool, where the line is also expanding
its local office as more documentation,
accounting and ship planning work is
shifted to Merseyside. In line with Grimaldis
preference to own rather than rent property,
ACL is investing in its own 40,000 sq ft four
floor office block in Liverpool that should be
completed by the end of 2015, and allows
plenty of room for growth.
Capacity and coverage
The new ships will be entering service just
as the big new global alliances being formed
become fully operational.
But Mr Abbott is not too concerned about
the potential impact of these mega-consortia
on the Atlantic trades.
It doesnt look as if, on the Atlantic, there
will be any significant change in capacity or
coverage, says Mr Abbott, having studied
plans of the P3 and G6 alliances.
Some duplication may be eliminated but,
overall, services appear to be staying much the
services still the easiest to manage despite
talk about new-style pendulum loops
connecting Asia, the US and Europe via the
enlarged waterway.
Rather than worry about what might
happen in the months and years ahead,
Mr Abbott and his staff have been fully
occupied in recent weeks struggling with
the schedule chaos caused by one of the
harshest winters on record for much of North
America.
The first three months of this year were
skewed enormously because of absolutely
atrocious weather conditions, Mr Abbott
recalls.
On Christmas Eve, every single ACL ship
was to the hour on time. Within a month, we
were a week late almost across the board
and all because of weather. Ships sailing
westbound were losing two or three days as
they battled at full speed against headwinds.
New York alone was hit by 14 snow storms
of three inches deep or more in the first
quarter of 2014. Truck queues over a mile
long built up at the gate in New York, while
there were numerous train derailments, all of
which created supply chain havoc that did not
start to improve until April.
Nevertheless, underlying trade conditions
have been promising, with ACL ships full
2000 Italys Grimaldi Group
becomes the largest ACL
shareholder with a 44% interest
2002 The Oslo Stock Exchange de-lists the
company. The Trans-Atlantic Conference
Agreement receives antitrust clearance from the
European Commission after years of litigation
2003 Andrew Abbott appointed
president and chief executive,
succeeding Olav Rakkenes
2007 ACL becomes a
wholly-owned unit of Grimaldi
Group and celebrates 40 years
of service
2012 Order placed in China
for ve fourth-generation G4
ships that will be the largest
con/ro vessels ever built
Source: ACL
G3 G4
Containers 1,850 teu 3,800 teu
Container rows 12 13
Container tiers 11 14
Reefers 192 200
Ro-ro space 18,500 sq m 28,900 sq m
Car deck height 1.65 m 2.2 m
Oversize deck
height
6.2 m 7.4 m
G3 v G4: Capacity comparison
westbound for containers, ro-ro cargo and
cars. The same is true for other carriers
as the US housing and automobile markets
recover.
Utilisation eastbound has been around
85% to 90% for containers, but ro-ro load
factors have been nearer 75%, reflecting
still-weak demand for infrastucture
equipment in Europe.
But looking ahead, it is the arrival
and introduction of the worlds largest
multipurpose ships and ACLs first
newbuildings since the mid-1980s that
will be the focus of attention for Mr Abbott
and his tight-knit team in the months to come.
BOX WORLD BRIEFING
ZIM has finalised the terms of
a restructuring that it said will
enable it to sign up for joint
ventures and fund a fleet
renewal.
The $3bn deal, which still
requires relevant creditor
and shareholder approval,
includes a $1.4bn debt
for equity conversion with
creditors and changes to the
so-called golden share held
by the State of Israel.
Meanwhile, majority
shareholder Israel Corp has
agreed to invest an additional
$200m in new equity,
provide the company with a
liquidity line of $50m, and
forgo $225m of loans that
were part of a $1bn support
from 2008-2012.
Israel Corp will also reduce
its stake from 99.7% to
32%, subject to creditor
and shareholder approvals
including a vote at a general
assembly.
Zim nalises restructuring deal
REGULATION
In addition, related
companies agreed to support
the company by $180m, by
amending charter contracts
and forbearing loans.
In total, the support
offered by creditors amounts
to $1.4bn. The estimated
equity valuation of Zim
following the restructuring is
$600m-$800m.
Details of the changes to
the golden share terms have
not been revealed by Zim
but it said, once concluded, it
would ensure that national
strategic interests are
fully safeguarded, while
eliminating provisions
that stand in the way of
implementation of the
restructuring agreement.
The shipping line, which
described negotiations with
creditors as protracted and
complex, said the restructuring
would enable Zim to explore
opportunities for strategic
partnerships and joint ventures
with a view to raising additional
capital to fund fleet renewal, IT
systems upgrade and further
business development.
The Israeli line is one of
the few deepsea operators
that does not belong to an
integrated alliance covering
some or all of the main east-
west trades, although it has
co-operative arrangements
with other carriers.
The line also revealed
in late May that it was
withdrawing from the Asia-
north Europe trade, reasoning
it doesnt have access to
vessels of the necessary size.
Speaking following the
publication of its first-quarter
result, which saw the Israeli
carrier narrow its losses, Zim
said the decision had been
made because of the ultra-
large boxships that are now
present on the trade lane.
Damian Brett
Zim also revealed in late May that it was withdrawing from
the Asia-north Europe trade. Photo: Dietmar Hasenpusch
CARRIERS
MANDATORY container
weight checks are to be
introduced following a
landmark agreement at
the International Maritime
Organization.
The IMOs maritime safety
committee approved changes
to the Safety of Life at Sea
Convention that will require
verification of container
weights as a condition for
loading packed export
containers aboard ships.
Moves to make container
weighing obligatory have
the broad support of most
shipowners, shippers,
port authorities and other
stakeholders, and follow
several high-profile
accidents caused at
least partly by cargo
misdeclarations.
The extent of inaccurate
cargo descriptions first came
to light following the MSC
Napoli grounding in 2007
when accident investigators
were able to compare
contents and cargo weights
with manifest information.
Efforts to improve safety
standards without legal
intervention failed to make
much progress.
The World Shipping Council
and International Chamber of
Shipping first began lobbying
for container weight checks
back in 2008 when they
hoped industry guidelines
IMO approves box weight checks
would be sufficient to raise
safety standards.
Eventually, though, the
IMO stepped in, but not
without resistance from some
members as well as certain
Asian shippers.
The approved changes to
the convention will enter into
force in July 2016 following
final adoption by the
maritime safety committee in
November 2014.
Janet Porter
BOX WORLD BRIEFING
PLANS to scan every
container destined for the US
have been postponed for at
least two more years because
of financial considerations
and questions about whether
this is the best way to protect
the countrys port security.
The deadline for
implementation of 100%
scanning of all inbound
containers to check for illegal
radiological materials or
nuclear weapons had already
been delayed from 2012 to
July 1, 2014.
Secretary for Homeland
Security Jeh Johnson has
now decided on another
24-month extension, citing
the same reasons that existed
two years ago.
In a letter last month to
Thomas Carper, chairman
of the Senate Committee
on Homeland Security and
Governmental Affairs, Mr
Johnson notes that the
conditions and supporting
evidence cited in the 2012
deadline postponement
continue to prevail
and preclude full-scale
implementation of the
provision at this time.
He goes on to say that the
use of systems available to
scan containers would have
a negative impact on trade
capacity and the flow of
cargo.
Mr Johnson points out
that scanners to monitor the
12m containers imported
in the US each year cannot
be purchased, deployed or
operated at ports overseas
because ports do not have
the physical characteristics to
install such a system.
The letter, seen
by Containerisation
International, also draws
attention to the huge cost of
such a scheme.
I have personally reviewed
our current port security
and DHS short-term and
long-term ability to comply
with 100% scanning
requirement, he writes.
Following this review, I
must report, in all candour,
that DHS ability to fully
comply with this unfunded
mandate of 100% scanning,
even in the long term, is
highly improbable, hugely
expensive and, in our
judgment, not the best use of
taxpayer resources to meet
this countrys port security
and homeland-security
needs.
Nevertheless, Mr Johnson
says he has instructed DHS
staff to undertake a better,
good-faith job of complying
with the 100% scanning
requirements underlying
objectives, notwithstanding
this exercise of waiver
authority and the obstacles of
full compliance.
The department will aim to
increase the percentage of
containers scanned abroad,
with the emphasis on high-risk
cargo, thought to represent
less than 1% of US-bound
containerised cargo.
Janet Porter
The P3 partners
are expected to
self-assess in
Europe to assure
there is no abuse
of position. Photo:
Russell Borg
US postpones 100% container scanning
THE vessel-sharing
agreement between
Maersk Line, Mediterranean
Shipping Co and CMA CGM
is scheduled to start in the
autumn, a little later than
planned, as regulatory
clearance is finalised.
The giant P3 alliance was
originally due to begin in the
early part of the third quarter.
However, both Maersk
Line and CMA CGM have
confirmed that they now
expect P3 operations to start
in the fall.
Although the Federal
Maritime Commission has
given approval, albeit with
certain conditions, the Chinese
authorities have not yet
granted antitrust clearance.
The European Commission said
in early June it will not launch
an antitrust investigation
against the alliance, but
will keep a close watch on
the network. The lines are
expected to self-assess to
ensure there is no abuse of
their dominant position.
The P3 partners had
held talks with European
Commission officials about
the super-alliance, in order
to get their blessing. The
three lines expect to have
the necessary approvals from
China by the middle of the
year.
However, there are
still a number of smaller
jurisdictions where the
process is likely to take a little
longer. South Korea, Ukraine
and Vietnam are thought
P3 start-up delayed
to be still considering the
competition implications. The
P3 lines want to have all the
legalities settled before they
start to operate a joint fleet.
Janet Porter
REGULATION
CARRIERS
THE NEWS THIS MONTH
MORE ONLINE AT CONTAINERSHIPPING.COM BOX WORLD BRIEFING
PORTS
UK RETAIL giant Marks &
Spencer has gone back on
its plans to develop a major
$300m distribution centre
at the DP World London
Gateway Logistics Park.
The retailer said it had
taken the decision not to
proceed with the London
Gateway development
following a thorough review
and added it had developed
an alternative plan.
This [plan] will secure
the delivery of the single
tier network by 2016-2017
as planned, by operating
from the two new national
distribution centres, at Castle
Donington and Bradford,
supported by four of the
existing regional distribution
centres which will be
converted into NDC use, it
said.
This will use our capital
investment more efficiently,
with a planned 130m
($219m) reduction in
investment whilst largely
retaining associated
benefits.
A London Gateway
spokesperson said that it
would continue to be a port
of choice for M&S and it
would keep moving forward
with it to support its business
development objectives and
reduce its supply costs.
We have recently
announced five new shipping
line services to the world
and a major new deal on
the Logistics Park with
Prologis, the worlds largest
developer of industrial real
estate. In addition, we are
already starting to build the
new common user facility
on the Logistics Park, the
spokesperson added.
Marks & Spencers decision
to develop the 900,000 sq
ft distribution centre at the
ports logistics park was
announced last June among
much fanfare, as it was the
ports first customer.
Damian Brett
M&S pulls out of London Gateway
MAERSK Line saw first
quarter profits rise to $454m
from $214m, while return on
invested capital soared to
9% against 4% a year earlier.
Volumes increased 7.3% to
4.4m teu, while freight rates
were lower, at $2,628 per feu,
down from $2,770 previously.
Results were helped by a
9% decline in unit costs and a
$72m impairment reversal as
idle vessels returned to service.
CMA CGM posted a net
profit increase of 1.2% to
$97m for the first quarter
and also announced the
promotion of Rodolphe
Saad to vice-chairman of the
group, and successor to his
father Jacques Saad when
the time comes.
Revenue rose 2.7% to
$3.9bn while return on invested
capital was up 0.2 percentage
points to 10.5%. Volumes
carried in the first quarter were
up 5.8% to 2.8m teu.
Hapag-Lloyd sank deeper
into the red in the first three
months, reporting a loss of
119.1m ($163.4m), down
from 93.6m for the same
period a year ago.
The Hamburg line said
it also incurred expenses
related to its planned merger
with CSAV.
First-quarter revenues
declined by 98m to 1.5bn
on the back of a $124 fall in
average freight rates to $1,422
per teu. Counteracting this price
decline was a 5.5% increase in
volumes to 1.4m teu.
Neptune Orient Lines
dipped into the red, reflecting
weak freight rates and a lack
of one-off gains.
The Singapore-listed group
reported a $98m net loss in
the first three months, having
booked a $76m net profit
during the year-ago period
with a one-off gain of $200m
from selling its headquarters.
APL, NOLs container
shipping business, swung into
core ebitda of $12m from
year-ago losses of $14m.
The result came as
revenue fell 5% on-year to
$1.9bn amid a weak rate
environment, even though
volumes increased 2% to
785,000 feu.
Orient Overseas Container
Line recorded revenues
totalling $1.4bn during the
three months, up 1.7% from
the same period of 2013,
while total volumes increased
8.9% to 1.4m teu.
However, overall average
revenue per teu fell 6.6%
on year to $1,026, according
to Hong Kong-listed Orient
Overseas (International) Ltd,
OOCLs parent.
Zim reduced its net
loss by 45% to $62m and
earnings before interest,
tax, amortisation and
depreciation improved from
Financial round-up: Q1 results season in full swing
a loss of $6m last year to a
profit of $29m.
However, revenues for the
period declined to $867m
from $918m last year as a
result of average freight rates
falling by $69, or 5%, to
$1,213 per teu.
CSAV posted a first-quarter
loss of $65.6m, smaller than
a year-earlier deficit of $96m
and a shortfall of $202.9m
in the first three months
of 2012. The latest figure
included a $40m provision
related to antitrust violations
in the car carrier trades.
The loss came against
the backdrop of a 10.6%
decline in average freight
rates compared with the 2013
first quarter. CSAV noted in
particular that business had
been hit by weaker demand in
Brazil. Nevertheless, volumes
rose by 1.8% overall compared
to the first quarter of 2013.
CI Editorial Team
CARRIERS
Port Metro Vancouver is already
close to Asian markets. And with
unprecedented infrastructure
investment in our gateway, were
getting even closer.
Were building land-side projects
that boost rail and road efciency.
Were increasing our container
terminal capacity and reducing on-
dock dwell through collaboration
with supply chain partners. And
were operating with longshore
labour certainty to 2018.
We re bringing your goods
closer to market and you closer
to your customers.
Fold to
Fold to
VANCOUVER
SHANGHAI
DALIAN
KAOHSI UNG
SHENZHEN
HONG KONG
TOKYO
YOKOHAMA
BUSAN
is better. Closer
41 June 2014
WITH carriers forming closer bonds
through the expansion of alliances,
the importance of customer service
is increasing as shipping lines look to
differentiate themselves from their rivals.
One way they can do this is by ensuring
the flow of data and booking information
is as accurate as possible so the customer
experience runs smoothly.
Multi-carrier e-commerce platform Inttra
recently began revealing each month
which five carriers that use the platform
have provided the highest quality data.
In its most recent release, APL led the
way followed by Mitsui OSK Lines, United
Arab Shipping Co, CSAV and Hapag-Lloyd.
Inttra chief marketing officer Sandra
Moran says that container shipping
lines will increasingly rely on automated
systems to create efficiencies and also to
match wider lifestyle trends.
The workforce doesnt want to spend
time calling people to find out where
something is, they want to self-serve
information, they want to work more
rapidly and with systems that work the
way they do in their personal life.
I think there will be continued
pressure for automation and the quality
of information that they should expect to
come back.
It offers huge opportunities for improved
service levels both with the expectation
of the customer being met and the carrier
having more time to offer other value-added
services.
And it continues to spiral up
in terms of meeting customer
expectations and in terms of
removing the base-level activities
which today just consume too much time
and money in the system.
However, in order to improve automation
of certain processes, she says, it is critically
important that the quality of data that flows
through the system improves.
There are gaps in the data quality and
thats because of the complexity of the
process, especially if you consider the
fact that carriers themselves receive data
from other parties like terminal operators
and trucking companies. These arent
closed loop systems and there are a lot of
opportunities for a data gap.
She adds that Inttra monitors data
quality in three different areas. Firstly,
accuracy did the container arrive
when the data said it would? Secondly,
timeliness is the information provided
in a reasonable amount of time? Finally,
completeness do all the status
messages expected actually arrive?
She says Inttra uses its findings to
work with carriers individually to identify
areas for improvement within their own
businesses, but it also identifies any areas
where data accuracy is poor outside of
carriers, such as terminals, and passes this
information onto the shipping lines so they
can identify solutions to improve accuracy.
UASC finished third in the most recent
Inttra report and the shipping lines vice
president, global sales and marketing, Eric
Williams, says data is playing an increasingly
important role in supply chains.
There is a lot of money tied up in those
supply chains on the cost side but also
from a revenue side in terms of on-shelf
availability, carrying
costs and
building up
inventories. Certainly in my time, working
with a lot of big companies, such as big
retailers in Europe for example, they are
making decisions on poor data quality and
putting assumptions into that.
As an industry, we need to continue
to raise data visibility and also the efforts
going into improving it.
Although he disagrees with the
assessment that shipping is commoditised
and says that the human touch is still an
important part of the industry, he admits
that data quality and automation of
procedures are increasing in importance.
Mr Williams says UASC invested in
simplifying its data landscape two years
ago, but says improving data quality is an
ongoing process.
Customer service is definitely an
area where we can help customers and
differentiate over competition.
We believe its really important to be
able to react to customers both on the
telephone and through the e-business
channels.
While the weakness of data accuracy in
some of the worlds main shipping regions
may make it seem like improving global
performance will be an uphill battle, Ms
Moran takes an optimistic point of view.
When we did analysis of the five worst
countries, it turned out that the number of
shipments that had incomplete data set
was 48% of total.
So a few systematic improvements
in those areas will raise data quality
that much more we will see radical
improvements by focusing on a
few key areas.
The data provision services of shipping lines are increasing in importance.
But is the accuracy of that data up to scratch, asks Damian Brett
QUALITY DATA ESSENTIAL
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ANALYSIS/DATA PROVISION
EQUIPMENT
WITH the advent of ever-larger vessels
concentrating services on major port hubs,
feedering from those ports has increased.
Specialist operators have emerged,
offering connections using smaller
vessels to outlying destinations off the
main routes operated by major liner
services. Many such ports could not justify
investment in infrastructure for larger
vessels but have generated sufficient
traffic to accommodate regular services
using smaller ships.
Initially feeders, as distinct from
shortsea carriers, developed fastest in
Asia, linking hubs such as Singapore to a
range of ports around the Indian Ocean,
Indonesia and Bay of Bengal. Vessels
deployed offered capacity in the 300
teu-500 teu range, but as volumes grew
and port facilities improved, larger vessels
found their way into feeder services. It is
now common to see vessels of up to 2,500
teu or more deployed.
Some of the larger carriers have
launched their own services in order
to control the entire supply chain,
supplanting the independents.
Fluctuations in volumes and destinations
demanded a highly flexible approach by
feeder lines to their operations. Short-term
charters, the ability to switch rotations
at short notice and comprehensive local
knowledge were essential to survival.
In Europe, many feeder services
developed on the back of existing shortsea
operations, such as Ireland-UK/Europe,
and global trade growth.
The opening of Russia and the Baltic
states to more intensive containerisation led
to the proliferation of services off the main
north continent hubs of Hamburg, Bremen/
Bremerhaven, Antwerp and Rotterdam.
In the Mediterranean, the use of
strategically placed hub ports that werent
geared to direct cargo flows created big
demand for dedicated feeder services to
redistribute containers to their ultimate
destinations.
Several major carriers have substantial
in-house networks radiating from these
hubs to all points between Morocco and
the Black Sea.
Team leader
In northern Europe, one of the leaders
in the feeder business, which also offers
shortsea services through its leased fleet
of palletwide equipment, is Antwerp-based
Delphis, through its 100% subsidiary Team
Lines Deutschland, based in Hamburg.
Delphis was founded in 2004 by
Alexander Saverys. Mr Saverys is a member
of a family associated with generations
of shipbuilding near Antwerp and
more recently with CMB through its
subsidiaries Bocimar and Euronav and
Exmar, noted players in aviation and the
bulk, gas and liquid shipping sector.
Ownership lies with family interests and
unsurprisingly, Mr Saverys did not divulge
any financial information when he spoke
to Containerisation International about
Delphis and its subsidiary businesses.
Team, the result of a merger of the
shortsea operations of four very well-
known and long-established Hamburg
owners focused on Baltic traffic, was
acquired in 2006.
The feeder operation covering 35 ports
is conducted from Team offices in Hamburg
using a fleet of 10 or so vessels with total
capacity in the region of 10,000 teu, and
sizes ranging from 650 teu to 1,440 teu.
Charters are all short-term with instances
of some being for single voyages only. The
buyers market has brought benefits to
charterers at the expense of the owners for
some years. However, competition has often
forced operators to pass on their savings
directly to the cargo carried.
All vessels are ice-class, a necessary
qualification for operating on the routes
from Hamburg/Bremen/Bremerhaven
to Russia, Poland and the Baltic States
and Scandinavia where winter weather
conditions are invariably severe. Equally,
all Team vessels are at the forefront of
meeting environmental concerns and
boast strict compliance with current and
upcoming regulations.
A key feature of any feeder operation is
the regularity and reliability of the schedule
with fixed-day sailings offered on all routes.
However, weather, congestion or other
causes of delays mean some disruption
is unavoidable, so getting to a berth on
schedule over a year is unlikely to exceed an
85% success rate with turnarounds taking
between two and three hours in smaller
locations to perhaps 24 hours in larger ones.
Where possible, night working is avoided
due to high costs.
In late 2013 Team announced a
collaboration with Germanys OPDR linking
Felixstowe, Rotterdam and Bilbao, perhaps a
precursor of future closer ties.
In 2009, Delphis acquired the terminal
activities Norsteve Oslo and through
its operating entity, Sjursoya Container
Terminal, a 100% subsidiary, runs the
largest terminal in Oslo with a nominal
capacity of around 200,000 teu. Plans are
in hand to increase this to perhaps 500,000
teu, giving it the capacity to handle a larger
proportion of Norways cargo needs.
Market reports suggest that there has
Delphis managing director Alexander Saverys tells Alastair Hill about the
challenges faced by shortsea operators in the current climate
FEEDERSHIP
FORTUNES IN FLUX
ANALYSIS/FEEDERSHIPS
CARRIERS
recently been a sharp decline in Russian
traffics, probably due in no small part to
the geopolitical issues in Ukraine. CKD
automotive traffic, for example, has all but
disappeared, but there has been an upturn
in cargo moving to Riga and Tallinn. All
of this has had an effect on Team and its
fellow feeders on these routes, although
there are some signs of a more general
recovery in line with the significant increase
in Asia-Europe volumes seen in 2014.
Niche feeder operators are being
progressively squeezed out of the market
and in-house feeders of the major lines
come and go but CMA CGM, Maersk and
Mediterranean Shipping Co among others,
maintain a high level of feedering, having
the volumes to sustain them to a wide
range of destinations.
distances. Truckers can compete on several
sectors and block trains offer price as
well as destination and environmental
advantages.
This brings into focus the matter of
emissions post-January 1, 2015, and the
effect on feeder operators. Shipowners
are faced with major investment to enable
compliance, whether it be entirely new
propulsion systems or the retrofitting of
scrubbers to clean the offending SOx and
NOx pollutants.
From January, permitted sulphur
emission levels fall from 1% to 0.1% in
emission control areas and some sources
suggest the effect could be up to an 87%
price increase on bunkers. This presents
a huge problem to operators and the cost
impact will have to be reflected in the
freight charges.
The ever-shortening time scale is a
sword of Damocles hanging over the
sector and only Containerships so far,
with German technical and operational
partners GNS/Nordic and Arkon, has made
any announcement about how it intends
to tackle the issue; it has ordered two
dual-fuel vessels for its fleet. The ultimate
outcome of these changes is, however, far
from clear as any transfer of cargo to road
is counter to EU aims.
Emissions will be a burning issue
during the run up to 2015, Mr Saverys
acknowledges.
The challenge for Team is to continue
to adapt to the changes in destinations
and service levels demanded, geopolitical
concerns and the actions of its major
competitors on land as well as at sea,
however they arise.
This is a tall order when the size and scope
of the latter alone is taken into consideration.
There has been chatter
that Team could be in the sights of Unifeeder
as an acquisition target.
Equally, some suggest that with its
dependence on Russian and Baltic traffics it
is overly vulnerable to tensions in the region.
Whatever the outcome there is a very
strong feeling that Team will survive as an
independent operator, albeit with further
joint services.
The Saverys family is resourceful and
experienced, with the financial muscle to
weather difficulties, so it is hard to imagine
Team leaving the scene without putting up
a fight.
In terms of the independently-operated
feeder lines, Delphis competes, amongst
others, against Unifeeder of Copenhagen,
Containerships of Finland, Singapore-
based X-Press Feeders, pure feeder line
BG Freight, MacAndrews part of CMA
CGM and OPDR.
Combined, their feeder services link
a vast range of ports throughout the
Mediterranean, Black Sea, Iberia, North
Africa, North Europe, Baltic/Scandinavia
and UK/Ireland. Major lines without
in-house feeders, therefore, have a wide
range of options and competition is fierce.
Sword of Damocles
Beyond the maritime feeders there is
also competition from substantial road
and rail operations over appropriate
ANALYSIS/FEEDERSHIPS
CARRIERS
There is a strong feeling
that Saverys Team
Lines will survive as an
independent operator.
FLEXI BLE LEASES
DI RECT SALES LONG-TERM WARRANTY
WWW. .COM
CUSTOM DESI GN
ROBUST, DEPENDABLE AND EFFI CI ENT
CRONOS REEFER
TYPICAL SPECIFICATIONS
REEFERS // DIMENSIONS ARE NOMINAL AND TYPICAL THERE MAY BE VARIATIONS
STANDARD 20
(THINLINE)
40 HIGH CUBE
(PRIMELINE)
CONTAINER TYPE
5,456 mm
2,294 mm
2,273 mm
2,290 mm
2,264 mm
2,221 mm
28.4 cu m
2,900 kg
27,580 kg
30,480 kg
INTERNAL LENGTH
INTERNAL WIDTH
INTERNAL HEIGHT
DOOR OPENING WIDTH
DOOR OPENING HEIGHT
CARGO ACCESS HEIGHT
CUBIC CAPACITY
TARE WEIGHT + MACHINERY
MAX PAYLOAD
MAX GROSS WEIGHT
11,590 mm
2,294 mm
2,554 mm
2,290 mm
2,569 mm
2,505 mm
67.9 cu m
4,530 kg
30,470 kg
35,000 kg
TOP QUALI TY
ANTWERP DUBAI DURBAN GOTHENBURG GRAND CAYMAN HAMBURG HONG KONG HOUSTON LISBON
LONDON NEW YORK RIO DE JANEIRO SAN FRANCISCO SEOUL SHANGHAI SINGAPORE SYDNEY TAIPEI TOKYO
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DRY FREI GHT SPECI ALS: Bul kers / Opentops / Fl atracks / Hal f Hei ghts / Rol l trai l ers / Sl i mwal l CPC
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Please contact:
MAGELLAN Maritime Services GmbH
Domstrasse 17
D 20095 Hamburg
Our Services:
Rental
Leasing (Term / Finance Lease)
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Purchase & Sale (New & Used)
Tel: +49 40 3786 5450
Fax: +49 40 3786 5460
E-mail: magellan@magham.de
Web: www.magellan-maritime.com
CONTAINERS WORLDWIDE
Size: 20 / 40 / 45
Type: Standard / High Cube / Palletwide / Reefer
Open Top / Flat / Bulk / Side Door / Double Door
THIS July is an important month for the
Port of Hamburg as it is when Germanys
Federal Administrative Court will decide
whether or not to give the port authority
permission to dredge and widen sections
of the river Elbe, which leads 130 km from
the North Sea to the port.
The Elbe is the artery that gives the
825-year-old port its life and makes it
unique. The port argues its inland location
shortens overland supply chains to the
south and east of Germany and to eastern
Europe, meaning shippers can save
valuable time and money when choosing
Hamburg over other facilities in the
northern European port range.
It is also better protected from the
effects of wind than other North European
facilities, the port says.
In contrast, the ports opponents say
the journey down the river adds to transit
times and increases fuel costs. It is also
known for charging higher dues than some
of its rivals.
But while the river feeds the port, it
could also limit its potential as its width
and depth constrain larger vessels access.
The port would like the river deepened
from 13.5 m to 14.5 m and have the
fairway broadened to allow the largest
boxships unhampered access to the port.
While the port handles vessels as large
as 16,000 teu, the ships are limited in
the number of containers they can carry
while making the journey down the river to
Hamburg.
Also, vessels with a combined width of
90 m are not allowed to pass each other
along around 50% of the river. This is
particularly problematic as vessel designs
are getting wider as opposed to deeper.
For instance, Maersk Lines 2013 Triple-E
class vessels have a breadth of 59 m, a draught
of 16 m and a length overall of 400 m.
This compares with its E-class vessels,
which it began to take delivery of in 2005,
with a breadth of 56.4 m, a draught of 16
m and length 397 m.
Proportionally, this means the Triple-E
vessels are 4.6% wider and 0.7% longer
but still have the same draught.
No Plan B
The plans to deepen and widen the river
have been floating around for years and
were initially approved by the three states
along the Elbes shores to the North Sea
Hamburg, Schleswig-Holstein and Lower
Saxony in April 2012.
But environmental groups launched an
appeal and in late 2012 the project was
brought to a halt.
However, the port is hopeful that the
plans will be approved and the work
estimated to take 21 months to complete
can finally get underway.
The leading German port has started the year strongly but congestion issues
mean dredging the River Elbe has become a hot topic, reports Damian Brett
HAMBURG
AWAITS
DREDGING
DECISION
Photo: Robert Mandel/Shutterstock.com
EUROPE/HAMBURG
PORTS
At the recent Global Liner Shipping
Conference held in the city, Hamburg Port
Authority chairman of the management
board Jens Meier said it wasnt working on
a plan B as it is dedicating all its efforts
to ensuring that dredging project gets the
go-ahead.
The importance of the project was also
highlighted at the event when two of
the shipping lines that call at Hamburg
expressed their concerns about the future
of the port.
Hanjin Shipping Europe managing
director Patrick Won said he was
concerned about the limited accessibility
to the port, as well as the cost of calling
there and hinterland congestion because
of ongoing road works.
He said other shipping lines were
increasingly using Bremerhaven and
Wilhelmshaven and said Hanjin may need
to switch some of its Hamburg services to
these ports in future.
However, he admitted that it was the
shipper that finally controlled where the
cargo would go.
OPDR Group chief executive Till Ole
Barrelet said the ports main selling point
was its hinterland infrastructure and
warned against letting this slip.
He also called for action on the dredging
of the Elbe.
In response to these criticisms, Mr Meier
said: I am absolutely sure the [dredging]
project will start. I also know the cost for
the shipping line but I am always looking
at the total process cost from end-to-end
and all the shipping lines have to make the
decisions by themselves.
I come from a logistics company and I
always add the total supply chain from the
cost side and when you put that together
we try to emphasise that the advantage is
with us.
Compounding factors
Earlier this year, the port also faced
congestion issues as a result of the
particularly tough winter conditions.
While the weather-related problems
also caused congestion at other North
European ports, Hamburg was one of the
worst affected.
At the time, Team Lines was forced to
apologise to customers regarding the
delays.
Please be informed that over the past
planning status, the first sections of this
project will be completed in 2018.
There are also three other options to
expand the ports container footprint,
although these are not finalised and it has
not yet been decided if or when they will
go ahead.
Despite all this, the port actually grew
much faster than its main two north
European rivals Rotterdam and Antwerp
in the first quarter of the year.
The German port saw box volumes jump
by 8% year on year to reach 2.4m teu.
In comparison, Rotterdams throughput
was flat at 2.9m teu and Antwerp recorded
a 0.9% increase to 2.1m teu.
Port of Hamburg Marketing chief
executive Axel Mattern says the volume
improvements came despite hinterland
issues.
Against the background of the current
situation on building sites within the port,
in the Elbe tunnel and on the A7 autobahn,
which have especially affected truck
traffic for limited periods, that is a striking
achievement on throughput.
Temporary hindrances caused by
asphalting outside the Elbe tunnel and
work on the Khlbrand Bridge in the port
will shortly be ended. During work on
construction of the A7, three lanes will be
available to traffic in each direction.
weeks we have been facing operational
problems at German hub ports, it said in
March.
The terminals are congested, suffering
slower operations and lacking in berth
capacity. Several Team Lines vessels have
been affected by these problems, resulting
in longer idle time in the port, additional
terminal calls and following delays of the
vessels.
The problems on the seaside are
compounded by congestion on the
landside as several road projects are
underway in the Hamburg area.
If the port continues to grow at first-
quarter pace, it will reach a utilisation rate
of 77% by the end of the year, above the
75% level where terminal productivity is
negatively affected by volumes.
And Europes leading box terminal,
Rotterdam, is adding two new state-of-the-
art container terminals APM Terminals
2.7m teu Maasvlakte II facility and the
2.3m teu Rotterdam World Gateway.
There is also the vastly under-utilised
state-of-the-art deepwater JadeWeserPort
just down the coast from Hamburg,
which is also waiting to pounce on any
operational issues.
Improving productivity
In the immediate future, the port
is concentrating on improving
communication between the various port
players to improve vessel and landside
planning.
Its smart port concept aims to spread
traffic more evenly through the day and to
avoid peaks and troughs.
It has created Feeder Logistics
Central and a Vessel Traffic Centre to
help better co-ordinate ship arrival and
departures.
HHLA, the main terminal operator in the
port, has also invested in tandem gantry
cranes and automation technology to help
improve productivity.
As these technologies are rolled out to
other terminals at the port, productivity
there will also improve.
The Eurogate terminal is also
being expanded to the west by
filling in the petroleum harbour basin
and the site to the north will be
restructured.
This will add around 2m teu of capacity
to the port. According to the current
EUROPE/HAMBURG
PORTS
HPA chairman Jens Meier: I am absolutely sure
the [dredging] project will start.
Who attends? Conference sessions include
3
Port & Logistics infrastructure Could rapid trade growth overwhelm
Lain American infrastructure?
3
Shipping watch Liner shipping trends, carrier alliances, service
schedules, freight rates, ship sizes.
3
Reefer shipping Perishable cargo trade trends & cold chain logistics.
3
Terminal productivity How will terminal operators keep up with the
demands of escalating ship size?
Host Sponsor Sponsors Port Partner Supported by Latin American Partner Organised by
Expert speakers include
3
Ports
3
Terminals
3
Carriers
3
3PLs
3
Shippers
Robbert van Trooijen
CEO Latin America &
Caribbean, Maersk Line
Poul Hestbaek
SVP Latin America West Coast
& Caribbean, Hamburg Sd
Juan Carlos Hernandez
Global Equipment and M&R
Manager, Chiquita
Jay New
Commercial Director,
Gulftainer
Howard Finkel
EVP Trade Division, COSCO
Container Lines Americas
John Bressi
Project Manager Crane Automation,
SSA Marine International
Giovanni Benedetti
Commercial Director, Sociedad
Portuaria Regional Cartagena (SPRC)
Guillaume Lucci
VP& Global Infrastructure Director,
ICTSI
A New World Order
Preparing for the Future of Container Shipping across
Latin America & The Caribbean
Conference | Port Tour | Networking | Exhibition | Free Seminars
14 16 October 2014
CCCI, Cartagena, Colombia
Featuring
More info & to book www.tocevents-americas.com
EASTERN
PROMISE
All the headlines from the latest Global Liner
Shipping Conference, where the industrys great
and good gathered in Dubai to discuss the issues
facing shipping in the Middle East
GLOBAL LINER SHIPPING CONFERENCE/DUBAI
CONFERENCE
Shipping line alliances are start of
collaboration trend
CONTAINER shipping line alliances are at
the first stage of a wider trend that will
see carriers work increasingly closely as
they attempt to remove waste from the
industry.
United Arab Shipping Co vice-president
Middle East Mohamed al-Mazeedi told
delegates attending Containerisation
Internationals Global Liner Shipping
Middle East and Indian Subcontinent
conference in Dubai that shipping lines
would look to increase their use of
collaboration as they sought to become
more efficient and return to sustainable
profitability.
He suggested that shipping lines could
co-operate on a range of procurement
activities, such as the purchase of vessels,
terminal services, bunkers, inland services
and containers.
Shipping lines could also look at
container pooling, where a shipping line
with import cargo passes the container
over to another carrier with export cargo
requirements rather than transport it back
to origin empty.
There are ways we can co-operate
where we reduce waste and its a win-win
situation for everyone, he said.
Its comprehensive collaboration, we
need to look at the bigger framework for
collaboration beyond the simple joint
schedule.
The joint schedule is critical but it
leaves a lot else on the table that can
improve the bottom line for the shipping
lines and also the industry.
However, he expected progress towards
increased collaboration to be slow.
I think it will be later rather than
sooner because the shipping lines are
more stubborn than other industries, they
are more conservative and they are not
change oriented.
But it will happen because I think it
brings in a lot of value. The carriers just
need to take the pride out of the situation
and focus on waste reduction and value
creation.
Dr al-Mazeedi said shipping lines could
also create sustainable profitability by
using the largest vessels possible on any
given trade route to create economies
of scale and create long-term strategic
partnerships with suppliers and reduce
chartering costs, inland cost, empty
repositioning costs and organisational
costs.
Only a matter of time until Jebel Ali
handles 18,000 teu ships
PORTS in Gulf Co-operation Council
countries must prepare to handle larger
vessels as export and import growth
pushes ships of up to 18,000 teu to the
region.
Speaking at the Containerisation
International conference, DP World senior
vice-president and managing director
UAE region Mohammed al Muallem said
it was only a matter of time until Jebel Ali
handled 18,000 teu ships.
He likened scepticism that this size of
vessel would not come to the port in the
foreseeable future to similar beliefs that
the A380 aircraft would only ever be used
on long-haul routes in the airline industry.
As long as it made economic sense,
he said, then 18,000 teu ships would
eventually call at Jebel Ali, which, when
its new 4m teu Terminal 3 opens later this
year, will be able to handle 10 vessels of
that size simultaneously.
I am confident that whether it is a year,
or two or three, the 18,000 teu ships will
come, he said.
As businessmen and businesswomen
we are here to provide efficient services.
CONFERENCE
Right: United Arab
Shipping Co vice-president
Middle East Mohamed
al-Mazeedi. Below: DP
World senior vice-president
and managing director
UAE region Mohammed
al Muallem. Left: Mr
al-Mazeedi, Mr Al Muallem
and SeaIntels Lars Jensen
take questions from the
audience.
But it is the bottom line which is important.
If we dont make a profit then there is no
point.
Our shipping line colleagues thought it
is nice to be big, but big isnt everything. If
you are big but dont make money, then it
doesnt make sense.
I hope some of our colleagues here
today can convince their bosses that they
should put their ships wherever they make
money.
Mr Al Muallem added that he believed
larger vessels would also be cascaded
from other trade lanes to the various
ports in the GCC countries and said these
facilities needed to prepare for the influx.
He reasoned that gateway volumes were
increasing rapidly as a result of growing
demand and production. He said that last
year Jebel Ali saw import growth outstrip
transhipment growth.
Also, export of petrochemical and
aluminium products was growing rapidly,
further fuelling demand and the need for
larger vessels.
[Export growth] has its own challenges,
he said. We need to be prepared for that.
We as a port and the GCC have only been
preparing ourselves for import growth or
transhipment growth.
What is new and is coming to us now
is that we need to prepare ourselves for
exports, not just ports, but the whole
supply chain.
On the import side, he cited a young,
growing demographic, vast infrastructure
spending, such as the $36bn rail project
to connect countries in the GCC, as well as
the football world cup and Expo 2020, as
reasons for the growth.
He added that it would not be long
before volumes on the Middle East-Asia
trade lane outstripped Asia-Pacific.
DP Worlds first quarter
Mr Al Muallem was speaking shortly after
the container port operator unveiled first-
quarter like-for-like container volume
CONFERENCE
growth of 10.5% to 14.3m teu. DP World
said its first-quarter growth was largely
driven by an improved performance from
Asia Pacific, India and United Arab Emirates
terminals, with Europe continuing to show
signs of improvement. Its UAE terminals
delivered first-quarter year-on-year growth
of 17.5% to 3.6m teu.
On a pure volume basis, there was a
pick-up of 11.6% compared with the same
three months last year, as new volumes
from London Gateway and Embraport
contributed to growth.
In a statement, DP World chairman
Sultan Ahmed Bin Sulayem said: As
anticipated, we have seen a return to
volume growth in 2014 due to the
addition of new capacity and a pick-up in
global trade in the first quarter.
We are encouraged by the volumes
handled at our flagship Jebel Ali port,
with the 1m teu expansion of Jebel Alis
Terminal 2 contributing to the strong
result.
P3 Network to affect Middle East to Asia
services
THE P3 Network will have an impact on
services from the Middle East as certain
Asia-Europe services call in the region.
Maersk Line managing director UAE,
Qatar, Oman and Iran Lars Oestergaard
Nielsen told the conference that it
had calls at ports in the region on the
eastbound leg of the Asia-Europe trade
lane.
As that trade lane is part of the network,
which is still awaiting clearance from
China following on from approval from the
US Federal Maritime Commission, these
services would therefore come under the
control of the P3.
However, Mr Nielsen said if the P3 were
to be approved it would be good news for
its customers in the region.
Our customers and even our colleagues
in the office were asking whether it would
have an impact in the Middle East, but
perhaps it will, he said.
It is only going to be an eastbound
impact. There will be a number of
improved services from the Middle East
to Asia.
The expectations are that we will see
four or five direct services every week
from the UAE going towards China and
Southeast Asia, which is a big difference
from where we are today.
We will also see at least one more
port call in Salalah going eastbound and
you will see some port pairs that are not
available today, direct calls into Yantian,
Busan and Yang Sheng and improved
coverage into Singapore and Qingdao.
So I think there are some advantages.
We know about the rapid growth of the
petrochemical business and they see
China and Southeast Asia as growing
markets.
Game-changing Arabian rail project will
benefit regional shipping
A RAIL project to link the six Gulf
Co-operation Council states will be a
game-changer for the region and for
hinterland connections from Arabias ports,
although critics fear a lack of customs
connectivity will reduce its effectiveness.
Speakers at the event said the proposed
rail network, creating new lines to link
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia
and United Arab Emirates, would make the
region more attractive for manufacturers
by improving hinterland links.
This would result in more efficient
supply chains and increased cargo
volumes as more businesses moved
operations to the region.
Rail operator Schenkers vice-president
and key account manager Middle East
and Africa Andy Vargockzy said: I
think that is the game-changer for the
Gulf Co-operation Council in terms of
productivity, in terms of capacity and it will
have a positive environmental impact as
well.
Speakers said
a proposed rail
network would
make the region
more attractive
for manufacturers
by improving
hinterland links,
though critics fear
a lack of customs
connectivity
will reduce its
effectiveness.
CONFERENCE
However, many question how quickly
some of the states will develop their
infrastructure and the linking lines.
The rail will be a game-changer, said
DP World UAE chief commercial officer
Dirk Van Den Bosch. Although we dont
know when and how.
While some have developed their
networks, it isnt going to help a lot unless
it gets connected with the GCC network.
Thats where it is still a little bit grey; some
say it could be 2019-2020.
Unless that GCC rail network really
starts happening we will not see a lot of
the game-changer effect that was referred
to. But it is coming and it will increase the
attractiveness of the region.
Sohar Port and Free Zone chief
executive Andre Toet said there were also
concerns about the connectivity of the
various customs agencies.
He said: [The network] only works if
your rules and regulations support it and
that is a major issue... The GCC should
have very smooth customs regulations
as soon as a train has to stop at a border
checkpoint, the whole benefit of rail has
gone.
There needs to be good agreement
between customs authorities and
governments and the various IT platforms
need to talk to each other.
There is already a platform in the UAE
and Oman will go live with its new customs
platform by the end of May can they
talk to each other? Are they willing to talk
to each other to make the ease of business
happen?
Its a very important point and a worry.
Another conference attendee
questioned how much impact the rail
network would have on supply chains in
the region, given its strong existing feeder
network that offers lower costs than rail
due to its economies of scale.
UASC hopes to use LNG to fuel ships
within three years of delivery
UNITED Arab Shipping Co hopes to be
sailing its new vessels using LNG fuel
within three years of their delivery,
according to its vice-president of network
operations.
Answering questions from
Containerisation International during the
conference, Franck Kayser said it would be
between three and five years after delivery
that the ships, built to be LNG-ready,
would be switched to that type of fuel.
He said: Internally we would like to use
it about three years down the line from
delivery, which means 2019 as the vessels
will begin to be delivered in 2016, and the
latest we would like to use it is about five
years after delivery, but the plan is to start
it earlier than that.
Mr Kayser said the two biggest
challenges to switching to LNG to fuel the
ships are the ability to deliver LNG in an
economical way and the need to create a
new model for procuring LNG.
He said that at present LNG was
procured on a five- to 10-year contract
with fixed volumes at a fixed cost,
compared with the way bunker oil is
purchased, with a certain amount procured
at the current price.
It is quite a different process, he said.
There are many different models being
worked on how to purchase LNG but at
the moment it is a little bit unclear how we
would do that.
He said Rotterdam and Singapore were
both working on plans to provide LNG
bunkering. Mr Kayser said there were several
reasons that LNG-ready ships are not on the
water or that many more are on order.
He cited the fact that shipyards
preferred to build standard design
boxships, where they could make more
Delegates gather
at the conference.
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money, and the risk associated with being
the first to order a new vessel design.
He also said that it was operators that
would gain the benefits of sailing with LNG
fuel, which means it is not in a pure vessel
owners interest to order this type of ship.
Mr Kayser outlined the benefits that
will come from using LNG fuel, despite
the initial higher capital expenditure
required and the fact it would reduce
cargo space.
LNG fuel will reduce energy costs by
as much as 20% compared with current
bunker costs, will generate savings on
maintenance costs of around 1%-2%,
based on UASCs dual-fuel design, and has
a higher energy content of around 17%
compared with current fuels.
It also emits 35% less carbon dioxide,
60% less NOx and produces no sulphur
emissions.
UASC, owned by six Arab states
including gas-rich Qatar, recently
exercised the option for another LNG-
ready 18,000 teu ship, bringing its total on
order to six.
It also has 11 14,000 teu ships on order,
all with Hyundai Heavy Industries. The
combined contract is worth more than $2bn.
Middle East petrochemical shippers face
equipment shortage
PETROCHEMICAL exporters in the Middle
East are facing a shortage of containers as
shipping lines struggle to reposition 20-ft
boxes.
Shipping lines and consultants outlined
the difficulties that shippers in the fast-
growing petrochemical industry in the
Middle East face in obtaining the 20-ft
containers they need for their heavy
products.
Maersk Line managing director Saudi
Arabia, Bahrain and Yemen Santosh Singh
was the first at the event to highlight the
issue.
We have a big issue with equipment
supply, Mr Singh said. Two years ago we
had no issue... in terms of the equipment
petrochemical customers needed in the
Gulf Co-operation Council countries.
But now it is becoming a big issue,
with some areas suffering from a deficit of
containers.
He said the situation had become more
severe over the last three months, as
exports surged.
Customers were projecting the need for
a level of equipment that had not been
planned for, he said.
The situation is tender, we need to give
it another couple of months to see if it is a
structural issue, but in the meantime it is
getting worse.
Tim Consult founder Bjorn Klippel said
more than 50% of chemical products are
transported in 20-ft containers because
this type of cargo tended to weight out
before the container was fully loaded in
terms of space.
When a 20-ft container is transported
to the Far East, how do you bring it back to
the loading point? he said.
One audience member asked whether
40-ft containers, where available, could be
used instead of 20-ft containers to ease
the problem.
Mr Singh said Maersk Line had run some
pilot projects using 40-ft containers and
that although the shippers were happy to
use the 40-ft containers, there were issues
with inland transportation at destinations
in Latin America and India.
He said that in certain areas there were
also shortages of 40-ft containers, such
as the Eastern Province of Saudi Arabia
and in Bahrain, because of an equipment
imbalance there too.
Another conference attendee told
Containerisation International that
although there were empty containers in
the region, shippers were not prepared
to pay to move them to where they were
needed.
UASC reveals Asia-Europe service
shake-up
UNITED Arab Shipping Co has revealed
the new set-up of its Asia-North Europe
service network as it continues to move
closer to members of the CKYHE Alliance
and China Shipping.
UASC is now offering five Asia-Europe
services through its vessel sharing
agreement with China Shipping Container
Lines and slot exchange agreements with
CKYHE Alliance
members Hanjin Shipping and Evergreen
Marine.
The AEC1 service, which utilises 10
vessels of between 8,500 teu and 9,500
teu, began on April 28, the AEC3 service,
which started on April 17 using 10 vessels
of 14,000 teu, and the AEC4 service, which
began April 15 deploying 10 vessels of
8,000 teu-10,000 teu, are new services.
The AEC8 and AEC9, both operated
with 11 ships of between 13,000 teu and
13,500 teu, are existing services that UASC
said had been enhanced.
The move comes as shipping lines
continue to adjust their networks in light
of the formation of the P3 Network of
Maersk Line, Mediterranean Shipping Co
and CMA CGM.
UASCs former offering on the Asia-
Europe trade consisted of four services,
two of which CMA CGM provided vessels
for.
UASC was a vessel provider in its AEC2
service, along with P3 member CMA CGM,
and its AEC8 service, along with CMA CGM
and CSCL.
MSC, APL, HMM, Maersk Line and MOL
all took space on the AEC2 service while
Yang Ming, Hanjin, Coscon and PIL took
space on the AEC8 service.
UASCs AEC7 service was previously
provided through a slot agreement on a
CMA CGM loop, while its AEC9 service
was through a slot exchange on a CKYHE
service from Hanjin.
While it is not yet clear whether the P3
Network will be approved by regulators
in Asia, shipping lines are preparing for a
world in which it exists.
The CKYH Alliance has expanded to
include Evergreen on the Asia-Europe
trade and is also forming new slot
agreements with UASC and CSCL.
The G6 Alliance has announced plans
to expand onto the transatlantic and
transpacific west coast trade lanes.
Meanwhile, Zim has lost its presence
on the Asia-North Europe trade after its
partner CSCL decided to go it alone on
their joint service.
UASC said its new network was part of
our continual commitment to better serve
our customers in Asia and Europe alike
by providing competitive transit times
between ports in Asia and North Europe.
It added that the new services would
offer direct coverage from south, east
and north China, Taiwan, South Korea and
Southeast Asia to the United Kingdom,
Germany, Netherlands, Belgium and
France.
It would also provide direct calls from
Asia to Felixstowe and from North Europe
to the Middle East.
GUEST COLUMNIST
MORE ONLINE AT
CONTAINERSHIPPING.COM
SULPHUR
CAP CREATES
NEW RISKS
MARPOL Annex VI requirement means
cost ramications for carriers, shippers
and port authorities, says Derik Andreoli
Senior Analyst at Mercator International
FUEL comprises between 40%
and 60% of ocean carriers
operating costs, and as oil
prices increased sharply over
the last decade, lines reacted
by slow-steaming and upsizing
the vessels in their fleets.
These twin strategies have
allowed them to greatly
reduce the volume of bunkers
consumed per container-mile,
but carriers remain vulnerable
to fuel price volatility.
Mercator forecasts
that carriers will see fuel
expenditures jump in the early
months of 2015 as a result
of the sulphur emissions cap
being lowered in Emissions
Control Areas, as dictated by
MARPOL Annex VI.
From January 2015, carriers
will be required to burn fuel
with a sulphur content no
higher than 1,000 parts per
million (0.1%) in the North
American, North Sea, Baltic
Sea, and Caribbean ECAs, as
opposed to the current limit
of 1%.
In order to meet the current
requirement, carriers burn low-
sulphur intermediate or heavy
fuel oil. These bunker fuels
are created by blending higher
sulphur IFO or HFO with lower
sulphur IFO or marine gas oil,
which is a middle distillate
very similar in composition to
diesel fuel.
As of April 18, 2014, the
price differential between
low sulphur IFO/HFO and
high sulphur HFO was $57
per tonne in Rotterdam and
$90 per tonne in Singapore.
With high sulphur HFO prices
at those two ports at $581
and $588 per tonne, the
current ECA tax amounts
to 10% ($57/$581) per
tonne for carrier strings
bunkering in Europe versus
15% ($90/$588) for those
bunkering in Asia.
Over the long-term, carriers
may choose to install exhaust
scrubbers, or convert engines
to run on liquefied natural gas.
However, by January 2015,
most carriers will
have no option other than
burning MGO while
steaming within the
boundaries of ECAs.
Under todays prices, the
ECA tax associated with
burning MGO rather than high-
sulphur HFO in the European
trades would be $405 per
tonne, and in the Asian
trades it would be $366 per
tonne. Thus, if prices remain
unchanged, the fuel burned in
ECAs will be between 162%
and 170% more costly per ton
than fuel burned in the open
ocean.
That said, it is estimated
that consumption of MGO
will increase by 50m tonnes
in 2015 as a consequence of
the lowering of the sulphur
cap. To give this volume some
perspective, 50m tonnes is
equivalent to approximately
3% of total global middle-
distillate consumption. Since
2000, there have only been
two years 2004 and 2010
in which middle-distillate
consumption increased by that
amount.
Using US on-highway diesel
prices as a proxy for the
middle-distillate market, we
see that in both cases demand
growth of this volume and
magnitude resulted in a 20%
price increase. Thus, history
suggests that MGO prices could
increase by approximately that
same amount in response to
rising demand.
Of course, the quantity
of fuel burned by vessels
operating in an ECA relative
to fuel burned on the open
ocean depends on which
ports are called and the
specifics of the route used
for a given deployment. In
order to put a concrete
number on how we might
expect carriers fuel costs to
change as a consequence of
the more stringent sulphur
regulations coming into
force in January, two G6
liner services the Atlantic
Express, ATX, which serves the
Europe-North America trade,
and the Super Shuttle Express,
SSX, which serves the Asia-
North America trade were
modelled using Mercators
Over the long term, carriers may
choose to install exhaust scrubbers,
or convert engines to run on
liquefed natural gas. However, by
January 2015, most will have no
option other than burning marine
gas oil when steaming within ECAs
From January 2015,
carriers will be
required to burn
fuel with a sulphur
content no higher
than 0.1% in certain
regions.
Photo: Sanit
Fuangnakhon/
Shutterstock.com
A big part of our reason for going into
the market was not just the services
but the connection that both the port
leadership and the customer service
teams had with Target. They really, truly
wanted to understand our business
how they could serve us better and
adjusted their operations accordingly
to really meet our needs.
Rick Gabrielson Target
Director of International
Transportation
Get the whole story at GAPORTS.COM/TARGET >
See how Americas second-largest general merchandise retailer
leverages the Savannah connection to keep their supply chain
owing and growing.
In their own words
GUEST COLUMNIST
proprietary voyage costing
model.
Whereas only one of the six
ports connected by the SSX
service, Long Beach, is located
in an ECA, all seven of the
ATX ports of call are located
in either the North Sea ECA
or the north American ECA.
Moreover, the voyage across
the open waters of the Pacific
is approximately twice the
distance of the transatlantic
ocean component of the ATX.
Consequently, the ratio of
time spent in ECAs to time
spent on the open ocean is
much greater for the typical
Europe-US east coast service,
versus the typical Asia-
California string.
While both the ATX and SSX
services will be negatively
impacted by the impending
sulphur limit reduction, the
fuel costs for the ATX will
be increased to a far greater
degree.
With the ATX operating
in an ECA 35% of the time,
fuel costs associated with
operating this deployment
are expected to increase by
23% if fuel prices remain
unchanged. If, as history
suggests, MGO prices increase
by 20%, the total fuel
expenditures for the same
string will likely rise by 33%.
By contrast, the vessels in the
SSX spend only 8% of the
time steaming in an ECA, and
projected fuel expenditures
will increase by 6% if fuel
prices remain unchanged. If
MGO prices rise 20%, then
fuel expenditures on the SSX
will likely go up by 11%.
If MGO prices increase 20%,
and if we assume that fuel
costs currently account for
50% of total operations costs,
total operating costs will likely
increase more than 15% for
the ATX and 5% for the SSX.
To the extent that these two
strings are indicative of the
North Europe-US east coast
and Asia-US west coast trade
lanes, it can be concluded that
operating in the Asian trade
will become significantly more
costly, and that operating
costs for the European
trade lane will increase at
approximately three times the
Asian trade lane rate.
The ramifications of a cost
shock of such magnitude
are unpredictable, but it is
probably safe to say that
ocean carriers will pass the
ECA tax onto shippers
through a fuel surcharge
mechanism of some form.
In turn, some shippers may
choose to adjust their supply
chains, and rising operational
costs may also drive some
carriers to alter their vessel
networks in order to reduce
the ratio of days spent
steaming in the ECAs to days
steaming in the open ocean.
By altering the field of play,
the uneven ECA tax will create
opportunities, but should
also be viewed as a threat by
carriers, terminal operators,
and ports alike.
The risk to ports and terminal
operators should not be
underestimated. Carriers and
alliances will undoubtedly be
looking to further adjust their
schedules and rationalise ports
of call to reduce time spent in
ECAs. The cost of, for instance,
calling at one or more southern
ports located on the US east
coast en route from Panama to
New York will become far more
expensive and some carriers
may simply decide to route
one or more Asia-US east coast
all-water strings directly from
Panama to Norfolk/New York
instead of calling one of the
more southern ports.
Container shipping is
an extremely competitive
industry, and cost-saving is
one of the primary strategies
employed by carriers. As they
have in the past, carriers will
continue to adjust their liner
services in order to minimise
fuel costs. The requirement
to burn 0.1% sulphur from
January 2015 will significantly
impact the single-greatest
expense on ocean carriers
income statements, and the
most effective way to control
these costs is by maximising
the time spent on the open
ocean relative to the time
spent in ECAs by adjusting
which ports are called at.
On each string calling at
multiple ports in an ECA, some
ports will be more at risk than
others, and it is imperative
that ports and terminal
operators understand how the
next phase of MARPOL Annex
VI sulphur cap regulations will
impact their respective risk
profiles.
The risk to ports and terminal operators should not
be underestimated, as carriers may look to adjust
their schedules to reduce time spent in ECAs.
Photo: gary718:Shutterstock.com
GUEST COLUMNIST
CYBERSECURITY RISKS
IN THE MARITIME SECTOR
Shipping lines need to take more notice of the threat
of cyber criminals, says Lars Jensen of CyberKeel
Lars Jensen is chief executive
and founder of the maritime
cybersecurity firm CyberKeel,
specialising in assessing
current security levels and
helping maritime companies
identify ways to improve
cybersecurity. Lars has been
in the maritime industry
for 13 years and is also the
founder and CEO of SeaIntel
Consulting providing leading
maritime consultancy
services.
INCREASINGLY, cybersecurity
or rather the lack thereof
in the maritime sector should
be giving all stakeholders
cause for concern.
For now, the most well-
known case of a breach is
the incident at Antwerp last
year, when drug traffickers
hacked into the Belgian ports
computer system in order to
retrieve specific containers.
But when we examine the
modus operandi of cyber
criminals, as well as the actual
level of security awareness
in the industry, it is clear that
the issue warrants much more
attention at the corporate
level.
The question is not when
the next successful attack
will happen: the question is
how many ports and shipping
companies have already been
penetrated without knowing
it?
We have asked numerous
managers in the industry the
same question: How do you
identify the people who are
already inside your systems?
Most often, they are unable to
answer the question, relying
principally on systems to keep
intruders out. Unfortunately,
any system can be broken into
if the attacker is sufficiently
proficient.
CyberKeel recently set
out to find what indication
of cybersecurity levels can
be found for the 20 largest
container carriers.
All carrier websites allow
for a multitude of data entry.
Typically this is related to
track and trace applications,
schedule applications,
email query forms, booking
applications and tariff
applications.
Merely by using these
entry forms, in the format the
carriers make them available,
it was possible to test whether
each website appears
vulnerable to a penetration of
databases as well as systems
running underneath.
Almost half of the major
container lines showed signs
of being vulnerable to such
penetration. Four carriers
showed particularly severe
signs that the construction
of the web interface in
combination with the
underlying database made
the attacks easier to perform.
Two of these carriers were in
the top-10 league of global
container carriers.
CyberKeel did not attempt
to actually exploit these
seeming vulnerabilities that
would be illegal. However,
based on experience, it does
indicate a likelihood that we
could manipulate data directly
in the carriers operations
systems should we have such
a desire. Client-specific work
has subsequently verified
the viability of some of these
weaknesses.
Another approach was
through the use of Shodan,
a freely available search
engine allowing users to find
specific types of computers
and hardware on the
internet. Within the hacking
community, Shodan has been
used to locate entry points to
systems such as traffic lights,
security cameras, onboard
monitoring systems on
Caterpillar trucks and control
systems for water parks, gas
stations, banks, universities,
powergrids and nuclear
powerplants.
With a reasonable level of
security, it would require a
significant level of technical
expertise and effort to locate
the exact systems. Simply
typing in the name of a
company as one would do
on a Google search should
not prove fruitful. Nonetheless
this is the approach CyberKeel
tried with the top 20 container
carriers.
Five container carriers
provided direct access to
specific servers for which
known exploits were readily
available. In other words,
it would be a matter of
minutes to gain entry into
these file servers. Multiple
carriers appear open to
attacks straight into back-
end systems, file servers, mail
servers and video conference
facilities. In one case, the
known exploit would allow
us to gain direct control of
a mail server belonging to a
carrier.
Combining the results of the
two tests show that 16 of the
top 20 container carriers are
vulnerable to relatively simple
penetration attacks. The tests
performed by Cyberkeel on
the container carriers were
very crude and simple, and
ought not to have returned
any results at all. The fact that
they revealed potential gaps in
cybersecurity for 16 out of the
top 20 carriers shows that the
level of cybersecurity in the
industry should give rise to
grave concern.
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