News and Events

Big Spike In Containership Lay-ups Mid-Peak Season

August 9th, 2018
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© Kok Keong Ng
By Mike Wackett
09/08/2018

Alphaliner’s bellwether containership idle tonnage data has recorded a big spike in vessels being consigned to lay-up, shifting the supply-demand balance back in favour of the charterer.
The consultant said the capacity of the idle tonnage fleet had risen to 341,000 teu by the end of July, representing 1.6% of the total global cellular fleet. This is a worrying increase for shipowners, not least because this has happened in the middle of the peak season.

Indeed, with the slack season not normally expected until October, Alphaliner said the amount of unemployed tonnage could reach 750,000 teu, or more, by the end of the year.
“Capacity rationalisation moves on the Far East-Middle East and Far East-North America routes are expected to further drive down the active fleet in the coming two months, although this will be partly offset by new service launches on the Australia routes,” said Alphaliner. With ocean carriers carrying forward some $1.2bn of red ink from the first quarter, and many likely to post even worse losses for Q2, the container lines have been under significant pressure to ‘stop the rot’. But with fuel prices still rising and freight rate increases not sufficiently compensating for extra costs, the lines have adopted a ‘slash and burn’ strategy of pulling services, cutting capacity and postponing planned new services. And this means the carriers have not taken up options for charter extensions on ships and instead returned as much tonnage as possible to owners.

The impact has been for brokers of the redundant ships to try to fix cargo on the spot market for as long as possible, but due to a low level of new enquiries, several owners have […]

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Cosco Shipping Operations ‘Back to Normal’ After Ransomware Cyber Attack

July 30th, 2018
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  • Cosco Shipping Operations ‘Back to Normal’ After Ransomware Cyber Attack Cosco Shipping Operations ‘Back to Normal’ After Ransomware Cyber Attack

    Cosco Shipping Operations ‘Back to Normal’ After Ransomware Cyber Attack

Cosco shipping operations ‘back to normal’ after ransomware cyber attack

By Gavin van Marle 30/07/2018
Chinese shipping giant Cosco appears to have largely got its US IT system back to normal following last week’s ransomware cyber attack that left its North American operations crippled.
In a customer advisory from its Shanghai headquarters, Cosco says its “network applications in the Americas have been totally recovered”.
It added: “All communication channels including telephone, email, and electronic data exchange have been restored.
“There has been a further increase in our service response. We are working at full stretch to process all the service requests received previously, and the service response is expected to be back on track within this week.”

A more detailed communique issued by Cosco in the US this morning office advises shippers and forwarders that the company’s email system is back up and running, except at Los Angeles and Long Beach, where customers could continue using the Yahoo email address it set up in response to the attack.
It added that shippers should also use the yahoo address rather than submitting information through the www.cosco-usa.com site, which remained closed “under the premise of ensuring network security”.
Shipping operations had returned to normal levels, Cosco claimed, with no berthing delays at its facilities in the LA-Long Beach port complex, and the release of import containers to hauliers and intermodal operators for shipments into the US hinterland were also back to normal.
And it added: “Meanwhile, the releasing for imported IPI cargo transferred through the US railway companies is back to normal too; we would only ask you to provide the proof of customs clearance to our customer service group email or temporary email addresses.”

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Trump Eyes Even Higher Tariffs As China Trade War Escalates

July 5th, 2018
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Bloomberg News
‎— With assistance by Xiaoqing Pi, Yinan Zhao, Miao Han, Andrew Mayeda, Jennifer Jacobs, Dandan Li, Elizabeth Konstantinova, Slav Okov, and James Mayger

After months of rhetoric, a 25 percent levy on $34 billion of Chinese goods entering the U.S. took effect just after midnight Washington time on Friday with farming plows and airplane parts among the products targeted. China hit back immediately via duties on U.S. shipments including soybeans and automobiles.

Neither side shows any signs of backing down. Trump is already eyeing another $16 billion of Chinese goods, and he indicated to reporters Thursday on Air Force One that the final tariff total could exceed $500 billion, almost the same amount that the U.S. imported in 2017. China’s Commerce Ministry accused the U.S. of “bullying” and igniting “the largest trade war in economic history.”

The first ever U.S. tariffs aimed just at China will likely rally Trump’s voters who agree with his “America First” argument that Beijing hasn’t played fair for years, stealing America’s intellectual property and undercutting its manufacturers.

But the risk is that a spiraling conflict undermines economic growth by gumming up international supply chains and inflicting higher prices on companies and consumers. The Federal Reserve has already noted some firms are slowing investment, while Harley-Davidson Inc. and General Motors Co. are warning they may cut jobs.
Given the moves were widely telegraphed, financial markets took them in stride. U.S. stocks rose and the dollar extended losses. Treasuries gained and gold declined as investors assessed the impact of the escalation in the trade rift.
Hours after the tariffs, the U.S. released jobs figures that showed few signs of any early pressures on employment from the trade tension. U.S. hiring topped forecasts in June, while the […]

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Walmart and JB Hunt join customer list for Tesla’s new all-electric Semi truck

November 20th, 2017
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  • Walmart and JB Hunt join customer list for Tesla’s new all-electric Semi truck Walmart and JB Hunt join customer list for Tesla’s new all-electric Semi truck

    Walmart and JB Hunt join customer list for Tesla’s new all-electric Semi truck

TESLA
By Alexander Whiteman 20/11/2017, The LoadStar

Retail giant Walmart has made tentative steps towards electric trucking with a $5,000 per vehicle deposit for 15 of Tesla’s new Semi trucks.

Launched in California on Thursday, the Semi has yet to be priced – although one analyst told the BBC just the engine could cost $200,000, more than double the price of an entire diesel truck.

Walmart is not alone, or was the first to take a punt on the vehicle: Michigan-based grocery chain Meijer placed an order for four trucks almost immediately after the launch, Canadian grocery company Loblaw put down $75,000 for 25 and JB Hunt said it had made a reservation for “multiple” vehicles.

The US operator became the first haulier to publicly back the Semi, and CEO John Roberts said the vehicles would help its west coast intermodal and contract services divisions.

He added: “Reserving Tesla trucks marks an important step in our efforts to implement industry-changing technology. We believe electric trucks will be most beneficial on local and dray routes, and we look forward to utilising this new, sustainable technology.”

A Walmart spokesperson told the UK Financial Times that five of the 15 vehicles it ordered would be used in US operations, with the remaining 10 destined for its Canadian business.

“We have a long history of testing new technology – including alternative-fuel trucks – and we are excited to be among the first to pilot this new heavy-duty electric vehicle,” said the spokesperson.

“We believe we can learn how this technology performs within our supply chain, as well as how it could help us meet some of our long-term sustainability goals, such as lowering emissions.”

Tesla may have drawn the crowds, but it wasn’t the only truck […]

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Air Cargo

November 9th, 2017
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  • Air Cargo Air Cargo

    Air Cargo

© Prayuth Gerabun

By Alex Lennane 09/11/2017

Forwarders and shippers are “feeling the pain” of a serious lack of air freight capacity in the market as rates soar on some lanes as high as $8.00 per kg.

There is “nowhere to turn”, said one Asia-Europe air freight forwarder, who reported a seven-to-ten-day backlog out of Asia.

“Rates are going sky high – and going up every weekend. It’s about $4 per kg as an average, and airlines are getting choosy over the type of freight they are accepting,” he said.

“Lots of people are suffering – I have had three retailers, who are not customers, contact me this week with fresh enquiries, as their incumbent forwarder has not able to accommodate them.”

The market seems to be facing a perfect storm – although, as one forwarder said wryly, “it isn’t too bad if you are a carrier”.

One of the biggest problems for general cargo is the current volume of ecommerce, which is daily, and higher-yield, according to one source.

“It’s a carrier’s market. Airlines are definitely becoming more selective with what they take and accept. E-commerce is a massive issue this year.”

There is also less capacity around to handle a “traditional” peak, following the withdrawal of freighter capacity by combination airlines in lacklustre years, as well as a move towards aircraft such as the cargo-unfriendly A380.

It has also been reported that scheduled airlines are pulling freighter flights to operate charters, booked up by big names for product launches. One source indicated that Coca-Cola alone operated 12 charters last week from Ireland to the US, while Samsung, Apple and Amazon are also thought to have booked significant amounts of capacity.

“The problem for shippers is that they are looking for alternatives, but […]

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Cosco buys OOCL for $6.3bn to form the world’s third-largest liner company By Mike Wackett 10/07/2017

July 17th, 2017
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Cosco has teamed with Chinese port operator Shanghai International Port Group (SIPG) to acquire Orient Overseas International Ltd (OOIL).

The new owners have pledged to keep the OOCL liner brand and its Hong Kong headquarters, and provided some assurances to worried staff that their jobs are safe for now.

The offer of HK$78.67 ($10.06) in cash per share represents a premium of about 30% on OOIL’s Friday closing price and values the company at around $6.3bn.

The Loadstar reported on 20 June that a takeover of the world’s seventh-biggest carrier by Cosco was “almost a done deal”, but this was dismissed by OOIL management as “fake news”.

Indeed, OOIL’s oft-repeated rebuttal that it was “not aware of, nor involved in any bid related to the company or OOCL”, appears to have been disingenuous.

However, behind-the-scenes negotiations appear to have been ongoing for months culminating in the Chinese state-owned carrier making the Tung family an offer they could not refuse.

Upon completion of the transaction, which remains subject to regulatory approval, as well as approval from Cosco Shipping Holdings shareholders, Cosco will hold a 90.1% stake in OOIL and SIPG 9.9%.

Combining Cosco’s container fleet with that of OOCL will see the merged carrier leapfrog CMA CGM to become the world’s third-largest container line with a market share of 11.5% for a total capacity of 2.42m teu, together with an orderbook of 640,000 teu.

After closing, Cosco and OOCL will “continue to operate under their separate brands” said a joint press release on Sunday. “Both companies are members of the Ocean Alliance and will continue to work together under this framework,” it said.

Andy Tung, chief executive of OOIL, whose family controls 68.7% of the […]

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FDA FSMA Rule on FSVP , Foreign Supplier Verification Program.

July 11th, 2017
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The FDA FSMA rule on Foreign Supplier Verification Programs (FSVP) for Importers of Food for Humans and Animals is final, and the first compliance dates begin May 30, 2017.

The final rule requires that importers perform certain risk-based activities to verify that food imported into the United States has been produced in a manner that meets applicable U.S. safety standards. This rule is the product of a significant level of outreach by the FDA to industry, consumer groups, the agency’s federal, state, local, tribal and international regulatory counterparts, academia and other stakeholders. The FDA first proposed this rule in July 2013.

After input received during the comment period and during numerous engagements that included public meetings, webinars, and listening sessions, the FDA issued a supplemental notice of proposed rulemaking in September 2014. The proposed revisions included providing importers flexibility in determining appropriate verification measures based on food and supplier risks, while acknowledging the greater risk to public health posed by the most serious hazards in foods.

The final rule has elements of both the original and supplemental proposals, with the addition of greater flexibility in meeting certain requirements to better reflect modern supply and distribution chains. For example, importers can meet key FSVP obligations by relying on analyses, evaluations and activities performed by other entities in certain circumstances, as long as those importers review and assess the corresponding documentation.

Compliance Dates

The date by which importers must comply with the FSVP regulations is the latest of the following dates:
•18 months after publication of the final rule;
•For the importation of food from a supplier that is subject to the preventive controls or produce safety rules, six months after the foreign supplier is required to meet the relevant regulations;
•For an importer […]

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February 2nd, 2017
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By Alex Lennane 01/02/2017

Amazon is to shift its Prime Air hub from Wilmington, Ohio, home of aircraft supplier ATSG, to Cincinnati, Kentucky.

The move, in which Amazon will invest $1.49bn into its new CVG hub in Hebron, has triggered further speculation on the e-tailer’s growing interest in logistics.

Amazon has agreed a 50-year lease on some 900 acres at the airport, similar to the size of the FedEx hub at Memphis, and expects to create more than 2,000 jobs when the site opens. A spokeswoman told The Loadstar that Amazon would “transition to utilising CVG this spring”.

Colin Sebastian, an analyst for Baird Equity Research, said in a note to clients: “We estimate a $400bn-plus market opportunity for Amazon in delivery, freight forwarding, and contract logistics,” according to Reuters.

In its latest nine-month figures, Amazon show shipping revenues up 42% year-on-year to $5.97bn – a number dwarfed however by its 42% rise in shipping costs to $10.5bn.

Reuters reported in December that Amazon was loading its own aircraft with big, lightweight boxes and giving the integrators, which are increasingly pricing by volume rather than weight, smaller items in a bid to cut shipping costs.

Amazon noted in its results it was seeking to “expand our fulfillment capacity … to meet anticipated shipment volumes from sales of our own products as well as sales by third parties for which we provide the fulfillment services”.

It added: “We seek to mitigate costs of shipping over time in part through achieving higher sales volumes, optimising placement of fulfillment centres, negotiating better terms with our suppliers, and achieving better operating efficiencies.”

Last week it was reported that Amazon had started shipping products via ocean freight, with figures showing it had acted as a freight forwarder […]

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Yang Ming Reiterates Its Financial Recovery Plan

January 24th, 2017
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Customer Advisory-Yang Ming reiterates its financial recovery plan

2017/01/23

Dear Valued Customers:

This advisory will update you further on Yang Ming’s most recent efforts to maintain competitiveness in the market.

Since the announcement of the Taiwanese government’s massive US$ 1.9 billion assistance program for the country’s shipping industry, Yang Ming has been proceeding with its own plans to improve on its competitiveness. Lead by its management team, Yang Ming has instituted a recapitalization plan aimed to provide immediate benefits to its balance sheets and improve on its liquidity.

In a December 22, 2016 shareholders’ meeting, the shareholders voted to approve a stock consolidation plan. This move was designed to pare down accumulated loss. Additionally, it was announced at the meeting that Yang Ming would receive injection of fresh capital from new investors. The first stage of this injection of capital will be from various government and private entities, including banks and financial institutions. Yang Ming will issue new stock to these investors, and with the new capital Yang Ming expects immediate benefits to its balance sheets. With this strong showing of government support, it is also expected to help enhance additional private sector investment in Yang Ming.

It is also anticipated that the recapitalization plan will result in a larger percentage of government owned and controlled interest in Yang Ming, well beyond the current approximate 33.3% held by the Ministry of Transportation and Communications of Taiwan(MOTC).

The management team of Yang Ming management has been instrumental in crafting and putting the recapitalization plan in motion. Yang Ming’s largest shareholder (MOTC) has also been a strong supporter of the recapitalization plan. The MOTC has been a solid advocate of the recapitalization plan and of Yang Ming before the […]

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Maersk Agrees to Acquire Hamburg Sud

December 1st, 2016
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Maersk Line and the Oetker Group have reached an agreement for Maersk Line to acquire Hamburg Süd, the German container shipping line.
Copenhagen, 1 December 2016

Maersk Line and the Oetker Group have reached an agreement for Maersk Line to acquire Hamburg Süd, the German container shipping line. The acquisition is subject to final agreement and regulatory approvals.
Hamburg Süd is the world’s seventh largest container shipping line and a leader in the North – South trades. The company operates 130 container vessels with a container capacity of 625,000 TEU (twenty-foot equivalent). It has 5,960 employees in more than 250 offices across the world and market its services through the Hamburg Süd, CCNI (based in Chile) and Aliança (based in Brazil) brands. In 2015, Hamburg Süd had a turnover of USD 6,726 million of which USD 6,261 million stems from its container line activities.
“Today is a new milestone in Maersk Line’s history. I am very pleased that we have reached an agreement with the Oetker Group to acquire Hamburg Süd. Hamburg Süd is a very well-run and highly respected company with strong brands, dedicated employees and loyal customers. Hamburg Süd complements Maersk Line and together we can offer our customers the best of two worlds, first of all in the North – South trades,” says Søren Skou, CEO of Maersk Line and the Maersk Group.
“We are proud to join the global market leader Maersk Line. While gaining access to a superior network and systems we will continue the Hamburg Süd brand and business model offering personalized solutions to our shippers and consignees. By joining forces both Maersk and Hamburg Süd will strengthen their product portfolio and cost position to the benefit of their customers,” […]

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