News and Events

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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Japan’s Nyk, Mol and Kline merger plan will create sixth largest shipping line

October 31st, 2016
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By Mike Wackett 31/10/2016

Japan’s big three shipping groups – K Line, MOL and NYK – have agreed to spin-off their container shipping businesses into a new joint-venture company with a total capacity of 1.4m teu, which would rank as the sixth largest in the world and have a global market share of approximately 7%.

A joint statement released today said the deal was subject to shareholders’ agreement and regulatory approval with a planned establishment of the new company scheduled for 1 July 2017, and the target for business commencement set for 1 April 2018.

“The three Japanese companies have made efforts to cut cost and restructure their business, but there are limits to what can be accomplished individually,” explained the statement.

It added: “Under such circumstances, we have decided to integrate our container shipping business so that we can continue to deliver stably high quality and customer focused products to the market place.”

The three companies all operate portfolios of diversified enterprises that include: bulk shipping, car transportation, LNG, tankers, offshore, energy heavy lift and air cargo transportation.

It has been agreed that the shareholding of the container line joint venture will be: K Line 31%, MOL 31% and NYK 38%, with a total contribution of Y300bn, including fleets and share of terminals, but will exclude terminal operating business in Japan.

According to vesselsvalue.com, NYK owns the largest container fleet, with 68 vessels providing a total capacity 507,046 teu, valued at $2.33bn; followed MOL, with 35 ships for 307,449 teu, valued at $1.7bn, and third K Line, which owns 31 containerships with a capacity of 240,440 teu and a value of $1.2bn.

Including current chartered-in tonnage the total number of ships operated by the joint-ventrue would equal 256 vessels […]

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FMC approves OCEAN Alliance

October 24th, 2016
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The Federal Maritime Commission said Friday it concluded its review of the proposed OCEAN Alliance, allowing the new ocean carrier alliance to take effect Monday, although it is not expected to commence operations until around April 2017.
By Chris Dupin |Monday, October 24, 2016 |American Shipper
The Federal Maritime Commission (FMC) said it has concluded its review of the proposed OCEAN Alliance, FMC Agreement No. 012426, allowing it to take effect Monday, although it is not expected to become operational until around April of next year.
The OCEAN Alliance members include COSCO Shipping, CMA CGM, Evergreen Marine and Orient Overseas Container Line Limited (OOCL).
The FMC said the members of the alliance are now permitted to share vessels; charter and exchange space on one other’s ships; and enter into cooperative working arrangements in international trade lanes between the United States and ports in Asia, Northern Europe, the Mediterranean, the Middle East, Canada, Central America and the Caribbean. The FMC does not regulate services that do not call the United States, but the Ocean Alliance is planning to serve the Asia-North Europe, Asia-Mediterranean, Asia-Middle East and Asia-Red Sea trades.
The FMC said it did an “exhaustive review” of the Ocean Alliance and “took advantage of the opportunity allowed for under the law to issue a request for additional information, which necessitates the filing of further documentation in support of the application.”
“The Commission worked very hard to balance the needs of not only the OCEAN Alliance applicants, but all other parties involved in the intermodal supply chain, with the ultimate goal of safeguarding competition in international oceanborne common carriage, with the American shipping public foremost […]

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Shipping industry could face $35bn write-off, as NYK’s impairment loss is likely to trigger review by lines

October 18th, 2016
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By Alex Lennane 12/10/2016

Last week’s news that NYK Line took the largest-ever impairment loss in container shipping history will come as little surprise to a desperate industry. But according to Alphaliner, there is no likelihood of another bankruptcy “at this stage” – despite a potential $35bn industry-wide write-off.

The Japanese line will record an extraordinary loss of JPY100bn ($972m) on its vessel assets – almost a quarter of its total assets.

Outside of Japan, noted Alaphaliner, most other carriers have not made the same move, even though current market values for ships are so low. But the research company said this week that the top 18 carriers may need to write off a massive $35bn in total, assuming a 25% impairment loss.

“NYK’s move could trigger a fresh review of containership asset valuations that have fallen to historical lows,” it said.

While the Panamax sector has been most affected by falling asset values – by as much as 80% below the depreciated book value – other vessel types have seen a fall of between 30 and 60% of their book value.

So what does it mean for NYK? A fairly significant impact on its full year results, but other carriers, already expecting a poor year, “will be wary to take another blow” noted Alphaliner.

“Carriers’ financial health remains weak,” added the consultancy. “All of the main carriers who have released their financial results are in the ‘grey’ to ‘distressed’ zone” – although only Maersk and OOCL are in the former.

On the upside, however, given the calls for greater transparency into the lines’ finances, the report concludes that “the likelihood of another bankruptcy after the Hanjin fiasco is low at this stage, based on Alphaliner’s assessment”.

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Bankruptcy looms for Hanjin Shipping as creditors reject latest rescue plan

October 18th, 2016
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By Mike Wackett 30/08/2016

Creditors decided today not to extend financial support to Hanjin Shipping beyond the end of its restructuring scheme on 4 September.

This leaves South Korea’s biggest shipping line with little option other than to file for court receivership.

Yesterday it appeared that Hanjin had made some progress in its negotiations with shipowners for reduced charter hire fees – a key requirement by creditors – by reaching agreement with Seaspan.

However, any deal has not so far been substantiated by Seaspan, which is owed more than $18.6m in unpaid charter fees.

In any event, the move appears to have been too little and too late to appease Hanjin’s creditors who have finally lost patience.

Led by state-owned Korea Development Bank (KDB), last week they rejected Hanjin’s revised self-rescue plan, saying there was effectively “no difference” between the proposal and the previous one.

Hanjin had proposed injecting Won400bn ($360m) by selling stock to its affiliate Korean Air and raising another Won100bn from further asset sales.

But the cash-strapped company is known to require at least Won1.3trn over the next 18 months just to pay back debt and run its business.

KDB had demanded that Hanjin Group pump in at least Won700bn, but the parent was clearly reluctant for fear of putting the whole group in peril.

South Korea’s top financial regulator, Yim Jong-yong, chairman of the Financial Services Commission (FSC), reaffirmed last week that there were no plans for the government to intervene.

He told reporters: “The government will let the company resolve its liquidity crisis on its own and handle the issue in accordance with ‘principles’ in case of failure.”

Meanwhile, in response to a suggestion made by the Korea Shipowners’ Association today, a Hanjin merger with restructuring compatriot Hyundai Merchant Marine […]

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Panama Canal aims to keep volume gains fueled by West Coast congestion

February 24th, 2015
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  • Panama Canal aims to keep volume gains fueled by West Coast congestion Panama Canal aims to keep volume gains fueled by West Coast congestion

    Panama Canal aims to keep volume gains fueled by West Coast congestion

Panama Canal aims to keep volume gains fueled by West Coast congestion
Date: Feb 23, 2015
Source: Journal of Commerce

The Panama Canal Authority is setting its sights on retaining the increase in container volumes from Asia to the U.S. East and Gulf Coast ports it gained in recent months, thanks to shippers diverting cargo from congested West Coast ports.

Even though it has not experienced any increase in the number of Panamax vessels transiting the canal during the labor strife that clogged West Coast ports, the canal agency aims to boost containership traffic by both individual carriers and by carrier alliances when it opens its new locks to post-Panamax vessel traffic next year.

After the 2002 lockout on the West Coast, when shippers diverted their cargo on Panamax ships through the Panama Canal to the East Coast, a lot of those shipments did not return to the West Coast after the contract was settled. The same thing is likely to happen even though the International Longshore and Warehouse Union and the Pacific Maritime Association have reached tentative agreement on a new contract
“I think that any changes to the carrier networks would probably stay for now,” said Doug Hayes, vice president of equity research, freight transport, at Morgan Stanley in London.

Although the Suez Canal captured all of the increase in post-Panamax container ship traffic diverted to the East Coast from Asia during recent months of West Coast port congestion, the Panama Canal saw a big increase in the number of containers loaded aboard the Panamax ships on the […]

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CN, UNIFOR REACH TENTATIVE AGREEMENT, AVOIDING LOCKOUT

February 24th, 2015
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CN, UNIFOR REACH TENTATIVE AGREEMENT, AVOIDING LOCKOUT
JOC Staff | Feb 24, 2015 9:36AM EST

Canadian National Railway late Monday night withdrew its threat to lockout 4,800 union members after the railroad reached a tentative labor agreement with Unifor.

A lockout could have hampered intermodal service as the second-largest Canadian railroad experiences a surge of volume from U.S. shippers diverting cargo through Canadian ports, namely Port Metro Vancouver and the Port of Prince Rupert, to avoid U.S. West Coast port congestion. CN had warned on Friday that it would lockout union employees involved in mechanical, intermodal, clerical and other types of work at 11 p.m. EST on Monday if an agreement wasn’t reached.

“We are very pleased that the company and union were able to find common ground on a tentative new labour contract,” CN President and CEO Claude Mongeau said in a statement. “ This settlement forecloses the prospect of a potential labour disruption that would have harmed CN’s employees, its customers and the Canadian economy.”

CN said details of the tentative agreement were being withheld until Unfor rank-and-file members voted on the deal. Unfor is expected to announce the results of its ratification vote in three weeks. It’s not clear how the tentative agreement addresses the main sticking point in negotiations that lasted eight months: CN’s refusal to pay into the union’s community fund.

“We were able to find solutions to the concerns raised by our members – this is best achieved at the bargaining table,” Unifor President Jerry Dias said in a statement.

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CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration

February 23rd, 2015
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  • CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration

    CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration

CN Threatens Monday Lockout If Union Doesn’t Accept Arbitration
Date: Feb 20, 2015
Source: Journal of Commerce

Canadian National Railway said it will lock out 4,800 union workers, some of whom are tied to its intermodal services, on Monday night if Unifor doesn’t agree to accept binding arbitration this weekend.

Although CN said it would deploy trained management personnel to take the places of Unifor employees in the event of a lockout, intermodal service would likely suffer. The potential deterioration in intermodal service comes as the railroad experiences a surge of volume as U.S. shippers divert cargo through Canada’s Port Metro Vancouver and Port of Prince Rupert to avoid U.S. West Coast port congestion.

Canada’s largest railroad said it would lock out the union employees involved in mechanical, intermodal, clerical and other types of work at 11 p.m. EST on Monday. The Friday announcement came after Unifor this week threatened to strike over a dispute on whether the railroad should pay into its community fund. The two sides have been negotiating a contract for six months, CN said.

“Our impasse is not about charity. CN already supports many charities and is willing to support charitable causes jointly with Unifor, but our principles are clear — we are not prepared to allow financial matters related to the union itself to take precedence over the interest of our employees,” CN President and CEO Claude Mongeau said in a statement.

Government intervention isn’t needed at this time, because the two sides can reach a deal via the arbitration process, he […]

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