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CSX, Kansas City Southern Q1 sales grow, but KCS profit off 28.9pc

PostTime:2019-04-24 08:20:06 View:12

AMERICAN Class I railways CSX and Kansas City Southern both reported first-quarter growth in revenue and profit. CSX first quarter net profit increased 20 per cent year on year to US$834 million, drawn on revenues of $3.01 billion, up five per cent. The Kansas City Southern suffered a 28.9 per cent decline in first quarter profit to $103 million, drawn on revenues of $675 million, up six per cent. CSX merchandise revenue rose six per cent to $1.8 billion and was led by the chemical segment's $586 million in revenue. Agricultural and food products improved revenue by 12 per cent to $244 million and forest products boosted revenue 11 per cent to $216 million. CSX coal volumes grew five per cent and revenue climbed seven per cent to $538 million, but intermodal sales declined five per cent to $428 million. Kansas City Southern (KSC) intermodal volumes fell nine per cent and another eight per cent in automotive and three per cent in industrial and consumer products. Also blamed for declines were service interruptions due to teacher protests in Lazaro Cardenas, Mexico.  A 21 per cent revenue increase was posted in chemicals and petroleum to $168.6 million. Agriculture and minerals increased revenue by eight per cent to $122.9 million, energy by five per cent to $64.4 million and industrial and consumer products by two per cent to $149.8 million.

ZPMC to manufacture shipbuilding gantries for Karachi yard

PostTime:2019-04-24 08:18:27 View:11

Chinese heavy equipment manufacturer Shanghai Zhenhua Heavy Industries Co., Ltd. (ZPMC) signed the contract for two shipbuilding factory gantries with Karachi Ship Building and Engineering Construction Plant of Pakistan. The deal marks the company’s entry into the Pakistan market to support China’s development of the countries along the Belt and Road. The gantries consist of high base and 4-link portal crane for the first time, which will be assembled on the site with the components shipped in containers. ZPMC recently delivered the ship loading system of the general contracting project to Kuantan Port of Malaysia. It is the first oversea bulk cargo general contracting project of the company. ZPMC, headquartered in Shanghai, has 10 production bases located in Shanghai and Nantong. The company is the largest port machinery heavy-duty equipment manufacturer in the world and owns a fleet of 25 transportation ships.

Singapore moves a step closer to completing first phase of Tuas mega-port

PostTime:2019-04-24 08:17:45 View:12

Singapore has moved step closer to completing the first phase of its new mega-port, with land reclamation due for completion in 2021. The final, and 221st, caisson for land reclamation of Tuas Terminal Phase 1 was installed on Tuesday afternoon and witnessed by Khaw Boon Wan, Singapore’s Coordinating Minister for Infrastructure and Minister for Transport. Reclamation for the first phase of the terminal is now 75% complete and according to the authorities is on schedule for completion in 2021. From 2021 terminal operator PSA Corp will start developing the first phase of the terminal which is designed to handle 20m teu a year. “Our Mega Port project at Tuas will transform our port operation, to position ourselves for the future. The project itself is a mega infrastructure project, and hence, an opportunity to transform our construction and reclamation industry,” Minister Khaw said. Tuas Terminal will open progressively from 2021 and by 2040 Singapore plans to have consolidated all its container port operations at the location in the far west of the island, with the port having a capacity to handle 65m teu a year.

LNG-powered ships to account for 60% of new orders by 2025: Korean study

PostTime:2019-04-24 08:16:49 View:16

Six out of 10 new ships ordered by 2025 are predicted to be LNG-powered vessels due to stricter environmental standards in shipping, a South Korean study says. A joint report by Korea Development Bank and Korea Trade-Investment Promotion Agency projected that about 60.3% of the world’s newbuilding orders will be LNG-fuelled ships by 2025. The report, based on data from Clarksons and Lloyd’s Register (LR), estimated that as many as 1,962 new LNG fuelled ships would be built by 2025. Demand for LNG bunker tankers is also expected to jump more than tenfold from 313,000 dwt in 2016 to 3.2m dwt in 2030. With Korean shipbuilders forecast to build more than 60% of the world’s large LNG-fuelled ships, the study estimated the domestic market for LNG vessel equipment to enlarge to KRW12trn ($10.8bn) in 2020 from KRW3trn in 2017. Read more: Keppel, DNV GL ink agreement to boost uptake of LNG as fuel In November 2018, the Korean government unveiled an ambitious plan to order 140 LNG-fuelled ships by 2025 to help revive the country’s ailing shipbuilding industry. The use of LNG as a marine fuel is gaining attention as global shipping is facing tougher environmental regulations and under pressure to operate cleaner vessels. From 1 January 2020, it will become mandatory under IMO regulation for ships to burn bunker fuel with a maximum sulphur content of 0.5%, down from the current cap of 3.5%. The use of LNG is considered a viable alternative to meet the IMO regulation as the clean gas is virtually sulphur-free and it emits 20% less greenhouse gas compared to conventional heavy fuel oil.

Asia Europe sailings cancelled to shore up declining spot rates

PostTime:2019-04-24 08:15:27 View:3

CARRIERS serving the Asia-North Europe trade are cancelling sailings to shore up declining spot rates, reports container shipping research house Alphaliner. The North Europe component of the Shanghai Containerised Freight Index (SCFI) slid a further 2.7 per cent to US$640 per TEU, and has fallen by 36 per cent since January. Anecdotal reports to London's Loadstar suggest carriers are beginning to discount heavily to fill their ships. "There was no immediate sign of light at the end of the tunnel" said one source. Said Paris-based Alphaliner: "The rate decline happens as capacity increases on the trade continue to outpace demand growth."  The consultant said the Ocean Alliance would blank four sailings to North Europe early next month, while THE Alliance will take out three during the same period, between weeks 17 to 19. According to Alphaliner's calculations, voided sailings will reduce trade capacity from 300,000 to 240,000 TEU during the period, but added that these capacity management measures would "not be sufficient to mitigate the capacity increase on the trade". This, it said, had been prompted by an extra, seventh loop by the Ocean Alliance this month and the upsizing of a THE Alliance string. As proof of market concern, Alphaliner reports that HMM has backed out of upgrading its standalone AEX service, which was due to start phasing in 6,300 to 6,700-TEU ships next month, adding up to 2,000 TEU in extra slots a week.  

US wins WTO dispute against China's grain import quotas

PostTime:2019-04-24 08:14:16 View:7

THE United States won a World Trade Organisation (WTO) ruling against China's use of tariff-rate quotas for rice, wheat and corn, which it successfully argued limited market access for US grain exports, reported Reuters. A WTO dispute panel ruled that under the terms of its 2001 WTO accession, China's administration of the tariff rate quotas (TRQs) violated its obligation to administer them on a "transparent, predictable and fair basis". TRQs are two-level tariffs, with a limited volume of imports allowed at the lower "in-quota" tariff and subsequent imports charged an "out-of-quota" tariff, which is usually much higher. The case, lodged in late 2016, marked the second US victory in recent months. In March, Washington clinched a WTO ruling on China's price support for grains.

CMA CGM hikes Asia-Red Sea rate US$200/TEU from May 1

PostTime:2019-04-24 08:13:28 View:7

FRENCH shipping giant CMA CGM has announced an Asia to Red Sea rate increase of US$200 per TEU effective May 1. This will apply to all dry, OOG, breakbulk and reefer cargo from all Asian ports to Red Sea ports, that is Jeddah and Sokhna. Corresponding FAK rates level will be settled follows: As of May 1, under CMA CGM FAK Tariff Guide Lines (excluding THC both ends) at $1,000 per TEU and $1,700 per FEU.  

COSCOCS Unveils Name of Sixth Valemax Unit

PostTime:2019-04-23 14:30:20 View:9

China COSCO Shipping Corporation (COSCOCS) held a naming ceremony for its sixth Valemax very large ore carrier (VLOC) in Yangzhou on April 18. The 400,000 dwt Yuan Shen Hai is one of ten VLOCs Shanghai Waigaoqiao Shipbuilding (SWS) will deliver to COSCO under a contract 2016. Measuring 362 meters in length and 65 meters in breadth, the Singapore-flagged Yuan Shen Hai will transport iron ore from Brazil to China under a 27-year agreement COSCOCS entered with Brazilian miner Vale. The remaining four Valemaxes for COSCOCS are all scheduled to be delivered by the end of 2019. The deal between COSCOCS and SWS is part of a bigger, 30-vessel order that Chinese owners Cosco Group, China Merchants Energy Shipping (CMES) and ICBC Financial Leasing Co have placed with four separate shipbuilders. ICBC and CMES later agreed to join forces on the VLOC project with the aim of reducing operational risks. The Valemax fleet is expected to give Chinese carriers control of about 30% of total iron-ore imports into the country in terms of volume.

MOL to Install AR Navigation System on 21 VLCCs – Supporting Watch-keeping and Ship Operation during Voyages to Ensure World-leading Level of Safety

PostTime:2019-04-23 14:29:12 View:13

Mitsui O.S.K. Lines, Ltd. yesterday announced its intention to install a navigation system using augmented reality (AR) technology jointly developed by Furuno Electric Co., Ltd. (President: Yukio Furuno; Headquarters: Nishinomiya-shi, Hyogo Prefecture) and MOL Techno-Trade, Ltd. (President: Hirokazu Hatta; Headquarters: Chuo-ku, Tokyo) on 21 MOL Group-operated very large crude oil carriers (VLCCs). The system displays information on other vessels sailing on a vessel’s planned route and surrounding sea areas and other ocean conditions, such as shallow waters, on tablets and screens. It integrates information from the Automatic Identification System (AIS) and radar with real-time video images from the bridge camera in collaboration with Furuno Electric’s cutting-edge Electric Chart Display and Information System (ECDIS) FMD3300 series. The system provides visual support to crewmembers during their watch-keeping and ship operations by using AR technology to superimposing real-time video imagery and voyage information. VLCC Suzukasan Example of AR navigation system screen The system has been installed on the 1st MOL’s next-generation FLEXIE Series car carrier, Beluga Ace, which was delivered in March 2018, and VLCC Suzukasan, delivered in October 2018 for the demonstration test. MOL has continued to refine the AR display screen and verify the system’s effectiveness. In officially commercializing the system under the Furuno Electric brand, it will be installed on MOL’s VLCC fleet, a vessel type that requires the highest level of operating safety, with the goal of achieving an even greater margin of safety. Due to its deep draft, VLCC operations require special care when navigating on the waters such as the Straits of Singapore and Malacca, a heavily trafficked sea lane that has limited areas. The project partners developed the system to support crewmembers, alerting them to other vessels they need to watch, the location of shallow waters, and so on, by displaying integrated real-time video images with information from nautical instruments on screens on the bridge even in congested sea lanes. The system will further enhance MOL’s marine technical skills, moving the company toward its objective of becoming “the world leader in safe operation.” MOL will sequentially install the system in its energy transport fleet including LNG carriers, as well as its dry bulkers to provide seafarers with greater support in watch-keeping and ship operation during voyages, and continue to refine and enhance its effectiveness. In addition, MOL expects this technology to play a key role in realizing autonomous ships in the future. MOL has moved ahead with advanced support of safe operation and reduction of its environmental impact, as set out in the “ISHIN NEXT – MOL SMART SHIP PROJECT -,” which began in November 2016, and aims to become customers’ first choice as a logistics partner by applying ICT technology to improve service quality and efficiency.

Tankers: Japan boosts spot VLCC charters as US crude imports lift shipping demand

PostTime:2019-04-23 14:23:01 View:15

Japanese refiners have stepped up chartering VLCCs in the spot market amid growing imports of US crude increasing voyage length and boosting shipping demand, shipping industry sources in Tokyo and Singapore said. This is a departure from the country’s chartering practices that have traditionally favored term contracts. It also shows how changing trade patterns, on the back of rising US crude exports, are impacting the supply chain. Japanese refiners chartered 29 VLCCs from the spot market during January-April, compared with 17 a year earlier, according to broker estimates assessed by S&P Global Platts. The total reached 12 spot VLCCs in December, the highest for any month last year. Spot charters in some months are equivalent to over 10% of the Japanese VLCC fleet, a shipbroker said. Others said a Japanese charterer covered more than 40% of its total VLCC requirements from the spot market in 2018. The US has taken up a bigger share of Japan’s crude imports as Iran imports have declined since the sanctions. US crude accounted for 3.5% of Japan’s total crude imports of around 3.18 million b/d over January-February, up from 0.7% a year earlier, according to Ministry of Economy, Trade & Industry data. At the same time, Iran’s share slumped to 2% from 6%. US crude voyages take twice as long as trips from the Middle East, which has tied up an increasing number of vessels owned by Japanese shipowners and their time-chartered tanker fleet. Additionally, the business opportunity for spot chartering of VLCCs from non-Iranian crude producers in the Middle East has expanded. Most of the spot VLCC charters were hired for cargoes from Saudi Arabia and other Persian Gulf countries outside of Iran, shipbrokers said. Due to logistical issues, if the time chartered VLCCs are queued at the load or discharge port, ships are taken from the spot market to cover the next cargo stem nominations. Japan’s JXTG Nippon Oil & Energy and Cosmo Oil are among the regular importers of crude from the US and Mexico. When crude prices are conducive, JXTG loads one time-chartered VLCC each month from the US, brokers and charterers said. IRAN SANCTIONS IMPACT US sanctions against Iran’s oil exports in November have not just forced Japan to shift towards US crude, but also impacted shipping, as vessels dedicated to Iranian trades cannot be used elsewhere, further limiting the pool of VLCCs available to Japanese refiners. Japan continues to import Iranian crude because it’s one of eight countries that received a six-month waiver from US sanctions. The volume has been declining despite the Japanese government providing a pool of VLCCs with insurance cover to call on Iranian ports. Last month, the Japanese government renewed its shipping insurance cover comprising protection and indemnity, or P&I, of up to Yen 932.7 billion ($8.36 billion), for each tanker carrying Iranian oil for the current fiscal year that started April 1. To be eligible for this cover, and to ensure proper insurance coverage for Iran loadings, Japanese refiners have to use their own or time-chartered Japanese ships to import Iranian crude. They are also unable to tap the spot market for Iranian trades as US primary sanctions prevent commercial charterers from taking that risk. Market participants in Japan caution that spot VLCC charters may slow down, at least until there is more clarity on US sanctions on Iran. The six-month exemption given to countries such as Japan is due to expire early next month. Meanwhile, Japanese refiners moving to the spot market are benefiting from lower rates. Platts on Thursday assessed the key Persian Gulf-Japan VLCC rate at Worldscale 43.65 compared with w63.5 at the beginning of the year. Imports from the US are expected to grow and this will keep the time-chartered ships busy, and in turn, keep the demand robust for the VLCCs in the spot market for loadings elsewhere, chartering sources said. In 2018, Asia was the largest regional destination for U.S. crude oil exports, followed by Europe, while Canada was the largest single destination, according to the US Energy Information Administration.

Global Ship Orders Fall to Lowest Level in 15 Years

PostTime:2019-04-23 14:21:15 View:11

Ship orders world-wide have shrunk to the lowest level in 15 years as vessel owners struggle with excess capacity that has kept freight rates well below break-even levels. There were 3,200 vessels of a combined 81 million gross tons ordered globally in the first quarter, the lowest figure since 2004, marine data provider Clarksons PLC said in a report released Friday. “The global order book has declined to its lowest level since the early stages of the shipbuilding boom,” George Warner of Clarksons Research said. Crude tankers and bulkers made up around two thirds of all orders a decade ago, Clarksons said, but this year the share has dropped to 42% as volatility in commodity markets and changes in global energy consumption have triggered shifts in ocean-going trade. Ship types like liquefied natural gas, or LNG, carriers now make up a bigger portion of orders. The 141 LNG carriers on order represent 13% of the total order book, compared to just 2% a decade ago, Mr. Warner said. The LNG market is surging on growing demand from countries including Japan, China and India, which are turning to gas rather than coal for power generation and heating. Seaborne LNG cargo markets also are being fueled by growing U.S. gas exports, as extraction costs in the U.S. are about a third less on average than those in other production centers including Russia and the Middle East. Cruise ship orders also make up a bigger part of the mix, comprising 12% of the global order book, compared with 2% a decade ago, according to Clarksons. The pullback in orders has hurt shipbuilding yards in big production centers in South Korea, China and Japan, where authorities are looking at closing some operations, consolidating businesses and other strategies to keep the industrial operations running. Some 4.5 million tons of new oil tankers were ordered in the first quarter of this year, down from 5.13 million tons in the same period of 2018, according to ship broker Banchero Costa. A total of 18 tankers were ordered by the end of March. LNG ship orders remained strong in the first quarter, with 13 new ships ordered, according to figures from DNB Markets. “This would equate to run-rate ordering of 56 vessels [this year], somewhat below last year’s 66, but still miles ahead of 14 in 2017 and 8 in 2016,” DNB analyst Nicolay Dyvik said in a report.

Q2 shipping outlook: Capesize rates seen falling more on Vale dam accident

PostTime:2019-04-23 14:20:00 View:3

The Capesize market looks to be weak again in Q2 as the Vale dam accident and repairs at key ports cut demand for the vessels that typically carry iron ore and coal, according to dry bulk market participants. Freight levels slumped in Q1 after Vale’s Brumadinho mining dam rupture in January, which led to mine closures. Tropical storm Veronica in the Pacific Ocean also damaged some ports in Australia, leading to less demand for Capesize vessels. “It is unreasonable to expect any large recovery, if the market is solely supported by Australian cargoes,” a ship-operating source said. According to Platts time charter equivalent, or TCE, assessments, the key Port Hedland, Western Australia, to Qingdao, China, Capesize route for Q1 averaged $5,519.26/day, down 52.07% from the year earlier average of $10,765.81/day. The Tubarao-to-Qingdao route averaged at $7,848.74/day, down 37.69% from Q1 2018’s average of $12,597.61/day. Typically, demand for shipment of raw materials is slow in the first quarter, leading to a weak dry bulk freight market. The dam accident and weather damage added to the seasonal weakness. VALE DAM ACCIDENT IN BRAZIL CUTS DEMAND FOR CAPESIZE VESSELS Taking into consideration the various announcements made by Vale, and assuming all of the affected remained closed or suspended until the end of 2019, the Brazilian miner’s net loss in iron ore production would be about 73 million mt. If Vale’s iron ore exports are shipped on Capesize and bigger Valemax vessels at a 70:30 ratio, this would mean approximately 280 Capesize voyages would evaporate. Brazil exports about 60% of its iron ore to China. Given this and a voyage duration of about 80 days, utilization of Capesize vessels would drop by 13,440 days. In the Pacific region, tropical cyclone Veronica last month caused both Port Dampier and Port Hedland to shut down for 132 hours and 92.5 hours, respectively, according to the Pilbara Ports Authority, which manages Western Australia’s two largest iron ore export ports. “Resuming production isn’t the company’s priority – the priority is the safety of its operations, of people and of communities,” Vale’s chief financial officer Luciano Siani Pires said in a recent conference call. Mining major Rio Tinto has announced some damages at its Cape Lambert A port facility in Western Australia in the aftermath of the cyclone. This along with a fire incident at Cape Lambert reported early January will result in a production loss of about 14 million mt of iron ore in 2019, the company said. The Port Hedland-to-Qingdao route recorded its lowest TCE rate fell in Q1 to as low as $192/day on March 7 and the Tubarao-to-Qingdao route touched $1,966/day on March 12. Both were the lowest levels since February 2017, according to Platts data. On the supply side of Capesizes, 13 ships were scrapped in Q1, already almost as much as all of last year, when 16 vessels were scrapped. Some market participants don’t see the trend continuing this year since many Capesize vessels are relatively new. Given the age cap of 15-18 years that iron ore mining majors use on chartering these vessels, only 20-30 Capesize vessels are viable scrapping candidates, unless owners and operators decide to scrap Capesize vessels below 20 years of age, which would increase the count of viable demolition candidates to 60-75 vessels. SLUGGISH DEMAND FOR SUPRAMAX, HANDYSIZE EXPECTED Time charter rates for Supramax and Handysize vessels opening in the Asia Pacific during Q2 could average well below the levels that were seen a year earlier, according to market sources. Supramax rates on the key South Kalimantan to Paradip route for 2019 Q1 averaged $8,811/day, down from $10,903/day a year earlier, according to Platts data. “The market overall is looking very sluggish and there is not much [demand] to push the shipping market,” a ship-operating source said. The market’s mood has dampened given the amount of uncertainty since the start of this year, which is unlike last year when rates were maintaining healthy levels, a second ship-operating source said. The demand for thermal coal cargoes out of Indonesia to regional destinations such as India and China is expected to remain fairly limited on the back of sufficient stockpiles at both the plants and ports. Minor bulk commodities within the region like nickel ore, bauxite and clinker, too, are expected to remain sporadic, according to market watchers. “The outlook for demand out of Australia still looks uncertain,” a third ship-operating source said. “The pace of activity is a lot slower than how the market was this time last year. A lot would depend on how the wheat crop harvest comes in,” the source added, noting that the poor harvest hurt Handysizes last year. In the Indian Ocean region, the demand for Supramax vessels from limestone cargoes has remained fairly limited as charterers have switched to using more Panamaxes on this trade. Although the east coast South American grain demand has been exceptionally good during Q1 and is likely to continue during Q2, too, this is not sufficient enough to pull the rates higher in the Indian Ocean, a Singapore-based ship-operating source said. US-CHINA TRADE TALKS, WEAK CAPESIZE MARKET HURT PANAMAX RATES The lack of clarity on progress being made in the trade discussions between China and the US is expected to keep sentiment on the Panamaxes tempered over Q2, ar at least until talks conclude, many market sources said. Panamax rates on the South Kalimantan to Paradip route averaged $7,547/day in 2019 Q1, down from $11,445/day in the same period in 2018. Weakness in the Capesize market should also keep Panamax freight rates from rebounding, the source said. Charterers have tried to combine Panamax parcels with Capesizes on major coal routes, which has further strained the demand for Panamaxes within the Asia Pacific. Also, the expected drop in seaborne coal movement within the Asia Pacific region partly because of import caps imposed by China is not helping the market either. While east coast South America grain supply is strong, the lack of demand for ships hired out of the Far East to do trips out of the west coast of North America or the US Gulf is hurting the Panamax segment. The drop in canola cargoes from Canada to China is expected to further quieten activity in the Far East.