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Panalpina suffers slight decline in first half profit and revenue

PostTime:2019-07-20 11:15:10 View:4

SWISS global forwarder Panalpina recorded stable has a first half year-on-year 5.5 per cent decline in consolidated profit to CHF34 million (US$34.4 million), drawn on revenues of CHF2.91 billion, down 1.5 per cent. "After it was announced that Panalpina and DSV would join forces, our competitors went more aggressively after our business in the second quarter, but we stood our ground," said Panalpina CEO Stefan Karlen.  "The decrease in profit was chiefly the result of lower margins in air freight and lower volumes from the automotive sector, which shifted into reverse gear. Nonetheless, group EBIT almost reached last year's levels." Air freight volumes increased five per cent in the first half year on year. Gross profit per ton decreased nine per cent to CHF659, while overall gross profit decreased to CHF337.2 million.  Substantially lower volumes in the automotive sector led to the decline in gross profit. EBIT in air freight decreased from CHF53.4 million to CHF 38.4 million. The EBIT-to-gross-profit margin came in at 11.4 per cent, compared to 15.1 per cent the year before. Ocean freight decreased three per cent year on year and gross profit per TEU increased slightly to CHF300 million, bringing gross profit to CHF215.9 million. For the first half of 2019, ocean freight recorded an EBIT of CHF5.5 million, compared to a loss of CHF5.5 million the year before. Logistics gross profit decreased three per cent to CHF 163.3 million year on year due to seasonality and the downturn in the automotive and technology sectors.  Nonetheless, the division successfully expanded its Logistics Manufacturing Services and in the second quarter achieved the highest quarterly EBIT ever. EBIT reached CHF8.1 million for the first half of 2019, compared to CHF 6.8 million for the same period last year. Panalpina combines air freight, ocean freight, logistics and manufacturing to deliver tailor-made end-to-end solutions for 12 core industries. Panalpina Group operates a global network with some 500 offices in around 70 countries and employs 14,500 people worldwide.   

WTO finds in favour of China that says US broke trade rules

PostTime:2019-07-20 11:12:28 View:6

THE World Trade Organisation Appellate Body (AB) has published a report upholding an earlier WTO decision that certain US Commerce Department countervailing (CV) duties on goods from China broke WTO rules. Specifically, the AB decision aligned with a March 2018 WTO compliance panel finding that the US Commerce Department failed to explain in several CV proceedings how Chinese government intervention in the market led to domestic prices for certain inputs deviating from a market-determined price and that Commerce failed to take into account price data on the record. "An investigator's determination of how prices in markets are in fact distorted as a result of government intervention must be based on positive evidence," states a summary of the AB decision, reported American Shipper. In the wake of a WTO dispute initiated by China in May 2016 to ascertain whether the US was complying with an earlier WTO ruling regarding US CV duties levied on certain imports, the Commerce Department amended the duty determinations in 12 of 17 relevant CV probes on China. The AB also upheld a compliance panel finding that evidence used by Commerce in several CV cases wasn't specific enough to prove that China was providing unfair subsidies to industries. However, the AB report upholds a WTO compliance panel finding that Commerce's determinations of what constitutes a "public body" align with WTO regulations. "Today's appellate report recognizes that the United States has proved that China uses state-owned enterprises (SOEs) to subsidize and distort its economy," the Office of the US Trade Representative said in a statement. Said the USTR: "Nonetheless, the majority in the report says that the United States must use distorted Chinese prices to measure subsidies, unless the US provides even more analysis than the hundreds of pages in these investigations. This conclusion ignores the findings of the World Bank, OECD working papers, economic surveys and other objective evidence, all cited by the United States."

Product Tanker Market Heading for a Solid Recovery

PostTime:2019-07-20 11:10:13 View:4

The product tanker market’s fundamentals, both demand and tonnage supply, have been showing signs of steady improvement of late. In its latest weekly report, shipbroker Allied Shipbroking said that “having entered into the second half of the year, all eyes (on the MR segment) have turned towards the refineries and the anticipation that they will further boost their upcoming production for low sulfur products in order to be ready for the upcoming IMO 2020 regulation. Demand figures have already started to reflect the prospects that were being expressed earlier on in the year, with key players such as China posting significant increases in their trade. According to official sources, the Asian giant exported 5.43 million MT of oil products during June, rising by around 13.5% compared to last year, while total exports in the 1st half of the year surpassed the 32.5 million MT mark (7.3% y-o-y rise)”. According to Mr. Yiannis Vamvakas, Research Analyst with Allied, “two new refineries began operations during the previous weeks in China, adding more potential to the total production figure and exports for the following months. However, it is worth mentioning that the Chinese government has announced a new batch of export quotas on petroleum products, which reached the 45.29 million MT on annual basis, a figure increased from 43 million MT that was being implemented last year”. “Meanwhile, positive information has been flowing from the US as well, with EIA data showing that demand for gasoline climbed to record levels of 9.93 million bpd in the last week of June, while combined crude and refined products exported reached an all-time high on weekly basis (676,000 barrels). At the same time, local refineries have started to build inventories of low sulfur fuel so as to be prepared for an uptick in demand. Specifically, stockpiles have risen by 9% compared to last year. In the interim, US East coast supply of gasoline and diesel has been disrupted from the closure of the Philadelphia Energy Solutions refinery due to the fire accident that occurred last month. This is likely to cause improved trade figures, as the US will need to balance this deficit with imports. Forecasts depicting gasoline imports for the US and Canada, from Northwest Europe has reached 1.4 million MT. On the supply side, the total MR fleet (including Handysize product tankers) has recently reached 2,480 units, approximately 1.81% higher compared to the beginning of the year”, Vamvakas said. Allied’s analyst added that “this is a relatively reasonable rise, as new ordering has remained limited during the year, following the slow new ordering activity noted in the last couple of years. The current orderbook stands at 198 vessels, with 77 of them being anticipated for delivery during this year. The figure has followed a declining trend, boosting confidence amongst owners, with the data showing that the orderbook has decreased by 10.4% compared to the same period in 2018 and 7.2% compared to the beginning of the year. Meanwhile, consistent scrapping has also helped keep a balance, with 23 units being recycled in the year so far, while there are another 219 units that can be considered as potential candidates for demolition (aged more than 20 years old). With the current trend pointing to a more moderate fleet expansion for the rest of the year, demand growth is likely to surpass, at least temporary the supply growth, working in favor of owners. All in all, current supply and demand conditions and forecasts paint a fairly positive picture for the product tanker segment. MR freight rates, despite the most recent slack, have posted an increase of almost 40% compared to the same period in 2018 and as we move forward into the final quarter of the year, it is expected that we will see further improvements take place”, Vamvakas concluded.

Baltic index at 5-1/2 year high on strong capesize, panamax rates

PostTime:2019-07-20 11:09:03 View:4

The Baltic Exchange’s main sea freight index climbed to its highest since December 2013 on Friday, driven by firm demand for capesize and panamax vessels. The Baltic index, which tracks rates for ships ferrying dry bulk commodities, rose nearly 2%, or 40 points, to 2,170, a peak since Dec. 24, 2013. The index rose for the ninth session in a row, mainly spurred by strong demand for vessels that ship iron ore from Brazil into China. “Vale has resumed operations at the 30 MMtpa Brucutu iron ore mine, leading to a massive surge in fixture activity and an even bigger rally in capesize spot rates,” Randy Giveans, vice president, equity research at Jefferies, said in a note. The capesize index gained 123 points, or about 3%, to 4,379 points, a peak since October 2010. Average daily earnings for capesizes, which typically transport 170,000 tonne-180,000 tonne cargoes such as iron ore and coal, rose $546 to $32,765. The panamax index rose 36 points, or 1.7%, to 2,170 points, its highest since December 2010. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, rose $295 to $17,348. The supramax index was 29 points higher at 982 points.

Compliance with IMO 2020 likely around 90%-95% in initial years: consultant

PostTime:2019-07-18 13:50:00 View:16

Compliance with the International Maritime Organization’s global sulfur limit for marine fuels will likely settle around 90% or 95% in the initial years after 2020, well above some industry estimates that pointed to compliance of 70%-80% a year ago, a bunker industry veteran and senior partner at 2020 Marine Energy, Adrian Tolson, said at an industry event. “The 2020 HSFO carriage ban, MEPC’s [Marine Environment Protection Committee’s] recent meeting in May and a growing awareness of the high risks of non-compliance have largely changed views on estimates,” Tolson said during S&P Global Platts’ 3rd Annual Bunker and Shipping Asia Conference in Singapore. Most shipowners of any size who want to trade internationally want to be compliant, Tolson said. Some industry estimates point to a 5% non-compliance post 2020, which might be too low as enforcement on the high seas will still be difficult, Tolson said. “There will be a lot of whistle-blowing activity. But there will be non-compliance for sure,” he added. While there may be some divergence about compliance estimates in the industry, this is unarguably the end of the HSFO era to a large extent, Tolson said. The marine fuel market accounts for about 60% of current global HSFO demand. So, anything that is happening to the marine fuels market will have a significant impact on HSFO demand, Tolson said. “We have a 300 million mt bunker fuel market. The current market is 85% HSFO. That’s about 230 million mt, or 4 million b/d,” he said. Post 2020, HSFO demand will likely drop to about 60 million mt and most of the bunker fuel mix will be VLSFO and diesel, he said. While there is momentum around LNG bunkering, its contribution in the global bunker fuel mix is only expected to be at a maximum of 10% by 2030, Tolson told Platts separately. LNG can be an extremely viable compliant fuel option, but only if you can get over the infrastructure costs, Tolson said. “Ultimately, everybody will want to buy the cheapest form of the product for compliance, which will be blended VLSFO,” he added. WHAT HAPPENS TO ALL THAT HSFO? Tolson said there will be well over 3,000 scrubbers by the end of 2020 and scrubbed HSFO will likely be around 0.80 million b/d by the end of 2020. “We have to wait and see how this [uptake of scrubbers] plays out,” he said, adding that HSFO demand could increase if the use of this technology accelerates more dramatically. “Meanwhile, we will see coker optimization between refineries regionally and co-operation between refining groups,” he said. For example, Repsol in Spain says it will take fuel oil production from Tarragona and move it to Bilbao and La Coruna and that is how it is going to optimize, he said. The overall impact is about 0.6 million b/d of HSFO being sucked into cokers, Tolson said. “We currently count a lot of LSFO in the high sulfur fuel oil pool. They’re part of the VLSFO pool like the Argentinian residuals, Brazil residuals and some of the fuel that comes out of West Africa,” he said. “So, about 0.2 million b/d just disappears because it is LSFO and not HSFO. We just count it at as HSFO right now,” he added. HSFO blended into the VLSFO pool will likely be about 0.3 million b/d, he said. “There’s also a lot of mid-sulfur barrels and a lot of optimization that could take place,” he added. “Crude slate adjustments will also take place… there is an obvious natural shift replacing high sulfur crudes with low sulfur crudes and we may see some HSFO’s blended into crude ,” he said. “I give crude slate optimization about 0.4 million b/d,” he added. Power generation is the easy solution to absorbing surplus HSFO], Tolson said. Countries such as Saudi Arabia, Pakistan and Russia will likely use HSFO in their domestic markets for power generation, he added, estimating the sector to take away 0.5 million b/d of HSFO. But power generation is a low price solution; it will drag down all HSFO prices as HSFO competes with LNG and coal as the energy source in the segment, he said. Ultimately storage tanks will fill up because there will very likely be an oversupply of HSFO, Tolson said, estimating storage to absorb about 0.35 million b/d or even more of HSFO. “If you can still find available storage, I think storage is a great play. There’ll probably be some potential refinery closures and significantly reduced runs once storage runs out. Some of that is already happening as refiners pre-assess the impact of 2020,” he added.

NYK Holds Fleet Safety Promotion Conferences for Shipowners and Ship-management Companies

PostTime:2019-07-18 13:48:00 View:17

During the month of July, NYK held three safety promotion conferences for shipowners and ship-management companies. The first two conferences were held at the NYK head office in Tokyo, and the third was convened at Imabari city in Ehime prefecture. Every summer, NYK conducts the Remember Naka-no-Se safety campaign, which draws on the lessons learnt by the Diamond Grace oil spill in July 1997 to encourage all NYK Group board members, employees, and related partners to bear in mind the importance of safe operations. These safety promotion conferences are conducted as part of this safety campaign to prevent the lessons of the Diamond Grace accident from fading away. A total of 208 participants from 93 companies participated in the three conferences. Under this year’s slogan of “2S (Seiri=Sorting, Seiton=Setting-in-order)” to encourage efficiency in the workplace by identifying and properly storing items, maintaining the work areas and items, and sustaining the new order, NYK aims to improve crew members’ safety awareness and strengthen governance by encouraging compliance with ship rules and various procedures to meet regulations. Participants also exchanged information to enhance crew member awareness of onboard dangers, and swapped ideas to prevent the recurrence of accidents and troubles. NYK also stressed understanding and cooperation for further safety and efficient operation by making use of digitalization in accordance with the NYK medium-term management plan “Staying Ahead 2022 with Digitalization and Green.” Through close communication with related parties, the NYK Group continues to promote steady activities that raise safety awareness in the group’s efforts to ensure safety and achieve sustainable growth. During the conference at Imabari city

Global shipping industry most exposed” to low carbon energy shift

PostTime:2019-07-18 13:38:31 View:16

Rapid decarbonisation of global energy supplies will have radical implications for the global shipping industry, detailed in a new report from MSI. Vessel selection will be critical, requiring divestment from sectors with the greatest exposure to fossil fuels. The consequences for shipping markets of a major shift in energy consumption away from hydrocarbons and towards renewables and biofuels is the subject of a report prepared by MSI on behalf of the European Climate Foundation that projects two demand frameworks – ‘Reduction’ and ‘Reference’ – designed to provide broad narrative and structure to long-term global energy demand by fuel. MSI’s shipping market modelling systems were used to analyse how global fossil fuel demand reductions could alter inter-regional commodity trade flows and the associated shift in required shipping capacity, industry earnings and asset prices, across all segments of the shipping industry. The MSI report does not provide commentary or assessment of the likelihood of the projected scenarios occurring, rather the scenarios are intended as frameworks to explore the implications for the shipping industry and associated capital markets of a major shift in energy demand. The two scenarios are informed by projections made or commissioned by the Intergovernmental Panel on Climate Change (IPCC) and the timeframe of the report is out to 2050, though the temperature targets associated with the IPCC scenarios have timeframe objectives that extend beyond this period. The Reference scenario is designed to provide a comparator to Reduction and describes a much more limited change in the global energy consumption profile. Under this scenario, global energy demand continues to grow robustly through the 2020s before stabilising in the 2030s. MSI Foresight, July 2019 Even under the Reference scenario there is a transition in the composition of the demand. Fossil fuels see an overall decline in their usage but it is nowhere near as severe as in the Reduction scenario. Renewables see the biggest net gain across the forecast horizon, increasing from 5% in 2020 to 16% in 2050, whilst Biomass/Biofuels see substantial growth to 2030, rising to 12% of global demand, but see little proportional gain beyond that. Reduction Scenario Global energy consumption in the Reduction scenario is largely based on projections made for pathways consistent with limiting warming to 1.5°C above preindustrial levels, as described in the IPCC SR1.5 report. Under this scenario, global energy consumption is not projected to see significant growth out to 2050, but rather, fluctuate close to recent levels, with significant reduction during the 2020s. Hydrocarbon use sees massive reductions. The most dramatic case is Coal which transitions from meeting about one quarter of global energy requirements to less than 5% by 2050. Over the same period the ‘Oil+Liquids’ share halves from about one-third to less than 20%. Of the major hydrocarbon energy sources, Natural Gas sees the least relative reduction, but nonetheless drops from about a quarter of global energy to close to 15%. Meanwhile the Reduction scenario assumes an explosion in the use of both Biomass/Biofuels and Renewables. Whilst the former presents its own environmental challenges, it also potentially offers alternative employment for ships. In the case of Renewables, this replacement of shipping demand is difficult to envisage. The key point is that currently it is the energy that is being shipped in the form of coal/oil/gas, not the infrastructure used to harness it (powerplants, refineries etc). Mass renewable energy and vehicle electrification may require significant shipping of infrastructure materials and metals for batteries,etc, but this would be a one-off event in the energy chain, as these are components not feedstocks. The majority of commodity shipping is associated with moving primary feedstocks. Further, renewable energy in the form of wind, solar etc. cannot be shipped, only transferred electrically via fixed grid or battery once harnessed, so wouldn’t generate any trade in secondary processed commodities, such as you see now in the form of e.g. oil products and steel. In essence this is one of the key benefits of renewables – they don’t require a constant feed of extracted/polluting natural resources. MSI Foresight, July 2019 Radical Ramification Taking the Reduction scenario as the focus of the report, MSI concludes that by 2050 world consumption of oil would halve, coal consumption would fall by 80% and natural gas demand would peak in the near term before declining. Whilst some sectors of the shipping market would be relatively unscathed – containerships being the most notable – sectors in which hydrocarbons make up a significant proportion of the cargo mix would undergo decades of stagnant or falling demand. The oil tanker market is most exposed to the low carbon transition as its entire cargo base is made up of fossil fuels. Overall, MSI’s models suggest that under the Reduction scenario, tanker demand would fall by slightly more than a third. Bulk carriers would also see demand from coal transportation fall by around half, but overall demand for bulkers would fall by 14% from 2020 to 2035 before returning to modest growth in the latter part of the forecast as the expansion of grain and minor bulks trade offset shrinking coal cargoes. Whilst falling demand is not unprecedented in the shipping industry, the sustained nature of the decline is. Setting aside the possibility of short-term factors driving spikes in demand, our models suggest that tanker demand would fall year-on-year every year from 2025 onwards under the Reduction scenario. Bulker demand would fall every year for fifteen years up until 2035. By contrast, although the collapse in tanker demand in the 1980s is of a similar scale at 39%, it was only five years before tanker demand began to pick up again. MSI Foresight, July 2019 The destruction of demand has significant ramifications for owners and financiers of vessels. It will hurt fleet utilisation, and the earning power of tankers and bulkers would collapse in the Reduction scenario, as shown in Charts 4 and 5. Earnings for a Capesize bulker would spend the 2030s averaging roughly half of their long-term median earnings, whilst for a VLCC earnings would underperform their long-term median by around a third. Carbon Carrier Crisis? Of course, such dire markets would provoke a significant supply side reaction, as owners slashed new ordering and scrapped uneconomic vessels. The tanker fleet would fall by around a third over the two decades after 2030, whilst the dry bulk fleet would shrink for nineteen out of twenty years from 2025, shedding 14% of capacity relative to its 2024 peak. Asset prices would also be hammered, with a benchmark 5 Yr Old Capesize bulker losing 40% of its 2018 value by 2030 under the Reduction scenario, whilst a VLCC would slide by 29% over the same period (with the lower decline due to the weak tanker market in 2018 rather than any real resilience). In aggregate under the Reduction scenario, by 2030 the dry bulk shipping industry would be worth half what it had been a decade earlier, although 2030 would mark the nadir and the industry would subsequently return to growth. The impact on the valuation of the tanker industry would be less dramatic but without respite, with the industry shedding 28% of its 2018 value by 2045. There may, of course, be mitigating factors. Renewable or non-carbon fuels may emerge, as could synthetic fuels (eg from carbon capture), and all would provide alternative sources of demand that are ideally suited to conventional bulk or gas shipping. But all of these potential sources of demand are in their infancy and a distant respite from the bleak picture painted above. Given the scale of the potential challenge, what can the carbon-carrying portion of the shipping industry do to manage the risk? Supply side restraint is key; as reduced ordering would mean that both tankers and bulkers would recover from the shock of the low carbon transition and see the fleet employment rate recover. The second is vessel selection. The exposure of larger bulkers to coal implies a particularly negative outlook under the Reduction scenario, whereas smaller geared bulkers would show more resilience. MSI Foresight, July 2019 Ship financiers would also find themselves caught in a vice, with earnings unable to cover debt repayments and falling life expectancy reducing the runway to recover a loan before the vessel is scrapped. More efficient vessels may be somewhat better placed, as greater efficiency should lead to longer life expectancy. However, the prospects for successfully recouping a loan, never mind an equity investment, in a vessel heavily exposed to fossil fuel cargoes seem challenging under a Reduction scenario. Assuming that commitments to cut carbon emissions will be met, the industry needs to prepare for the radical transition that this implies. Vessel selection will be critical, and potentially divestment from sectors with the greatest exposure to fossil fuels may prove the only way to profitably navigate the changing landscape. Furthermore, if the timeline posited above is accurate then the time to react is now. Most owners would assume a minimum vessel lifespan of 20 years when evaluating an investment, which means that investing in anything other than the oldest vessels today implies significant exposure to this transition. Notwithstanding this, discussion of these potentially disastrous demand-side dynamics is almost totally absent from the shipping industry. MSI Foresight, July 2019 The concept of ‘stranded assets’ has gained increased traction in recent years, mostly to refer to reserves of coal, oil and gas that cannot be burned due to tightening emissions regulation and price competition from renewable energy sources. Most analysis of the financial risk of stranded assets has focused on the ‘upstream’ part of the energy sector, or electricity generation, especially coal-fired power stations. This report broadens the debate to encompass the fact that coal, oil, and liquified natural gas are all internationally traded commodities, relying on maritime shipping to function. The discourse within the finance community regarding such concepts can now hopefully be extended to shipping departments and the wider shipping industry.

Hong Kong Harbour down all around in June's container throughput

PostTime:2019-07-17 22:57:46 View:15

THE Hong Kong Marine Department figures showed that the harbour's June container throughput declined 12.7 per cent year on year to 1.16 million TEU, having suffered a year to date loss of 8.7 per cent to 7.08 million TEU. Laden outbound containers declined 7.7 per cent to 6.2 million TEU while laden inbound containers fell 6.7 per cent to 3.04 million TEU. Outbound empties were down 18.6 per cent to 345,000 TEU while inbound empties came in at 514,000 TEU, down 12.9 per cent.  

CMA CGM hikes Asia-North Europe rate to $1,150/TEU from August 1

PostTime:2019-07-17 22:56:52 View:6

FRENCH shipping giant CMA CGM will raise Asia-North Europe Freight All Kinds (FAK) rates from August 1 to US$1,150 per TEU, $2,200 per FEU, $2,250 for high cubed and reefer FEU. These rates will apply from date of implementation until further notice but not beyond August 14, said the announcement. They will also apply from all Asian ports including Japan, Southeast Asia and Bangladesh to all northern European ports including the UK and the full range from Portugal to Finland/Estonia, and on all dry cargo, OOG, paying empties and reefer cargo.

Kuala Lumpur seizes Beijing cash, threatening China's Belt and Road plan

PostTime:2019-07-17 22:56:06 View:8

CHINA's troubled Malaysian Belt and Road projects may have been derailed again after Malaysian authorities seized US$241.43 million held by China Petroleum Pipeline Engineering Corp (CPP), a Chinese state-owned company, reports Caixin. The on-again off-again Belt and Road projects were taken on by the previous administration, but rejected by newly elected Prime Minister Mahathir Mohamad, aged 95, as being too financially burdensome and requiring the presence of "too many warships". Beijing persuaded Kuala Lumpur to resume the $10.7 billion Belt and Road projects last April. Malaysia reportedly backed down when with faced $5.3 billion "termination costs" contained in initial agreement, according to London's Financial Times. In an unprecedented move in Malaysian banking, the Pakatan Harapan (PH) government ordered HSBC, early in July to transfer the funds held in CPP’s account in Malaysia to Suria Strategic Resources, which is wholly owned by the Malaysian Ministry of Finance. In response to queries from Singapore's Straits Times, CPP, which was the lead contractor for the pipeline projects awarded in November 2016 by the previous government of Prime Minister Najib Razak, confirmed that the funds were transferred out. "CPP firmly abides with the laws of Malaysia and is perplexed by the unilateral transfer of monies without notifying CPP," said the company, a unit of China's state-owned oil and gas giant China National Petroleum Corp.

Trump-China Trade Tensions Hit Panama Canal Revenues

PostTime:2019-07-17 13:37:11 View:15

The trade tension between the U.S. and China is making waves at the Panama Canal. Cargo from the U.S. to China going through the key waterway has slumped this year as the Asian giant cuts its imports of American food and fuel, according to Panama Canal Authority CEO Jorge Luis Quijano. Amid the dispute, Japan has displaced China as the canal’s second-largest user, while U.S. businesses remain the canal’s biggest customers, he said. U.S. President Donald Trump complained this week that China hasn’t increased its purchases of American farm products, a promise he said he secured last month at a meeting with President Xi Jinping. China is relying more on countries such as Qatar, and Trinidad and Tobago, for gas, and Brazil for soy, according to Quijano. “This is a bigger disadvantage to the U.S., because China just buys the same products elsewhere,” Quijano said. The canal forecasts revenue of $3.2 billion this fiscal year, up 2% from 2018. That would have been higher without the trade dispute, which cut traffic from the U.S. to China by about 8 million tons since the current fiscal year started in October, according to Quijano. Traffic through the canal on the most important route, from the East Coast of the U.S. to Asia, was 78 million tons in the 2018 fiscal year. Despite this, Moody’s Investors Service this year upgraded the canal’s credit rating to A1, from A2, citing its strong financial performance since the expansion, and low debt levels. Draft Restriction Quijano said the U.S-China dispute could cost the canal more money if tensions continue. At the same time, it may get a boost from new LNG terminals scheduled to come online in the coming months in the U.S. states of Georgia and Texas which will help supply growing demand from Japan and South Korea, he said. Low water levels caused by a drought this year forced the canal authority to restrict the size of vessels allowed to cross the new set of locks. A draft restriction of 44 feet that mainly affects container ships will likely remain in effect for the coming weeks until rainfall picks up, Quijano said. The canal has studied the possibility of building an additional set of locks for even bigger ships, but demand isn’t likely to merit such an undertaking in the next 10-15 years, he said.

IMO2020 to result in 50% hike in bunker costs on Far East-Europe trade lane

PostTime:2019-07-17 13:35:39 View:14

Bunker costs per TEU are set to increase by over 50% from January 2020 as the IMO2020 rules force global container lines to switch to more expensive low sulphur fuels. Calculations by MDS Transmodal using its online BAF Calculator suggest that a switch from IFO380 to MGO on a benchmark Far East-Europe service using 18,500 TEU ships would increase the bunker cost/TEU by $62 for the headhaul direction and $39 for the backhaul direction. This level of increase in BAFs will in itself lead to heated negotiations as shippers seek to avoid additional costs and the lines look to protect their bottom lines. However, results from the BAF Calculator for the Far East-Europe trade lane show there are significant variations around these benchmark results depending on the service used; the increase could be as high as $81 per headhaul TEU and $51 per backhaul TEU. While some lines are installing scrubber systems so they can continue to use cheaper high sulphur fuels, they will need to recoup the cost of their investment and may use the additional cost of burning MGO incurred by their competitors to inform their pricing decisions. Greater transparency in the calculation of BAFs would therefore help shippers to make the most appropriate decisions in the run-up to the IMO2020 deadline. MDS Transmodal today announced the launch of its BAF Calculator, a new online service from the UK-based maritime and freight transport consultancy. The BAF Calculator allows global shippers and shipping lines to calculate the bunker cost per TEU for each of 154 deep sea container services operating on seven major trade lanes. “We developed the methodology for Hapag Lloyd’s Marine Fuel Recovery (MFR) mechanism back in autumn 2018”, said Chris Rowland, Managing Director of MDS Transmodal. “But we wanted the whole market to have access to an independent and transparent source of data on bunker costs for containers as the IMO2020 deadline approaches”. Features and benefits of the BAF Calculator include: • free access to the bunker cost per TEU for benchmark services on seven major global trade lanes; • access via a Premium Subscription to the bunker cost per TEU for specific services on the seven trade lanes; • separate bunker costs per TEU for both headhaul and backhaul directions; • the ability to change bunker prices for different fuels and oil prices; • steaming distances in SECAs automatically taken into account; • uses the methodology that MDS Transmodal developed for Hapag Lloyd’s Marine Fuel Recovery (MFR) mechanism.