T P Chí Containerisation Informa - Ci - 201403 PDF

www.containershipping.
com MARCH 2014

Data Hub: Load Factors ..............................08
Data Hub: World Fleet Update ...............13
Trade Routes: Asia-North Europe ..........16
Shippers Column ........................................52
TOP BOX HUBS:
SHANGHAI IN
POLE POSITION
P25
CARRIERS
NILEDUTCH:
A GROWING ROLE
IN WEST AFRICA
P39
PORTS
CSAV/HAPAGLLOYD:
A MARRIAGE OF
CONVENIENCE?
P22
MORE INSIGHT
THE
ULRICH KRANICH
INTERVIEW
SEA
CHANGE
CARRIERS
Boost your import-export trade with
HAROPA, the TOP French port system for
foreign trade
THE high-performance logistics solution in
Europe with:
3,000 liner services with best transit times
1,000 companies as our partners
550 ports of call all over the world
www.haropaports.com
LE HAVRE
PARIS
Herv CORNEDE
Commercial and Marketing Director
High speed
PORT SYSTEM
March 2014
MARITIME pundits and practitioners appear to be coalescing
around a 4% growth in global container volumes for 2014,
albeit with wide regional differences.
Depending on which space you occupy in the ocean freight
world, this is either a good or disappointing forecast.
For port operators and freight forwarders, 4% is a welcome
relief, but for container shipowners it is not enough to fill the
production line of larger vessels coming on stream.
Maersk Line chief executive Sren Skou warns that the container
shipping industry needs to learn to exist in an environment of
excess capacity, while Hamburg Sds Peter Frederiksen believes
that the next couple of years will not become any easier.
In this issue we have the thoughts of Hapag-Lloyd executive
board member and Box Club chairman Ulrich Kranich on the
effect of non-vessel operating investors ordering ships without
firm employment commitments and the need for G6 members
to operate 18,000 teu ships.
We also analyse the business rationale behind a merger
of Hapag-Lloyd and Chilean carrier CSAV, other than creating
the worlds fourth-largest box shipping line, and whether it
betokens a further round of carrier consolidation.
Niche carrier NileDutch also comes under the spotlight,
which has made a success of its West Africa trade, so allowing
it to order four bespoke 3,500 boxships with gearing and a
wide-beam best suited to the ports they will serve.
And then there is our look at the top 30 container ports in
2013, with a host of regional league tables so beloved by our
specialist readership. More data is available online.
Editor-in-chief Containers Janet Porter
(+44 (0) 20 7017 4617) janet.porter@informa.com
Editor Roger Hailey
(+44 (0) 20 7017 4361) roger.hailey@informa.com
Senior reporter Damian Brett
(+44 (0) 20 7017 5754) damian.brett@informa.com
Art editor/sub editor Heather Swift
(+44 (0) 20 7017 3207) heather.swift@informa.com
Content sub editor Karen Thomas
(+44 (0) 20 7017 6071) karen.thomas@informa.com
Advertising production Russell Borg
(+44 (0) 20 7017 4495) russell.borg@informa.com
Advertising sales Alan Hart
(+44 (0) 20 3377 3820) alan.hart@informa.com
Advertising sales manager Niraj Kapur
(+44 (0) 20 3377 3868) niraj.kapur@informa.com
Marketing manager Louise Challoner
(+44 (0) 20 7017 5445) louise.challoner@informa.com
Subscription sales William Purchase
Tel: +44 (0) 20 7551 9529 ci.subscriptions@informa.com
Retentions Pauline Seymour
(+44 (0) 20 7017 5063) pauline.seymour@informa.com
Informa plc, Christchurch Court, 10-15 Newgate Street, London EC1A 7AZ
Telephone: +44 20 7017 5000 Fax: +44 20 7017 5007
Incorporating
www.containershipping.com MARCH2014
Data Hub: LoadFactors..............................08
Data Hub: WorldFleet Update...............13
TradeRoutes: Asia-NorthEurope..........16
Shippers Column........................................52
TOPBOXHUBS:
SHANGHAI IN
POLEPOSITION
P25
CARRIERS
NILEDUTCH:
AGROWINGROLE
INWESTAFRICA
P39
PORTS
CSAV/HAPAGLLOYD:
AMARRIAGEOF
CONVENIENCE?
P22
MOREINSIGHT
THE
ULRICH KRANICH
INTERVIEW
SEA
CHANGE
CARRIERS
an informa business
Audited by ABC.
Total circulation 10,017
Jan Dec 2011
Containerisation International is published monthly by
Informa plc. Printed by Wyndeham Grange, Southwick,
Sussex. Distributed in the US by Pronto Mailers
Association. US Periodicals Postage Paid at Middlesex
NJ 08846. POSTMASTER: please send US address
corrections to: Containerisation International c/o Pronto
Mailers Association, P.O.Box 177, Middlesex, NJ 08846.
Sources, uses and disclosures of personal data held by
Informa plc are described in the Official Data Protection
Register. No part of this publication may be reproduced,
reprinted or stored in any electronic medium without the
express permission of the publishers.
Informa plc ISSN: 0010-7379
Good news for some, bad news for others as the
industry continues to navigate choppy waters
TAKING THE ROUGH
WITH THE SMOOTH
Chinas Shanghai retains top spot overall, followed by
regional rival Singapore, while Shenzhen has pushed Hong
Kong into fourth place.
In the next issue, Janet Porter will outline current industry thinking
at the Trans-Pacific Maritime annual conference in Los Angeles.
Finally, I urge you to join the editorial team in April at the
16th annual Global Liner Shipping conference in Hamburg,
where the latest industry topics will feature high on the agenda
of senior excutive speakers.
Tschuess til then.
Roger Hailey, editor
Join us on:
Group name:
Containerisation International
@ContainersInt
Subscription rates
UK: 940/Europe
EUR1,230
ROW: USD1,825
Subscriptions hotline:
Tel: +44 (0) 20 7551 9529
Fax: +44 (0) 20 7017 7860
ci.subscriptions@informa.com
Customer services:
Tel: +44 (0) 20 7017 5540
Fax: +44 (0) 20 7017 4614
subscriptions@informa.com
CORRECTION: WORLD FLEET UPDATE
The timelines for the Vesselsvalue data in our last issue for Post
Panamax, Panamax and Handy should have read January 17 2014 ,
December 17 2013 and January 17 2013. Our apologies for the error.
MARCH 2014
www.containershipping.com CONTAINERISATION INTERNATIONAL 01
March 2014
TRADE ROUTE
INTELLIGENCE
Alliances look set to dominate the Asia
to North Europe trade, but the issue of
overcapacity still remains
P16
ALL CHANGE AT
HAPAGLLOYD
Ulrich Kranich speaks exclusively to
Containerisation International about the
future of container shipping as he
prepares to retire after 40 years in the
business
P18
MARRIAGE OF
CONVENIENCE
Alastair Hill looks at the proposed
merger between Hapag-Lloyd and CSAV
and nds both lines have much to gain
and lose
P22
DATA HUB
TRADE STATISTICS
MDS Transmodal looks at the main American
trade lanes, where there are signs of the
beginning of a recovery
P04
DATA HUB
LOAD FACTORS
Looking at the likely vessel utilisation rates
for the key American trade lanes
P8
EVENTS
HAMBURG CALLING
Containerisation International heads to
Hamburg for the Global Liner Shipping
Conference 2014
P10
REEFER BOX UPDATE
Market looks set to be stronger and more
stable than last year
P12
10
I am not looking
for any more
challenges
DATA HUB
DATA HUB
DATA HUB
VIEW FROM THE BRIDGE
CARRIERS
WORLD FLEET
UPDATE
Some pain, some gain, as total capacity rises
and more panamax scrapping is expected
P13
02 CONTAINERISATION INTERNATIONAL www.containershipping.com
CONTENTS / MARCH 2014
P18
ULRICH KRANICH
VIEW FROM THE BRIDGE
March 2014
PORTS SEIZE GROWTH
OPPORTUNITIES
Leading box hubs show creditable rises
P25
TIMING IS
EVERYTHING
Two new terminals are set to open in
Rotterdam, but is now the right time to be
adding capacity?
P32
WHATS IN A NAME?
NileDutch has made a success of West
Africa, and sees a bright future ahead
P39
CLASS SOCIETIES
TAKE ACTION
Boxships will become stronger and better
able to withstand weather and loading
extremes
P50
A DIY APPROACH TO
REGULATION
Chris Welsh discusses why the creation of
the P3 Alliance shows why the consortia
block exemption has to go
P52
PORTS
PORTS
Please contact:
MAGELLAN Maritime Services GmbH
Domstrasse 17
D 20095 Hamburg
Our Services:
Rental
Leasing (Term / Finance Lease)
Sale and lease back (New & Used)
Purchase & Sale (New & Used)
Tel: +49 40 3786 5450
Fax: +49 40 3786 5460
E-mail: magellan@magham.de
Web: www.magellan-maritime.com
CONTAINERS WORLDWIDE
Size: 20 / 40 / 45
Type: Standard / High Cube / Palletwide / Reefer
Open Top / Flat / Bulk / Side Door / Double Door
GUEST COLUMNIST
VICTORY AT SEA
Igal Dafni speaks exclusively to
Containerisation International about his
legal battles with former employers CMA
CGM and Zim
P42
NEWS ROUNDUP
Maersk Line prot driven by better
eet utilisation, while APM Terminals
posts prot rise and Damco reports in
the red
P44
Evergreen joins CKYH and boosts
alliances average boxship size
P47
New agreement sees rst quarter 2016
opening for expanded Panama Canal
P48
CARRIERS
CARRIERS
BOX WORLD BRIEFING
REGULATION
www.containershipping.com CONTAINERISATION INTERNATIONAL 03
ISSUE 2/VOL 47
04 CONTAINERISATION INTERNATIONAL www.containershipping.com March 2014
DATA HUB
TRADE STATISTICS
SUPPLY/DEMAND INDICATORS
FOR CONTAINER SHIPPING
DATA PROVIDED BY:
AT A global level, based upon trade data
available in mid-February (including from
China and Brazil), MDS Transmodal estimates
that total underlying maritime container
volumes have grown by some 5% in 2013
when compared with a year earlier.
The underlying global volume for the
fourth quarter of 2013 was almost 40%
above the level of five years earlier,
reflecting a compound growth rate of
some 7%, including the intervening
recession.
Trade data becoming available over the
last month (principally for the fourth quarter
of 2013) is most encouraging in that it
indicates the beginnig of a recovery.
MDS Transmodal estimates that for
2013, global container trade grew by
4.5% and it is forecast for the forthcoming
12 months to possibly increase to 7%,
with a strong recovery for Asia-Europe
traffic.
For this edition, MDS Transmodals main
focus is on American trade lanes. Overall
imports into North America from the fourth
quarter of 2012 to the same quarter of 2013
are estimated to have increased by some 7%.
An important factor behind this positive
outcome has been the Chinese new year
holiday season.
This year led to an earlier than usual
increase in exports from Asia to North
America in the last quarter of 2013
compared to the same quarter previous year;
a similar trend has been experienced from
Europe.
REASONS FOR
OPTIMISM
Asia to North America East Coast North America to East Coast South America
Leading indicators: headhaul from Asia 000 teu. Italics = projected
Commodity 2011 2012 2013 2014
89 Miscellaneous Manufactures 1316 1378 1432 1554
77 Electrical Machinery 1057 1068 1154 1334
75 Office Machines & Adp Equipment 1049 1085 1096 1235
82 Furniture 1021 1130 1194 1267
62 Rubber Manufactures 981 1050 1123 1145
Overall headhaul index 100 106 111 118
Overall backhaul index 100 105 113 126
Leading indicators: headhaul from ECSA 000 teu. Italics = projected
Commodity 2011 2012 2013 2014
05 Vegetables & Fruit, Nuts 56 55 49 55
07 Tea/Coffee/Cocoa/Spices 52 40 43 42
27 Crude Fertilisers & Minerals 50 44 48 51
66 Mineral Manufactures 45 50 61 54
Asia to North America (000 teu)
Asia includes NE and SE Asia
EC North America to EC South America (000 teu)
EC North America includes US, Canada, Mexico (EC), Puerto Rico and Greenland
13,148 313
6,869 504
13,759
4.6%
346
10.5%
7,398
7.7%
529
5%
14,588
6%
351
1.4%
8,275
11.9%
599
13.2%
15,096
3.5%
379
8%
8,642
4.4%
617
3%
2012 2012 2013 2013 2014 2014 2015 2015
North America to Asia (000 teu)
North America includes US, Canada, Mexico, Puerto Rico and Greenland
EC South America to EC North America (000 teu)
EC South America includes Brazil, Argentina, Paraguay and Uruguay
Underlying eastbound trade has grown by 6% in 2012 and is
estimated to have grown by 5% in 2013.
Underlying westbound trade has grown by 5% in 2012 and is
estimated to have grown by 8% in 2013.
Of the leading headhaul commodities, most show steady growth.
Annual headhaul growth from 2013 to 2016 is forecast at 3%.
Service capacity (eastbound) in the fourth quarter of 2013 is
estimated to have been 8% above the fourth quarter of 2012.
Y-o-Y in the fourth quarter of 2013, estimated utilisation is
estimated to have increased marginally, but freight rates and profits
declined.
Underlying northbound trade fell by 3% in 2012 but is estimated
to have grown by 5% in 2013.
Underlying southbound trade fell by 11% in 2012 but is estimated
Of the leading head-haul commodities, none display sustained growth.
Service capacity (northbound) in the fourth quarter of 2013 is
estimated to have been 4% below the fourth quarter of 2012.
Y-o-Y in the fourth quarter of 2013, estimated utilisation is
estimated to have been stable but freight rates and profits
decreased.
2012
2012
2013
2013
2014
2014
2015
2015
Latest trade data on American trade lanes suggests the beginning of a recovery
The shipping industry announcements to introduce new cuts in capacity
through both cancellations and merging of their services are signs of gloomier
performances during the first quarter of 2014.
Despite cuts in capacity, freight rates after the increase following the general
rate increase announcements have carried on falling and on February 14 the
Comprehensive Index of the Shanghai Containerised Freight Index witnessed a
6% fall compared with the previous week.
As for the Asia-North American components of the SCFI, both indices to
the US east coast and US west coast have also decreased during the last few
weeks.
Graph A compares current global supply versus demand. It shows that, if
seasonality is not taken into account, the gap between the two measures has
grown which explains the fall in freight rates.
In detail, with the first quarter of 2006=100, global supply has reached a level
of 167 in the fourth quarter of 2013 versus an index of 146 estimated for demand
(not adjusted for seasonality), a gap of some 21 index points.
This gap has remained at the same level than those estimated for the third
quarter of 2013. In order to maintain an acceptable level of profitability,
shipping lines will need to exploit the economies they will gain from their larger
new ships.
Underlying growth in trade from Asia to North America is estimated to have
North Europe to East Coast South America Asia to East Coast South America
North Europe to East Coast South America (000 teu)
North Europe includes northern Europe, Scandinavia and the Baltic
Asia to East Coast South America (000 teu)
500
1,798
588 994
521
4.2%
1,927
7.2%
574
-2.4%
974
-2%
528
1.3%
2,140
11.1%
581
1.2%
1,066
9.4%
528
8.1%
2,307
7.8%
603
3.8%
1,142
7.1%
2012
2012
2013
2013
2014
2014
2014
2015
East Coast South America to north Europe (000 teu)
East Coast Sout America to Asia (000 teu)
Underlying northbound trade fell by 5% in 2012 and is estimated to
have fallen by 2% in 2013.
Underlying southbound trade grew by 3% in 2012 and is estimated
to have grown in 2013 by 4%.
Of the leading head-haul commodities, meat, fruit & veg and tobacco
show growth.
Annual headhaul growth from 2013 to 2016 is forecast to be 2%.
Service capacity (northbound) in the fourth quarter of 2013 is
estimated to have been 11% above the fourth quarter of 2012.
Y-o-Y in the fourth quarter of 2013, estimated utilisation is estimated
to have remained stable whereas freight rates and profits declined.
Underlying eastbound trade fell by 1% in 2012 but is estimated to
have grown by 7% in 2013.
Underlying westbound trade grew by 9% in 2012 but is estimated to
have fallen by 2% in 2013.
Of the leading headhaul commodities, all are showing
growth.
Service capacity (southbound) in the fourth quarter of 2013
was 3% above the fourth quarter of 2012.
Y-o-Y in the fourth quarter of 2013, estimated utilisation,
profits and freight rates are estimated to have declined.
2012 2012 2013 2013 2014 2014 2015 2015
* Excludes intra regional trade. ** Forecast. On the basis of trade data available in mid-
August, the consultancy projects the following changes in underlying demand along the main
trade lanes for loaded containers for the forthcoming 12 months (4Q 2013 3Q 2014 as
compared with the previous 12 months). For explanatory notes that define how data has been
organised please see www.boxtradeintelligence.co.uk.
2011-
2012
2012-
2013
2013-
2014**
North America to Europe -6% +4% +2%
North America to Asia +5% +8% +12%
Asia to Europe -3% +3% +11%
Asia to North America +6% +5% +6%
Europe to Asia 0% +2% +3%
Europe to North America +6% +6% +7%
North America exports * +2% +5% +6%
North America imports * +6% +4% +5%
Asia Exports * +3% +5% +10%
Asia Imports * +7% +5% +9%
Europe & Med Exports * +5% +4% +7%
Europe & Med Imports * -2% +3% +9%
Intra Asia +6% +4% +9%
Intra Europe +4% +5% +3%
Global overview +5% +5% +8%
Leading indicators: headhaul from ECSA 000 teu. Italics = projected
Commodity 2011 2012 2013 2014
01 Meat & Meat Preparations 87 92 91 97
05 Vegetables & Fruit, Nuts 85 73 78 67
07 Tea/Coffee/Cocoa/Spices 61 52 58 69
27 Crude Fertilisers & Minerals 52 51 48 48
12 Tobacco & Manufactures 40 46 44 42
Commodity 2011 2012 2013 2014
83 Travel Goods & Handbags 183 150 159 199
65 Textiles & Made-Up Articles 160 162 167 191
76 Telecom & Recording Equipment 147 142 148 186
Underlying unitised trade growth rates (year on year)
www.containershipping.com CONTAINERISATION INTERNATIONAL 05 March 2014
DATA HUB
TRADE STATISTICS
DATA HUB
TRADE STATISTICS
risen by 4.6% in 2013. Positive results are also expected for the near
future. For 2014, MDST forecasts an increase of almost 6%. Furniture
and rubber manufactures are the principal commodities exported
eastbound.
Trade from the east coast of South America to the east coast of
North America is estimated to have increased by 5% in 2013, with a
higher growth rate forecast for 2014. Mineral manufactures are the
main commodities exported northbound.
Trade from the east coast of South America to northern Europe is
estimated to have fallen by 2.4% in 2013 but is expected to recover
in 2014.
Trade from Asia-east coast South America is estimated to have
grown by some 7% in 2013, and the growth rates are forecast to
reach double digits in the near future.
Trade between Asia and West & Central Africa is estimated to have
grown by more than 12% in 2013 and growth rates are expected to
remain in double-digits in the 2014. Growth is led by rubber, mineral
and metal manufactures.
Finally, trade between north Europe and West & Central Africa is
estimated to have grown by about 4% in 2013, and is forecast to
grow by higher rates in the following years. Growth is being led by
foodstuffs.
Asia to West and Central Africa North Europe to West and Central Africa
Asia to W&C Africa (000 teu)
North Europe to W&C Africa (000 teu)
North Europe includes northern Europe, Scandanavia and the Baltic
1,262 567
889 205
1,417
12.3%
592
4.4%
915
2.9%
204
-0.5%
1,589
12.1%
686
15.9%
991
8.3%
173
-15.2%
1,720
8.2%
717
4.5%
1,056
6.6%
181
4.6%
2012
2012
2013
2013
2014
2014
2015 2015
W&C Africa to Asia (000 teu)
W&C Africa includes Cameroon, Cape Verde, Angola, Congo (Rep), Congo (Dem Rep), Gabon, Sao
Tome, Ivory Coast, CAR, Niger, Nigeria, Liberia, Mali, Eq Guinea, Burkina, Ghana, Togo, Benin and Chad
W&C Africa to North Europe (000 teu)
W&C Africa includes Cameroon, Cape Verde, Angola, Congo (Rep), Congo (Dem Rep), Gabon, Sao
Tome, Ivory Coast, CAR, Niger, Nigeria, Liberia, Mali, Eq Guinea, Burkina, Ghana, Togo, Benin and Chad
Overall westbound trade grew by 10% in 2012 and is estimated to
have grown by 12% in 2013.
Underlying eastbound trade grew by 15% in 2012 and is estimated
Of the leading headhaul commodities, all show some growth.
Service capacity (southbound) in the fourth quarter of 2013 is
estimated to have been 10% below the fourth quarter of 2012.
Y-o-Y in the fourth quarter of 2013, utilisation is estimated to have
increased marginally, but profits and freight rates are estimated to
have decreased slightly.
Overall southbound trade grew by 14% in 2012 and is estimated
to have risen by 4% in 2013.
Underlying northbound trade fell by 1% in 2012 and is estimated
to have fallen by 1% in 2013.
Of the leading headhaul commodities, miscellaneous food products
show the most growth.
Service capacity (SB) in the fourth quarter of 2013 is estimated to
have been 12% below the fourth quarter of 2012.
Y-o-Y in the fourth quarter of 2013, utilisation is estimated to have
increased, but freight rates and profits are estimated to have decreased.
2012
2012
2013
2013
2014
2014
2015
2015
This data is provided by Box Trade Intelligence in collaboration with MDS Transmodal.
Much more detail is available directly from BTI (www.boxtradeintelligence.co.uk),
including tonnages and estimated teu at the country x country x 3,000 commodities level,
individual ship deployment and estimated revenue, profit, rates and utilisation at the
tradelane and individual ship level.
Commodity 2011 2012 2013 2014
66 Mineral Manufactures 129 143 169 181
65 Textiles & Made-Up Articles 95 87 95 103
69 Metal Manufactures - Other 76 79 92 99
Leading indicators: headhaul from N Europe 000 teu. Italics = projected
Commodity 2011 2012 2013 2014
26 Textile Fibres 41 44 46 49
03 Fish & Fish Preparations 36 60 51 55
01 Meat & Meat Preparations 31 33 39 52
09 Miscellaneous Food Products 29 32 37 50
11 Beverages 28 33 32 33
Supply - based on actual data Demand - based on actual data
Demand seasonally adj
60
80
100
120
140
160
180
2
0
0
6
Q
1
2
0
0
6
Q
2
2
0
0
6
Q
3
2
0
0
6
Q
4
2
0
0
7
Q
1
2
0
0
7
Q
2
2
0
0
7
Q
3
2
0
0
7
Q
4
2
0
0
8
Q
1
2
0
0
8
Q
2
2
0
0
8
Q
3
2
0
0
8
Q
4
2
0
0
9
Q
1
2
0
0
9
Q
2
2
0
0
9
Q
3
2
0
0
9
Q
4
2
0
1
0
Q
1
2
0
1
0
Q
2
2
0
1
0
Q
3
2
0
1
0
Q
4
2
0
1
1
Q
1
2
0
1
1
Q
2
2
0
1
1
Q
3
2
0
1
1
Q
4
2
0
1
2
Q
1
2
0
1
2
Q
2
2
0
1
2
Q
3
2
0
1
2
Q
4
2
0
1
3
Q
1
2
0
1
3
Q
2
2013 Q4
Supply Index=167
2012 Q4 - 2013 Q4
% change quarter on quarter
Supply=3.0%
Demand=7.6%
2013 Q4
Demand Index=146
2
0
1
3
Q
3
For explanatory notes that define how data has been organised please
see www.boxtradeintelligence.co.uk.
Graph A: Global supply v demand and seasonally adjusted
demand
driven by dedication ports of vlissingen and terneuzen
www.zeelandseaports.com
Its in our character
The port is our life. Hands-on mentality, hard work and accessible people,
thats our character. Anyone who gets to know Zeeland Seaports becomes
acquainted with professionals who are proud of their ports. We understand
that your interests are also our interests. Clients come first. Always. We know
whats important to your company. Thats all in our character, and one of our
many strengths:
location on open sea
draft of 16.5 metres
congestion-free connections with the hinterland
no nine-to-five mentality
accessible ports and people
dedicated terminals for a broad range of cargo
you can reach us 24/7 at +31 115 647400
March 2014 8 CONTAINERISATION INTERNATIONAL www.containershipping.com
DATA HUB
LOAD FACTORS
INCREMENTAL IMPROVEMENTS
Load factors on some of the main American trade lanes are set to improve this year, but is it
enough to increase prices, asks Damian Brett
East coast North America to east coast South America
East coast
services from
North America to
South America
are set for
another tough
year in 2014
as overcapacity
continues to
blight the trade
lane.
MDS Transmodal has estimated that volumes will increase by
more than 10% this year, but coming from such a low base, and
ever so slightly headed off by a year-on-year capacity increase of
1.7%, it isnt enough for any dramatic improvement in the chronic
overcapacity.
That said, there is a slight improvement in every quarter of the
year compared to last years levels.
2
East coast South America to east coast North America
It is shaping up to be an improved year
for carriers with services operating from
South America to North America as careful
capacity management is helping improve
vessel utilisation rates.
The improvement in load factors
compared with last year comes as carriers
have increased capacity on the trade lane
by just 1.9% year on year during the first
quarter. This compares with estimated cargo
growth of around 4% year on year for 2014.
While carriers may be facing up to a
better year than the last, there are still questions marks as to whether it will be enough for lines
to launch a major rate push. For three out of four quarters load factors are below the 80% mark.
Rates are most likely to rise during the third quarter when utilisation levels reach 83%.
In terms of capacity additions during the first quarter, carriers have increased capacity by just
0.4% compared with the fourth quarter.
1
East coast North America to Mediterranean
Services from the east coast of North America to the Mediterranean are set to enjoy slightly better
utilisation rates than they did last year.
However, as in the head-haul direction, services sailing from North America were swamped with
additions last year which has created overcapacity. As a result, it is not shaping up for a year of
major rate improvements.
In fact, our estimates show that capacity
increased by around 15% last year
compared with flat demand as the economies
of Mediterranean countries struggled for
growth.
This year, carriers appear to have calmed
down slightly and capacity additions are closer
to the 2% mark, with Mediterranean Shipping
Co adding larger vessels to services.
In contrast, improvements in Mediterranean
economies are expected to lead to demand
growth of just under 3%.
3
2
1
5
East Coast North America to Mediterranean
0
20%
40%
60%
80%
100%
Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13
average utilisation rates
East Coast South America to East Coast North America
0
20%
40%
60%
80%
100%
Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13
East Coast North America to East Coast South America
0
20%
40%
60%
80%
100%
Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13
3
March 2014 www.containershipping.com CONTAINERISATION INTERNATIONAL 9
OUR METHODOLOGY: The freight rate forecasts shown in the tables are mainly based on projections of estimated average vessel utilisation in each trade lane, combined
with other relevant circumstances. The fuller the ship, the more likely rates will rise and vice versa. Cargo forecasts are based on the latest information from all sources available to
Containerisation Internationals editorial team. These will always be conservative, and only take account of normal seasonal variations. Fleet capacity information is derived from
Lloyds List Intelligence. Current shipboard capacity in each route is estimated by deducting space lost for broken stows and wayport cargo from the operating capacity offered on
every vessel in that tradelane. This is projected forward by estimating where newbuilds are likely to be deployed, as well as where replaced vessels are likely to be cascaded into.
Average vessel utilisation is simply one divided by the other. It should be noted, therefore, that the resulting freight rate trends only reflect what should theoretically happen if ocean
carriers continue acting according to form. They do not take into account dramatic changes in strategy, such as mass lay-ups, service consolidation and more hub and spoke operations.
East coast North America to North Europe
Analysts are expecting a good year for demand growth on
services from the east coast of North America to North
Europe, with increases of as much as 7% predicted, although
Containerisation International is opting for a more conservative
4.5%.
Meanwhile, carriers have increased capacity by just
1.7% in the first quarter, helping to push utilisation rates
ahead of last year and to reach a peak of 77% in the first
quarter.
However,
utilisation
rates are set
to weaken
as the year
progresses
and they dont
appear to be
high enough
for major price
increases.
5
DATA HUB
FREIGHT FORECASTER
NEXT EDITION: EUROPEAN TRADES
DATA HUB
LOAD FACTORS
North Europe to east coast North America
The headhaul
direction of the
transatlantic trade
lane is set for a
positive year as
utilisation rates
are projected to
be ahead of last
year and are set
to breach the
93% mark in
the third quarter.
Additionally, in every quarter of the year they are set to stay above the
85% mark.
The primary reason is the continuing recovery of North American
countries, which is set to lead to growth of as much as 5% year on year
in 2014.
This is slightly offset by capacity additions of 2.2% but with demand
increasing ahead of supply, utilisation should improve.
At the start of the year, capacity was up 2.4% compared with the
previous quarter, when it was depressed by gaps in services.
The gaps in Victory Bridge and Maersk TA2 schedules have now been
filled. Partly offsetting these improvements have been a reversion to
fortnightly frequency for the Pad service and a gap in PAX.
6
Mediterranean to east coast North America
LOAD factors on
services from the
Mediterranean
to the east coast
of North America
look set to
improve slightly
over the coming
12 months
compared with
last year.
But even
though the situation is getting better for carriers, utilisation levels do
not appear to have improved enough to allow the shipping lines to
stage a major rate push.
The overcapacity on the trade lane stems from strong demand
growth in 2013 being outstripped by capacity additions.
Our estimates show that volumes increased by a decent 5.7% in
2013. However, carriers increased capacity on the trade lane by as
much as 15%.
This year, demand growth is set for another good year, increasing
by 4.8%. Meanwhile, carriers seem to be being a lot more careful
with capacity additions. In the first quarter they increased supply
by just 1% year on year, largely through Mediterranean Shipping Co
adding larger vessels to its loops.
4
4
6
North Europe to East Coast North America
0
20%
40%
60%
80%
100%
Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13
Mediterranean to East Coast North America
0
20%
40%
60%
80%
100%
Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13
East Coast North America to North Europe
0
20%
40%
60%
80%
100%
Q4 14 Q3 14 Q2 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13
KEY: Green (84% and above): Carriers should be able to protect rates or even improve prices, unless the market has hit the top or sentiment dictates otherwise. Grey (80%-83%):
Freight rates should be fairly steady compared with the previous quarter unless market sentiment dictates otherwise. Red (79% and below): Carriers are likely to have a tough time
improving rates and prices could well decline compared with the previous quarter, unless the market has hit the bottom or sentiment dictates otherwise.
AS THE P3 alliance draws closer to
clearance, the container industry is bracing
itself for dramatic change.
Join us in April at the 16th annual Global
Liner Shipping conference to examine the
impact of consolidation and collaboration
with debate, discussion and analysis from
senior industry figures.
This years programme has been
designed to tackle container shippings key
issues head-on: from alliance formation
to supply chain transparency, port and
terminal development to innovation in
container vessel design.
As the industry enters a formative
and critical period, Containerisation
Internationals flagship event has also
undergone a series of changes for 2014.
For the first time, this years conference
will take place in Hamburg, bringing together
more shippers and carriers than ever before.
Participants will benefit from an
executive panel of speakers, including
representatives of Maersk Line, Khne
+ Nagel, Hanjin Shipping, OPDR Group,
Nestl, Sony and Bacardi as well as
distinguished German shipmanagers,
including Claus-Peter Offen and Hermann
Klein, chief executive of E.R. Schiffarht.
Participants will not only benefit from
Hamburgs rich history as a global centre
of container shipping, but they will also
enjoy the opportunity of sailing the River
Elbe in the events most luxurious evening
networking activity to date.
Over the events two days, an electronic
polling system will be used by the audience
to cast anonymous votes. From this, live
data will be generated and analysed,
allowing us to address the industrys most
controversial issues directly.
We will examine Germanys future share
of container shipping as well as ask the
audience to decide whether new alliances
will benefit the industry.
We understand that all stakeholders
need to have their voices heard and the
Shippers Corner has been designed
to give the liner customers a chance to
discuss their requirements for sustainable
pricing models and reliability of service.
Plus, shippers are invited to attend the
conference free of charge. Companies who
have already registered their attendance
include BASF, Nokia, Solvay, Clarks Shoes,
Heineken, Total Produce and many more.
As we enter a new chapter in shipping
history, dont miss your opportunity to
explore consolidation, collaboration
and the future of container shipping.
Containerisation International and Informa
Maritime Events look forward to seeing
you in Hamburg this April.
Keynote Session
Explore the operational and commercial
significance of alliance formation in this
years keynote session featuring Karsten
Kildahl (Maersk Line), Jochen Gutschmidt
(Nestl) and Otto Schacht (Khne+Nagel).
New Location
Assess the future of Germany as the global
centre of container shipping and examine
the evolutions of the shipmanager/liner
relationship with key contributions from
Claus Peter-Offen and Hermann Klein
(E.R. Schiffarht).
Data Hub and Ask the Analysts
Review what the future years will hold for
containerisation with the latest market
intelligence for supply and demand, world
fleet capacity and global cargo traffic flow.
Free Shipper Passes
To apply for a free shipper pass, please
email camilla.perselli@informa.com
Enhanced networking opportunities
Participate in a carriers/shippers speed
networking session, where business cards
are exchanged in a fun and fast-paced
activity which will help you make 20 new
contacts in 20 minutes.
LATEST ANNOUNCEMENTS
Chairman for GLS 2014 revealed
Jesper Kjaedegaard, Partner, Mercator
International will be taking on this
prestigious role
Senator Frank Horch, Minister of
Economics, Transport & Innovation,
Hamburg to open conference
New speaker confirmed
Jens Meier Chairman, Executive Board,
Hamburg Port Authority
To view the latest programme or to register,
visit www.globallinershipping.com/
FKT2634CI, email maritimecustserv@
informa.com or call +44 (0)20 7017 5511.
Join Containerisation International for two days of discussion on industry change
HEADING TO HAMBURG
GLOBAL LINER SHIPPING CONFERENCE/HAMBURG 2014
EVENTS

2
0
1
4

C
.
H
.

R
o
b
i
n
s
o
n

W
o
r
l
d
w
i
d
e
,

I
n
c
.

A
l
l

R
i
g
h
t
s

R
e
s
e
r
v
e
d
.

w
w
w
.
c
h
r
o
b
i
n
s
o
n
.
c
o
m
Leverage global volumes for your
global shipments
Secure the capabilities and space you need with the #1 NVOCC
from China to the United States* and have condence your freight
will arrive according to plan. Whether you need solutions for air,
ocean, ground, customs clearance, or project logistics, complete the
job with a leader in global forwarding by your side.
Discover your global forwarding options.
solutions@chrobinson.com | 800.323.7587
Execution Across
Continents
*According to U.S. Customs and Census Bureau data
#
1

N
V
O
C
C

f
r
o
m

C
h
i
n
a

t
o

t
h
e

U
n
i
t
e
d

S
t
a
t
e
s
*
Scan this code to
download a FREE
copy of our Going
Global white paper.
DATA HUB
REEFER BOX UPDATE
INDUSTRY sentiment indicates
that an extra 10,000 high
cube 40 ft reefers will be
manufactured in 2014, a 9%
rise on the estimated 110,000
units produced last year.
On the demand side, Maersk
Container Industry the
container manufacturing unit
of AP Moller-Maersk said
that the growth forecast for
reefer volumes in 2014 is
4%-5%, compared with about
1% last year.
In a first quarter update
to customers, MCI chief
commercial officer Soren
Leth Johannsen said: Based
on these indicators, we
conservatively estimate that
the total market will reach
120,000 reefers in 2014.
As the second-largest
manufacturer of both
reefer containers and reefer
machinery, MCI is well placed
to gauge the temperature
of specialist box equipment
supply and demand.
Mr Johannsen wrote of
the harsh business climate
and other events around the
world that negatively affected
harvests and the supply chain.
According to Netherlands-
based consultancy Dynamar,
the global reefer container fleet
reached 2.3m teu equivalents
in 2013 and, at nearly 900m
cu ft, reefer container capacity
exceeds conventional space by
a factor of 4.5.
A return to higher reefer
production would be in line
with a general increase in dry
container equipment assets,
with an estimated 2.4m teu
equvialents produced last year.
Leading lessor TAL purchased
300,000 teu for delivery in
2013, while Textainer saw a
9.6% increase in its dry and
reefer fleet to 3m teu. Reefer
industry sources spoken to by
agreed with MCIs general
perception that that the reefer
market for this year will be
stronger and more stable
than in 2013.
The top six container
lessors remained the primary
purchasers of reefer boxes
with Cronos named as the
leader of the pack, although
this could not be confirmed.
Rates appear to be hovering
around the $4.50 per diem
level for a typical five year,
long term lease on a newbuild
40ft high cube reefer on direct
delivery from China.
Industry insiders say that
Mediterranean Shipping Co has
booked 10,000 leased reefer
units, seen as the biggest
single deal since Maersk Line
stepped back from purchasing
newbuilds after boldly raising
reefer rates by $1,500 a box
from January 2013.
The MSC move is not
REEFER INDUSTRY HOTS UP
Predictions that market will be stronger and more stable than last year, writes Roger Hailey
thought to reflect a fleet
catch-up strategy ahead of the
P3 alliance link up, with Maersk
Line and CMA CGM, with the
Danish carrier reputed to have
a 200,000 strong reefer park.
Said one source, who asked
not to be named: MSC is large
reefer fleet operator in its own
right, and that is sometimes
why some lessors walk away
from a deal with them. This
is possibly more to do with
natural replacement needs
and market growth. Those two
things coupled would warrant
that scale of leasing deal.
There is also industry
speculation whether Maersk
will return to the market with
a larger reefer order later this
year, after its self imposed
moratorium.
Factory gate reefer prices
appear to have a $1,500+
spread, due to the choice of
box and machinery options
available in the market.
Reefer boxes, with specialist
insulation, can be fitted by
a variety of refrigeration
machinery produced by
specialist manufacturers.
Again, depending on
machinery specification for a
40ft high cube reefer, industry
observers report a low end or
sub $15,000 price tag for box
and machinery versus a high
end ticket in the mid $16,000
bracket.
And for those with a longer
term view of the reefer market,
MCI is looking to capture
some air cargo volumes
via a technology leap in air
cleaning systems in its Star
Cool Integrated refrigerated
containers.
The Bluezone patented
technology has proven in test
and trials to be an efficient
eliminator of molds, fungi and
bacteria.
It is argued that Bluezone
has modal shift potential.
Fresh-cut flowers are a $14bn
global market, and more than
90% of intercontinental
shipments are by air.
The top six container
lessors remained the
primary purchasers of
reefer boxes.
DATA HUB
WORLD FLEET UPDATE
SOME PAIN, SOME GAIN
Total capacity rises and more panamax scrapping expected, reports James Baker
Teu Size range In service February 2014 On Order 2014 On Order 2015 On Order 2016+ Total vessels
on order
Total teu
on order*
No Teu No Teu No Teu No Teu
0-499 345 96,580 1 250 1 160 - - 2 410
500-999 732 552,546 7 5,597 1 606 1 540 9 6,743
1,000-2,999 1,861 3,372,451 63 105,762 54 104,248 8 17,870 125 227,880
3,000-4,999 934 3,862,150 33 141,914 10 38,200 9 34,600 52 214,714
5,000-7,499 618 3,724,952 30 169,250 10 62,200 - - 40 231,450
7,500-9,999 336 2,879,716 44 390,938 57 515,614 18 165,762 119 1,072,314
10,000-12,999 67 749,132 21 217,686 13 134,362 5 50,000 39 402,048
13,000-15,999 129 1,749,558 22 295,916 22 309,850 13 184,500 57 790,266
16,000+ 9 157,680 12 215,490 31 546,710 - - 43 762,200
Total 5,031 17,144,765 233 1,542,803 199 1,711,950 54 453,272 486 3,708,025
World Cellular Fleet February 2014 (excluding newbuild postponements and cancellations under negotiation)
Hanjin Italy is the largest vessel listed in the
inactive fleet in February as it undergoes repair.
Photo: Dietmar Hasenpusch
THE world cellular fleet
remained largely stable during
February, with net decline of
seven vessels, taking the total
fleet to 5,031 ships on the
water, according to data from
Lloyds List Intelligence.
Total capacity, however, rose
marginally from 17.12m teu
to 17.14m teu, reflecting the
increasing size of ships delivered.
Deliveries during the month
included the latest in Maersk
Lines Triple-E fleet, the 18,270
teu Magleby Maersk. Other
large vessels joining the world
fleet last month included
the 14,000 teu APL Merlion
and 13,360 teu Cosco Spain,
operated by APL and Coscon,
respectively.
Eight vessels were removed
from the fleet last month, all
but one being panamaxes.
While the majority were
vessels at the end of their
working life, two 17-year-
old vessels, the 4,545 teu
Source: Lloyds List Intelligence
Vessels laid-up 28 February 2014
Notes: Lloyds List Intelligence monitors reported and AIS movements of commercial vessels worldwide. This extract identies vessels with no recorded
movement in the past 25 days.
Inactive teu
size range
Owner operator Chartered in /unknown Total % total fleet
No of ships Teu No of ships Teu No of ships Teu
0-499 15 5,079 94 22,353 109 27,432 28.3%
500-999 12 7,979 57 41,290 69 49,269 8.9%
1,000-2,999 20 31,934 53 91,350 73 123,284 3.7%
3,000-4,999 9 38,223 35 146,087 44 184,310 4.8%
5,000-7,499 8 49,526 20 114,280 28 163,806 4.4%
7,500-9,999 - - 2 16,521 2 16,521 0.6%
10,000-12,999 - - 1 10,114 1 10,114 1.4%
13,000+ - - - - - - -
Total 64 132,741 262 441,995 326 574,736 3.4%
Vessels delivered February 2014
Vessel name Shipyard Teu Reefer
plugs
DWT Knots Beneficial owner Operator Deployment
Magleby Maersk Daewoo Shipbuilding & Marine
Engineering
18,270 600 194,417 23 A.P. Moller-Maersk Maersk Line Asia-Europe
APL Merlion Hyundai Samho Heavy Industries 14,000 150,936 Neptune Orient Lines
(NOL)
APL Asia-Europe
COSCO Spain Nantong COSCO KHI Ship
Engineering
13,360 700 152,860 25 China Ocean Shipping
(Cosco)
Cosco Container
Lines (Coscon)
Asia-Europe
Cap San Raphael Hyundai Heavy Industries (HHI) 9,700 2,100 124,461 21 Dr August Oetker KG Hamburg Sd
APL Miami Daewoo Shipbuilding & Marine
Engineering
9,200 700 112,000 23 Neptune Orient Lines
(NOL)
APL
Ever Lucent CSBC Corporation 8,000 105,000 24.5 Evergreen Marine Evergreen Marine Asia-Europe
Ever Lively Samsung Shipbuilding & Heavy
Industries
8,000 943 104,135 24.5 Evergreen Marine Evergreen Marine Middle East
Gulf/Indian
Subcontinent
-Asia
Alex Pasus Hanjin Heavy Industries &
Construction Company
5,400 650 62,292 Korea Marine
Transport Company
(KMTC Line)
Korea Marine
Transport Company
Limited (KMTC Line)
Cap Saray Shanghai Shipyard Company 4,800 600 57,500 21.5 Ship Finance
International
Hamburg Sd
Sainty Vigour Sainty Shipbuilding 1,070 13,800 18.3 Interglobal Marine
Agencies
DATA HUB
WORLD FLEET UPDATE
Pudong and the 4,024 teu
Hanjin Wilmington, were also
scrapped.
Broker reports indicate that
more panamax scrapping
is expected this year, with
Alpahliner forecasting a record
year for panamax breaking.
Ship Finance Internationals
acquisition of seven
panamaxes on long-term
charter to a leading owner
indicates there is still
money to be made out of
the sector, albeit these vessels
are reported to have a high
reefer capacity and are sold at
the expense of the vessels
original KG owner.
While no prices were
mentioned in the SFI
deal, prices reported for
older tonnage reported by
VesselsValue continued to fall.
The value of a five-year-old
4,250 teu panamax is down
14.6% to $23.9m, while a
10-year-old 4,000 teu vessel
is down a similar amount
on the year to $14.2m. The
only sector to see values
increase significantly was post-
panamax vessels, where the
value of a five-year-old 7,000
teu post-panamax ship is up
8% to $46.6m
One ray of light for the
beleaguered panamax sector
is the intra-Asia market, where
Alphaliner reports increased
demand as panamaxes offer
more efficiencies than the
traditional 1,000 teu-2,800 teu
vessels employed on regional
routes.
The continued weak rates
being achieved by lines,
despite attempts to force up
rates on key routes, have left
a large number of ships sitting
idle and removal of this excess
tonnage should help ease
pressure on owners.
Lloyds List Intelligence reports
326 inactive containerships on
the last day of February, up from
313 a month earlier. The new
total comprises 574,736 teu and
represents 3.4% of the world
fleet. While the majority of these
are small vessels in the feeder
to sub-panamax range, the
largest segment by capacity
remains panamaxes, where 44
vessels comprising 184,310
teu remain inactive.
The largest vessel listed in
the inactive fleet is 10,100
teu Hanjin Italy, which is being
repaired after it was involved
in a collision in late January.
An increasing number of
cancellations is also helping
keep fleet growth muted,
following decisions by Zim,
Ship Finance International and
Paragon, amongst others, to
cancel orders in the past month.
Nevertheless, these
cancellations and demolitions
have done little significant to
reduce the number of vessels
on the water, and as Maersk
Line chief executive Sren
Skou said in a recent interview,
lines must learn to exist in
an environment of excess
capacity for some time yet.
Maersk expects an
increase of up to 10% in the
containership fleet in 2014,
offset by vessel scrapping
and slow steaming, against
expected demand growth of
only 5%.
DATA HUB
WORLD FLEET UPDATE MORE ONLINE AT CONTAINERSHIPPING.COM
Valuations for post-panamax, panamax and handymax container vessels
Note: All values in $m
Age Capacity (teu) February 17,
2014 ($)
January 17, 2013
($)
Monthly change
($)
February 17, 2014
($)
Yearly change
($)
0 4,250 34.1 38.4 -4.3 38.8 -4.7
5 4,250 23.9 28.7 -4.8 28.0 -4.1
10 4,000 14.2 20.5 -6.3 16.6 -2.4
15 4,000 8.9 13.0 -4.1 9.6 -0.7
20 3,750 8.4 8.1 0.3 7.3 1.1
25 3,750 8.4 8.1 0.3 7.5 0.9
Panamax Source: Vesselsvalue.com
2014 ($)
January 17, 2013
($)
Monthly change
($)
February 17, 2014
($)
Yearly change
($)
0 1,400 18.5 18.2 0.3 20.4 -1.9
5 1,400 13.4 13.1 0.3 14.4 -1.0
10 1,400 8.8 8.4 0.4 8.6 0.2
15 1,400 5.2 4.9 0.3 4.6 0.6
20 1,400 3.4 3.3 0.1 3.0 0.4
25 1,400 3.5 3.3 0.2 3.1 0.4
Handymax Source: Vesselsvalue.com
Current and historical values for tankers, bulkers and containers.
Daily updated sales lists, vessel specications and ownership
information.
Data exports, valuation certicates, interactive charts and
automated alerts
2014 ($)
January 17, 2013
($)
Monthly change
($)
February 17, 2014
($)
Yearly change
($)
0 7,000 66.4 60.3 6.1 59.8 6.6
5 7,000 46.6 45.0 1.6 43.1 3.5
10 6,500 27.7 32.2 -4.5 25.6 2.1
15 5,500 13.5 20.3 -6.8 14.8 -1.3
20 4,500 9.3 9.4 -0.1 8.1 1.2
Post-panamax Source: Vesselsvalue.com
Vessel name Teu DWT Speed (knots) Config Year built Price ($m) Purchaser
Cap Salinas 4,800 56,300 21 Gearless 2014 43.5 Germany
HLL Atlantic 4,700 59,150 18 Gearless 2002 11.5 China
Pancon Challenge 1,064 16,544 19 Gearless 1998 4.5 Singapore
Vega Spinell 706 8,200 17 Gearless 2007 Undisclosed Greece
Vega Sonja 704 8,200 17 Gearless 2008 Undisclosed Greece
Vega Dolomit 704 8,200 17 Gearless 2007 Undisclosed Greece
Vega Zirkon 704 8,200 17 Gearless 2007 Undisclosed Greece
Vessels sale and purchase February 2014
Notes: C=cellular; GL=gearless; G=geared; NC=non-cellular; MPP=multipurpose; U/D=undisclosed Source: Braemar Seascope
Vessels demolished February 2014
Vessel name Built Teu Broken date Broken place Shipbreakers Previous Beneficial owner
Pudong 1997 4,545 04-Feb-14 Alang Indian Breakers Norddeutsche Vermogen
Holding
Mekol 1992 4,230 16-Feb-14 Alang Indian Breakers Ernst Komrowski
Reederei
Kyam 1991 4,224 05-Feb-14 Alang Indian Breakers Ernst Komrowski
Reederei
Hanjin Shanghai 1995 4,024 04-Feb-14 Alang Indian Breakers Hanjin Shipping
Hanjin Wilmington 1997 4,024 16-Feb-14 Alang Indian Breakers Hanjin Shipping
Yuan He 1994 3,764 20-Feb-14 Taizhou Chinese Breakers China Ocean Shipping
(Cosco)
Cashel 1991 3,604 03-Feb-14 Chittagong Bangladesh Breakers Ernst Komrowski
Reederei
Flippa C. 1991 1,158 18-Feb-14 Alang Indian Breakers Canbaz Denizcilik ve
Nakliyat
DATA HUB
ALLIANCES currently provide 42% of
weekly capacity on services from Asia to
North Europe, according to Lloyds List
Intelligence.
Adding in the prospective P3 Network,
as much as 96% of weekly capacity on the
trade lane could be made up of alliances,
depending on the P3s revised services.
The largest containerships in the world
are deployed on this route, particularly by
the P3 members. The expanding number
of orders for these larger ships will add
to overcapacity and limit deployment
opportunities for smaller ships, no matter
how many alliances are created.
Through slot charters and partnerships,
Maersk Line, CMA CGM and Mediterranean
Shipping Co combined provide 56% of the
current services on the Asia-North Europe
Alliances could dominate the Asia to North Europe route, but their
creation will not solve the overcapacity issue. Sarah Bennett reports
JOINING FORCES
25 services with 286 vessels
Average total weekly capacity is
257,000 teu
Most capacity on this route is made
up by 13,000-15,999 teu ships,
with 43% of total capacity
DATA HUB
trade lane. The G6 Alliance offers five
services with a nominal 55,000 teu average
weekly capacity.
The CKYH Alliance currently offers four
services, which from mid-April will increase to
six services after Evergreen joins the alliance
to form the CKYHE, comprising 43,000 teu.
Evergreens decision to join the CKYH
alliance on the Asia-Europe route is in
response to the impending P3 Network,
as CMA CGM currently uses slots on
Evergreens two Asia-North Europe services.
The Zim and China Shipping service AX1 is
the only service not including alliances or P3
members on the Asia-North Europe trade lane.
By the end of 2015, the global fleet over
16,000 teu will grow five-fold from 140,000
teu to 920,000 teu of capacity. These are
likely to be used on Asia-North Europe
services as ports in these regions are able to
handle containerships of this size.
Once the larger ships are brought into
service, smaller vessels will be squeezed out
to maintain sustainable service capacities.
However, volatile container volumes may strain
carriers deployment plans for the larger ships.
Cargo volumes on services from Asia-
North Europe route grew in 2013, according
to Container Trades Statistics. For January to
Maersk
Essen: one
of two ships
moved to
the AE2
service.
Photo:
Dietmar
Hasenpusch
DATA HUB
TRADE ROUTES
13,000-15,999 5,000-7,499
7,500-9,999
10,000-12,999 3,000-4,999
% of total Asia-North Europe (teu)
0
10
20
30
40
50
60
70
80
90
100
16,000+
7%
27%
15%
43%
Figure 1: Teu range proportion among
Asia-North Europe operators
TRADE ROUTE INTELLIGENCE
DATA HUB
TRADE ROUTES
November, compared to the same period in
2012, figures show a 2% increase westbound
from 8.1m teu to 8.3m teu and a 4% increase
eastbound from 4.1m teu to 4.3m teu.
Any change in container volumes puts
further pressure on carriers to maintain
sustainable service capacities.
Maersk Line deploys its largest ships on
this route and operates 50,000 teu per week.
Maersk Lines 18,000 teu capacity Triple-E
ships serve its AE10 service which offers
the highest average weekly capacity on this
route: 16,683 teu.
Currently, there are eight containerships with
more than 16,000 teu, all deployed on the Asia
to North Europe route. Maersk Line has fifteen
more Triple-E ships currently in build.
Excluding Maersk Line, five containerships
with more than 16,000 teu are due to be
delivered in 2014 and 21 ships of that size
during 2015.
The smallest vessels on this route are
safe at the moment as they serve areas
that cannot currently accommodate larger
vessels, such as CMA CGMs NEMO service
calling in Australia.
However, the mid-sized vessels on other
services are at risk and some have already
been deployed on other routes.
For example, the new 18,000 teu Madison
Maersk and Magleby Maersk were added to
the AE10 service in January and replaced
the 15,000 teu Emma Maersk and 13,000
teu Maersk Essen, which were moved onto
the AE2 service.
These replaced the 8,000 teu vessels Maersk
Taurus and Maersk Taikung and these are now
deployed on regional European services.
Ships that have not found other
deployment opportunities are being
returned to owners to be idled or scrapped.
One example is the eight-year-old 5,089
teu Wehr Hong Kong, previously named
Maersk Dellys, which was sent back to
its owners after being taken off Maersk
Lines and MSCs Asia to Australia service,
Boomerang/Wallaby, at the end of last year.
It has been idle at Singapore ever since.
Others have been scrapped, such as the
20-year-old 4,181 teu Hemol, previously
named Maersk Miami, which was scrapped
after being returned to its owner in January
2014.
We can expect the pace of demolitions to
increase once the expanded Panama Canal
opens. This will lead to more deployment
opportunities for the 5,101 teu to 13,000
teu sized ships, but fewer areas to deploy
panamax-sized ships.
The creation of alliances will lead to the
efficient deployment of the new larger ships,
but it creates another problem of the growing
overcapacity of older mid-sized tonnage.
0
30,000
60,000
90,000
120,000
150,000
Maersk, CMA CGM, MSC G6 Alliance CKYH Alliance
Figure 3: Alliance capacity on Asia-North Europe route
0 10,000 20,000 30,000 40,000 50,000
ANL Singapore
Zim
OOCL
HMM
UASC
Yang Ming
K Line
MOL
NYK
Hanjin Shipping
China Shipping
APL
COSCON
Evergreen Line
Hapag-Lloyd
MSC
CMA CGM
Maersk Line
Figure 2: Weekly operated teu on Asia-North Europe route
THE VIEW FROM THE BRIDGE
INSIGHT FROM THE CSUITE /ULRICH KRANICH
ULRICH Kranich has seen the best of times
and the worst of times for container shipping
during a career spanning four decades.
The bleakest period, he says,
undoubtedly followed the collapse
of Lehman Brothers, which sent cargo
volumes plunging in 2009, the first year-
on-year contraction in the the history of
containerisation.
A
L
L

C
H
A
N
G
E

A
T

H
A
P
A
G
L
L
O
Y
D
Box Club chairman and Hapag-Lloyd executive board member
Ulrich Kranich talks to Janet Porter about how container shipping is
changing as he prepares to retire after 40 years in the business
Since then, the industry has had a bumpy
period, struggling with low trade growth,
high bunker prices and the arrival of a
huge number of boxships. Many of these
were ordered by non-operating owners
without firm employment commitments
when times were better. Others were
commissioned more recently by lines keen
to acquire modern fuel-efficient tonnage,
with sophisticated electronics and engines
better-suited to slow-steaming. Hapag-
Lloyd is in the latter camp.
Together, these orders have undoubtedly
delayed supply and demand equilibrium by
a few years. Mr Kranich reckons the industry
crisis would have been over by 2012
without the speculative element.
But despite the continuing imbalance,
Kranich: The G6 lines
will need to have
18,000 teu ships
sooner or later.
NEXT MONTH:
ALE?????????? ? ?? ? ?? ? ?? ? ?? ?PE
Mr Kranich is now feeling quite positive
about the future.
That partly reflects his belief that the
tonnage excess is not nearly as bad as the
20% often cited.
When measuring supply in terms of
what can really be carried, rather than the
theoretical nominal capacity, Mr Kranich
estimates the ship surplus to be 10% or less.
Against that backdrop, Mr Kranich thinks
there is a very good chance of having
some form of balance in terms of global
supply and demand within a couple of
years. Indeed, there were times last year
when ships were full.
With the orderbook down to a near-
normal 21% of the existing fleet, Mr
Kranich is quietly confident that the worst
is definitely over, with the industry now
close to being able to manage capacity
again after the instability of recent years.
Helping the situation is the fact that
speculative shipowners who have caused
so much havoc, many of them German KG
investors, would no longer be able to raise
sufficient equity to start ordering again.
But others will be returning to the
shipyards, with Mr Kranich hinting that
the G6 Alliance, of which Hapag-Lloyd is a
member, will order 18,000 teu ships so as
to compete with the planned P3 Network
of Maersk Line, Mediterranean Shipping Co
and CMA CGM.
The G6 lines will need to have 18,000
teu ships sooner or later, he predicts.
With about half the cargo that the P3
carriers move in the Asia-Europe trades,
the G6 lines will not require so many
ultra-large boxships. That will reduce the
investment per member line.
One loop of 18,000 teu ships would
represent a pair of vessels per member,
while two loops would need four apiece.
At the moment, ships of that capacity
cost between $130m and $150m each,
depending on specifications.
The capital investment would not be a
deterrent, says Mr Kranich.
Although no firm decision has been
taken yet, Mr Kranich says every member
line must be thinking about 18,000
teu ships, with the G6 group likely to
have at least one loop of that size vessel
in operation within three years, if the
partners agree to upgrade.
Despite improving trade prospects, the
financial performance of global carriers is
likely to remain uneven.
Speaking to Containerisation
International as lines started to post
their 2013 earnings after a very mixed
performance in the first three quarters of
the year, Mr Kranich attributed the wide
range of operating margins in part to
newbuilding delivery schedules, and the
different prices paid for new ships. That
makes it hard to compare results during
this transition phase.
But pricing also needs to be tackled,
with many lines still unable to calculate
their costs correctly. Having relied for so
long on conferences to set freight rates,
some are not yet fully adjusted to the new
regulatory environment.
The whole industry has been through
a process of extreme change, says Mr
Kranich, and now has to learn the word
profit again. In his opinion, decent returns
will only be achieved through centralised
pricing and with sophisticated yield
management systems that can calculate
the profit of each leg of a voyage, taking
into account all elements including costs
such as empty container repositioning,
feedering and inland transport.
Hapag-Lloyd has always prided itself on
its IT systems, but it is clear from freight
rates charged by some competitors that
many do not know their costs, claims
Mr Kranich. That leaves those with good
HAPAGLLOYD BRINGS TAKEOVER
EXPERIENCE TO MERGER TALKS
Positive lessons learned from 2005 acquisition of CP Ships
MOVE fast is the advice Ulrich
Kranich has for any company involved
in a takeover, writes Janet Porter.
Hapag-Lloyd has plenty of
experience of large scale acquisitions,
most recently buying CP Ships in
2005, the same year that Maersk
swallowed up P&O Nedlloyd, which
itself had been formed from a merger
of P&O Containers and Royal Nedlloyd
a few years earlier.
All three offer lessons for businesses
considering similar expansion moves,
with P&O Nedlloyd providing an
example of what not to do. With equal
shares in the new combination, neither
shareholder was in charge, with joint
chairmen at one stage.
One party has to lead an
integration, says Mr Kranich. You
cannot have a 50-50 partnership, as it
is then very difficult to integrate the
two operations.
Maersks takeover of P&O Nedlloyd
also ran into problems as the Danish
line at first tried to keep two IT
systems, having only just introduced
a new one of its own, which added to
the software chaos that ensued.
Failed attempts to combine Hapag-
Lloyd and Hamburg Sd are thought to
have collapsed over which side would
be in overall control, whereas current
negotiations with Chiles CSAV,
still underway at the time of going
to press, would leave the Chilean
line very much the junior partner,
assuming there is a positive outcome.
In any takeover process, it is
essential to keep customers happy,
says Mr Kranich, and that means
keeping personnel motivated.
While some CP Ships staff at the
time of the takeover were disgruntled,
Hapag-Lloyd felt it was vital to protect
its corporate culture and thinking, and
to have a single identity.
From the moment we merged, all
[additional staff] were Hapag-Lloyd
employees, said Mr Kranich, with
the newcomers having to adapt to the
ways of the German line.
Crucially, the enlarged group had
just one IT system from the start,
with CP Ships technology shelved
straightaway.
Hapag-Lloyd set up a 300-strong
team to act as IT trainers for the new
workforce
The overriding message from
Mr Kranich is to do it fast, even if
you make some small mistakes,
rather than drag out the whole
amalgamation process.
yield management processes with little
choice at times but to follow the market
rather than lose cargo, and just ensure that
variable costs are covered.
Overall, though, he says carrier behaviour
is changing for the better as lines gradually
move away from old-style conference
thinking, and work more closely with
customers on different pricing packages.
Mr Kranich joined Hapag-Lloyd in 1975
and was appointed managing director
of Hapag-Lloyd Container Line in 1997,
becoming a member of the executive board
in 2006. He will retire at the end of June,
when executive board chairman Michael
Behrendt will also step down, before joining
the supervisory board in a years time.
By then, another milestone may have
been reached in Hapag-Lloyds history, a
move that could elevate the German line to
number four in the world if current merger
talks with Chiles CSAV are successful.
Interviewed during the due diligence
process, Mr Kranich was unable to discuss
the proposed tie-up, but admitted he had
not foreseen that European lines would
become so dominant.
A combination of fierce competition and
no state support may have forced them to
be far more cost-conscious and efficient
than some of the big Asian carriers, he says.
Although a less familiar face in
shipping circles than many of his peers,
Mr Kranich is regarded by those who
have worked with him as one of the most
knowledgeable men in the business, with
a real grasp of both the macro and micro
sides of the industry.
Hes a thinker, said one business
associate.
The high esteem in which he is held
by other industry bosses was underlined
two years ago when he was elected
chaiman of the exclusive Box Club, a
position only held by six others since the
association was set up by former Hapag-
Lloyd chairman Hans Jakob Kruse in the
1970s. With his pending retirement, Mr
Kranich will soon be handing over to a new
chairman, probably in March.
So as he prepares to leave the company
he joined almost 40 years ago, what are his
thoughts about future industry develoments
and trends? His answer is perhaps a little
surprising. At a time when many lines
are keen to open up new routes and find
niche markets ahead of the competion, Mr
Kranich insists that global carriers have to
concentrate on the traditional big trades
which have the volumes.
That is where you make your money,
he says.
The Asia-Europe trade may have been
difficult in recent years, but over time it
has been the outstanding performer.
TWICE a year, the heads of the worlds top
container lines get together to discuss
matters of mutual interest, with the
exception of any talk about commercial
issues such as freight rates or fleet
deployment that would be in breach of
antitrust rules, writes Janet Porter.
UIrich Kranich is the current chairman
of the International Council of
Containership Operators, better known
as the Box Club, which was set up by one
of his predecessors nearly 40 years ago.
Former Hapag-Lloyd chairman
Hans Jakob Kruse, who died in
February at the age of 84, felt it was
important for those in charge of the
leading ocean carriers to have the
opportunity to meet on a regular
basis, away from public gaze.
Known throughout the industry as
Jack, Mr Kruse was probably the most
high profile personality in container
shipping throughout the 1970s and
1980s, and remained active in the
business after he stepped down
as chairman of Germanys largest
shipping company in 1993.
He founded the Box Club in the
mid-1970s, and although numbers
attending have fallen since then
the biannual meetings in March and
September remain a firm fixture on
the maritime calendar. The event is
hosted by a different line each time.
Membership is restricted to the
presidents, chairmen and chief
executives of the worlds biggest
container lines, and the Box Club still
likes to keep a very low profile.
JACK KRUSE REMEMBERED
Once he steps down, Mr Kranich says he
has no plans to look for another industry
position. Having had little time for himself
in recent years, he admits he is now looking
forward to having a private life again.
On the work front, I am not looking for
any more challenges, he laughs.
Any matters that the group wants
to pursue further are delegated to the
World Shipping Council, the body set
up by the Box Club in 2000 to represent
industry interests in Washington.
Hapag-Lloyd has been closely
associated with the Box Club from
the beginning, with the German line
providing three of its seven chairmen.
Executive board member Adolf
Adrion was in the chair for a few years
until his retirement in 2008.
Mr Kruse was at the forefront
of container shipping during the
industrys formative years as lines
developed from largely regionally-
focused businesses to global
operators.
Mr Kranich, the seventh chairman,
believes the Box Club still plays an
important role, giving industry leaders
a forum in which to exchange views on
non-competitive issues such as safety,
regulation, infrastructure, emissions
and more recently piracy.
A new chairman will be elected
at the March meeting to be hosted
by United Arab Shipping Cos chief
executive Jorn Hinge in Dubai.
Box Club is the legacy
of former Hapag-Lloyd
chairman who died in
February
Kruse: founder of the Box Club died in
February at the age of 84.
Port of partnerships
logistics
value
meets
Welcome to the port of Amsterdam. Where
the customer meets the best logistical
experts. The experts who provide you with
tailor made solutions. Here all logistic
facilities are available for your logistic
requests; an excellent one-stop-shipping
location. The port of Amsterdam has very
good multimodal hinterland connections by
sea, inland waterways, rail, road and air. And
all congestion free! The port of Amsterdam
is located just 15 minutes from Amsterdams
city centre and Amsterdam Airport Schiphol.
A perfect seaport-airport hub. Want to know
more about the port of Amsterdam where
all kinds of transports meet? Go to
www.portofamsterdam.com.
COMPANIA Sud Americana de Vapores
ranks among the worlds oldest shipping
lines, able to trace its history as far back as
1872 following the amalgamation of two
local lines.
Its local Chilean rival CCNI only dates
back to 1930.
Inevitably, CSAV has been through
many turbulent times. In its early years, it
operated along the Chilean coast linking
to the US and Panama. Principal cargoes
were fruit and minerals from the abundant
natural resources of Chile.
Its main competitor was the UK line
Pacific Steam Navigation, which from the
1840s operated numerous services along
the Chilean coast through to Panama,
initially with sole rights granted by the
Chilean government.
Failing to meet operational targets, this
monopoly was broken, leading to the
development of local operators.
The First World War offered CSAV the
opportunity to break PSNCs hold on the
South American west coast as the latters
vessels were diverted to war work.
The Panama Canal opened in 1914,
eliminating the hazardous passage around
Cape Horn and giving access to the US east
coast but also to competition, particularly
from Grace Line.
The Great Depression in the 1930s
reduced demand for the key nitrate and
copper cargoes, led to financial problems and
severely damaged the national economy.
However, CSAV survived and embraced
containerisation.
More recently, after graduating to the
ranks of the worlds top lines with services
to the US, South America, Europe, Asia and
Oceania, it has undergone an enforced
slimming-down and is now engaged in talks
with Hapag-Lloyd regarding some form
of association, most likely a merger of its
container activities with those of the German
line. CSAV shareholders will meet on March
21 to vote on the merger proposal.
From a position among the top 10 global
carriers in 2009-2010, CSAV, including
CSAV Norasia, has fallen to 19th, according
to Lloyds List Intelligence.
It now deploys a container fleet of 55
vessels with a low average age, of which
around 20% are owned. Total capacity
comes to 279,000 teu in service and
71,600 teu on order.
The extent of its global reach has been
reduced, although it still serves most of
the major global economies and maintains
a high profile where it operates.
With its bias towards north-south trades,
it offers the benefit of diversification to a
mainly east-west carrier.
Over the last 10-15 years, CSAV has
been something of a commercial football
being kicked around between different
family companies that dominate much of
Chiles commercial life.
The present majority shareholders
belong to the Luksic dynasty, Chiles richest
family, rated perhaps the 30th richest in the
world with a net worth of some $18bn.
The family fortune was made when,
in the 1980s, they invested in the
Antofagasta Railway company turning it
into the London-listed copper mining giant
valued at around $15bn, of which the
family control 65%.
Other Luksic investments include 59%
of Banco de Chile and interests in brewing
and packaging through the conglomerate
Quinenco.
A smaller holding in CSAV of some 10%
is held by interests associated with the
Claro family through Marinsa.
The timing of the Luksic investment
in CSAV in 2011 looked then to be
something of a gamble.
There appeared to be some recovery in
global container shipping, and their reading
of the situation must have been that the
bottom of the cycle had been reached.
Commentators at the time suggested
the move was ill-timed, and so it proved.
Quinenco, a Chilean-quoted Luksic
company, saw its share price slump after
taking its holding in CSAV, and CSAV itself
has fallen consistently ever since and is
now valued at around $650m.
As Chilean carrier CSAV and German carrier Hapag-Lloyd negotiate to merge, both
have much to gain and to lose, writes Alastair Hill
MARRIAGE OF CONVENIENCE
ANALYSIS/CONSOLIDATION
CARRIERS
CSAV could be the perfect partner for Hapag-
Lloyd despite its parlous financial situation.
There have been stock issues to which
Luksics contribution has exceeded $1bn
but CSAVs performance has shown that
this was less an investment, more the
throwing of a lifebelt to the sinking line.
The effect of the share price falls on
the prospects of striking a deal with
Hapag-Lloyd must make the valuation
and allocation of value between the two
parties something of a dilemma.
CSAVs share price has fallen steadily
after a brief rally in early December 2013
at the time of the first announcements
regarding the Hapag-Lloyd development,
so the uncertainties in the concept will
have grown.
A brief look at CSAVs figures reveals the
amounts of the various capital injections
made and the dramatic reduction in
activity since the peak year of 2010.
Additionally, the negative working
capital position and negative reserves
demonstrate the struggle that the line has
had to survive and shows how critical the
need for additional capital has been.
Annualised 2013 revenues are now
around 40% less than the peak in
2010, and since then there have been
accumulated losses approaching an
astonishing $1.7bn.
Along with other carriers, CSAV will
have welcomed even the limited effect of
reductions in bunker prices in 2013.
There has been negative working capital
since 2011 and capital increases total
nearly $1.5bn since 2010 despite there
being, unsurprisingly, little movement in
underlying assets.
The commercial imperative for CSAV is
easy to see; some form of reorganisation
had to be made to ensure survival.
For Hapag-Lloyd the value is less clear but
size enables a better competitive position
vis--vis the P3 vessel-sharing agreement
proposal between Maersk, Mediterranean
Shipping Co and CMA CGM, and additional
trades and stronger positions on existing
ones should bring revenue benefits.
Given the failure of the earlier talks
with compatriot Hamburg Sd, the CSAV
proposal meets the declared objective of
Hapag-Lloyds management to seek out a
merger in an overprovided market place,
but is CSAV the ideal partner?
Perhaps it is easier to see when looking
at the other lines of sufficient size to make a
difference that there are few other prospects.
Too big a partner could threaten the
existence of a Hamburg-based line, in just
the same way as any Far East connection
would also threaten the fundamental
objective of European base for Hapag-
Lloyd, which must be a primary objective
of the present major shareholders.
This pretty much left only CSAV, despite
its parlous financial situation.
There should be service duplications
to eliminate and undoubtedly staff
reductions, but where will they bite?
There is the interesting precedent in that
the 1970s merger between NordDeutscher
Lloyd and Hapag led to joint head offices
in Bremen and Hamburg before the latter
eventually prevailed.
This will not be repeated, but cost levels
in Chile must compare favourably with
those of Hamburg, which could lead to
some functions being based in Valparaiso.
Mergers seldom bring the benefits
proclaimed by the participants so there
will be an enormous task ahead to at least
realise some of the more obvious.
Failure to secure this deal, after
false starts with NOL in 2008 and then
Hamburg Sd, will throw into question the
independent future of Hapag-Lloyd and
perhaps even the survival of CSAV; the
coming months of due diligence will be
critical and the outcome will be eagerly
watched by financiers, commentators and
competitors alike.
CSAV has undoubtedly been on the
brink of bankruptcy, so the arrival of a
powerful prospective partner has not
come a moment too late.
Despite its fabulous wealth, the Luksic
family will still have been stung by the extent
of the additional funding it has had to provide.
According to the documents filed by
CSAV regarding the position with Hapag-
Lloyd, CSAV will commit its container
operations to a merged organisation
in return for 30% of the equity, will be
its largest shareholder and, with the
participation of Kuhne Maritime and the
City of Hamburg, will hold a total 75.5% of
the new entity.
There will be an initial capital raising
of 370m ($506m), to which CSAV must
subscribe 259m within 100 days of
conclusion of the transaction, giving CSAV
a 34% share.
A further 370m will be raised within
one year as part of a listing of Hapag-
Lloyd, a declared aim of Tui, holder of 22%
of the company.
Separately, CSAV has to raise $200m to
complete the financing of its new 9,300
teu vessels.
Post-merger revenues are expected to
reach $12bn and the combined fleet will
total some 200 vessels of which CSAV will
provide around 25% giving them, in fourth
position, a global share of some 5.6%,
capacity of around 1m teu and annual
liftings of some 7.5m teu. This is still far
short of the top three.
Annual savings through the combination
are expected to reach $300m.
Alastair Hill is a qualified accountant with
over 30 years experience in the container
shipping and wider transport industry.
ANALYSIS/CONSOLIDATION
CARRIERS
Table 1: CSAV revenue and profitability 2010 to Q3 2013 ($m)
9 months to
Q3 2013
2012 2011 2010
Revenue $2,468 $3,432 $4,796 $5,215
Pre-tax profit -$134 -$191 -$1,107 $206
Table 2: CSAV balance sheet 2010-Q3 2013 ($m)
Q3 2013 2012 2011 2010
Cash $250 $212 $175 $524
Other current assets $386 $441 $680 $891
Current liabilities -$754 -$749 -$1,547 -$958
Net working capital -$118 -$96 -$692 $457
Fixed assets $1,202 $1,308 $1,579 $1,242
Other assets $493 $521 $745 $560
Other liabilities -$491 -$868 -$1,028 -$872
Net assets $1,086 $865 $604 $1,387
Share capital $2,632 $2,305 $1,692 $1,172
Other reserves -$1,546 -$1,440 -$1,088 $215
www.contshipitalia.com
One flag. One team. One soul.
Make the difference.
Cagliari
Salerno
Gioia Tauro
Ravenna
La Spezia
Milano
Milano, La Spezia, Cagliari, Ravenna,
Gi oia Tauro, Salerno and Tangier.
Your terminal operator.
C
M
Y
CM
MY
CY
CMY
K
Pagina CS istituz 185x135.pdf 1 14/03/12 19:40
WERE MAKING
LOGISTICS LOGICAL
SEE HOW MUCH YOU COULD SAVE
WITH OUR SMART CALCULATOR
visit www.pdportcentriclogistics.co.uk/benefit-calculator
or to find out more about our portcentric logistics solutions call 0800 111 4071
P
D
P
O
R
T
C
E
N
T
R
IC
LO
G
IS
T
IC
S

NEW
EVENT
Your gateway to Africa, Europe & the Americas
10-11 December 2014 | The Auditorium | Santa Cruz de Tenerife
3
2-day conference
3
Ice breaker drinks reception
Host Port
3
Networking programme
3
Port tour
www.toc-marketbrieng.com
3
Exhibit area
3
Closing gala dinner
THE worlds top 30 container ports
continued to show creditable growth in
2013, despite fears that red ink would
flood the Excel spreadsheet.
Overall, the top 30 box ports in our
survey allowing for estimates where
year end data was not available
recorded a 3.3% rise over 2012 by
handling 347.5m teu, an average growth in
line with industry forecasts.
For 2014, Drewry has forecast a 4.3%
increase in global box port throughputs.
But within that 2013 brush stroke
number for the top 30 last year, there were
a range of spectacular rises and some
unfortunate declines.
There were few surprises among the
premier league of the leading box hubs,
as judged by teu equivalents handled.
Shanghai retained its position as the top
global container port in 2013 by notching
a 3.4% increase in volumes over 2012 to
33.6m teu. It outperformed four of the top
10 ports in terms of percentage rises, and
met port managements own targets.
The top Chinese gateway, strategically
located at the mouth of the Yangtze River,
averaged just one blip per quarter in
terms of a percentage decline but the
powerhouse port overcame this with
consistent overall rises in each three
month period.
It was reported by Lloyds List that
port operator Shanghai International Port
P
h
o
t
o
:

B
l
o
o
m
b
e
r
g
Top 30 Ports 2013
Country Port 2013 teu 2013 % +/- 2013 teu +/- 2012 teu 2011 teu
China Shanghai 33,639,500 3.4% 1,110,500 32,529,000 31,739,000
Singapore Singapore 32,578,300 2.9% 928,900 31,649,400 29,937,700
China Shenzhen 23,278,000 1.5% 337,870 22,940,130 22,570,800
China Hong Kong 22,288,000 -3.6% -829,000 23,117,000 24,384,000
South Korea Busan 17,680,000 3.8% 639,433 17,040,567 16,184,706
China Ningbo 16,770,000 7.0% 1,100,000 15,670,000 14,510,000
China Qingdao 15,520,000 7.0% 1,017,000 14,503,000 13,020,010
China Guangzhou 15,300,000 3.8% 556,400 14,743,600 14,260,040
UAE Dubai 13,641,000 2.7% 361,000 13,280,000 13,000,000
China Tianjin 13,000,000 5.7% 700,000 12,300,000 11,580,760
Netherlands Rotterdam 11,621,249 -2.1% -244,667 11,865,916 11,876,900
Malaysia Port Klang 10,350,409 3.5% 348,914 10,001,495 9,603,926
Taiwan Kaohsiung 9,937,718 1.6% 156,497 9,781,221 9,636,289
China Dalian 9,912,000 23.0% 1,851,600 8,060,400 6,400,030
Germany Hamburg 9,300,000 4.6% 408,440 8,891,560 9,014,165
Belgium Antwerp 8,578,269 -0.7% -56,900 8,635,169 8,664,243
China Xiamen 8,008,000 11.2% 806,300 7,201,700 6,450,500
US Los Angeles 7,868,579 -2.6% -209,135 8,077,714 7,940,510
Malaysia Port Tanjung
Pelepas
7,620,000 -1.0% -80,000 7,700,000 7,520,000
US Long Beach 6,730,573 11.3% 684,911 6,045,662 6,061,085
Indonesia Tanjung Priok* 6,500,000 4.8% 300,000 6,200,000 5,649,119
Thailand Laem Chabang 6,041,476 1.9% 115,039 5,926,437 5,731,063
Germany Bremen/
Bremerhaven
5,809,455 -4.7% -286,318 6,095,773 5,925,487
Vietnam Ho Chi Minh
City
5,501,710 8.4% 425,757 5,075,953 4,814,000
US New York/
New Jersey*
5,490,000 -0.7% -39,909 5,529,909 5,503,486
China Lianyungang 5,480,000 9.2% 460,000 5,020,000 4,850,190
China Yingkou 5,301,000 9.3% 450,000 4,851,000 4,030,000
Japan Tokyo* 4,900,000 3.1% 148,347 4,751,653 4,639,664
Saudi Arabia Jeddah 4,561,288 -3.8% -177,935 4,739,223 4,018,764
Spain Algeciras 4,336,459 5.5% 224,610 4,111,849 3,602,631
Total 347,542,985 3.3% 11,207,654 336,335,331 323,119,068
Source: Port authorities, government ministries, terminal operators *Estimated
TOP PORTS/UPDATE
PORTS
PORTS SEIZE GROWTH
OPPORTUNITIES
Leading box hubs show creditable rises, writes Roger Hailey
Group expects throughputs at the East
China Sea gateway to plateau at 3%, as
Chinese exports slow.
Singapores box cluster essentially
the PSA Group terminals remained
in second spot with 32.6m teu, a 2.9%
increase over prior year but lower than
Shanghai.
PSA Group chief executive Tan Chong
Meng said: 2013 has been an exciting
and challenging year for PSA. The group
invested in and upgraded our facilities and
equipment, stretched ourselves to handle
ever larger mega ships, and exceeded the
exacting demands our customers have
placed on us.
He added: For 2014, PSA will continue
to upgrade our terminals globally, and
make suitable investments in new growth
markets and in our existing portfolio, as we
have done last year.
When compared with the up-and-
coming (mainly Chinese) ports, these
annual increases for the top pairing seem
modest, but more likely reflect high
utilisation rates, which restrict the capacity
for spectacular growth.
Chinas Shenzhen continued its
relentless rise handling 23.3m teu in
2013 to be the number three box port as
it overtook Hong Kong but Shenzhens
annual throughput versus 2012 was up
only 1.5%, reflecting a sluggish southern
China export drive.
It was still enough to push Hong Kong
down to fourth place as the Pearl River
Delta hub recorded a 3.6% decline the
third largest fall among the top 30 to
reach 22.3m teu, nearly 1m teu behind
Shenzhen.
Shenzhen has suggested setting
up a port complex with Hong Kong,
splitting cargo according to each others
competitive edges, it was reported by
Lloyds List.
Hong Kong provides higher-end
services with higher charges, while both
South Koreas Busan port complex was
in fifth place globally, with a 3.8% rise to
17.7m teu for a hub that has traditionally
served as a transhipment port to China,
bypassing the busy ports in Asias number
one economy.
Busan boasts 221 Asian routes,
accounting for 60% of its total route
network, thanks to the increase in intra-
Asia trade.
Dubais Jebel Ali is the sole non-
Asian port in the top ten. As the flagship
transhipment hub in the Middle East for
Dubai-based terminals group DP World,
Jebel Ali again came in at number nine
with a 2.7% rise to 13.6m teu.
The 1m teu expansion of Jebel Alis
Terminal 2 contributed to that record
result, and this year DP World will add 4m
teu of new capacity at Terminal 3.
Dubai may still cast a glance over its
shoulder to monitor tenth placed Tianjin,
which notched up a 5.7% increase to put
it just 600,000 teu behind the UAE port.
In northern Europe, Dutch port
Rotterdam was still the regions number
one container hub despite a 2.1% fall
in box volumes to 11.6m teu, a figure
that saw its global ranking unchanged at
eleventh.
The poor European economy was
partly to blame for the Dutch hubs fall
in container volumes. Another factor was
services and handling fees offered by
Shenzhen are lower than those in Hong
Kong, the Transport Commission of
Shenzhen Municipality said in a statement
on the Shenzhen Ports Association
website.
Part of the reason for that mooted
cooperation is that Shanghai and
Singapore are now more than 9m teu
ahead of Shenzhen, a greater margin than
the 7m teu in 2012, when Hong Kong still
held the number three slot.
There are seven Chinese ports (including
Hong Kong) in the top ten global ports for
2013, together handling 139.8m teu, an
increase of 2.9% year on year.
The combined eleven Chinese ports in
the top 30 handled 168.5m teu, up from
160.9m teu in 2012, an improvement
helped by significant rises for Dalian
(23%), Xiamen (11.2%), Lianyungang
(9.2%) and Yingkou (9.3%).
Top 10 Chinese ports 2013
Port 2013 teu 2013 %+/- 2013 teu +/- 2012 teu 2011 teu
Shanghai 33,639,500 3.4% 1,110,500 32,529,000 31,739,000
Shenzhen 23,278,000 1.5% 337,870 22,940,130 22,570,800
Hong Kong 22,288,000 -3.6% -829,000 23,117,000 24,384,000
Ningbo 16,770,000 7.0% 1,100,000 15,670,000 14,510,000
Qingdao 15,520,000 7.0% 1,017,000 14,503,000 13,020,010
Guangzhou 15,300,000 3.8% 556,400 14,743,600 14,260,040
Tianjin 13,000,000 5.7% 700,000 12,300,000 11,580,760
Dalian 9,912,000 23.0% 1,851,600 8,060,400 6,400,030
Xiamen 8,008,000 11.2% 806,300 7,201,700 6,450,500
Lianyungang 5,480,000 9.2% 460,000 5,020,000 4,850,190
Total 163,195,500 4.6% 7,110,670 156,084,830 149,765,330
Source: Port authorities, government ministries, terminal operators
Top 5 Asian ports 2013 (excluding China)
Singapore Singapore 32,578,300 2.9% 928,900 31,649,400 29,937,700
South Korea Busan 17,680,000 3.8% 639,433 17,040,567 16,184,706
Malaysia Port Klang 10,350,409 3.5% 348,914 10,001,495 9,603,926
Taiwan Kaohsiung 9,937,718 1.6% 156,497 9,781,221 9,636,289
Malaysia Port Tanjung
Pelepas
7,620,000 -1.0% -80,000 7,700,000 7,520,000
Total 78,166,427 2.6% 1,993,744 76,172,683 72,882,621
Top 5 North European ports 2013
Netherlands Rotterdam 11,621,249 -2.1% -244,667 11,865,916 11,876,900
Germany Hamburg 9,300,000 4.6% 408,440 8,891,560 9,014,165
Belgium Antwerp 8,578,269 -0.7% -56,900 8,635,169 8,664,243
Germany Bremen/
Bremerhaven
5,809,455 -4.7% -286,318 6,095,773 5,925,487
UK Felixstowe* 3,700,000 0.0% 0 3,700,000 3,400,000
Total 39,008,973 -0.5% -179,445 39,188,418 38,880,795
TOP PORTS/UPDATE
PORTS
Top 10 US ports 2013
Port 2013 teu 2013 % +/- 2013 teu +/- 2012 teu 2011 teu
Los Angeles 7,868,579 -2.6% -209,135 8,077,714 7,940,510
Long Beach 6,730,573 11.3% 684,911 6,045,662 6,061,085
New York/New
Jersey*
5,490,000 -0.7% -39,909 5,529,909 5,503,486
Savannah 3,033,618 2.3% 67,405 2,966,213 2,944,684
Oakland 2,346,528 0.1% 2,136 2,344,392 2,342,526
Virginia (Hampton
Roads)
2,223,532 5.6% 117,646 2,105,886 1,918,029
Houston 1,950,071 0.8% 15,226 1,934,845 1,867,708
Tacoma 1,891,570 10.5% 180,280 1,711,290 1,476,153
Charleston 1,601,367 5.7% 86,780 1,514,587 1,381,352
Seattle 1,574,994 -16.5% -310,686 1,885,680 2,049,733
Total 34,710,832 1.7% 594,654 34,116,178 33,485,266
TOP PORTS/UPDATE
PORTS
NO CHANGE AT THE TOP FOR US PORTS
But Long Beach is gaining ground on rival Los Angeles
WEST coast rivals and neighbours Los
Angeles and Long Beach remained the
number one and two US container ports,
with east coast gateway New York in
third place, all roles unchanged from
2012, writes Roger Hailey.
The top ten US box ports saw a 1.7%
rise in volumes to 34.7m teu in 2013,
representing a wide range of full year
results, with Long Beach achieving the
highest annual increase and Seattle the
greatest decline.
For the top 20 North American Free
Trade Agreement hubs, including those
in Canada, the US and Mexico, the total
was 47m teu, an increase of just 1.6%
over 2012. See the full data online now.
Los Angeles maintained its lead US
role with 7.8m teu in 2013, a 2.6%
decrease compared with positive
growth averaging 1.6% for the two
prior years.
The top US container gateway
managed box volume increases in only
four of the 12 months in 2013, with
year-end throughput rallies of 17.3%
and 11.1% in November and December,
halving what had been a cumulative
5.4% decline up until October.
The December figures for Los
Angeles were helped by an 8% rise
in import containers due to inventory
stocking for the Chinese new year.
Port bosses at Los Angeles have
acted to stem the seeping of box
business to Long Beach, by introducing
an Ocean Common Carrier Incentive
Program to reward shipping lines that
bring new container business to the
port in 2014.
Under the incentive scheme, an ocean
carrier will earn $5 per teu equivalent
for each incremental container it ships
through Los Angeles in calendar year
2014. The rate jumps to $15 per teu for
all teus, if a carriers container volume
grows by 100,000 or more units for the
same 12-month period.
The baseline for measuring increased
volume will be the total number of
containers each carrier moved through
the port in calendar year 2013. Carriers
will receive their incentive in a lump-
sum payment in early 2015. If effective,
the scheme may be extended into 2015.
Los Angeles commented: While
transpacific trade is projected to grow,
international shipping is undergoing
sweeping change. With larger vessels
and increased global shipping capacity,
carriers are revisiting the traditional
business model of calling at a dedicated
marine terminal.
And so Long Beach continued to gain
ground, with a 11.3% rise to 6.7m teu,
a volume rise that sees a remarkable
turnaround from the 0.3% decline in
2012 versus 2011.
There were no red ink percentages in
the monthly box roll call at Long Beach,
although the pace did slow down in the
final quarter, up by 5% compared with
double-digit increase in the prior three
quarters, with January to March seeing a
18.9% year on year surge.
That reflects terminal investments in
Long Beach by Mediterranean Shipping
Co and CMA CGM in early 2013, which
resulted in service shifts.
On the east coast, New York remained
the leading gateway, with an estimated
full year 5.5m teu, which would
represent a 0.7% decline.
The west coast ports, despite
reservations about the effect of an
expanded Panama Canal, delayed or not,
are still attracting major investments.
January this year saw Canadian
investment group Brookfield announce
plans to take a 49% stake in the west
coast terminal assets of MOL, with the
deal set to complete by the second
quarter of 2014. MOLs TraPac facility is
comprised of three gateway container
terminals in Los Angeles and Oakland
which together handled 900,000 teu in
2013 and which have surplus capacity.
The Los Angeles terminal is
undergoing $185m modernisation to
double its capacity and provide one of
the most automated terminals in North
America upon completion in 2016.
Also on the west coast, Tacoma saw a
10.5% rise in 2013 to 1.9m teu, while
Puget Sound neighbour Seattle fell
16.5% to just under 1.6m teu.
Seattle and Tacoma have filed
a discussion agreement with the
Federal Maritime Commission that
will allow both ports to gather
and share information to identify
potential options for responding to
unprecedented industry pressures.
A joint statement said: The ports
of Seattle and Tacoma face fierce
competition from ports throughout
North America and must adjust to shifts
in the global maritime industry.
Global shipping lines, continuing
to lose millions of dollars each year,
are investing in larger vessels with
more capacity, sharing those vessels,
consolidating terminals and reducing
the number of ports at which they call.
These discussions are aimed at
increasing our collective market share
and generating more container cargo.
PORTS
TOP PORTS /UPDATE
Germanys Hamburg, which won back
feeder traffic and so pushed ahead by an
estimated 4.6% to 9.3m teu last year, the
only port among the top five in northern
Europe to post an increase.
Rotterdam Port Authority stated: Cargo
shifted to Hamburg, ports in Scandinavia
and the Baltic were more frequently served
directly by vessels from the Far East, and
Rotterdam suffered capacity problems
during peak volumes. Finally, industrial
unrest caused vessels to choose other ports.
Hamburg port authority said: The return
to growth was primarily due to the fact that
container traffic with Asia picked up again
last year, especially with China, Port of
Hamburgs most important trading partner.
In addition, traffic with the Baltic Sea
region also grew by 10.1%. The Baltic, with
the main trading partners Russia, Finland,
Poland and Sweden, is of enormous
importance for the container traffic at the
Port of Hamburg.
The fact that the Port of Hamburg
managed to achieve such a good result
in spite of the ship-handling problems
experienced at the Kiel Canal came as a
surprise to us.
The top German box port is quite
optimistic about global trade: Provided
the liner services operated by the shipping
companies remain stable, and provided
further that the Kiel Canal can continue to
function smoothly, we anticipate growth
on the China and Baltic Sea container
routes, which are of particular importance
to us.
The top five in northern Europe saw
combined volumes fall 0.5% to a fraction
over 39m teu. Felixstowes estimated
2013 volumes were unchanged while
Bremerhaven fell 4.7%.
Selected Mediterranean ports 2013
Spain Algeciras 4,336,459 5.5% 224,610 4,111,849 3,602,631
Spain Valencia 4,317,157 -3.4% -152,597 4,469,754 4,327,371
Greece Piraeus 3,164,000 15.7% 429,986 2,734,014 1,680,133
Italy Gioia Tauro 3,087,000 13.4% 365,896 2,721,104 2,305,000
Malta Maarsaxlokk 2,750,000 8.3% 211,920 2,538,080 2,360,489
Italy Genoa 1,988,013 -3.7% -76,793 2,064,806 1,847,102
Spain Barcelona 1,720,383 -2.2% -38,264 1,758,647 2,033,549
Turkey Mersin 1,378,800 9.1% 115,305 1,263,495 1,126,588
Italy La Spezia 1,300,432 4.3% 53,214 1,247,218 1,307,274
France Marseille-Fos 1,097,740 3.4% 36,547 1,061,193 944,047
Total 25,139,984 4.9% 1,169,824 23,970,160 21,534,184
SUSTAINABILITY ALL ALONG THE LINE.
HHLA_AZ_CI_420x150_ENG_DRUCK.indd 1
Belgian hub Antwerp, again a victim of
the European recession, was near static at
8.6m teu, with a 0.7% dip on 2012.
But the port remains sanguine, citing
positive prospects, with Antwerp
winning market share in the Far East and
consolidating its position as the market
leader on other trade routes from the
proposed P3 global alliance.
MSC, part of the P3, announced in late
December 2013 that it wanted to move its
operations to Antwerps Deurganck dock.
MSC has already reached its limits at the
ports Delwaide dock in terms of terminal
capacity (last year it handled 4.6m teu) but
also because 16,000 teu and 18,000 teu
capacity vessels cannot be handled behind
the Berendrecht lock.
No competing developments were
offered after the port authority issued
invitations for expressions of interest,
giving MSC the green light.
Estimated statistics for Brazilian hub
Santos indicate a 7.2% rise in throughputs
to 3.4m teu, as it enjoys the benefits of
two new box terminals and proximity to
Brazils most populated city.
And analysis by research house SeaIntel
indicates that schedule reliability in
Brazilian ports declined by 2.4% points
during 2013.
It appears to have been a curates egg
in 2013 for the top eight ports in the
Caribbean and Latin America, with total
thoughputs down 0.4% to 17.2m teu.
Santos, Callao (Peru), Buenos Aires
(Argentina) and Guayaquil (Ecuador) all
saw positive increases while Panamanian
duo Balboa and Manzanillo MIT, Cartagena
(Colombia) and Kingston (Jamaica) were in
decline for the year.
Kingston saw a reduction in teu volumes
Selected Caribbean and Latin American ports 2013
Brazil Santos* 3,400,000 7.2% 228,315 3,171,685 2,985,922
Panama Balboa 3,063,579 -5.8% -187,560 3,251,139 3,232,265
Panama Manzanillo MIT 2,025,904 -1.6% -33,860 2,059,764 1,899,802
Colombia Cartagena 1,865,233 -7.9% -159,488 2,024,721 1,691,341
Peru Callao 1,855,019 2.1% 37,356 1,817,663 1,616,165
Argentina Buenos Aires*
including
Exolgan
1,730,000 4.5% 74,000 1,656,000 1,865,000
Jamaica Kingston 1,703,949 -8.2% -151,476 1,855,425 1,756,832
Ecuador Guayaquil* 1,565,000 8.0% 116,313 1,448,687 1,405,762
Total 163,195,500 4.6% 7,110,670 156,084,830 149,765,330
HHLA links the port with the European hinterland in a
way that is as efficient as it is eco-friendly. At our state-of-
the-art seaport terminals we connect ships and trains to
form environmentally friendly logistics chains. Our innovative
rail companies transport goods to areas located deep
inland. Find out more about this consistently sustainable
concept at hhla.de/en/sustainability
SUSTAINABILITY ALL ALONG THE LINE.
GROWING TOGETHER.
03.02.14 16:10
TOP PORTS/UPDATE
PORTS
due to the slower pace of international
trade, as Israeli carrier Zim put through
lower box volumes , CMA CGM shifted
some cargo and there was a fall in
boxes reliant on the auto industry in
Venezuela.
The row about $1.6bn of overrun costs
for the Panama Canals third set of locks
continues to cloud optimism that the
strategic Pacific-Atlantic waterway will be
ready to accept larger vessels from the first
quarter 2016.
But that did not stop a fanfare opening
for Cubas new port at Mariel, which is
jostling for position as a transhipment hub
for the expanded Panama Canal.
More data is available online at
www.containershipping.com, including
our interactive Top 100 Ports 2013 tool
TOP PORTS/UPDATE
PORTS
FINANCIAL PRESSURE LEADS TO ASSET SALES
Carriers sell terminal stakes to generate cash, but is it just a short-term solution?
CONTAINER lines seeking cash were able
to monetise part of their terminal assets
in 2013, but will this trend continue in
2014 and just how much ownership are
the carriers prepared to yield?
China Merchants paid 400m
($549m) for a 49% stake in CMA
CGMs Terminal Link business, while
Mediterranean Shipping Co sold a 35%
stake in Terminal Investments Ltd for
$1.9bn to Global Infrastructure Partners
and a group of co-investors.
CMA CGM bucked the trend in
January 2014 when its CMA Terminals
arm holding those assets not part
of the China Merchants deal bought
a 25% stake in the still to be built
Nigerian box terminal at Lekki box from
Philippines-based ports group ICTSI.
In the same month, Japans Mitsui
OSK Lines sold a 49% stake in its US
terminal operating unit TraPac but
only the west coast terminals in Los
Angeles and Oakland to Canadian
asset manager Brookfield Asset
Management.
The idea is that MOL and Brookfield,
in negotiations for two years before
putting pen to paper, will look for joint
ventures in Latin American box ports,
leveraging the Canadian investors
capital base and the Japanese lines
container volumes.
Drewrys Senior Analyst for Ports &
Terminals, Neil Davidson, believes that
a key feature of 2014 and beyond
will be the continuing financial
pressure on carriers to turn their
terminal assets into cash.
It is interesting, for example with
MOL and CMA CGM, that while the lines
are under pressure to sell assets, at the
same time they still want to invest in
the port sector because they know that is
somewhere they can make money.
It is a funny quandary that the lines
face: ports can be profitable, so you want
to invest more in them, but yet in the
short term the lines want to realise those
assets and make some cash.
The amount of control a line is
prepared to sell in its port assets will
depend on that need to raise cash,
believes Mr Davidson, with South Korean
carriers possibly under greater pressure
to sell a higher, even a majority, stake.
Even the giant global terminal
operators face increased pressure as
shipping alliances and their attendant
terminal assets take shape.
The question is whether the alliances
will favour their own port interests over
those held by others.
Says Mr Davidson: Obviously, the
alliances have the power to choose
where they call and that does have a
bearing on the volume that goes to each
port.
But you still cannot get away from
the fundamentals of a ports location
and the transport costs to and from the
port. Those sort of organic factors will
still play a very strongrole in how much
market share each port has.
Transhipment traffic is a different
story altogether. For gateway traffic,
organic factors will always be the
primary choice of port.
The P3 alliance should it
receive regulatory approval has
raised questions over the choice of
transhipment hub in the Mediterranean,
with each shipping line having different
options at present.
Says Mr Davidson: It is fairly
fragmented in the Mediterranean; it is
not as if one super-hub has emerged
in the Western Mediterranean, for
example. It is spread over four hubs,
and that fragmentation is a fact.
In transhipment, it makes sense for
alliances to concentrate the volumes as
much as possible, to get the maximum
transhipment by focusing, where
possible, on one place to achieve the
critical mass and connectivity.
He adds: The big problem that
the P3 and any alliance faces, is
that you cannot find any port that
is large enough to take it all in
the Mediterranean. There is not a
Singapore-type port with 30m capacity
available.
There is limited capacity. You have
to spread the volume around in certain
locations.
BMT Asia-Pacific believes that the
South East Asian market, driven by
intra-Asia box trades, is among the
most attractive globally.
The Hong Kong-based subsidiary of
the UK maritime design, engineering
and risk management consultancy has
recently launched two analytical tools
for prospective port investors.
BMT Asia-Pacific director and chief
economist Simon Su says: We think
that South East Asia is probably the
hottest market at the moment.
Dr Su adds: For the mature ports,
the market is still under the downturn.
What we see in terms of the investment
profile are prospects more for the
emerging markets.
Emerging markets can mean
greenfield developments, an asset class
that is favoured by existing terminal
operators rather than non-industry
investors.
ON THE face of it, 2014 is a difficult
year for the Port of Rotterdam to open
one of the biggest developments in its
long history, which stretches back to the
fourteenth century.
Work on Maasvlakte II began in 2008
and involved the reclamation of around
20m sq m of land, half of this consisting of
infrastructure such as seawalls, waterways,
roads and port basins and the other half of
industrial sites.
The start of operations for terminals
on the new Maasvlakte II development
comes on the back of a 1.7% year-on-
year decline in box volumes at the port
in 2013 and the news that three of its
major customers may reduce the number
of services that call at the port, if plans to
merge services on three of their key trade
lanes are given the go-ahead by regulators.
Other major new box terminals
London Gateway and JadeWeserPort being
the most high profile have opened in
North Europe during the past couple of
years as well.
The time is right
But the Port of Rotterdam Authority and
APM Terminals, which will operate a fully
automated terminal on Maasvlakte II, feel
the timing is right.
The 4m teu Rotterdam World Gateway
terminal, which is run by a consortium
made up of DP World, APL, CMA CGM,
Mitsui OSK Lines and Hyundai Merchant
Marine, will also be opening for business
this year, but declined an interview.
Port of Rotterdam Authority director
containers, breakbulk and logistics
Emile Hoogsteden says that the existing
Maasvlakte port area is filling up and has
reached a utilisation level of between
85% and 90%.
Its not full, but its becoming pretty
full, he says. And although there are
moments where there is sufficient
capacity, there are also peak times as
shipping lines all want to call on the same
day and that puts added pressure on our
systems.
It is only towards the end of 2014 that
the Maasvlakte II terminals will open and
it wont be until early 2015 that they are
fully on stream and provide us with the
capacity that we need.
Also, shipping lines are looking at
whether there is sufficient capacity going
forward, so there is an immediate need,
but also this will provide assurance that
there will be capacity in the longer term.
Thats why its a good thing that the two
terminals will come on stream.
APM Terminals Maasvlakte II managing
director Frank Tazelaar says that the new
terminal, which has a first phase capacity
of 2.7m teu and could be expanded up to
4.5m teu, has the bonus of having already
secured sister company Maersk Line as
lead customer.
One challenge that APM Terminals has
is that it also has a 3m teu terminal in the
existing Maasvlakte port area, which is
where Maersk Line currently calls.
Mr Tazelaar says that both terminals
have their own strengths and have
different market propositions.
He explains the Maasvlakte II facility will
offer a higher level of productivity, which
will suit larger vessels, and the existing
facility is able to provide a more flexible
approach.
The existing facility is open for new
business so we are looking for new
customers as widely as we can, he says
Obviously there are synergies that we
can find between these two facilities so we
will look for that.
The service level at the Maasvlakte
II facility in terms of productivity
because of the latest technology it has
at its disposal over time will be higher
than the existing facility and we also have
a hinterland product that has a bit more
capability in terms of the barge quay and
rail service.
On the other hand it is fair to say that,
in general, a manned terminal can be more
flexible so they can more easily scale up
depending on market needs.
But we will focus on the arrival of the
ultra large containerships, where from day
one we will have capabilities to serve the
huge guys.
P3 conundrum
But what of the reduction in the number
of services that the P3 Network of Maersk
Line, Mediterranean Shipping Co and CMA
CGM will offer if the proposal gets the
go-ahead? The carriers plan to reduce the
number of services that call at Rotterdam
from nine to four.
Mr Hoogsteden says he was a little
Hoogsteden: We see Rotterdam not just as a
point in the supply chain but an integral part of
the supply chain.
Two new state-of-the-art terminals will open for
business in Rotterdam later this year, but is now
the best time to add capacity, asks Damian Brett
TIMING IS
EVERYTHING
ROTTERDAM/MAASVLAKTE II
PORTS
surprised by the reduction when the
carriers made their announcement but, he
says, following on from consultation with
the three carriers, he doesnt expect the
move to translate to lower volumes.
He says: We might have fewer services
but we will get, for instance, the 18,000
teu strings and they will only call at three
ports in Europe; Rotterdam, Bremerhaven
and Wilhelmshaven.
We approached the three shipping
lines and they said they were a bit
surprised by some of the negative
publicity over the decision.
They see it completely differently; as
they get good, fast connections with the
big vessels which will allow them to grow
volumes.
Early finish
APM Terminals Maasvlakte II will open for
business in November this year and civil
works were completed four months ahead
of schedule.
The early finish has allowed APM
Terminals extra time to test equipment and
IT software.
For an automated terminal it is
extremely important that all the pieces
come together at an early stage, Mr
Tazelaar says.
What this all should lead to is a
moment in May or June this year when
all the equipment and all the software is
ready for end-to-end testing.
This is the moment when we have
the entire puzzle and we start testing the
system all the way from quay to gate and
all the way back again.
One of current battle grounds for
terminal operators is the level of
productivity they can provide compared
with their rivals.
But some have questioned whether
manned or automated facilities are able to
offer the higher levels of productivity.
Mr Tazelaar says that the Maasvlakte II
terminal will be the second generation of
automated terminals and will offer better
productivity than first-generation facilities,
such as the pioneering ECT terminal at
Maasvlakte One.
He says the terminal, which will be
able to handle two 18,000 teu vessels
simultaneously, will offer productivity
levels 25% to 50% higher than the
average for north-west Europe, although
he refuses to reveal real numbers for now.
First we open, then we prove what
we are worth, he says. When we first
planned the terminal 12,000 teu vessels
were already in use but we anticipated
We started receiving the equipment
more than a year ago because we wanted
to carry out testing.
Not because we want to test it in
a mechanical way, I think that will be
basically alright, it is really the automation
integration we are testing.
At the moment we have all the
necessary equipment for our terminal line
up; we have the vehicles, the automated
gantry cranes for the stack, the super-post
panamax quay cranes, a barge crane and
two rail cranes.
To a large extent, that is all the
equipment we need at least one of
all the different sorts of equipment. This
means we can combine and test all the
pieces of the puzzle, for instance a vehicle
with a crane, to make sure the integration
works.
We have used the time as well as we
can and we now have two to three of
the most important integrations already
working and we know the performance
of that we know how the vehicles can
talk to the stacking cranes, we have gone
through the motions of that.
Mr Tazelaar admits the testing phase
identified certain issues, but adds that
these have been solved and points out
that this is the very reason for testing.
APM Terminals will operate a fully
automated terminal on Maasvlakte II.
ROTTERDAM/MAASVLAKTE II
PORTS
PORTS
ROTTERDAM /MAASVLAKTE II
that vessels would get larger and therefore
that the hinterland productivity had to
increase.
So thats all locked into the design and
we have given a clear task to suppliers
to meet those productivities for their
elements of the project.
The level of automation at the terminal
is quite staggering even the batteries
for the automated guided vehicles are
changed automatically.
Automation was ready for the big spread
in container business just at the moment
when the crisis hit us in 2008, he adds.
At the time there were a lot of projects
on the drawing board and there were only
a few courageous operators that actually
went through with the project.
I am convinced in the future for
automated terminals but obviously I am a
believer.
Looking behind and in front
So with the completion of the first phase
of the Maasvlakte II project, what is the
next project for Rotterdam Port Authority,
or is its work done for the time being?
We see Rotterdam not just as a point in
the supply chain but an integral part of the
supply chain, says Mr Hoogsteden. We
look what is happening in front of us and
what is happening behind us.
The authority is developing what is has
termed a container transferium, which is
similar to an inland terminal but closer to
the port than a traditional inland terminal
would be.
It will help encourage a modal shift to
barge transport and help relieve the roads
around Rotterdam.
Construction work began on the
transferium late last year and it is designed
to relieve the A15 motorway of 200,000
teu per year.
We have worked with the market
to convince them not to put them on a
truck but put them on a barge, says Mr
Hoogsteden.
They have concerns about the cost of
extra handling, but we have shown that
together with the market you can put them
on the barge, bring them to the transferium
and put them on the quay.
We have shown that at such a short
distance it is very efficient, it is safe, you
dont have a lot of accidents, you have
timeliness and it is low cost.
Another example of where Rotterdam
is making investment is Inland Links, an
online portal that the authority created
with the association of Dutch inland
terminals.
It provides an overview of all the
container services that are available in
the Rotterdam area and aims to make
the market more transparent for smaller
players. It also provides a route planner
and empty container functionality that
allows various players to share containers
to create efficiencies.
We try to be innovative and stimulate
co-operation between the various actors
in the supply chain and also sometimes
competitors, he says.
We have to think along with the market
and not just be a landlord but also what
we like to call port developer.
We like to think with the market and
how can we improve the ease of doing
business via Rotterdam.
Most of the processes and systems are
working well in the port but with the big
shipping line alliances you have to make
sure you bring that to a higher level.
That is done through a continuous
process of dialogue with the main carriers
to review all the elements how can we
improve the barge process, for example.
It is also looking to develop its shortsea
facilities and is developing an LNG
bunkering facility to open in 2016 in
line with the implementation of tighter
requirements for emission control areas
that will come into force in January
2015.
Increasing vessel sizes
When asked about the increasing size of
vessels, Mr Hoogsteden says the port has
a 20 m draught and will be able to handle
22,000 teu vessels.
There is also space to develop more new
terminals at the port, he says.
APM Terminals is also looking ahead
and Mr Tazelaar sees sustainability as a
key battle ground for box terminals in the
future.
On the shipper side safety and
sustainability are increasing in
importance, he says. We have a lot
of bigger shippers and forwarders
visiting our terminal and you realise that
the safety and sustainability of their
supply chain is an important part of
that.
We have prepared not only for the
productivity battle, which is obvious for
the next couple of years, but also for the
battles for the years thereafter.
APM Terminals
Massvlakte II will
open for business in
November this year.
porlners
wilh new
opporlunilies
When lhe
righl experlise
As world trade moves full steam ahead, a
smooth supply chain is critical. With over 35
years of managing the worlds most productive
ports, Gulftainer has the expertise you need.
Our constant innovation and award-winning
performance are always on call to partner your
global ambitions.
Gulftainer operates in Khorfakkan, Sharjah and
Ruwais in the UAE, Iraq, Russia, Brazil, Lebanon
and Saudi Arabia, with logistics ofces in
Turkey, Pakistan and throughout the region.
gullloiner.com
Porlnering progress
THE names of shipping lines can tell you a
lot about the history of the company.
CMA CGMs name, for instance, is a
reminder of the merger of two separate
French carriers into what has become the
worlds third largest shipping line. Maersk
Line bears the name of its founder.
Niche carrier NileDutchs name also
tells the tale of its past, although it could
perhaps lead to some confusion as none
of the West African specialists services
currently go anywhere near the River Nile.
Chief operating officer Jan Willem
de Braal, who has worked for the
company for 19 years in a variety of roles,
explains that the company began life in
the early 1980s as a ro-ro operator in
the eastern Mediterranean hence the
name but its focus quickly switched to
West Africa, where it made a success out
of shipping new and secondhand cars and
trucks.
At the time, containerisation was in
its infancy in Africa so it made sense to
operate ro-ro services that are not limited
by a requirement for cranes to lift and load
cargo and where vessels are able to use
ports with low draughts.
Gradually, containers edged their
way into the market and over time, ro-ro
vessels became harder to find to the
point when, in 2010, NileDutch took the
decision to switch entirely to container
shipping.
Mr de Braal says that by then, 90% of its
volumes were containers and the vehicle
trade was changing, with African countries
wanting new cars, largely from Asia, so it
was the right time to leave the ro-ro trade.
Today, trade lanes connecting with West
Africa are booming with strong volume
growth. Figures from Container Trades
Statistics show that during the first 11
months of last year, volumes from Europe
to Sub Saharan Africa increased 7.3% year
on year while MDS Transmodal estimates
that box volumes from Asia to West Africa
jumped by 14.1% between 2012 and
2013.
As a result, new shipping lines are
looking to start up services to the region
and cascade larger vessels from other
trade lanes. This has brought with it the
problem of carriers offering low rates in
order to win customers, in some cases
creating overcapacity.
And Mr de Braal says that volume
growth is not as straightforward as it may
appear.
West Africa is usually seen as the
Dakar-Angola range, he says. The most
southern port in Angola is Namibe, and in
that region the growth is considerable, but
if you look at specific ports, in some cases
there may be decline and another one can
grow substantially.
While in Europe this may not be a
problem, because the ease of cross border
transportation allows you to cater for one
country by bringing containers into another,
in Africa cross border transportation and
feeder operations are limited and it is hard
to simply switch ports of call.
This makes it more difficult to adjust
services when one country sees container
volumes grow and another suffers from
decline.
So, yes there is growth in the whole
region but then the question for niche
players like ourselves is, is it in our sub-
region? says Mr de Braal.
That is always a difficulty on paper
it all looks very good but you still need the
growth to be in your own set of ports.
So what is NileDutch doing to try and
get around this particular conundrum?
We try to cover more than one port,
which is something that we have been
very successful in over the last few years.
We were heavily focused on Angola
and weve managed to give a lot more
attention to other destinations. But that is
something that needs to be done over the
course of time, in our experience.
Of course, you can follow the strategy
of some of the newcomers weve seen and
just offer low rates, but that is not in our
mentality and not in our way of working.
The way we prefer to work is to have
a solid, long-term relationship with
customers and that is something you need
to build slowly. So we try to make small
steps and try to understand the market
the destination in this case and then
build up a customer base and build up
trust between the players.
This means we wont be as affected
by overcapacity because we have a
loyal customer base but also at a certain
moment, if you have a base and need the
flexibility, then you can still try to increase
the share you have on other destinations.
This year represents an important
milestone in the history of NileDutch, as
it will see the company receive its first
brand-new vessels.
NileDutchs de Braal says volume growth is not
as straightforward as it may appear.
NileDutch has made a success of West Africa and sees a bright future ahead
despite current di culties, reports Damian Brett
WHATS IN A NAME?
WEST AFRICA/NILEDUTCH
CARRIERS
Were Going Deeper.
See how.
Thanks to the new South Carolina Inland Port thats 341 kilometres
from Charleston and with access to ve interstates, you can extend
your reach deep into the fast-growing Interstate 85 corridor and beyond.
Even better, that means shorter inland distance and lower cost. Combine
overnight rail service with the deepest, most productive port in the
region, and you now have the most efcient way to ship cargo in the
expanding Southeastern U.S.
OUR
PORT IS
341 KM
DEEP.
SCSPA.com
While the company has owned ships
in the past, these have always been
secondhand vessels.
The first of the four new ships will be
delivered in May and the last in early
2015. Mr de Braal says the ships were
designed with Africa in mind.
The 3,500 teu vessels are geared to
mitigate the problem of a lack of cranes
and are wide-beamed to cater for the
lower draught in African ports.
Mr de Braal says they will also be some
of the most fuel-efficient ships serving
West Africa.
The decision to order the vessels was
also based on concerns that tonnage
suitable for the market might become less
available in the future.
While this may be the first time
NileDutch has ordered new vessels, it has
expanded its fleet rapidly during the last
couple of years.
Last year, it ranked as the worlds 24th
largest carrier according to Lloyds List
Intelligence data, with year-on-year fleet
growth of 40%.
The increases in the size of its fleet
are partly down to the flexible approach
the company has adopted to its fleet
chartering in tonnage on a short-term basis
to cope with growth and port congestion,
which ties up vessels.
So with 2014 shaping up to be an
important year for the Rotterdam-
While West Africa faces some challenges
in the short term, the longer term picture
is positive and Mr de Braal is hopeful for
the future.
Africa is changing, he says. Slowly
but surely and some places more than
others there will be a middle class.
Consumption is changing, the role of China
will change further and other people are
coming in. There is a big interest from all
over the world.
In that respect the business is changing,
trade flows are changing, consumption is
changing the goods are changing and the
consumer is changing.
There is the opportunity for
supermarkets and when the supermarkets
come in you get different demands in
terms of information in the supply
chain you get an emphasis on the
supply chain.
We also see more frozen and chilled
goods, so the reefer business is growing.
There are many opportunities.
E-commerce is another area of growth in
Africa, he says.
The challenges are there of course;
everybody wants a piece of the cake, the
ports are not always developing at the
same speed as the businesses.
This is an exciting time and we have a
reasonable market share so we think we
are ready to handle that, but for time being
we still have a lot to do in West Africa.
headquartered carrier, how is it expecting
the year ahead to progress?
We are more optimistic about 2014
than 2013. Overcapacity will continue. It
is the typical thing in our industry the
chicken and egg/vicious circle we need
bigger ships to improve economies of
scale but it can lead to overcapacity.
But this year we hope that rates will
improve as the market has been close to
the bottom for a while now and it cant
continue forever.
Looking further into the future, Mr de
Braal views the cascading of larger vessels
onto non-traditional trade lanes as an
ongoing problem and says it needs to
come to an end.
There is also the ongoing problem of
port infrastructure, but NileDutchs fleet
of geared tonnage helps to mitigate that
issue to an extent.
In the meantime, NileDutch will
concentrate on optimising its operations.
It has no plans to introduce new services
to its existing operations; two covering
Asia, one to northern Europe and one to
South America.
The strategy is to find the economies of
scale, says Mr de Braal. We are operating
bigger and bigger ships and we are
working very hard on fuel efficiency, slow
steaming and trying to find fuel efficient
ships, trying to be smarter in the way we
do things.
While NIleDutch has owned ships
before, they have alway been
secondhand vessels. The line will
welcome its first newbuilding in May.
WEST AFRICA/NILEDUTCH
CARRIERS
HE IS no doubt a man of strong character,
tenacious and determined, and very
experienced in the shipping industry.
That was a comment by a Hong Kong
High Court judge in a verdict released on
February 10 this year, which encapsulated
the second court triumph for Igal
Dafni who has battled with his former
employers, Zim and CMA CGM, two of the
worlds most prominent shipping lines.
It was tough. What can I say? I was
the sole witness on my side in both
proceedings, completely alone. People in
both companies were afraid of testifying
against their employers. In the Zim hearing,
there were 10 witnesses on the opposite
side, seven in CMA CGM case.
But I felt very strong because I knew
I was telling the truth, so it was only a
matter of time for justice to come, said
Capt Dafni, one week after the Hong Kong
ruling which ordered the French line to pay
him $2.3m in emoluments as a result of his
forced resignation in March 2008.
Born in Israel in 1946, Capt Dafni joined
Zim as a cadet in his 20s. He spent the next
two decades on the high seas with the last
10 years as captain of general cargo ships,
tankers, bulkers and containerships.
Retiring from the sea in 1985, Capt
Dafni took up various executive positions
in the Haifa-headquartered company,
including building its West African network
from scratch.
In 1994, he relocated to Hong Kong
to head Gold Star Line, the intra-Asia
subsidiary of Zim that was running a $0.5m
annual deficit on four multi-purpose ships
when he took over.
In the following decade, Capt Dafni
revived GSL. By the time I left, GSL was
among the top five intra-Asia lines with a
fleet of over 28 fully containerised vessels,
$300m in turnover and $30m in profit
annually, he said.
In 2004 Capt Dafni was appointed
president of Zims Asia Pacific region,
a promotion that put him in a team
of executives directly reporting to
then-chairman Idan Ofer and one
that eventually cost him two jobs and
subsequent lawsuits.
Idan Ofer and I couldnt see eye to eye,
said Capt Dafni, who has been living in
Hong Kong for two decades and acquired
Singaporean citizenship in 2004.
He subsequently tendered his
resignation and was immediately
headhunted by Farid Salem, group
executive officer of CMA CGM, to
spearhead the planned acquisition of
Taipei-based Cheng Lie Navigation Co,
with a promise from Mr Salem to head the
target companys operation for three years
if the buyout was consummated, according
to court documents.
In March 2007, CMA CGM bought CNC
Line for $160m and appointed Capt Dafni
as chief executive and managing director.
It was a good deal for the seller and an
even better one for the buyer, said Capt
Dafni. One year later, I think CNC Line was
worth around $250m.
With 20 years of operational
experiences under his belt, Capt Dafni
quickly rejuvenated CNC Line, which was
facing bankruptcy just six years before the
French line took over. By the end of 2007,
CNC Line reported that monthly loading
volumes surged 75% from the takeover
level and revenue per teu increased 3%,
court papers show.
That success generated attention from
not only the media but also his former
employer. Zim was worried what I was
doing at CNC was a copycat of what I did
with GSL and that it would eclipse GSLs
business, although I never took any GSL
business, he said.
In December 2007, Zim sued Capt Dafni
in Singapore, along with five other parties
who were Zims shipping agents, over
breach of contracts and fiduciary duties. It
was very clear to me that the Zim litigation
was a tactic to stop me from expanding
CNC and nurturing it into a meaningful,
fierce rival against GSL, he said.
Although Capt Dafni was cleared of any
wrongdoing in the Singapore High Court
in 2010, the legal action by an Israeli
company against an Israeli employee
by birth and the subsequent media
coverage caused huge embarrassment
for CMA CGM and its Lebanese-born
founder Jacques Saad, according to court
documents.
In March 2008, Capt Dafni was forced
to resign from CNC. Four months later, he
sued CMA CGM over unpaid salaries and
bonuses, while the Zim litigation was still
underway.
Still, the ongoing legal wrangles did not
inhibit his entrepreneurial drive. During the
30 months that he was embroiled in two court
cases, Capt Dafni started up two companies.
In 2009 he co-founded Asian Shippers
Association, an umbrella platform
for small- and medium-sized freight
forwarders, with six other people. The
following year, he established Great
The environment in
container shipping has
completely changed.
It is now a playing feld
for the big companies.
Entry barriers for
newcomers are very
high
Igal Dafni talks exclusively to Lloyds List Asia Correspondent Jing Yang
about his legal battles with former employers Zim and CMA CGM
VICTORY AT SEA
EXCLUSIVE INTERVIEW/IGAL DAFNI
CARRIERS
Eagle Shipping Line in Hong Kong, which
provided feeder services to Vietnam and
the Philippines in joint sailings with Yang
Hai Shipping of South Korea, which was
founded by former KMTC chairman YH
Choi.
Neither venture lasted long. In 2011,
ASA was closed down. In 2012, Great
Eagle was out of business following the
bankruptcy of its South Korean partner.
The environment in container shipping
has completely changed. It is now a
playing field for the big companies. Entry
barriers for newcomers are very high, said
Capt Dafni, now a partner at Hong Kong-
based ILP Freight Limited, a consortium-
like organisation that brings together
45 freight forwarders and non-vessel
operating common carriers in Asia, Europe,
South America and Africa.
I dont want to work for anybody
anymore. Im not used anymore to being
dictated on how to do things.
I enjoy the flexibility and freedom
at the current job, where my
entrepreneurship can be better applied.
suffering. Unless they see things I dont
see, I no longer understand how this
business is working. People are fighting
for market share rather than the bottom
line, which doesnt make sense to me. Or
maybe Im an old-timer who doesnt know
whats going on anymore.
Sitting at the other side of the table,
one of the amazing finds for me is how
serious shipping lines are when fighting
for cargoes.
I once had two carriers in the same
consortium offering completely different
rates, extensively undercutting one
another, which is unimaginable. For
example, quotes of $400 difference for
slots on the same ship. Shipping lines are
so big today that power is being delegated.
In some sense theyre losing control, he
said.
At the age of 68, Capt Dafni said he still
feels having a lot to contribute to small
and medium companies in the logistics
side. I still feel active and will happily
continue to be active for at least the next
five years.
I relish the joy of building up a business,
seeing its growing, similar to what Ive
done with GSL and CNC, said Capt Dafni.
ILP, which stands for International
Logistics Providers, has a goal to issue
its own bill of lading to grow into a
reasonable enough player, he added.
What do freight forwarders and
NVOCCs need? Two things: good rates and
a space on the ship. So to work as a freight
forwarder I can take advantage of my
experiences and connections to help them
develop, said Capt Dafni, who joined ILP
in October.
He called the super-sizing of container
vessels unbelievable and observed that
consolidation of lines is almost a must to
achieve maximum efficiency and coverage
of ports.
I dont see any way for anybody to stop
P3. There may be a delay in regulatory
clearance, but it will get approved and be
in operation eventually.
Lines keep ordering big ships when
oversupply is already severe. More ships
cant make rates increase. Most lines are
I dont want to work
for anybody anymore.
Im not used anymore
to being dictated on
how to do things
EXCLUSIVE INTERVIEW/IGAL DAFNI
CARRIERS
BOX WORLD BRIEFING
MAERSK Lines rapid reversal
of fortunes continued in 2013
with profit of $1.5bn against
$461m previously, and AP
Moller-Maersk chief executive
Nils Andersen attributed the
strong result both to much
better fleet utilisation and to
lower fuel costs.
Capacity increased by only
0.2% to 2.6m teu, despite the
delivery of the first Triple-E
18,000 teu ships, whereas
cargo volumes grew by 4.1%.
That enabled Maersk Line
to maintain its market share.
The 2014 result is forecast
to be in line with that of last
year, with further reductions
in operating costs and the
same market share.
We foresee a challenging
rate environment, said Mr
Andersen.
However, the goal is to
again have an earnings before
interest and tax margin
at least five percentage
points above the industry
average, to keep focused on
capacity management and
make sure the Triple-E ships
are introduced into service
without disrupting the
supply-demand equation.
So more of the same, said
Mr Andersen.
But he warned of
continuing overcapacity as
more ships are delivered;
Maersk is not sure that
consolidation moves now
taking place will have much
effect on the market and the
bottom line this year.
Much also depends on
competitor behaviour, Mr
Andersen said. We could be
positively surprised.
Maersk Line prot driven
by better eet utilisation
LOGISTICS
PORTS
Total costs decreased by
10.6% to $2,731 per 40-ft
container, driven mainly by
cheaper bunker costs and
operational savings.
Maersks bumper profit
compares with a loss
reported by APLs parent
company Neptune Orient
Lines earlier in the month.
Other major carriers will be
reporting soon.
Speaking to analysts
during a conference call,
Mr Andersen said good
utilisation rates were the key
to the good result posted by
Maersk Line.
It has an agreement to
terminate charters covering
14 leased vessels, of which
five were redelivered in 2013
and the rest will be returned
to owners this year.
In total, the time chartered
fleet was reduced by 27
ships last year compared with
2012.
Bunker consumption
decreased by 12.1% during
the year, with the price down
by 9.9% but total fuel costs
were cut by 21% to $5.3bn
against 2012.
Maersk Lines return on
invested capital climbed to
7.4%, not far short of the
8.5% target and up from
2.3% in 2012.
Maersk said its figure for
earnings before interest
and taxes was about 7.5
percentage points above
the industry average, well
above the ambition of five
percentage points.
The three members of the
proposed P3 alliance hope to
start operations in the middle
of this year, assuming they
secure regulatory clearance,
but the vessel-sharing
agreement will not have any
significant impact on the
2014 result, Mr Andersen
said.
Preparation for P3 was
progressing, he said, and
although there would be
benefits from the moment it
begins, start-up costs for the
three member lines would
neutralise the financial
benefits for 2014.
Janet Porter
CARRIERS
Andersen:
We foresee a
challenging rate
environment.
AP MOLLER-Maersks box port
arm, APM Terminals, reported
an annual net operating
profit after tax of $770m for
2013, a 9.8% rise on-year,
as revenues increased 3% to
$4.3bn.
APMT expects its 2014
performance will be above
2013 and to grow more than
the market supported by
increased contribution from
joint ventures and associates
combined with productivity
improvements in existing
facilities, said the parent
company.
The number of boxes
handled across APMTs global
asset base rose 3% to 36.3m
teu in weighted ownership
share, and volumes from
third-party customers
non-Maersk shipping line
subsidiaries reached 50%,
up from 48% in 2012.
The net operating profit
was impacted by pre-tax
divestment gains of $70m,
versus $117m in 2012, and a
lower tax expense of $56m,
down from $163m in 2012.
Roger Hailey
THE AP Moller Maersk-owned
logistics firm Damco reported
a 1% decline in ocean freight
volumes for 2013 and an
operating loss of $111m as
restructuring costs took their
toll on the business.
Damco saw 2013
revenues decline by 0.5%
on-year to $3.2bn and its
net operating result slipped
APM Terminals
posts 9.8%
rise in prots
Damco reports in the red
from a $55m profit in 2012
to a $111m loss last year.
It blamed the loss on a
restructuring programme.
A global restructuring
programme was initiated
with the aim at simplifying
and consolidating the
operational strcture within
Damco, it said.
Damian Brett
Carrier is a part of UTC Building & Industrial Systems, a unit of United Technologies Corp. Copyright United Technologies Corporation 2014.
It pays to be in control.
Pause the ripening process and fast-forward your global business opportunities.
The XtendFRESH system helps slow the ripening process by removing ethylene and simultaneously controlling
CO
2
and O
2
levels in multiple combinations, so you can freshly transport bananas and a broader range of perishables
to new markets in all corners of the globe. The exclusive option is modular and easy to install on existing Carrier
container refrigeration units with Micro-Link
3 controllers, making it a lower-cost option for atmospheric control.

Combine these nancial benets with expanded business opportunities, and its clear that there are bunches of
reasons to Turn to the Experts
at Carrier for the XtendFRESH system.

www.carrier.com/container
The global conference for people who
own, move & handle containerised cargo
www.tocevents-europe.com Conference | Networking | Port Tour | Exhibition
24 26 June 2014
ExCeL
|
London
CONFERENCE
Global Port Partner Conference Sponsor
BOX WORLD BRIEFING
EVERGREEN is exploring
ways of extending its
co-operation with four other
Asian container lines after
becoming a full member of
the CKYH alliance in the Asia-
Europe trades from March.
The Taiwanese line has
joined Cosco Container Lines,
K Line, Yang Ming and Hanjin
Shipping, which have worked
together for several years.
The decision is a U-turn
for Evergreen, which until
recently preferred to retain
flexibility through loose-knit
arrangements with other lines
and not to lock itself into a
formal alliance.
That position changed,
following the formation of
major co-operative agreements
that are changing the landscape
of the global container shipping
industry, such as the proposed
P3 Network and extended G6
Alliance.
Having announced that
it would now be part of the
enlarged CKYHE Alliance,
which plans to start operations
from April 1, Evergreen told
that it was prepared to go
further.
In the future, we are
seeking further co-operation
either with individual
members or to join the
alliance in other markets
such as north-south trades
and regional feeder routes
in order to enhance service
frequency and widen
geographic coverage, the
line said in an emailed reply.
Evergreen boosts
CKYHs average
boxship size
Evergreen has individual
service co-operation
arrangements with the
four founder members of
the CKYH Alliance, and
said it could extend these
relationships in one of two
ways.
The decision to join
the alliance follows other
strategic shifts, with
Evergreen now investing in
14,000 teu ships after years
of focusing on nothing larger
than 8,500 teu.
Group chairman Chang
Yung-fa was reluctant to
operate bigger ships that, he
argued, could be hard to fill.
The Evergreen founder,
who fought bitterly against
the Far Eastern Freight
Conference when the
Taiwanese outsider entered
the Asia-Europe trades, now
appears to have dropped
his resistance, both to ultra-
large ships and to close
partnerships.
Once ranked number
one in the world, although
it is now down to fourth
place, Evergreen made
its mark on the industry
through innovative concepts
such as round-the-world
services in the early days of
containerisation and with its
determination to operate solo
wherever possible.
But with the global industry
consolidating into three main
groups and virtually every
other line going for bigger
tonnage because of the
economies of scale and new
ships cleaner, more efficient
engines, Evergreen has now
decided to follow suit.
Evergreen adopts a
flexible approach to strategic
planning, the carrier said.
On the Asia-Europe trades,
we join the CKYHE Alliance to
enhance our competitiveness
in line with market
development trends.
In other markets, we have
various forms of service
co-operation with different
partners and will seek more
co-operation opportunities to
further enhance our service.
The line points out that it
first launched a joint service
with Cosco in the Asia-South
Africa and east coast South
America trades in 1999.
It went on to work with
individual members of the
CKYH group in other markets
such as the Asia-North
America, Asia-Europe, Asia-
Australia and the intra-Asia
trades, through joint services
or space swap arrangements.
Before joining the CKYHE
Alliance, Evergreen said it
focused mainly on slot-exchange
arrangements with other
members of the consortium.
As a full member, however,
Evergreen will work with the
rest to rationalise port rotation,
optimise network coverage and
increase service frequency.
The enhanced co-operation
enables Evergreen Line to
strengthen service quality,
reduce operating costs
and achieve better asset
utilisation, the company said.
In the Asia-Europe trades,
Evergreen deploys 20 ships
of 8,500 teu.
Janet Porter
CARRIERS
Evergreen is now seeking
future co-operation.
Evergreens move to join
CKYH Alliance will boost
the groupings average
vessel size on the Asia-
Europe trade to 11,050 teu
by 2015 although its
economies of scale would
improve further if China
Shipping Container Lines
and United Arab Shipping
Co were to join.
Analysis from SeaIntel
shows that the CKYH
Alliances average vessel
size on the trade lane will
increase from 9,050 teu
today to 9,900 teu by the
third quarter of 2014 when
Evergreen joins.
This compares with
the average vessel size
of 12,200 teu that the P3
Network will be able to
offer on the trade lane if it
receives regulatory approval.
By the end of 2015, the
expanded CKYHE Alliances
average ship size on the
trade will reach 11,050 teu.
Damian Brett
Economies of scale
BOX WORLD BRIEFING
AN EXPANDED Panama Canal
will now accept its first
fee-paying larger vessel in
the first quarter of 2016, a
further delay of three months
to a mega project already six
months behind schedule.
Against the backdrop of
$1.6bn in contested project
overrun costs for the canals
third set of locks, twelve extra
weeks is a relatively modest
period to wait for a stragetic
Pacific-Atlantic trade artery
that this year celebrates 100
years in operation.
Compare three months to the
alternative: a new contractor
moving in to finish the job,
probably taking the completion
date to 2018, at the earliest.
But now the Panama
Canal Authority and the
construction consortium
Grupo Unidos Por el Canal
have signed a conceptual
agreement that provides
greater certainty for ACP, the
builders and shipowners.
We have reached a
conceptual agreement that
protects the interests of the
Panama Canal, within the terms
of the contract and respecting
our position, said Panama Canal
Administrator Jorge Quijano.
He added: The third set
of locks will be completed
within the terms of the
contract, as requested from
the very first day.
The complex deal (see
panel) does not settle the
dispute on cost overruns, but
it does provide a framework
Panama Canal
parties reach
tacit agreement
LOGISTICS
of financial commitments and
future incentives that indicate
a willingness on both sides to
complete the project.
It also marks the point
when ACP and GUPC began
the process of rebuilding a
commerical relationship that
had turned decidedly sour,
and in the full glare of global
publicity. This should pave
the way for constructive talks
to end the primary dispute.
In late December 2013, the
Spanish-led GUPC informed ACP
that it would cease work from
January 19 on the third set of
locks because it was in dispute
about the overrun costs.
Mr Quijano responded
quickly and called a press
conference in which he spoke
of a Plan B but added: we
would rather finish the job
with this consortium.
The January 19 deadline
passed and GUPC continued
working, although effectively
on a go-slow, and then
stopped altogether.
Both sides have been
playing hardball, but both
had a lot to lose should the
dispute result in lengthy
delays for the $5.4bn canal
expansion, $3.2bn of which is
attributable to the project for
the third set of locks.
For ACP there would be a
loss of extra revenue from
larger containerships and
other vessel types.
In fiscal year 2013 there
were 3,103 transits of
container vessels, a 6.8% fall
on prior year, while revenues
from the sector were B/951.4m
($951.4m), a 0.9% fall.
Despite that decline, the
value of container vessel tolls
stands at nearly three times
the revenue accrued from the
next largest sector, dry bulk.
There was also the issue of
finding a replacement contractor
with the capability to finish the
25% of the locks project still
outstanding, including the 12
lock gates still on the European
continent, in Italy.
It would be a herculean task
to find a replacement contractor,
with GUPC estimating a further
two year delay for the project
should ACP terminate the
original contract.
For GUPC, failing to
complete such a high profile
engineering project would
not enhance the corporate
CV for its members: Sacyr
Vallehermoso (Spain),
Impregilo (Italy), Jan de
Nul Group (Belgium) and
Constructora Urbana (Panama).
ACP estimates that
the total delay costs will
amount to $300m, of which
the builders are liable for
$54m, thus providing the
prospect of more tricky
negotiations about allocation
of compensation costs.
The $3.2bn locks contract,
with an embedded three-stage
dispute arbitration process,
appears to have ample
opportunity for horse trading
between the two sides.
When the third set of locks
are installed and the canal
begins accepting 12,500 teu
ships, rather than the 4,000 teu
of today, then a further three
year maintenance contract
comes into play for GUPC.
Of course, first quarter
2016 is still way off, and the
global shipping industry will
be hoping that ACP and GUPC
continue on course quickly for
a final settlement, across all
areas of dispute, that removes
the threat of further delays.
Roger Hailey
The Panama Canal will be able to accept larger vessels
once the lock expansion project is completed.
* The construction of the third set of locks is completed by
December 2015.
* The 12 lock gates in Italy must be in Panama by
December 2014, to be transported in staggered shipments.
* The Performance Bond for $400m may only be released
to Zurich North America, to obtain nancing to complete
the work.
* GUPC will pay $100m and ACP will advance $100m,
which will enable works to regain a normal pace in March.
* The moratorium for the repayment of advances may
be extended until 2018, subject to fulllment of certain
milestones and other conditions.
CONCEPTUAL AGREEMENT: AT A GLANCE
Totally briefed.
Every day.
When time is precious, we know it is vital for you to have an instant
snapshot of the important stories shaping the maritime world on a daily
basis. Our new Daily Brieng gives you just that. Developed in response to
customer feedback, our global team of journalists will make sure that you get
an instant and informed picture of whats important and likely to shape the
decisions you need to make.

Our client services team are on hand to help with any questions you may have.
Call them on +44 (0)20 3377 3996 or email clientservices@informa.com
Containerisation International subscribers have full access to Lloyds List online.
Check out lloydslist.com/daily-briefng for yourself
CONTAINER shipping has an impressive
safety record. More than 5,000 cellular
ships are now in service, part of a global
supply chain that ensures cargo is
delivered to even the remotest parts of the
world. Rarely does anything go wrong.
But last years MOL Comfort casualty,
when a five-year old panamax ship
snapped in half, was a wake-up call for the
whole industry that shows that there is no
room for complacency.
Classification societies, the technical
organisations responsible for ensuring
ships are constructed and maintained in
compliance with their safety rules, swung
into action.
The outcome should be much stronger
containerships within a few years
hopefully at no significant extra cost.
Container shipping is one of those
behind-the-scenes industries that does
not impinge on public consciousness
until, of course, something goes wrong.
When the 4,400 teu MSC Napoli grounded
off the UKs south coast in 2007, there was
widespread astonishment at the sort of
things the ship was carrying, from shampoo
and biscuits to car parts and motorbikes.
Local beaches were swamped with
treasure-hunters in reality, looters.
In contrast, the MOL Comfort incident,
probably the most spectacular catastrophe
of recent years and reminiscent of the MSC
Carla break-up in 1997, received relatively
little attention outside the industry, partly
because it happened well away from the
TV cameras.
The 8,110 teu Bahamas-flag Japanese-
built ship broke in two near the coast of
Yemen, with both halves subsequently
sinking. Fortunately, the crew were all
rescued, but cargo owners lost everything.
Amid speculation about whether storm
damage, poor loading, construction
flaws or bad design were to blame, those
responsible for maritime safety moved fast
both to find out more and to ensure there
would be no repeat of the incident that
could have been so much more serious in
terms of loss of life or injuries.
The International Association of
Classification Societies, whose 13
members set the design and construction
standards for ships and then continue to
monitor vessels throughout their life, is
reviewing the way in which the strength of
a containership is analysed.
IACS, representing all the top
containership classification societies
including Lloyds Register, ABS, DNV-GL,
Bureau Veritas and ClassNK, which was
responsible for MOL Comfort, is not going
to introduce common structural rules
for containerships as it has for tankers
and bulkers, let alone harmonise them, a
process that took years .
These ensure that the hulls of ship types
covered by the rules are built to identical
safety specifications, so that there is no
competition between shipyards on a
vessels strength.
Aware that developing such rules is a
lengthy process, IACS has decided instead
to develop common structural analysis
requirements for containerships.
In other words, all class societies will
have to use the same methodology to test
the structural strength of post-panamax
boxships.
That means the new rules, which will be
mandatory when developed, will apply to
all ships of around 5,000 teu and larger.
These are the ones that are seeing the
greatest amount of technical innovation,
and account for the largest share of the
orderbook.
The rules will not be applied
retrospectively to existing ships, but to
newbuildings ordered after they come into
force, probably around 2016.
The 90,613 dwt, MOL Comfort and
its sisterships MOL Creation, MOL
Celebration, MOL Competence, MOL
Courage, MOL Charisma and the slightly
larger MOL Commitment were built by
Japans Mitsubishi Heavy Industries to a
new lightweight design.
In a technical review published in
September 2007, MHI said it had jointly
The break-up and sinking of
MOL Comfort has shown there
is no room for complacency
when it comes to safety.
Photo: gCaptain
Boxships will become
stronger and better able
to withstand weather
and loading extremes,
reports Janet Porter
CLASS SOCIETIES
TAKE ACTION
CLASS SOCIETIES/SHIP CONSTRUCTION
REGULATION
developed with Nippon Steel steel plates
that were thinner than the standard
thickness.
This steel has already been used for
the first time in the world on an 8,100
teu containership constructed by MHI
and has gained the deep appreciation
of the customer both for its safety and
performance, MHI said in an introduction.
MOL Creation was constructed in MHIs
Nagasaki Shipyard and Machinery Works for
Mitsui OSK Lines as the worlds first 8,100
teu class containership using 47 kgf/mm2
high-tensile steel strength and was delivered
in June 2007 as the first ship in the six ship
series of that class, the paper continues.
ClassNK was involved in this project,
according to MHI.
The 302 m long, 45.8 m wide MOL
Comfort was delivered soon after, in mid-
2008.
The surviving ships were rapidly
strengthened following MOL Comforts
sinking, as were three chartered to APL
also built to the same design APL
Zeebrugge, APL Poland and APL Ningbo
and APL France, formerly MOL Charisma.
In a statement soon after the incident,
MOL said its ships had been structurally
reinforced at the midship part by adding
structural materials.
As reinforced, these vessels have
approximately double the hull strength
required in the above-mentioned
requirements, MOL confirmed.
The Japanese line has now begun legal
proceedings against MHI, and has also
taken the rare step of dual-classing MOL
Comforts sister ships.
Lloyds Register, which had been
advising MOL, will join ClassNK as
classification society for MOL Charisma,
the first of the series to have double
certification.
For IACS, though, the race is on to ensure
nothing like this ever happens again, and
that new designs are checked by a peer
group before construction begins.
This is more urgent than ever, given
that ships are becoming bigger in terms
of cargo capacity, with wider beams, and
subject to whipping and springing forces
that may not be fully understood.
Sharing knowledge and best practice is
seen as the way forward.
IACS chairman Roberto Cazzulo insists
there are no loopholes or gaps in the
existing technical requirements.
rules, based on an underlying common
standard.
The IACS requirements will create a
level playing field, says Mr Cazzulo, who
is also chairman of the Italian classification
society Rina. In future, there will be a
more uniform approach to containerships.
Designs will not be standardised, but
certain issues of a general nature known as
functional requirements can be addressed.
One area to be considered is the
strength of a ship, taking into account a
combination of factors such as the weight
of containers and loading conditions, and
ensuring the scope of the analysis is the
same across the IACS membership.
We are are broadening the scope
of the standard verification criteria, not
standardising designs, says Mr Cazzulo.
Although the goal is to make ships
more robust, he does not think the
new requirements will necessarily add
significantly to newbuilding costs.
The amount of steel is unlikely to
change much, he predicts. What may result
is a more optimal weight distribution so
that hull girders are stronger. The extra
steel required to strengthen MOL Comforts
sisterships was relatively small.
The hope is that a more uniform
approach to containerships by class
societies will help both naval architects
and shipyards to build stronger, safer
vessels with a greater safety margin than
for many of those in operation today.
IACS initiative comes at a time when there
is broad consensus that ships will continue
to get larger, and that designs will evolve.
So what did cause a modern
containership to break in two, with both
halves subsequently sinking?
A preliminary report published
by ClassNK late last year set out
recommended safety measures without
explaining the cause of the casualty.
However, while the official line is that
the cause of the accident remains unclear,
insiders are certain the incident was linked
to the use of the high tensile steel and
over-thick steel plates that were more
prone to cracking.
The MOL Comfort misfortune has forced
IACS members to review their rules in
order to ensure that containerships of the
future are more robust, with much wider
seaworthiness margins, and that there is
no competition between shipbuilders or
owners where safety is concerned.
Nevertheless, as ship capacities
increase, the association recognises the
need to broaden the envelope in terms
of structural standards.
We decided it was time for a state-
of-the-art review of IACS criteria on
containerships, Mr Cazzulo told
Containerisation International.
Other classification society bosses agree
that more needs to be done.
Casualties such as the MOL Comfort loss
are a reminder that we still have work to
do, DNV GL maritime chief executive Tor
Svensen said earlier this year.
Safety is our core business.
IACS members need to take a more pro-
active approach to preventing large-scale
accidents, he said.
Although containership losses or
major catastrophes are relatively rare,
the risks are greater than ever because
of the sheer number of post-panamax
vessels in service and the huge volume of
containerised cargo being shipped around
the world.
IACS members each have their own
way of assessing the structural strength of
containerships, but that will not be the case
in future, with a unified approach once new
rules are adopted. When the MOL Comfort
incident investigation is completed, the
conclusions will be taken into account.
Having agreed on a new approach to
the structural safety of containerships
at its council meeting in December,
IACS is now putting together a group of
experts who will draw up more detailed
recommendations.
These are likely to be ready in about a
years time and will form the platform for
individual members to develop their own
Cazzulo: Safety is
our core business.
CLASS SOCIETIES/SHIP CONSTRUCTION
REGULATION
SHIPPERS have long supported
consortia and vessel-sharing
agreements as the most
appropriate form of cooperation
between ocean carriers.
Indeed, shippers were
instrumental in shaping the
current regulatory framework
for consortia in Europe in the
1980s and, more recently, in the
development of guidelines for
non-rate making agreements
in the Asia-Pacific region under
the auspices of the Asia-Pacific
Economic Cooperation.
Historically, that support was
predicated on the basis that
consortia and VSAs were entirely
different animals from liner
conferences and rate-making
and discussion agreements.
The latter restrict or eliminate
competition through price
fixing or discussions on price
which have the same effect as
price fixing. The former are not
price agreements, but they can
potentially influence prices
through cooperation on capacity
and vessel sharing.
The European Union block
consortia regulation (BER)
therefore marked an important
legal milestone in recognising
the distinction between
consortia and price fixing
discussion agreements, one that
eventually paved the way for the
repeal of the liner conference
block exemption.
For example, even DG
Competition itself up until the
early 1980s did not recognise
the difference between
consortia and conferences, and
thought they were synonymous.
Shippers support for
consortia and VSAs, in particular
their potential to reduce costs
and expand the range of services
to shippers, did not therefore
mean or imply support for the
consortia block exemption.
On the contrary, shippers
have consistently argued that
consortia, VSAs and other forms
of carrier cooperation should not
be given any special treatment
under EU competition law.
There are a number of
reasons for this. First, it should
not be assumed that all forms
of consortia, VSAs or pooling
arrangements can be lumped
together as universally beneficial
or benign.
While the wider benefits of
consortia are not disputed, there
are some inevitable restrictions
of competition. For example, a
reasonable level of commonality
of costs will reduce competition
between consortia partners
but, at the same time, the
resulting efficiencies may allow
the benefits to be shared by
shippers through reduced costs
and prices.
However, as the proposed new
P3 global alliance demonstrates,
lines do not need the BER to
plan their future cooperation
arrangements since the scale of
joint operations will be based on
mega-container vessels of up to
18,000 teu.
As a result, because the
market shares of the P3 lines
will exceed the 30% threshold
of the BER, individual self
assessment under the general
provisions of the EU competition
rules guidelines will be
required.
The BER is therefore not
required to guarantee the
benefits of consortia agreements
for shippers. The reality is that
the merits of standard consortia
agreements will continue to
exist in the absence of any BER
since self-assessment will cover
good agreements that genuinely
confer benefits to shippers
through reduced costs, lower
rates and extended services in
any event.
The second reason why self
assessment is necessary is to
deal with potential problems
arising with the BER. For
example, where there is an inter-
relationship between carriers
belonging to more than one
consortium in the same trade
or related trades which can
potentially affect or eliminate
competition, the BER does not
provide any solutions or a safe
harbour for carriers.
Effectively, the carriers will
have to use the self-assessment
mechanism under the horizontal
competition guidelines.
In other words, the consortia
is required under the existing
BER to aggregate their market
shares and self-assess the
potential competition law
implications resulting from
market dominance and potential
elimination of competition.
Finally, two major competition
issues arise from the consortia
BER itself. They concern
information exchanges between
members of the consortium
which is permitted by the
A DIY APPROACH
TO REGULATION
The creation of the P3 Alliance shows why the consortia
block exemption has to go, says Chris Welsh
Chris Welsh is secretary
general of the Global
Shippers Forum
BER, provided the information
is limited to the purpose of
the agreements considered
compatible under the BER.
The problem is where to
draw the line. The EU horizontal
competition guidelines provide
detailed guidance on the
permitted information exchange,
which will assist carriers to
comply in the same way as
other sectors without using the
consortia BER as an excuse for
information exchange outside
the permitted parameters.
This aspect of information
exchange with an industry hard
wired in collusion and with lines
who continue to participate
in carrier rate and discussion
agreements outside or EU
jurisdiction has always worried
shippers.
Similarly, the Global Shippers
Forum has always been
concerned about the major
risk of carriers mis-interpreting
the BER provisions permitting
capacity adjustments in
response to fluctuations in
supply and demand (article
3(2)).
The GSF believes these
sensitive areas, that can lead
to capacity restrictions for the
purposes of maintaining higher
prices, are better dealt with
under self-assessment rather
than under an ambiguous
BER.
GUEST COLUMNIST
The future is calling.
Port of Long Beach
FLEXIBLE WORKS
No port is connected to a better
transloading network.
Distribution should be on-demand. Thats the way you need it. Our unparalleled
transloading capabilities mean you can make the smartest choices. Whether
youre moving by truck or by train, or taking advantage of over 900 million square
feet of warehouse space, Long Beach is your gateway to the nations most
extensive distribution network. Its time to get moving.
polb.com/FlexibleWorks

T P Chí Containerisation Informa - Ci - 201403 PDF

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

T P Chí Containerisation Informa - Ci - 201403 PDF

Diunggah oleh

Hak Cipta:

www.containershipping.

com MARCH 2014

3 controllers, making it a lower-cost option for atmospheric control.

at Carrier for the XtendFRESH system.

Anda mungkin juga menyukai