July 12, 2010 - China's administration has been pushing the three major airlines - Air China, China Eastern and China Southern - to merge their cargo operations to claw back business in a market dominated by foreign carriers, which control about 80 percent of China's international cargo.

The state-owned Assets Supervision and Administration, the eventual owner of the three carriers, initiated a tri-party plan, which called for the merger of cargo operations of the three carriers when the industry suffered its worst hit in decades during the financial crisis.
 
But the proposal failed to take off and the carriers instead decided to pursue their own partnerships.

China Eastern Airlines is trying to convince a merger partner and another carrier it took over recently to merge cargo operations; Air China is moving ahead with its cargo venture with Hong Kong-based Cathay Pacific Airways, which is likely to take off soon; and China Southern is seeking an alliance or partners for a venture.

China authorities admit domestic carriers' fleet of 80 freighters is too small, compared to the hundreds of freighters deployed by international airlines. Instead of improving their overseas network, China carriers have also resorted to price wars to lure cargo from Asia to Europe, resulting in return flights being mostly empty.

"A successful consolidation of China cargo airlines will cut costs, raise efficiency and meet long-term goals," said Wei Zhenzhong, secretary-general of the China Air Transportation Association.

Consolidation is favoured by civil aviation authorities. Ministry of Transport senior officials are encouraging air cargo carriers to consolidate, restructure and cooperate. "The ministry is hoping that China will have at least one air cargo carrier that ranks among the world's top five in the coming decades,'' Wei said.

Zhu Qingyu, director of the marketing research department, said consolidation, in whatever form, would at least stop price wars and help supply chain integration.

Asked about the tri-party merger initiative, Air China president Kong Dong admitted there was such a proposal but took a passive stand and said, "Air China would actively participate in consolidation if it is so asked."

China Eastern general manager Ma Xulun rejected widespread speculation that the cargo operations of the big three carriers will be merged into a single freight airline.

According to industry analysts the carriers did not warm to the ministry's initiative and indicated the merger plan was too far-fetched.

There are several hurdles for such a merger to take place. One is the disagreement among the carriers on who should lead the merger. The three carriers have been competing fiercely among themselves on domestic and international routes. Air China Cargo has been showing good returns and is naturally seeking a leading role in any merger. But China Eastern's China Cargo Airlines has a bigger fleet following the merger with a Shanghai carrier and takeover of another airline, and feels it should be the leader.

Another hurdle for the merger is the wide variety of planes in the three carriers' fleets, which adds to maintenance costs. The three carriers' fleets are composed of Boeing 777s, B747-200s, Airbus aircraft and MD11-transformed freighters.

On top of that. making arrangements for joint use of bellyhold space on passenger planes is also a tricky issue as Air China and China Eastern are in different airline alliances.
Another hurdle is the different systems of management at the three carriers, not to mention their complex shareholding.

Fears of a monopoly is also a potential danger that can upset the applecart unless the government can persuade anti-monopoly authorities at home and abroad.

After looking at the host of problems faced by the ministry-initiated merger, the three carriers decided to pursue their own partnerships. Air China, which sank a Singaporean bid for China Eastern shares, has formed a cargo joint venture with Hong Kong-based Cathay Pacific Airways to explore its market in southern and eastern China.
Air China board of directors spokesperson Huang Bin said that the venture was going through approval formalities and will most likely take off in the latter half of the year. Air China has eight B747 freighters and will take another four from Cathay by December.

As the new venture will be based in Shanghai, Cathay, which reported a 30 percent rise in cargo volumes in May, will be able to expand its footprint from the Pearl River Delta to the Yangtze River Delta. The joint venture has been cleared by anti-monopoly authorities in the European Union.

Meanwhile, China Eastern's cargo arm is trying to merge its cargo operations with two other carriers that have investors from the mainland, Taiwan and Singapore.

China Eastern is holding talks with Shanghai Airlines Cargo, the cargo arm of Shanghai Airlines, and Great Wall Airlines, for the merger of cargo operations. All three carriers are based in Shanghai.

Following share purchases in March, China Eastern is now the largest shareholder of Great Wall Airlines, a joint venture between a Beijing company, SIA Cargo and another Singaporean partner.

China Eastern merged last year with Shanghai Airlines, whose shareholders include China Ocean Shipping Co (Cosco) and EVA Air, a subsidiary of Taiwan-based shipping company Evergreen.

 

 

By Susan Geng
Cargonews Asia

 

 

July 12, 2010 -  Three more ocean carriers - Orient Overseas Container Line (OOCL), NYK Line and Hyundai Merchant Marine - have joined the bandwagon of lines that have announced emergency congestion surcharge on all import containers handled at Jawaharlal Nehru Port (JNPT) from Thursday, reported The Economic Times.

The surcharge will be US$150 per 20-foot equivalent unit and $300 per 40-foot equivalent unit.

The carriers said in a notice that the surcharge was necessary to offset additional costs incurred as a result of increased congestion and rail delays at the west coast hub.

Earlier, APL and Wan Hai Lines levied a $150 per TEU and $300 per FEU surcharge on all inbound containers shipped through the port.

"Due to serious port congestion in Nhava Sheva, we will implement a port congestion surcharge for all inbound cargo including inland shipments," the notice said.
 
Cargonews Asia
  

July 14, 2010 - (BEIJING) The European Union has threatened to renew a tariff on bicycles from China for another five years while scrapping similar levies against Vietnam.

 

The EU said it would reconsider letting lapse the 48.5 per cent duty on Chinese bicycles while allowing levies of as much as 34.5 per cent on Vietnamese bikes expire.

 

The bloc imposed the import taxes in July 2005 to punish Chinese and Vietnamese exporters of bicycles for selling them in Europe below cost, a practice known as dumping. The goal was to help EU producers, including Accell Group NV, counter a decline in their home-market share.

 

The review will determine if the expiry of the duty against China 'would be likely, or unlikely, to lead to a continuation of dumping and recurrence of injury', the European Commission, the 27-nation EU's trade authority in Brussels, said yesterday in the Official Journal. The measure was due to lapse this week along with the levies against Vietnam and will now stay in place during the probe, which can last as long as 15 months.

 

The investigation results from an April 13 request by the European Bicycle Manufacturers Association, which claims that letting the trade protection against China lapse would likely result in a continuation of dumping by Chinese exporters and a recurrence of injury to the EU producers, according to the commission.

 

European trade protection against Chinese bicycles dates to 1993, when the EU introduced a 30.6 per cent anti-dumping duty on imports from the country. The bloc renewed that levy in 2000 before raising it to the current 48.5 per cent in 2005 at the same time as introducing anti- dumping duties on imports from Vietnam.

 

Bloomberg

 

 

 

July 12, 2010 -  Port Klang, comprising Northport and Westports, has retained its title as the country's busiest container port in the first half of this year, with a 48.3 per cent share of the total number of containers handled by all Malaysian ports.

Its rival, Port of Tanjung Pelepas in Johor, was listed second busiest, handling 35.4 per cent of the country's total container throughput, reported Business Times.

Port Klang moved 4.31 million TEUs of cargo in the January-June 2010 period, up 29.3 per cent from 3.33 million TEUs a year earlier, as the global economic recovery boosted cargo traffic, said Port Klang Authority (PKA) general manager Kee Lian Yong.

It handled 856,110 TEUs of exports, up 25.8 per cent from a year earlier, and the volume of imports rose 18.2 per cent to 828,082 TEUs. Transhipment volume rose 34.5 per cent to 2.62 million TEUs.

Kee said Westports led the way in the first half of 2010 with a 30 per cent increase in container volume from the same period in 2009, handling 2.65 million TEUs, while Northport saw a 28 per cent increase to 1.66 million TEUs last year.

"We are on track to achieve our stretch target of 8.4 million TEUs for the whole year, where Westports is projected to handle 5.2 million TEUs and Northport 3.2 million TEUs. The fourth quarter is traditionally the busiest quarter of the year," Kee said.

Port Klang moved 7.31 million TEUs last year, a decline of 8.3 per cent compared with 7.97 million TEUs recorded in 2008.
"The projection for 2011 is a growth of 10 to 12 per cent in container volume," said Kee.

Meanwhile, in terms of tonnage handled, traffic through Port Klang in the first five months (January-May) of this year increased by 36.8 per cent to 65.54 million tonnes from 47.90 million tonnes a year earlier.