December 7, 2010 -  Ocean container carriers may struggle to push through freight rate hikes planned for January, an analyst said.

The conditions that enabled container lines to sharply boost rates at the beginning of 2010 are "noticeably absent" for the next round of increases, according to Paris-based Alphaliner.

Carriers were able to push through rate hikes in January 2010 because deep capacity cuts on Asia-Europe and trans-Pacific routes coincided with a surge in cargo demand driven partly by inventory re-stocking in the U.S. and Europe.

A shortage of containers further tightened capacity, triggering a scramble for space that enabled carriers to push through a series of rate hikes that sparked the recovery in the container shipping market.

These factors are missing in today's market as carriers prepare to lift rates by $500-$600 per 40-foot container on Europe-Asia routes and set a $400 per 40-foot guideline increase for the 2011/12 trans-Pacific contract season.

"Carriers have made only modest capacity reductions during the current winter period, and some even continue to add new capacity despite only moderate utilization levels," Alphaliner said.

The current weekly capacity on the Far East-Europe and Far East-North America routes is 19 percent higher than 12 months ago.

The idled box fleet currently stands at 147 container vessels with a combined capacity of 356,000 20-foot equivalent units compared with a peak of 1.5 million TEUs a year ago.

Meanwhile, inventory levels in the U.S. reached a new record high in November as stock replenishment appears to have reached a peak.

Shipping volume peaked early this year and no significant surge in cargo volume is expected in late December on the eve of the planned rate hikes.

Carriers are counting on a repeat of the market rally in January 2010 to reverse the steady decline in freight rates, which has seen spot rates from China dropping by 29 percent from their July peak.

But modest capacity cuts and high inventory levels "suggest that the carriers' planned price increases will be less successful this time," Alphaliner said.

Barring further capacity cuts there will be sufficient capacity in late January when shippers rush to move goods ahead of China's Lunar New Year holidays which begin on Feb. 3.

   

December 6, 2010 -   There's widespread belief among carriers and shippers that CSA 2010 will tighten truck capacity, but no consensus on when and by how much.

Various trucking officials warn anywhere from 175,000 to 300,000 drivers may leave the industry as a result of the initiative, but those drivers won't lose their licenses en masse, as early rumors about CSA 2010 suggested. First, the Federal Motor Carrier Safety Administration has no authority to revoke state-issued commercial driver's licenses. Second, the safety initiative will be introduced over the next year, with enforcement the last stage of its deployment.

"They should really call it CSA 2011 or 2012," said Satish Jindel, president of SJ Consulting Group, a transportation consultant in Pittsburgh.

That means truckers will face mounting pressure over time to clean up their safety records or turn in their keys.

Trucking companies already have weeded out some poorer performing drivers, said Doug Waggoner, CEO of Echo Global Logistics in Chicago.

"Some of these people are getting thinned out of the bigger companies, but they will get jobs with smaller companies," he said. "There is so much demand for truck drivers right now you can
leave one company and have 10 job offers the next day."

That suggests a "cascade" of drivers with less than stellar safety records from the top carriers to the bottom feeders, in terms of safety compliance.

"If they're leaving one company and going down the chain, they're staying in the system," Waggoner said. But as CSA 2010 extends the FMCSA's reach, those operators running illegally below the agency's radar will be squeezed. "Just having more teeth in hours-of-service enforcement will change everything," Waggoner said. "Everybody's got to play by the rules, and carriers that were doing 700- or 800-mile runs overnight with a single driver will have a harder time doing that."

Those carriers and their drivers will eventually drop out of the capacity pool, he said, which will improve highway safety and increase profitability for the remaining carriers. "It will be slow and gradual," Waggoner said, "so the market will have time to adjust." 

  

December 8, 2010 -  The Gulf region could be "the future center of gravity for the global petrochemicals and chemicals industry," as the industry shifts from mature economies to emerging countries, says H.E. Sheika Lubna Al Qasimi, minister of foreign trade for the United Arab Emirates (UAE). Al Qasimi was speaking earlier today in an opening keynote address to the fifth Gulf Petrochemicals and Chemicals Association (GPCA) Annual Forum, currently being held in Dubai.

The recent global economic downturn may have accelerated the eastward migration of production, Al Qasimi says. "The longer-term trend continues to be one of global petrochemical supply migrating away from the traditional production centers in Europe and North America and toward low-cost regions such as the Middle East and in particular the Gulf region," she says "Industry analysts suggest that this downturn should see further migration of the industry to the Middle East and Asia."

Gulf petrochemical producers are expected to account for 20% of global ethylene production by 2014, a huge rise from the region's 5% share at the beginning of the previous decade. "Overall, the coming years will see the share of Gulf producers in global chemicals production capacity rise further to reach an estimated 16% in 2015 and 20% in 2010," Al Qasimi says. Projects to increase Gulf petrochemicals capacity "will be fuelled by massive domestic and foreign investment inflows coinciding with the international petrochemical sector's movement toward best-cost areas with excellent access to global markets, as reflected by the increasing involvement of the world's major petrochemical players in the GCC," she adds.

The economic downturn left the Gulf chemical industry relatively unscathed with regional petrochemical production growing 3.7% in 2009 as capacity expansion programs continued unabated, Al Qasimi says. Output increased 6.3% in Saudi Arabia last year, and production in Abu Dhabi, Kuwait, and Qatar rose 4.4%, 3.2%, and 7.4%, respectively. "Even within a tough economic environment where capital infusion has become increasingly challenging, the ability of GCC producers to fund their expansion projects has not been an issue," she says. The Gulf added more than 4 million m.t./year of ethylene capacity in 2010, and by 2013 nine more crackers and downstream plants will be onstream in the region, of which five will be in Saudi Arabia, one in Qatar, one in Abu Dhabi, and two in Iran. Saudi Arabia will add 7 million m.t./year of ethylene capacity through 2014, accounting for 25% of global capacity growth, Al Qasimi says.

Innovation has played a "huge role" in the development of the Gulf petrochemical business. This has "enhanced industry efficiencies and helped promote a culture of innovation within the region," Al Qasimi says. "Such emphasis on innovation can lead to sustained economic growth, improved global competitiveness, and more employment and entrepreneurship opportunities," she says.

The emerging Gulf petrochemical industry faced a major challenge in 2009-10 from "protectionist actions" by countries such as China, India, and the European Union "to block imports and protect indigenous industries," Al Qasimi says. These have taken the form mainly of antidumping duties. "While we in the Gulf are pleased that some of the cases in China and India have been closed, we remain concerned about the potential impact of such measures on the development and health of the regional and global industry," she says. "That said, we remain committed to free trade and expect all countries to abide by WTO rules." 

December 6, 2010 - Container truck drivers at India's Cochin Port on November 29 launched an indefinite strike, halting cargo movements to and from India Gateway Terminal, which is managed by DP World.

The Trade Union Coordination Committee, representing all major labour groups in the port, is demanding wage improvements and additional benefits.

"Container trucking activity is at a virtual standstill and if the strike is not called off immediately, shippers will be forced to divert time-sensitive cargoes to neighboring ports," a shipping line agent at Cochin said.

Union leaders said drivers had been demanding wage increases since May and despite several hearings before local labor authorities, no decision was made on wage revision and social security benefits, the Journal of Commerce said.

Reports said negotiations aimed at resolving the impasse between the port terminal authority and striking drivers over a new wage contract had not begun as of Tuesday afternoon.

The labor action comes at a time when the port authority is gearing up to launch its International Container Transshipment Terminal under a 38-year concession agreement with DP World. The $500-million project, touted as India's first transshipment facility, is expected to offer an annual capacity of 1 million TEU in the first phase, increasing to 3 million TEU when fully developed.

Cochin handled 290,000 TEU in fiscal 2009-10 ending March 31, up from 261,000 TEU the previous year. Throughput for the April-October period, the first seven months of fiscal 2010-11, increased to 197,000 TEU from 174,000 TEU on a year-on-year basis. 

  

December 7, 2010 -    The European Commission (EC) has signed a treaty to establish a new airspace block, and has agreed targets for reducing the cost of using air traffic management systems for airlines.

The new functional air space block (FAB), where the provision of air navigation services and related functions are performance-driven and optimised through enhanced co-operation among air navigation service providers, will cover Belgium, France, Germany, Luxembourg, the Netherlands and Switzerland.

It is Europe's third air space block and will be the busiest, in terms of traffic, of nine planned blocks.

The EC also agreed that the target for reducing the cost of air traffic control systems would be set at 3.5% a year between 2012 and 2014. This is watered down from the 4.5% cost reduction target recommended earlier this year by Europe's independent Performance Review Board.

The moves are part of Europe's Single European Sky (SES) initiative.

The International Air Transport Association (IATA) said the EC had taken two steps forward, but one step back.

Director General and CEO Giovanni Bisignani said: "The SES achieved two major milestones this week. For the first time, governments accepted performance targets to drive efficiencies in Europe's air traffic management system.

"This ends the concept of 'we spend and airlines pay' as the modus operandi for Europe's 34 air navigation service providers. The second is the signing of a treaty to formalise FAB.

"This will be Europe's third FAB and will handle the largest traffic volume of those planned. Both milestones move us closer to fulfilling the decades-old dream of the SES."

However, he added: "The watered-down 3.5% target is a major disappointment. It is not a serious challenge to air navigation service providers to reduce costs.

"Instead it is a licence for them to continue with business as usual over the next three years. Targets need to drive change, not support the status quo.

"Given the PRB's assumption of 2.7% traffic growth and inflation of 1.9% over the 2012-14 period, they can meet the 3.5% cost reduction target simply by containing their costs."

SES has five main targets to achieve by 2020: a 50% reduction in the cost of European ATM, a three-fold increase in airspace capacity, an improvement in the safety record by a factor of 10, a reduction in average delays to an average of 30 seconds, and a 10% reduction in the effects of aviation on the environment. 

  

November 24, 2010 -   BDP International has developed a new comprehensive solution for the optimal management of ISO tanks and multiple element gas containers (MEGCs) - one of the core assets of chemical as well as oil and gas (O&G) companies.

An ISO tank is a term used to describe a steel 'pill shaped' container which complies with the International Standards Organisation regulations for the transportation of bulk liquid.

The global logistics and management firm's new solution, dubbed 'The BDPSmart Tower', is expected to address the long-standing problem of the industry by simplifying and improving the management of the flotilla of the industrial tanks used for shipping chemicals and other industrial liquids or gases.

It is estimated that under-utilisation of these containers could be costing chemical and O&G companies more than US$1.5bil a year in unrealised revenue, The Star reported, citing industry sources.

BDP (Malaysia) Sdn Bhd general manager Ng Kar Yit said this new system would realise untapped revenue and yields of the asset due to a better a turnaround time.

"BDPSmart Tower provides end-to-end visibility from the port of departure to the port of desination, its status at the clients' venue until the tanks are returned to their owners.

"We got people on the ground all around the world that render real-time update on the status of the tanks and advise on the next step of action," he told StarBiz.

Of the approximately 250,000 tanks worldwide, 100,000 are owned or leased by chemical or leased by chemical, petrochemical and O&G companies, which are the target market of the solution.. 

  

Promoting trade between Long Beach and South America via the Panama Canal

December 7, 2010 - Officials from the Port of Long Beach and the Panama Canal Authority signed a Memorandum of Understanding (MoU) on Tuesday to promote more trade between Latin America and the US.

The two authorities have agreed to exchange ideas aimed at boosting trade between Long Beach and countries in the East Coast of South America and the Caribbean, via the Panama Canal.

The MOU also calls for an exchange of ideas in the areas of engineering, dredging technology and environmental practices.

"Latin America is a relatively small but an emerging trade partner for our region. This partnership will help increase our reach to this market as it expands," commented Richard D. Steinke, executive director at the Port of Long Beach.

"This accord expands the global network of port authorities, like the Port of Long Beach and the ACP, who are dedicated to green, sustainable and efficient development," said Mario Cordero, Long Beach Harbor Commissioner.

"The Port of Long Beach is dedicated to growing that network and has signed similar agreements with several ports in China, Europe and Mexico," Cordero added.

Officials said that while trade with Latin America accounts for a small percentage of the Port's annual trade volume, officials hope to tap into emerging manufacturing markets to boost future trade.

The Panama Canal is undergoing an expansion project that will double its capacity by 2014.

December 3, 2010 -  Jiaxing International Container Feeder Port, the first river container terminal in eastern China's Zhejiang province has started operation, according to maritime sources, Xinhua reported.

The feeder terminal allows local shippers within 70 kilometres to go through customs procedures at a nearer place.

It also offers waterway intermodal service to the port of Shanghai, reducing about 20 percent of cost for shippers and one third of carbon emission compared to the old way of transportation according to estimation.

Jiaxing International Container Feeder Port is located on the Shanghai-Hangzhou Canal, taking up 320,000 square metres.

It has eight 1,000-tonne berths with an annual capacity of 2.5 million TEU.

The maiden sailing from the terminal uses a ship that can carry 75 TEU, equalling to the capacity of 38 container trucks.

December 7, 2010 - Cefic has confirmed its earlier forecast that growth in output of chemicals will slow in Europe during 2011 compared with 2010. Cefic raised slightly its 2011 forecast for year-on-year growth in production of chemicals, excluding pharmaceuticals, in the European Union (EU) to 2.5%, from 2%. Cefic also nudged its projection for full-year 2010 EU chemicals output growth from 9.5%, to 10% compared with 2009. Cefic made its last forecasts in June 2010.

"We maintain our view from earlier this year that the sharp chemicals rebound in 2009 and early 2010 was driven by inventory rebuilding, [government] support measures, and exports," says Cefic director general Hubert Mandery. "But chemicals output levels forecast for the end of 2011 will remain well below the peak levels reached in 2007."

Overseas demand has been the main driver of the rapid recovery in EU chemicals production growth in 2010, Cefic says. Domestic demand is "much improved," but it will remain below pre-crisis levels for the foreseeable future.

Sources of uncertainty include sharp fiscal tightening by EU member governments, very strong price increases for various types of raw material, and fluctuations in the value of the euro, Cefic says. Doubts also surround U.S. monetary policy, and economic growth levels in China and the rest of Asia, which will all impact EU chemical export levels, Cefic adds.

The European chemical industry streamlined its operations during the economic recession and these efforts are bearing fruit, Cefic says. "Companies have done their homework, have made adjustments, and continue to grow output," says Cefic president Giorgio Squinzi. "In the first eight months of 2010, this enabled Europe's chemical industry to post a trade surplus of €32 billion."