December 10, 2010 -  Ninety per cent of the container ships heading to Northern Europe from Asia have been forced to slow to the speed of a "fresh breeze" because of a sudden slump in demand.

Analysts said the ships had been ordered on to "extra-slow steaming" as a way of saving money and stretching out the work they have, reported The Times.

The average speed of container ships has been cut from 25 to 17 knots, which, according to the Beaufort scale, equates to a fresh breeze.

Demand for imported goods from Asia has fallen, leaving shipping firms with significant excess capacity. The purchasers of the cargo are usually happy with this arrangement as it postpones the arrival of goods they are struggling to sell.

The situation in the shipping market has deteriorated so sharply that companies are expected to start idling vessels within weeks. Emmanuel Bousquet, a sector strategist at Olivetree Securities, said: "Shipping companies took a lot of capacity out in 2009, so when demand, particularly from retailers restocking, increased this year they initially struggled to meet it. A lot of extra capacity has now been added but demand has slowed again and the fourth quarter of this year and the first quarter of next are looking tricky for shippers."

The Shanghai Containerised Freight Index, a measure of demand for cargo containers, has fallen to levels last seen in April. Alphaliner, an industry consultancy, said that 90 per cent of ships heading from Asia to Northern Europe and 83 per cent heading to the Mediterranean were on extra-slow steaming.

"The profits of shipping firms are usually in line with the container indexes, so we are expecting a short-term squeeze on the shipping companies," Bousquet said.

The race to get Asian goods to European shoppers has slowed to a crawl. 

  

December 10, 2010 - Industry observers are telling shipping lines that unless they maintain discipline, and carefully match demand with supply, a rate war is likely to ensue, according to the Shipping Gazette.
 
In comments made at Amsterdam's Intermodal Europe 2010 conference, Box Trade Intelligence analyst Doug Bannister, who once oversaw UK operations for Maersk, and Arthur Worsley, an FIS container derivatives broker, noted that the risk of oversupply remained palpable.
 
Both attributed the excess to an on-going fight to capture market share, similar to what happened in 2009.
 
Rates have declined over 22 weeks, as has demand, cautioned Mr Worsley, who warned that it would only take the actions of one line to send the entire market into a price war, reports London's International Freighting Weekly.

 
But Maersk vice president for terminals intermodal and equipment Soren Toft remained optimistic, saying his company was obliged and willing to show leadership when it came to avoiding the mistakes of last year.

December 13, 2010 -  Although the growth in demand for air freight appears to be slowing, both airlines and airports are seeing record volumes of business, volumes that are triggering increased investment.

The latest monthly figures from Lufthansa Cargo saw an 18.2% increase in volume in November as compared with the same period last year, with traffic in the Americas increasing by 20%. With 11 months of the year gone, volumes are up 19.1%. Admittedly a considerable proportion of this appears to be gain in market share; none-the-less underlying demand remains strong. Indeed, so confident is Lufthansa Cargo in its future prospects that it is investing heavily in new aircraft with the equivalent capacity of 6 MD-11s. In addition it is looking to build a new hub for handling pharmaceutical traffic in Hyderabad in India and a new temperature controlled facility in Frankfurt. Overall the company thinks the market will grow by 4.6% per annum for the next twenty years.

This growth is paralleled in Lufthansa's home airport of Frankfurt, which is seeing record cargo volumes. Europe's largest cargo airport saw a "new historical November record of 198,333 metric tons, up 5.2% year-on-year". For the year so far volumes are up 23.4%. This means the airport is operating at near full-capacity and according to Fraport, the airport's owner; this is forcing airlines to deploy increasingly larger aircraft to meet the growing demand.

Unsurprising this expansion is not just seen in Europe. HACTL (Hong Kong Air Cargo Terminal Ltd) once again has seen record demand in November with a volume of 254,552 tonnes handled. This represents a year-on-year growth of 5.6% although the increase for the year to date is 26.7%. Traffic is now higher than at the pre-recession high seen in 2007. Hong Kong Airport, however, is well positioned in term of new cargo handling capacity, with Cathay Pacific planning to open a new dedicated cargo facility at the airport in 2011.

The rest of the world's air cargo network is likely to see substantial investment in the short to medium-term in order to manage such continuing growth in the sector. Belly- freight still offers potential, however as illustrated in the case of Lufthansa, air freighters are also likely to see growth. In the short-term, however, it would appear that the sector will have the potential for growth in both freight rates and margins as airlines and airports continue to hold a strong hand.

December 14, 2010 - The UAE has lifted a ban on cargo flights from Yemen after it imposed the restrictions following the discovery of parcel bombs on planes in Dubai and London in October.

A Yemeni official said the UAE government lifted the ban following a visit by a UAE airports security team to Yemeni international airports in Sanaa, Aden, Mukalla and Seiyun.

The UAE and a number of other countries placed an embargo on cargo planes coming from Yemen as precautionary measures following the failed attempts to transport bombs to US targets.

Egypt is reportedly considering lifting the ban on Yemen's incoming cargo flights.

The Yemen-based al-Qaida organisation in the Arabian Peninsula claimed responsibility for the plots and warned of further attacks against the US and its allies.

December 9, 2010 - The Transportation Security Administration is exploring the viability of authorizing airline representatives in foreign countries to screen cargo on their behalf to help close the gap between screened and unscreened cargo on passenger flights, said a Department of Homeland Security official with close knowledge of the situation.
 
Under the congressional mandate that went into effect on Aug. 1, all cargo on passenger planes must be screened at the piece level by the airlines, or certified shippers and freight forwarders. The rule was implemented with few noticeable delays because of intensive legwork by the TSA and the air cargo industry. One-quarter to one-third of inbound international cargo is still not screened because the agency doesn't have the authority to impose the same rules overseas, agency officials have publicly stated.

Instead, the TSA has used its standard security program for foreign airlines entering the U.S. market as the vehicle to gradually ratchet up the amount of cargo they screen.
 

The TSA has indicated it may take until mid-2013 to achieve the screening mandate for inbound flights, but is under pressure to move faster. Bills have also been introduced on both chambers of Congress to expand the 100 percent mandate to cargo-only planes in the wake of the Yemen-based parcel bomb plot targeted at U.S. planes.
 
The agency is entertaining the idea of allowing freight forwarders with facilities near airports to do inspections using an airline's screening protocols to help spread the burden, the official said on condition of anonymity because approval has not been granted to speak to the press.
 
In the United States, the TSA set up the Certified Cargo Screening Program so that parties up the supply chain can screen prior to cargo arriving at the airport and help prevent backlogs. Companies can use X-ray, explosive trace detection or physical checks to meet the requirement. Screening during the packing process is a big benefit to shippers because unscreened pallets and other consolidated shipments must be disassembled and screened by logistics companies or airlines, opening the possibility of delayed or damaged cargo.
 
The difference is that each facility is a standalone entity that must be certified by TSA as meeting its screening criteria, whereas the overseas version would involve the forwarder as the airline's authorized representative.
 
The official said that no airlines have stepped forward since the idea was broached last summer. "Nobody has raised their hand and taken advantage to run a pilot like this," the source said. 

December 13, 2010 -  India - A substantial increase in India's industrial output is expected to bring in fresh rate hikes due to the economy's double digit growth this year.

Manufacturing output, which accounts for 80% of India's industrial production index, has soared 11.3% compared to last year, while capital goods output such as construction equipment and factory machinery grew 22%.

This favourable growth of India's robust economy will serve to empower the beleaguered Indian government, still reeling from political fallout due to a telecom scandal that has cost the national treasury an estimated US$40 billion.

"This is quite encouraging. I hope this trend will continue and double-digit growth in the industry will be possible," Finance minister Pranab Mukherjee said.

India is right behind China in the race for the fastest-expanding major economy. The recent figures look set to affirm government projections that economic growth for the fiscal year to March 31 could cross 9%, Industry Week reported. 

 

December 14, 2010 -   Security firms are urging cargo interests, warehouse operators and transportation companies to take added security measures during the holiday season to protect against cargo theft.

A survey by security technology provider FreightWatch International found cargo theft during seven U.S. holiday periods over the past two years was 28 percent higher than during non-holiday periods.

Cargo theft generally increases during the New Year's Eve, New Year's Day, Memorial Day, July 4, Labor Day, Thanksgiving and Christmas holidays primarily because cargo is not in motion or is left unattended during those holiday periods.

Popular items for thieves include food and drink, electronics, clothing and shoes, pharmaceuticals, consumer care products, building and industrial supplies, auto parts and alcohol.

Theft of food and drink, consumer care products and pharmaceuticals registered higher growth the past two years than other cargoes.

States with the highest number of incidents of theft were Florida, California, New Jersey, Texas, Illinois and Georgia.

FreightWatch encouraged cargo interests to step up their security measures and guard freight closely throughout their supply chains. 

  

December 14, 2010 - From 1 January 2011, traders will have to make an electronic declaration to Customs with security data on goods before they leave or enter the European Union. The aim of this measure is to increase security in international trade, by enabling customs to carry out better risk analyses on the basis of the information received in advance, and therefore to better target controls. Traders have benefited from a transitional period to adapt their electronic systems to these new rules since July 2009.
 
Algirdas Semeta, Commissioner responsible for Taxation and Customs, Audit and Anti-Fraud said: "Customs today plays a vital role in ensuring the security of citizens and safe trade. Advance security information will assist Customs in the early detection of risky shipments and therefore to increase security without delaying reliable trade."
 
From 1 January 2011, all traders involved in customs transactions and international logistics will have to provide EU Customs with security data through electronic declarations, before goods are brought into, or out of, the European Union. In addition, a uniform set of EU risk-criteria will be applied by Member States when carrying out Customs controls on goods entering or leaving the EU.
 

Recent air cargo security incidents have shown that the reinforcement of Customs risk analysis systems is essential for good security.

 

Access to security data at an early stage, i.e. before goods physically arrive at the border will allow cargo movements to be more efficiently screened and enable Customs authorities to carry out better risk analyses. As such, Customs will be better able to focus controls on high risk cargo, while quicker processing and release of goods at entry or exit will help to ensuring smooth trade.

The type of security data requested from the traders varies according to the means of transport and the reliability of traders involved in the operation. It can include, for example, a description of the goods, information on the consignor or exporter, the route of the goods, and any potential hazards. The time limits for submitting advance security data also vary according to the means of transport: from 24 hours in advance of loading for maritime cargo to 1 hour before arrival for road traffic or even less for certain air transport.

Since 1 July 2009, it has been possible for traders to submit their advance declaration on an optional basis. From 1 January 2011, it will be compulsory. 

  

December 14, 2010 -  China hopes to have free trade discussions with India during premier Wen Jia Bao's visit to New Delhi this week, a signal of how the two Asian powerhouses may try to smooth tensions over their economic and border rivalries.

'The free trade agreement is the next stage (of India-China relations). It is our hope that we can start the process,' China's envoy to India, Zhang Yan, told reporters yesterday.

'We are very much positive on these issues. I think that in general the Indians think it is positive but need more time.'

While a deal could be years away due to Indian fears that it could become a dumping ground for cheap Chinese goods, it highlights how world powers are trying to boost ties with a South Asian nation that is one of the few stars in a weak world economy.

Mr Wen's visit will be the first to India by a Chinese premier in four years and comes a month after President Barack Obama's trip. President Nicolas Sarkozy and British Prime Minister David Cameron have also visited India this year.

Despite a boom in bilateral commerce in the past decade, and cooperation on global issues such as climate change, India and China remain deeply suspicious of each other's growing international influence.

Both powers compete from Latin America to Africa for resources. Many in India fear that China wants to restrict its influence, potentially by opposing a UN Security Council seat for India or encircling the Indian Ocean region with projects from Pakistan to Myanmar.

Assistant Chinese Foreign Minister Hu Zhengyue said that everything would be up for discussion during the Dec 15-17 visit to New Delhi. Mr Wen then goes straight to Pakistan, India's nuclear armed rival, for another two nights.

'No issues are off the table,' Mr Hu told reporters in Beijing, adding that the India trip was to expand bilateral trade, increase cooperation and promote regional peace and stability.

China and India plan to sign a series of business deals, including one agreed in October for Shanghai Electric Group Co to sell power equipment and related services worth US$8.3 billion to India's Reliance Power.

Representatives from Shanghai Electric and commercial banks would accompany the delegation and try to iron out financing details, said Liang Wentao, a deputy director-general at the Ministry of Commerce. He would not give a value for the total amount of deals to be signed.

India's trade deficit with China rose to US$16 billion in 2007-08 from US$1 billion in 2001-02, according to Indian customs data. China is India's biggest trading partner, with bilateral trade expected to exceed US$60 billion this year.

India has sought to diversify its trade basket, but raw materials and other low-end commodities such as iron ore still make up about 60 per cent of its exports to China.

In contrast, manufactured goods - from trinkets to turbines - form the bulk of Chinese exports.

Analysts said that India would be reluctant to agree to any trade deal. India's US$1.3 trillion economy lags China's US$5 trillion economy in 2009, according to the World Bank.

'I think the Indian side will not be able to accept any free trade agreement, as the fear is that China would dump goods in the Indian market,' said Srikanth Kondapalli, head of East Asian Studies at Jawaharlal Nehru University.

India and China have also clashed repeatedly over a raft of political issues including their long-disputed border, China's increasingly close relationship with Pakistan, and fears of Chinese spying.

Mr Wen's trip to Pakistan, meanwhile, will aim to further cement a relationship both sides describe as 'all-weather'. 
 

   

December 9, 2010 - The United States and Brazil have initialed a framework for an open skies treaty that loosens regulation of the aviation market between the two countries, the State Department said Monday.

A separate agreement will lead to a significant expansion of airline services on an interim basis until all the open skies elements go into effect several years from now.

Brazil is one of the restrictive international air markets in Latin America.