text: Bi-Monthly TLSC Bi-Monthly Newsletter 15-31 MARCH 2011 issue Transport-Logistics-Supply Chain News Audit Lebanon'free publication http://auditlebanon.web.officelive.com 15-31 March 2011 Issue "The only time you run out of chances is when you stop taking them" Points of Interests Falling rates could cost top carriers $13 billion this year Container ships keep dominating new building orders Genco Shipping & Trading Limited Completes Acquisition of 13 Supramax Vessels Private jet business booms as unrest sweeps Mideast and lot more news inside AUDIT LEBANON free publication Page 1 Bi-Monthly TLSC 15-31 MARCH 2011 issue Falling rates could cost top carriers $13 billion this year The world's ten top container lines could lose as much as US$13.3 billion in revenue this year, unless they can push-up rates. The figure is an estimate from SeaIntel Maritime Analysis, based on freight rate statistics from the Shanghai Shipping Exchange which measures the development in spot rates on main trades out of Shanghai. In 2010, the average freight rate for "main haul" routes (transpacific, Asia-US east coast, Asia- Northern Europe and Asia-Mediterranean), was $3,083 per feu, a figure expected to fall 28% to $2,219 per feu this year. SeaIntel said this trend could be extended to all trade lanes. "Most other trades globally have been seeing consistent declines," said the analyst. "If we assume an average top-10 carrier has 25% of its volume locked into long-term contracts at 2010 levels, valid until 2012, and we further assume that other trades only decline at half the rate of the main haul – 14% – the carrier would still face an average freight rate decline of some $380 per feu in 2011. "Any decline in the freight rate is passed right through to a [carrier's] bottom line." SeaIntel said it had been estimated that the top ten container carriers would transport 35 million feu this year. Using its estimate of an average rate decline of $380 per feu, this would see turnover by these carriers plunge $13.3 billion on 2010, which could result in net losses for the year. Media reported that freight rates had continued to tumble over the last few weeks, almost dipping below the US$1,000 per teu mark on the Asia to Europe trade. The latest Shanghai Containerised Freight Index shows prices on the four main trade lanes fell in the week ending 20 March from the week before and rates are now at their lowest point since September 2009. And with no capacity reductions yet announced by shipping lines, observers said planned rate increases were looking less and less likely. Prices from Shanghai to North Europe fell to $1,019 per teu from $1,076 the previous week, while rates from Shanghai to ports in the Mediterranean slumped to $1,001 from $1,042. Meanwhile, rates from Shanghai to the US west coast slipped $37 to $1,617 per feu and rates to the east coast fell $41 to $2,821 per feu. However, some freight forwarders have reported shipping lines quoting rates as low as $800 per teu on services from Shanghai to the UK. AUDIT LEBANON free publication Page 2 Bi-Monthly TLSC 15-31 MARCH 2011 issue Container ships keep dominating new building orders New building orders for container ships have kept stealing the spotlight in the market during the past few weeks, as more and more companies are trying to prepare themselves for the expected rise of global container trade, especially from 2013 onwards. Hot on the heels of Maersk's mega order for at least 10 Triple-Es, i.e. the largest ship type currently available with a capacity of 18,000-TEUs each, OOCL confirmed an order of $816 million with Samsung for six ships of near 14,000 TEUs each, the largest ships the company has ever operated. According to the latest weekly report from Clarksons, "the demand from the operators for the very large ships seems to remain firm - as the fight for market share and maximising economies of scale continues. It will be interesting to see if this spate of ordering continues and very interesting to see if the large Japanese Liner companies also join the ordering frenzy being witnessed at the moment. There have been a total of 17 firm container ships over 10,000 TEU ordered so far this month and if all options are declared for these firm orders, this will rise to 40 ships! With the liner companies seemingly focusing on the largest super post panamax ships, it will be interesting to see how the newbuilding market continues to develop for the smaller feeders and new generation of post-panamax 3- 7,000 TEU Vessels. We believe that the trend will continue, of non historical container owners entering the sector and becoming tonnage providers for the lines, servicing the very important inter-regional and feeding trade. One thing remains certain - with the giant ships on the long haul routes there will more than likely be a strong demand for shorter haul feeding off from the large container ports - and again this adds further strength to the broader container newbuilding story" said the world's leading shipbroking company. In terms of reported business; In Dry, Samho Shipbuilding are reported to have won an order from Manta Denizcilik Nakliyat for a pair of 35,000dwt Handysize bulkers with deliveries due in 1Q 2012. In Containers, as already said, OOCL have signed 6 option 4 x 13,800 TEU Vessels at Samsung H.I. at a reported price of USD 136 Mill per vessel and deliveries from 2013 onwards. In a separate analysis, Golden Destiny said that 12 new orders were reported in total during the course of the previous week. The exact figure of the invested capital remains unknown since 10 of the 12 orders (all of which in the container sector where reported at undisclosed prices). This week the only interest reported was in the container and special cargo sector. From the ordering activity, both sectors lately appear to be very attractive and with investment opportunities. "The Greek presence has been noticed this week in 4 transactions reported in the secondhand and 4 in the newbuilding market. The preference in the secondhand market was towards bulkcarriers, while the total invested capital was region $ 105,5 mil. In the newbuilding market the Greek presence was noticed only in the container panamax sector, however the invested capital remains undisclosed" mentioned the shipbroker. It added that in the secondhand market, 25 vessels reported to have changed hands this week equalling a total amount of money invested around of US$ 806,500,000, with four transactions reported on private terms. In terms of reported number of transactions, the S&P activity remained on the same level with last week, while is down by region 42% comparable with previous year's weekly S&P activity when 43 vessels induced buyers' interest. In terms of invested capital, the container sector appears to be the most overweight with around US$ 360 mil invested in the sector, a 44.5% share of the total invested capital in the S&P secondhand market. "In the demolition market, 22 vessels reported to have been headed to the scrap yards of total deadweight 669,300 tons, with the most of activity being concentrated on the dry sector. In terms of reported number of transactions, the Demolition activity has been marked with a 46.5 % positive w-o-w change, while in terms of deadweight the weekly change was almost at 100% (91.5%), which means that bigger vessels headed the scrapyards. In terms of scrap rates, the highest scrap rate has been achieved this week by Bangladesh for a general cargo vessel that seems to obtained $ 525/ldt, however an old sale and also we remain cautious since the situation in Bangladesh we understand hasn't yet been stabilised" concluded the report. Nikos Roussanoglou, Hellenic Shipping News Worldwide AUDIT LEBANON free publication Page 3 Bi-Monthly TLSC 15-31 MARCH 2011 issue Genco Shipping & Trading Limited Completes Acquisition of 13 Supramax Vessels Genco Shipping & Trading Limited yesterday announced that it has taken delivery of the Genco Rhone, a Supramax newbuilding. The Genco Rhone is the final vessel to be delivered to the Company under Genco's agreement previously announced on June 25, 2010 to acquire 13 Supramax vessels from Setaf SAS, a wholly owned subsidiary of Bourbon SA. The Company also announced that it has reached an agreement to enter into a spot-market related time charter for the Genco Rhone with AMN Bulkcarriers Inc. for 11 to 13.5 months at a rate based on 102% of the average of the daily rates of the Baltic Supramax Index, or BSI, as reflected in daily reports. Hire is paid every 15 days in arrears net of a 5% third party brokerage commission. Genco maintains the option to convert the balance of any period of this charter to a fixed rate based on the Baltic Supramax Index FFA values at 102%. The time charter for the Genco Rhone is expected to commence on or about March 30, 2011 and is subject to the completion of definitive documentation. The Company used its available cash to pay the remaining balance of approximately $32.13 million for the Genco Rhone. On August 20, 2010, the Company entered into its previously announced $253 million senior secured term loan facility and intends to use the credit facility to refund a total of $21.5 million associated with the purchase of this vessel to the Company. Genco Shipping & Trading Limited transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. Excluding Baltic Trading Limited's fleet, and assuming deliveries of the three remaining Handysize vessels we recently agreed to acquire, we will own a fleet of 53 drybulk vessels, consisting of nine Capesize, eight Panamax, 17 Supramax, six Handymax and 13 Handysize vessels, with an aggregate carrying capacity of approximately 3,812,000 dwt. In addition, our subsidiary Baltic Trading Limited currently owns a fleet of nine drybulk vessels, consisting of two Capesize, four Supramax, and three Handysize vessels. References to Genco's vessels and fleet in this press release exclude vessels owned by Baltic Trading Limited, a subsidiary of Genco. Private jet business booms as unrest sweeps Mideast Private jets, once playthings of the rich, have become a necessity for travellers in the restive Middle East and North Africa where commercial airlines have scaled back flights. Business is booming. Banned by many firms as an extravagance after the global downturn, jets – some with gold-plated interiors, bedrooms and bathrooms – are vital for businessmen, diplomats, politicians and families wanting quick, discrete exits from trouble spots. Airspace over the world's No. 1 oil exporting region is buzzing, with passengers doling out as much as $18,000 for an hour-long flight on an 18-seater, after protests toppled rulers in Tunisia and Egypt this year and the unrest spread to Gulf states including Bahrain, Yemen, Kuwait and Saudi Arabia. "During the peak of the Egypt unrest, we were flooded with calls," said Shane O'Hare, president and chief executive of Royal Jet, based in Abu Dhabi. "We had corporate customers, individuals, families, diplomats and others calling for our service," he said. The company got about 20 calls a day, with up to seven trips every couple of days compared to just two flights normally in the same period in the last two years. "People were desperate to leave," Paras Dhamecha, executive director of Dubai-based operator Empire Aviation Group, said of Egypt where his firm ran six to seven flights a week transporting groups and large families. "The crisis is very unfortunate, but it has boosted business for us," said Mark J. Pierotti, chief operating officer of Al Jaber Aviation, an Abu Dhabi-based premium charter and business jets service. "We are not back to the levels we saw in 2007, but it seems like we can get there soon." The business jet market fell hard in 2009 after five consecutive years of growth as companies cut spending and tighter credit made purchases difficult, but business is up by at least 15 per cent since December and the company is inundated with rescue calls, Mr. Pierotti said. AUDIT LEBANON free publication Page 4 Bi-Monthly TLSC 15-31 MARCH 2011 issue "There have been repeated demands for the best business jets. The Airbus A318 is very popular and so are the Embraer Lineage," he said. "We have seen very difficult times in 2008 and 2009 when the recession peaked. But now, we are back. We see hope." The Gulf's proximity to North Africa, where much of the fighting has been centred, has made havens of Qatar, the United Arab Emirates and Saudi Arabia. Seventy per cent of business jets in the region are owned by Saudi and UAE-based companies. Companies desperate to pull their staff out of Libya have also inundated private jet firms with calls as U.N.- sanctioned air strikes hit the North African state and rebels engage in a fierce war with supporters of leader Muammar Gaddafi. "Security was a major concern in Libya. The airspace was actually closed when the unrest intensified," said Royal Jet's Mr. O'Hare. "We operated aircrafts to Malta and made arrangements for our clients to reach (there) from Libya." He declined to specify those arrangements. Al Jaber's Mr. Pierotti said the operator had at least three flights going to Tunisia each week during its crisis and about two flights a day to Cairo. The massive earthquake and tsunami in Japan brought yet more passengers, as Arab businessmen and diplomats stuck in Japan called on operators to get them home. The need is not just for speed but also for privacy, in some cases, as politicians, diplomats and other public figures opt to evade the media glare during a political crisis or hold private discussions, something more difficult to do on commercial flights. Business jets also offer a certain discretion – reports of Egyptian, Tunisian and Libyan politicians fleeing on private jets have been widely reported during the current unrest. "They (private jets) are a means of travelling under the radar," said Sudeep Ghai, partner at London-based airline and airport consulting firm Athena Aviation. Mr. Ghai forecast the corporate jet industry will grow 8-10 per cent this year, with more than 200 jets expected to be delivered in the Gulf region by 2015. "It is a discrete but highly relevant need in the current environment," he said. "In times of perceived crisis, business aviation often reacts in a way that is opposite to commercial aviation," said "Regular passengers whose travel needs are non-essential will stay at home. But, as available frequencies are cancelled, journeys to the airport become more complicated and security concerns rise, the time-poor, must-travel segment will usually find a way to fly and business jets provide the convenience of taking you where you need to go, on demand." Taiwan: Shipbuilding market continues decline Taiwan's shipbuilding market is still depressed despite recent economic growth and might not show a strong rebound until 2012, Taiwan's leading ship manufacturer said Wednesday. Industry prices which have fallen sharply since the economic recession took hold in 2008, have only recovered to 80 percent of pre-crisis levels, said Tang Tay-ping, chairman of the state-owned shipbuilder, CSBC Corp. Taiwan has failed to provide better mortgage conditions for foreign companies and many buyers are still delaying taking delivery of new vessels to avoid having to make early payments, Tang said, adding that those factors are hampering the market growth. As a result, CSBC will increase its production capacity by 50 percent to meet the challenges of the sluggish market, Tang said. Although Japan has been sent reeling by the March 11 earthquake, tsunami and nuclear crisis, its shipbuilding industry has not been affected and remains one of the world's top three shipbuilders along with China and South Korea, Tang said, adding that his company's orders of raw materials and equipment from Japan have been AUDIT LEBANON free publication Page 5 Bi-Monthly TLSC 15-31 MARCH 2011 issue unaffected. The annual revenue of CSBC Corp. decreased by 16 percent to NT$26.1 billion (US$870 million) before tax, while the price per share has decreased from last year's NT$3.39 to NT$2.35. Swissco group orders three new vessels Swissco Holdings Ltd has announced that it has, through its wholly owned subsidiaries, Swissco Energy Services Pte Ltd and Swissco Offshore Pte Ltd, entered into shipbuilding contracts for the construction and delivery of three offshore support vessels, including one anchor-handling tug supply vessel and two utility vessels. The total contract value for the construction of the OSVs is approximately S$27 million, excluding owner supplied items. The OSVs will be constructed in the province of Guangzhou in China, and are expected to be delivered to by the end of 2012. The vessels are expected to be deployed in the region as well as to oil and gas fields in the Middle East. "Even though charter rates have not fully recovered from the effects of the last financial setback in 2008," said. Robert Chua, Chairman of Swissco Holdings Ltd, "our organisation needs to position itself in preparation for the recovery." "We are building vessels on a selective level and keeping to our niche in the OSV market for the time being." The funding for the construction of the OSVs is expected to be from internal resources as well as bank borrowings. The Swissco group currently owns and operates a fleet of 38 OSVs and expects to take delivery of additional five vessels in 2011 and with the aforementioned order, another three vessels in 2012. The economic consequences of the Arab world's revolt Political turmoil in the Middle East has powerful economic and financial implications, particularly as it increases the risk of stagflation, a lethal combination of slowing growth and sharply rising inflation. Indeed, should stagflation emerge, there is a serious risk of a double-dip recession for a global economy that has barely emerged from its worst crisis in decades. Severe unrest in the Middle East has historically been a source of oil-price spikes, which in turn have triggered three of the last five global recessions. The 1973 Arab-Israeli War caused a sharp increase in oil prices, leading to the global stagflation of 1974-1975. The Iranian revolution in 1979 led to a similar stagflationary increase in oil prices, which culminated in the recession of 1980-1981. And Iraq's invasion of Kuwait in August 1990 led to a spike in oil prices at a time when a US banking crisis was already tipping America into recession. Oil prices also played a role in the recent finance-driven global recession. By the summer of 2008, just before the collapse of Lehman Brothers, oil prices had doubled over the previous 12 months, reaching a peak of $148 (Dh543.52) a barrel — and delivering the coup de grâce to an already frail and struggling global economy buffeted by financial shocks. AUDIT LEBANON free publication Page 6 Bi-Monthly TLSC 15-31 MARCH 2011 issue We don't know yet whether political contagion in the Middle East will spread to other countries. The turmoil may yet be contained and recede, sending oil prices back to lower levels. But there is a serious chance that the uprisings will spread, destabilising Bahrain, Algeria, Oman, Jordan, Yemen, and eventually even Saudi Arabia. Non-fundamental factors Even before the recent Middle East political shocks, oil prices had risen above $80 to $90 a barrel, an increase driven not only by energy-thirsty emerging-market economies, but also by non-fundamental factors: a wall of liquidity chasing assets and commodities in emerging markets, owing to near-zero interest rates and quantitative easing in advanced economies; momentum and herding behaviour; and limited and inelastic oil supplies. If the threat of supply disruptions spreads beyond Libya, even the mere risk of lower output may sharply increase the "fear premium" via precautionary stockpiling of oil by investors and final users. The latest increases in oil prices — and the related increases in other commodity prices, especially food — imply several unfortunate consequences (even leaving aside the risk of severe civil unrest). First, inflationary pressure will grow in already-overheating emerging market economies, where oil and food prices represent up to two-thirds of the consumption basket. Given weak demand in slow-growing advanced economies, rising commodity prices may lead only to a small first-round effect on headline inflation there, with little second- round impact on core inflation. But advanced countries will not emerge unscathed. Indeed, the second risk posed by higher oil prices — a terms-of-trade and disposable income shock to all energy and commodity importers — will hit advanced economies especially hard, as they have barely emerged from recession and are still experiencing an anaemic recovery. The third risk is that rising oil prices reduce investor confidence and increase risk aversion, leading to stock-market corrections that have negative wealth effects on consumption and capital spending. Business and consumer confidence are also likely to take a hit, further undermining demand. If oil prices rise much further — towards the peaks of 2008 - the advanced economies will slow sharply; many might even slip back into recession. And, even if prices remain at current levels for most of the year, global growth will slow and inflation will rise. What policy responses are available to dampen the risk of stagflation? In the short run, there are very few: Saudi Arabia — the only Opec producer with excess capacity — could increase its output, and the US could use its Strategic Petroleum Reserve to increase the supply of oil. Over time — but this could take years — consumers could invest in alternative energy sources and reduce demand for fossil fuels via carbon taxes and new technologies. Because energy and food security are matters of economic as well as social and political stability, policies that reduce commodity-price volatility should be in the interest of producers and consumers. Time to act But the time to act is now. The transition from autocracy to democracy in the Middle East is likely to be bumpy and unstable at best. In countries with pent-up demand for higher income and welfare, democratic fervour could lead to large budget deficits, excessive wage demands, and high inflation, ultimately resulting in severe economic crises. So a bold new assistance programme should be designed for the region, modelled on the Marshall Plan in Western Europe after the Second World War, or on the support offered to Eastern Europe after the collapse of the Berlin Wall. Financing should come from the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, as well as from bilateral support provided by the US, the European Union, China, and the Gulf states. The goal should be to stabilise these countries' economies as they undertake their delicate political transitions. The stakes are high. Unstable political transitions could lead to high levels of social disorder, organised violence, and/or civil war, fuelling further economic and political turmoil. Given the current risk-sensitivity of oil prices, the pain would not be confined to the Middle East. AUDIT LEBANON free publication Page 7 Bi-Monthly TLSC 15-31 MARCH 2011 issue Intra-Asia Trade to Reach 22 Million Teu Intra-Asia trade is likely to reach 22 million teu this year, overtaking the two east-west trunk trades between Asia and North American, and Asia and Europe, according to new data from Box Trade Intelligence (BTI). BTI said intra-Asia trade volume is expected to jump by 7% in 2011 and by 5% in 2012. Although intra-Asia trade is expected to post single-digit growth figures over the next two years, the crisis in Japan could have a significant impact on trade volume, BTI revealed. The box trade analyst said Japan is the second-largest trading country after China, representing 16% of total exports and 20% of total imports. In certain commodity types, Japan represents 42% of all road vehicles produced in the region, 43% of specialised machinery, 42% of all power generating machinery and 72% of pulp and waste paper products. The report also revealed that by 2012, Chinese exports will represent 35% of intra-Asia trade, with an annual average growth rate of 12%. Horizon Lines Said to Weigh April Bankruptcy as Convertible Bonds Plummet Horizon Lines Inc. (HRZ) may file for bankruptcy as soon as April after the shipping company agreed to pay a $45 million fine to resolve U.S. Justice Department price- fixing charges, according to three people familiar with the matter. Horizon Lines failed to get bondholder approval to waive a default after the fine and may be forced to seek court protection if talks with creditors to restructure its debt fail, the Charlotte, North Carolina-based company said in a March 28 regulatory filing. The company may seek to swap its debt for equity to avoid bankruptcy, said the people, who declined to be identified because the talks are private. Jim Storey, a spokesman for Horizon Lines, didn't return two calls and an e-mail seeking comment. Stephen Fraser, interim chief executive officer, didn't immediately return a message left on his voicemail. Legg Mason Inc. (LM) and its Western Asset Management Co. unit, BlackRock Inc. (BLK), Pioneer Investment Management Inc. and Angelo Gordon & Co. own about 85 percent of Horizon Lines $330 million in 4.25 percent convertible notes due August 2012, according to data compiled by Bloomberg. The notes dropped to 80 cents on the dollar from 91.1 cents on March 28, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The securities dropped from 91.125 the past two days, Trace data show. Three years of mostly declining container volumes amid the worst recession since the Great Depression are being exacerbated by the Justice Department fine and a proposed $20 million settlement in a class action lawsuit. Moody's Investors Service yesterday downgraded Horizon Lines two levels to Caa3, its third-lowest rating. The operator of container ships between the continental U.S., Alaska, Hawaii and the nation's territories expects to be in default on the terms of its convertible notes during the second quarter, the company said in the filing. It expects to violate the terms of its senior credit facility in the third quarter. The Justice Department settlement and pending civil litigation "could prevent the company from accessing credit markets" and refinancing its convertible notes, according to a presentation by investment bank Houlihan Lokey, which is advising creditors. Horizon Lines is being advised by Moelis & Co. and Kirkland & Ellis LLP. The company's shares fell 35 cents, or 22 percent, to $1.27 as of 4:15 p.m. in New York Stock Exchange composite trading. The shares dropped 61 percent this week and have fallen from as high as $36.55 a share in July 2007. AUDIT LEBANON free publication Page 8 Bi-Monthly TLSC 15-31 MARCH 2011 issue China Cosco Predicts 32% Bulk-Cargo Slump as Global Fleet Outpaces Demand China Cosco Holdings Co., Asia's largest shipping company by market value, forecast a 32 percent drop in dry-bulk traffic this year as expansion in the global fleet outpaces demand. Commodity shipments will slump to 959 billion ton- nautical miles this year from 1.42 trillion last year, the Tianjin, China-based shipping line said in a statement late yesterday. Container volumes will rise 9.4 percent to 6.8 million, it said. Global dry-bulk capacity will expand 14 percent this year, outpacing a 6 percent rise in demand, the shipping line said, after China financed orders for new vessels during the global recession to help prop up shipyards. The capacity increase has caused the Baltic Dry Index, a commodity- shipping rates benchmark, to drop 47 percent in the past year. "There are simply too many bulk ships on order right now," said Um Kyung A, an analyst at Shinyoung Securities Co. in Seoul. "The Baltic Dry Index could remain at current levels for about four years unless there's a spike to demand." Traffic for the company's dry-bulk fleet last year was little changed, trailing a 19 percent jump in container volumes as rebounding consumer spending in the U.S. and Europe revived demand for shipments of Asian-made goods. The company's container-shipping revenue was 43 percent higher than its dry-bulk sales in 2010 after being almost the same a year earlier. Container Gains The container pick-up helped China Cosco, operator of the nation's largest cargo-box fleet, post a 2010 net income of 6.9 billion yuan, compared with a year-earlier loss of 7.5 billion yuan, according to the statement. The company was expected to post a profit of 6.8 billion yuan, according to the average of 14 analyst estimates compiled by Bloomberg. China Shipping Container Lines Ltd., the nation's second-biggest cargo-box carrier, separately reported a profit of 4.2 billion yuan last year, compared with a loss 6.49 billion yuan a year earlier, in a Shanghai stock exchange statement. This year, the container-shipping market will "maintain its equilibrium due to the increase of cargo volume and reasonable management" of capacity industrywide, China Cosco said. Europe, Transpacific The company's container-shipping revenue surged 68 percent last year to 46.3 billion yuan, with sales on Asia- Europe and transpacific routes both almost doubling because of increased volumes and higher rates. The company, with 150 container ships at the end of last year, will receive six this year and 32 more in the next two years. China Cosco's dry-bulk fleet totaled 450 vessels at the end of last year. It has 18 ships on order through 2014. The company, controlled by China Ocean Shipping (Group) Co., dropped 0.5 percent to HK$8.05 as of 10:29 a.m. in Hong Kong. The stock has fallen 2.3 percent this year, while the benchmark Hang Seng Index climbed 1.3 percent. The Baltic Dry Index dropped 41 percent in 2010 to end the year 1,773. The index has fallen 11 percent this year because of an oversupply of vessels and slowing demand in China. Bulk Backlog The backlog of on-order bulk ships is equal to 43 percent of the current global fleet by deadweight tons compared with a 25 percent rate for container ships, according to data on the Bloomberg terminal. Iron ore imports by China, the world's biggest buyer, may also fall for a second year in 2011 as record high prices spur output from domestic mines, according to Mysteel Research Institute. Shipments into the country fell 1.4 percent last year, the first decline since 1998. AUDIT LEBANON free publication Page 9 Bi-Monthly TLSC 15-31 MARCH 2011 issue Red flag for regional shipping International trade is facing higher risks because of the globalisation of shipping networks, with future disruptions especially likely to emanate from the Mena region. Efthimios Mitropoulos, the secretary general of the UN International Maritime Organisation (Imo), said safety and security risks to shipping associated with "catastrophic events" ranging from natural disasters to terrorism were on the rise. "An event in one particular area has a substantial potential to affect the global system as a whole," he told the World Ports and Trade Summit in Abu Dhabi. "It is vital that strategic shipping lanes be kept open under all circumstances." In this region, those include the Strait of Hormuz, which 40 per cent of the world's sea-borne crude supply passes through on its way from the Gulf to the Indian Ocean. Other regional maritime choke points for international shipping are the Bab al Mandab connecting the Red Sea and the Gulf of Aden, and the Suez Canal in Egypt, which links the Mediterranean and Red seas. About 11 per cent of the world's crude passes through the canal. All three strategic sea lanes are subject to security threats related to unrest in the Mena region, and Somali piracy in the Gulf of Aden and beyond. "The strategic importance of the Gulf of Aden is clear," Mr Mitropoulos said. Because of that, the Imo has placed its anti-piracy action plan at the top of its agenda this year. Last month, the group sent a letter to its members, sister UN agencies and various organisations outside the UN flagging naval reports of "an unacceptably high proportion" of commercial shipping in the pirate-infested region failing to show visible deterrent measures or to act upon navigational warnings of pirate attacks or suspect vessels. "Too many large ships seem to think they are invulnerable. But experience has shown this is not the case, particularly when it comes to fully laden tankers," said Mr Mitropoulos. While the extent and nature of potential threats to shipping were still to be assessed, the importance of the Gulf to global energy trade had become "clearer than every before", he said. If substantial threats to Mediterranean shipping lanes emerged, shipments of Caspian and Iraqi oil via Turkey from the Ceyhan export terminal could be jeopardised. One option for western oil-consuming countries might be to increase imports of Nigerian oil, Mr Mitropoulos suggested. Farouk Soussa, the chief economist of Citigroup, told the conference he was deeply disturbed by the prospect of the Gulf of Aden being flanked on both sides by failed states if Yemen's economic and political problems worsened. "It keeps me up at night." Under such a scenario, oil prices would "go through the roof" and threaten the global economy, he predicted. Ali al Yabhouni, the general manager of the shipping units of Abu Dhabi National Oil Company and the UAE's Opec governor, called for the international community to combat Somalian piracy by helping the divided state re- establish effective central government and rule of law. How far will renewed optimism in the multipurpose sector reach? Drewry sets the scene The multipurpose sector and in particular the project cargo arena, have experienced a prolonged emergence from the global recession due to the inherent time lag in much of the cargo demand for this sector. Things are now moving in a positive direction with effective AUDIT LEBANON free publication Page 10 Bi-Monthly TLSC 15-31 MARCH 2011 issue demand for the multipurpose fleet expected to experience growth of 7% pa on average to 2015, a rate higher than that of the container and dry bulk sectors. In recent weeks fear surrounding the embattled Beluga Group's announcements have stirred concerns, but it is important to remember that this situation is one that is internal to that organisation rather than being a manifestation of trading conditions. Susan Oatway Editor of the Drewry Multipurpose Report states, "The vessels that Beluga has contracted on a charter basis are likely to be released back into the market. But demand levels are such that these vessels will be sought after and are expected to be utilised by other operators". It is the aforementioned trading conditions that Drewry has carefully analysed in its Annual Multipurpose Report and herein lays the indicators for the sectors prosperity. Competitive threat is the key issue for the multipurpose fleet with it being squeezed by container and dry bulk carriers. This situation is an on-going facet of the sector but Drewry has delved deeper into the competitive analysis to highlight the changing approach of market players. Positive demand growth for dry bulk and containerships implies that MPV market share of these sectors should remain steady. The real competition is stemming from minor or neo-bulk and general project cargo markets, which is where MPV volumes are generated from. Drewry has examined in some detail project cargo and the prospect for this driving an increase in demand. Projections suggest growth averaging at least 11% pa to 2015, but we must be mindful of sectors, for example container liners, who have already started to position themselves against project carriers. Maersk for instance have recently been marketing their doesn't 'fit in a standard box' options. Now let us consider the current vessel orderbook to understand the multipurpose carriers' response to this adapted competition. Order levels have reached 28% of the current fleet, with a skew towards those with a greater lift capacity, indicating that carriers are looking to niche markets where they can offer specialised services based around the project cargo demand increases. "Yes, competitive threat is a major concern for the multipurpose sector, but reacting in an innovative manner, which we can see happening already within the project cargo arena, is how carriers are going to capitalise on market conditions. Given the unfolding Japanese crisis there is yet to come a possible demand shift towards the very ships that constitute the multipurpose sector'' stated Susan Oatway of Drewry Maritime Research. Development plan for shipyard cluster in Dahej The government of Gujarat has prepared a development plan for building a shipyard cluster at Dahej in southern Gujarat. The government has approved a fund of INR 500 crore to develop a marine shipbuilding park on the banks of river Narmada. In a written reply to a query raised in the state assembly on Monday, Mr Narendra Modi chief minister of Gujarat who also holds the ports portfolio informed that the government was proposing a shipyard cluster on the banks of river Narmada. A marine shipbuilding park is expected to be developed under this cluster in Dahej. The government has made a budgetary provision of INR 500 crore for the project. The minister also informed that a development plan for setting up a shipyard cluster near Dahej had been prepared so far. The move has come as a step towards making Gujarat the shipbuilding hub of India and a global destination in this sector. The shipyards may also attract private sector players with FDI. The government intends to focus on development of port-based industry and increasing the capacity of ports through PPP option. An investment of around INR 3400 crore in port-clusters like Dahej and Bhavnagar is expected in a few years. AUDIT LEBANON free publication Page 11 Bi-Monthly TLSC 15-31 MARCH 2011 issue Tanzania to Expand Dar es Salaam Port Capacity Tanzania Ports Authority is to invest $560m in developing two new container terminals at the port of Dar es Salaam. The new terminals will add an additional 500,000teu capacity to the port, which recorded a 460,000teu capacity in 2010. Construction is expected to commence by the end of next year. Dar es Salaam is Tanzania's principal port with a capacity to handle 4.1 million tonnes of dry cargo and six million tonnes of bulk liquid cargo. The port has a total quay length of 2,000m with 11 deepwater berths, and handles 95% of the country's international trade. The port also serves the landlocked countries of Malawi, Zambia, Democratic Republic of Congo, Burundi, Rwanda and Uganda. CMA CGM Columba Opens Vietnam Terminal Largest ship ever to call a Vietnamese port inaugurates Cai Mep The CMA CGM Columba became the largest container vessel to call at a Vietnamese port when it participated in the inauguration of the new Cai Mep International Terminal. Three Asian container lines also participated in the opening two weeks ago. Approximately 30 miles southeast of Ho Chi Minh City, CMIT is the first container terminal in Vietnam offering shipping lines direct access to the newly dredged 46-foot-deep Cai Mep Terminal channel. "CMA CGM is delighted to be CMIT's first customer," said Jean-Charles Tassoni, general director of CMA CGM Vietnam. "We are confident in the ability of CMIT to meet the growing needs of CMA and congratulate everyone involved in bringing this important new container terminal into operation. The CMA CGM Columba, which is on her maiden voyage, is the first of a new series of ships with 11,500 20-foot equivalent units capacity in French ocean carrier CMA CGM's FAL3 service between Asia and northern Europe. "Welcoming the maiden call of CMA CGM Columba begins a new era in Vietnamese ports," said Michael Them Rasmussen, general director of CMIT. "We look forward to working in partnership with CMA CGM to achieve their performance goals in the Southeast Asia market." CMIT, which has an annual capacity of 1.1 million TEUs, is a joint venture between APM Terminals, a unit of Denmark's A.P.Moller-Maersk, Vietnam National Shipping Lines and Saigon Port. JAL Exits Bankruptcy Protection Airline makes full repayment of $4.88 billion in rehabilitation debts Japan Airlines flew out of bankruptcy protection on Monday, about 14 months after going into it. "From this new starting point, JAL will unite as one as we work towards rebuilding the business," the Tokyo-based company said in a statement. JAL had filed for bankruptcy protection in January 2010 under the Corporate Rehabilitation Law, which is similar to Chapter 11 in the U.S., marking one of the biggest corporate failures in Japanese history. On Monday, the Tokyo District Court gave the nod to the unusually quick completion of JAL's court-backed rehabilitation process. AUDIT LEBANON free publication Page 12 Bi-Monthly TLSC 15-31 MARCH 2011 issue The airline also made a full repayment of rehabilitation debts totaling about $4.88 billion the same day with about $3.15 billion in new loans from 11 major creditor banks and cash in hand. The 11 lenders include two government-affiliated banks -- the Development Bank of Japan and the Japan Bank for International Cooperation -- and nine domestic private banks. In a bid to boost its financial base, JAL will also receive a total of $156.79 million in investment from eight companies, including Daiwa Securities Group and Kyocera. JAL Chairman Kazuo Inamori, a founder of Kyocera, said at a press conference on Monday that he considers the new capital as sufficient and said the company has no plans for additional financing for now. As a court-appointed administrator, Enterprise Turnaround Initiative of Japan, the government's turnaround body, has played a central role in the rehabilitation process for JAL. JAL has carried out restructuring measures, including cutting 16,000 jobs, or about one-third of its total workforce, and terminating many loss-making domestic and international routes. JAL also stopped operating its own freighter flights at the end of last October. These turnaround efforts paid off. The carrier eked out an operating profit of $1.96 billion during the first nine months of fiscal 2010, which started in April 2010. Following the bankruptcy protection filing with the Tokyo District Court in January 2010, the Tokyo Stock Exchange delisted JAL shares the following month. JAL aims to relist by the end of 2012, but the struggling carrier may still run into turbulence due to Rising fuel costs and a sharp decline in traffic in the wake of the devastating earthquake and tsunami that hit the northeastern part of Japan on March 1 Etihad switches focus of new UAE rail link to freight Etihad Rail is to suspend plans for a dedicated passenger link between Abu Dhabi and Dubai in favour of freight, it has been announced. It is understood that Etihad Rail's Dh40 billion (US$10.89bn) nationwide rail project has been revised to 1,200km in length – a slight contraction from last year's plan, when it was expected to extend 1,500km, including a commuter line between the UAE's two largest metropolitan areas. The rail project will be built in three phases across all seven emirates between next year and 2019. Once complete, the nationwide network will transport about 50 million tonnes of cargo and 16 million passengers. Richard Bowker, CEO of Etihad Rail, said: "When we talked about a 1,500km network, it did include the possibility of a direct route to Abu Dhabi and Dubai for passenger trains." He added: "Our priority at the moment is the mixed freight and passenger network. "By any measure what we are trying to achieve would be considered colossal. [Right now] it's all about priorities, it's all about focus." The first line will be a 270km link to carry granulated sulphur between the Shah gas field and the Ruwais industrial cluster for the Abu Dhabi National Oil Company, reflecting Etihad Rail's primary objective of transporting goods and heavy industrial products such as steel, concrete and petrochemicals. That line will gradually be extended to Dubai and the northern Emirates to link ports, airports and manufacturing centres. While the rail system will initially be driven by diesel locomotives, there are contingency plans for Etihad Rail to transition to electrified trains later, officials said. The railway is expected to significantly reduce lorry emissions, as well as road congestion and the need to build more motorways. It is estimated that one train can handle the freight load of 300 lorries. AUDIT LEBANON free publication Page 13 Bi-Monthly TLSC 15-31 MARCH 2011 issue DSME expects raft of LNG orders post-quake South Korea's Daewoo Shipbuilding & Marine Engineering believes a loss of nuclear capacity in Japan will see a raft of liquefied natural gas (LNG) ship orders. DSME shares have risen more than 8 percent since the March 11 earthquake as Japan's anticipated increase in demand brews hopes for rising LNG ship orders, say analysts. DSME, the world's No.1 LNG vessel manufacturer, is now participating in tenders to supply LNG ships to Russian and European firms, a source at DSME told Reuters, adding that overall LNG ship orders could grow to around 15 to 20 ships annually starting this year. Maersk increases piracy surcharge to US$ 350 per FEU Maersk Line has announced an increase in its piracy risk surcharge of 40% as from 1 April, bringing the surcharge to US$ 350, up from $250 per FEU (Forty-foot container unit). The surcharge applies on all trade between Europe, the Indian Ocean islands and East Africa. "As a result of increased piracy, and our efforts to prevent attacks and protect our crews and cargo, we have revised our emergency risk surcharges to mitigate higher security expenses," Maersk said in a statement. For Middle East-East Africa trade lanes, the surcharge will go to $400 per FEU, up from $250 per FEU, and for US- East Africa services the new surcharge becomes $400 per FEU, up from $300 per FEU currently. Hanjin Shipping adds new Pacific North West trade service Hanjin Shipping has announced Wednesday a new service to the Pacific North West trade from 22 April 2011. The weekly voyage will cover the ports of Hong Kong, Yantian, Kaohsiung, Tacoma, Vancouver and Busan with five of 4,300 teu ships, jointly operated by Hanjin and its partner Yang Ming Line. Hanjin will contribute one vessel while Yang Ming will provide four. The expansion of this trade lane service will contribute to Hanjin making a stronger presence in the regions and enhancing its service network, the shipping firm said. JUST FOUR WEEKS AND NINE FABULOUS CRUISES REMAINING FOR MSC SINFONIA MSC Sinfonia arriving in Durban – just four weeks of cruising remaining this summer. Picture Trevor Steenekamp South Africans still have nine fabulous cruises aboard MSC Sinfonia to choose from during the next four weeks in April before the luxury cruise ship concludes her 2010/2011 record breaking summer season and departs for Europe on 3 May. The cruise liner which has become one of the most popular vacations of choice for tens of thousands of South Africans is scheduled for a final month of short 3,4 & 5 night cruises to Mozambique from Durban with departures every Monday and Friday. On Saturday 30 April, MSC Sinfonia sirens will boom a fond 'arrivederci' (Italian for 'until we see each other again') as she departs Durban, her South African home port of the past six months, for a leisurely three night coastal cruise along our shores to arrive in Cape Town on 3 May. AUDIT LEBANON free publication Page 14 Bi-Monthly TLSC 15-31 MARCH 2011 issue She leaves the Mother City the same day for a 18 night northbound cruise to Genoa, Italy, that will include a fascinatingly diverse range of ports of call from Walvis Bay, Namibia, Dakar in Senegal, Santa Cruz de Tenerife in the Spanish Canary Islands, Funchal on the Portuguese island of Madeira, Malaga in Spain and Civitavecchia, the port of Rome. The 2,100 capacity MSC Sinfonia will spend the South African winter cruising in the Mediterranean Sea before returning to South Africa on 8 November. The smaller 1,500 capacity MSC Melody departed the country for Europe earlier in March and returns on 6 December. Early booking discounts of up to 40% are already on offer for the 2011/12 season and Starlight Cruises reports a strong demand from the public wishing to take advantage of these offers before they are withdrawn. "It has been a record breaking season for both of these luxury cruise ships with a combined total of over 120,000 passengers cruising out of Durban and Cape Town. We are clearly seeing a new trend in local tourism where cruising features high on the list of options," said Allan Foggitt, marketing director of MSC Starlight Cruises. Foggitt said the phenomenal public response and enthusiasm for cruising had endorsed the company's decision to bring two ships to South Africa this past summer. "We are confident in the South African market and committed to growing it further. Cruising is clearly one of South Africa's best value and most exciting local holiday options especially with children up to the age of 18 cruising and eating for free," said Foggitt. Together MSC Sinfonia and MSC Melody were able to offer a greater range of cruise destinations at competitive prices to Mozambique and the Indian Ocean islands of Mauritius, Madagascar and Reunion. The new Cape Collection of cruises out of Cape Town to Walvis Bay and Mossel Bay and the weekend Atlantic Ocean 'cruise to nowhere' had also proved enormously popular, he said. "In addition we are capturing an increasingly significant sector of the conference and incentive corporate market. And then wonderful romance of cruising has also opened new options for couples celebrating their weddings, renewing their vows and honeymooning." "We are looking forward to an even better cruise season in 2011/2012 when MSC Sinfonia and MSC Melody return to our shores later this year," said Foggitt. AUDIT LEBANON free publication Page 15 Bi-Monthly TLSC 15-31 MARCH 2011 issue TRUCKING PROBLEMS AT THE PORTS Chaos along Durban's Langeberg Road. Picture by Terry Hutson Trucking delays are again a bone of contention at the port of Durban, as trucks calling at the Durban Container Terminal are either caught up in traffic congestion along the notorious Bayhead Road, where road-widening works have added to the headaches, or they face delays outside the terminal gates with little possibility of gaining either access or answers. Drivers have complained to their employers or customers (many truck operators are one-man businesses for whom any delay has serious if not catastrophic implications) that "things have become chaotic with machines inside the terminal being parked off and managers are in meetings." It seems the South African curse of 'meetings' will simply not go away. What happened to the old practice of having a meeting after working hours (which was one sure way of keeping big-mouths shut and the meetings short)? We heard recently of similar problems at the Cape Town Container Terminal, until a short and very to-the- point blast from a certain outspoken customer of some standing made sure that 'managers' remain available to make decisions. Back in Durban, we hear that drivers are being delayed by up to 12 hours to collect one container. That's something that is simply not on! Not in a modern and supposedly well-run terminal, that aspires to be world-class. Yesterday it was reported that trucks had been sitting in the staging area since the night before. Clearly Transnet Port Terminals, which operates the two container terminals mentioned above, has lots of work still to do – preferably without the need for further 'meetings'. Hanjin receives another 10,000 TEU ship Hanjin Shipping received its second 10,000 TEU class containership on last Friday. The Hanjin Netherlands is the second of the series of five 10,000 TEU class ships ordered from Samsung Heavy Industries. Hanjin received the first 10,000 TEU ship - the Hanjin Korea - in June last year. According to Hanjin Shipping, the Hanjin Netherlands will join the Hanjin Korea in the Asia-Europe trade soon after delivery, sometime in the beginning of April. The other eight vessels in the series are scheduled for delivery during this year. AUDIT LEBANON free publication Page 16 Bi-Monthly TLSC 15-31 MARCH 2011 issue Safmarine and Maersk refocus on Africa trades Safmarine Bayete. Picture by Koos Goudrain via Robert de Lange AP Moller-Maersk CEO Nils Andersen said recently that the group was going to focus heavily on the developing world for its future growth, saying that the AP Moller-Maersk is strong in Africa and has a good footprint in South America. In evidence of this, Maersk Line announced last week that it would be moving one third of its ship calls from Hong Kong to its third South China gateway at Nansha. This has been followed up by an interview between the South China Morning Post and John Boudreau, Safmarine's Shanghai-based regional executive, who advised that three additional port calls would be made in China to coincide with the delivery of larger container ships to Safmarine, ships that are designed for the Asia – West Africa trades. Safmarine has two services between West Africa and China already calling at Nansha, in addition to the ports of Fuzhou, Ningbo and Yantian. One of the services also calls at Hong Kong. A third service connects West Africa with Tanjung Pelepas in Malaysia and this loop is going to be extended to China once the first of Safmarine's three 4,500-TEU container ships is delivered next month (April). The Maersk Group including Safmarine has 22 ships on order that are suitable for the West Africa trades, which they refer to as 'Wafmax' vessels. Boudreau said the strengthened service would cut the transit time between West Africa and East China/South Asia by at least a week because there will be more direct calls without the need for transshipping cargo through multiple ports. He pointed out that Safmarine (and Maersk) had recently upgraded their Far East-East Africa services with a direct shipping service between Nansha and Yantian to Mombasa and Dar es Salaam. This, he told the paper, was to satisfy demand from customers by adding more capacity and frequency of services. The type of cargo carried, he said, was meat, poultry, citrus fruits and other perishables, consumer goods and semi-finished manufactured products. It also included raw materials such as palm oil. Shanghai – Europe box rates slide below $1,000 per teu Spot rates for shipping containers from Shanghai to Europe have dropped below $1,000 per twenty-foot unit for the first time since March 2009 due to low volumes and fierce competition, shipping body BIMCO said last Friday. "The spot rate has been sliding since mid-2010, paused only by a short breather around the turn of the year," Copenhagen-based shipping association BIMCO said. After another weekly drop in freight rates on this main trading lane, boxes are being shipped at $992 per teu, $27 per teu lower than last week, BIMCO said in a statement. "Low volumes have triggered fierce competition on main trading lanes including Shanghai-Europe. Rate cuts are ongoing as liner companies struggle to fill their vessels," BIMCO analyst Peter Sand said in the statement. AUDIT LEBANON free publication Page 17 Bi-Monthly TLSC 15-31 MARCH 2011 issue HS1 trial a success for Class 92 locomotive The prospect of Continental-sized containers travelling through the Channel Tunnel to London took a step forward last week when DB Schenker Rail successfully completed trials on the HS1 route. On 25 March, a Class 92 locomotive completed a trial run on HS1, which connects the Channel Tunnel to London, to test new signaling systems that had been installed inside the locomotive. The Class 92 travelled from Dollands Moor near Folkestone to Singlewell at Gravesend. It was the first time that a Class 92 locomotive has operated on HS1 with its on-board signaling system fully operational. The transportation of Continental-sized wagons on the UK's railways has, until now, not been possible because of the UK's relatively small rail wagon height and width restrictions. DB Schenker said the trial was an "outstanding success" and marked a milestone in the five year project in conjunction with Ansaldo STS and Systra. The main aim of the project was to modify the TVM430 signaling system to enable class 92s to operate on three different infrastructure systems; HS1, Network Rail and Eurotunnel. DB Schenker now plans another trial with a set of loaded European-sized wagons. Once that trial has successfully taken place, regular European-sized freight trains will be introduced to operate to and from London. CEO of DB Schenker Rail (UK) Alain Thauvette said: "This is a very significant milestone. The success of this trial opens up the reality of these larger freight trains travelling from anywhere across Europe on the DB Schenker Rail pan-European network direct into London for the first time. "This is the significant key that will unlock modal shift between road and rail on cross Channel operations. "I congratulate everyone involved and look forward to the success of the loaded trial, followed by the introduction of regular services." The Rail Freight Group (RFG) also welcomed the news. RFG Policy Manager Maggie Simpson said: "We are delighted that DB have now concluded a successful test and look forward to seeing the start of commercial services. "HS1 must now do all it can to ensure rail freight operations on the route can start as soon as possible." Intermodality, which is a member of the European X-Channel Intermodal Transport Enhancement project along with DB Schenker, said the success of the trial was a "giant leap for cross-Channel rail freight". Beluga's woes continue Beluga Intonation of Beluga Projects in Durban harbour. Picture by Trevor Jones Additional companies within the Beluga grouping have opted for insolvency following the discovery of financial irregularities at head office. Beluga's woes came to a head not long after it sold a 49.5% stake to American Oaktree Capital. A subsequent investigation into the company's financial statements revealed irregularities which led to the laying of a charge of AUDIT LEBANON free publication Page 18 Bi-Monthly TLSC 15-31 MARCH 2011 issue fraud against Beluga's founder and CEO, Neils Stolberg, along with a number of his directors. Stolberg has denied the charges but has been arrested and is appearing in court. Beluga's headquarters have meanwhile been searched by prosecutors looking for evidence but Oaktree, which had taken effective control of the company has begun filing for insolvency for a number of the subsidiary and group companies. These include Beluga Chartering, Beluga Shipping, Beluga Fleet Management, Beluga Sea Academy, Beluga Off-Shore Crewing and Beluga Travel Lounge. Meanwhile it is reported that several Beluga ships have either been detained in ports around the world or are still at sea with 'nowhere to hide'. According to Voytenko Mikhail's Maritime Bulletin, these include Beluga Shanghai which is at anchor near the coast of South Korea and running short on provisions, Beluga London which entered Richards Bay yesterday while reportedly short on fuel, Beluga Festival at anchor outside Richards Bay, and Beluga Mumbai under arrest in Indonesia, with a lack of fresh water and no funds to buy more. The report says the crew are forced to gather rainwater to survive. CRUISE NEWS: MSC CANCELS CALLS IN TROUBLED ARAB LANDS MSC Fantasia – one of the MSC cruise ships not affected by the port cancellations MSC Cruises has announced that it has decided to extend the cancellation of the call at the port of Tunis (la Goulette) up to the end of the 2011/2012 winter season as part of its commitment to always 'putting the safety and comfort of its guests first'. In a statement issued yesterday, MSC Cruises added that all calls to ports in Egypt and Bahrain would be substituted with other 'exciting' ports of call with immediate effect through to the end of the 2011/2012 winter season. The change will affect the itineraries of the following ships: MSC Armonia, MSC Lirica, MSC Magnifica, MSC Melody, MSC Opera, MSC Orchestra and MSC Splendida. WILHELMSEN SHIPS SERVICE GROWS ITS LOGISTICS BUSINESS Clarence Bothelo has been appointed as Ships Spares Logistics (SSL) Manager in the Customer Services Department at Wilhelmsen Ships Service for the Africa, Middle East and Black Sea (AMB) regions. Located at the company's Dubai, UAE office, he is responsible for driving the sales of Wilhelmsen Ships Service's SSL offer in the AMB region and for building SSL expertise in Customer Services. Ships Spares Logistics is a service offered by Wilhelmsen Ships Service which has a single point of contact for managing the delivery of spare parts from manufacturer to vessel, with total visibility on data and associated prices. The service combines the use of a central Freight Forwarding Centre with an online service which provides its contract customers with the ability to see the location and status of their orders, as well as offering a number of unique reporting features. "We have seen an increasing interest in our Ships Spares Logistics service. Our focus on 'track & trace' capability, performance reports and especially on the one-point contact in our customer service is seen as a superior benefit by our customers. We are looking forward to seeing more agreements in the Africa, Middle East and Black Sea region," said Bothelo. "Furthermore, we have been receiving an increasing number of trial orders from India, Dubai, Turkey, Ukraine and Bahrain, and customers have now begun to show interest in the SSL offer and look at us as a global solutions provider," he adds. AUDIT LEBANON free publication Page 19 Bi-Monthly TLSC 15-31 MARCH 2011 issue Bothelo holds a Master's degree in Financial Management from Mumbai University. Prior to joining Wilhelmsen Ships Service, he was the key account manager with a major logistics company in Mumbai for six years. He also worked with other freight forwarding companies in various positions. Cosco inks $1bn intent for two Sevan Drilling units Singapore: Cosco Corporation (Singapore)'s subsidiary has on Thursday signed a letter of intent with Sevan Drilling in respect of turnkey contracts of two drilling units for approximately $525m each. Cosco Nantong Shipyard will perform turnkey engineering, procurement and construction (EPC) and installation for the delivery of the two drilling units based on the Sevan 650 design. The agreement also granted options to Sevan Drilling to order up to two more similar drilling units under EPC contracts at the same price of $525m per unit. The drilling units are scheduled to be delivered in the fourth quarter of 2013 and second quarter of 2014 respectively. Congestion Closes India's Nhava Sheva Export Gate Work slow-down, influx of imports jams nation's largest container port Because of congestion, terminal management closed the export gate at Nhava Sheva International Container Terminal in India's Port of Jawaharlal Nehru. An unofficial "go-slow" campaign by a group of workers threatened serious delays to cargo moving through the country's busiest container gateway. "The DP World Terminal has been facing serious productivity and congestion issues over the past 10-15 days following an informal go-slow action by workers at the private terminal," a shipping line agent at Nhava Sheva said. As of Tuesday morning, nearly 20,000 20-foot equivalent units, mostly imports, are jamming the terminal yard, which offers just about 6,500 ground slots for container storage. "In a bid to cope with the alarming situation, terminal management has decided to close the export gate for all services until further notice," the agent said. State-owned rail operator Container Corporation of India said the increased congestion and gate restrictions at the terminal could lead to "missed" shipping connections for outbound traffic. "As a result of the slowdown in the work, around 15 to 20 trains with export containers are currently either detained or regulated short of the Nhava Sheva Port for want of space. It is quite likely that these export containers will miss their scheduled vessel connections," Concor said. The private terminal operator attributed the backlog to a sudden surge in import arrivals, and said it is making all possible efforts to restore normal operations. NSICT is the second-largest container facility at Nehru with capacity of 1.4 million TEUs a year. Around 65 percent of India's total containerized traffic moves through the three terminals at Nehru. Its consolidated volume for fiscal 2009-10, which ended March 31, 2010, totaled a record 4.06 million TEUs and according to latest traffic trends, throughput is likely to reach an "all-time high" of 4.25 million TEUs in fiscal 2010- 11, which ends March 31, 2011. Charter Rates Rise Amid Falling Freight Rates Ocean carriers seek tonnage to defend market share as peak season nears Container ship charter rates are still rallying even as freight rates are falling as ocean carriers seek additional tonnage to defend market share amid strong cargo volume ahead of the summer peak shipping season. A gearless Panamax vessel of 3,500 20-foor equivalent units capacity is earning $18,800 a day compared with $14,000 in December and a 2010 average of $13,250, according to London-based broker Clarkson. The current rate for a 3,500-TEU ship is close to three times the average $6,575 earned in the container shipping slump of 2009 but well adrift of the $29,958 these vessels were commanding through the 2007 bull market. AUDIT LEBANON free publication Page 20 Bi-Monthly TLSC 15-31 MARCH 2011 issue The charter market rally coincides with retreating freight rates, especially on the barometer Asia-Europe trade where the cost of shipping a 20-foot box from Shanghai to the Le Havre-Hamburg port range in northern Europe last week sank below $1,000 for the first time in 18 months. All sizes of container vessels are commanding higher rates though gains taper off for Handy 1,000-TEU ships and 725-TEU feeders. A 4,250-TEU ship on a 24-month charter is fetching $28,625 a day compared with $22,555 at the beginning of the year, according to the Hamburg Shipbrokers Association. A 2,700-TEU vessel is pocketing $17,761 a day compared with $13,917 in early January. The HSA's ConTex index of rates for six vessel sizes has soared to 712 from 547 in mid-December. A year ago, it stood at just 275. With charter shipowners holding out for even higher rates and longer hire periods, some ocean carriers are staying out of the market in anticipation it will retreat as more tonnage becomes available. Some lines plan to return vessels to their owners when fixtures expire even if this causes short term capacity shortages until the arrival of ships they have on order at Asian shipyards. A few carriers are cashing in on the buoyant spot market by re-letting to rival lines ships they chartered at low rates during the 2009 slump that are now surplus to requirement following a restructuring of services. So far sub-letting has not put downward pressure on the market and the gap between charter and freight rates seems set to widen in the coming weeks. The surge in spot rates has come too late for owners that chartered out vessels during the 2009 bear market forcing several German KG investor funds who own the ships to provide additional funds to meet debt service payments. Wilhelmsen launches its largest car carrier The new Mark V class of car carrier for Wilh. Wilhelmsen, Tønsberg Norwegian shipping company Wilh. Wilhemsen has introduced into service its latest Ro-Ro- car carrier, Tønsberg, which is also the largest in service. With a ship's length of 265 metres and a cargo volume of 138,000m³, the ship has a capacity of 8,500 car equivalent units (CEU), compared with 8,000 CEU for the next largest ship in the company fleet. The new ship which was built by the Mitsubishi Heavy Industries in Nagasaki, Japan is designed to use between 15 and 20% less fuel than older car carriers. By the end of 2012 Mitsubishi will have built another three of this class of ship for Wilhelmsen and its Swedish partner Wallenius Lines. AUDIT LEBANON free publication Page 21 Bi-Monthly TLSC 15-31 MARCH 2011 issue The ship has six fixed and three hoistable decks which allows the ship to carry high and heavy cargo such as excavators, bulldozers, wheel loaders and harvesters. Cargo space is also available on the weather deck reachable from a ramp. The stern ramp is 12 metres wide and has a safe working load of 505 tonnes. The clear height of the main deck is 7.1 metres which the company says is unprecedented for this kind of ship. The ship features environmentally friendly features such as an advanced turbo generator that produces electricity from exhaust heat, a Unitor water ballast water treatment system, and protected fuel tanks to minimize leakage in case of grounding or collision. Tønsberg will enter Wallenius Wilhelmsen Logistics' round-the-world trade. The ship takes its name from the coastal town in Norway where Wilh. Wilhelmsen was founded in 1861 Maersk and Safmarine opening new feeder service Maersk Line and Safmarine have joined forces to form a new dynamic Intra-Europe liner feeder company, which they currently refer to as NEWCO and which they say is intended to increase focus and agility and to grow market share. The new company is currently recruiting staff for the new venture. Newco will operate as a stand-alone legal entity, reporting directly to the Maersk Line CEO. Hamburg Süd orders six 9,600-TEU ships Hamburg Süd has placed orders with Hyundai Heavy Industries for six 9,600-TEU container ships, which will become the largest in the German company's fleet. The order placed with Hyundai includes an option for a further four ships. As with Hamburg Süd's Santa class, the largest class presently in the fleet, of which three of the ten on order have been delivered, emphasis is placed on reefer capacity, with 1,700 reefer points specified for the new ships. The vessel will also be designed for containers one foot higher than standard boxes (hi-cubes). Delivery is scheduled for between May 2013 and January 2014. High level of radiation found on MOL ship in Chinese port Chinese border control officials detected a high level of radiation on board the container ship MOL PRESENCE when the vessel called at Xiamen on 22 March. The ship had arrived from Oakland with a general cargo that included furniture, clothing and machinery and called at Tokyo en route. Chinese authorities ordered the ship to remain off the port limits. Several shipping lines have cancelled calls at Japanese ports because of fears of radiation but Hamburg Süd last week announced it would be resuming such calls. WWL cuts carbon emissions by 21% Wallenius Wilhelmsen Logistics (WWL) reports that the company managed to cut its CO2 emissions by 21% last year, compared with 2009. The company attributed the improvement to increased fleet optimisation and utilisation. The company also reported results of its low-sulphur fuel policy, which has allowed it to cut its SO2 emissions by 151,000 tonnes from 2000 to 2010. CEO Arild Iversen remarked that the company's commitment to sustainability, which has delivered steady and strong results, is the best way to prepare its customers for a world of increasing environmental costs and regulations. AUDIT LEBANON free publication Page 22 Bi-Monthly TLSC 15-31 MARCH 2011 issue The figures cited above are contained in the company's 2010 Environmental Sustainability Report, which was the shipping industry's first emissions inventory report to receive third party verification that it conforms to the accounting requirements of ISO 14064-1 and the GHG protocol. "A future that demands sustainability is on our immediate horizon," commented Melanie Moore, vice president of Environment at Wallenius Wilhelmsen Logistics, "New international regulations beginning in 2012 will significantly increase shipping costs as vessels will be required to burn cleaner, more expensive fuels. Improved environmental performance is the best way to prepare our fleet and our customers for these changes." WWL's other environmental initiatives from 2010 include the launch of the Castor Green Terminal & Processing Centre - the world's first zero emissions marine terminal concept, and the Green Zone - an employee innovation challenge that generated nearly 200 ways for the company to reduce energy consumption at ports and terminal facilities. DHL signs €17m deal with Skanska Skanska Stomsystem has signed a new three-year contract with DHL Freight worth approximately €17 million, with an option to extend. The agreement covers all shipments of prefabricated concrete elements from Skanska's factories in Bollebygd and Strängnäs in Sweden. DHL Freight will invest in around thirty new trailers to satisfy the client's special transport needs. In addition, DHL Freight and Skanska will launch a number of additional joint projects in the areas of environment, safety and administration. According to Stefan Nilsson, CEO of DHL Freight Nordics & Sweden, the transportation of prefabricated concrete elements will be a new business segment for DHL Freight with a great potential for development. Furthermore, Skanska Stomsystem's Purchasing manager, Joakim Gullmark, said the company is about to grow substantially in terms of sales, and will be increasing the number of shipments in the next couple of years. Refurbishment of Lobito port (Angola) to finish on schedule Modernisation projects underway at the port of Lobito in Angola are expected to be concluded on schedule despite some financial difficulties, the chairman of the port's management company, Bento Paixão dos Santos told Angolan news agency Angop. Construction of an terminal for loading and discharging mining products is underway. The terminal quayside is 500 metres long and has a work area 300 metres wide. Included in the project is a dry dock which is currently around 50% complete which the contractor says he expects to complete before the end of the year. As part of the programme to expand and modernise the port's facilities several projects have been concluded, notably paving the port area, providing new lighting and the construction of a new railway line feeding into the port. Another project that has been concluded is construction of the Vessel Tracking System (VTS) building overseeing the port and approaches. Last Thursday the Commercial Port of Lobito celebrated its 83rd anniversary as an independent company from the Benguela Railroad (Caminho-de-Ferro de Benguela). AUDIT LEBANON free publication Page 23 Bi-Monthly TLSC 15-31 MARCH 2011 issue Maersk names new WAFMAX vessel AP Moller-Maersk has named the first of a series of 22 West Africa MAX (WAFMAX) container vessels currently being built by Hyundai Heavy Industries in Korea. The new Maersk Conakry will be the largest container ship able to call West Africa. Once a market served entirely by small feeder vessels operating from hubs like Algeciras in Spain, the 4,500 TEU WAFMAX vessels are purpose-built to provide Maersk Line's Asian customers with direct services to West African ports. The ships are 250 metres long with a draught of 13.5 metres, the maximum size allowable in West African ports. Some of the vessels will be equipped with onboard cranes to enable calls at ports without standing cranes. The growth of the African market, combined with physical infrastructure not developing at the same speed, has created a demand for ships with special designs that are able to match the maximum capacity of the ports. The WAFMAX vessels are also the most fuel-efficient, using 30% less fuel per container moved than the industry average on the Asia-Africa trade. The vessels are to be delivered this year and in 2012. Maersk Line recently signed a contract with Daewoo Shipbuilding & Marine Engineering for ten 18,000 TEU vessels, with an option for another twenty. Norbert Dentressangle completes acquisition of TDG Norbert Dentressangle announced today that it has finalised the acquisition of 100% of Laxey Logistics Ltd, the holding company that owns transport and logistics group TDG. The €241-million acquisition follows the approval of the deal by European competition authorities on March 21st, and an agreement to purchase TDG signed on November 29th, 2010. The transaction maintains Norbert Dentressangle's financial flexibility, while accelerating its growth and international expansion, and strengthening its three business activities. TDG will be consolidated in Norbert Dentressangle's financial statements as of April 1st, 2011. The transaction valued Laxey Logistics' total share capital at £212 million, or €241 million. Norbert Dentressangle also assumed an estimated £30 million of TDG's debt as a part of the deal. The acquisition was paid entirely in cash from Norbert Dentressangle's reserves and available credit lines. This strategic acquisition boosts Norbert Dentressangle's pro-forma 2010 revenue to €3.6 billion, with 57% realised outside France. The acquisition strengthens Norbert Dentressangle's position in transport (€1.95 billion in revenue), logistics (€1.6 billion, and freight forwarding (€100 million), achieving critical mass in the freight forwarding sector - which the company only entered in early-2010. TDG's revenue is generated by its logistics activities (54% of 2009 revenue) transport (32%) and freight forwarding services (14%). TDG generates 74% of its revenue in the UK, 12% in the Benelux countries, 8.5% in Spain, 4% in Ireland and 1.5% in Germany. AUDIT LEBANON free publication Page 24 Bi-Monthly TLSC 15-31 MARCH 2011 issue Agility releases 2011 Corporate Social Responsibility Report Agility has launched its first Corporate Social Responsibility (CSR) Report, which reviews the company's CSR commitments to date and highlights its progress and priorities for the future. Agility has grown from a local warehousing company in Kuwait to a top ten player in the logistics industry operating across 100 countries, and its social responsibilities have grown in direct proportion to its influence in local economies. 2011 CSR Report highlights Environment • Agility has developed and employed a number of tools to assist customers in determining how to measure and reduce their supply chain operations environmental impact. • Agility has established a global program to improve employee awareness about the environment with a view to reducing the company's environmental impact. • Agility is engaged in the global dialogue on the environment, most notably as a strategic partner of the World Economic Forum (WEF), where it participates in various environment related working groups. Community involvement • Agility has leveraged the passion and local knowledge of its employees to enable them to guide its community investment strategy. • Agility has supported more than 400 community projects in more than 57 countries, reaching an estimated 500,000 people, since 2006. • Agility employees led 130+ projects in 2010 alone, focusing primarily on youth and education, health, and eco-volunteering initiatives. Humanitarian and emergency logistics • Agility provided partner organisations with logistics support in 22 emergency response operations during the last five years. This includes major disasters such as the Pakistan flooding, Haiti earthquake, Indonesia earthquake, Philippines typhoon and Myanmar cyclone. • Agility is part of a dynamic partnership with UPS, TNT and Maersk to assist in global disaster response by deploying rapid response Logistics Emergency Teams (LETs) to assist the UN Global Logistics Cluster in setting up humanitarian supply chains during emergencies. Employees • Agility's Code of Business Ethics & Conduct includes strong language around its commitment to employees and fair labour practices. • Agility is an employer in emerging markets; more than 81% of its workforce is based in Asia, Africa and the Middle East. • Agility has a diverse and multicultural workforce, with more than 100 nationalities represented. • Agility invests heavily in training and development programs for its employees. Its e-learning platform contains 771 courses on 1,923 topics. Through its regional training programs, Agility offers employees occupational health and safety skills, customer services, sales and marketing training, language courses, team building exercises and management courses. • Agility has developed programs that contribute towards safe and healthy work environments. Since the foundation of its Driver Training Academy in 2006, Agility has sharply reduced the accident rates and the number of injuries, lost hours, vehicle and cargo damage and late delivery penalties. Business with integrity • Agility has committed to high standards in its Code of Business Ethics & Conduct. • Agility established a global ethics and compliance program reporting to the highest level of the company's management. • Employees completed more than 28,000 ethics training sessions between 2008 and 2010. AUDIT LEBANON free publication Page 25 Bi-Monthly TLSC 15-31 MARCH 2011 issue • Agility employees are encouraged and empowered to identify and report ethical concerns through systems that include an alert line available to any employee wishing to provide anonymous input. • Agility became a signatory of the World Economic Forum's (WEF) Partnering Against Corruption Initiative (PACI). • Looking forward, Agility intends to widen and deepen its training program, especially at operational and local levels, and will create a strong internal audit program. Hamburg Süd and OOCL each order 6 new containerships Hamburg Süd has ordered six 9,600 TEU vessels from Hyundai Heavy Industries, with an option for another four; OOCL has signed a contract with Samsung Heavy Industries for six 13,000 TEU vessels. Hyundai Heavy Industries (HHI) has been awarded a KRW 800 billion deal to build six 9,600 TEU containerships for Hamburg Süd. The agreement includes an option for four additional same-class vessels. These new containerships are designed to carry containers one foot taller than conventional containers. They can carry 1,700 refrigerated containers, 1,000 more than other same class vessels. The containerships are scheduled for delivery between May 2013 and January 2014. OOCL has signed a contract with Samsung Heavy Industries for the construction of six 13,000 TEU vessels. This marks the first newbuilding order OOCL has placed for mega container vessels of this size. The new 13,000 TEU vessels further reinforces OOCL's commitment to substantial asset investment in order to offer customers better service and to support the expansion of world trade with reduced environment impacts. The six container vessels are to be delivered by 2013. DB Schenker inaugurates new facility in Manila DB Schenker recently inaugurated a new facility in Manila, consolidating three units that had previously been located in Metro Manila into a central complex in the Sabrina Compound in Sucat/Paranaque City. The new facility provides 2,400 m² of office space for the corporate office, and accommodates the teams for air and ocean freight, customs clearance, special projects and contract logistics. The building includes nearly 1,000 m² of space for cross-docking operations. Adjacent to the 5,000 m² open yard is an area dedicated to project logistics. The complex also includes seven warehouses with a total of around 18,000 m² of storage area and 8,500 pallet positions. The new facility enables orders to be processed faster and allows through-going supply chain solutions. Internal processes have also been streamlined. According to Dr Thomas Lieb, chairman of Schenker's management board and responsible for global air and ocean freight, Manila is a key hub in DB Schenker Logistics' global network. The company also intends to further expand its network of locations - primarily in the Asia-Pacific region - with customers in the consumer electronics sector in mind. AUDIT LEBANON free publication Page 26 Bi-Monthly TLSC 15-31 MARCH 2011 issue UK's freight transport policy needs a rethink According to LCP Consulting, the UK's freight transport policy needs a new vision based on solid evidence. Since 2000, five attempts to define the UK's integrated transport policy have failed to produce a robust policy approach to freight and logistics. A new paper released this week says that freight transport policy requires urgent attention to address national growth and climate change agendas. If radical changes aren't made, freight transport and logistics' heritage as a major driver of economic performance will be at risk, and it will fail to meet national goals for the environment. The paper argues that developing a new vision for Britain's industrial and logistics landscape is a huge challenge, because the data and modelling on which it should be constructed is fragmented, inconsistent and incomplete. The LCP Consulting Paper, UK Freight Transport: setting a coherent strategy and direction for 2020 and beyond, highlights the importance of freight and logistics and the nature of the challenge going forward. The work also identifies some significant omissions in current freight data that should influence future decision making and the development of freight policy: • The work of more than one million vans and foreign-registered HGVs (which account for around 6% of the total distance travelled by lorries on British roads) are going unrecorded. • Off-shoring of UK manufacturing and growth in global sourcing has distorted national statistics. • A previous commitment to define freight flows by sector is not yet fulfilled. The report's author, LCP Consulting's chairman Professor Alan Braithwaite, said: "Freight transport policy needs to clearly define the strategic priorities and provide guidance on future operating practices, but the data and modelling used to develop and determine policy will need to be significantly upgraded to inform public debate on the difficult policy choices ahead." He added that future freight and logistics development is unlikely to meet the goals for carbon reduction and economic performance unless positive policy actions are taken. These will involve a combination of taxation to promote more efficient use of resources, regulation to drive more efficient, safe, clean and fair operations, and planning processes that enable innovation and investment to deliver a step change. To meet economic and climate change goals, a transformation in freight policy is required, which will include special attention for integrated planning for future capacity as current policy paradigms on networks don't represent the structure of supply chains. Since private investment will be important to realise the transformation, planning and policy clarity will be essential to release the flow of private funds. The paper also highlights government initiatives that combine to call for an urgent rethink on freight transport policy. These include: • The tight budgetary constraints set by the Comprehensive Spending Review on the Dept for Transport (DfT) • The drive by HM Treasury to introduce private funding to bridge the gap • The focus of the Dept of Business on business growth arising from services and logistics innovation • The Localism Bill, which will create a completely new planning landscape through which transport policy must be delivered • The Fourth Carbon budget, which provides scenarios for improvement and calls for structural change in meeting the more demanding of them. Highlighting one of the eight key conclusions from the White Paper, Professor Braithwaite said: "The network for freight and logistics that will enable it to contribute to reduced congestion and improve economic and environmental effectiveness is a much wider challenge than has been articulated. It involves complex interactions of capacity and flows and with passenger movements. This has yet to be adequately recognised in policy development partly because of deficiencies in the available data and modelling." The White Paper outlines another seven key points: AUDIT LEBANON free publication Page 27 Bi-Monthly TLSC 15-31 MARCH 2011 issue • The freight and logistics sector has made a substantial contribution to past UK economic success. Indeed, subject to concerns over the completeness and reliability of the data, freight and logistics has punched above its weight over the last ten years, delivering economic growth with improving freight efficiency. As such it is an important national asset, whose contribution is often overlooked. • Freight and logistics will need to make a significant contribution to meeting longer term congestion and climate change goals. This will require a basket of radical measures incorporating technical, modal and supply chain structural dimensions. • Since the freight and logistics element of transport strategy will be fulfilled in future through a combination of private and public funding, it will be crucial that there is an integrated public-private vision and high-level plan within which competitive markets can operate. • There is limited prospect of normal rates of freight and logistics development meeting the goals for carbon reduction and economic performance; positive policy actions will be needed to ensure the future contribution from freight and logistics. • There is a credible bundle of fiscal, regulatory and planning measures that have the potential to deliver transformation of UK freight and logistics. Formalising this bundle will require an integrated vision and a quality evidence base that does not exist today because of the constraints of the data that is collected and the process that has been followed hitherto. • Notwithstanding a commitment to evidence based policy, the data base for freight and logistics policy development is limited and will require a major remedial effort to provide a platform on which integrated policy for freight transport can be developed. • The creation of the transport strategy vision will require exceptional skills and tools to facilitate the adoption of key policy measures and win the buy-in of all the stakeholders including political representatives, operators and private investors (on whom we will depend to fund the change). Professor Alan Braithwaite concluded: "The hope is that Ministers and policy makers, including the Secretary of State for Transport, will reflect on this carefully considered White Paper and set out to create a national vision for freight, logistics and transport at pace. After five prior attempts in the last ten years, there is no time to waste." TDG launches new ADR container transport service TDG has introduced a new container service from its Thurrock depot for customers moving containers under ADR regulations. The new service can handle 20-ft and 40-ft iso-tankers, and also provides storage on site. Having always used road tankers to move product in the past, TDG Thurrock has now responded to customer requirements with the development of this complimentary container handling service. "Typically, container operators move and store non-hazardous products," said TDG site manger, Chris Smith. However, he pointed out that TDG's drivers are ADR trained and its tractor units meet stringent ADR safety standards, which is not commonplace for container operators. TDG can also offer an integrated solution including import and export ocean freight management and customs brokerage through its own in-house International Services teams. TDG Thurrock specialises in moving product to and from Tilbury and the Thames ports, and is increasingly working with consignments from Felixstowe. New / upgraded ocean services CMA CGM upgrades its EPIC service between India, Pakistan, the Middle East and Europe; Evergreen launches a weekly TMI service between Thailand, Malaysia and Indonesia; Hanjin Shipping receives its first ore carrier. CMA CGM has upgraded its EPIC service between India, Pakistan, the Middle East and North Europe (five ports served directly), reducing transit times to the eastern Mediterranean. Effective March 30th, a new westbound call at Port Said will cut transit times by four days to Lattakia (Syria) and Istanbul (Turkey), by six days to Mersin (Turkey) and by seven days to Beirut (Lebanon), AUDIT LEBANON free publication Page 28 Bi-Monthly TLSC 15-31 MARCH 2011 issue The Salalah call will be replaced by by Khor Fakkan, to liaise with the MASCAREIGNES line serving the Indian Ocean. The service will deploy eight 5,700 TEU vessels calling at: Southampton > Rotterdam > Hamburg > Antwerp > Le Havre > Port Said > Khor Fakkan > Jebel Ali > Port Qasim > Nhava Sheva > Mundra > Jeddah > Port Said > Malta > Tangiers > Southampton. CMA CGM therefore offers multiple destinations from the Indian subcontinent to the Middle East and North Europe with calls at major transhipment ports in the Mediterranean: • Tangiers for West Africa and Latin America • Malta for the western Mediterranean • Khor Fakkan for the Indian Ocean • Port Said for the Adriatic Sea, Black Sea, Middle East (Syria, Lebanon, Egypt), Turkey and Greece Evergreen Line launched a weekly Thailand - Malaysia - Indonesia (TMI) service on March 16th to enhance its Southeast Asia service network and replace the existing Indonesia - Malaysia (IS1) service. The TMI service is an expansion of the previous IS1 service, extending its calls to Bangkok and Laem Chabang in Thailand. The service deploys one existing 900 TEU containership plus an additional 820 TEU vessel, calling at: Bangkok > Laem Chabang > Port Klang > Tanjung Pelepas > Jakarta > Tanjung Pelepas > Bangkok. Hanjin Shipping has received its first ore carrier - the 300,000 ton Hanjin Tubarao. The Very Large Ore Carrier (VLOC) is under long-term contract with POSCO, and will be deployed in the transportation of iron ore from Brazil to Korea. According to Young Min Kim, president & CEO of Hanjin Shipping, the new ore carrier is a milestone in the carrier's efforts to develop its bulk business. Hanjin Shipping recently took delivery of its first 300,000 ton Very Large Crude Carrier. MOL upgrades North Europe – West Africa service Mitsui OSK Line is upgrading its current ARN service to a fixed-day weekly service between Europe and West Africa, with connections via Antwerp for Asian and North American cargo. The new service will launch from Hamburg on April 6th, calling at Thamesport, Antwerp, Dakar (Senegal), Tin Can (Nigeria), Tema (Ghana), Antwerp and Hamburg. Abidjan will also be included in the schedule when the political situation in the Ivory Coast allows. French customers will benefit from excellent connections between Le Havre and Antwerp southbound, and Le Havre and Hamburg northbound. South Africa aims for Cape-to-Cairo FTZ According to Trade & Industry Minister Rob Davies, the possibility of a Free Trade Zone that would include 26 Eastern and Southern African countries could be tabled in South Africa by mid-2011. The 'Cape to Cairo' FTZ would require the collaboration of the Common Market for Eastern & Southern Africa (COMESA) and the East African Community (EAC). Davies pointed out that a big regional market such as this would stimulate growth, referring to India as an example, saying growth in its domestic market was originally the catalyst for India's economic growth. He also noted that the Dept of Trade & Industry was busy negotiating with India about the possibility of a preferential trade agreement. The establishment of an FTZ would help to increase intra-Africa trade. Currently, only 12% of African trade is intra- regional. The establishment of a massive FTZ poses a few challenges. AUDIT LEBANON free publication Page 29 Bi-Monthly TLSC 15-31 MARCH 2011 issue One of these challenges is the acceleration of the development of infrastructure in South Africa's neighbouring countries, particularly in terms of transport. Another is for African countries to add value to their exports. Hanjin Shipping opens dedicated terminal in Vietnam Hanjin Shipping officially opened its dedicated terminal in Cai Mep, Vietnam, on March 16th. A joint venture between Hanjin Shipping, Saigon New Port, Mitsui OSK Line and Wanhai Lines, the Tan Cang Cai Mep International Terminal (TCIT) has been developed over the past two years. 2 The terminal is located on a 346,000 m plot of land at the basin of the Cai Mep River, which is 50 km from Ho Chi Minh City. With a depth of 15.8 metres, the terminal can accommodate mega-vessels, and with two berths it can handle up to 1.15 million TEU of cargo per year. Se-Hwa Jung, chief executive of Hanjin Shipping's Terminal Business unit commented: "We are expecting a lot from this new dedicated terminal in Vietnam as it will soon become a major logistics hub in the region." He added that many major carriers are investing in intra-Asia trade, and Hanjin believes that a dedicated terminal will strengthen its presence in the market. Hanjin Shipping currently operates fourteen dedicated terminals around the world, including Algeciras in Spain, which opened last July. Status of Japanese ports According to Reuters, some of the Japanese ports that sustained major damage in last week's earthquake and the subsequent tsunami may be out of action for months. Japanese ports handling as much as 7% of the country's industrial output sustained major damage from last week's earthquake and tsunami, disrupting global supply chains and causing billions of dollars in losses. The box shipping industry was seen as the worst affected, since the destroyed ports handled containerised cargo for dozens of major manufacturing companies. Tokyo and all ports south of Japan's capital were operating normally after briefly shutting down operations, while the rest of the country's ports were being assessed for damage. The brief closure of all Japan's ports was expected to cost the country more than $3.4 billion in lost seaborne trade, according to Lloyd's List Intelligence. The northeast coast ports of Hachinohe, Sendai, Ishinomaki and Onahama were so severely damaged that they are not expected to return to operation for months, if not years. Hachinohe supplies fuel products to the local fishing fleet and US military installations in Japan and South Korea, while Sendai handles a range of goods from rubber products to paper and machinery. Japan's top crude oil and LNG port, Chiba, as well as the country's ninth-largest container port, Kashima, were also affected, but to a lesser extent. Other damaged ports include Hitachinaka, Hitachi, Soma, Shiogama, Kesennuma, Ofunato, Kamashi and Miyako. These ports handle a range of products from sugar and non-ferrous metals to cars and wood products. Japan's Sendai Gas said that it was unable to reach the tsunami-hit Shinminato LNG terminal near the port of Sendai in the country's northeast, but the terminal appeared undamaged from a distance. All the remaining LNG terminals in Japan were in operation. Three 80,000-tonne panamax vessels owned by Kawasaki Kisen Kaisha and one operated by Mitsui OSK Lines were damaged or grounded by the earthquake. AUDIT LEBANON free publication Page 30 Bi-Monthly TLSC 15-31 MARCH 2011 issue Japan is assessing the damage to port infrastructure, which is vital to receiving aid, commodities and goods for rebuilding areas. The situation is expected to delay oil shipments and cause major port congestion. According to Michael Webber, an analyst at Wells Fargo Securities, crude currently en route to Japan will likely be discharged in India or elsewhere in Asia, with the refined products forwarded to Japan once the ports re-open. Maersk suspends service to three Japanese ports The world's biggest container shipping line, Maersk, has suspended services to and from three Japanese ports. While there are no commercial restrictions in booking with Maersk Line to or via Japan, the carrier has suspended services to and from Sendai, Hachinohe, and Onahama, where terminal facilities and containers were seriously damaged. While many of Japan's ports are operating at normal capacity, the closures on Friday and Saturday resulted in congestion in the ports of Tokyo and Yokohama. Maersk told Reuters that the there have been no reports of damages to the carrier's yard equipment in the ports of Tokyo, Yokohama, Nagoya, Kobe, Osaka and Hakata ports. At the moment, Maersk Line continues to serve other Japanese ports as usual, but this may be subject to changes later. The impact of Japan's earthquake and tsunami on shipping While the earthquake and subsequent tsunami that hit Japan last week immediately disrupted transportation and logistics operations throughout the country, the scale of the disaster's impact on the shipping industry is still unknown, says BIMCO. Whether directly affected, i.e. damaged or destroyed by the earthquake and/or the tsunami, or indirectly affected, e.g. an assembly line relying on just-in-time deliveries, it will be a while before a lot of Japanese manufacturers regain their normal output levels. Productivity may also be affected by power cuts. While this will have an immediate negative impact on the demand for export shipping, BIMCO points out that, as the situation starts returning to normal, the demand for shipping may be higher in the medium- to long-term because of this natural disaster. According to BIMCO, the lack of exports from Japanese factories may well cause liner companies to leap-frog Japanese ports on their transpacific trading lanes. There are also implications for import shipping. Dry bulk shipping may be impacted in many ways, as Japan is a major importer of thermal coal for power generation, iron ore and coking coal for steel production and grains for food and feedstock. Several nuclear power plants may be shut down for days or weeks, and some coal-fired power plants have lost their coal stocks to the floods. Tanker shipping may be impacted as refineries are on fire, which could affect product tanker demand. Moreover, the nuclear power plant shutdown may also affect overall oil imports for power generation. Kuehne + Nagel to acquire 75% of New Zealand-based Cooltainer Following the acquisition of three South American airfreight forwarders specialised in perishables logistics in January, Kuehne + Nagel has now entered into an agreement to acquire 75% of the shares of New Zealand-based reefer operator, Cooltainer. AUDIT LEBANON free publication Page 31 Bi-Monthly TLSC 15-31 MARCH 2011 issue Founded in 1967, Cooltainer, is headquartered in Christchurch and operates a dedicated branch network throughout Australia and New Zealand. Cooltainer provides a comprehensive door-to-door service for temperature-sensitive cargo in the South Pacific region, and successfully covers niche markets such as the Trans-Tasman and Pacific Islands trades. According to Peter Ulber, Kuehne + Nagel's executive vice president of Sea & Air Logistics, New Zealand is of key importance for perishables exports to Australia and the South Pacific Islands, and Cooltainer's activities ideally complement K+N's operations in Australia and New Zealand. Agility expands SE Asia cross-border trucking services; opens new office in Vietnam Agility expands its Southeast Asia cross-border trucking operations, opens a new office in Vung Tau and relocates to a larger facility in Hanoi. Agility is expanding its Southeast Asian cross-border trucking operations in response to increasing demand for road services to connect countries across the region and into China. Agility's integrated trucking network provides shippers with an option to truck directly to several major cities in South East Asia and China, as well as direct connections to major airports and ports in the region. The service provides a time- and cost-effective alternative to air and sea freight, and its flexibility opens new transport routes and enables the combination of land, air and sea for the transportation of raw materials and finished goods. According to Mike Gildea, Agility's CEO of South East Asia, customer demand for cross-border logistics in South East Asia has grown dramatically every year as more manufacturers relocate to the region to take advantage of the increasing connectivity and lower labour and land costs. He added that the door-to-door option provides the optimum solution for many customers' supply chain needs, and Agility regularly transports time-sensitive cargo from Thailand and Malaysia to Hong Kong. Agility cross-border links between Vietnam and South West China are well established, and the company's expanding network now includes regular services connecting Vietnam and Cambodia with Malaysia, Singapore, Laos and Thailand, providing shippers with a cost effective alternative to airfreight with savings of between 30% and 40%. Agility has also been working with authorities in Southeast Asia to improve border administration and accelerate customs clearance, while improving security through a reduction in trans-loading. Agility's security measures include the use of GPS-equipped trucks and in-container cameras connected to a command centre in Bangkok. In other news, as part of Agility's ongoing expansion in Vietnam, the company recently opened a branch office in Vung Tau and relocated its Hanoi office to a new, larger facility. Strategically located with direct access to the city's business and commercial districts, the new Hanoi office provides a complete range of services including airfreight import, export and transit services, comprehensive customs services and cross-border transportation, as well as specialised solutions for fairs and events and project logistics. The new office in Vung Tau provides a wide range of logistics services catering to the specific needs of retail, hi- tech and the oil & gas markets. The main focus will be on logistics support to the oil & gas industry via trade lane management, customs clearance charters, material management, export compliance analysis, rig management and other related supply chain management solutions. Gildea said that this new branch will support the global upstream and downstream network and will connect the region with other major oil & gas centres in Houston, Aberdeen, Dubai and Singapore. AUDIT LEBANON free publication Page 32 Bi-Monthly TLSC 15-31 MARCH 2011 issue Agility's Ho Chi Minh office will remain the headquarters for Agility's operations in Vietnam, Cambodia and Laos, and will continue to offer a wide range of logistics services. TransContainer acquires 67% of KedenTransService JSC TransContainer has obtained control over a 67% stake in JSC KedenTransService: 20.1% directly and 46.9% indirectly through a subsidiary. KedenTransService operates seventeen cargo handling terminal facilities across Kazakhstan, and also owns a fleet of around thirty freight locomotives. KedenTransService provides customers with a wide range of freight forwarding, logistics and customs clearance services, as well as cargo transhipment at the Dostyk cross-border terminal to and from China. Following this acquisition, Kazakhstan Temir Zholy, the Kazakh state-owned railway company, will hold a 33% stake in KedenTransService, with an option to buy back a stake of up to 17% in KedenTransService from TransContainer. TransContainer and Kazakhstan Temir Zholy have also agreed general principles of co-operation in the Republic of Kazakhstan, with the objectives of increasing transit rail container traffic between Asia and Europe by providing integrated logistic services both in Russia and Kazakhstan, as well as establishing a unified container handling infrastructure and optimising the terminal handling business for transit container transportation. More intermodal traffic in North America The Association of American Railroads (AAR) has reported further gains in intermodal rail freight traffic for the week ending 12 March. Intermodal traffic across North America was up 6.5% to 214,828 trailers and containers, compared with the same week in 2010. In total, US railroads transported 292,164 carloads in the week, up 1.3% compared with last year. However, weekly carload volumes on eastern railroads were down 2.8% compared with last year, but up 4.2% in the west. For the first 10 weeks of 2011, US railroads reported carrying over 2.87 million carloads, up 5.5% on last year, and 2.17 million trailers and containers, up 7.8%. Canada's railroads didn't fare as well for the week and saw volumes fall 3.9% to 70,551 carloads, and 2.7% to 43,401 trailers and containers. For the first 10 weeks of 2011, Canadian railroads carried 701,633 carloads, down 1.6% year on year, and 449,059 trailers and containers, up 3.2%. Mexico's rail network carried 15,545 carloads in the week ending 12 March, up 14.1% on the same week last year, but only 6,488 trailers and containers, down 15.1%. Over the first 10 weeks of the year, Mexican railroads carried 143,963 carloads, up 6.4% on last year, and 71,530 trailers and containers, up 8.5%. Combined North American rail volumes for the first 10 weeks on US, Canadian and Mexican railroads totalled 3.71 million carloads, up 4.1% and 2.69 million trailers and containers, up 7% compared with last year. AUDIT LEBANON free publication Page 33 Bi-Monthly TLSC 15-31 MARCH 2011 issue South Africa-Transport minister sends Merchant Shipping Bill to parliament The Merchant Shipping (Safe Containers Convention) Bill 2010 will assist South Africa carry out its obligation to maintain the highest standards with regards to the safe carriage of containers over the country's water. This is according to Transport Minister Sibusiso Ndebele who, on Tuesday, asked the National Assembly to pass the Bill. The minister said a major part of world trade depended on South Africa's coastal waters and that 98 percent of the country's trade was seaborne. Against this backdrop, South Africa had an obligation to the international community and itself to continue maintaining the highest standards in the safe carriage of containers over the country's waters. Ndebele said the Bill gave effect to the International Convention for Safe Containers as adopted by countries belonging to the International Maritime Organisation. "The Convention entered into force in December 1977, setting international standards for the safe carriage of containers throughout the world. "Since its adoption in 1972, maritime countries were expected to ratify the Convention by passing relevant legislation through their national Parliaments and Cabinets, which would enable the application and enforcement of provisions of the Convention," he noted. As part of the process to ratify this Convention, a law known as International Convention for Safe Containers Act, was passed in 1985 through the Department of Trade and Industry. "This Bill therefore proposes to reassign functions related to the implementation and administration of the Convention from the Minister and the Department of Trade and Industry to the Minister of Transport and the South African Maritime Safety Authority," Ndebele explained. Doing so would ensure that the necessary functions were assigned to appropriate authorities that had the responsibility for transport and related safety matters, he said. The Bill would translate the provisions of the convention into force of law in South Africa. Key provisions of the Bill include: The requirements for the approval, repair, inspection, detention and disposal of containers Prescribing minimum size for containers, especially for carriage by sea excluding air freight Setting out procedures for the safety approval by an Administration of a Contracting State or by organisation acting on its behalf, of containers used in international transport. The Bill would create an enabling environment for the growth and development of a container industry that is properly regulated, Ndebele said, and also deal with the development of the maritime industry, coastal shipping and regional integration. "The administration and enforcement of the proposed measures are entrusted to the South African Maritime Safety Authority," he added. AUDIT LEBANON free publication Page 34 Bi-Monthly TLSC 15-31 MARCH 2011 issue Industrial Policy Action Plan succeeds in attracting investment (South Africa) Transnet's decision to assemble 90 of the 100 locomotives on order from General Electric and the securing of R14 billion in planned investments in the automotive sector, are some of the immediate achievements of the Industrial Policy Action Plan (IPAP), the Minister of Trade and Industry Rob Davies said this week. Davies, who briefed the National Assembly's portfolio committee on trade and industry, outlined several achievements of the plan but hastened to add that a lot of work still had to be done in the role out of IPAP. The initiative was launched last year. He said lots of work had so far been spent setting up systems, but said the coming year would yield results, particularly with the country's revised procurement legislation - the Preferential Procurement Policy Framework Act (PPPFA) is expected to come into force. The full document detailing the activities to be rolled out under the IPAP in the next financial year is expected next month, he said. Davies said the R14 billion in the automotive sector is in the form of investment commitments from both assemblers and component suppliers. Transnet took delivery of the first two locomotives at Koedoespoort last month, where 90 locomotives are to be assembled by Transnet at their plant in the North West town. This is part of the pledge by state-owned entities (SOEs) to introduce more localisation and supplier development into their procurement policies. The first of a hundred Class 43 diesel locomotives on order for Transnet Freight Rail. Picture Wikimedia Commons The department's Deputy Director General of industrial development Nimrod Zalk said departments were also looking to promote local manufacturing and pointed to the Department of Health's recent R4.2 billion ARV tender, where 72 percent of the contract's value was awarded to South African manufacturers, while achieving significant price reductions relative to the 2008 ARV tender. Zalk also outlined several key areas where the department had made progress with the IPAP, in areas such as procurement, industrial financing, improved competition and trade. While the Industrial Development Corporation's (IDC) has earmarked R25 billion for the green economy and a further R5 billion for an agro-processing fund, a R10 billion job creation fund, announced by President Jacob Zuma last month in his State of the Nation Address, would be priced at prime minus 3 percent. Added to this 10,211 direct jobs created between April and December last year through the Department of Trade and Industry's Enterprise Investment Programme, which is aimed at small and medium-sized firms in the manufacturing and tourism sectors. AUDIT LEBANON free publication Page 35 Bi-Monthly TLSC 15-31 MARCH 2011 issue To improve trade for exporters, the South African Bureau of Standards (SABS) has set up the Exporter Early Warning System on Technical Barriers to Trade. The system identifies technical barriers to trade notified to the WTO and is distributed for free to subscribers on a weekly basis. To crack down on anti-competitive practices, the competition authorities has also launched investigations into a number of areas, including tyre companies, scrap merchants, chemical firms, airlines, construction companies among others. Zalk also detailed various achievements in the government's sector support programmes, these include: - The creation of 1,100 new jobs in the clothing sector through the Clothing Textile Competitiveness Programme, which also helped firms retain 40,000 other jobs. - The seizure of R37 million worth of clothing merchandise suspected of being counterfeit or non tax compliant, following raids on 56 premises by the SA Revenue Services (Sars). - The creation of 950 jobs and R40 million in investments in the call centre sector and the training of 3,400 young trainees are being trained under the Monyetla II Programme. Added to this Zalk said the revision of building standards would make the installation of solar water heaters or similar technologies in new buildings mandatory with a communication campaign to be rolled out in the 2011/12 financial year. The forestry sector would create over 8,000 direct jobs with 161 licenses issued by the Department of Water and Environmental Affairs for 10,000 hectares. Davies said the licensing process had long been stalled, but that the Minister of Environmental Affairs and Water Edna Moleywa was now taking water licensing issue seriously. So far 10 percent of licenses had been issued for forests used mainly for the manufacture of furniture, however, Davies said he wanted to see the process move a lot faster. He said an intra-departmental task team report on developing a fairer steel price was adopted by Cabinet which mandated the departments of economic development, trade and industry and minerals and resources to come up with a fairer price. Zalk said the manufacturing sector was hampered by among other things, the slowdown in fixed expenditure – both private and public, the slow recovery of the global economy and the strong rand. While the PPPFA regulations still needed to be promulgated by the National Treasury, Zalk listed various outstanding issues, chief among these include: - The promulgation by the Department of Energy of the biofuel blending process (Biofuels Mandatory Uplift Regulations) as well as the overhauling of Refit rules to focus on localisation of production of green technologies. - Shareholder compacts at state-owned enterprises to secure fleet identification still must be completed by the Department of Public Enterprises. - The scaling up of the Customs Fraud Campaign. He said the next IPAP would also look at boosting support for the commercialisation of intellectual property, where there was currently a gap. Turning to implementation of the IPAP, Davies was adamant that his department would take a sterner approach in meeting targets, than was taken by his department in the first industrial policy action plan of 2007, where he said many of the targets were not met and goals simply shifted when they weren't met. He said the department held internal monthly progress meetings around IPAP, calling in officials from other departments when necessary, and following a system where programmes were colour-coded according to highlight those that were on target. Though the IPAP's first progress report had come nine months after the launch of the plan, Davies stressed that the department would endeavour to submit progress reports every six months to the portfolio committee. Davies said the new component of skills had been added to the IPAP's 2012/13 plan as skills formed a major medium-term constraints in economy. AUDIT LEBANON free publication Page 36 Bi-Monthly TLSC 15-31 MARCH 2011 issue The IPAP would also included programmes for boat-building sector and had elevated a Western Cape initiative in the oil and gas servicing industry to become a national programme. Davies also clarified the role of the IPAP under the New Growth Path, pointing out that while the growth path referred to totally of measures, the IPAP focused on manufacturing and high-value sector inside the NGP. "There are no battles between ourselves and Economic Development over whether the IPAP has priority over the New Growth Path and visa versa," he said, adding that because of their scope both plans could not be run by the same department. Tanzania to raise US$ 3.5 billion for Dar es Salaam – Rwanda and Burundi railway Tanzania, Rwanda and Burundi have announced a joint venture that aims at raising the US$ 3.5 billion needed to build a new railway connecting the two landlocked countries of Rwanda and Burundi with Tanzania's port of Dar es Salaam. The 1,651-km railway would consist of two sections. One between Dar es Salaam and Isaka might require an upgrade of Tanzania's existing central railway while the further section from Isaka in Tanzania to Kigali in Rwanda, and from Keza in Tanzania to Gitega and Musongati in Burundi, would involve building from scratch. This section alone is expected to cost $2.63bn. Feasibility studies for the section of a railway between Tanzania and Rwanda and Burundi as well as an upgrade of the central railway between Isaka in Tanzania and the port at Dar es Salaam has already been completed and the estimates are derived from these studies. The East African countries want the project either to be on a build, operate and transfer (BOT) basis or a joint venture. The railway has the potential to attract investment into industries including nickel mining in Burundi and Tanzania, according to studies funded by African Development Bank, the US Government and American railway Burlington Northern Santa Fe. "We are ready to go into partnership with private companies that can raise the money for construction of the railway," said Tanzania's President Jakaya Kikwete. "We are ready to borrow, preferably from concessional sources." Dar es Salaam is closer to Rwanda and Burundi than is the Kenyan port of Mombasa and the greater share of the landlocked countries trade is handled by the Tanzanian port but is mostly moved by road at present. AUDIT LEBANON free publication Page 37 Bi-Monthly TLSC 15-31 MARCH 2011 issue TNPA 2011 tariff book is now available Transnet National Ports Authority has just made available the latest tariff book for 2011, with rates and charges that will become effective on 1 April 2011. The tariff book, which comes in hard copy or as a pdf file, is issued in terms of National Ports Act regulations, and is based on an average 4.49% increase in tariffs compared with the 2010 fiscal year. This is in accordance with the ruling from the Ports Regulator who made the determination. Hard copies of the Tariff Book are being sent to TNPA clients and the pdf file is available on the TNPA website at www.transnetnationalportsauthority.net Hapag-Lloyd and Zim tweak rotation of Europe/West Africa loop German carrier Hapag-Lloyd and Israel's Zim Line intend changing the rotation of their joint Europe – West Africa service as from 5 April 2011. At that time the service, which Hapag-Lloyd refers to as the WAX service, will call at Antwerp, Hamburg, Thamesport, Antwerp, Dakar, Tin Can Island, Tema, Abidjan, Amsterdam and Antwerp. The service operates with three ships, two from Hapag-Lloyd and one from Zim, with an average capacity of 1,717 TEUs. Thamesport and Abidjan are the new calls in the rotation although the Abidjan call will remain on hold until the European sanctions against Ivory Coast are called off. MOL has slots in this service. MOL introduced fixed day schedule to weekly Europe-West Africa schedule Mitsui OSK Line (MOL) says it has upgraded its container services between Europe and Senegal, Ghana, Nigeria and, once the EU sanctions are lifted, Abidjan. The new rotation becomes Thamesport, Antwerp, Dakar, Tin Can Island, Tema, Abidjan (when practical), Antwerp, Hamburg, with the service commencing on 6 April with the Hamburg departure. Transit will be seven days from Antwerp to Dakar and up to 31 days back to Thamesport. "This reliable weekly service, with fast transit times, will be especially useful for customers shipping fresh produce from West Africa to Europe and further afield," said Colin de Souza, MOL Vice President of MOL's North South Trades. Transnet finalises its executive committee Transport parastatal Transnet on Wednesday announced the members of its executive committee. "It is my belief that the reconfigured Executive Committee will contribute significantly to ensuring that the company plays a key role in making South Africa's New Growth Path a reality, and that Transnet plays its rightful role as the custodian of South Africa's rail, ports and pipeline infrastructure," group chief executive Brian Molefe said. The announcement follows nearly two years of uncertainty due to the delay in the appointment of a new group chief executive and board. Last month, Public Enterprises Minister Malusi Gigaba announced that Cabinet approved Molefe's appointment for a five-year period. "Transnet has been without a permanent group chief executive for a considerable period of time, which is undesirable given its strategic importance to the South African economy," Gigaba said at the time. Molefe took over following December's appointment of Transnet chairperson Mafika Mkwanazi being tasked with the group chief executive function. Mkwanazi took over from Chris Wells who resigned. With effect from 21 March 2011, the Transnet executive structure will be: Brian Molefe - Group Chief Executive Virginia Dunjwa - Chief Risk Officer Siyabonga Gama - Chief Executive: Transnet Freight Rail AUDIT LEBANON free publication Page 38 Bi-Monthly TLSC 15-31 MARCH 2011 issue Mark Gregg-Macdonald - Group Executive: Planning and Monitoring Pradeep Maharaj - Group Executive: Human Resources and Strategy Charl Moller - Chief Executive: Transnet Pipelines Tau Morwe - Chief Executive: Transnet National Ports Authority Moira Moses - Group Executive: Transnet Capital Projects Khomotso Phihlela - Group Executive: Commercial Anoj Singh - Acting Chief Financial Officer Karl Socikwa - Chief Executive: Transnet Port Terminals Zola Stephen - Group Executive: Legal, Corporate and Public Affairs Richard Vallihu - Chief Executive: Transnet Rail Engineering "I expect each member of the team to finalise their key performance targets as soon as possible to allow every member of the 55,000-strong workforce to improve our operations by focusing on efficiency, productivity and safety. Above all, we have to prioritise customer service," said Molefe. Namibe's port fees to be reviewed CIA map of Angola showing port of Namibe Angola's Customs department has agreed to review port fees at the southern Angolan port of Namibe in addition to other concerns regarding overbearing bureaucracy. It is reported that the fees charged by Namibe port are four times higher than those in Walvis Bay in Namibia. Complaints have also been made by importers and exporters about the delays in processing cargo through Customs. AUDIT LEBANON free publication Page 39 Bi-Monthly TLSC 15-31 MARCH 2011 issue Cameroon-Nigeria highway planned – will boost West and Central African trade map showing the towns of Bamenda in Cameroon and Enugu in Nigeria that will be linked by the first phase of this section of the Trans African Highway. Map Commonwealth A new east-west highway connecting Cameroon with Nigeria and funded by the World Bank, the African Development Bank and Japan's Agency for International Development, is scheduled for completion in 2013. Work on the highway project, long envisaged but equally long in getting underway, commenced last June and when completed will open a new transport corridor between East, Central and West Africa. Benefits are expected to accrue to the millions of inhabitants living along the route. Ultimately the highway is intended as part of the Trans African Highway connecting the Nigerian port of Lagos on the Atlantic coast with the Kenyan port of Mombasa on the Indian Ocean. The current section of 433 km connects the town of Bamenda in north-western Cameroon with Enugu in eastern Nigeria, with a joint border post linking the two countries. Proponents of the road say it will increase trade exchanges and strengthen cooperation between the respective nations of the region. ECOWAS awards contract to build two border posts The Economic Community of West African States (ECOWAS) has awarded contracts for the building of two border posts linking Nigeria and Benin, and Ghana and Togo. The aim of the two posts, which are being funded by the European Union, is to harmonise border controls and Customs practices with an aim of facilitating the movement of trade among the West African states. ECOWAS says that real transport facilitation will be realised only when each country removes illegal roadblocks and other unnecessary checks. AUDIT LEBANON free publication Page 40 Bi-Monthly TLSC 15-31 MARCH 2011 issue Takoradi received new cargo handling equipment Port of Takoradi in Ghana. Picture courtesy OTAL The Ghana port of Takoradi has inaugurated new cargo handling equipment at the port including mobile cranes, reach stackers, Mafi tractors and fork lift trucks. Alhaji Abukari Sumani, chairman of Ghana Ports & Harbours Authority said the port would be redesigned and dredged to enable larger ships to use the port. Additional cargo handling equipment is expected in the near future. Sierra Leone port workers concerned about possible privatisation Port workers at Sierra Leone Ports Authority say they are concerned about possible privatisation of the Queen Elizabeth II harbour quay. The Port Workers Union and the Sierra Leone Labour Congress are in talks with the National Privatisation Commission and the Government of the West African country concerning service and redundancy benefits for some 800 workers who will be affected by the move. Togo installs Vessel Tracking Management System Transas Mediterranean in cooperation with its local partner SERAMAR has delivered a Vessel Traffic Management System (VTMS) to Port Autonome de Lomé in Togo. The System is installed in Lomé Port - the main point of exchange for the country. The System, which was provided on a turnkey basis, is intended to monitor and regulate the maritime traffic flow in order to improve safety conditions in the area. High traffic density justifies the choice of sophisticated software able to improve port's efficiency. Complementary to the Transas monitoring solution Navi-Monitor, the Lomé Port VTMS is equipped with a set of hardware components – a radar, an operator workstation, AIS and VHF equipment. In addition, Transas Marine specialists carried out a comprehensive operational and maintenance training for operators and technicians. This project continues the range of successful VTMS installations conducted by Transas on the African continent. "Rising safety and security concerns have made a significant shift in minds over the last few years. Ports are becoming even more conscious and take deliberate decisions in choosing suppliers of critically important safety systems," said Christopher Loizou, Transas Marine's Shore-Based Systems Business Unit Director. Transas has supplied VTMS to Libya, Morocco and Ivory Coast. AUDIT LEBANON free publication Page 41 Bi-Monthly TLSC 15-31 MARCH 2011 issue Nigeria announces plans for deepwater port in Akwa Ibom Nigeria's Federal Government has revealed plans to build a new deepwater port in the Ibaka area of Akwa Ibom State. Visiting the site Federal Minister of Transport Alhaji Yusuf Suleiman said the site chosen would enable the building of a deepwater port suitable for modern large capacity shipping. With its deep shoreline the adjacent Ibom Industrial City will have the best deep sea port in Nigeria, he said, which was what had attracted the federal government's support for the project. The minister gave no indication when the building of a the new port would begin. Algeria awards US $1.7 billion rail contract Spain's Fomento de Construcciones y Contratas (FCC) and Algeria's ETRHB Haddad have won a US $1.72 billion contract to build a 66km railway line in Algeria. The link will connect the city of Tlemcen, west of Algiers, with the border at Akkid Abbas, and will form part of a line connecting Oued Tleat to the Moroccan border. The line will require the construction of 34 viaducts and nine tunnels, perhaps explaining the seemingly high cost given its short distance. The construction period for the project is 48 months. The line will be double-tracked, electrified and designed for a maximum speed of 220 km/h. The contract covers signalling and telecomms systems, and the construction of a new passenger station in Maghnia. This rail project is part of Algeria's economic development programme for 2009-2014, which has a budget of approximately US $150 billion. 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