CONTAINER shipping companies have proved to be remarkably resilient despite suffering industry-wide operating losses totalling more than US$6 billion last year.

According to a survey by Alphaliner, three small carriers, TCC, Yanghai Shipping and Johan Shipping with a combined market share of only 0.2 per cent filed for insolvency last year.

Although most major carriers appear to have successfully weathered the storm of 2011, a number continue to struggle under high indebtedness and committed capital spending obligations.

The survey showed that fresh capital injections may be required to keep some of the companies solvent. It's estimated that total short-term funding needs for container carriers could reach $20 billion in the current year based on the companies' estimated debt repayment and finance cost requirements.

Only four out of the 17 carriers surveyed reported healthy leverage ratios last year with net debt-to-EBITDA of below seven fold. Eight out of 17 major carriers reported negative EBITDA cash flow earnings with almost half being unable to service interest payments from cash flow and had to raise cash by selling shares, borrowing or selling assets.

Apart from the three Japanese carriers - MOL, NYK and "K" Line - all of the other majors have had outstanding capital expenditure on new ships that need to be paid in the next three years, which further strains balance sheets.

Among the most leveraged carriers, Zim faces the highest liquidity risk with debts of $2.5 billion against a shareholders' equity of $351 million as at the end of last year. It also has obligations of $1.7 billion on the outstanding balance on 13 ships due to be delivered in 2015.

Zim was forced to sell its stake in a Nigerian container terminal for $154 million last year to raise cash. The company's shareholders, Israel Corp and the Ofer Group, it had to contribute $150 million of subordinated loans in the last three months to bolster the firm's finances.

Despite this, Zim still faces a potential cash shortfall despite the fact that it has received waivers from its creditors from its debt covenants - it still has about $819 million of short-term debt due this year which needs to be financed.

Despite the weak liquidity position for some of the carriers, none of the main carriers are expected to sink into bankruptcy, the survey showed, adding that operating margins are improving rapidly due to the successful implementation of rate increases on the key Asia-Europe and transpacific trade lanes in the last two months.

Even in the event of a sustained slump, existing stakeholders are expected to step in to rescue the carriers. The shipping lines with high gearing ratios including Yang Ming, Hyundai Merchant Marine, Hanjin Shipping and Zim are all expected to receive stakeholder support given the importance of these firms to their respective local interests.

Source Shipping Gazette - Daily Shipping News

TROUBLED Horizon Lines has reached a deal with Ship Finance International Limited (SFL) to return five ships it had chartered, but laid up in the Philippines.

Under the agreement, the shipping company and logistics operator will give a 10 per cent stake in the company to SFL plus a US$40 million bond to end the charter.

The five 2,824-TEU Hunter class ships were used by Horizon in its transpacific service that made a stop in Guam on the westbound leg, reported American Shipper. Originally Horizon had chartered the space on the ships for the eastbound leg to Maersk, but when that agreement expired in 2010, it started its own service from China to the United States. It was discontinued last year when freight rates plummeted and Guam volumes were lower than expected.

America's biggest shipping line, Horizon Line, of Charlotte, North Carolina, faced serious financial trouble in February 2011 after it was hit with a US Justice Department price fixing fine of $45 million - later cut to $15 million - as well as class action awards to shippers of more than $13 million. Near bankrupt, it was de-listed from the New York Stock Exchange.

Subsidiaries of SFL will release Horizon from its remaining charter obligations, totalling $220.8 million over seven years.

Horizon said its earnings and cash flows will be improved by the termination of $32 million in annual vessel charter obligations for the five ships leased from SFL, as well as the elimination of about $3 million in annual lay up costs for the idle vessels.

Horizon also announced it has completed transactions with 99 per cent of its noteholders, cutting the company's debt by $188.4 million.

"These transactions successfully close a chapter in the history of Horizon Lines that we have been working diligently to complete for these past many months," said Horizon acting CEO Stephen Fraser.

"Horizon Lines moves forward today from a stronger financial position that will enable us to better focus on customers in our core Jones Act trades and to invest in the future of our business."

In another development, Horizon said it will reduce the size of its board from 11 to seven, effective immediately. Jeffrey Brodsky is succeeding departing Alex Mandl as chairman. In addition to Mr Mandl, William Flynn, Bobby Griffin, and Carol Hallett will also depart. Mr Fraser will remain CEO on an interim basis until a new chief is named.

Source Shipping Gazette - Daily Shipping News

ASIA-EUROPE westbound container traffic increased 15.6 per cent in February to 2.8 million TEU year on year while eastbound volume was up 8.8 per cent to 1.8 million TEU, according to the latest Container Trade Statistics (CTS).

CTS, which collates data from major carriers, said February numbers looked good because of the timing of Chinese New Year's factory shutdown in January last year. The holiday fell in February in 2012.

Transatlantic February volumes increased 10.6 per cent eastbound to 1.2 million TEU while westbound volume went up 21.7 per cent to 1.4 million TEU.

Source Shipping Gazette - Daily Shipping News

THE Long Beach City Prosecutor's Office said that Pacific Coast Container (PCC) after pleading no contest will pay a US$460,000 for 47 counts transporting overweight loads through Long Beach.

"Overweight vehicles are unsafe for our roads," City Prosecutor Doug Haubert said. "They are dangerous because they create potholes for motorists and they can't brake in time when traffic slows."

The report said the City Prosecutor's Office filed the case in early January after earlier attempts were made to persuade Oakland-based PCC and its affiliate trucking companies to follow the rules for vehicles. It noted that fines for overweight commercial vehicles are based on excessive weight. PCC's loads were alleged to be, in most cases,10,000 pounds or more overweight.

"Some of these loads were dangerously overweight," said Deputy City Prosecutor Chad Salzman, who handled the case. He had described PCC in a statement in January as being "the most egregious violator we have seen".

The report noted that aside from being dangerous companies that frequently ignore the rules on overloading gain a competitive advantage over companies that operate within the law.

"Strict enforcement of the law will ensure a truly competitive environment," said Mr Haubert. "It is not fair to those who abide by the law to compete against those who ignore it. This penalty should send a strong message to other companies that they need to comply with the law, especially when public safety is at stake."

Source Shipping Gazette - Daily Shipping News

PORTS of Auckland in New Zealand has announced an unaudited net profit of NZ$18.6 million (US$15.2 million) for the six months ending December 31, 2011.

The result includes NZ$4.8 million in after tax gains that are not expected to reoccur. Removing those gains, the underlying profit for the first half of the port's financial year amounted to NZ$13.8 million, down from NZ$14 million profit recorded in the same period a year earlier.

Revenue rose by nine per cent year on year to NZ$96.6million, while operating costs excluding depreciation increased by NZ$5.7 million, or 11.5 per cent.

Total container volume during the period under review rose slightly by 0.2 per cent year on year to 454,234 TEU. Within this result, full import container volume grew by 1.7 per cent to 169,557 TEU, which a statement from port authorities said reflected a "relatively subdued economic environment".

First half transshipment volumes were down 6.3 per cent year on year. Bulk and breakbulk volumes stood at 1,897,094 tonnes, up only 0.9 per cent year on year.

The gains reflected in the first half results, which are not expected to reoccur include a change in shipping schedules which created a 20 per cent increase in empties for the period; revenue from salvage services provided during the grounding of the container ship Rena in the Bay of Plenty.

A record number of cruise ships for the Rugby World Cup; a 14 per cent increase in vehicle imports influenced by the Japan earthquake and the introduction of stricter emission standards on Japanese imports from January 1 2012; and prior period taxation adjustment due to timing.

Expectations for the second half of the financial year are described by port authorities as being "uncertain given the costs of industrial action and associated loss of business".

Said port CEO Tony Gibson: "It's been a challenging period for the business. Second half results will be impacted by decreased container volume associated with recent industrial action and loss of the Maersk and Fonterra services."

The port authority has been engaged in a long dispute with the Maritime Union over the port's proposal to introduce flexible docker shifts to prevent wages from escalating.

The row over wages has prompted rolling strikes and lock-outs. However, both parties have resumed negotiations after an Employment Court judge granted an injunction and the port's management abandoned a plan to hire external stevedoring contractors.

Source Shipping Gazette - Daily Shipping News

THE Iranian navy rescued Chinese hijacked cargo vessel, the Xianghuamen, from nine Somali pirates near Iran's southern port of Chabahar in the Gulf of Oman, Reuters reported.

The pirates took control of the vessel of the Nanjing Ocean Shipping Company in eastern China during the early hours of the morning en route to the Iranian port of Imam Khomeini after a stop at Singapore following Shanghai port call.

The 28 Chinese crewmen hid in a cabin of the Panama-flagged cargo ship while the pirates broke down the doors brandishing guns and axes, ordering the captain to sail the ship towards Somali waters.

The Iranian frigate opened fire after requests to stop were ignored which led to the crew shutting the engines down and six jumping into the sea. Under fire the pirates surrendered and the crew was rescued.

Source Shipping Gazette - Daily Shipping News

INDIA's top three container terminals have defied the Tariff Authority for Major Ports (TAMP) regulator's order to cut rates by ignoring the deadline for their reduction, reports Live Mint-Wall Street Journal.

TAMP "notified" the rate cut of 44.2 per cent in February to be applied by Gateway Terminals India at Mumbai's JN port after the firm sought a rate hike of 8.7 per cent. Gateway Terminals is an Hague-based APM Terminals, a unit of Denmark's AP Moller Group, which also owns Maersk Line.

"We haven't yet started billing the new rates notified by TAMP," said a top executive at Nhava Sheva International Container Terminal (NSICT), the facility run by Dubai's DP World at Mumbai's Jawaharlal Nehru (JN) port.

One shipping agent told Live Mint that the terminals in an agreement with shipping lines, their main customers, not to charge them the lower rates and settle bills later. "The idea is to see if they can get a stay order from the courts. Then they need not apply the new rates," the agent said.

The issue puts the spotlight back on the powers of TAMP, the regulator for ports controlled by the government, but even an agency spokesman said: "TAMP has no powers to enforce its own orders."

In February, TAMP notified a rate reduction of 12.3 per cent at Chennai International Terminals when the terminal had asked for a hike of 15 per cent. Chennai International Terminals is owned by Singapore's PSA International.

At least three Mumbai-based executives from three shipping lines confirmed that they have not been billed the new rates, but declined to be named.

On March 23, the Delhi high court dismissed petitions filed by three terminal operators seeking a stay on the rate cuts ordered by TAMP on jurisdictional grounds. But the Delhi court told Gateway and NSICT to seek redress at the Mumbai high court and Chennai International Terminals were told to go to the Madras high court where their respective terminals are located.

Said a TAMP spokesman: "No courts in the country have granted any stay against the TAMP order to cut rates at these facilities. So the TAMP orders have come into effect as per dates specified in the gazette."

And that would be February 23 for Gateway, February 29 for Chennai International Terminals and March 16 for NSICT, he said.

PK Agrawal, chief executive officer of Gateway Terminals, did not respond to calls seeking comment and PSA declined to comment too, said Live Mint.

The Container Shipping Lines Association (CSLA) lobby group said: "We are recovering THC only on an actual basis. We are not making any money out of this. There is no profiteering going on."

Source Shipping Gazette - Daily Shipping News

GERMANY's Hamburg Sud has celebrated the naming of its containership 7,100-TEU Santa Teresa at the Cruise Terminal in Rotterdam, the seventh newbuilding of a series of 10 identical vessels which feature 1,600 reefer slots.

This is one of the largest ships ever built for Hamburg Sud, noted the Shipbuilding Tribune. Following her delivery at Daewoo Shipbuilding & Marine Engineering in Korea in September, the Santa Teresa initially operated in Hamburg Sud's service between Asia and South Africa/South America east coast.

In January, it was then phased into the shipping group's Europe-South America east coast service. The ship was named after a town in the Brazilian province of Espirito Santo, west of the port city of Vitoria.

The Santa Teresa is the only ship of the Santa series to be christened in Europe. All other nine sister ships of this class were, or will be, named in South America or Asia. The last three ships of this series - the Santa Ursula, Santa Barbara and the Santa Ines will be delivered in summer 2012.

Source Shipping Gazette - Daily Shipping News

ANOTHER day of a 48-hour Greek dockers strike against austerity programmes launched as a condition of the country's financial rescue have brought ports to a halt, reports London's Containerisation International.

With the country heading towards a fifth straight year of recession and domestic demand shrinking, a disruption of its trade could be disastrous, said the report.

Source Shipping Gazette - Daily Shipping News

A VIETNAMESE ship carrying 60 containers of auto parts sank off the shore of southern Vietnam after a collision with a Thai vessel, according to VietNamNetBridge.

The 16-member crew of the Truong Hai Star was rescued and authorities salvaged 30 containers, said the report. Most containers carried auto parts. The sunken vessel is reportedly worth US$2 million.

The incident comes after a cruise ship collided with a containership in fog off the Vietnamese coast on March 16. The Silver Shadow, operated by Silversea Cruises, sustained minor damage, and the cargo vessel was badly damaged, according to CNN.

Source Shipping Gazette - Daily Shipping News

GERMAN owner Hansa Shipping and Chinese shipyard Jiangsu New Yangzi Shipbuilding have decided to equip four new 4,800-TEU ships with the German ballast water treatment technology "CleanBallast" developed by RWO, a subsidiary of Veolia Water Solutions & Technologies, reports

The technology is scheduled for the delivery over the course of 2012. Incidentally, Veolia also owns Hong Kong Tramways.

"We have picked RWO knowing that we are dealing with a sensitive and important task for the future," said Dejan Golub, superintendent of Hansa Shipping.

"RWO has long and comprehensive knowledge, as well as sustainable experience in marine water processing. Therefore, we are absolutely convinced that we will have the right partner in achieving excellent performance," he said.

"We trust that the technical solution of the RWO system, using a reliable, powerful and redundant filtration system, together with the well proven electrochemical disinfection unit, will bring us the benefit of meeting even stricter requirements than the present ones," said Mr Golub.

To complete the water treatment system of the new vessels, Hansa Shipping has also decided to install RWO's WWT-LC plants for onboard sewage treatment, as well as its oil-water separators SKIT/S-DEB to ensure best results in treating oily water, the report added.

Source Shipping Gazette - Daily Shipping News

HONG KONG's Asia Airfreight Terminal (AAT), the airport's second ground handler, posted four per cent year-on-year increase in March cargo volume to 65,929 tonnes, the company announced.

March exports increased five per cent to 47,270 tonnes year on year while imports were up four per cent to 18,114 tonnes with transshipments falling 21 per cent to 545 tonnes.

Year to date, cumulative export tonnage from January to March was 113,665 tonnes, up 0.1 pr cent year on year. Total import tonnage for first quarter was 53,181 tonnes, up five per cent. Transshipments fell 19 per cent year to date to 1,553 tonnes.

"The tonnage in March saw slight improvements. Nevertheless, we are cautious of the challenges ahead," said AAT corporate development chief Kenneth Yeung.

Source Shipping Gazette - Daily Shipping News

TAIWAN's Mandarin Airlines has launched direct flights between Wenzhou, a city in eastern Zhejiang province, and Taipei, reports Xinhua.

An E90 aircraft carrying 97 passengers took off from Wenzhou Yongqiang Airport at 1322 hrs, marking the inauguration of the twice weekly service.

The direct route takes 80 minutes, making it the shortest between the mainland and Taiwan. Previous routes, via cities such as Shanghai and Hangzhou, took six hours, according to a statement from Yongqiang Airport.

Twenty thousand people travelled from Taiwan to Wenzhou last year as tourists, visiting relatives or on business with 30,000 from Wenzhou going to Taiwan at the same time.

Source Shipping Gazette - Daily Shipping News

IBERIA pilots are staging on-again off-again Monday and Friday strikes to protest the entry of cut-rate subsidiary airline from entering the market.

The strikes have resulted in Spain's largest airline suspending 156 flights from the first of the week, reports the Prensa Latina news agency.

Strikes will continue on Mondays and Fridays until July 20, which have resulted in 148 routes being cancelled for April 13 and another 152 for April 16, according to Iberia.

The pilots, members of the Spanish Union of Airline Pilots (SEPLA), who already staged 12 strike days between December and February, have now announced their new walkout schedule.

SEPLA opposes Iberia Express, a low-cost subsidiary that started up short- and medium-range flights on March 25.

Source Shipping Gazette - Daily Shipping News

AIR INDIA is seeking to expand its ticket sales and distribution network globally by appointing general sales agents (GSA) in 56 countries, reports the Press Trust of India.

The GSAs would be appointed worldwide, sources told PTI, adding that strengthening of the distribution network across the globe would help the carrier boost its international sales.

They would have an initial contract for five years, which would be subject to review every year.

Following the 2008 global downturn and mounting losses, the cash-strapped airline had shut down a large number of its overseas offices (operated by the airline itself) to cut costs.

Keeping the high costs of running a full-fledged office in many countries, this time round, the airline is going for more GSAs in these countries, the sources said, adding only 10 countries would have online offices.

But now with its much-awaited INR180 billion (US$3.5 billion) financial restructuring plan getting the nod from the State Bank of India-led consortium, Air India is trying to revive its fortune both by cutting costs and creating additional revenue streams.

Source Shipping Gazette - Daily Shipping News

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The magazine JŪRA has been published since 1935.
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