SLOW-STEAMING's impact on costs continues to puzzle shippers and carriers who agree and disagree that it negates advantages of the all-water Panama route from Asia to the US east coast and others asking whether it costs carriers more at a time of low utilisation and more ships on longer, slower loops.

"Ironically, carriers are discovering that slow-steaming increases their operating costs because the fuel savings are more than offset by the higher costs of operating a longer strings," reports DC Velocity, of Attleboro, Massachusetts.

"The roundtrip cost of operating a string of seven 8,500 TEU ships steaming at 13 knots in the US west coast-Far East trade is higher than operating a string of five ships in the same trade steaming at 19 knots, according to data from Paris-based advisory firm Alphaliner," said DC Velocity.

The advantages are also apparent. With bunker costs up to US$650 a ton in 2011 from $350 a ton in recession-wracked 2009, slow-steaming can reduce costs three to five per cent as fuel burn drops as ships move through water more slowly.

"Slow-steaming is here to stay," Rick Wen, vice president of the US arm of Hong Kong's Orient Overseas Container Line (OOCL).

But Theodore Prince, who runs a Richmond, Virginia maritime consultancy bearing his name, has doubts, predicting companies will adopt an inventory bifurcation, with higher-value Asian-made goods entering on the west coast and lower-value commodities heading to the east through Panama where longer transits mean less.

Mr Prince said he believes the expanded Panama Canal will result in little cargo diversion from west coast to east coast ports because slow steaming lengthens transits and magnifies the problems they create.

Beneficial Cargo Owners (BCOs) won't achieve sufficient cost savings from an all-water route through the canal to justify the longer sailing times when compared with offloading cargo on the west coast and trans-loading to rail for the inland move, he said.

"Slow-steaming has just widened the discrepancy," he said. "The railroads haven't slowed down."

Maersk North American sales vice president William Woodhour said carriers may yet launch premium services at faster speeds, which, of course, would come with higher rates. "You have to segment your market and focus faster speeds on customers who want it," he said.

Tim Feemster, vice president and director of global logistics at real estate giant Grubb & Ellis, said it's possible that the marketplace would welcome an expedited form of liner service, noting that railways and truckers have launched similar services in recent years. "The trouble is, we haven't seen the demand for it up to now," he said.

For shippers, a longer voyage could mean additional inventory carrying costs. Slow-steaming also complicates a company's ability to react to unexpected events, such as bad weather or a labour disruption, which could affect product flow. Slower speeds can trigger changes in ordering, production, and scheduling as companies adjust to filling any holes in inventory if the goods are still on the water rather than in a DC or with their customer, said the report.

To offset slow steaming, NCR Corp, a global technology company based in Georgia, will sometimes intercept shipments arriving on the west coast before they can be transloaded to a railhead and have them moved inland by truck for faster delivery, said NCR vice president Michael Chandler.

But Genuine Parts Co vice president Mike Orr said his company has yet to experience any adverse impact on its business as a result of slow-steaming.

Home Depot supply chain vice president Mark Holifield said slow steaming causes his firm no trouble because ocean freight is slow and a couple of days of voyage variability means nothing.

"Predictability and consistency is more important than speed," said Mr Holifield, adding that slow-steaming is acceptable "as long as we can count on the published schedule."

Source Shipping Gazette - Daily Shipping News

JAPAN's Mitsui OSK Lines (MOL) has announced that it will work together with Mitsui Engineering & Shipbuilding to conduct a demonstration run of an electrically-controlled slow speed diesel engine modified to include a gas injection system.

The engine will be designed, manufactured and delivered to a shipyard for one of the shipping group's newbuildings, which is being built with oil injection specifications. During manufacturing it will be temporarily modified to an electrically-controlled gas injection, dual fuel, slow speed diesel engine. It will be run with vaporised LNG at MES Tamano Works in the first half of 2013.

LNG has recently been highlighted as one of the potential propulsion fuels for future ship design, a company statement said.

It plans to start investigating the adoption of gas injection technology for future vessels, along with its Sempaku ISHIN project, one of the environmental strategies in its mid-term management plan "Gear up! MOL".

Source Shipping Gazette - Daily Shipping News

GUIYANG's Gaimao Logistics Centre has been approved by China's Ministry of Railways to undertake the container and full truckload business transfer from the Guiyang Eastern Railway Station, Xinhua reports.

According to the development plan, the facility has a container cargo capacity of 10.54 million tonnes, and will be upgraded to 12.7 million tonnes in long term. It also has a bulk capacity of 8.13 million tonnes, which will be upgraded to 11.8 million tonnes over time, said the report.

The facility is divided into three that includes a container freight yard and two bulk handling sections. It will eventually cover 160.2 hectares with an overall capacity of 24.5 million tonnes.

Being the largest cargo distribution facility in southwest China, the facility currently covers 100 hectares and can handle up to 100 rail carloads a day. It is also one of the 40 railway container depots in China.

Source Shipping Gazette - Daily Shipping News

THE Atlanta office of UK-based SBS Worldwide has launched three consolidation services with weekly departures from Shenzhen, Hong Kong and Shanghai to New York.

The SBS simplified consolidation services are designed to meet the needs for transparent pricing and fixed-weekly sailings with reliable transit times, said a company statement.

"Most weekly consolidation services from China to the US transship are via Hong Kong. By offering consolidation services from Shenzhen and Shanghai directly to New York, we are able to remove a transport leg, which reduces lead times and makes the service more cost efficient," said SBS Worldwide chairman Steve Walker.

"The fact a transport leg has been removed also increases the reliability of service as the risk of goods being delayed in transit are lessened," said Mr Walker.

New services also reduce the risk of cargo being damaged during transport as product is only handled once at origin, compared with services that tranship via Hong Kong where cargo needs to be re-loaded, the company said.

Source Shipping Gazette - Daily Shipping News

INTTRA, a provider of e-commerce solutions for the ocean freight industry, is hosting this year's Transpacific Maritime Conference (TPM) this week in Long Beach, California, where participants have been invited to join a special breakout session on "Enhancing Collaboration through Performance Measurements."

The session will be led by Milan Vaclavik, director of product management at INTTRA and Lars Jenson, CEO of SeaIntel Maritime Analysis, who will share insights on carrier and shipper performance and how a revolutionary business insights platform from INTTRA, OceanMetrics, is enabling a new conversation on accurate, real-time performance metrics in order to move the industry forwards.

The company said this year's event promises to deliver an in-depth look at current issues in emerging sourcing and consumer markets in Asia, China's role as the leading source of US container goods and more.

Measuring performance of carriers, shippers and trading partners across the ocean supply chain is integral to improving and optimising workflow. However, a key challenge among the industry has been the absence of a standard set of metrics with a common set of data.

Mr Vaclavik and Mr Jenson will provide an overview of how shippers and carriers can better collaborate using common information and an agreed set of metrics available through OceanMetrics, which is powered by transactional data that represents more than 15 per cent of global ocean container trade, the company said.

Source Shipping Gazette - Daily Shipping News

DACHSER Transport of America has announced that its parent company has started building a new branch office in Zevenaar, the Netherlands, to cope with soaring volume.

The facility is expected to start operations this summer and will be one of the group's largest branch offices in Europe, a company statement said.

The 30,200-square-metre logistics complex is being constructed in multiple stages on a 20-acre site. "The volume at the Zevenaar location has soared in recent years," said Aat van der Meer, managing director for the Netherlands.

"As a result of this growth, we have outgrown our present site." With the new complex, the logistics provider expects to further the global reach of its warehousing and contract logistics activities and to increase access to worldwide markets. The new facility will also be located closer link to global procurement and distribution channels, it said.

"This expansion further supports growth of our network overseas and therefore only helps to expand the capabilities we offer American clients and their global partners," said Frank Guenzerodt, the company's US president and CEO.

The first construction phase will develop a 7,200-square metre cross-doc with 82 bays as well as a three-story office building. Following completion of the first phase, the office expansion will include the construction of an additional 3,300-square metre cross-doc and a 16,100 square metre warehouse.

Source Shipping Gazette - Daily Shipping News

QUALITY initiatives commenced last year by the London-based St Kitts & Nevis International Ship Registry (SKANReg) have led to a major improvement in Port State Control inspection results, which show that detentions were down 62 per cent and deficiencies had dropped 49 per cent.

SKANReg is now seeking support for further progress in a submission to the International Maritime Organisation's Flag State Implementation (FSI) sub-committee ahead of its 20th session from March 26-30. The registry says it is a "source of frustration" that, with only a small number of ships operating within certain regions, even a single detention can result in targeting of its ships and adversely affect its PSC list ratings in some areas. It is suggesting a harmonised system of reporting PSC statistics to avoid distortions.

The proposal comes as SKANReg - operational since 2005 - steps up its bid to attain PSC Grey List status within the next one to two years and White List ranking within two to four years from now. As part of this drive, the registry has successfully applied to the Voluntary IMO Member State Audit Scheme and is due to be audited in the second half of next year. Technical assistance has been offered by several countries, notably Australia and Turkey.

The St Kitts & Nevis Government last month became the 23rd signatory to the Maritime Labour Convention 2006, which sets out new working and living standards for seafarers. The convention needs backing by 30 countries. However, it is expected to come into force shortly, after seven ratifications were received in the last six months.

As reported in its paper to the FSI sub-committee, SKANReg enhanced its regulatory oversight in 2011 with a string of new measures that slashed ship detentions and deficiencies in the three main PSC regimes where its 320 SOLAS vessels operate.

Registrar Nigel Smith says: "Our fleet is gradually becoming more diverse and sophisticated, but at the same time we remain loyal to owners and managers from developing nations who often operate older tonnage. This raises special challenges in maintaining standards, but it categorically does not mean there is any room for compromise on quality."

Source Shipping Gazette - Daily Shipping News

KENYA and Ethiopia have signed an agreement in Nairobi to build a rail link between Lamu with Addis Ababa to develop the Lamu Port-South Sudan Ethiopia Transport (LAPPSET) logistics corridor between the two countries.

China has begun feasibility studies to transform Lamu, some 300 kilometres north of Mombasa and 100 south of Ethiopia, into the largest port in East Africa, as part of their String of Pearls strategy, says Wikipedia.

Kenyan President Mwai Kibaki and Ethiopian Prime Minister Meles Zenawi, who signed the accords, also explored plans to expand bilateral trade, more particularly the removal of trade barriers which could unlock this "huge potential", reports London's Containerisation International.

"It is necessary to reconfirm border lines and sensitise the communities residing along the common frontier to ensure they understand where they can go and where they can't under the trade agreements between Kenya and Ethiopia," said the joint statement.

Lamu is the oldest inhabited town in Kenya, says Wikipedia. Its economy was based on slave trade until its abolition in 1907. Construction of the Uganda Railroad in 1901 started competition with the Port of Mombassa.

Source Shipping Gazette - Daily Shipping News

HONG KONG's Asia Airfreight Terminal (AAT), the airport's No 2 ground handler, has announced it handled 51,690 tonnes in February, up 23 per cent year on year.

Export cargo volume for February was 33,249 tonnes, up 27 per cent year on year while import cargo volume was 17,955 tonnes, up 18 per cent with transshipments coming in at 486 tonnes, down 14 per cent.

Cumulative export tonnage for January and February was 66,395 tonnes, down three per cent against the same period last year. Total import tonnage for first two months was 35,067 tones, up six per cent year on year, while transshipment cargo volume was 1,009 tonnes, a decline of 17 per cent.

Looking ahead, AAT general manager for corporate development Kenneth Yeung said: "In view of the slowdown in global trade, we can only be cautiously optimistic about the possible recovery later this year."

Source Shipping Gazette - Daily Shipping News

THE Nanning city airport, serving the capital of Guangxi Autonomous Region, posted a 66.3 per cent increase in air cargo year on year to 5,398 tonnes, Xinhua reports.

Outbound cargo were 2,727 tonnes, inbound cargo were 2,670 tonnes. The newly launched air cargo charter service from Nanning to Dhaka last year was said to have stimulated the growth in the airport's cargo throughput.

Source Shipping Gazette - Daily Shipping News

LUFTHANSA Cargo has called for swifter implementation of the certified shipper approval process in Germany.

Addressing 250 delegates from the logistic industry at the fifth Security Conference in Frankfurt, board member for operations, Karl-Rudolf Rupprecht said: "With only 13 months to go until EU Directive 185 goes into force, fewer than one per cent of shippers in Germany have been accredited. This shows a need for action. All must take steps to speed up the approval process."

Dr Rupprecht said his airline is making thorough preparations for April 2013 so as to be able to continue to offer its customers security processes.

One of the main topics under discussion was the inadequate level of harmonisation of international security standards. Dr Rupprecht said mutual recognition of EU directives and US regulations, particularly as regards transatlantic traffic, was long overdue.

"It is neither comprehensible nor acceptable," he added, "that the US authorities recognise security measures for air cargo from France or Switzerland, say, but do not recognise the virtually identical measures that apply in Germany. This results in additional checks on all departures from Germany to the USA.

"Insufficient harmonisation was thus creating inefficiencies, lengthy processes and high costs, and did not result in any security gains, Dr Rupprecht said. "In the past few years, Lufthansa Cargo's security costs have increased more than tenfold. And that trend looks set to continue."

However, the airline manager also pointed out that, in spite of the scope for improvement with regards processes and harmonisation, security levels in the industry were recognised as being high, and the measures in place ensured a high degree of security for airfreight traffic.

Harald Zielinski, head of security and environmental management, said the airline's security conference had a key role to play in this process. "Dialogue between politicians, the authorities and the logistics companies is crucial if we want to further improve security regulations and at the same time ensure smooth implementation as well as competitive processes and costs. With our fifth Security Conference, we have once again brought together top representatives from all the areas involved."

Source Shipping Gazette - Daily Shipping News

NASDAQ listed Air Transport Services Group (ATSG) posted a 14 per cent increase in fourth quarter net profit year on year to $13.5 million, drawn on revenues of $166.5 million, down seven per cent.

Full year revenues in 2011 increased nine per cent to $730.1 million, including $160.7 million in reimbursements for fuel and related expenses. Revenues derived from German forwarder DB Schenker were 15 per cent of total sales.

"Results from nine additional 767 freighters in service in the fourth quarter of 2011 helped offset the effect of the wind-down of our business with DB Schenker," said CEO Joe Hete.

"Some of that cargo volume shifted to the freighters we operate for DHL, allowing us to retire the majority of our older 727 and DC-8 aircraft and to start to restructure our airline operations," he said.

"We purchased two more 767-300 aircraft in February 2012 for deployment later this year, recognising their advantages and appeal to major air cargo network operators. This aircraft type continues to offer lower capital risk and attractive after-tax cash returns due to our passenger-to-freighter conversion strategy," he said

Looking ahead, Mr Hete said the company would devote greater resources to growing its wet lease or aircraft, crew, maintenance and insurance (ACMI) services in the first quarter.

"As a result, our first quarter 2012 financial results are expected to be below first-quarter 2011 levels. After the first quarter, we expect to grow toward a range of $190 to $200 million in adjusted EBITDA for the year, including the effect of increased pension expense and increases in engine maintenance costs," Mr Hete said.

"Our 2012 results will benefit from a full year of gains from the owned and leased aircraft which entered service during 2011, as well as owned and leased aircraft which we plan to add during 2012," he said.

Source Shipping Gazette - Daily Shipping News

UAE-based Etihad Airways has recently started a new service from Abu Dhabi to Shanghai's Pudong International Airport.

The service uses Airbus 300-300 aircraft, offering five flights a week and will be upgraded to one flight a day since April 15.

Etihad Airways was founded in 2003, operating an Abu Dhabi-based network covering 84 destinations in Middle East, Africa, Europe, Asia, Australia and North America. It carried 8.3 million passengers in 2011.

Source Shipping Gazette - Daily Shipping News

AILING national carrier, Malaysia Airlines, spinning off some of its ancillary businesses, including its air cargo unit MASkargo, as part of a business plan to turn itself around could be losing an important long-term income earner for short-term capital gains, says a Standard & Poor's analyst.

"Cargo has proven to be a profitable business for MAS, with Malaysia recognised as a manufacturing base for many companies," said the S&P credit agency's aviation analyst Shukor Yusof.

"As such, divesting MASkargo is an easy way to raise money, but more importantly is whether it makes sense for MAS in the long term," he said, according to the Star Daily of Malaysia.

He pointed to the need for MAS to address the 15 per cent increase in non-fuel expenses to MYR10.4 billion (US$3.4 billion) last year from MYR9.03 billion in FY10, which he said is "worrying".

MAS said in its business plan announced last December that it had become a very complex business with a number of different operating entities: core full-service airline, MASholidays, MASkargo, MAS Aerospace Engineering (engineering and maintenance), training, catering and ground handling.

"The business recovery requires the need to de-clutter to ensure proper focus on the core business: flying the customers. MAS also needs to give the ancillary businesses sufficient freedom to achieve full potential.

"The plan is therefore to commence the process of having strategic partners to these ancillary businesses starting with ground handling, training and engineering and maintenance. However, at present MAS is now focused on the introduction of the Airbus A380 (super jumbo) into its fleet and the launch of the short-haul premium service carrier," the airline said in an email reply to criticisms published in the Star Daily.

At news conference last week, MAS group CEO Ahmad Jauhari Yahya, said the airline was in the process of exploring options including joint ventures and/or strategic alliances for MASkargo amid the "stubbornly high fuel prices and weak global demand for cargo."

MASkargo contributed 15 per cent of the airline's revenue after passenger operations. The cargo unit has been profitable until last year (FY11) when it reported a pre-tax loss of MYR18.78 million on revenue of MYR2.05 billion, compared with a pre-tax profit of MYR141.71 million on revenue of MYR2.36 billion in the previous year.

MAS had said the cargo division suffered in line with an overall slowdown of the industry globally, as well as due to higher fuel costs and impairment of its A330 freighter fleet.

Source Shipping Gazette - Daily Shipping News

The settlement agreement between commercial vehicle and engineering group MAN and Abu Dhabi-based International Petroleum Investment Company (IPIC) regarding the repurchase of shares in Ferrostaal has been completed. This also renders MAN’s agreement with Hamburg-based MPC Group — whereby MPC will acquire 100 percent of the Ferrostaal shares from MAN immediately afterward — fully effective. The transaction has been implemented as agreed in November 2011. Ferrostaal is now part of the MPC Group.

Source MAN Group

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The magazine JŪRA has been published since 1935.
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