OASIS OF THE SEA - The world's biggest cruise ship

Cater for: more than 6,000 passengers

Cabling: more than 3,000 miles of electrical cabling - that is about the distance from London to New York

Weight: more than 225,000 tonnes

Cost: more than £800m

Date of completion: 28 October 2009

Speed: 22.6 knots (41.9 km/h; 26.0 mph)

Souce: http://news.bbc.co.uk/1/hi/business/8380738.stm

Idling ships clog up Singapore shores

From the top of Singapore's Equinox bar you can see the city skyline and ship after ship after ship.

Singapore claims to be the busiest port in the world, with some 130,000 ship arrivals each year.

But these days, the problem is many of those vessels are not putting back out to sea.

The usual stay for a cargo carrier is just ten days. That is enough time to offload one set of cargo and take on another load, re-fuel and re-stock supplies.

But, of the 220 container ships arriving in Singapore this year, - excluding the tugs, yachts and bunkering vessels which are permanent port residents - more than half have stayed longer than that.

Another 44 cargo ships have been in port for more than six months.

Time is money

It costs about $1,000 (£614) per day to keep a ship at Singapore port.

On top of that, most of these ships would have been bought with multi-million dollar loans that need to be serviced.

They will have a crew that needs to be paid, fed and watered. Engines and machinery that need to be maintained.

All of this is necessary for a ship to maintain its class - the equivalent of an MOT or bill of health.

Being taken "out of class" means a ship cannot trade or earn money and cannot be insured for voyage on the open sea.

Staying afloat

The sharp downturn in world trade is behind this enforced idleness.

And, in the absence of global economic recovery, all firms can do is minimise their costs.

A ship owner can save up to 80% of his or her running costs just by laying anchor 45 minutes south of Singapore, off the Indonesia islands of Batam-Rempang-Galang.

Earlier this year, Rob Wilkins, general manager, Enviro Force, opened a new anchorage off Galang.

"In Singapore you have to maintain a full crew (25-30 people on average) on-board your vessel," he says.

"In Batam you don't.

"You can save on insurance costs, maintenance costs and crew costs by laying up here instead."

Laying anchor

Mr Wilkins and his partner Damian Chapman are serial entrepreneurs.

For months, they have noticed more and more vessels idling in ports, running up huge costs. According to AXS Alphaliner, 511 container ships are laid up.

That is a tenth of the global fleet.

"Laying up" is the term for taking a ship out of service.

There are different levels: hot stacking requires the engines to be fired up every day, allowing a vessel to be brought back into service in days; but a vessel kept in cold stack can be welded closed with engines off for months at a time.

At the most extreme end, ship owners can take the ship out of class and save hundreds of thousands of dollars in insurance costs alone.

Treading water

But, these are drastic measures.

Ship owners have a range of options before they lay-up their vessels.

The most common is idling your vessel beyond the port perimeters.

On the ferry between Batam and Singapore, Damian points out ships that have been left anchored for months.

They don't pay port dues which saves them money but also means they don't have access to port services.

One Singaporean shipmaster (who wants to remain unnamed) brags business is booming since he turned his two small service ships over to water supplies.

Crew on these idling vessels are not allowed to go ashore for food or water.

Sink or swim

A rusting oil tanker also sits outside Singapore limits.

Damian says it is being used for storage.

"When the oil price was low, it was worth buying up crude and holding onto it until the price rose," he says.

"That tanker will probably be sold for scrap… as soon as scrap metal prices recover."

And that's a big problem. Even for those owners who want to cut their losses and sell up, the market is grim.

Jonathan Le Feuvre, managing director of shipping services firm Fearnleys Asia, says "scrap metal prices are down 75% from their peak a year ago".

"And," he adds, "there are no trading buyers" who would buy the ship as a going concern.

Only those who have to sell, perhaps forced by their bank, would sell up at such low prices.

Mr Le Feuvre recites anecdotes of Chinese and Greek shipping owners who have snapped up bargains at a 90% discount from the peak.

Anchors aweigh

There is, however, some sign of hope on the horizon: China.

"It's the only game in town," according to Mr Le Feuvre.

"It is single-handedly lifting the dry sector (trade in coal, metal ores and other raw materials) out of recession," he says.

"Ten months ago, owners of Capesize bulk carriers (ships carrying 150,000-170,000 dead weight tonnage used for the transport of, say, iron ore and coal) were effectively transporting cargo for free at charter rates of $5,000 a day."

On 8 July, rates hit $67,000 a day.

Eye of the storm

But, many question whether this recovery in the dry sector can be sustained.

Owners of smaller container ships used to transport consumer goods such as cars, televisions and refrigerators say business remains slow.

There is still little sign people in the United States and Europe are returning to shops to buy these shipped goods.

And dismal US jobs data suggests economic recovery will take longer than hoped.

AXS Alphaliner predicts a quarter of the container fleet will be idle by the end of next year.

"Things will look pretty rosy in containers about 18 months from now' time," says Mr Le Feuvre, "but we're going to go through a year and a half of hell to get there."

Source: http://news.bbc.co.uk/2/hi/business/8142838.stm, 10 July 2009

Idling ships clog up Singapore shores

French shipping giant CMA CGM keen to strengthen presence in Malaysia

Marseille is France's largest commercial port

MARSEILLE: Malaysia’s liberalisation of 27 local services sub-sectors, including the transport sub-sector, prompted French shipping giant, CMA CGM to mull over plans to strengthen its foothold in the country.

Transport Minister Datuk Seri Ong Tee Keat had during a visit to the headquarters of the world’s third largest container shipping company in the French city last Thursday shared the Malaysian Government’s policy to liberalise the transport sub-sector, including the opening of 30% restriction in foreign ownership.

CMA CGM has had a presence in Port Klang since 1994 and is one of the largest customers of Port Klang. It has since June 1 also served the port of Tanjung Pelepas.

In welcoming the move, the company’s president Jacques R. Saade said “such liberalisation will change the strategy (of the company) in Asia.”

The shipping giant also welcomed Ong’s announcement of gradual liberalisation of cabotage of key sectors such as from Peninsular Malaysia to three major ports in east Malaysia, namely Sepangar, Kuching and Bintulu. (See also page 7)

Saade said the company would seriously explore the opportunities available from such a move. He also said the company would expand its dry port bonded warehouses, which include the Port Klang Free Zone.

Later, Ong visited the Port of Marseille, one of the oldest and busiest sea ports in France.

Marseille Port also raised its interest to establish an in-house university specialising in shipping and maritime as part of its education and training project.

Ong took the opportunity to test-drive its state-of-the-art port simulator.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/6/22/maritime/4167711&sec=maritime, 22 June 2009

Port Klang poised to be London Metal Exchange hub

Accreditation by London Metal Exchange a big boost for port

LONDON: Port Klang is poised to become Asia’s leading distribution hub for the London Metal Exchange (LME) following its accreditation as the exchange’s Good Delivery Point.

The move will further enhance Malaysia’s image as a major regional logistics centre for LME trade, according to Port Klang Free Zone general manager Chia Kon Leong.

He said Port Klang’s listing was fast-tracked as it had always been LME-ready with its excellent port infrastructure, strong logistics support and sound operational systems.

Chia said the port was strategically located to capitalise on the burgeoning LME trade from producing countries like Australia and Europe to the vast consuming markets of South East Asia and China/Far East.

“We reckoned that Port Klang is targeting to receive 150,000 to 200,000 tonnes of metals within the next six months,” he said.

Chia had earlier witnessed the presentation of the Letter of Accreditation from the exchange’s CEO Martin Abbott to Transport Minister Datuk Seri Ong Tee Keat at the LME boardroom in London on Friday.

Established for over 130 years, the LME is the world’s premier non-ferrous metals market, offering futures and options contracts for aluminium and aluminium alloy, copper, nickel, tin, zinc, lead and plastics.

With a turnover in excess of US$3 trillion per annum, the LME also contributes to the UK’s invincible earnings to the tune of more than £250mil in overseas earnings each year.

Port Klang’s listing as a Good Delivery Point was approved by the LME on May 8, thereby allowing the port to receive LME-traded metals since June 10.

The accreditation is of immense significance to Malaysia as there are now only two other approved listed delivery locations in South East Asia, namely Pasir Gudang in Johor and Singapore.

LME delivery points are mainly in major ports around the world, which must meet strict criteria before they are approved for the handling of metals and plastics traded through the exchange.

Chia said Port Klang was strategically located at the crossroads of the world’s busiest shipping lane as well as being the world’s 15th busiest container port and one of Asia’s largest multi-purpose ports.

He said the port was centrally located in South East Asia, close to the huge consumer market in China which had no delivery points despite the enormous volumes of LME metals being shipped there.

“We’re close to consuming areas but away from major producers like those in Australia,” he said, citing BHP Billiton as one of the world’s largest mining companies.

Chia also said Port Klang was unique in a sense as within its free zone, there were companies which could consume such metals.

He said one firm, for instance, could actually get its copper supply from within the free zone, unlike other delivery points which were purely distribution areas.

He added that the listing had enhanced Port Klang’s resilience in facing the recessionary environment as metals needed to be stored due to lower consumption.

“We provide LME traders, warehouse companies and other users with highly competitive rates backed by cost-effective and efficient operations,” he added.

Ong said Port Klang was offering not just one port terminal but two and 405 ha of (Port Klang) free zone as a delivery location.

“And that free zone certainly has vast potentials that will suit the LME’s business purposes,” he noted.

Abbott said the LME appreciated the fact that Malaysia operated a fiscal regime that was encouraging to the international business community.

“With regards to Asia in general, as probably the biggest single growth area for the LME in the next 10 to 20 years, we’re very happy to have Malaysia and Port Klang as our strategic partners in our long-term business growth,” he added.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/6/22/maritime/4164516&sec=maritime, 22 June 2009

M’sia ready for IATA e-freight service

MALAYSIA’s airfreight industry has received recognition from the International Air Transport Association (IATA) as a site ready for the IATA e-freight service.

The Malaysia IATA e-freight implementation team, led by Malaysia Airlines Cargo Sdn Bhd (MASkargo), started work in February and delivered the IATA e-freight on schedule.

Also involved were Royal Malaysian Customs, Emirates, Singapore Airlines, Cathay Pacific, KLM, DHL Global Forwarding, DB Schenker, the Airfreight Forwarders Association of Malaysia, Penang Freight Forwarders Association, Federation of Malaysia Freight Forwarders, Kuala Lumpur Airport Services and Malaysia Airports (Sepang) Sdn Bhd – KLIA Free Zone Authority.

IATA e-freight became operational between Kuala Lumpur and Hong Kong, Singapore and Dubai on May 26, with further expansion planned in the coming months to South Korea and The Netherlands.

Facilitated by IATA, the project is an industry-wide initiative involving carriers, freight forwarders, ground handlers, shippers and customs authorities.

IATA e-freight effectively eliminates the need to send paper documents with air-cargo shipments, thereby streamlining processes, improving speed and reliability and cutting costs.

Over the past year IATA has assessed the readiness of 148 locations worldwide in addition to the original six e-freight sites.

Of these, 44 countries, representing approximately 80% of global air-freight volumes, have the appropriate international treaties and high level customs framework in place to qualify for IATA e-freight.

Malaysia is the 20th e-freight location worldwide to deliver paper-free cargo documents.

MASkargo managing director Shahari Sulaiman said the implementation of the e-freight programme would lift their status to be on par with established industry players.

“The e-freight programme that MASkargo is embarking on will bring tangible benefits by simplifying the business, reducing costs and improving opportunities in the industry’s ever-changing and complex environment,” he said.

Source:http://thestar.com.my/maritime/story.asp?file=/2009/6/1/maritime/4003402&sec=maritime, 01 June 2009

Reader’s Digest Trusted Brand award for FedEx

FEDEX Express, a subsidiary of FedEx Corp listed on New York Stock Exchange, has been named a Trusted Brand by readers of Reader’s Digest across the Asia-Pacific.

In this year’s Reader’s Digest Trusted Brands in Asia Survey, FedEx won the Gold Award for the sixth consecutive year in the overall Asia regional category of the airfreight/courier service division.

“It is an honor for FedEx to be recognised as a trusted brand and service provider by customers in this region for six years in a row.

“FedEx has always been focused on making every customer experience outstanding since we established operations in Asia 25 years ago,” said David L. Cunningham Jr, president of FedEx Asia-Pacific, in a statement.

“The results from this year’s Reader’s Digest Trusted Brands in Asia Survey reflects FedEx’s success in delivering and anticipating what customers want,” he said.

Inaugurated in 1999, the Reader’s Digest Trusted Brands in Asia Survey is the region’s most comprehensive poll that seeks to identify Asia’s most trusted companies.

In addition to trustworthiness and credibility, the survey also measures the companies’ commitment to innovation, quality of services and products, corporate values, understanding of customer needs as well as corporate social responsibility.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/5/11/maritime/3869058&sec=maritime, 11 May 2009

Northport wins Asia’s best container terminal award

NORTHPORT (M) Bhd bagged The Best Container Terminal Award (Asia) at the Asian Freight and Supply Chain Awards 2009 held in Hong Kong recently.

Northport, a multi-purpose terminal, was selected for the award from a list which included other top container terminals in Asia.

The selection was based on a list of criteria, which included crane productivity, timely and adequate investment in new terminal infrastructure to meet future demand, effective use of information technology and efficient turn-around of trucks delivering and picking up containers.

Northport, which handled three million twenty-foot equivalent units (TEUs) last year, offers one of the widest shipping connectivity among ports in Malaysia with about 123 container shipping lines linking it to some 300 ports worldwide.

Managing director Datuk Basheer Hassan Abdul Kader said in a statement that Northport was committed to maintaining high performance and productivity because leading shipping lines that called at the port required standards comparable with other major global ports to which they were linked.

Last year, 81 shipping lines as well as 44 conventional and 502 container vessels made about 8,000 ship calls at Northport.

On the impact on the global economic downturn, Basheer said container cargo through Northport dropped 15% (year-on-year) in the first quarter of this year.

Northport is one of the major hubs in Malaysia for exporting cargos and this moderate decrease was within expectation.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/5/11/maritime/3869211&sec=maritime, 11 May 2009

MISC logistics arm’s facilities certified halal

MISC Integrated Logistics’ (MILS) storage and warehousing facilities have been certified halal by Halal Development Corp (HDC).

MISC said in a statement that the certification was awarded based on the merits of hygiene and syariah compliance for both dry and cold storage.

The integrated logistics arm of MISC Bhd is located at the MISC Logistics Hub (MLH) Free Commercial Zone (FCZ) on Pulau Indah, Port Klang.

MILS’ dry warehouse, with 250,000 sq ft of space, can handle 23,000 pallets.

The cold-storage facility is able to accommodate multiple temperatures ranging from 18°C to -25°C. The cold room is equipped with mobile racking solution with a capacity for 8,500 pallet positions for frozen products and 1,200 pallet positions for chilled products.

The storage facility at the FCZ, coupled with MISC’s Halal Express Service shipping route, makes MISC one of few companies truly capable of offering customers the entire value chain in halal logistics.

MILS has also formed a joint venture in Dubai, which will give it the opportunity to tap and strengthen the group’s connectivity and promote the halal capabilities of MILS logistics hub in Malaysia.

The hub can be seen as a bridge to Africa, the Middle East and Europe where the halal markets are huge.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/5/4/maritime/3815066&sec=maritime, 04 May 2009

MMC hurt by low cargo volume

MMC Corp Bhd sees lower revenue contribution from its port business in Johor this year due to the drop in cargo volume, said chief executive officer Hasni Harun.

Both its ports in the state, Port of Tanjung Pelepas (PTP) and Johor Port, had been hit by the global recession, he said.

“Ports in the region have been experiencing a decline in volume of between 15% and 20% since the fourth quarter last year.

“There has been a spike in volume last month due to the replenishment of depleted inventories but it is premature to say whether this is sustainable.

“Subject to an improvement in consumer confidence globally, the situation may not lead to a long and deep downturn. It might improve in 2010 and we hope to maintain what we’ve achieved last year,” he told StarBiz.

PTP registered a container throughput of 5.6 million twenty-foot equivalent units (TEUs) last year, up 1.8% against 2007.

Johor Port handled 17.2 million freight weight tonnes of bulk and conventional cargo in 2008, representing a growth of 8% year-on-year, and recorded 934,767 TEUs of containers last year, an increase of 1%.

The two ports contributed 14% to MMC group revenue in 2008 compared with 20% in 2007.

Hasni said the decline in percentage of contribution from its ports despite higher revenue was due to the increase in Malakoff Bhd’s revenue contribution, resulting from the 12-month consolidation of Malakoff’s results last year versus only eight months in 2007.

“Based on the current slowdown, we expect the revenue contribution from our ports to also be lower year-on-year,” he said.

On capital expenditure (capex), Hasni said PTP planned to spend RM400mil to RM500mil this year, which is lower than the RM900mil spent last year, in line with the slowdown in business.

“This year’s capex includes for additional equipment at existing berths (berths 9 and 10), which will further increase the port’s operational efficiency, as well as for the ongoing construction of berths 11 and 12.

“We are making prudent decisions on capex and will equip berths 11 and 12 progressively as global shipping trade improves,” he said.

He added that Johor Port also expected to spend a lower amount of capex this year, primarily for maintenance works.

Going forward, Hasni said PTP’s value proposition was in its strategic location, unrivalled potential capacity growth, connectivity and competitive rates.

“These attributes will continue to make PTP an ideal choice for shipping lines, particularly those that are restructuring their routes and collaborating with other lines to minimise costs under the current economic scenario.

“Meanwhile, Johor Port focuses on high-value cargo and commodities in the bulk and break-bulk terminals,” he said.

Besides port operations, MMC has finalised the acquisition of Senai Airport Terminal Services Sdn Bhd (SATS) in Johor for RM1.7bil.

According to Hasni, having interests in ports and an airport allowed the company to achieve better integration between the two modes of transportation.

“PTP is recognised as an ‘airport within a seaport’ and this further enhances the inter-modal movement of cargo from ships to airplanes and vice-versa.

“The acquisition of SATS will expand MMC’s logistics business, in line with its vision to be a global utilities and logistics group,” he said.

SATS is currently undergoing an expansion, including the extension of its runway from 3,354m to 3,800m, which will accommodate fully-loaded long-haul cargo flights.

“An Aero-Mall is also being built, which will add 6,500 sq m, bringing the total outlet space to 8,500 sq m to cater for the growing population residing within easy access of the airport. The mall is scheduled for completion in the first quarter of 2010.

“The airport also has a cargo capacity of 80,000 tonnes per annum and offers bonded warehouse and warehousing facilities,” he added.

Hasni said SATS’ potential would be realised with the development of Senai Airport City into a regional cargo and logistics hub.

Works on Senai Airport City, with a gross development value of RM10bil, would commence towards the year-end and scheduled for completion by 2020, he said.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/4/27/maritime/3769672&sec=maritime, 17 April 2009

Oil and gas getting more banks’ attention

An official with a foreign bank says there is still money available from banks for ship finance despite the current global economic slowdown.

SHIP financing is now skewed towards the oil and gas industry and Asian banks are showing more interest in the maritime sector, according to feedback from the Sea Asia 2009 maritime conference.

One revelation from a session in ship finance during the conference recently was the changing landscape of traditional ship financiers in terms of the amount currently being loaned to ship owners.

It was noted that of the top 30 banks in global ship finance last year, 16 had dropped out in the first quarter of this year and had been replaced by banks which had previously kept a low profile in the sector, said Paul Chang, head of shipping (Asia) and chief representative of Hong Kong representative office at HSH Nordbank AG.

Chang said Asian banks were increasingly attracted to the shipping sector and to ship finance.

“National shipping lines still had fewer problems securing finance from their own national banks, for example the close relationship between Taiwan banks and Taiwanese owners,” he said in a statement.

Dagfinn Lunde, a managing director at DVB Bank SE, said there was still money available from banks for ship finance.

“If you have the words ‘energy’ or ‘offshore’ in your project, even some US banks are still willing to lend,” he said.

Philip Clausius, president and CEO of FSL Trust Management, a Singapore-based listed shipping trust fund said: “Develop your relationships with Asian banks – every Asia-based borrower needs to achieve a balance between Western and Asian banks.

“As many Asian banks do not yet have as much experience in this sector, be patient and take small, slow steps,” he advised.

FSL now split 50:50 its borrowings for ship finance between Western banks and banks based in Asia, and this had worked well for them, he added.

Meanwhile, session chairman Harald Serck-Hanssen, the global head of shipping, offshore and logistics at DnB NOR bank, called on bankers to devise a new formula which would give borrowers (shipowners) the thing they need most – certainty.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/4/27/maritime/3767480&sec=maritime, 27 April 2009

Selangor Freight Forwarders and Logistics Association (SFFLA)

THE Selangor Freight Forwarders and Logistics Association (SFFLA) is spearheading efforts to improve the level of professionalism in the industry via education and development of standardised regulations.

President Tan Ah Beng said the association would submit an application to the Government for a RM1mil grant to develop certificate and diploma programmes in logistics and freight forwarding.

“We are awaiting the endorsement from the Transport Ministry to be submitted together with our application. The grant is under the Government’s stimulus package for training.

“It will also be used to subsidise the fees of the programmes that will be offered to its members and the public, especially school leavers, at competitive rates,” he told StarBiz.

SFFLA also needed the grant to provide professional training for its members that would be responsible to teach the programmes, he added.

Selected members will be trained by representatives from the United Nations Economic and Social Commission for Asia and Pacific (Unescap) and the association also plans to use professional lecturers to teach some subjects.

SFFLA is working closely with Unescap in developing the modules and the association has bought a building equipped with educational facilities.

Besides that, it is also working on standard requirements and rules for the freight forwarding industry as there is no mechanism currently to govern the industry.

“According to the plan, all freight forwarders doing business in Port Klang must register with the Port Klang Authority,” Tan said.

“We will also come up with the standard requirement for a freight forwarding company in terms of paid-up capital and insurance liability.

“By doing this, it is hoped that the level of confidence of international clients will be strengthened when dealing with Malaysian freight forwarders.”

On the current business volume, Tan said the industry suffered about 20% fall last month year-on-year.

“But freight forwarders that had enjoyed good business growth of 7% to 8% in the last 10 years should be able to withstand the current downturn.

“In addition, the freight forwarding business belongs to the service industry which is not capital-intensive,” he said.

However, according to Tan, the logistics industry with assets in terms of warehouses and trucks might be hit harder by the economic slowdown.

He said the current situation could have been better if the country had strived harder to become the hub for transhipment and consolidation of cargo in the region.

“We cannot rely on our direct import and export volume alone as it accounts for only about three million twenty-foot equivalent units annually via Port Klang.

“Red tape and unnecessary charges are a hindrance to make Malaysia a conducive cargo hub,” he said.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/4/20/maritime/3721025&sec=maritime, 20 April 2009

MASkargo offers discounts, cuts capacity to stay profitable

MALAYSIA Airlines Cargo Sdn Bhd (MASkargo) is offering discounts, reducing capacity and implementing various new initiatives to remain profitable in its current financial year ending Dec 31 (FY09).

The cargo arm of Malaysia Airlines has been suffering a cargo volume decrease due to the global economic downturn.

Shahari Sulaiman ... we plan to introduce new flights. Year-on-year, the company recorded a reduction in cargo volume of about 28% in January and February.

Its Penang operations also recorded close to 50% fall in volume for the first two months of this year.

Managing director Shahari Sulaiman said the terminal charges rebates for cargo transhipped via Malaysia Airlines Advanced Cargo Centre had been increased to 100% for air-to-air, land/rail-to-air, and sea-to-air transhipments from April 10 to September.

“With this initiative, we hope that freight forwarders would be able to increase their transhipment volume. A 5% month-on-month volume increase is already good,” he told reporters during a high-tea session with the media last Friday.

Transhipment cargo constitutes about 60% of the total volume handled by MASkargo at the KL International Airport (KLIA).

The company handled 353,000 tonnes of transhipment cargo out of a total cargo volume of 623,314 tonnes at KLIA last year.

In matching its capacity with the current slowdown in air freight volume, Shahari said MASkargo had reduced its flights out of Pudong International Airport, China, to four flights from nine a week.

“Pudong used to be our biggest station in terms of volume. However, due to the economic situation, we have to make some adjustments. We will start to pump in more capacity once the economy is back on track as China is expected to be the first country to recover from the crisis. We expect to benefit from this due to our large exposure there,” he said.

Overall, Shahari said MASkargo had reduced its freighter and belly capacity by 30% and 7% respectively this year.

“This is better than maintaining our previous capacity with ad hoc cancellations that will hurt our product branding and customers.

“Although there is a huge cut in our overall capacity, KLIA only recorded a 10% reduction in air freight capacity due to our obligation to support the industry in our country,” he said.

He added that any excess capacity would be channelled to do charter business.

“We recently deployed our A300 freighter previously catered to the Asean region to do charter business in the Middle East.

“We also have a 747 freighter in the Middle East to do charter business,” he said.

Shahari said MASkargo’s strategy to maintain a healthy bottom line also included new destinations with potential high cargo volume.

“We plan to introduce new flights to Lagos in Nigeria, Malmo in Sweden and Colombo in Sri Lanka,” he said.

Although hit hard by the challenging economic climate, MASkargo had not been complacent in beefing up its operations quality.

“Our mishandling rate had improved to 0.03% this year. We have installed 50% more CCTVs to upgrade our security level and are participating in the International Air Transport Association’s pilot programme in air freight security,” he said.

On the current economic downturn, Shahari believed that the situation had bottomed out for the air freight industry as he had seen some slow recovery since last month.

“I think we will need at least two years to return to our pre-economic crisis level,” he said.

MASkargo recorded a 1.9% fall in revenue to RM2.67bil in FY08.

Shahari said MASkargo still recorded profit for the period, but he did not disclose the figures.

“This year, we expect lower revenue growth for the first half and expect business to pick up in the second half,” he said. — BY SHARIDAN M. ALI

Source: http://thestar.com.my/maritime/story.asp?file=/2009/4/13/maritime/3678363&sec=maritime, 13 April 2009

CMA CGM: Measures to save US$600mil

CMA CGM, one of the world’s top three companies in container shipping, expects its cost-effective measures to save about US$600mil this year.

The French company will continue to rationalise its services in slowing markets, consolidating lines and strengthening partnerships to maintain service quality while reducing costs.

According to a company statement, as three-quarters of its fleet was chartered, CMA CGM has significant leeway to adjust to market demand.




“More than 180 ships will come out of charter this year and will be returned to their owners, renewed or replaced at attractive contract rates, leading to substantial cost savings for the group,” it said.

CMA CGM’s fleet comprises 395 vessels, of which 98 are owned.

“Also, the group is increasingly operating its ships at economical speed to lower bunker fuel consumption,” it said.

It said CMA CGM was campaigning for lower transit rates in the Suez and Panama Canals and would continue to re-route part of the fleet via the Cape of Good Hope.

It has also begun renegotiating contracts with terminals and shipyards to reduce costs.

The group has also raised its freight rates, which had previously dropped to unjustifiably low levels.

“All these new measures, which will be deployed in 2009, will reduce operating costs by approximately US$600mil,” said the statement.

CMA CGM chairman and founder Jacques R. Saade said the company was quite confident it would weather the current crisis due to its forward-looking strategy, the flexibility of its systems and processes and international shipping expertise.

“Asia-Europe and Asia-US will unavoidably return to growth. But this year will be a period of consolidation in the shipping sector and the major players will emerge stronger in the end,” he said.

Financially, the group had done relatively well last year although shipping companies had started operating in choppy waters since the last quarter.

The CMA CGM group reported revenue of US$15.1bil last year, up 28.2% against 2007.

Its net income stood at US$124mil and will be entirely reallocated to strengthening the group’s equity, as in previous years.

Freight volumes rose by 15.6% to 8.9 million 20ft equivalent units (TEUs).

Its container fleet represented 1.76 million TEUs, up 14% in capacity against 2007.

Its reefer fleet grew sharply last year, making CMA CGM the world’s second largest carrier of goods in refrigerated containers.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/4/13/maritime/3670540&sec=maritime, 13 April 2009

Delta Air Lines

THE number of empty seats on planes flown by US airlines is rising this year despite aggressive fare sales and capacity cuts, darkening the outlook for industry earnings in the first quarter and beyond.

Airline data on March load factors, which measure how full an airplane is, showed a third-consecutive month of declines and the largest drop for some carriers this year.

“We’re seeing some real good fare-sale activity, but load factors are still dropping,” said Jim Corridore, airline analyst with Standard & Poor’s Equity Research. The airline industry has been battered since last year by economic recession that has eroded travel budgets. Carriers have fought back with sweeping capacity cuts and fare sales designed to generate spring and summer travel.

But March traffic data show that despite carriers’ best efforts to stoke demand, the decline in load factors is accelerating.

Delta Air Lines Inc, the world’s largest carrier, saw its March load factor drop 4.4 percentage points to 80.5%, following a 2.7-point dip in February. The carrier’s capacity was down 7.9% in the month.

AMR Corp’s American Airlines saw its load factor slump 4.8 points to 79.2% as capacity fell 5.6%. In February, the carrier’s load factor declined 2.9 points.

Declining load factors will hurt first quarter results, which airlines will begin posting this week, said Morningstar equity analyst Basili Alukos. “They’re having fewer people in the planes, so it means you’re going to have way lower earnings.”

Analysts expect losses from top carriers in the first quarter, according to Reuters Knowledge. The consensus forecast for Delta calls for a US$1-per-share loss. AMR is seen losing US$1.48 per share, while the loss at UAL Corp, parent of United, is estimated at US$4.49 per share. — Reuters

Source: http://thestar.com.my/maritime/story.asp?file=/2009/4/13/maritime/3683984&sec=maritime, 13 April 2009

Facts
1) Delta's Atlanta hub is the busiest airline hub in the world
2) On October 29, 2008, Delta closed its merger with Northwest Airlines to form the world's largest commercial carrier

MISC eyes small shipping firms

MISC Bhd, the largest shipping company in Malaysia, may take advantage of the current downcycle in the industry to acquire smaller units or subsidiaries of “troubled” shipping companies at lower prices.

An AmResearch analyst told StarBiz that MISC would be doing relatively well if a small acquisition took place despite the gloomy environment that had affected trade, the lifeline of the sector.

“MISC has stable revenue from its liquefied natural gas (LNG) tankers business with 70% to 80% of the vessels on long-term contracts where the earliest will expire only in 2013,” he said, adding that the global downturn had an insignificant impact on these secured contracts.

MISC is the world’s largest single owner-operator of LNG tankers with a fleet of 27, which is expected to expand to 29 this year.

MISC’s offshore business and huge order book from its heavy engineering division via subsidiary Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) will keep the group busy for the next 12 to 30 months.

According to a recent report by the research house, these three divisions now collectively account for 100% of the company’s pre-tax profit.

Also, the analyst said, MISC had secured a credit line of about US$1bil last year to part-finance its fleet growth and other purposes.

MISC’s underperforming businesses are in the container shipping and chemical tanker divisions.

The report said MISC would likely take over a unit of a financially-troubled shipping company similar to the American Eagle Tankers (AET) acquisition in 2003.

MISC bought AET at a 10% discount when Neptune Orient Lines Ltd auctioned it due to its high debt level and loss-making operation.

AET, now a wholly-owned subsidiary of MISC, was purchased at an equity consideration of US$445mil, or US$1.1bil inclusive of net debt.

“Although MISC’s gearing immediately rose to 66% post-purchase of AET, natural de-leveraging from healthy free cash flow brought the gearing down to 17% in 2006,” said the report.

MISC’s net gearing for the financial year ended March 31 (FY09) is forecast to stand at 0.3 times while international peers in its league, such as General Maritime Corp, Aries Maritime Transport Ltd and Taiheiyo Kaiun Co Ltd, were already in the red with stretched balanced sheets at two to 13 times net gearing.

The report said although prospects of the acquisition seemed challenging in the immediate term, MISC’s profitability was a factor supporting the move.

The research house’s earnings forecast for MISC in FY09 is at RM1.4bil compared with RM2.4bil in FY08. Its nine-month earnings for the period ended Dec 31 was at RM1.2bil.

It is also possible that MISC is eyeing another oil and gas fabrication yard since the proposed reverse takeover of Ramunia Holdings Bhd via the injection of subsidiary MMHE for RM3bil did not materialise in November.

But, according to the analyst, the chances were slim as there were only a few fabrication yards in Malaysia.

“Additionally, MMHE had already expanded its land size by 50% to cope with the increasing demand via leasing the land next to its location.

“But, we are not ruling out this possibility that the yard acquisition may replace the takeover of the shipping unit,” he said.

Despite the rosy outlook, MISC is not immune to the effects of the shipping downturn, as it has two underperforming businesses, namely the container shipping and chemical tanker divisions.

The report said the net profit of RM250mil in its third quarter was 24% lower year-on-year as it was dragged down by these two divisions due to oversupply of vessels in the marketplace that had hurt freight rates, especially for container ship.

“Container ship deliveries are expected to rise to 1.7 million 20-foot equivalent units (TEUs) this year and 1.8 million TEUs in 2010, adding an estimated 14% and 13% capacity respectively to the existing fleet.

“As a response to the oversupply situation, measures have been taken by container ship operators to reduce available capacity in the market by laying off vessels and scrapping old vessels to restore freight rates at healthy levels,” it said.

According to Clarkson Research, idle container space in the fleet in February amounted to 800,000 TEUs – equivalent to more than 300 vessels – accounting for 6.5% of available fleet in the beginning of the month.

But the analyst said the losses suffered by these two divisions could be offset by the earnings of its LNG tankers, heavy engineering and offshore operations until the economy stabilised.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/4/6/maritime/3619877&sec=maritime, 06 April 2009

Westports bags two brand awards

WESTPORTS Malaysia has bagged two awards at the annual BrandLaureate Awards last week.

The port’s executive chairman Tan Sri G. Gnanalingam received the Brand Personality award for his distinctive branding effort and success.

For more than 30 years, Gnanalingam has been actively involved in brand development for the country that involved small and heavyweight companies, sports, marketing and advertising as well as the corporate world.

From left: The BrandLaureate CEO Dr K.K. Johan, Tun Abdullah Ahmad Badawi, Gnanalingam and Asia Pacific Brands Foundation chairman Tan Sri Dr Elyas Omar.

It was often behind the scene that the marketing wizard undertook brand development and image building initiatives such as the Benson & Hedges Malaysian Open Golf, the 1989 SEA Games hosted by Malaysia and the Westports Millennium Ad.

On the international front, he lent support to campaigns to promote the nation as a transportation hub especially in port industry. Gnanalingam accepted the award from former prime minister Tun Abdullah Ahmad Badawi. The event was organised by the Asia Pacific Brands Foundation.

Westports, as one of the fastest growing terminals in Malaysia, was also awarded the Best Brand in Logistics – Ports.

Gnanalingam said in a statement the awards by BrandLaureate were certainly an honour to Westports’ dedicated and skilful workforce.

“We have continued to innovate and provide the best services to our customers,’’ he said. “Westports was founded around innovation and the pursuit of excellence, and those core values have continued to be at the heart of everything we do.”

Source: http://thestar.com.my/maritime/story.asp?file=/2009/4/6/maritime/3628082&sec=maritime, 06 April 2009

World trade fall hits Hong Kong shipping

Ships travel to and from the manufacturing and trading hubs of southern China through the Lamma channel, and it is still busy.

But the ships once sitting heavily in the water, loftily loaded with containers, are now visibly higher in the water.

There is less cargo moving around the world, so less need for ships. Hence, dramatically lower rates for hiring large ships, and so a growing crisis in world shipping.

As the China boom deflates, demand for steel, iron ore and other bulk items from around the world diminishes, leaving bulk carrying ships all dressed up with nowhere to go.

"If you sit in one of the glamorous bars on the south side of Hong Kong, especially in the evening, you will see the lights of lots of ships," says Tim Huxley, chief executive of Wah Kwong Shipping, one of Hong Kong's largest ship-owners.

"Those ships are sitting there, waiting," he says.

"Those are bulk carriers and container ships that haven't got anywhere to go at the moment, there's no cargo for them to carry.

"They're sitting waiting for instructions, waiting for an upturn in trade that will see them moving again, carrying the raw materials that are needed to make the finished goods that are then exported out of southern China to the markets of the West."

Lay-up

Hong Kong has about 70 ships in "hot lay-up" at the moment, meaning they are waiting with full crews. Singapore has several hundred ships in "cold lay-up", where the ships are without crew.

A more long-term parking operation such as this is discouraged in the typhoon-laden Hong Kong waters.

This kind of waiting carries large hidden costs - looking after the crews and preparing to clean the ship's hulls in Hong Kong, and the rising risk of collision in the crowded seas.


The ports of southern China are busy with building, scrapping and repair
Far starker is the fact that ship owners, and often long chains of charterers and sub-charterers, are paying massive day-rates on ships that are earning nothing for them.

"The whole shipping market starts to unravel," says Chris Howse, a leading shipping lawyer and partner of Richards Butler, who is busier than ever at times like these.

"It went from an extreme," he says. "There were examples quoted in the press of this type of ship which was earning $150,000 (£102,000) a day, then the price crashing right down to $5,000 a day. That will not cover the operating costs of the ship."

There have even been cases where an owner was seeking to hire out his ship on a voyage from India to China for the cost of the fuel and the crew.

Charter chains

A ship owner will typically rent out, or charter, a ship for a fixed rate over a number of years and the charterer will often sub-charter that ship on to a sub-charterer for a higher rate and a shorter period.


Hong Kong provides not just ports, but full shipping services
Such chains can go up to six or seven sub-charterers and, in current times, can break when any one of those in the chain starts experiencing problems.

That is when the shipping lawyers come in.

Given Hong Kong's legal system, it is where most of the China shipping trade is serviced and where such problems as these are handled.

Chris Howse describes how a troubled charterer is currently tackling the lack of trade and trade finance.

"It is a matter of saying to the owners, 'we have an excellent business relationship, we basically need to renegotiate the terms of our charter'," he says.

"'I don't want to give you your ship back. If I give you your ship you won't be able to do much with it, because there are lots of ships sitting idle with no work at all. You may have an enormous claim against me, but I may or may not be able to pay that claim because these claims can be extremely large'."

If new arrangements cannot be reached, companies start to hit the wall, such as Britannia Bulk, Atlas shipping, or several Korean shipping companies.

The troubles that are afflicting Armada Singapore, which has applied for a Scheme of Arrangement with its creditors, have had a significant impact on a large number of shipping and trading companies. It lists more than 64 creditors.

History helps?

The surprising fact in Hong Kong is that, so far, no major ship-owning company is in dire straits.

Tim Huxley and other experts agree that Hong Kong owners, many of whom can trace a long history back to Hong Kong's founding as a major world port, are traditionally conservative and careful.

In Hong Kong we have an industry that's positioning itself for what could be a longer haul in terms in our sector-specific recession, than what we have in the global slowdown overall

Tim Huxley, chief executive
Wah Kwong Shipping
"I can think of many Hong Kong owners who are not adversely affected by this at all because their gearing, the financing on their ships, is so low, or they're debt-free, so they don't have a problem," says Mr Howse.

"Similarly, a number of Hong Kong's chartering and trading groups are weathering the storm well, because they called the market right - Hong Kong's Noble Group being a good example.

They have been "smarter or luckier depending on how they've played the market".

Order book

But what is exercising the minds of the many shipping experts based in Asia's maritime centre is that even when world trade recovers, shipping will still face trouble.

"In Hong Kong we have an industry that's positioning itself for what could be a longer haul in terms in our sector-specific recession, than what we have in the global slowdown overall," says Mr Huxley.


Container ships in Hong Kong waters are much higher in the water

That is because of the huge number of ships on order, following a massively over-enthusiastic ship-ordering spree in recent years.

This over-investment can be seen, for example, in the sector of cape-size bulk carriers, ships that carry more than 100,000 tonnes, mainly engaged in iron ore trades, carrying iron ore from Brazil or Australia to China.

"In that sector of the shipping market, 105% of the fleet is currently on order, so that means there are more ships being built, than currently exist," Mr Huxley pointed out.

These and many other ships were ordered in the last three years at top prices, so their asset value has now declined. And there is much less money available to finance them.

Shipyards are still building, and the scrap yards of India and Bangladesh are booming as some ships are now being sold for scrap at a faster rate.

But even if world trade picks up, shippers face a huge over-supply of ships, and plunging rates for renting them out.

The love affair between Wall Street and shipping is over, and the industry is hunkering down to face a long and painful recession.

Source: http://news.bbc.co.uk/2/hi/asia-pacific/7973752.stm, 6 April 2009

Talks on iron ore benchmark prices push down Baltic Dry Index

THE Baltic Dry Index (BDI) fell 59 points in three consecutive days last week to 1,714 on Thursday due to ongoing negotiations on annual benchmark prices for iron ore imports.

The negotiations will likely be concluded after April 1.

China, the world’s biggest steelmaker, is looking at lower iron ore prices while suppliers such as Rio Tinto, BHP and Vale are waiting for demand to revive.

According to China Daily, an online news portal, talks between miners and Chinese steelmakers may drag for a longer time compared with last year as negotiations are more complicated this time.

As the world’s largest iron ore consumer, China expects to have a bigger say in negotiations, according to the daily.

Iron ore takes up a large chunk of dry-bulk shipping capacity.

The other common cargoes that are carried on dry-bulk vessels are cement, grain, coal and fertiliser.

The decline in BDI is also in line with the world’s crude steel production that is on the downtrend.

The production of the 66 countries reporting to the World Steel Association was 84 million tonnes in February, a drop of 22% year-on-year.

“Crude steel production showed a continued decrease in nearly all the major steel-producing countries in February compared with the same month in 2008, except for Iran and China,” the association said in a statement.

It said Iran recorded an increase of 15.9% in February and the Middle East was the only region showing production growth this month.

“China’s crude steel production for February 2009 was 40.4 million tonnes, an increase of 4.9% compared with the same month last year,” it said.

World Steel Association represents about 180 steel producers (including 18 of the world’s 20 largest steel companies), national and regional steel industry associations, as well as steel research institutes.

Association members produce about 85% of the world’s steel.

The BDI had shown signs of recovery early this year on stronger bookings for iron ore and coal transportation to China before the Chinese New Year and on advanced demand for raw materials to make steel.

The index took a beating last year due to slower iron demand from China post-Olympics, coupled with the global economic downturn that has affected the construction and shipbuilding industries.

The BDI stood at 2,298 points on March 10. It slumped almost 92% last year from its peak of 11,793 points.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/3/30/maritime/3578473&sec=maritime ,30 March 2009

Century Logistics stays optimistic

CENTURY Logistics Holdings Bhd, a logistics and supply-chain services provider, expects to maintain last year’s performance in the current year ending Dec 31, provided the economy does not deteriorate further.

Certain business segments are still doing well amid the weak economic climate, according to deputy managing director Mohamed Amin Kassim.

“For example, our logistics services in containerised goods are not affected by the downturn due to a wide customer base from various sectors,” Mohamed Amin told StarBiz.

“Also, our supply-chain management is holding up quite well as our key customers are still enjoying optimal cost of their supply chain via our services,” he said.

Century Logistics provides supply-chain management solutions which involve the procurement and assembly of different kinds of products such as refrigerators, vacuum cleaners, plasma televisions, air-conditioners and washing machines.

“The demand for warehousing services is quite high now although movements may not be as active as before,” he said, adding that the company’s oil logistics business had returned to its peak level due to the weak oil price.

Century Logistics, which has a licence to provide oil logistics services on floating storage units, owns six very-large crude carriers that provide ship-to-ship oil transfer off Pasir Gudang and Port of Tanjung Pelepas.

In the middle of last year, according to Mohamed Amin, the oil logistics business was temporarily stunted due to record high oil prices.

“There were a lot of speculation about the future of oil prices then and that had halted buyers from trading,” he said.

Century Logistics’ operations in India, China and Thailand are also promising. “Our team has just came back from India and is quite sure the demand is still healthy there,” Mohamed Amin said.

And although its business in China started only last year, the company expected to record a modest profit this year, he added.

Century Logistics operates in China via Century-YES Logistics (Yichun) Co Ltd, managing the logistics system of an inland port.

The company also has high hopes for its operations in Bangkok where it is investing RM25mil to RM30mil in a distribution centre.

Mohamed Amin Kassim “The centre is expected to be operational by September and due to the interest and advice given by multinationals there, I believe business should begin fast.

“Some multinationals that are near to our facility there are closely monitoring our expansion and we have specifically built our facility according to their needs,” Mohamed Amin said.

Despite the positive outlook, he noted that it could be a challenging year as the company was unsure of the economic situation for the rest of this year.

Mohamed Amin said logistics providers would have a direct impact in line with the double-digit throughput drop in ports and air-freight industries year-to-date.

“Right now, our freight business is affected by lower shipping rates. We have to reduce our margin to continue serving our customers.

“Our transportation division (conventional trucks) also experienced a slide due to the downturn,” he said.

In its previous financial year, Century Logistics posted a net profit of RM15.9mil on the back of a RM156.9mil revenue, representing a drop of 23.9% and 3.7% respectively versus 2007.

“I think last year’s results were still quite okay, given the high oil price that had impacted our business,” Mohamed Amin said.

“But part of our lower net profit was due to the business venture in plastic-lining manufacturing that did not materialise due to the different goals (set) with our partner then.

“Thus, we had to write off about RM4mil due to the machinery that we had bought to support the business.”

Source: http://thestar.com.my/maritime/story.asp?file=/2009/3/30/maritime/3567090&sec=maritime ,30 March 2009

Schenker’s new facility in Vietnam will be regional key logistics hub

SCHENKER Vietnam Co Ltd’s new flagship facility in Song Than Industrial Park I in Binh Duong Province aims to tap into Vietnam’s growing economy.

Costing US$5.5mil, the facility is a joint investment with Vietnamese partner, Gemadept Corp.

The new facility will function as a key logistics hub for manufacturers, original equipment manufacturers, contract manufacturers and distributors alike, especially for the enterprises in high-tech and industrial zones in Binh Duong Province and Ho Chi Minh City.

“The opening of this facility is testimony to the strong support from our customers, employees and partners, for our steady development and growth in the Vietnamese market,” said Schenker Vietnam managing director Juergen Braunbach said.

“At the same time, it also demonstrates the long-standing commitment which DB Schenker has to this dynamic market.”

Schenker (Asia Pacific) Pte Ltd chief executive officer Steve Dearnley said the facility would not only serve as an important hub for the Vietnamese market, but also an integral hub in the regional and global freight network, as the group continued to strengthen its logistics footprint to better serve customers’ needs in Vietnam, Asia Pacific and the rest of the world.

DB Schenker first entered the Vietnam market in 1990, and has since grown across six locations throughout Vietnam, offering a full range of air and ocean freight, contract logistics and supply chain management, as well as project logistics and relocation services.

With annual sales of 18 billion euros, over 90,000 employees and over 2,000 company locations in all the important economic regions of the globe, DB Schenker is one of the leading providers of logistics services worldwide.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/3/23/maritime/3527732&sec=maritime, 23 Mac 2009

Port of Koper appoints Infinity Logistics its port rep effective April 1

PORT of Koper, a major seaport in Slovenia, aims to tap into new markets in South-East Asia by appointing Malaysia’s Infinity Logistics & Transport Sdn Bhd its port representative effective April 1.

This will be an addition to the port’s current key markets in the Mediterranean, Middle East and the Far East regions.

Port of Koper is a multi-purpose terminal that handles containers, vehicles, dry bulk cargo, liquid bulk cargo and general cargo.

Infinity Logistics managing director Chan Kong Yew said that via the agreement, the company would promote the port independently to bring substantial cargo volume from this region, especially Malaysia, to Luka Koper.

“The port is strategically located near the Atlantic Sea with huge markets beyond Slovenia that include Hungary, Austria, southern Germany, Czech Republic, the Balkan area, Ukraine and Russia,” he told StarBiz.

He said although Port of Rotterdam was a more popular choice for Europe-bound cargo as industrialisation had started there, of late businesses had been moving to the south, nearer to Luka Koper, at the heart of Europe.

The area has increasingly become the preferred manufacturing hub of Europe due to the lower labour cost and strong domestic demand.

Additionally, Luka Koper is well connected to the European hinterland via highways and rail.

“As the automotive industry is one of the main customers of the port, we are looking at the possibility of linking South-East Asia’s small and medium enterprises that support the automotive industry,” Chan said.

“We are also planning to provide the logistics connection for palm oil mill operators here to trade their palm kernel expeller and palm kernel cake there for farming purposes.”

Port of Koper president Robert Casar said the appointment of Infinity Logistics as its port representative in this region was to bank on the logistics company’s local know-how and expertise.

“This is to bridge the trade gap between the two regions as due to the economic downturn, certain cargo had recorded significant drop at our port. We need to tap into new markets and South-East Asia promises bright prospects,” he said.

Casar said another possible business venture was the export of crude palm oil to Europe via Port of Koper. Malaysia currently exports two million to 2.6 million tonnes of crude palm oil annually via another major port in Europe.

“We want to change this by providing more exposure on the capability, prospects and cost efficiency of our port in this region.

“Currently, the average annual throughput that comes from South-East Asia to Europe via our port is 8% to 9%. We plan to increase this via the agreement with Infinity Logistics,” Casar said.

Besides the excellent connection to the rest of Europe, the Port of Koper has also beefed up its infrastructure and equipment to enhance efficiency.

“Via our development plan that cost about 71 million euros that started last year, we have extended our quay length, procured additional quay cranes and built more warehouses.

“By early July, we can welcome post-panamax container vessels to our port,” Casar said.

On the performance of the port in the current challenging economic climate, he said the port had been growing quite robustly in the last decade with average annual tonnage growth of one million tonnes.

Last year, the port handled about 16 million tonnes of cargo.

“But we are unsure about growth this year due the global economic downturn. In January alone, our car handling volume has dropped about 40% on year-on-year basis,” he said.

This is the second agreement inked by Infinity Logistics as a representative of foreign ports in the South-East Asian region.

The first agreement was with PD Ports of Britain in late 2007.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/3/23/maritime/3526264&sec=maritime, 23 Mac 2009

(Newspaper) Japan's global levy on bunker fuel proposal

Source: The Star, 17 Mac 2009

Cabotage

THE higher prices of consumer goods in Sabah and Sarawak, compared with the peninsula, should not be conveniently attributed to the high shipping cost to east Malaysia in relation to the implementation of the cabotage shipping policy, said Malaysia Shipowners Association (Masa) chairman Nordin Mat Yusoff.

The Federation of Sabah Manufacturers recently urged the Government to remove the policy on account of its adverse effects on the prices of goods in Sabah.

Nordin Mat Yusoff Under the cabotage shipping policy, implemented since 1980, domestic trade between any two ports in the country can only be served by Malaysian-owned shipping companies with Malaysian-flagged ships.

Nordin said that if the high prices of consumer goods in east Malaysia were caused by high shipping cost, the current downtrend in freight rates should have lowered prices of the goods, but this was not the case.

“Total ocean freight rates declined by about 41% in the last six months in Peninsular-east Malaysia trade but this has not been reflected in the landed prices of the current consumer goods there.

“Also, total freight rate comprising basic freight rate and bunker adjustment factor has actually dropped quite dramatically by about 10% and 300% respectively due to the slide in oil price.

“But, it is unfortunate to note that consumers in east Malaysia are not beneficiaries of our lower prices,” he told a press conference last week.

Masa, in its recent study that compared the retail prices of goods between August and February in Sabah and Sarawak, found that the prices there had either been maintained or increased.

Furthermore, Nordin said shipping rates were only one of eight components in a total supply chain involved in the transportation of goods.

Among other costs involved in total supply chain are charges related to port, forwarding, trucking, storage and terminal handling services.


Vessels often return to Port Klang from east Malaysia with empty containers

“We have always maintained that the shipping cost is only one component of the total transportation and logistics cost and that it makes up 46% of the total transportation cost.

“From this, shipping freight makes up between 5% and 7% of the retail price of consumer goods.

“It is therefore unfair to assume that shipping cost is the only arbiter of the landed cost of consumer goods,” he said.

Explaining why freight rates from Port Klang to places such as Hong Kong are cheaper than to east Malaysia, Nordin pointed out that the Port Klang-east Malaysia trade route often resulted in vessels coming back from east Malaysia to Port Klang with empty containers as east Malaysia had more imports than exports.

“The Port Klang-Hong Kong freight rate is cheaper because Hong Kong is usually lacking in containers due to its high volume goods transportation activities while vessels from Port Klang need to bring extra empty containers to carry goods out of Hong Kong.

“And these extra containers going there are usually given low freight rates by shipping companies as the cost will be covered by the higher freight rates transporting goods out of Hong Kong to Europe and many other places,” he said.

It was also misleading for anyone to suggest that shipping charges from Kota Kinabalu to Southampton were twice that of similar charges from Port Klang to Southampton because of the cabotage policy, he added.

“In fact, the argument is wrong because the policy only involves domestic shipping among local ports,” he said.

Describing it as “barking up the wrong tree,” he said the removal or relaxation of the cabotage policy would in no way change the situation.

This is because the question of freight rates between Kota Kinabalu and a foreign port of destination would be influenced by, among other factors, volume of cargo, geographical factors such as the remoteness of a market, port infrastructure and performance.

Nordin said Masa would resist any attempts to remove the cabotage policy, as it could cause huge collateral damage to the Malaysian shipping industry and also undermined national interests.

Source: http://thestar.com.my/maritime/story.asp?file=/2009/3/9/maritime/3415403&sec=maritime

Cabotage is the transport of goods or passengers between two points in the same country.

(Newspaper) All About Logistics - Swee Joo

Source: The Star, 02 March 2009

Hovercraft / Air-cushion Vehicle (ACV) 氣墊船

A hovercraft, or air-cushion vehicle (ACV), is a craft, designed to travel over any smooth surface supported by a cushion of slowly moving, high-pressure air, ejected downwards against the surface below, and contained within a "skirt." Hovercraft are used throughout the world as a method of specialized transport where ever there is the need to travel over multiple types of surfaces. Because they are supported by a cushion of air, hovercraft are unique among all forms of transportation in their ability to travel equally well over land, ice, and water. Small hovercraft are often used for sport or passenger service, while giant hovercraft have been built for civilian and military applications to transport cars, tanks, and large equipment into difficult or hostile environments and terrain.

Design

Hovercraft can be powered by one or more engines. Small craft, such as the SR-N6, usually have one engine with the drive split through a gearbox. On vehicles with several engines, one usually drives the fan, or (impeller), which is responsible for lifting the vehicle by forcing high pressure air under the craft. The air inflates the "skirt" under the vehicle, causing it to rise above the ground. Additional engines provide forward thrust in order to propel the craft. Some hovercraft utilize ducting to allow one engine to perform both tasks by directing some of the air to the skirt, the rest of the air passing out of the back to push the craft forward.

Source: http://en.wikipedia.org/wiki/Hovercraft

Westports recipient of 100,000th Allison device

WESTPORTS Malaysia is the recipient of the 100,000th Allison automatic transmission device manufactured in Hungary that powers the port’s prime movers.

All of Westports’ 273 prime movers are equipped with Allison Transmission 3000 series model.

“We are proud to be the recipient of the 100,000th Allison automatic transmission,” said Westports executive director Ruben Emir Gnanalingam in a statement.

“The two companies share a common commitment to delivering innovation and quality services to customers.”

He said the prime movers were an important link in Wesports’ constant pursuit to improve overall performance and productivity.

“As a vital link from vessel to yard and vice-versa, Westports has always given priority to maintaining an efficient fleet of prime movers to ensure that there is always maximum availability of these vehicles during operations, so that our productivity levels are not compromised,” he added.

Allison Transmission is the world’s leading designer, manufacturer and seller of medium and heavy-duty automatic transmission devices for trucks, buses as well as off-road and military vehicles.

It has so far delivered 35,000 units of Allison transmission devices for prime movers at ports worldwide.

“With our broad range of products and technical expertise, Allison Transmission is poised to help port operators like Westports improve efficiency and cost effectiveness through innovation and new technologies.

“This, coupled with our timely service support via our channels factory-trained technicians and advanced diagnostic tools, help keep Westports’ operations efficient and productive,” said Allison Transmission Singapore operations commercial director G.H. Tan.

“The current global economy presents challenges, but we look at it as an opportunity to differentiate ourselves and our clients from the rest.”

Source: http://thestar.com.my/maritime/story.asp?file=/2009/2/23/maritime/3317876&sec=maritime, 23 Feb 2009

Trans-Asia gears for slowdown

TRANS-ASIA Shipping Corp Bhd (Tasco), an integrated logistics solution provider, has embarked on various initiatives to minimise the impact of the global economic slump on its core business.

These include the diversification of its clientele base, postponement of investment projects and cost-cutting measures.

The main-board listed company suffered 30% to 40% drop in the volume of goods handled for the electronics and motor vehicle sectors in January against the same month in 2008.

These sectors account for about 60% of Tasco’s total volume.

Managing director Lee Check Poh said that to diversify its customer base, Tasco had recently clinched additional contracts from tobacco company Philip Morris and a new job from golf set maker Callaway.

“For Philip Morris, we are moving their goods from the ports to factories and the job started last month,” he told StarBiz, adding that Tasco was also responsible for the distribution of goods for Philip Morris.

“As for Callaway, Tasco is entrusted to be the distributor of Callaway products in Asia,” he added.

Additionally, Lee said, Tasco was recently chosen by Perusahaan Otomobil Kedua Sdn Bhd to handle the distribution of the carmakers’ service parts nationwide.

“Hopefully, our efforts will offset the drop in volume that we are currently experiencing although that may not be the case. This is because the drop last month was quite significant,” he said.

Lee hoped the situation was only a “short-term glitch” that might be due to inventory adjustments in the electronics and motor vehicle sectors. “If the volume picks up by March or April, that will be really good news for us,” he said.

Lee said Tasco was also delaying its investment in a new warehouse until the economic outlook became clearer.

Tasco would also accommodate the change in trend by some manufacturers who wanted to focus on cost per unit for logistics services as opposed to a time-based contract, he said.

On a more positive note, Tasco could ride on its strong ties with Nippon Yusen Kabushiki Kaisha (NYK), one of Japan’s largest shipping firms which has a strong logistics arm. NYK, which has a 27.8% stake in Tasco, has 231 offices in 33 countries.

For its international air freight business, Tasco has a strong international partner, Yusen Air & Sea Service Co Ltd.

“With the support of our international partners, we hope to ride through the current economic turmoil,” Lee said.

Tasco has remained resilient financially, with a cash balance of RM46mil as at Dec 31 last year.

It also did quite well in the last financial year ended Dec 31, posting a 12.9% growth in net profit to RM14.9mil while its revenue expanded by 11.1% to RM366.5mil.

According to OSK Research, Tasco expects to show positive growth in net profit in the current financial year despite a drop in sales. This is because it has been granted tax incentives on investments made from 2003 to 2008 totalling about RM100mil.

“Hence, we can expect a significant reduction in effective tax rates over the near term, which we estimate at 11% from more than 25% over the past few years,” the brokerage said in a report.


Source: http://thestar.com.my/maritime/story.asp?file=/2009/2/23/maritime/3305850&sec=maritime, 23 Feb 2009

All About Logistics - Seaworthiness of Vessels

Legal Definition
The legal definition of a seaworthy ship is, "one which is in a fit state as to repairs, equipment, crew, and in all other respects, to encounter the ordinary perils of the sea".
It is also necessary to note that the law does not require a shipowner to provide an immaculate or a perfect ship: the standard of seaworthiness is only one of reasonable fitness.

Concept: Seaworthiness ≠ safety
'Unsafe' is a wider concept, and seaworthiness is only one aspect of safety.
Safety = Seaworthiness + Conditions on board which affect human
Strictly speaking, seaworthiness should only concern matters impinging upon her ability to encounter the ordinary perils of the sea, as earlier described. The other category is concerned with conditions on board a ship which affect the health, safety and welfare of human lives.

4 Legal Categories
A) Fitness to Carry Cargo
- Fit to receive the cargo at the beginning of the loading + Fit to deliver along the agreed voyage
1) Obligation in proving suitable equipment and machinery to fit to carry the cargo
2) Ship must free from defects to ensure: safety of the ship + safety of the cargo

B) Time when Seaworthiness is Necessary
- when the ship leaves her moorings without the intention of returning to them
1) Before departure – vessel already unseaworthy – BREACH of contract – repair needs to be done
2) After departure - then only vessel becomes unseaworthy – NOT breach of contract – as there is no obligation to continue to be seaworthy

C) Legal Actions for Unseaworthiness
- Seaworthiness of vessel cannot be categorised as being "a condition" or "a warranty".
- Damage which connected/caused by the initial unseaworthiness – shipowner will be liable
Remedies (Condition) – monetary compensation + end of contract
Remedies (Warranty) - monetary compensation only

D) Burden of Proof (shipper must prove the vessel is seaworthiness)
- On the shipper

Source: http://www.findlaymarine.com/seaworthy.html
Extra information: http://maritimeknowhow.com/English/Know-How/Charter_parties/time_charter_party/ordinary_time_charter/seaworthiness_of_vessel.html

Sample - Certificate of Seaworthiness