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
Monday, March 30, 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
Monday, March 23, 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.
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
Tuesday, March 17, 2009
Thursday, March 12, 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.
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.
Tuesday, March 3, 2009
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