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Freight/bunker surcharge continues to decline According to Container Trade Statistics (CTS), indexed all in rate levels from and to Europe for October, November and December 2014 fell across the board compared with those for the same months of 2013. Only November’s levies from Europe to North America and those inbound from the combined Middle East/Indian Sub-Continent region stayed constant.
At first glance, a dramatic development without precedence, certainly if considering the strategic Europe-Far East trade, where prevailing or at least perceived overcapacity will have had its impact. However, as indexed all in rate levels are concerned, the dropping BAF (Bunkr Adjustment Factor) following the well publicised, sharply reduced, oil/bunker prices from mid-2014 has clearly had an effect. For example, between October-December 2014, the bunker surcharge as applied by CMA CGM between Rotterdam and Shanghai was adjusted downwards by $ 37 eastbound and $ 74 westbound.
Multimillion container ports a South Asian reality
Fourteen ports, two more than in the previous year, handled in excess of 10 million TEU in 2014, together forming the exclusive club of multi-millionaires. Combined, they lifted 260 million TEU, an increase of 5.5% year-on-year. Nine ports are Chinese with Rotterdam and Dubai being the only ones outside the Far East. The two new entrants were Koohsiung, earlier entering this league in 2007 (although 10, the validity of the numbers was disputed) to drop out again the year after and Dalian.
Shipping lines continue to bleed
As reported in DynaLiners, turnover of NOL’s container shipping division APL dropped by 4% year-on-year to $ 7.0 billion. Its net loss grew however from $ 76 million to $ 260 million, the sale of its headquarters building in 2013 mitigated that year’s losses. Its operating loss (core EBIT) did maintain the trend seen in 2013 over 2012 with a further reduction, this time round of 38% to $ -143 million.
Unfortunately, the agreed sale of its APL Logistics business for $ 1.2 billion, will come too late to positively impact the 2014 result. It is to be hoped, for NOL and APL’s sakes, that business sees a turnaround for, other than vessels and following the sale of the head office building in 2013, there is not too much more to sell.
Carrier freight push to fall flat
Carriers’ proposed general rate increases and peak season surcharges for February on the Asia-north Europe trade appear to have fallen flat, according to Freight Investor Services broker Richard Ward, although last week’s Wold Container Index indicates the partial acceptance of mid-January GRIs. Ward said initial market feedback suggests additional tonnage has absorbed what extra cargo there has been in the lead up to the Chinese New Year.
Given that this time of the year usually provides carriers with one of their best opportunities to increase rates, it does not bode well for carriers and the year ahead, he said. However, Ward says their one saving grace is that the cost of the fuel remains well below levels this time last year. As a result, some lines have raised their profit forecasts for the years, with NYK increasing its expected group earnings by 14.5% for its coming financial year, he said.
The latest Shanghai Containerised Freight Index shows that freight rates on the Asia-Europe trade fell $ 103, or 8.2%, to $ 1,153 per TEU, which is down 27% on-year. For Asia-Mediterranean routes, freight rates fell $ 33, or 2.3%, last week. However, according to the SCFI, prices are once again down on this time last year, when they were 13% higher at $ 1,609 per TEU.
Cyber security gaps in ports
“Deficient” and/or “Delinquent” are the accusations that politicians and the public are levelling against ports, with an implication that they are guilty of both strategic shortcomings when it comes to protection from cyber-attacks. But industry analysts reckon that the criticism is to a large extend unfair. Publicity about banking and commercial attacks is a large part of the reason.
Brian Lord, Managing Director of PGI Cyber, says: Ports are a hidden element of infrastructure, not like electricity and many people forget about them. He says the IT industry is also to blame for making cyber security impenetrable to clients. The result is that people making investment decisions shove responsibility for cyber security to the IT department. But attacks are probably on the way.
Peregrine Storrs-Fox, Risk Management Director for TT Club says: The main media and public interest to date has been focused on banking and retail sectors, which have historically considered themselves to be most at risk and probably done more than other industries to protect themselves in the last 10-15 years. There is little reason to consider shipping, transport or the supply chain to be immune to attach; it is dependent on who is doing the attacking and to what end.
Thomas Heverin, a cyber-security Specialist with PGFM Solutions, reckons that ports should be on their guard against everyone. Lone hackers may wish to disrupt seaport operations just to embarrass seaport authorities. Overall threats can come from multiple sources, both internal and external, with each source having its own intent. Ports need to develop strategies to defend against the different types of threats and attackers.
All you have to do is stop a port from operating for a short time, not destroy any infrastructure, which will reverberate along the supply chain.
[The writer, a Maritime Economist, is a Chartered Fellow (Logistics Transport), Chartered Shipbroker (UK), Chartered Marketer (UK) and a University of Oxford Business Alumni. He is also a Fellow of NORAD/JICA and Harvard Business School (EEP).]
