Transhipment business to decline
Almost since the birth of containerisation and the multimodal flexibility of the humble steel box, cargo has been transhipped between large mother ships and small feeder vessels. Huge hubs have emerged, such as Singapore, Port Tanjung Pelepas, Port Said, Salboa, Marsaxlokk and Algeciras, where well over 85% of the cargo handled is transhipped. But even in stablished and large gateways, such as Rotterdam, Hamburg, Valencia, Busan, Port Klang and Miami, a significant volume of traffic comprises transhipment cargo.
Globally, an estimated 27-28% of all boxes handled are either relayed to/from feeder vessels or between mainline ships. In 2015, that would have equated to a highly significant 187m/194m TEU. The sector’s importance to terminal operators, port authorities and those carriers offering feeder shuttles, therefore, cannot be underestimated. But the percentage is down, according to Drewry Maritime Research Senior Analyst for Ports and Terminals Neil Davidson.
While obtaining hard data on transhipment volumes isn’t easy and an element of judgement is required, in general I can say the global incidence of transhipment is slightly down over the past few years. The estimate for transhipment incidences in 2015 was 26.4%, down from a high in recent years of 27.1%, but with high regional variations. He noted the highest incidence as being in Asia where 57.1% of box handling activity was transhipment, while it was just over 22% in Europe and 11.7% in the Middle East/South Asia.
Davidson alluded to a report published by the group earlier this year, which revealed that, in H1 2016, the number of boxes transhipped at main hubs in Asia had stalled. At Singapore, traffic slipped by 5% in the period from January to end-June, while at Hong Kong, an even larger 10% dip was reported. Moreover, these figures followed disappointing 2015 results, when Singapore’s traffic dropped by 9% (2.9m TEU), and Hong Kong’s volumes slid by 10% (2.2m TEU). (WorldCargo News)
Container freight rates recovery not until 2019
The Loadstar, a leading shipping analyst has predicted the return of rate volatility to the world’s major trades as the spectre of overcapacity comes back to haunt the industry. This is despite growing confidence in a container market recovery over the past six months and other expert opinions. Alphaliner Executive Consultant Tan Hua Joo told delegates at the TOC Asia Container Supply Chain event in Singapore, that despite 2016 being the most balanced year in terms of supply and demand since, 2009, with a global fleet growth of just 1.6%, hopes on the part of carriers for greater stability are still some time away.
This is largely because the growth rate last year was constrained due to a high number of new vessel delivery deferrals, in combination with an unprecedented number of vessels sent to scrapyards and an unnaturally large idle fleet propelled by the collapse of Hanjin. As we move into this year the rate of growth in the global fleet is going to increase as there is very little room for the industry to keep the growth of the fleet down, Tan said.
However, this view was contradicted by Robbert van Trooijen, Head of Maersk Line for Asia-Pacific, who claimed that 2017 would be the year in which all of us would find that balance. Alphaliner is forecasting total fleet delivery of 1.32m TEU, mostly ultra-large container vessels (ULCVs) and although it also forecasting another year of record scrapping levels, up to 700,000 TEU, there will still be a net increase in the global fleet of 620,000 TEU, a 3.1% rise. Around 1.6m TEU of the world’s fleet was idled last year, although some 500,000 TEU of this was Hanjin tonnage, but much has been brought back into operation.
Tan said a lot of the Hanjin vessels have been brought back into operation and panama vessels have been something of a spike in demand due to the new alliances’ demand for capacity, pushing charter rates back up to around $ 10,000 per day. Idle Hanjin tonnage is now down to about 200,000 TEU and we expect this to be reintroduced by May, he added. So as long as the shipping lines take back this idle capacity there is no sign of a recovery in the market, as carriers continue to bid for market share and significant freight rate instability will continue. In fact, we do not see a genuine recovery in the freight markets for another 18 months, it is not until 2019 that the supply-demand situation comes back into balance, he suggested.
CMA CGM to operate new Mundra container terminal
CMA CGM signed a joint venture agreement with Adani Ports to operate a new container terminal at India’s Mundra Port, increasing the pressure on public rival Jawaharlal Nehru Port Trust. Mundra in recent years has made steady market share gains, particularly from North Western India and the early completion of the terminal elevates Mundra to India’s largest container hub. Under the agreement, the French carrier’s subsidiary CMA Terminals will operate the facility for 15 years with an option to extend it twice for 10 more years.
The only terminal on India’s West Coast able to handle mega-ships has an annual capacity of 1.3 million 20 foot equivalent units and spans more than 27 hectares (67 acres) with a 650 meter (2,133 feet) long quay and a draft of 16.5 meters. CT4 has four rail mounted quay cranes of 65 tonnes capacity capable of handling ships up to 18,000 TEUs and twelve 41 tonne lift rubber-tire gantry cranes. The terminal is CMA CGM’s first port investment in India, where it has been operating since 1984 and has around 4,000 staff and 29 offices.
The carrier calls at 13 Indian ports and operates eleven direct weekly services connecting the country with Europe, Africa, North and South America, Asia, Australia and the Middle East. The early completion of the terminal brings Mundra that much closer to its goal of doubling its annual capacity to 6.6 million TEUs. Work to expand capacity at an existing terminal operated by Mediterranean Shipping Co., to reach that 6.6 million TEUs is ongoing. (JOC)
Singapore ranked world’s Top Maritime Capital
Singapore has once again clinched top position in Menon’s Leading Maritime Capitals of the World Report. The Menon Report is produced by Norwegian consultancy firm Menon Economics and is a widely accepted study of the world’s leading maritime capitals, looking at 24 objective indicators and garnering survey responses from more than 250 industry experts across all continents. Singapore also ranked first in the two previous editions of the report in 2012 and 2015. Singapore was ranked number one this year in the following three categories; Shipping, Ports and Logistics and Attractiveness and Competitiveness.
The maritime nation also scored impressive results in the remaining two categories; second place in Maritime Technology and fourth place in Finance and Law. Singapore jumped three places from fifth to second position in the Maritime Technology category. The Menon Report noted that Singapore maintained its reputation as a world leading maritime hub because of the width of the city state’s maritime industry. In the sectors of Shipping and Ports and Logistics, Singapore emerged first due to its strategic geographic location, its position as an important centre for commercial management and as the world’s second largest port.
Singapore’s offering as an international maritime centre continues to grow. While more than 140 shipping companies are represented in Singapore, new companies continue to establish a presence with the West of England P & I (protection and indemnity) Club as a recent example. Singapore ranked top in Overall Attractiveness and Competitiveness due to the ease of doing business and customs procedures. According to the report, seven in 10 experts regarded Singapore as one of the three most attractive cities in the world for relocating their headquarters and identified it as one of the maritime capitals most prepared and ready to adopt digitalisaiton.
In 2016, the port’s vessel arrival tonnage increased by 6.3% to 2.66 billion gross tons. Andrew Tan. Chief Executive of Maritime and Port Authority of Singapore (MPA) said, we are not just talking about containers at our port anymore. We are also talking about the banks, insurance. P&I Clubs, classification societies, legal arbitration, the whole ecosystem that has developed through years of conscientious and constant effort, invested in the rest of the maritime cluster in last few decades. (The Maritime Executive)
(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)).