Friday, October 31, 2008

Oct. 31 - BBC box is empty in Shanghai

Update Nov. 11
The BBC Box NYKU8210506 is still sitting empty in Shanghai. It's suppose to be taking a shipment of clothes to the U.S. Maybe the buyer cancelled the order.

Oct. 31

Reading this headline makes me want to say the box got Shanghaied, but I don't think anyone uses that term these days. However, looking it up in Wikipedia, I find that SpongeBob SquarePants had an episode entitled Shanghaid.

Actually, the BBC container was returned empty on Oct. 25. It had a pretty quick turn around, being picked up full at 06:55 and returned empty at 12:18 the same day.

The BBC site says the next cargo will be clothing, destined for the U.S. (actually, I think in the video he said "America", which I always find a bit strange.)

Here are the details from the NYK tracking site. If you ever want to check the location yourself, just go into the site, type in the prefix and container number (no spaces) and click on track.

NYKU8210506 Container Size/Type 40'/DRY

Status As Of Event Location Mode
OCT-25-2008 12:18 Empty container returned to carrier at destination Shanghai, CHN Truck

Moves to Date Event Location Mode
OCT-25-2008 06:55 Picked up for delivery at destination Shanghai, CHN Truck
OCT-22-2008 05:30 Vessel Arrival Shanghai, CHN COPENHAGEN EXPRESS/011
OCT-22-2008 05:00 Discharged from vessel at last port of discharge Shanghai, CHN COPENHAGEN EXPRESS/011

The BBC is always vague about when the container will depart. They had said early November.

Considering the cargo is clothing, it will probably go on a ship to either Los Angeles/Long Beach or New York/New Jersey. As the container belongs to NYK, it will go on an NYK ship, or one in their vessel sharing agreement. They have several sailings a week, so it will be a bit tough to guess which one.

Wednesday, October 29, 2008

Pirates live it up

According to the BBC, the newly acquired wealth of the pirates has some ill effects:

"They promote the use of drugs - chewing khat [a stimulant which keeps one alert] and smoking hashish - and alcohol," Mr Hassan says."

It's also interesting to note that piracy has caused members of competing clans to work together.

Piracy initially started along Somalia's southern coast but began shifting north in 2007 - and as a result, the pirate gangs in the Gulf of Aden are now multi-clan operations.

But Garowe resident Abdulkadil Mohamed says, they do not see themselves as pirates.

"Illegal fishing is the root cause of the piracy problem," he says.

"They call themselves coastguards."

Britannia Bulk in financial difficulties

Here is an example of the problems with one bulk carrier, which has caused the BDI (discussed in my Oct 27 post) to plummet.

From Reuters (click here for complete article)

An unexpectedly sharp drop in dry bulk shipping demand and the subsequent decline in rates charged for shipping services caused "a significant net loss" for the quarter. In addition, the company paid more to retain shipping vessels than it received for chartering them to customers, Britannia said in a release.

The company, which transports goods in and out of the Baltic region, said that there was a "very high risk" of default for its loan facility with Lloyds TSB Bank Plc and Nordea Bank Denmark A/S.

Okay, now get this. They did not OWN all of their vessels. So, they thought the charter market would stay on it's wild ride, paid a huge amount to keep vessels on charter, and then guess what? They couldn't find cargo which would pay enough to offset what they were paying for the charters.

By the way, this company had it's IPO in June of 2008. That's right - just 4 months ago.

MOL resigns from stabilization agreements

As reported in the JOC, MOL (Mitsui OSK Line) has decided to drop out of "stabilization" agreements from North America.

I am not sure what these agreements allow. It's either discussing vessel sharing, general rate increases, specific rates, or maybe capacity. Anyhow, the EU just pulled the plug on rate discussions to/from Europe. This is the official wording from MOL

"With the European Union's abolition of liner anti-trust immunity, it has become extremely difficult to align the business processes of our entire organization when its regional divisions must operate to differing standards," Masakazu Yakushiji, executive vice president of MOL's liner division, said in a statement.

I expect other carriers will follow suit.

Tuesday, October 28, 2008

Close look at the BDI, Baltic Dry Index

The Baltic Dry Index tracks charter rates for dry bulk ships. These ships carry mainly ores and grains, not liquids carried by tankers, hence the term "dry". And in bulk, not in containers.

The demand for bulk ships increased significantly when the container carriers began increasing the prices (presumably) or, at the very least, not making containers available for, commodity cargoes. This came about in the U.S. when exports began booming.

Because of this demand, charter rates on bulk ships surged from around 10,000 per day to over 100,000 per day. Absolutely crazy. Much worse than what was seen with charter rates for container ships.

In an October 24 article in American Shipper, Khalid Hashim, CEO of Thailand-based Precious Shipping, explained the reasons, as he saw them, for the dramatic decline in the Baltic Dry Index, the measuring stick for dry bulk rates.

“The deteriorating credit line led to the collapse of the BDI over the past few months, while little has changed in terms of fundamental demand and supply for dry bulk shipping,” according to notes from the JP Morgan-organized call, which took place Oct. 17. “Hashim thinks urbanization and economic advancement, which have been driving the demand for dry bulk shipping, remain unchanged. However, due to lack of trade credit, real demand is converting into potential demand and disappearing from the market.”

Today, October 28, the BDI hit a 6 year low.

Out of Barron's,

The Baltic Dry Index slid below the 1000-point mark, the first time it’s been south of four digits since August 2002, as the prices shippers are willing to pay for marine transport fall close to the costs of putting a vessel in the water and staffing it. The Baltic Dry Index has fallen 89% this year, as the credit crisis has robbed shippers of the ability to finance cargo movements. Shipowners have taken steps to reduce costs - for instance, trimming vessel speeds to save on fuel costs - but may begin to simply refuse to move cargo if pricing doesn’t show some improvement.

A lot of the bulk carriers went public in the last couple of years. The stocks were interesting as they were paying great dividends. But this is a wild, wild business, much like trading pork bellies.

It will be interesting to follow.

Monday, October 27, 2008

Arms onboard the M/V Faina abandonded by receiver

An Associated Press article confirms neither the ship's owner nor the receiver in Kenya want the cargo onboard the M/V Faina. There is no mention if the shipper in Ukraine is interested in getting it back, but I rather doubt it.

"The arms-laden Ukrainian cargo ship MV Faina, (was) hijacked Sept. 25 with a cargo of 33 battle tanks and heavy weaponry.

The pirates who hold the Faina, said Monday that its operator wants to negotiate only for the release of the vessel and crew of 20 - and not its cargo.

The pirates' spokesman Sugule Ali said they received a fax on Friday from Viktor Murenko, the head of ship operator Tomex Team, saying Kenya had declined to pay any ransom for the cargo it claims.

The Murenko letter said the pirates are at, "liberty to destroy or throw the weapons to the sea if they deemed that fit," Ali told The Associated Press via satellite phone from the Faina.

In Russia, a spokesman for ship owner Vadim Alperin said such a thing was physically impossible as there was no way to unload or destroy the cargo with U.S. forces surrounding the ship.

"The ship owner doesn't care about the cargo, he has already cursed it in all ways possible," said Mikhail Voitenko. But he said that it was impossible to separate the cargo from the ship. "Physically it's impossible."

Kenya's Foreign Affairs Minister Moses Wetangula repeated that the government would not pay any ransom, and told the AP that Tomex Team is responsible for the cargo until it is delivered.

Ali said the pirates passed on a copy of Tomex Team's letter to the U.S. Navy, and that the Faina's captain, Viktor Nikolsky, confirmed the signature on the letter belongs to his boss."

I especially like the phrase "the ship owner..has already cursed it (the arms) in all ways possible". Yes, I think the arms have not only been cursed, but are cursed.

Sounds like the makings for the next Indiana Jones movie. Not to make light of the situation, but ya'll got to admit, if this wasn't so serious, it would be funny.

Once again, Pirates make threats

Oct. 27th, Russia Today claims

"The Somali pirates who hijacked a Ukrainian freighter, the Faina, have issued an ultimatum. According to reports on Somali radio they've threatened to kill 20 crew members, if a multi-million dollar ransom is not paid within 24 hours."

It also makes comments that Russia may take some action.

"The Russian warship, 'Neustrashimy' (Fearless,) is now off the Somali coast where it will conduct anti-piracy patrols. It may also be used to intercept the Ukrainian freighter captured a month ago."

There are no reports in the African press regarding the ultimatum by the Pirates.

Could be the Russians are looking for an excuse.

Putting things in perspective

The New York Times Saturday Profile highlights a musician from Mozambique. In addition to his career as a musician, he runs an organization which promotes clean water and safe sanitation. Mainly, they install concrete latrines.

When you look at how badly your 401K is doing, consider these statistics for Mozambique: (from the BBC Country Profile)

Between 1977 and 1992 up to a million Mozambicans died from fighting and famine in a war that ruined the economy and much of the countryside. The country has been left with a legacy of landmines and amputees.

Life expectancy: 42 years (men), 42 years (women) (UN)

GNI per capita: US $310 (World Bank, 2006)

The movie, Madagascar:Escape 2 Africa, will be released November 7th.

The premise of the movie is the animals leave Madagascar and end up on the mainland of Africa. If one assumes they land on the spot just west of Madagascar, they will be in Mozambique.

Unfortunately, I don't think the movie will make any mention of the country. That's too bad. Mozambique could use some tourism promotion.

Sunday, October 26, 2008

Neustrashimy patrols for pirates

Russia Today reports as of October 27th, the Neustrashimy, a Russian warship, has finally arrived off the coast of Somalia.

The M/V Faina, being held be pirates, has 2 Russian crew members. Speculation is, the Russians might use force against the pirates holding this ship.

As I mentioned in my blog of Oct. 25th, Russia asked Somalia permission to use force in Somalia's territorial waters.

No good news

According to this article in The Wall Street Journal, " Shipping companies are considered a barometer of economic health, which makes the current downturn particularly worrisome."

Other depressing comments from this article:

regarding trucking,

"In part because of high fuel prices, 1,905 trucking companies ceased operations during the first half of the year, according to Donald Broughton, a research analyst at Nashville, Tenn.-based investment bank Avondale Partners. By the end of 2008, as many as an additional 2,000 of the more than 200,000 for-hire trucking concerns in the U.S. are expected to fail, he says. Gainey Corp., a Grand Rapids, Mich., carrier with 2,200 trucks and more than $400 million in annual revenue, sought bankruptcy-court protection last week."

liner shipping,

"Ocean transport is also under pressure. The number of shipping containers entering the U.S. through its top 10 container ports between January and September was 7.2% lower than it was during the year-earlier period, according to Paul Bingham, managing director of HIS Global Insights, which tracks port data. Such containers typically carry consumer goods ranging from apparel to electronics."

and rail

"Union Pacific Corp., the largest railroad in the U.S., said Thursday that fourth-quarter freight volumes will slide about 5%. Burlington Northern Santa Fe Corp. said third-quarter volume had slipped 1.5%. The nation's top four railroads -- Union Pacific, Burlington Northern, Norfolk Southern Corp., and CSX Corp. -- all reported third-quarter drops in volumes from last year. "It's going to be a tough year in 2009" for the economy, said James Young, chief executive of Union Pacific. "Consumers have pulled back even more, and we're going to manage the company accordingly."

Saturday, October 25, 2008

Pressure on Pirates

Finally, ships are arriving off the coast of Somalia to combat the Pirates.

The Russian vessel Neustrashimy is close to the area.

Reuters reports "Russia, which sent a warship to Somalia's coast to combat pirates, asked the African nation on Thursday for carte blanche to use force in its territorial waters."

On Oct. 25, from Russia Today, "The Russian warship 'Neustrashimy' (Fearless) is set to enter the waters off Somalia on a mission to combat piracy. Seven NATO vessels are already monitoring the area which is notorious for hijackings. The Russian vessel may be used to help intercept a Ukrainian freighter (M/V Faina) captured a month ago with 20 people onboard."

Even the Columbia Journalism Review has been following the saga of the M/V Faina.

There are reports, such as this one in Deseret News, that Blackwater is planning to get into the business of protecting vessels from pirates.

"Blackwater is offering the MV MacArthur, a 183-foot vessel with a crew of 14 and a helicopter pad, as an escort for ships through the Gulf of Aden. The helicopters and MacArthur won't be armed, although workers will carry guns, Mathews said."

JOC article "Sinking Feeling"

There is a very good article in the Journal of Commerce, updated Oct. 22nd, entitled "Sinking Feeling". I read it only today. It's rather lengthy, and the following 2 paragraphs I had to read twice to comprehend.

"The deceleration of container volumes also is causing problems at container terminals in the U.S., which were hot targets for acquisitions in 2006 and 2007. Some of the financial institutions that bought into the market borrowed heavily and are struggling to comply with debt covenants, or milestones of volume levels, revenue or returns on equity that the borrowers guaranteed.

When a borrower misses one of those covenants, it is in technical default, even if it has made all the required interest payments on the loan, which may have been syndicated to other lenders or banks. With container volumes slowing, there are reports that one of those borrowers has breached its covenant, and that the financial institution behind the fund that owns the terminal has moved the terminal asset onto its balance sheet in order to protect it. In ordinary times, this might not cause alarm, but with credit being scarce and trust in equally short supply, the creditors are said to be seeking recourse."


My first reaction is to say who in their right mind would borrow money on these conditions! But, then I realized it's the same people who said the price of houses will keep going up.

Good grief. No wonder things are in such a mess.

Friday, October 24, 2008

The voice of experience

Whilst perusing the blogs at Lloyds List, I ran across the below comment.

Unfortunately, the post is anonymous. Obviously the writer knows a thing or two about charter markets.

This should be required reading for anyone born after 1965.

Comment by Anonymous - Friday 10 October 2008
Sea freights market always had an appeal on me for being one of the most 'pure and flexible' markets, compared with many other economic sectors. It has always been strongly a demand-and-supply thing, though many could argue that in the recent years the physical market has been more and more conditioned by the derivatives, following the global trend. Nevertheless the way the dry cargoes market has recently fallen caught all of us by surprise. During the recent long boom everybody consolidated the idea that the past hard times would never return as they were. We have higher bunker prices, higher running costs and wealthy owners able to keep it up. What recently happened is deeply concerning. It indicates that historical weakness of the ship owners did not change so much during the years. I belong to those who lived (or better survived) during the mid 80's crisis and I am disappointed to note that we are repeating the same old mistakes. Nowadays there are a couple of factors making things worse: 1) The massive newbuilding capacity of Chinese yards. 2) A financial system which has allowed owners to expand and modernise their fleets with close to zero equity. I am afraid that this time the lesson will be much harder and do not believe we will learn it.

EU considering more rule changes for liner shipping

Traffic World reports EU's Competition Directorate (referred to as DG Comp), has given ocean carriers notice they are considering changing the rules, some more:

"A new DG Comp proposal threatens to limit liner carriers' ability to share vessel capacity through alliances, slot exchanges and vessel-sharing agreements.

The draft proposal for consortia regulation came just as the liner industry is adjusting to the Oct. 18 end of a 150-year-old system of rate-setting conferences in European trade lanes.

Carriers were shocked by the proposal's assumption that there is no competition among carriers that are members of alliances or vessel-sharing agreements, and that these kinds of consortia would be considered as single entities when measuring an agreement's market share."

If this goes through, look for more mergers in the international shipping industry.

Thursday, October 23, 2008

Who gets paid if a truck broker goes bankrupt?

I made some statements in an earlier blog that truckers will probably get stiffed if Greatwide Logistics goes out of business. Later, I thought it best to research the regs.

Things haven't changed much in 30 years. Here's the important stuff from the CFR 49, the bible of the trucking industry. The broker is required to maintain a surety bond or trust fund, but it doesn't say in what amount. Whatever the amount, it won't be enough to cover everyone if they go bankrupt.

Applicable statutes under Title 49, U.S. Code:

The Federal Motor Carrier Safety Administration does not have the authority to order payment of monies owed on brokered loads. The law does require that brokers be licensed and maintain surety bonds or trust fund agreements for the protection of shippers and carriers when disputes arise. If a broker is licensed, information may be obtained on the identity of its surety or trustee from the Federal Motor Carrier Safety Administration at 202-358-7000. A claim with supporting documentation then may be filed with the surety or trustee for monies owed by the broker.

A broker may be requested by a carrier or shipper to state in writing whether it is acting as an agent of the carrier or shipper. However, there are no federal regulations containing specific guidelines relative to the legality of an agency relationship between carriers and brokers or shippers and brokers. Therefore, courts generally look to State laws of agency relationships to establish when payments to a third party should be considered. A motor carrier may pursue payment from a shipper when a broker fails to remit compensation to the carrier or the carrier may take the matter to court to determine liability.

click here for complete CFR 49 text

3rd largest U.S. non-asset based trucking company files Chapter 11

According to an article in American Shipper, Greatwide Logistics will allow itself to be sold to the original lien holders. Apparently some hedge funds have bought into this trucking broker.

This part of the article is interesting:

"Dallas-based Greatwide is the third-largest, non-asset-based trucking company in the United States, with annual revenue of about $1.2 billion and major customers such as Wal-Mart, Target and IBM. Its business model relies on using independent agents rather than owning its own trucks to move freight.
The move essentially means that two hedge funds holding Greatwide’s primary debt, Centerbridge Capital Partners and D.E. Shaw, forced out private owner Investcorp and will now have the first opportunity to own the company."

First off, a non-asset-based trucking company is a truck broker. They just match loads with trucks, bill the customer, pay the trucker, and take some money for themselves. The problem is there isn't much margin. When times are good they can do really well, but if they don't watch the pennies, things can turn ugly fast (which apparently is what happened).

I love this quote from the company.

"Chief Executive Raymond B. Greer said in a statement. “Greatwide’s fundamentals are solid. We believe the proposed transaction is a prudent and necessary step to significantly reduce our debt and interest burden in order to enhance our flexibility to continue to invest and grow.”

I hope the companies using Greatwide know they will responsible to pay the truckers if Greatwide doesn't. Probably not. It's been some time since bankruptcies like this, which forces everyone to read the rule book. Only us old folks know from experience how this goes. But then, all of these truckers are small independents, and unless someone is helping them go after their money, they will probably be the ones who get stiffed.

Wednesday, October 22, 2008

Hamburg-Sued chairman to retire

Dr. Klaus Meves, Chairman of the Board, Hamburg-Sued, will retire at the end of the year.

The American Shipper reports replacement will be Dr. Ottmar Ghast. Well, the American Shipper doesn't refer to either of these gentlemen as "Dr.", but I happen to know they are.

The article states no reason was given for the retirement. I am quite certain Dr. Meves is 65, which has been the required age of retirement for the Chairman of Hamburg-Sued.

Let's wait and see if there is some more shuffling amongst the ranks of Hamburg-Sued.

BBC Box unload in Shanghai Oct. 22nd

The BBC confirms the BBC Box, NYKU8210506 unloaded in Shanghai. They don't give the date, but it would have been the 22nd of Oct.

According to the BBC video, the next trip for the container will be clothing for the U.S. market. They say it is scheduled to leave in a couple of weeks.

As mentioned in my blog of Sept. 23rd, the original scheduled ETA in Shanghai was Oct. 20.

M/V Copenhagen Express, Voyage 024263

Southampton 23-24 Sept

Ningbo 15 Oct.

Xiamen 15-16 Oct.

Singapore 16-17 Oct.

Shanghai 20-21 Oct.

There was no mention of the port calls at Xiamen and Ningbo, so I think these were cancelled. Only Singapore was mentioned, and that was the only port call shown on the tracking map.

The NYK master schedule is not showing the Copenhagen Express anywhere. My hunch is it is being phased out; meaning taken out of this trade lane. The NYK Vega, which was a new building (this is the slang for a brand new ship), came into position in the schedule right behind the Copenhagen Express. This is a good indication it will replace the Copenhagen Express.

Tuesday, October 21, 2008

Where is the Neustrashimy?

Update Oct 30 - as of Oct. 28 she was to leave Yemen for the Gulf of Aden

Apparently those who know aren't saying.

The blog American Chronicle says it is passing through the Suez, but then it states other sources says it's already in Somali waters.

Someone at the Port of Long Beach has a brain

From my blog post of September 19th regarding the new truck plan at the ports of Los Angeles and Long Beach.

"The incentive program offers $20,000.00 for each new truck a company puts into service from Oct 2008 until Oct 2009, provided the truck is privately funded (don't ask me what that means), AND the company must commit that truck will make an average of 6 trips per week for 5 years."

So someone at the Port of Long Beach woke up and realized these truckers can't buy new trucks with private money. I suppose the "new" credit crunch prompted this, unless they read my blog (ha).

From the Port of Long Beach web-site:

"On October 1, the oldest trucks, 1988 and older, were banned from Port service. By 2012, all trucks must meet 2007 emission standards. To assist truck owners with the cost of replacing their vehicles, the Port has established a cargo fee, paid by cargo owners. The fee will generate revenue to subsidize truck replacement. The fee ($35 for cargo containers that are 20-feet-long or smaller, and $70 for all other containers) will be assessed beginning in the coming weeks. Additional funding is coming from the Port and the state, through Proposition 1B and the California Air Resources Board."

I don't know if the Port of Los Angeles has done the same, but I suspect they have, or will.

The party's over for bulk carriers

Apparently bulk shipping is a bit like farming. I come from farm country, and there is a joke in these parts that goes; "How do you end up with a million from farming?
Start out with 10 million!"

The first bulk carrier has gone bankrupt. Industrial Carriers Inc. They had 1 billion dollars in revenue in 2007. One Billion! They operated 50 ships. I don't know how many they owned, if any.

Lots of companies have entered the bulk shipping business in the last 10 years.
One can understand why. One can also understand why this will probably be just the first of many companies to go belly up.

From the Journal of Commerce:

"During the market's free-fall that began this summer, rates for 150,000-165,000-ton Capesize ships crashed by 50 percent as of last week to just over $12,000 a day compared with a peak of $233,000 in late May."

Click here for complete article.

That's almost a 95% drop in revenue! Of course the charter rates were insanely out line on the high side, the result of too much demand for bulk cargoes such as iron ore and grains.

I will post later regarding the other companies, especially those who issued stock.

Where's the BBC box?

The BBC Box, NYKU8210506, is due into Shanghai tomorrow, October 22nd.

It's onboard the Copenhagen Express, Voyage 011. Here is the NYK web-site with the schedule.

Unfortunately it doesn't hold the data I input. If you want to check it out yourself, you need to type in Southampton, GBR as the origin port, Shanghai, CHN as the destination port, change to arrival date, input arrival date as Oct. 22, and change to sort by arrival date. Then you should get the schedule, but one time it didn't work right for me, so good luck.

I guess the BBC should let us know on the 23rd it unloaded. It appears they keep the actual arrival date secretive. Can't say I blame them.

Tuesday, October 14, 2008

Pirates deadline passed for blowing up M/V Faina

The Somali Pirates gave last night as the deadline for ransom to be paid for the M/V Faina. They said they would blow up the ship if ransom was not paid by the deadline.

The deadline has passed. The ship wasn't blown up.

I was wondering how these pirates decided to make the announcement they would blow up the ship. I can only imagine one of them make such a bold proclamation, and the others said "oh yes, that will really show them, let's do that!" But then reality set in at some point and probably the Pirates decided against this.

Russia Today has an article and a video regarding the M/V Faina, especially from the viewpoint of families of the crew.

Monday, October 13, 2008

M/V Faina - still held by Somali pirates

The deadline for ransom set by the Pirates is tonight. They claim they will blow up the ship and themselves if this deadline is not met.

Russia Today has an article stating there has not been any change to this.

I can only hope the military vessels in the area have some plan.

Hapag-Lloyd will be sold

The parent company of Hapag-Lloyd, TUI, held a special meeting on Sunday to discuss the future of Hapag-Lloyd. NOL had withdrawn from the bidding, so the only offer left was from the group of Hamburg investors.

They accepted this offer, but with a twist that TUI will now be one-third owner in the new company.

I suspect TUI was anxious to get Hapag-Lloyd off their books, as the next few years will be rather dismal for the shipping industry. However, there could also be some good buying opportunities during the downturn, which this new consortium might want to take advantage of.

Sunday, October 12, 2008

Test your knowledge of Iran

A large part of the international shipping business is learning about foreign countries. If one deals with a lot of different countries, sometimes all we can learn is the geography, language, and transport system.

When I worked at The Coleman Company, we exported to over 120 different countries. There were times I could barely figure out how to ship to there, let alone take time to learn about the country.

One of the countries we shipped to back then was Iran. Of course, that was before the fall of the Shah.

On today's "Foreign Exchange" program with Daljit Dhaliwal, she interviewed the author of a new book about Iran, "The Ayatollah Begs to Differ" by Hooman Majd. He was born in Iran, but grew up in the U.S., and has been going back to Iran over the last couple of years.

There is a brief 3 minute video (click here and scroll down) which is really worth watching, even if you can't watch the interview.

One Somali pirate killed. Two others wounded.

This just in from Reuters

Somalian military forces in northern Somalia have killed one of the pirates onboard the M/V Awail.

This is not the same group of pirates holding the M/V Faina.

Friday, October 10, 2008

The Russians are coming!

Information Dissemination has an update on the Russian warship Neustrashimy (in English translated to either Fearless or Intrepid).

This vessel will go to the coast of Somalia to combat piracy.

There are some interesting comments regarding possible military actions. This, in light of the pirates announcing they will blow up the M/V Faina, it's crew and themselves if their demands are not met by Monday, October 13.

Good Pirates VS Bad Pirates

Another ship was hijacked by Somalian Pirates. The M/V Awail, loaded with cement, bound for Bosasso. (or Bosaso, or Boossaaso)

However, the spokesman for the Good Pirates (perhaps their ship is named the Lollipop) claimed they were not the ones who hijacked this ship which was bound for Somalia.

".. the pirates who seized a Ukranian ship carrying a cargo of battle tanks in the Gulf of Aden last month say they won't hijack aid ships or merchant vessels bringing goods to Somalia.

``We have had nothing to do with the hijacking of such vessels and have been preventing other pirates from seizing such ships,'' Sugale Ali Omar, spokesman for the group, said by satellite phone today."

I guess they must be getting some P.R. training. Too bad they haven't figured out that threatening to blow up the M/V Faina is not good P.R.

Pirates Threaten to blow up M/V Faina

This just in

"Sugule Ali tells The Associated Press that the bandits who have been holding the MV Faina for the past two weeks met Friday and decided they will blow up the ship along with themselves and the crew, if they don't get the ransom."

And out of Russia Today, the news reports

"The ship owner got in touch with a pirate who said his name was Muhammad, reports the Maritime Bulletin Sovfracht website. The man said they considered the value of Faina’s load much greater then the value of the ship itself, so they wanted the owner of the weapons to pay for their return.

The web-site also said earlier media reports that claimed the pirates had cut the ransom for the ship and its crew to $8 million were ‘absolutely groundless’.

The vessel was captured by Somalian pirates on September 25 off the Kenyan coast. The ship was transporting arms including tanks, multiple rocket-launch systems, ammunition and other weapons to either Kenya or Sudan according to various sources.

The delivery is subject to a parliamentary investigation in Ukraine along with other arms contracts. The commission suspects many of the deals lacked transparency or were illegal."

I think the problem is no one wants to admit they own this cargo. Ukraine probably shouldn't have exported it, Kenya says they are the importer, but all indications are it is actually destined to southern Sudan. I have read one report claiming the owner of the vessel is Israeli. All of these people are probably thinking it wouldn't be a bad idea if this ship did get blown up (as long as the crew was safe).

It's like the old game "hot potato".

I guess the pirates have figured out that no one wants to negotiate, so they have decided to say they will blow up the ship as a means to force someone to negotiate.

The problem is, I think this will just be a good excuse for force to be used against them.

The Russian warship Neustrashimy is on it's way, but there are no reports of it's exact position. Russia had claimed it would be put into service off the coast of Somalia early Nov., but it really should be arriving before that.

Maybe this will be one time the Americans and the Russians can act together to free the M/V Faina and it's crew. Well, let's hope for at least the crew. Having all that military equipment destroyed probably wouldn't be a bad thing.

Thursday, October 9, 2008

Iceland has a steamship line - for now

I had forgotten Iceland has a steamship line, Eimskip. The article in the
Journal of Commerce quotes some unnamed source insisting their services will remain unchanged.

I guess I wouldn't give my name either if I were making that claim. Eimskip lost money in the 3rd quarter of 2008, and their shareholders owned a good chunk of the bank that just went belly up.

Iceland has a population of only 301,000. I don't even know how it got to be it's own country. North Dakota, which I am quite certain is the least populated state in the U.S., has over 600,00 inhabitants.

Anyway, if you happen to have any give-aways with the name Eimskip on them, I would hang onto them.

I expect they will be collectible very soon.

Wednesday, October 8, 2008

Update Oct. 8, M/V Faina

There are reports coming out of Kenya that commandos are going to use force to take over the M/V Faina, still being held by pirates in Somalia.

I don't really know how reliable they are.

Here is an article from The Nation. We'll have to just wait and see.

Map of Somalia

I noticed a google ad offering for sale; Banks in Somalia.

I clicked on it and saw a nice map of Somalia, so thought I would include it here.

Further into this web-site are instructions to set up a bank. For only a million dollars you can set up a bank in Somalia. They are trying to attract off shore banking, but make a point they don't allow money laundering. Wonder how many of those guys from Lehman Brothers have set up banks.

But seriously, we are all moaning about the financial crisis in the U.S., when the per capita GDP of Somalia is USD 200.00.

Now those folks have something to whine about.

What Goes Up, Must Come Down.

I am no economist, but being old I remember a couple of recessions.

Everyone is running around like chicken little. The stock markets around the world are dropping like a rock. But, weren't they incredibly overheated?

Hasn't everyone in the shipping industry been overworked for like the last 3 years? Not only were U.S. imports relatively strong, the exports went crazy. It has been at least 20 years since the U.S. export market has been so strong.

But now things are going to slow down. I think it's called a correction. I doubt we will go into a depression as people are claiming. I don't think those folks even know what a depression is. My parents lived through the depression and the Kansas dustbowl. Up until a few years ago my mother still saved aluminium foil.

Yes, there will be lay offs. Companies will go out of business, or be bought by others. Consumers will reducing their purchases, which will have a ripple effect through the world. This happened in the 70's, and 80's.

Everything is cyclical. I don't know why it's such a big surprise.

The good news is with the drop in demand, oil prices are already coming down. And with demand down in general, prices for commodities will also start coming down.

I expect the stock market will continue to drop. My guess is the Dow will get down below 8500 before it bottoms out. And, I am thinking the recession will go on for 3 years.

Good thing I am retired.

Tuesday, October 7, 2008

Updated 10/10 - Will Hapag-Lloyd be sold anytime soon?

Updated Oct. 10

NOL (Neptune Orient Line)/APL announces they no longer want to buy Hapag-Lloyd

In my blog of Sept. 30, I stated that the owner of Hapag-Lloyd probably had wished they sold it last summer.

Appears John Fredricksen,a major shareholder of TUI (the parent company) had these exact thoughts.

He reportedly told Die Welt, a German publication, that he doubts a good price will be fetched for Hapag-Lloyd in the current economic environment.

click here for more from American Shipper.

Monday, October 6, 2008

Warning! Take Dramamine before viewing.

Follow the Container has an amazing video from You Tube onboard a containership.

It is filmed during a heavy storm. Watching this, one realizes how it is containers get washed overboard, as well as the perils of sailing.

I remember a guy I use to work with, Rainer, sailed on a tankers. He said they use to tie ropes around themselves during storms.
Good thing.

Enjoy viewing, but honestly, I almost got sea sick watching this.

click here to view

Somalia Government Now Wants to Fight the Pirates

Last week the Somalian Government gave foreign forces approval to use action against the pirates. I am sure they realized doing anything less would make everyone question how much the government might be behind and/or supporting the actions of the pirates.

I don't think it was, but after all, the pirates were bringing lots of money into this very very poor country. I suspect they were viewed a bit like "Robin Hoods". However, theie bad luck to have hijacked the M/V Faina will most likely end their activities.

From The East African (Nairobi) Oct. 5

"The government has lost patience and now wants to fight pirates with the help of the international community," Somali president, Abdullahi Yusuf said in a radio address.

In June, UN Security Council resolution gave permission for such action to stop "piracy and armed robbery at sea," but this has at most been weak and unco-ordinated.

That could dramatically change with the formation of an international task force to combat Somali piracy. By the end of last week, Belgium, Cyprus, France, Germany, Lithuania, the Netherlands, Spain and Sweden had offered ships for the force, which was also expected to be joined by the US and Britain and possibly Russia. On its part, the Somali government says it will welcome any action by the task force against the pirates."

click here for complete article

I was surprised Lithuania was named as part of the international task force. I didn't know they had a navy. Must check into that.

Sunday, October 5, 2008

Update: BBC Box onboard M/V Copenhagen Express

The Copenhagen Express is holding to schedule. Arrival in Shanghai is still showing as Oct. 20.

NYK Schedule
Southampton to Shanghai Schedule Detail Current Date: Oct-05-2008
Note: Schedules are guidelines only.

Line Europe Container Line


Depart From Date Arrive At Date Carrier
Southampton, GBR Sep-24-08 Shanghai, CHN Oct-20-08 Copenhagen Express 11e37

As of Oct. 4, the BBC tracking site has the ship in the Red Sea just NW of Jiddah (what I knew as Jeddah) Saudi Arabia. I really like their map.

Follow The Container has a really cool overhead picture of the Suez Canal.
This web-site is tracking the container and has lots of great pictures.

I know a lot of school kids are following this container. I think it's a great way to learn geography. Makes me want to go back to school.

The Book on "The Box"

The BBC "The Box" project was conceived based on the book by Marc Levison,
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger.

It was published by Princeton University Press. Their web-site has a video with an interview of the author.

I watched it. I found it not boring. I usually am, so this should be viewed as a compliment.

click here to view

Friday, October 3, 2008

Russian Warship Neustrashimy ETA Gulf of Aden is Nov. 6

The BBC reports

"According to Russia's Itar-Tass news agency, the Russian warship Neutrashimy is to commence patrols in the Gulf of Aden on 6 November."
Click here for complete article

Conference System Doesn't Work for Carriers

I have always been amazed that even when carriers have anti-trust immunity, they don't really know how to use it.

This report from Lloyds List says the carriers agreed to one thing, and then did something else.

What a surprise.

Only Maersk adhered to the agreement.

My guess is they were the one to propose it in the first place, and everyone else just took advantage of them.

"... a reported decision by lines at a Far Eastern Freight Conference meeting earlier this year to target ship utilisations of around 85% to keep rates stable as new capacity comes on stream.

Lloyd’s List was told by a third party that Maersk Line was one of the very few major carriers to adhere to that agreement, only to find other carriers snatching away its accounts by cutting rates.

Maersk Line, which has adjusted capacity in line with a slowdown in volume growth, then abandoned its policy of restraint to protect its customer base and ensure market share was not eroded, according to market sources.

But the result has been a bloodbath, with spot freight rates plummeting to record lows just as lines begin negotiating 2009 contracts with their big customers. "

Click here
for complete article.

Where is the Neustrashimy?

Updated - see these blog posting for more recent info
Russian Warship ETA
The Russians are Coming (click on information dissimination)

I ran across a blog with pictures of a couple of dangerous looking ships off the coast of Somalia.

See them here at

I have no idea what they are, but it's fun to speculate. Maybe the Russians are planning an attack from land? Notice the one ship is beached.

The Neustrashimy really should be close to reaching the location of the M/V Faina by now. Maybe one of these ships is the Neustrashimy.

I would like to see the Russians do something. However, they don't generally have much regard to the lives of those held captive. I hope they will this time.

Thursday, October 2, 2008

European Group to Patrol Somali Waters

From the BBC Oct. 2nd.

"The European Union has agreed to establish an anti-piracy security operation off the coast of Somalia.

French Defence Minister Herve Morin said at least eight countries have agreed to take part.

The announcement came as the International Maritime Bureau (IMB) reported a further three attempts to seize ships overnight."

The eight participating countries were not named in this article.

European Group to Patrol Somali Waters

Ukraine Admits Illegal Arms Trading

According to Russia Today, the Prime Minister of Ukraine admits there has been illegal arms sales from Ukraine.

This all came to light because of the hijacking of the M/V Faina by Somali pirates. The vessel was going to Kenya, but it was determined the cargo of tanks and other weaponry was destined for Sudan.

The Russian vessel Neustrashimy is on it's way to Somalia. It should be there any day now, but I suspect it's location is being kept quiet.

So, here's the deal. The pirates stopped a ship and are holding it ransom. Now that everyone knows the cargo should NOT be going to it's destination, they will keep it from being released.

I wonder what will happen. The ship will be returned to Ukraine? Russia will take control of it?

Oh, and the other thing. These tanks could have been sold for a lot more money to Pakistan (who apparently wanted them). I presume the decision who to sale them to was based on how much kickback the "authorities" in Ukraine would receive. I guess those folks are on their way to somewhere else by now.

Update 18:00 CDT

From The Nation, Nairobi, Kenya (click here for complete article)

"The Nation sent questions to the Ukrinmash (the official Ukrainian arms dealer) website address but none of them has been answered.

The questions included: "Are you in contact with the pirates?

"Are the pirates demanding ransom?

"Are you ready to pay?

"Which countries are helping you?

"Was the consignment destined for Kenya or Southern Sudan?"

It also emerged that Kenya might have been sucked into an arms stockpiling contest between the Sudanese government in Khartoum and the South Sudan administration based in Juba."

Maritime Security Patrol Area (MSPA)

Despite the outcry from shipowners, apparently the navies of the world are doing something to stem the piracy problem in the Gulf of Aden. However, I am guessing the Somali pirates have taken their business a bit south of this zone.

The U.S. Navy issued a press release outlining the international response to piracy.

"BAHRAIN, Manama (NNS) -- Since the inception of the Maritime Security Patrol Area (MSPA), Combined Task Force (CTF) 150 has helped deter more than a dozen attacks in the Gulf of Aden. However, criminals have still successfully targeted several vessels in the region.

The Maritime Security Patrol Area was established Aug. 22 in support of the International Maritime Organization's (IMO) call for international assistance to discourage attacks on commercial vessels transiting the Gulf of Aden.

The MSPA is a geographic area in the Gulf of Aden utilized by Combined Maritime Forces to focus their efforts against destabilizing activities. These activities include, but are not limited to: criminal activities, drug smuggling operations that support terrorist and violent extremist organizations and human smuggling. Coalition forces patrol the MSPA, which is not marked or defined by visual navigational means, on a routine basis.

Initially under Canadian Commodore Bob Davidson's leadership, CTF 150 ships are now commanded by Danish Royal Navy Commodore Per Bigum Christensen.

"Coalition maritime efforts will give the IMO time to work international efforts that will ultimately lead to a long-term solution," said Vice Adm. Bill Gortney, commander, Combined Maritime Forces."

Following are suggestions for ships.

"Mariners must remain vigilant," said Christensen, CTF-150's commander. "A ship's master and her crew are the first line of defense for their own ship."

This fact has been highlighted by merchant mariners who have been able to take effective proactive measures to defend their vessels. Such measures have included deterring attacks simply by keeping a sharp lookout for suspicious small boats operating in the vicinity of their ships, increasing speed and maneuvering to avoid small craft, and even repelling would-be boarders with water from fire hoses.

Gortney also suggested that the shipping industry must consider hiring security teams for their vessels."

"The coalition does not have the resources to provide 24-hour protection for the vast number of merchant vessels in the region. The shipping companies must take measures to defend their vessels and their crews."

Ocean Carriers Reducing Capacity

Five Ocean Carriers are joining together in a Vessel Sharing Agreement which will reduce the capacity between Asia and Australia.

As reported in the Journal of Commerce

"(This) cooperation will result in a net capacity reduction equivalent to 800 TEUs per week, or 3.2 percent of total trade capacity. Significant cost increases and poor freight rates both south- and northbound have made this step necessary."

Click here for complete article.

Evergreen will be joining the already existing VSA as report in the Hamburg-Sued press release.

"Hamburg, 1 October 2008. APL, Hamburg Süd, Hapag-Lloyd and Hyundai
Merchant Marine have decided to team up with Evergreen in the trade
between North East Asia and Australia. With this cooperation the four
AAS partners (Asia Australia Services) together with Evergreen will
jointly provide one of the most comprehensive service networks in the
trade with two fixed-day weekly service loops with the following
ports of call:

Northern Loop: Yokohama - Osaka - Pusan - Qingdao - Shanghai - Ningbo
- Melbourne - Sydney - Brisbane - Yokohama
Southern Loop: Kaohsiung - Yantian - Hong Kong - Melbourne - Sydney -
Brisbane - Kaohsiung"

Expect to see more of this type of rationalization in all trades as business slows.

Wednesday, October 1, 2008

Anti-Trust Violations in Puerto Rico Trade, Jail Time for Execs

Apparently there will be jail time for shipping executives who have violated the anti-trust laws.

As far as I know, this is a first in the U.S. shipping industry.

Here is the press release from the Department of Justice. click here

Back in the day there were closed conferences, then there were open conferences, then there was the right to independent action, and eventually the whole anti-trust protection is going away.

Honestly,I was shocked there will be jail time. Not sure how much time, but guess there will be some.

I knew a couple of these guys who will be going to jail. I use to collude with them in conference meetings back when it was legal. I really feel bad for them and their families.

I guess it's hard for people to adjust when they change the rules of the game.

The African Viewpoint - M/V Faina

The Nairobi, Kenya news claims the M/V Faina had incorrect information on their registration documents. This might have just been an oversight, or maybe not.

"The pirates got the ship owner's contacts from the pilot as the registered office in official documents in the ship had wrong details.

"The ship manager is registered as Tomex in Panama and the contacts given are fake. The ship owner is registered as Waterlux Ag in Panama and has already been contacted and is cooperating with the pirates," said the source."

This news report is claiming there are 4 dead onboard the ship. However, the pirates are still denying any death except the Captain, who apparently died of a heart attack.

Click here for full story

M/V Faina Saga Continues

Update 23 Oct.
The Faina is still being held by Pirates. More from the BBC.

Oct. 1

I'm not really sure what's going on with the M/V Faina. Yesterday there were reports of shooting onboard and that 3 pirates were killed. The "spokesman" for the pirates denies that.

I had an idea that maybe they fired their guns into the air as a celebration for the ending of Ramadan, and people hearing this jumped to conclusions. It's just my guess, with nothing to base it on, so please don't quote me on this.

As far as the cargo onboard and where it's going, looks like the folks in Kenya are doing a lot of back peddling. Could be a lot of stuff has been going through their country that shouldn't be, and now they are sweating bullets (pardon the expression).

This article in the the African news is great.

Here are parts of it (if you are too lazy to click on the above).

"However, Mr Munyi denied speaking to Mr Mwangura. "I have not spoken to him and if you insist tell him to prove that I spoke to him," said Mr Munyi when contacted."

Huh?? I'm sorry, but I can't help but laugh. Tina Fey take note.

And then this....

"Mr Mwangura had also asked why the Kenyan government was silent about a vessel carrying 17,000 tonnes of salt to Mombasa that was also allegedly hijacked on the same day as the Ukranian vessel.

"The vessel was suspicious because Kenya does not import salt," Mr Mwangura said."

Well now, wonder what happened to THAT ship? Assuming of course there is such a ship.

And I still don't know when the Russian vessel the Neustrashimy will get there.
Everyone seems to be keeping a lid on it's whereabouts.