Wednesday, September 30, 2009

Aid for Hapag-Lloyd delayed

From Reuters

BERLIN, Sept 30 (Reuters) - The German parliament's budget committee is delaying talks on state aid for container shipping company Hapag-Lloyd due to concerns from all parliamentary parties, sources familiar with the matter said on Wednesday.

It's all a big mystery.

Perhaps there is some concern this is not money well invested by the government.

I think there is reason to be concerned. Same as we have concerns in the U.S. about various bail-outs performed by our government.

Update 11:43 PM
Bloomberg has a more detailed article regarding the problem.
Apparently there is some concern exactly how the money will be spent. The term which was used was "opaque", which is of course, the opposite of "transparent", a term often used.

The petition for aid is “raises serious questions on where taxpayers’ money will be spent, and we need answers quick,” Juergen Koppelin, the Free Democrats’ budget spokesman, told reporters after the meeting. “Hapag has commissioned ships to be built in South Korea, there are plans to construct new buildings, and the list goes on.”

Yes, absolutely. Why do they still have those orders for new ships?

Just yesterday, CMA CGM figured out maybe they should be cancelling their orders - of course, this is because they have run out of cash.

Why should Hapag-Lloyd not be in the same position? Just because the government will give them the money?

click here for Bloomberg article

Tuesday, September 29, 2009

Wake-up call for CMA CGM

I guess CMA CGM has finally figured out things aren't getting better any time soon.

Pity is, they only figured this out when they have almost run out of cash.

Now, they will ask creditors for a moratorium on debt, and consider canceling and/or delaying ship orders. They better do more than just consider.

Note to the Management of CMA CGM -
Wake up! If you don't cancel the ship orders, start cutting costs like crazy, you will be filing for bankruptcy reorganization.

From the Journal of Commerce

Carrier unable to meet payments on $5 billion debt

CMA CGM reached agreement to establish a committee of French, European and international banks that will help it restructure its troubled balance sheet, the company said Tuesday.

The French carrier, the world’s third-largest container line by capacity, met with its creditors in Paris on Sept. 25 to ask for a moratorium on its debt. The group of banks, which includes major financial institutions from Asia and the Republic of Korea, discussed measures that CMA CGM said will ensure its “continuing development.”

The shipping line, which is owned by Jacques Saade and his family, said the bank committee will propose measures to resolve the carrier’s short and medium term financing requirements and strengthen its capital structure.
The French carrier has 60 large new container ships on order that are scheduled for delivery through 2012 and accumulated a debt of $5 billion on which it is no longer able to meet payments, according to the French journalists’ Web site, which said CMA CGM is asking its creditors to freeze the repayments for one year.

As part of an effort to conserve cash, CMA CGM said it will continue to try to renegotiate and in some cases cancel “certain ship deliveries.”

CMA CGM has a fleet of 91 owned and 272 chartered ships with a combined capacity of 1,024 million 20-foot equivalent units.

click here for link

TUI Travel pays back loans early to TUI parent

TUI will need cash to shore up Hapag-Lloyd, despite the expected bail out from the government.

Apparently, they will get some of this cash quite soon from their other company, TUI Travel.

From Bloomberg News

Sept. 29 (Bloomberg) -- TUI Travel Plc, Europe’s largest tour operator, said it plans to sell 300 million pounds ($477 million) of convertible bonds to start repayment of a loan from controlling shareholder TUI AG and fund acquisitions.

The U.K. holiday company also obtained a new 140 million- pound loan facility from a syndicate of five banks and will repay 92 million pounds of the 900 million pounds it owes TUI tomorrow, Crawley, England-based TUI Travel said today.
“These actions remove the immediate refinancing risk, but they crystallize an increased financing cost and we will need to adjust forecasts to reflect this,” Evolution analyst Ivor Jones wrote in a note today. He has a “sell” rating on the stock.

TUI Travel fell less than 1 percent in London trading, while shares of parent company TUI gained as much as 8.5 percent in Frankfurt. TUI, which owns a 51 percent stake in the tour operator, needs funding to support the unprofitable Hapag-Lloyd container line, in which it holds the biggest stake.

One smart move on the part of TUI Travel is to cancel orders for new planes.

The tour operator said today it has canceled 10 of the 23 787 Dreamliner aircraft ordered from Boeing Co., while adding no-obligation purchase rights to buy a further 13 of the planes.

Container carriers need to be doing this. They just keep thinking by the time the new ships come out of the yard, business will have picked up.
They need to just keep their old ships running, and maybe try to negotiate a similar no-obligation purchase with shipyards.

I realize this is a new idea for shipyards. Boeing has been through the ups and downs many times, so by now they know how to handle these drops.

Shipyards will need to learn how to handle the downturn. Most of the ones around today haven't been through such lean years.

Monday, September 28, 2009

Hapag-Lloyd on track for government monies

Looks like things are falling in place for Hapag-Lloyd to get some money from the government.

They sure will need it.

From The Wall Street Journal (who picked this up from Dow Jones)

FRANKFURT (Dow Jones)--The German government's steering committee Monday signaled there will likely be a positive vote on state-backed guarantees for struggling shipping company Hapag-Lloyd AG (GD-HPL) of a total of EUR1.2 billion.

The German budget committee is still set to discuss the matter Wednesday.

Hapag-Lloyd is set to get 90% of the guarantees from the government's special Germany fund, the German economics ministry said in a statement.

The German federal and Hamburg governments will each provide half of the guarantees.

Hapag-Lloyd, which is 43.3% owned by TUI AG (TUI1.XE) and 56.7% by consortium Albert Ballin GmbH & Co. KG, applied for the state-backed guarantees in August.

The company's owners Monday declined to comment on the subject in detail.

The state guarantees must be examined by the European Union Commission, which said two weeks ago it is "in informal contact" with Germany about the issue.

-By Frankfurt Bureau, Dow Jones Newswires; +49 69 29725 500;

Offer to Zim bondholders

From Israeli newspaper Globes

Sep 09 16:57

The shipping company has deferred $2 billion in payments to shipbuilders.

Israel Corporation (TASE: ILCO) told bondholders of wholly-owned subsidiary Zim Integrated Shipping Services Ltd. that it is not asking them to forego part of the debt, but only to delay payments on the bonds. Israel Corp. added that it transferred $100 million to Zim during August, and that it will transfer an additional $250 million as part of a Zim recovery plan, if the bondholders approve the debt settlement next month.

Israel Corp. will include in the Zim recovery plan a $150 million discount over four years on the leasing fees that Zim pays Ofer Shipping Holdings Ltd.

I don't know what these payments from Zim to Ofer are for, but I suspect it's a better deal for Ofer than for Zim.

click here for link to article

Mitsui OSK share price falls

From Bloomberg

Sept. 28 (Bloomberg) -- Mitsui O.S.K. Lines Ltd., operator of the world’s largest merchant fleet, fell the most in five months in Tokyo trading after doubling its first-half operating loss forecast.

The company dropped 5.4 percent to 521 yen at the close. Nippon Yusen K.K., Japan’s largest shipping line by sales, fell 3.3 percent and third-ranked Kawasaki Kisen Kaisha Ltd. slumped 7.3 percent.

Mitsui expects an operating loss of 13 billion yen ($146 million) in the six months ended September, it said after the market closed on Sept. 25. The company widened its loss forecast after higher-than-expected fuel and container-terminal costs outweighed a rebound in freight rates.

I guess a lot of the carriers didn't think it would really get this bad when making their projections for the first half of 2009.

It's not going to be any better for the 2nd half of 2009, and perhaps even 2010.

It will stabilize, but not get better.

Saturday, September 26, 2009

Did Israel and Russia have secret meeting?

When looking for information on the Arctic Sea saga, I ran across an article claiming that on Sept. 10, 2009, the Prime Minister of Israel made a secret trip to Russia.

From Russia Today

10 September, 2009, 13:16

Russia’s Kommersant business daily has shared insider information from an unnamed source in the Kremlin that Israeli PM Benjamin Netanyahu visited Moscow incognito to talk on Russia’s arms contracts with Iran and Syria.

....several media sources referred to a high-ranking official of the Israeli government who claimed that Netanyahu really did visit Moscow. The source, though, refused to tell whom exactly Israeli PM met in Russia.

Israeli media was quick to expose that the Israeli PM was on a secret mission to Moscow to talk about Russia’s arms contracts with Iran and Syria or, more specifically, the possible delivery of air defense S-300 missile infrastructure to Iran.

The recent saga of the Arctic Sea bulk carrier, a vessel with a Russian crew, hijacked in the Baltic Sea, has sparked a conspiracy theory about Russia covertly delivering S-300 missile infrastructure to Iran.

And then, two weeks later Iran (From the New York Times)

.....sends a cryptic letter describing a small “pilot” nuclear facility that the country had never before declared.

The Americans were surprised by the letter, but they were angry about what it did not say. American intelligence had come across the hidden tunnel complex years earlier, and the advisers believed the situation was far more ominous than the Iranians were letting on.

The timing is such that I really think the two must be somehow linked.

Friday, September 25, 2009

Vessel Arctic Sea still held by Russians

The Arctic Sea saga is not over. It hasn't been in the press much, but Tradewinds has an update today.

Russian authorities had apparently planned to hand the ship back to its owner in Las Palmas last week but have not done so. The Spanish port’s captain has also refused permission for the ship to berth saying the presence of Russian military personnel onboard compromised its existence as a merchant vessel.

The Solchart representative who had flown to Las Palmas with a view to once again assuming control of the ship arrived back in Helsinki on Thursday night after a second fruitless journey within the last few weeks.

The developments led Matveev to cry foul over the tactics of the Russian Investigative Committee (RIC) which has been conducting an investigation into the ship’s true cargo and events surrounding its apparent hijacking.

“Russia has stolen the ship from us and stolen the cargo from the timber industry.” The cargo of sawn timber was due to be discharged at an Algerian port in early August.

“And now they are towing it again to nowhere,” said Matveev who has been tracking the ship and contends it is on the move northwards from the Canary Islands.

Matveev said he has asked the RIC why they continue to occupy the ship and described their response as laughable.

“They told me they are there to secure the ship again from further hijackings from Spain and Africa.

“I told them we have seven other ships; would you like to secure them as well?” he mocked.

The Arctic Sea's series of misadventures and the heavy-handed nature of Russia’s ‘rescue’ mission have sparked theories that it may in fact have been ferrying a weapons cargo, possibly to Iran or Syria.

Eight suspects apparently detained onboard have been charged in Moscow with piracy and armed hijacking.

There is something really fishy about this whole thing, and I would not be surprised if the recent decree against Iran is somehow mixed up in all this.

I hope Tom Clancy is tracking this story, as if someone can get to the true story behind this, it would be a good read.

click here for link to article

Is CMA CGM looking for a bailout?

Could be.

From The Journal of Commerce

French ocean carrier CMA CGM is meeting with creditor banks and French finance ministry officials in Paris Sept. 25 to discuss its financial situation.

The talks will focus on how CMA CGM can tap the government’s strategic investment fund which aims to help strategically important French companies through the global economic downturn, according to French press reports.

CMA CGM, the world’s third largest ocean carrier, declined to confirm or deny the reports.

I don't blame them for trying to tap some of the government monies. They will need to raise some cash to survive the next few years, so why not try to get it from the government?

Of course, they really need to be cutting costs and getting efficient, so they can compete with all the asian carriers, who will dominate the industry over the next decade.

But, looks as if they are trying to hold the "Old Europe" together.

Earlier this month, CMA CGM founder and Chairman Jacques Saade urged European governments and banks to act to ensure Europe’s top carriers Maersk, MSC and CMA CGM survive container shipping’s deepest slump.

“I call on the competent authorities, banks and public bodies to protect the three big European maritime companies and ensure the survival of the maritime sector in Europe,” Saade said at a meeting of Medef, the French employers’ federation.

The French ship-owners association has lobbied the government to establish a $1.8 billion fund to help carriers meet banks’ demands for extra collateral to cover the fall in value of ships on order.

What they need to do is bite the bullet, and just cancel the orders for new ships.

Wednesday, September 23, 2009

Should shipyards quit building ships?

I find it a little strange that shipyards continue to build ships.

I live in the "air capital of the world", and all of the aircraft companies have slowed their production. They have laid off workers, and are shutting down the factories for a week, whenever there is a holiday. Some are considering shutting down from Thanksgiving (late Nov. in the U.S.) until after New Years (Jan. 1).
Why should ship yards be any different. Don't they get it? The demand is just not there.

Apparently not. From Lloyd's List

Keith Wallis - Wednesday 23 September 2009

Reinhard Lüken

EUROPEAN shipyards will start to run out of work in 2011 if the newbuildng ordering drought continues, a top executive at the Community of European Shipyards’ Associations warned today.
Cesa secretary general Dr Reinhard Lüken said the backlog of orders at European yards was fundamentally healthy compared with the rest of the world.

I don't think so.

Wake up and smell the coffee.

Zim cuts charter payments to shipowners

Zim is strapped for cash and has apparently, just started paying 35% less to the owners of the chartered ships in their fleet.

One of them has rejected this reduction. I can't say I blame them. They have the ships on a 12 year charter. Everyone thought the international shipping business would just keep going up and up, and thought "hey, let's lock in these prices for 12 years". Well, it didn't work out that way, but I am sure the contracts did not have any stipulation for this type of reduction, and now, one owner, Danaos, is saying they won't accept the offer from Zim.

I don't know what Zim will do if they really play hard-ball. The only way they could legally get out of this mess will be to file some sort of bankruptcy reorganization. I don't know if Israel has laws which allow this.

From Lloyd's List

Marcus Hand, Singapore - Wednesday 23 September 2009

DANAOS has rejected a move by financially strapped Zim Integrated Shipping Services to cut its containership charter hire payments by 35%.

The New York-listed shipowner said Zim had, from the beginning of September, unilaterally started to cut hire payments to shipowners by 35% for a period of three years. Danaos has six boxships on 12 year long charters to Zim and rejected the charter hire cuts.

“Danaos has not accepted this offer, nor acquiesced to this reduction, and it is in discussions with Zim and evaluating the situation,” Danaos said.

Zim also has ships on hire from Costamare, Rickmers Reederei, ER Schiffahrt, Hansa Treuhand, Zodiac Maritime and Ofer Brothers.

Zim has already reached agreement with companies related to Israel Corp to reduce charter rates by an accumulated $150m over the coming years, pending shareholder approval and agreements with other shipowners.

Last week Zim’s parent Israel Corp said shipowners that agreed to charter rate cuts would be offered promissory notes that will be convertible into shares, with the shipping company to be spun off within the next seven years.

Monday, September 21, 2009

ILA wants to stop computerization

The ILA has rejected a contract extension, because, get this, the terminals and carriers want to be able to use more computer technology, and the union says NO!

I realize everyone is fearful of losing jobs to computers, but please, look at the big picture.

From The Journal of Commerce

The NYSA is part of United States Maritime Alliance, which proposed a two-year extension of the ILA's Atlantic and Gulf master contract that expires next September.

The ILA's 200-member wage scale committee rejected the extension this month, mainly because it did not meet union demands to restrict the use of computer-based technology.

NYSA President Joseph Curto said the contract rejection was "disappointing" because employers had worked with the ILA in implementing technology. He said the extension would have given an immediate wage increase totaling an estimated $1.24 million in the next year to entry-level dockworkers, whose pay would have jumped from $16 an hour to $20.

ILA opponents of the extension complained that it would have delayed by one year a general wage increase set for Oct. 1 under the current contract. But Curto said that during the proposed extension to 2012, dockworker wages in the port would have risen an estimated $61.5 million because of back-loaded increases targeted mainly at workers in lower wage tiers.

click here for link

Sunday, September 20, 2009

Is Business Improving?

Not really

From Tradewinds

The report, released Friday by the National Retail Federation (NRF) and IHS Global Insight, now expects a total of 12.5 million teu during the year, up from the prior forecast of 12.3 million teu.

But the 2009 estimate represents a 17.7% drop compared to 2008 levels.

click here for link to article

Well, it's probably hit bottom, but that's the most we can say at this point.

Friday, September 18, 2009

Hapag-Lloyd Expecting Federal Monies

From Bloomberg

Sept. 18 (Bloomberg) -- German state aid for Hapag-Lloyd AG, in which tour operator TUI AG holds the biggest stake, will probably be approved by the federal government today, securing the shipping line’s future financing, a Hamburg lawmaker said.

“The city government has told us that the federal government will approve the aid after we complied with all the conditions it imposed,” Barbara Ahrons, the economy spokeswoman for the ruling CDU group in the Hamburg parliament, said in an interview today. “I’m confident,” she added.

click here for link

Wednesday, September 16, 2009

China's foreign trade off 20%

From Chinese Shipping

BEIJING, Sept. 11 -- China's foreign trade figures continued to fall in August, but their downward rate slowed, the General Administration of Customs (GAOC) said Friday.

The total value of imports and exports for August was 191.7 billion U.S. dollars, a decrease of 20.6 percent compared with the same month last year, but a 2.3 percent increase from July.

Their trade is off around 20% compared to year ago figures. It's difficult to know if the increase August vs July is significant, as I am not sure when the "peak season" starts.

click here for link

Tuesday, September 15, 2009

Owner of Arctic Sea is bankrupt

From Tradewinds

In a statement in both Russian and English on Solchart’s website, Matveev wrote that the 1992-built ship’s owner went bankrupt after 17 August, the day the ship was intercepted by the Russian Navy off Cape Verde after a three week-long series of misadventures. (The announcement in English incorrectly reports that the company went bankrupt after 17 September.)

click here for link to complete article

Monday, September 14, 2009

CMA CGM to charge "reefer consumption surcharge"

This is the explanation from CMA CGM as to their new "reefer consumption surcharge".

“One of the main differences between dry containers and reefer containers is the energy consumption needed to maintain the temperature during transportation, as well as to properly ventilate containers carrying perishable commodities. The electricity used for reefers aboard container vessels means extra fuel consumption, thus extra cost for both Shippers and Carriers. With this Reefer Consumption Surcharge, CMA CGM and affiliates provide customers with a more transparent and balanced segregation of costs.” , explains Claus P. Ellemann-Jensen, Vice President Reefer, CMA CGM Group.

Well, what's wrong with the logic is firstly, the reefer (as in refrigerated) rates are (or should be) higher, because they do require the extra energy. Unless CMA CGM messed up and agreed to contract rates including the bunker surcharge, they will be getting more money in the bunker surcharge whenever the fuel costs increase.

Now, having said that, and re-reading their press release, perhaps they were charging a flat bunker surcharge per container, rather than a percentage, which was always the norm. But if that is true, all they need to do is change the bunker surcharge to have a new category for reefers. I trust there is a different charge for 20ft or 40ft drys, and they should have a different (and much higher) charge for reefers.

My guess is they got into some contract rates for reefer cargo which really didn't cover their true costs. Now, when money is tight, everyone is taking a close look at how much money they make (or lose) on each container.

Because they can't increase the rates, they devised a "new" surcharge, which will apply to all rates and contracts, even if someone signed a contract valid for a year.
The only way a customer can be exempt is if they managed to get a contract specifically stipulating "no other new charges or surcharges can be applied during this contract period".

I suspect there will be some very unhappy customers. A carrier can only get away with doing this one time. The next round of contract talks, you can bet the customers will insist on the above mentioned wording.

Here's the link to the CMA CGM web-site with the press release.

Friday, September 11, 2009

Beluga Shipping goes through the arctic shortcut

Beluga shipping operates specialized heavy lift vessels.

They have made the news, by going through the Arctic Shortcut.

From the New York Times

MOSCOW — For hundreds of years, mariners have dreamed of an Arctic shortcut that would allow them to speed trade between Asia and the West. Two German ships are poised to complete that transit for the first time, aided by the retreat of Arctic ice that scientists have linked to global warming.

The ships started their voyage in South Korea in late July and will begin the last leg of the trip this week, leaving a Siberian port for Rotterdam in the Netherlands carrying 3,500 tons of construction materials.

click here for link to article

Thursday, September 10, 2009

Zim cash injection may run into problems

From Globes online

On October 14, an Israel Corp. shareholders’ meeting will be held to approve a $250 million injection into Zim. This cash injection is a vital condition for executing the debt arrangement.

Most of Zim’s creditors (banks, shipyards, and ship lessors) have agreed to a postponement of payments due to them in return for higher interest rates. Sources at Israel Corp. said that the fact that these creditors were prepared to reschedule debts rather than exercise liens indicated their faith in the company’s future. A sensitive issue in the debt arrangement is Zim’s debt to shipyards privately owned by the Ofer family, which controls Israel Corp., that have sold and leased ships to Zim.


Some Zim bondholders criticized Israel Corp.’s announcement. “Under the arrangement, the bondholders will remain last in the queue, and will receive the debt only in another seven years, while the parties at interest will receive their money before that. The state ought to intervene,” one investment institution said. “The Ofer family has shown contempt for the bondholders. They published principles of a debt arrangement with the bondholders today, even though we have still not reached agreement.”

The representative of another institution said, “The Ofer brothers should take on some of the debt by injecting some of the cash they have received from Zim in the past, and this money should be for the benefit of the bondholders.”

In response to the criticism, Zim said, “Negotiations are taking place with the bondholders’ representatives in a businesslike and constructive atmosphere. Zim has not published any terms of the final agreement, which has yet to be reached. The only two principles that have been published is that Zim is not seeking forgiveness of debt, and that it is asking the bondholders to reschedule the debt.”

click here for link to complete article

Wednesday, September 9, 2009

Update- Arctic Sea 09/09/2009

I doubt we will ever know the truth as to what is onboard the Arctic Sea.
The Russian minister states
The information that there were S-300 missiles aboard the Arctic Sea is absolutely not true. Russia will launch an inspection of that ship as soon as possible, and I assure you we will keep it as transparent as possible so that everyone will be able to see that the rumors are false,” assured journalists the Russian foreign minister at a news conference in Moscow on Tuesday.

Since then, a forensic team from Russia’s Investigative Committee of the General Prosecutor’s Office has carried out a detailed inspection of the Arctic Sea’s cargo bay.

Yea, well, apparently there weren't any reporters allowed to witness this. Maybe the word "transparent" should not have been used.

Especially since
Arctic Sea is now in open sea.


Investigators have inspected its cargo in detail. There’s only timber and sawn wood. Forensic experts found no cargo but the one declared so far,” Vladimir Markin, the committee’s spokesman, told the media.

He added that the team is to go on with its work on on board for several days.

Oh this is just laughable. This kind of work is not performed at sea. And why were they going to take it to some port in the middle of nowhere to do this inspection?

Little wonder why.

In the meantime, the reporter who broke the story thought it best to leave Russia

Maritime reporter Mikhail Voitenko, who fled Russia after receiving threats for his suggestions about the cargo of the hijacked merchant vessel Arctic Sea, has moved to Bangkok from Istanbul.

On Friday, the editor of the online Maritime Bulletin-Sovfrakht told CNN the cargo ship might have been involved in “some secret kind of shipment”.

“I don't think that this was a criminal cargo or drugs. I think it's something more important or dangerous,” Voitenko said.

Containerships on order

American Shipper has a lengthy article reviewing the Top 20 list published by Alphaliner.
Here is the link

The part that caught my eye, was the amount of new tonnage which is on order.

According to maritime news service Alphaliner, Maersk has 371,000 TEUs of capacity on order, MSC has a whopping 623,000 TEUs, and CMA CGM another 505,000 TEUs. All told, that’s more than 1.5 million TEUs of capacity. For comparison, that’s nearly as much capacity as the next three biggest lines — Evergreen, APL, and Hapag-Lloyd — have in their current fleets.

All carriers are trying to delay these orders, but I don't know how much that is going to cost them. The shipyards certainly aren't happy about it.

Not a good time to be owning container ships.

Tuesday, September 8, 2009

$6 Billion and counting...

From The Journal of Commerce
All 17 major public shipping companies lost money so far this year

Losses sustained by liner companies hit more than $6 billion in the first six months of the year, according to AXS-Alphaliner.

That just for the first half of 2009. And get this...

Current freight rates are cash negative and all major carriers are making losses at the EBITDA level (Earnings before Interest, Tax, Depreciation and Amortization).

Just imagine how bad the results for 2009 will be.

click here for link to article

More staff reductions at container carriers

In my blog of Aug. 31, 2009, I reported Hanjin would reduce their staff.

They were trying to do so by offering early retirement (I presume), at least they stated they are targeting employees over 50.

Of course labor laws vary widely from country to country.

Hapag-Lloyd has met with the union in Germany to review the need for staff cuts.
It was reported they are looking at about a 10% staff cut. I don't know if the labor laws have changed, but it use to be, in Germany, lay-offs went by kind of a "who needs the job most" criteria. This meant that single women were laid off first, then single men, then married men. This was before it was common for married women to hold full time jobs in Germany.

I hope they use a different criteria today.

Zim will also have lay-offs in Israel. This is how it will be handled.

From Globes online

"Our principle is that everything must be consensual. Layoffs should not be compelled. Zim's management will send us a list of employees, and in my experience, the committee approves 70-80% of the list, so long as it is within the agreement reached."

Weissand added that not all of the layoffs will be among people over 50, since Zim's management will probably include employees it considers unproductive in the list.

click here for link

Humm. Well, if they have employees which they consider unproductive, and they haven't got rid of them by now, perhaps this is why Zim is in a financial bind.

Or, perhaps it's a problem with the chosen word in English. I'll give them the benefit of the doubt, and say perhaps it would be employees who are "non-essential".

Monday, September 7, 2009

KG funds have idle tonnage

Lloyd's List reports

- Monday 7 September 2009

AROUND one in every six of the 614 boxships idled or in lay-up is operated by a German KG fund, writes Michelle Wiese Bockmann.
The German-financed vessels comprise 132 of the world’s inactive boxships according to Lloyd’s Marine Intelligence Unit data.

Considering the so called "peak season" is not yet over, this is particularly worrisome.

Container carriers will get rid of their charter tonnage before they lay-up their owned ships. The percentage of owned to chartered tonnage varies from carrier to carrier, but it wouldn't surprise me if the KG funds don't end up with 50% of their tonnage idled.

That's my guess.

We will have to see what the reports say in January.

This does not bode well for the international shipping business.

Friday, September 4, 2009

CMA CGM to sell assets

Fairplay is reporting CMA CGM will sell assets

CMA CGM plans to sell off assets because of losses expected this year, chairman Jacques Saadé has announced.
But the French container giant expects profits to return in the first quarter of 2010

I don't have a subscription, so I don't know what else they are reporting.

I do find it a little amusing, because, Seeking Alpha did an article on GSL (which was started by CMA CGM as a lease back entity for their ships). Someone posted a comment and linked to my blog, in response to people saying CMA CGM doesn't need to sell assets.....

Well, I hate to say I told you so... We will have to wait and see what they sell, and to whom. If they sell ships to GSL, I doubt GSL would get the better end of the bargain.

Apparently GSL has been trying to entice investors just this last week.

I'd rather spend my money in Vegas.

Tanker rates below cost

Some companies have started scrapping tankers, especially the single hull ones.
The rates are depressed, and new buildings coming out, putting more pressure on the rates.

Maersk is trying to delay delivery of new tankers, and even trying to get a price cut on orders placed for new buildings.

The tanker market was the one "bright spot" in international shipping, but it too has gone.

As with everything, until the supply more closely matches the demand, the rates won't be very good. Some are considering lay-up, but apparently with tankers, that becomes problematic due to recertifications which must be obtained to carry oil.

From Bloomberg

Ship owners are contributing $703 a day toward fuel costs to ship Middle East crude, according to the London-based Baltic Exchange. Rates have been below operating costs since July. Should the losses persist, some owners may choose to idle their ships, according to Jens Martin Jensen, Singapore-based chief executive officer of Frontline’s management unit.

“If you see another quarter, then I think owners have to do something,” Jensen said by phone today. “We are subsidizing oil companies.”

The Organization of Petroleum Exporting Countries has cut output by 4 percent this year to 28.4 million barrels a day, according to Bloomberg estimates. Over the same period, the fleet of in-service supertankers has advanced 5.8 percent to 528 ships, according to Lloyd’s Register-Fairplay data on Bloomberg.

The five-member Bloomberg Tanker Index, led by Frontline, dropped 19 percent this year, extending last year’s record 49 percent slump. Frontline rose 3.20 kroner, or 2.5 percent, to 132.70 kroner as of 2:46 p.m. in Oslo, valuing the company at 10.3 billion kroner ($1.7 billion).

click here for link

Thursday, September 3, 2009

Update- Hapag-Lloyd Berlin bail-out

From Reuters (click here for link)

TUI and the Albert Ballin consortium, which owns 57 percent of Hapag-Lloyd and includes Swiss-based German billionaire Klaus-Michael Kuehne and the city of Hamburg, appear to have overcome their differences despite mutinous murmurings from Kuehne earlier in the process.

They have agreed to convert existing credit lines into equity or hybrid loans while unwinding an earlier deal to sell Hapag-Lloyd’s 25 percent stake in Hamburg’s Altenwerder container terminal. This should pave the way for the German government to make the loan guarantees available.

Kuehne — who owns 55.8 percent of Swiss logistics firm Kuehne & Nagel — has bigger plans for Hapag-Lloyd, pushing the idea of a tie-up between Germany’s largest container shipping company and a European or Asian peer.

Kuehne’s instincts are probably right in the longer term. He clearly knows the business and how to run a successful logistics company. But it was necessary to paper over the differences between shareholders in order to keep the German government onside.

Hapag-Lloyd runs into more problems with financing

My, what a mess.

A few weeks ago, Hapag-Lloyd sold off some of their stake in a terminal, in order to secure financing.

Now, the German government thinks that wasn't very smart, and they want Hapag-Lloyd to buy it back, to use as collateral for the requested government bail-out.

I guess investors are thinking the only thing of value now is the terminal. That does not bode well for Hapag-Lloyd the container carrier.

From the Journal of Commerce

Germany did not accept terms of the rescue of container shipping line Hapag-Lloyd, Germany's Bild newspaper reported without citing sources.

Investors had tried to secure a $1.71 billion loan guarantee from the German government in a package submitted last month. But the government demanded collateral that shareholders couldn’t agree on.

Berlin said Hapag-Lloyd should buy back from its own shareholders, TUI and the Ballin Consortium, a 25.1 percent stake in the Altenwerder container terminal, according to the newspaper. That stake would be collateral for the loan guarantee
click here for link

Wednesday, September 2, 2009

K-Line ratings cut

Sept. 3 (Bloomberg) -- Kawasaki Kisen Kaisha Ltd., Japan’s third-largest shipping line, fell the most in a week in Tokyo after Nomura Securities Co. cut its rating on the stock because of overcapacity among container lines.

K-Line, as Kawasaki Kisen is also known, fell as much as 3.3 percent to 385 yen and traded at 389 yen as of 9:52 a.m.

The shipping line, which gets more than 40 percent of its sales from transporting containers, is suffering from a slide in demand for furniture, building materials and electronic goods in the U.S. and Europe as the supply of ships increases. Nomura cut its rating on K-Line to “reduce” from “neutral”.

click here for link to Bloomberg article

What's up with the ILA?

I don't know what world these folks live in... with international shipping down more than 10%, they reject a proposal to extend their current contract?

International Longshoremen’s Association delegates unanimously rejected a proposed two-year extension of the ILA's contract for Atlantic and Gulf dockworkers on Wednesday.

click here for link to article from Journal of Commerce

Maybe, this will be the year that the carriers say, enough is enough.

A container crane operator makes over 100,000 per year.

I wonder if they still have water boys?

Maersk shares drop after new offering

From Bloomberg

Sept. 2 (Bloomberg) -- A.P. Moeller-Maersk A/S fell the most in six months, as the company held its biggest share sale since World War II to help finance acquisitions in the oil and terminals businesses.

Maersk fell as much as 8.4 percent in Copenhagen, its biggest one-day drop since March 5. The shares traded at 34,000 kroner, down 7.9 percent, at 12:15 p.m.

click here for complete article

Maersk to sell more stock

Maersk has announced they will

...sell up to 250,340 treasury B shares, or about 5.7% of the total share capital, to new and existing institutional investors.

At Tuesday’s closing price of DKK36,900 per B share on NASDAQ OMX Copenhagen, the value of the share issue would be up to DKK9.2bn ($1.75bn).

They say this money could be used for acquisitions, but I certainly hope they set aside a good chunk of it to cover loses, because at the rate they are going

Last month AP Moller Maersk reported an interim loss of $540m and doesn’t expect things to be much better in the second half of the year.

It won't take long to go through a billion dollars.

click here for link to article from Tradewinds

Tuesday, September 1, 2009

Arctic Sea - inteview by Spiegel

The German publication Der Spiegel interviewed the Russian Envoy, as to the hijacking and capture of the Arctic Sea.

It has been translated into English for their on-line publication.

Russian Envoy Talks About Arctic Sea Hijacking

'We Found Nothing Conspicuous on Board'

In an interview with SPIEGEL, Russia's ambassador to NATO, Dmitry Rogozin, 45, says rumors surrounding the cargo of the hijacked freighter Arctic Sea stem from "Russophobia" and that the case highlights the need for close cooperation to stop piracy between Moscow and NATO.

click here for link