CMA CGM- 2015 3rd quarter results

CMA CGM announced their 3rd quarter 2015 results.  The operating profit for 3rd quarter 2015 is
less than the 3rd quarter of 2014.   Here are some details from their web-site.

MD&A 30th of September 2015 versus 30th of September 2014 

 Operating revenue General:

Consolidated operating revenue decreased by USD 408.5 million, or 3.3% from USD 12,509.1 million in the first 9 months of 2014 to USD 12,100.6 million in the first 9 months of 2015 primarily due to a 3.9% decrease in shipping revenue and a 5.3% increase in other activities. Transported volumes increased by 6.5% or 593 thousand TEU, from 9,110 thousand TEU in the first 9 months of 2014 to 9,703 thousand TEU in the first 9 months of 2015. 

click here for link to complete summary

And, from the finance report

OPERATING PROFIT BEFORE GAINS ON DISPOSAL OF PROPERTY AND EQUIPMENT AND SUBSIDIARIES, DEPRECIATION & AMORTIZATION, etc.

            For the nine-month period ended                            For the three-month period ended
                 2015                          2014                             2015                       2014

                1,137.8                      876.4                             243.7                      325.1

As you can see, the first 9 months the profit increased, but for the 3rd quarter is decreased compared\
to 2014.  This does not bode well for end year 2015 results.

click here for link to finance report

Scorpio Bulkers Inc. - one-for-twelve reverse stock split

Press Release from Scorpio Bulkers

Scorpio Bulkers Inc. Announces Reverse Stock Split to Be Effective December 31, 2015
MONACO--(Marketwired - Dec 30, 2015) - Scorpio Bulkers Inc. (NYSE: SALT) (the "Company" or "Scorpio Bulkers") announced today that its board of directors (the "Board") has determined to effect a one-for-twelve reverse stock split of the Company's common shares, par value $0.01 per share, and a reduction in the total number of authorized common shares to 56,250,000 shares. The Company's shareholders approved the reverse stock split and change in authorized common shares at the Company's special meeting of shareholders held on December 23, 2015.
The reverse stock split will take effect, and the Company's common shares will begin trading on a split-adjusted basis on the New York Stock Exchange ("NYSE") as of the opening of trading on December 31, 2015. A new CUSIP number will be assigned to the Company's common shares when the reverse stock split becomes effective.
When the reverse stock split becomes effective, every twelve of the Company's issued and outstanding common shares will be combined into one issued and outstanding common share, without any change to the par value per share. This will reduce the number of outstanding common shares from approximately 344.2 million shares to approximately 28.7 million shares.
No fractional shares will be issued in connection with the reverse stock split. Shareholders who would otherwise hold a fraction of a common share of the Company will receive a cash payment in lieu thereof at a price equal to that fraction of a shares to which the shareholder would otherwise be entitled, multiplied by the closing price of the Company's common shares on the NYSE on December 30, 2015.
Shareholders with shares held in book-entry form or through a bank, broker, or other nominee are not required to take any action and will see the impact of the reverse stock split reflected in their accounts on or after December 31, 2015. Such beneficial holders may contact their bank, broker, or nominee for more information.
On December 17, 2015, the Company received notice from the NYSE that the Company was no longer in compliance with the NYSE's continued listing standards because the average closing share price of its common shares over a consecutive 30 trading-day period ending December 15, 2015 has fallen below the requirement to be at least $1.00 per share. The purpose for seeking shareholder approval to effect the reverse stock split was to increase the market price of the Company's common shares. The Compapany believes that the increased market price for its common shares that is expected as a result of implementing the reverse stock split will cure this deficiency.

In a separate release, Scorpio announced the sale of 5 vessels, 2 of which are still being built.  

It appears the management is doing everything they can to hang on.  The question is, will it be enough?

New Rules for container weighing

As from July 1, 2016 the International Maritime Organization (IMO) amendments to the Safety of Life at Sea (SOLAS) Convention requires the shipper of a packed container to provide the container`s verified gross mass (VGM) prior to stowage aboard ship.

This is VERY IMPORTANT.  Beginning July 1, 2016, shippers will be required to VERIFY the
weight of the contents and packaging inside the container they deliver to be shipped.

Here is a link to the brochure published by The World Shipping Council.

http://www.worldshipping.org/industry-issues/safety/faqs/SOLAS_VGM__Industry_FAQs_Dec_2015_US_letter_WEB.pdf

Christmas at sea and in the port of Hamburg | Traditions and customs

Mergers Ahead

Now that CMA CGM will purchase NOL (APL), and China Shipping and COSCO are set to merge,
what will be the next mergers?

Hapag Lloyd was looking to buy NOL, but lost out to CMA CGM, so will Hapag Lloyd be looking for another line to acquire?

Who are the likely candidates?

A merger between the two Korean companies, Hyundai Merchant Marine and Hanjin Shipping is possible. Even though the stock of each company is traded on the Korean stock exchange, somehow I think the government would not let either company be sold to a non-Korean company.

OOCL is listed on the Hong Kong stock exchange.  I don't know if there is a majority owner who could possibly block a sale.  According to published data they are making money.  If I were looking to buy a shipping company, this one has possibilities.

Yang Ming's stock is listed on the Taiwan Exchange.  According to Bloomberg, this company has negative earnings of around 1.00, with the stock trading around 8.00.   This company is leasing newbuilds (ships) from Seaspan, and I don't know how many of their fleet might be owned.  The fundamentals of this company look problematic.  They might be purchased cheaply, but if the industry continues in it's downward trend this company might not make it.

That's it for now.

Hamburg Süd name Carrier of the Year 2015 by DHL

PRESS RELEASE

17-Dec-2015

Press Information

Peter Frederiksen, Hamburg Süd (front row r.), was presented with the award by Dominique von Orelli, DHL Global Forwarding (front row l.).

On 9th December, DHL Global Forwarding presented Hamburg Süd with the ‘Carrier of the Year 2015’ award. DHL is one of the leading global logistics enterprises and, with this honour, is underscoring the outstanding working relationship with Hamburg Süd, which ranks among the ten largest container shipping companies worldwide.

“We are happy to award Hamburg Süd as the Ocean Carrier of the Year for outstanding customer service, schedule reliability and rate competitiveness. The company has proven to be a trustworthy partner and shown great commitment to supporting DHL Global Forwarding’s business needs over the last couple of years,” explains Dominique von Orelli, Head of FCL Product & Capacity Management, DHL Global Forwarding. “Hamburg Süd has improved its value proposition for us on many key trade lanes, such as Asia to Latin America or Asia to the US. This allows us to offer high-quality, increasingly competitive service to our customers globally.”

The award was received by Peter Frederiksen, Member of the Executive Board of Hamburg Süd, at the annual DHL Carrier Meeting in Bonn: “Hamburg Süd sees itself as a quality carrier. Our aim is to offer the best possible solution for every logistical challenge. The excellent collaboration with DHL is aspiration and motivation in equal measure. The award confirms our belief that, in an extremely competitive market, it is possible to score successes with customer orientation and operational excellence. And it reflects the strong commitment of the entire Hamburg Süd team globally.”

Basis for bunker charge as published by the TSA (Transpacific Stabilization Agreement)

This is the basis listed by the TSA for the bunker charge

TSA Fuel Price-Bunker Charge Conversion Table
	Average	Bunker Charge for Next Quarter (US$)
	Weighted Fuel Price	West Coast			East Coast/Gulf
	(US$/Ton) 800.01 - 820 780.01 - 800 760.01 - 780 740.01 - 760 720.01 - 740 700.01 - 720 680-01 - 700 660.01 - 680 640.01 - 660 620.01 - 640 600.01 - 620 580.01 - 600 560.01 - 580 540.01 - 560 520.01 - 540 500.01 - 520 480-01 - 500 460.01 - 480 440.01 - 460 420.01 - 440 400.01 - 420 380.01 - 400 360.01 - 380 340.01 - 360 320.01 - 340 300.01 - 320 280.01 - 300 260.01 - 280 240.01 - 260 220.01 - 240 200.01 - 220 180.01 - 200	20' 551 540 529 518 508 497 486 475 464 454 443 432 421 410 400 389 378 367 356 346 335 324 313 302 292 281 270 259 248 238 227 216	40' 612 600 588 576 564 552 540 528 516 504 492 480 468 456 444 432 420 408 396 384 372 360 348 336 324 312 300 288 276 264 252 240		20' 1077 1056 1034 1013 991 969 948 926 905 883 861 840 818 797 775 753 732 710 689 667 645 624 602 581 559 537 516 494 473 451 429 408	40' 1197 1173 1149 1125 1101 1077 1053 1029 1005 981 957 933 909 885 861 837 813 789 765 741 717 693 669 645 621 597 573 549 525 501 477 453

And this is what the TSA has stated is the recent costs for bunker fuel

Weekly Average Price Differentials 0.1% MGO Low-Sulfur vs. Standard Bunker Fuel
	Week Of: Nov 30 Dec 07 Dec 14 Dec 21 Dec 28 Jan 04 2016 Jan 11 Jan 18 Jan 25 Feb 01 Feb 08 Feb 15 Feb 22	USWC 271 261.5 253	USEC/Gulf 213 200.5 188
	Source: Bunkerworld Reminder: Figures denote difference in price; as example, “100” means that at the load port in question, low-sulfur fuel cost $100/MT more than standard bunker fuel.

I guess if the bunker prices drop below 180 they will have to update their chart.

click here for link to their site

Hapag Lloyd stock

Hapag Lloyd issued an IPO (initial public offering of stock) back in November.

From Bloomberg news (at the time of issue).  The stock ticker symbol is HLAG and trades on Xetra exchange.

Hapag-Lloyd shares were sold at 20 euros ($21.92) apiece, the German shipping company said on Tuesday, confirming an earlier Reuters report.
The company had originally targeted a market cap of more than 5 billion euros, but in wobbly markets offered shares for 23-29 euros each.
Weak demand later prompted it to postpone the IPO, trim the number of shares on offer and lower the price range to 20-22 euros.
Several large investors had cancelled share orders after a profit warning from peer Maersk rocked already jittery markets.

Read more at Reutershttp://www.reuters.com/article/hapag-lloyd-ipo-idUSL8N12Y3Q820151103#gVW9QRZjDioSPTrl.99

CMA CGM to buy NOL (operating as APL). Consolidation in the industry continues.

CMA CGM, the French shipping company, has offered to buy NOL,  (formerly Neptune Orient Line) which is a Singapore company, and operates under the name of APL (formerly American President Line).

This sale will probably be approved by the various governments.  It's doubtful China would protest, as they are getting ready to merge COSCO and China Shipping.

These mergers are the continuation of consolidation in the container shipping industry.  However, it is not yet enough to improve their fortunes.   All of the carriers continue to believe growth will come, when they need to be realizing profits will not come by growth, but by increased efficiencies by each company.

Because the "per slot cost" has been the indicator for lowest cost in the industry, everyone has concluded that bigger is better, because each slot would then cost less.   However, those nickles and dimes in the other parts of business add up, and those costs of have been ignored by the carriers for years.

The industry is sadly lacking in efficient computer systems.  They allow terminal operators to run and dictate the shore side part of the business.  The carriers are unwilling to take on the unions.   They have become "wholesalers" of cargo, giving the NVOCC/consolidators  cheap rates because the carriers have been too lazy to deal with the difficulties of handling small shipments.

Just as it has taken 40 years after deregulation for the airline industry to see consolidation and profits, it will likely take this many years for the container shipping industry.

Maersk Line - decline in 3rd quarter profit

Maersk Line posted disappointed profit for the 3rd quarter of 2015.   I fear we will not be seeing and upturn in the industry until there is more consolidation in the industry.

From Maersk Line

“The Maersk Group delivered an underlying profit of USD 662m in the third quarter. The decline of nearly 50 percent compared to last year was primarily due to container freight rates deteriorating to a historically low level, especially in the later part of Q3, and profits in Maersk Oil being impacted by the lower oil price. The expected underlying result of around USD 3.4bn for 2015 reflects good performance in very challenging oil and container shipping markets, where the continuous actions taken in all our business units to reduce the cost base will enable us to maintain our ability to pursue the opportunities arising in our industries,” says Group CEO Nils S. Andersen.

American President Line (APL) parent company confirms takeover talks

NOL, the parent company of APL has confirmed they are in take over talks with

Maersk and CMA CGM.  I presume they are in separate talks with each company,
however the combination of these 3 companies would certainly be interesting.

From World Maritime News

Singapore-based container shipping company Neptune Orient Lines Limited (NOL) is in preliminary discussions with French CMA CGM SA and Danish A.P. Moeller-Maersk A/S with respect to a potential acquisition of NOL, the company said, thus confirming recent media reports.
“NOL has a duty to assess all options to maximise shareholder value and improve its competitiveness. From time to time, NOL enters into discussions on possible combinations involving NOL, while remaining focused on returning its core liner business to sustainable growth and profitability,” NOL added.
However, the company stressed that there is no assurance that any such discussions will result in any definitive agreement or transaction, or that any offer for NOL will be made.
“NOL will make an appropriate announcement in the event that there are any material developments. Shareholders of NOL and investors are therefore advised to exercise caution when dealing in shares in and other securities of NOL,” the company concluded.
The confirmation comes on the back of an announcement dating back to July, in which NOL said that the investment company Temasek Holdings Pte. Ltd, NOL’s majority stake owner, was in talks with an undisclosed buyer to sell its stake in NOL, but that there was still no definitive deal yet.
Previously, NOL had been linked to a potential merger with German carrier Hapag-Loyd and subsequently Hong Kong’s Orient Overseas (International) Ltd, nevertheless none of them were realized.Tamasek holds 65% stake in the company whereas the remaining 35% is traded on the Singapore Stock Exchange. NOL, which operates through the APL brand, has 92 vessels in its fleet.

Swift International Logistics- license revoked by the FMC

The U.S. Federal Maritime Commission has received several complaints from customers of
Swift, stating their cargo has not been delivered, and they cannot get information from Swift.

On Nov. 3, 2015 the FMC announced they have revoked the license of Swift, and some of the apparently abandoned cargo is in peril of being auctioned.  Following is the news release from the FMC.

November 3, 2015

On November 2, 2015, the Federal Maritime Commission (FMC) revoked Swift International Logistics Inc.’s (Swift) ocean transportation intermediary (OTI) license. Swift is no longer authorized to provide OTI services. Consumers and businesses should not tender cargo to Swift or its agents for the international shipment of goods.

The Commission has information that four shipments that were handled by Swift will be auctioned by transportation providers to whom payments for service have not been made.

The consignees are:

1. Naveed Ali 
   • place of delivery: Jebel Ali, United Arab Emirates 
   • estimated date of arrival: 7 October, 2015
2. Francoise Marie
   • place of delivery: Bassens, France
   • estimated date of arrival: 25 August, 2015
3. Allan Fraser Brown
   • place of delivery: Dar Es Salaam, Tanzania
   • estimated date of arrival: 18 September, 2015
4. Pasquale Vassilli
   • place of delivery: Lisbon, Portugal
   • estimated date of arrival, 27 August, 2015

The above-named consignees or their agents should contact the Commission’s Office of Consumer Affairs and Dispute Resolution Services at 202-523-5807 or complaints@fmc.gov as soon as possible.

click here for link to FMC

Another Carjacking Ring in New Jersey

Last year a carjacking ring was broken up.   I wrote about it in this blog posting.


Your Stolen Car is In West Africa


Now, another carjacking ring operating mainly in New Jersey was broken up.  They were going after specific high end cars.   If you drive a black Mercedes S550, take extra precautions.

From The Waterfront Commission

21 CHARGED IN TAKEDOWN OF INTERNATIONAL CARJACKING/THEFT RING THAT STOLE LUXURY CARS FROM SUBURBS IN NEW JERSEY AND NEW YORK TO SELL OVERSEAS
Law enforcement partners in “Operation 17 Corridor” recovered 90 cars worth over $4 million

October 28, 2015

           TOTOWA, N.J. – Acting Attorney General John J. Hoffman announced that 21 men have been charged in the takedown of a major international carjacking and stolen car trafficking ring that stole luxury cars from suburbs along the Route 17 corridor in New Jersey and neighboring New York, as well as other suburban communities in northern and central New Jersey, shipping the cars to West Africa where they command premium prices. Eighteen men were arrested yesterday on charges including first-degree racketeering, carjacking and money laundering as a multi-agency team fanned out to execute arrest warrants. Three men are being sought as fugitives on arrest warrants.

click here complete report

Hapag-Llloyd IPO

Hapag-Lloyd has been trying to do an IPO for a few years.  The world economy is not making this easy, and once again they have postponed it for a few days, because their competitor Maersk, downgraded their forecast.

Hapag-Lloyd says their forecast is unchanged.  They are not as involved in the Asian trade as Maersk, and Maersk also has much more exposure in the oil exploration and transportation than Hapag-Lloyd, so I think
Hapag-Lloyd is probably valid to hold to their forecast.

Here's what Reuters reported

German container shipping group Hapag-Lloyd [HPLG.UL] is postponing its stock market debut by a week after investors turned its back on the company following peer Maersk's (MAERSKb.CO) profit warning, two sources told Reuters.
If demand for the shares remains weak Hapag may lower the offer price, the people familiar with the deal said on Tuesday, adding that cancelling the IPO also remained an option.
Hapag-Lloyd said it was extending the offer period for its initial public offering (IPO) by a week to Nov. 3, with trading now likely to start on Nov. 6.
"The order book had been more than one time subscribed. Now the main goal is to get investors to come back who have shied away due to Maersk," one of the people said.
Hapag-Lloyd reiterated that its earnings outlook remained unchanged, despite peer Maersk's (MAERSKb.CO) slashing its 2015 profit targets last week.

Don't do business with Medrano Express, also known as Diamond Shipping

I don't know the history behind this company, but many people got taken for a ride.

http://www.greensboro.com/news/local_news/international-shipping-company-banned-from-north-carolina/article_f2affe6e-d3de-5c21-b5c4-1d601831f266.html

A news release from the N.C. Attorney General's Office said Medrano Express, Diamond Shipping, Inc. and Jorge Medrano are permanently banned from the shipping business in North Carolina after Judge Donald Stephens signed a default judgement on Monday. 

Medrano Express, which is based in Hempstead, N.Y. and operates under the name Diamond Shipping, specializes in shipping items to Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Mexico. The company operates in 20 states and had offices in Raleigh and Charlotte. 

Price of WTI Oil for 2016

It's been some time since I have posted, and several years since I dared to make a prediction regarding the price of oil.

My last forecast was for 2012, and I thought oil we be around $100.00 a barrel.  That prediction was a little high, but not by much.

Now that oil has dropped down to half of that,  I will go out on a limb and say that for 2016, the WTI Oil price will be around $60.00 a barrel.

It's been in the $50.00 range for most of 2015, and it really should hang around that or even lower, as no one seems to be halting production.    But, I just feel it in my bones that it's going to inch up a bit.

Now, as for predictions for the shipping industry for 2016,  I will have to put on my "thinking cap" for a bit.

Later.




 

U.S. West Coast Ports standoff

I'll be honest.  I don't understand what is going on with the labor situation on the U.S. West Coast.

There are allegations that labor has slowed down since Nov. 2014.   Labor has said they didn't slow
down their work, that cargo didn't move due to a chassis shortage, or something along that line.

Now the terminals, or carriers (one never know who is in charge) has decided to teach the union  a lesson,
and has decided to not hire labor to work ships for 4 days, because they would need to pay a lot of extra overtime due to the holidays.   The shipping companies haven't been making money for several years, the daily cost of vessels has decreased immensely due to all the competition, so I guess they are happy to go along with this position.

There is probably something behind all this posturing, but it doesn't seem to be really strategic, more like a couple of kids on the playground not agreeing to work together to get a baseball game going.

News reports say the only sticking point in the contract negotiation is the arbitration clause.  It doesn't make a lot of sense, but neither the union nor the Pacific Maritime Association are putting out anything which really makes a lot of sense.

If anyone has any inside information on what is going on, feel free to share.