China vetoes P3 Network

Wow.  This is really interesting.  Am sure Maersk, MSC and CMA-CGM thought this would be no big deal.
China decided it was.

From  peopledaily.com

China vetoes shipping alliance

(Xinhua)    07:54, June 18, 2014

 

 

BEIJING, June 17  -- An application by three leading global shipping firms to build an operational alliance has been rejected by China due to monopoly concerns, the Ministry of Commerce said on Tuesday.
Major container shipping lines, Maersk Line, Mediterranean Shipping Company and CMA-CGM, in October 2013 agreed to establish an operational alliance named P3 Network to provide customers with more frequent and flexible services. The network would involve three trade lanes: Asia-Europe, Trans-Pacific and Trans-Atlantic.
The network was expected to start operation in the second quarter of 2014, but will be subject to approvals by various authorities, including the European Union, United States and China.
The ministry supports companies to sharpen their competitive edge, but when firms try to improve market share through a "concentration of undertakings", it should be carefully studied, said a statement on the ministry's website.
The three operators handed in the application to the ministry on September 18, 2013 for a "concentration of undertakings" anti-monopoly probe.

MSC Monterey has severe crack in hull

The MSC Monterey, which was named in 2007,  experienced a crack in the main deck,
which then spread to the outer hull. The article says it was named in 2007, but built in
2008, so I don't really know how old it is, but it's not THAT old.


The vessel was built in Romania.  It is now south of Newfoundland, and plans are
to make temporary repairs and go to Boston.

If I were a ship operator, would certainly start checking the steel integrity of any ship built in Romania.

click here for link to article  at Maritime Matters

The Fight is On

All containership carriers are losing money.

Maersk stated they would not lose market share, which we can guess only means
they won't be pushing to raise rates.

So the other carriers are getting together and forming joint services (Vessel Sharing Agreements, VSA's), to at least save some money.

The latest one is Hamburg Süd and MSC

Here is the press release from Hamburg Süd

Hamburg Süd and MSC fuse Mediterranean – South America East Coast Services



Hamburg, 22 December 2011. In view of continuous poor trading conditions and replacing its current service set up, effective from mid January 2012 Hamburg Süd and MSC will restructure their services between the Mediterranean and South America East Coast. The two currently separate services will be fused into one common service that will be operated by eight vessels of 5,900 TEU nominal capacity. Of those, Hamburg Süd is to provide initially one vessel and MSC seven vessels.



The new port rotation will be as follows: Valencia – Gioia Tauro – Livorno – Genoa – Fos – Barcelona – Valencia – Suape – Rio de Janeiro – Santos – Buenos Aires – Montevideo –Rio Grande – Navegantes – Itapoá – Santos – Rio de Janeiro – Suape – Tangier – Valencia.



The new service allows for more comprehensive port coverage in South America and connects to the Hamburg Süd network to Eastern Mediterranean and Middle East destinations via the hub port Tangier.

New Vessel Sharing Agreement - Asia/S. Africa/E.Coast S. America

As can be expected when times get tough, the carriers ban together in Vessel Sharing
Agreements. This allows each to continue service, but with less vessels.

This is what transpired in the 1990's, before there were a bunch of container carriers who finally went bust.

Below is the press release from Hamburg-Sud. There are 5 companies joining together. Hamburg Süd, Maersk, CMA-CGM, CSAV, and CSCL (China Shipping). There is no mention of MSC, who just announced a huge agreement with CMA CGM, so not sure if they will get slots on this service or not.

Dec. 8, 2011


Asia – South Africa/South America East Coast

Hamburg Süd/Maersk Line and CMA-CGM/CSAV/CSCL

Winter Season Restructuring



Hamburg, 8 December 20011. In an effort to balance supply and demand during the forthcoming traditional period of weaker demand, Hamburg Süd and Maersk Line on the one hand and CMA-CGM, CSAV and CSCL on the other, have reached an agreement to combine their services between Asia, South Africa and the East Coast of South America as from December 2011.



Each Group is currently operating two weekly services in the trade. For the period from December 2011 through May 2012, the existing ASAS/NGX Sling 2 service will be merged with the existing ASAX/SEAS Sling 2 service. The current capacity deployed by the carriers in the ASAS/NGX Sling 1 service and ASAX/SEAS Sling 1 service will remain unchanged and independent.



Consequently, the new structure will be as follows:

ASAS/NGX 1: 11 x 7,100 – 7,450 TEU vessels

Participating carriers: Hamburg Süd and Maersk Line



ASAX/SEAS 1: 11 x 6,500 TEU vessels

Participating carriers: CMA-CGM, CSAV, CSCL



New Joint Service: 11 x 4,200 – 4,600 TEU vessels

Participating Carriers: CMA-CGM, CSAV, CSCL, Hamburg Süd, and Maersk Line

Schedule: Shanghai – Ningbo – Nansha – Hong Kong – Chiwan – Tanjung Pelepas – Singapore – Durban – Rio de Janeiro – Santos – Paranagua – Itajai – Santos – Port Elizabeth – Durban – Singapore – Hong Kong – Shanghai



Starting vessel for this New Joint Service will be MV Cap Jackson – Shanghai – December 16th.



The above changes will ensure adequate coverage of- and competitive transit times for the Asia, South Africa and East Coast South America market, both Eastbound and Westbound.

Will Maersk continue to chase market share?

Bloomberg News has an article covering the new vessel sharing accord between MSC and CMA CGM. click here for link (also quoted below).

In the article the, this previous comment by Maersk is mentioned.

Maersk has said it is prepared to outlast rivals as the industry faces four years of overcapacity, and will reduce prices to preserve market share.

I wonder if in 6 months time Maersk will still be signing this tune. Furthermore,
if one looks at the history of VSA's, the carriers involved do not generally increase their market shares. That is, until one of them takes over their competitor, and even then, the original combined market share does not generally last.

I hope the management of Maersk thinks about this, before they continue the
drive for market share. How about changing the focus to improve service and performance?

You know, "build it and they will come?"

Offer exceptional service and the customers will come to you?

Just a thought.

By Christian Wienberg - Dec 1, 2011 8:54 AM CT

Mediterranean Shipping Co. and CMA CGM SA, the world’s second- and third-largest container lines, agreed to a vessel-sharing accord meant to fight falling rates as overcapacity makes the industry unprofitable.

The deal includes cooperation on Asia-Northern Europe, Asia-Southern Africa and South American routes, Marseille, France-based CMA CGM said today in a statement.

The partnership will compete with industry leader A.P. Moeller-Maersk A/S, which in September merged some of its Asia to Europe trades into a fixed daily service with a fleet of 70 ships. Maersk has said it is prepared to outlast rivals as the industry faces four years of overcapacity, and will reduce prices to preserve market share.

“The partnership is a result of the incredible tough competition we see in the container market with falling rates and overcapacity,” Janne V. Kjaer, a transport analyst at Silkeborg, Denmark-based Jyske Bank A/S, said by phone. “The industry will have more of these partnerships going forward as the market conditions force container lines into action.”

Maersk’s Copenhagen-based container unit has a global market share of 15.8 percent, according to estimates released today by Alphaliner. MSC, based in Geneva, has 13.2 percent and CMA CGM has 8.5 percent, according to Alphaliner. The smaller rivals are closely held.

“The agreement, which is designed to improve the two partners’ respective performance, will help to drive extensive operating synergies and enhance quality of service,” CMA CGM said. The companies will be able to “deploy the best ships in each of their fleets, while increasing the number of ports of call and frequency of sailing.”
Maersk Prediction

Maersk’s container unit last month lowered its full-year forecast to a net loss from an August prediction of a “modest” profit. The unit lost 1.58 billion kroner ($287 million) in the third quarter versus a 5.9 billion kroner profit a year earlier.

“It’s not unlikely that we will see some container lines going out of business in this unprofitable market,” said Jyske’s Kjaer, who has a “buy” recommendation on Maersk shares.

Maersk declined 580 kroner, or 1.5 percent, to 37,220 kroner at 3:46 p.m. in Copenhagen. The stock has lost 26 percent this year.

Press Release - MSC and CMA CGM agreement

Here's the press release which is on the MSC web-site (click here for link)

December 1st, 2011

MSC and CMA CGM sign major partnership agreement


The world’s second and third-largest container shipping companies have announced
the signature of a major agreement. The two family-owned companies, the Swiss-
Italian MSC and France’s CMA CGM, today agreed to form a broad-based operating
partnership spanning several trades, including Asia-Northern Europe, Asia-Southern
Africa and all of the South American markets.

The agreement, which is designed to improve the two partners’ respective
performance, will help to drive extensive operating synergies and enhance quality of
service for all of their customers.

On a certain number of trades, the partnership will also enable the Groups to deploy
the best ships in each of their fleets, while increasing the number of ports of call and frequency of sailings.

Diego Aponte, Vice President of MSC, said: “we are very happy to have signed this
broad-based partnership, which will unite our two family-owned companies in the
years ahead. The agreement offers us new opportunities to optimise the use of our
respective fleets, improve our transit times and increase our performance.”

Rodolphe Saadé, Executive Officer of CMA CGM Group, said: “for more than 30
years, our two companies have followed the same trajectory and for a number of
years we’ve cooperated on a few lines. Based on this experience and our shared
vision of the shipping industry, we have decided to step up our partnerships, which
reflect a commitment to long-term cooperation and will enable us to offer customers
improved solutions and services.”

More on CMA CGM agreement with MSC

The Financial Times has an article about the new announced
partnership between CMA CGM and MSC.

click here for link

They don't really say what the agreement entails...so guess we will have to
wait and see.

Generally these agreements are some sort of Vessel Sharing Agreement. If
they try to do anything beyond that, they will most surely get into trouble
with authorities.

In fact, I wouldn't be surprised if governments aren't looking closely at
all of the containership companies. Tt hasn't been that long ago
that they could legally get together and fix rates, and old habits die hard.

MSC and CMA CGM were 2 of the biggest rate cutters around. But, looks like
this might have come back to bite them.

We shall see.

CMA CGM to partner with MSC

CMA CGM has stated they will partner with MSC. The official announcement has not yet been made.

This is what is reported in the Journal of Commerce

MSC and CMA CGM, the world’s second and third largest ocean carriers, are joining forces on key trade routes in a game-changing move that is likely to trigger a new round of consolidation in the container shipping industry.

A spokesman for French carrier CMA CGM said the carriers will shortly issue a statement about the alliance, which is expected to involve the Asia-Europe route, the world’s biggest liner trade.

CMA CGM’s partnership with Geneva-based MSC also will cover trades to Latin America and between Asia and South Africa.

The alliance between the two family-owned companies comes at a time of deepening losses in the industry triggered by excess capacity and slowing world trade that has prompted moves by smaller carriers to pursue consolidation.

In the past week, Chile’s CSAV and Zim, the Israeli carrier, have been reported to be seeking partners, while Malaysia’s MISC announced it will exit container shipping because of mounting losses.

The CMA CGM/MSC partnership is also expected to exert fresh pressure on Japan’s top three shipping lines, MOL, NYK and “K” Line, to re-examine plans to spin off their ocean container activities into a single unit.

CGM CMA and MSC in dispute with Korean Ex-Im Bank

From Lloyd's List

TWO of Europe’s largest containership operators are heading for a showdown with Korea Eximbank over demands for extra money to cover the cost of newbuildings that were already financed, and are ready to be delivered.

Mediterranean Shipping Co and CMA CGM are said to be the companies most immediately caught up in the wrangle. But unless some solution is found, many others could find themselves in a similar position, say industry sources.

Korea Eximbank, which has financed the ships at the centre of the dispute, is applying strict loan-to-value terms and telling owners to provide more of their own equity to compensate for declining ship prices.

This is the problem with declining ship values. The banks don't want to be stuck with ships valued less than they are owed, which occurred this week due to the Eastwind Maritime Bankruptcy.

The Korean Ex-Im Bank is also hanging their hat on international guidelines.

Korea Eximbank’s ship financing director Hoseob Jeung said there had been no change of policy, and that loan covenants had always been based on market value.

Mr Jeung said that the bank was following Organisation for Economic Co-operation and Development guidelines, in line with other international banks.

click here for link to article

Armed guards onboard cruise ship fend off pirates

Apparently MSC has hired armed guards for their cruise ships. Israelis.

Cruise line security work is a popular job for young Israelis who have recently been discharged from mandatory army service, as it is a good chance to save money and travel.

It certainly has paid off. Their vessel Melody was attacked. And not in the Gulf of Aden, where they would have been escorted. This attack happened about 500 miles east of Somalia and 200 miles north of the Seychelles.

The Melody was on a 22-day cruise from Durban, South Africa, to Genoa, Italy, when the pirates fired "like crazy" with automatic weapons late Saturday, slightly damaging the liner, Pinto said. The pirates tried to put a ladder on board, but were unable to climb aboard, he said.

The commander said his security forces opened fire with pistols, and the ANSA news agency said the pistols had been kept in a safe under the joint control of the commander and security chief.

"When they saw our fire ... they left us and went away. They followed us for a bit but then stopped," he told Sky TG24.

I wonder if MSC has hired guards for their containerships. If not, they are probably now considering doing so.

Dramatic drop in containership charter rates

Lloyds List has a nice article regarding MSC and the ships they have chartered in at rock bottom rates.

There has been much talk about the drop in charter rates for containerships.

This confirms it.

Here are the figures - from $45,000.00 per day,

down to $7,000 - $10,000 per day

In 2004, NYK fixed the Bellavia and Octavia at $37,750 per day, thought to be the most ever paid for that size ship and period, and then re-let the pair to China Shipping for 12 months at an even higher $45,000 per day.


Brokers have now confirmed ...(MSC) has chartered a series of 8,400 teu newbuildings for two years from German shipowner Norddeutsche Vermögensanlage, paying $10,000 a day for the first 12 months, and then $12,000 a day for the balance. Norddeutsche Vermögensanlage declined to comment.

At the same time, MSC has fixed a quartet of 5,000 teu vessels at just $7,000 per day for 12 months, from dates in the second and third quarters, with options for another year at $10,000 a day.

I'll bet the other container carriers, as well as ship owners, are really irritated by this action.

Everyone else is pulling out tonnage to reduce the oversupply, and MSC is using this opportunity to get cheap ships and increase their market share.

MSC is a privately owned company in Switzerland, but with roots in Italy. There isn't much out about their finances. They have always run a pretty low cost operation.

I remember some in the shipping community grumbling that MSC ran old rusty ships.
But how many people see the ships anymore? As long as they are structurally sound, does it matter if they are not all new and shiny?