Heathrow terminal 6

Heathrow terminal 6 in jeopardy

It has been decided that plans for a 6th terminal will be halted to keep costs down whilst the 3rd runway is being built.  

Heathrow published its half yearly report last month, which made no mention of the proposed plans.  Instead it stated that further investment in terminals 2 and 5 will go ahead instead, which allows the work to be done over a longer period of time to keep the costs under control. Whilst keeping costs under control, this also means that passengers will not face an increase in air fares despite the building of the 3rd runway.

When terminal 6 was submitted for public consultation it discussed the loss of up to 700 homes in the area, and was scheduled to be built by 2020.

According to the report, over 30% of the UK’s non-EU exports by value pass through Heathrow today. In the six months ended 30 June 2017, Heathrow’s cargo volumes increased 9.1% to 0.82 million tonnes, one of the strongest periods in the last 5 years in terms of year on year performance, with notable increases on North America and the Middle East.

John Holland-Kaye, Chief Executive Officer of Heathrow, said: “Heathrow’s strong start to 2017 is a boon for Britain…more British trade is flying high on new trading links and our expansion plans are on track. The Government set us the challenge to expand Britain’s hub while keeping airport charges close to current levels. Working with airlines, we are making good progress to meet this challenge whilst delivering all our local commitments and the global connections our country needs.”

Earlier this month it was announced that MPs will now not vote on Heathrow’s proposed expansion until 2018, with a final policy statement on airport capacity in the South East being delayed until next year.

container port Southampton

Southampton on the list of top container growth in 2016

During 2016 126 ports handled more than 1 million teu containers.

According to DynaLiners report entitled millionaires roundup, 82 ports had experienced growth in the year with 5 ports showing growth of 25% or more.

These ports were Chittagong, Bangladesh (26%), London (26%), Salalah, Oman (29%), Tangshan, China (27%) and Southampton (26%).

14 ports reached over 10m teu. These included Antwerp, Belgium; Busan, South Korea; Dubai, UAE; Hong Kong; Kaohsiung, Taiwan; Port Kelang, Malaysia; Rotterdam, Netherlands; Singapore and Tianjin, Shenzhen, Guangzhou, Ningbo, Qingdao and Shanghai, China.

New entrants to the table included Itajai with 1,104,100 teu and growth of 12%, Izmit with 1,143,000 teu and growth of 16%, Port Qasim with 1,124,000 teu and growth of 16% and Qinzhou with 1,138,000 teu and growth of 24%.

No ports dropped out of the table but 43 saw negative growth on 2015, of which Freeport (Bahamas) recorded the largest decline of -14%. Lagos and Port Said each had a 12% decline, Santos had a 10% decline, Tanjung Pelepas had a 9% decline, Hai Phong had an 8% decline, Lianyungang had a 7% decline, Long Beach had a 6% decline and Kingston had a 5% decline.

The total teu handled by the ports was 589,350,800, with other ports not on the list accounting for 117,649,200.

China topped the list of teu growth by country in 2016, maintaining its position from 2015.

The Far East, North Europe and North America retained position one, two and three respectively from 2015, with the Far East seeing a 2% YoY growth, 3% for North Europe and 1% for North America.

Of the terminal operators included in the data, PSA remained in first place with 56,300,000 teu, growing 6%, Hutchinson Ports also maintained second place but with a 3% dip in growth, followed by APM Terminals also staying at number three with a 3% growth. DP World was fourth, keeping its rank but with zero growth, Cosco Shipping Ports also stayed at number five with a 4% growth.

The report took into account full and empty, loaded and discharged, including transhipment containers. It noted that “Chinese port statistics often include (large) unknown quantities of containerised river cargo. Without these, some of them might even not qualify for millionaire status.”

• Source: Port Strategy

cosco oocl

Cosco’s acquisition of OOCL may face further hurdles

Although they resumed trading on the Shanghai Stock Exchange (SSE) this week, Cosco’s take over of OOCL could still hit a stumbling block.

Cosco’s shares were suspended two months ago and the SSE issued a letter of enquiry on July 18th seeking clarification on two points of the proposed deal. The first is whether it would clear anti trust and monopoly regulators around the world, and secondly, how Cosco intend to keep OOIL listed on the Hong Kong Stock Exchange as previously agreed.

Being allowed to resume trading must mean that the assurances given were satisfactory, however, the take over does still seem to be subject to regulatory review within other countries.

According to OOIL, the offer is ‘dependent upon the satisfaction of pre-conditions, which include the necessary regulatory approvals as well as approval from Cosco Shipping Holdings shareholders. The controlling shareholder, who currently holds 68.7% of OOIL, has irrevocably undertaken to accept the offer’.

Cosco have agreed to maintain OOIL’s listing on the stock exchange, and will make sure that the public shareholding ratio of OOIL meets the requirements of the Hong Kong Stock Exchange (HKSE).

Regulatory and shareholder approval are paramount to the deal going ahead, and it presumably isn’t going to be quick. In reality it may be more difficult to adhere to the terms agreed.

For more information on the take over, please take a look at this video

yara

The world’s first autonomous electric cargo ship

Built by Norwegian firms Kongsberg and Yara, the Yara Birkeland will be the world’s first fully electric autonomous container ship. It will use GPS, radar, cameras and sensors to navigate itself. With a cost of around £25 million, which is 3 times the cost of a standard container ship, she will hopefully pay for herself as without the need for fuel or crew the annual operating costs could be slashed by up to 90%. Its size will be small compared to modern standards, with capacity for 100-150 shipping containers.

Until 2019 it will be operated as a manual vessel before moving to remote operation and then fully autonomous from 2020. It should begin to ship products from Yara’s production plant to the Norwegian ports of Brevik and Larvik in the later part of 2018.

Svein Tore Holsether, Yara’s president, said: “Every day, more than 100 diesel truck journeys are needed to transport products from Yara’s Porsgrunn plant to ports in Brevik and Larvik where we ship products to customers around the world. With this vessel we move transport from road to sea and thereby reduce noise and dust emissions, improve the safety of local roads, and reduce emissions.”

Yara Birkeland will be over 70 metres (230 ft) long, with a beam of 15 metres (49 ft) and a depth of 12 metres (39 ft). She will have a draught of 5 metres (16 ft).

Uncrewed shipping remains unchartered territory. Much of the processes and communications are still in development, and a move to fully autonomous depends on the technology being able to catch up with the design. It could be quite a while before there is no need for any crew!

You can watch the video here

gridlock customs

Gridlock for British ports if additional customs checks approved

As government negotiations to facilitate Britain’s exit from the European Union gather pace, the UK Chamber of Shipping says the EU is ignoring the risk Brexit could bring to European ports. According to one group of MPs the increase would be five fold and confidence in border arrangements post Brexit is alarmingly low. Her Majesty’s Revenue and Customs have told the Treasury select committee that it estimates a customs declaration rise from 60million a year to over 300million a year after the UK leaves the EU.

Chief executive of the chamber, Guy Platten, said: “The EU sells £240bn of goods to the UK each year, most of which travels through ports. So the negative impact of a so-called hard Brexit on ports such as Dover will be felt just as severely if not more so by European ports. I don’t think the EU has fully grasped this yet.”

The chamber said the proposed return of border controls would lead to increased bureaucracy, “guaranteed” lorry gridlock and threats to the prosperity of both EU member states and the UK. Platten continued: “Much of the attention on the impact of leaving the customs union has been on UK ports, but major EU ports such as Calais, Zeebrugge and Dublin would find themselves equally as vulnerable. The UK government understands the importance of sorting this out around the negotiating table, but we are yet to see evidence that the EU negotiators fully understand their own vulnerability.”

Dover has no room to expand from its 2.6 million lorries a year, and Eurotunnel, which caters for 1.6 million lorries a year faces the same issue. John Keefe, its spokesman, said: “On one side of Eurotunnel we have an area of outstanding beauty, so you can’t build to the left, and on the right we have the motorway; then you have to look at moving up, down, or back along the motorway.” Earlier this year, senior freight industry leaders including Eurotunnel said the introduction of customs checks at Dover after Brexit could cause gridlock in south-east England, with lorries queueing in Kent for up to 30 miles (48km) to get across the Channel.

In the summer of 2015, a French ferry workers strike led to more than 7,000 trucks backed up the motorway almost as far as Maidstone. With as many as 16,000 trucks a day using Dover, the potential for a repeat of that episode alarms business. An emergency traffic management strategy at the time, called Operation Stack, is estimated to have cost the Kent economy £1.5m a day, with parts of the M2 turned into a vast lorry park.

Concerns that this could be the case again seem to be well founded, and there doesn’t seem to be any evidence of a hard and fast plan for the UKs customs situation. With under two years to go until this would have to come into force, decisions need to made fast.

cosco oocl

Cosco’s acquisition of OOCL could be the most expensive take over in shipping history

On Sunday 9th July a joint statement was issued by Orient Overseas International Ltd (OOIL) from Hong Kong, Chinese state owned Cisco Shipping Holdings Ltd (Cosco) and Shanghai International Port Group Co (SIPG). 

Cosco and SIPG are acquiring all of OOIL shares at an offer price of HKD 78.67 (USD 10.07) per share, an overall pace of £4.9 billion. The price represents a 31% premium on Fridays closing price of HKD 60 and values OOIL at around 42.9 billion.

On the completion of the deal, Cosco will hold 90.1% while SIPG will hold the remaining 9.9% stake in OOIL. The joint buyers said they will keep the OOIL branding, retain its listed status and maintain the companies’ global headquarters in Hong Kong along with all management. Employees will retain the existing compensation and benefits, nor will any lose jobs as a result of the transaction for at least 24 months.

It was only in May that the Orient Overseas Container Line (OOCL) had the worlds largest container ship, the OOCL Hong Kong but just months later the 7th biggest container shipping line is being sold to a Chinese rival.

China’s vision of dominating world trade seems to be becoming more of a reality with the take over, and aims to become less dependent on Hong Kong.  The take over of the OOCL parent company (OOIL) will also propel Cosco from 4th to 3rd of the global container shipping marketing share.

low tariffs after brexit

Low tariffs post Brexit for British Manufacturers and Retailers

According to the Freight Transport Association (FTA) the government’s commitment (announced on 26 June 2017) to securing existing duty free access to UK markets for 48 of the world’s developing nations will ensure that British manufacturers and retailers can continue to trade efficiently and profitably. These agreements should ensure that the price of household items, ranging from textiles to tea, can be maintained at pre-Brexit levels.

Alex Veitch, Head of Global Policy at FTA says “Imports of many of our staple household items, which reach our shores in bulk shipments from around the globe, currently benefit from reduced or zero tariff agreements.  These keep prices stable, both for retailers and for manufacturers – a key requirement when other areas of the economy are currently more volatile.  FTA lobbying of government has been relentless in the past year on behalf of the members of the British Shippers’ Council, to ensure that their opinions have been considered, and we look forward to working with the Department for International Trade in the coming months to ensure that the nation’s shopping basket continues to be as affordable as possible.”

Since the EU referendum announcement, FTA has met representatives from the Department for International Trade on three occasions to discuss the priorities of the logistics sector.  “Today’s announcement is good news for British retailers, and great for developing countries.  Trade policy is set by EU member states, so after Brexit the UK will be free to chart its own course.  By committing to a policy of duty-free access to UK markets for these states, the government has stated its intentions to ensure that Britain will keep on trading outside the European Union.

As an EU member, the UK and companies based here can sell their goods freely to customers anywhere else in the EU without those customers having to pay additional taxes to import those goods. British consumers and companies can also import from elsewhere in the EU without tariffs.  The EU also has agreements allowing free trade with countries such as Norway, Switzerland, South Africa and South Korea. Outside the EU, the UK will need to strike new deals in order to have free trade with those countries or the remaining EU members.

According to analysis by Civitas, if the UK leaves the EU without a trade deal UK exporters could face the potential impact of £5.2 billion in tariffs on goods being sold to the EU. However, EU exporters will also face £12.9 billion in tariffs on goods coming to the UK.

Brexit is still making its mark on the logistics industry, and the period of uncertainly means that global trade is at a transition. The UK will have to feel its way, and hope that the agreements made stay in place to ensure that we are in a strong position to trade.

amphibious

Amphibious AG600 prepares for its maiden flight

Manufactured by the Aviation Industry Corporation of China (AVIC) and following on from a successful run of ground evaluations, the AG600 is expected to take off from land for the first time this month. With a maximum take off weight of 53.5 tonnes, the amphibious plane is similar in size to a boeing 737.

It measures 36.9 metres in length and has a wingspan of 38.8 metres and AVIC have reportedly ordered 17 of them so far. Although marketed primarily as a firefighting aircraft for its ability to take off and land on water, it will also be used for military cargo, passenger transport and search and rescue operations. It will have the ability to carry up to 50 passengers and could also be used for a host of military operations including long-range patrols, anti-submarine warfare tasks, and mine-laying missions.

The land operation will take place before a flight on water during the later half of 2017.

shipping alliance

The new shipping alliances are in place. How are they impacting?

The changes in shipping alliances recently put in place have have already had a big impact on European ports. Coming into effect on April 1st, shippers have experienced significant changes in their carriers’ service networks. On the trans-Pacific trade alone, the alliances will offer 18% fewer direct routes and 33% of the routes will have transit times that are shorter or longer by three or more days compared to the member carriers’ alliance offerings before April.

Rotterdam is feeling the change the most. According to CargoSmart, the Hong Kong based shipment services provider, Rotterdams services from the alliances have fallen by 3 to 23, but the number of vessels passing through and being deployed has increased by 30.  Southampton, Antwerp and Hamburg have also seen the number of deployed vessels increase by 18, 16 and 13 respectively.

Felixstowe have seen a decrease in services through the port by 21, and Bremerhaven by 17.  Bremerhaven has also seen the average vessel capacity rocket by 1000 ten, and Southampton and Le Have have both seen capacity jump by 1200 teu.

Hamburg Port Authority chief executive Axel Mattern, speaking to Container Shipping & Trade said that berth availability and hinterland connections are “key factors” when it comes to dealing with the new alliances and their services. “The challenges with the big ships are on the navigational side. You need to be able to cope with the volumes which are being churned out from all of these big ships. Facilities need to handle all these volumes in a very limited time frame. They are not designed for the storage of containers. They are designed for perfect handling. That is the challenge. You need the capability to enable the volumes to flow.”

According to the Wall Street Journal, American farmers are concerned that the restructuring will make it far harder for them to deliver US commodities abroad. Port calls have been falling since before the new alliances formed, though. Sailings to U.S. ports from Asia recently were running at a weekly rate of 57, down from 65 four years ago, according to Alphaliner, which tracks such activity. However, with larger vessels coming into use, overall capacity has risen 4% to the U.S. West Coast and 22% to the East Coast in that same period, the data show.

With the alliances only having been in place for less than 3 months, the full impact is yet to be seen. Vessels into ports and numbers of containers are bound to fluctuate whilst the alliances find their feet, but with less capacity and demand always changing, it will be interesting to see how the changes affect the ports long term.

uber

Uber branching out!

In mid May, Uber announced the Uber Freight App, which connects trucking companies and drivers with shippers. In similarity to its ride sharing app, users will be able to view near by drivers and book loads, sending a rate confirmation within seconds. 

However, it faces stiff competition from already established apps in the freight industry.  Convoy offers similar services to Uber, and can bid on rates as opposed to offering flat rates, and Go99, based in Vancouver, has a similar model. Amazon is also reportedly working on a matching app at present.

Uber is promising to pay truckers within 7 days, much less than the standard 30 days companies normally need to wait. With no haggling with brokers, back and forth negotiations or hassles, Uber are marketing themselves as the middle man but not the forwarder.  According to their website, they fundamentally believe that by focusing on drivers’ pain points we can solve the industry’s biggest challenges. Happy drivers means happy shippers, and ultimately everyone benefits, including the end consumers of the goods. We’ve built a team of industry experts, leading technologists, and, of course, truck drivers to help us push the industry forward and level the playing field for trucking companies.

At the moment Uber are just rolling this out in America, and it will take a long time, if ever, for it to become something that the UK uses.  Taking the personal touch away from freight delivery isn’t necessarily a good thing, and being able to have someone manage your delivery is a part of the process. It remains to be seen whether they can make this as successful as their other ventures, and break into an industry that is already very well established.