OTM Belgian Shippers' Council

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Belangenorganisatie logistiek - handel en industrie

O.T.M. staat voor Organisatie van Traffic Managers. Zij is de enige organisatie die de
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producten gebruik maken van eigen vervoer of van transportbedrijven.

European Transport Policy Update

Bron: ESC - 21 April 2011

ESC Rail Freight Council & Inland Transport Council meeting early May; Mark the Date!

At ESC's next Rail Freight Council meeting taking place on the 3rd May DG MOVE will provide members with a briefing on possible policy options to support Wagonload Transport. The Commission will promote Single Wagonload transport in the next call in the Marco Polo programme. It will also launch a comprehensive study on Single Wagonload traffic taking into account future business models and production methos for SWL traffic. It will address questions related to the "last mile" (industrial spurs, railports), freight flow consolidation and deconsolidation, train formation facilities and services as well as regulatory issues related to these.

The Rail Council will also review the White Paper on Transport. Whereas the ESC supports many of the intentionsm, the Commission needs to underpin this with a concrete action plan. This means in particular the adoption of the Recast of the 1st Railway Package before 2012 as one of the essential initiatives to make the White Paper a success.

The ESC Inland Transport Council - also taking place on the third May - will review the recent developments with regards to the Eurovignette (see below). The Parliament's transport committee last week, at second reading, on the so-called 'Eurovignette Directive', which would enable EU countries to set up road charging systems to make trucks pay for their "external costs" such as pollution and noise. ESC welcomes the fact that the European Parliament's transport committee insisted that financial revenue from green tolls should be earmarked for reinvestment in transport infrastructure. But with this there is still ongoing work for ESC and other stakeholders to lobby the Council which is not supporting this position.

The Council will also discuss initiatives to further promote and support pilots of longer and heavier vehicles in Europe. The White Paper of the Commission recognises that truck efficiency should be encouraged and with this there is recognition on the need to take a fresh look at rules on vehicle weights and dimensions. ESC believes that in order to allow more efficient ways to operate, optimize payload of trucks and reduce the number of trucks and trips required when meeting the transport demand, the Commission should allow EMS vehicles to operate more widely in and throughout Europe.

Revision of the Sulphur Directive

ESC understands that the Commission will issue its draft proposal on the Revised Directive 1999/32/EC on Sulphur.

The revised EU regulation will bring EU rules in line with the IMO decison to limit value for sulphur in the SECA (Sulphur Emissions Control Area) to 0,1% by weight in 2015 and globally to 0.5% by weight in the year 2020 or, depending on fuel supply, at the latest by the year 2025. At present, the maximum permitted sulphur content in marine fuel is 4.5% by weight - 3.5% in 2012 - while within the SECA the limit value of 1.0% by weight is applicable (see alsoarticle below).

In response to a recent ESC letter to the European Commission, the Director General of DG Environment has informed ESC that the Commission has developed a package of accompanying measures to help shipowners and operators in complying with the stricter limits applying the SECA's. Such measures comprise promotion of green ship technology and infrastructure, alternative fuels. and clarification of state aid rules. Furthermore the Commission will further monitor possible impacts on short sea shipping as a result of increasing fuel costs.

Shippers are seriously concerned about the impact of the new EU regulation which will increase dramatically shipping costs (between 30% and 45%) will distort competition, trade flows and internal market.

ESC believes that the introduction of more stringent requirements in the North European SECA is counter-productive and unacceptable from an environmental point of view because of the expected modal shift back to road freight transport with the accompanying higher greenhouse gas emissions. Regarding Germany, the basic volume at risk of a shift to road transport in 2015 would be around 2.7 million trailers. The foreseen modal back shift would not be in line with the wider EU objectives for a greener economy and sustainable growth supported by a larger share of short sea shipping in the transport and logisics chains.

More ships fail to meet new low sulphur limits

Lower limits on the sulphur content of bunker fuel ushered in under new regulations in July last year have sparked a dramatic jump in cases of vessels failing to comply with regulations.
A 1% sulphur limit was introduced into Emission Control Areas from July 1, 2010, but ship inspections conducted by the Netherlands Transport and Water Management Inspectorate on the sulphur content of bunker fuel in ships docking at Dutch ports have revealed a 46% rate in non-compliance in the second half of last year.

This compares to a non-compliance rate of 7% on the higher sulphur content of 1.5% in the period leading up to the new regulation coming into force. Over the whole year, 135 ships' bunker fuel samples were taken by the Dutch authorities. Up to the end of June, 72 ships were inspected and five of these were found to be infringing the rules. This is in contrast to the second half of year, when 29 of 63 ships inspected were found to be non-compliant with the new 1% sulphur content regulation.
The non-compliance cases resulted in port state control taking action in 10 of these cases, according to the inspectorate.

Low-sulphur fuel is becoming increasingly expensive. Since March, the price differential between low-sulphur fuel and and 3.5% sulphur fuel has widened from around $20 a tonne in late February to $84 a tonne in early April.

According to energy analyst ICIS, the difference between 1% and 3.5% had been around $10 a tonne several months before the uprising in Libya. The widening differential has been attributed to nervousness in the market over Libyan supplies of low sulphur crude. Events in Japan, which knocked out nuclear power plants, have also had an impact by increasing demand for low sulphur fuel oil.
Regulatory pressure on shipping to reduce its sulphur emissions is steadily increasing. Close on the heels of last year's lower sulphur limit is the change in the global sulphur content cap. This falls from the current 4.5% to 3.5% from the start of 2012. From January 2015, the sulphur content of bunker in ECAs falls fromthe current 1% to 0.1%.

The next stage, if implemented, will come at the start of 2020, with the implementation of a 0.5% global cap on the sulphur content of bunker fuel. According to the Outlook for Marine Bunkers and Fuel Oil, 6% of global bunker consumption after 2020 could still comprise 3.5% sulphur fuel through the use of scrubber technology.
Lloyds' List 11 April 2011

TRAN Committee adopts charging of heavy goods vehicles for the use of certain infrastructures (Eurovignette)

At its meeting on the 12th April, the Parliament's transport committee adopted the so-called 'Eurovignette Directive', which would enable EU countries to set up road charging systems to make trucks pay for their "external costs" such as pollution and noise.

The report drafted by Belgian Socialist MEP Saïd El Khadraoui was adopted, with amendments, by 26 in favour, one against and 11 abstentions. It allows exemptions for lorries between 3.5 and 12 tonnes provided the Member State provides a justification. To encourage fleet renewal, it includes phased, time-limited exemptions for heavy vehicles with the cleanest engines (EURO 5, 6),including in sensitive areas such a s mountain regions.Toll prices can also vary according to the time of day but must remain revenue-neutral. The aim is to encourage lorries to avoid certain road stretches during peak hours (to be limited to a maximum of 8 hours a day), without generating additional revenue. The vote sets the Parliament's views miles away from EU member states on how to use the financial revenue from green road tolls. The Parliament insists on earmarking such revenue for improving the sustainability of the transport sector, for example by investing in research into cleaner engines and alternative freight transport modes. But the Council – representing EU member states – merely proposes that the funds raised "should" be earmarked for programmes that improve the sustainability of the transport system. EU countries, it insisted, "retain ultimate discretion on how to spend these funds". While the European Commission would have preferred "should" to be replaced with "shall", it has endorsed the Council's first-reading vote.

Earmarking the revenue had already been discussed at a three-way meeting between the European Parliament, the Council and the Commission in March, but no agreement was reached.

In addition to earmarking tax revenue, MEPs want national finance ministers to declare toll revenues and how they are used. MEPs are asking for 15% of the money to be earmarked for trans-European TEN-T projects. Acknowledging that the dossier is very complex and politically sensitive, Parliament's draftsman El Khadraoui said he believes that the vote represents "a balanced compromise which I think is a good basis for improving the Council's position". But "if we do not manage to get a balanced agreement with the Council, we will need to go to conciliation," he added, speaking to the press after the vote.

European haulers are also very opposed to the idea that vehicles meeting the requirements of euro VI norm, which are not even for sale today and (no sooner than 2013 the new standard), would be exempted from this extra charge for external costs for only three years. This period is too limited to encourage entrepreneurs to enhance investments in the best future technology. Moreover, euro III (or at least euro IV) have not been exempted but still represent a large part of EU businesses' fleets," it added in a statement.

According to green NGO Transport & Environment (T&E), "the agreement is still a long way from allowing countries to charge the full costs of the damage that road freight transport causes, including congestion and climate change"."Failing to tackle the problem of congestion, including an opt-out for charging lighter trucks (3.5 to 12 tonnes) and further limiting additional noise costs in mountainous areas are some of the gaps left open by today's decision," T&E said in a statement.

Council and Parliament delegates met this week to discuss the dossier
The Plenary vote is foreseen for 6 June 2011.

EP Exchanges of view on the EMSA Regulation
Rapporteur: Mr Knut Fleckenstein (S&D, DE)

EMSA's role in promoting maritime safety and the additional contribution it could make to policies such
a s the "Single European Sea" were broadly supported during the discussion of Mr Fleckenstein's
working document. He identified key issues including whether EMSA should be involved not only in
responding to but also preventing pollution from oil and gas platforms, how to improve cooperation with third countries, the need to simplify customs procedures for ships travelling between Member
States and measures to develop training for seafarers. However he noted that discussion in Council was not very encouraging and that Parliament would therefore need a clear majority in order to make progress.

Members agreed that EMSA was playing a valuable role and most considered that, where ppropriate,
its existing technology and systems should be used to support other European projects. Some expressed concern about aspects of the Commission's proposal including changes to the role of EMSA's administrative board and the lack of clear definitions for new tasks. Others recalled that Parliament had already endorsed proposals such as a European coastguard and a maritime space without borders. The Commission representative welcomed the broad consensus regarding EMSA's added value and noted that aspects of the proposal had been discussed during the adoption of the third maritime package. It was also underpinned by an external evaluation and an impact assessment. EMSA would continue to have safety and protection of the marine environment as its core tasks but, where it had built up useful expertise, this should be made available to assist other policies. Inspecting oil platforms would first require legislation to be adopted setting out thestandards to which they should comply. Timetable foreseen:
••Draft report: June 2011
••Adoption in TRAN Committee: October 2011
Debate in TRAN Committe on the Working time directive

The Commission has recently published a document on the review of the (general) working time
Directive 2003/88 a s well a s a report on the implementation of Regulation 561/2006 on driving
and rest times and the specific working time Directive on road transport activities (Directive
2002/15) in 2007-2008. The Commission representatives outlined the main issues relevant for
road transport. In regards to the current review of the (general) working time Directive, the Commission pointed out that the specific situation of certain road transport mobile workers could deserve particular attention as some provisions regarding daily rest, breaks, weekly rest periods, night rest and night work periods do not apply to them. Neither are they covered by the specific Directive. For example, vehicles under 3.5 tonnes, vehicles suited to carrying fewer than 10 persons, and regular passenger transport services whose route is less than 50 km are excluded from the scope of the specific Directive 2002/15. The Commission therefore considered that greater harmonisation of working time rules for all road transport mobile workers might be needed. Referring to the implementation report of the driving and rest times Regulation and the working time Directive for road transport, the Commission stressed that many Member States were not respecting their data reporting obligations and that they were - in addition - focusing too much on random checks instead of targeted ones. The Commission also outlined the reasons for the considerable differences in the frequency of detection of offences between the Member States.

US shippers fail to see benefits of slow steaming

US SHIPPERS have criticised container lines for being reluctant to pass on the cost savings from slow steaming and argue that the carrier-driven strategy has hit supply chains.
The Washington-based National Industrial Transportation League, in written evidence to the Federal Maritime Commission on slow steaming, also called for more information on the overall environmental benefit when engine temperatures and combustion characteristics are factored in.
NITL said that many of its shipper members have seen increased shipping costs since the implementation of slow steaming by the lines, in response to overcapacity. NITL states that reduced fuel costs from slow steaming are "merely a potential advantage to shippers that has not been widely realised". While box carriers serving the US trades "may claim" that fuel savings are reflected in the rates they charge, NITL counters that a lack of appropriate data makes it difficult to assess the assertion.

NITL suggests that the FMC may be in a better position to collect data from the carriers and to determine the extent of any fuel savings and potential pass through. The shippers' lobby says: "Even if other factors affecting rates make it too difficult to ascertain the true nature of any pass through, the commission should be able to ascertain the true effect of slow steaming on fuel consumption, based on operational and fuel cost information presumably retained by the carriers. "Although carriers are not legally obliged to pass through fuel savings derived from slow steaming to shippers, it may be relevant to any cost/benefit analysis conducted on the impact of slow steaming on US importers and exporters." NITL argues that slow steaming has resulted in longer transit times, a drop in effective vessel capacity and a worsening of container and equipment shortages.

"Slower vessel speeds have resulted in increased transit times for millions of shipments," NITL says. "One of the key aspects of the supply chain that transit time affects is inventory. Initially, slow steaming accelerated the depletion of inventory, making it harder for shippers to fill their store shelves and manufacturers' production lines in a timely manner. Over time, however, shippers have been forced to adjust to lengthened voyage times by increasing the amount of inventory they carry at higher costs." NITL's conclusion is that slow steaming has not benefited shippers: "Instead, carriers appear to have retained the economic benefit of slow steaming for themselves." It called for more information to characterise the effects of slow steaming, adding: "Our observation is that shippers and consumers have transferred economic wellbeing to carriers. "The analytical question would seem to be whether that transfer of wealth has been offset by the reduced negative effects of vessel engine emissions into the atmosphere."
Lloyds List 11 April 2011

Mixed support for global containership forum

CMA CGM's Nicolas Sartini has undoubtedly started something, although maybe not in quite the way he was anticipating, writes Janet Porter. And credit should also go to French President Nicolas Sarkozy.

For what is being proposed is shipping's equivalent of G-20, a forum that enables all interested parties to come together to discuss matters of mutual interest and bring stability to a volatile industry.
Ever since the conference system was abolished in Europe nearly three years ago, lines have been wary of dialogue that could land them in trouble with regulators.

Yet the air cargo industry has been able to form a global forum in which all sectors of the business are prepared to participate without too much fuss. That is because items on the agenda cover industry-neutral issues such as electronic booking.

The CMA CGM senior vice-president's proposal is somewhat more controversial. Taking inspiration from President Sarkozy, who proposed the G-20 group of leading finance ministers in a bid to avert future financial crises, Mr Sartini would like to see a similar assembly for the container shipping industry, open to carriers, shippers and regulators. "This industry is highly capital intensive. A fleet of 10 large ships and the containers which are needed to fill them represent an investment close to $2bn for the ships and $500m for the boxes," he told a recent conference.

"Sometimes, opening a new maritime route is like building a new motorway but without the knowledge that one or more competitors are building a parallel one. Does it really make sense to have several parallel motorways?" he asked. "If the traffic is strong enough, yes. If not it is a huge waste of financial resources. In order to avoid building parallel motorways, carriers need a forum to co-ordinate somehow their developments."

As the recent banking turmoil demonstrated, total deregulation can lead to chaos, Mr Sartini said.
"I believe that shipping companies need their own G-20 in order to ensure that the global shipping network remains efficient and provides stability for customers. This G-20 could be open to carriers, shippers and regulators, in a total transparency."
Lloyds List 11 April 2011

Piracy has to be tackled on land

The counter-piracy conference being held in Dubai has resolved in no uncertain terms that immediate and strong action is needed by the international community to tackle the problem and that this needs to be taken onshore as well as on the high seas.

'We have to unite - nationally, regionally and globally - to fight the threat of piracy,' said Abdullah bin Zayed Al Nahyan, the UAE's minister of foreign affairs. 'Not only is piracy a threat to maritime services, but it is highly disruptive to the economic well-being of our country and everyone's livelihood.'

The call to action stressed the importance of dealing with the root cause of piracy and dealing with the situation in Somalia itself. In a passionate speech, Mohammed Abdulahi Omar Asharq, deputy prime minister and foreign minister of the Somalia Transitional Federal Government, said: 'The response of the world to Somalia will determine whether we consolidate peace or piracy on the high seas.' 'We are committed to bringing stability and peace to our country, but we also need the will and the resources of the international community to help effect this change.' The minister's plea was supported by almost all of the national delegations that spoke at the 'Global Challenge, Regional Responses: Forging a Common Approach to Maritime Piracy conference.

At the shipping level, several speakers alluded to the additional costs of the piracy scourge with Morten Englestoft, coo of Maersk Line, pointing to significantly higher fuel costs and emissions as a consequence of the carrier not being able to slow-steam through piracy-invested waters. There was he said also additional insurance and labour costs.

Ron Widdows, president of NOL and chairman of the World Shipping Council, also stressed these additional cost elements. 'While it is difficult to say exactly what piracy is costing the liner shipping industry, I would guess it is at least USD2-USD3 billion annually on the fuel front and as much as USD1 billion on insurance,' he said. 'Eventually, these higher costs will find their way back to the consumer.' This year has seen another jump in Somalian piracy incidents and worryingly the greater use of mother ships, use of crew as human shields and deployment of more sophisticated weaponry.

DP World sees 'community care ' as answer to piracy

DP World, the global marine terminal operator, has committed half a million dollars to causes that it thinks will help combat piracy and help lead to its eradication.

The bulk of the funds (USD400,000) will be channeled into the company's Port Community Livelihood and Security Initiative (PCLSI), with USD100,000 being donated to the United Nations (UN) Trust Fund to Support Initiatives of States Countering Piracy off the Coast of Somalia.

The announcement was made ahead of a UN and UAE government fund-raising session on the sidelines of the two-day International Counter-Piracy Conference co-convened by the UAE Ministry of Foreign Affairs and DP World at Madinat Jumeirah, Dubai.

The PCLSI is a collaborative project that addresses what DP World refers to as 'critical human and infrastructure needs' in and around the perimeter of ports in Africa and South East Asia.It is particularly in areas affected by, or at risk of becoming havens for, piracy. Sultan Ahmed Bin Sulayem, chairman of DP World, explained: 'At DP World we have seen first-hand the difference long-term investment and involvement with the community can bring to an economy. This has been a major component of DP World's business development strategy in Africa and elsewhere. 'It is our hope that the PCLSI initiative will galvanise industry support for port-communities in unstable, and/or economically fragile regions.'

PCLSI evolved out of a three-year-long collaboration among DP World, USAID and FHI around 'ROADS', a growing pan-African health and development programme establishing SafeTStop Community Centers along major arteries linking ports with inland population centres.

The SafeTStop centres offer a range of services, including health care and vocational training. Within a couple of years, it is intended that these programmes will be offering health, education and training to hundreds of thousands of people in port communities all over Africa.

DP World has already invested USD100,000 in the collaboration, which is currently active in three countries - Djibouti, Mozambique and Senegal.

FMC advises shippers: 'don't just focus on contract rates'

The Federal Maritime Commission's (FMC) Chairman Richard Lidinsky has urged shippers not to just focus on rates but to emphasise service needs and consider the incorporation of forecasting, on the eve of the annual transpacific contract signing in May.

Presenting his recommendations on contract signing at the FMC's general open meeting - Discussion of current trade conditions and next steps on the Commission's Fact Finding 26 Recommendations - yesterday, Lidinsky [pictured] said: 'If your cargo is at all time sensitive, don't just focus on the rate in a contract. When capacity is tight, reliable service can be more important, and you should discuss and negotiate a contract that better sets forth and protects your service needs and expectations.'

He added: 'You should discuss how your anticipated volumes may fluctuate during the year. You can consider negotiating a 'floor' and a 'ceiling' for your and the carrier's weekly or monthly volume commitments. 'Consider incorporating forecasting into your contract...if a carrier knows when volumes will increase or decrease in advance, it can better plan its equipment positioning and vessel space to meet a shipper's needs.'

Other recommendations include: Considering bonuses or incentives that encourage more reliable service, being clear about what surcharges would or would not be added to the negotiated rate and to pay 'particular' attention to how peak season surcharges are handled.

Lidinsky also highlighted the need for a dispute clause in the contract, consisting of a tiered approach of informal resolution, mediation and arbitration before parties resort to litigation. He has previously said that he would ask US Government to make it a law that shippers must add a clause in their transpacific service contracts if the majority do not voluntarily do this in this year's contracting season.

He told CI-eXpress that there has been no decision yet on going to Congress on the shipper contract dispute clause; but the FMC has had success with encouraging shippers and carriers to voluntarily consider adding the clause - Lidinsky said at yesterday's meeting that the Westbound Transpacific Stabilisation Agreement (WTSA) had drawn up a draft contract checklist that encourages particular attention to be paid to dispute resolution. He also singled out US shipper group NIT League for recommending that its members use the FMC's rapid response teams to resolve disputes.

Lidinsky praised the two groups for also recommending that contracts provide for forecasting by shippers and for suggesting the breakdown of shippers' minimum quantity commitments by quarterly, monthly or weekly expectations.

He observed: 'There is remarkable consistence between this advice from both the shipper and carrier groups, and my personal observations form the past two years and the Fact Finding investigation.'
CI-on line 14/04/11

Carriers warned by Drewry

Ocean carriers have been warned that unless control over freight rate pricing is regained soon, they will be lucky to break even this year. Drewry's latest issue of Container Forecaster estimates that their combined profit in 2011 will now only reach USD7-8 billion, compared to USD17 billion in 2010, but if the recent scramble for market share continues, this could reduce to zero.

The report states: 'The industry is well accustomed to profit swings, but if, as seems likely, industry profits vanish this year, it would mark possibly the shortest business cycle container shipping has ever seen. In the space of three short years the industry will have gone from bust in 2009 (-USD19 billion) to boom in 2010 (+USD17 billion est.) and back to bust (small profit or loss) in 2011.'

Carriers are blamed for failing to manage the introduction of new vessel capacity efficiently, and for recklessly fighting over market share. The report concludes: 'It is not the global supply of ships that is hurting the industry; it is the inability of the operators to deploy their tonnage effectively at the trade route level, combined with the knock on effect of cascading. Slow steaming can no longer absorb so much capacity as every string on the Asia - Europe trade is already switched to this mode.

Neil Dekker, its editor, opined: 'A large dose of common sense is needed by the container industry and the direction it takes in the second quarter is in the hands of the carriers.'

East-West freight rates excluding fuel are projected to decrease by 13.2% in 2011 based on normal behaviour, but Drewry fears that unless spot rates recover in the next 4-6 weeks, recently signed beneficial cargo owner (BCO) annual rates in the eastbound transpacific might be above the spot market, which will lead to re-negotiations. A precursor to the volatility that might lie ahead can be seen with the retrenchment of CSAV in the transpacific, and suspension of The Containership Company's single service in the same trade.

Asked to comment on who was to blame for freight rates becoming so volatile, a senior 'hands-on' ocean carrier executive who asked to remain nameless for obvious reasons, laconically lamented: 'Forwarders. They love playing us off against each other to improve their mark-up, and no more so than now.' .
CI-on line 15/04/2011

FMC pursues trade facilitation plan

While the Washington (DC)-based Federal Maritime Commission's (FMC) brief remains regulatory in the sense of ensuring a highly competitive ocean freight industry in the US trades, there is a shift in emphasis. In a presentation at the CI 13th Global Liner Shipping Conference, Ronald Murphy, the agency's managing director,' said: 'The real story today is the new shift in FMC focus from traditional regulation of the industry [maritime] to trade facilitation.'

He stressed that the FMC was keen to assist US shippers export their products by 'fostering a fair, efficient and reliable international ocean transportation system' and by 'protecting the public from unfair and deceptive practices'.

He explained that chairman Lidinsky's goals for the FMC could now best be described as:

*Granting economic relief when appropriate
*Increasing the sustainability of ports and vessels
*Supporting America's exporters, importers and consumers

Moreover, Murphy emphasised a change in approach with regulatory enforcement actions generally being replaced by dispute resolution and consultation.

He stressed that the FMC planned to 'reach out, especially to small and medium-sized shippers, and offer educational support on service contract issues. He also urged ocean carriers and importers/exporters to negotiate dispute resolution clauses in their contracts.

'We are ready to act as a neutral mediator when differences arise between counterparties,' he said. 'We are confident that this is a far more satisfactory way of settling disagreements than going to court and are prepared to seek an amendment to the 1984 Shipping Act if container shipping industry players continue to resist the agency's mediation services.'

In other moves, Murphy mentioned that the FMC was making progress in setting up an international ocean transportation working group and an intermodal container working group to address industry problems and access/equipment availability issues.'

The latter became a real problem for US exporters last year and partly led to the Oberstar bill being promulgated . This advocated that anti-trust immunity for liner shipping companies should be terminated, thereby putting the US on a par with the totally deregulated liner shipping industry that prevails in Europe.

'We are conducting a study on the impact of the EU's repeal of its block exemption of liner shipping conferences in 2008,' said Murphy. 'Data on all on the main east/west trades - transpacific, transatlantic and Asia/Europe/Asia - has been collected and is being analysed. 'By the end of this year , that anaylsis should be completed and the draft submitted to the Commission.'
CI-on line 07/04/2011

French dockers make peace at last

Port workers in France have finally reached agreement with the French Government, promising a return to normality at last. Following eighteen months of debilitating industrial action, the employment agreement was signed last week by a division of the powerful CGT union, the Federation Nationale des Ports et Docks (FNPD). In essence, the French Government appears to have accepted that certain port workers in difficult jobs can continue to automatically qualify for early retirement.

According to the FNPD, those with difficult jobs that have been working for 15 years will be able to retire two years early. Those with 18 years experience will gain an additional one year. As it is not yet clear what jobs qualify for this benefit, or what the base retirement age will be - the old national retirement age of 60 years, or the recently extended age of 62 years, it is not possible to say which side has come out of the dispute best.

The other half of the industrial problem, namely the transfer of remaining state-employed port workers to the private sector, also appears to be resolved. Marseilles-Fos was one of the last ports to finalise the transfer, including crane drivers, and signed its agreement with all involved on Friday. In many respects, the issue has been fudged, as the port workers have had to be offered employment guarantees by each state-controlled Port Authority that the private sector was not prepared to accept.

Be that as it may, the agreements have been signed, encouraging French Port Authorities to believe that the worst is over. Dirk Becquart, director of development and vice-president of Marseilles-Fos' Port Authority, opined: 'We think customers can at last look forward to a productive future in all French ports. The healing process has begun, and I am confident it will be completed successfully. We know what has to be done, and appeal to all those that have lost confidence in French ports to help us return to good health.'
CI-on line 18/04/2011

Cote d'Ivoire back in business

The World Bank and the African Development Bank (AfDB) have confirmed that they will meet with senior Cote d'Ivoire Government officials during the annual spring meetings of the International Monetary Fund this week end. Both banking groups are keen to help the West African country following four months of upheaval since the disputed presidential election in late November 2010.
AfDB President Donald Kaberuka said: 'We have a deep and direct understanding of the crisis in Cote d'Ivoire and its impact, given that our headquarters is located in Cote d'Ivoire. 'Our assistance will be geared towards the rehabilitation of social and economic infrastructure necessary to put the Ivorian economy back on a sound footing. We will do this in close collaboration with other development partners.'

Robert B. Zoellick, the president of the World Bank, agreed: 'We will provide prompt support, drawing practical lessons from the just released World Development Report, to help get people back to work, and to integrate improved security with advances in justice and governance. 'We will work closely with regional partners, such as ECOWAS and the African Union as the Cote d'Ivoire is also important for the West African region as a whole.'

Meanwhile ocean carriers continue to reintroduce services stopped during the crisis and/or suspended as a consequence of European Union and other international sanctions/embargoes being introduced on the Cote d'Ivoire. In a recent customer advisory, Safmarine, which is one of the largest liner companies serving the market, said that its services to Abidjan and San Pedro, had been resumed. 'The first vessel to call at Abidjan will be Nikolas (2,506TEU) on May 4 and Tove Maersk (1,446TEU) on May 7,' said Safmarine,' with regular sailings [depending on the future situation] thereafter.
CI-on line 15/04/2011

Container industry on the hunt for trusted rate indices

Derivatives has become a dirty word. Ever since the spectacular collapse of energy giant Enron a decade ago, and the growth of new-fangled financial products that almost nobody fully understood but which brought the global banking system to its knees, derivatives have been viewed with deep suspicion in many corporate headquarters.

So when a number of shipbrokers started to promote container freight derivatives early last year, the reaction from the bosses of some of the world's biggest ocean carriers was hostile and obstructive, with the spectre raised of outside speculative forces destabilising cargo trades and creating far greater price volatility.

That initial resistance has, if anything, grown stronger over time. Yet at the same time, many lines are keen to negotiate multi-year service agreements with their customers, and recognise that this can only be achieved if there is a price benchmark that can be used to adjust freight rates in line with market fluctuations so that neither party is penalised, should conditions change over the life of the contract.
Without that reassurance, shippers prefer, where possible, to negotiate shorter contracts in the current climate where freight rates still seem to be heading down.

One major shipper told Lloyd's List that ocean carriers would soon be invited to tender for six-month rather than the usual one-year contracts, given market prospects. If sentiment subsequently turns, those same cargo interests would be equally keen to lock themselves into longer-term contracts before freight rates rallied.

Rather than taking a bet on which way the market may move over the coming year or more, one solution is to use an index as a reference point. This formula is gaining support from the same lines that remain highly critical of the various indices currently published, and which are either being used as basis for derivatives trading, or could be if the fledgling market becomes more liquid.
Recognising that the exchanges between the advocates and opponents of container swaps need to become less acrimonious and that calmer voices should prevail, the Container Freight Derivatives Association wants to engage all industry players in a rational debate about the role that new-style risk management tools could play.

"We want to avoid a slanging match," says Morgan Stanley executive director Brian Nixon, who is also president of the CFDA. The association realises that the first task is to develop rate indices that have integrity and are universally trusted. "In addition to the Shanghai Containerised Freight Index, the CFDA will support any other new index that is created and is seen to be fair, trustworthy and transparent and generally accepted by the market," the CFDA states.

"The key to a viable index-linked contracting mechanism is trust in the underlying index. The market should work together to make this new opportunity a reality." Many ocean carriers have turned their fire on the SCFI against which derivatives are being traded, claiming that it is neither an accurate reflection of market fundamentals nor sufficiently transparent. The index is based on spot cif rates, including all surcharges.

The allegations are disputed by backers of the index and now Zhang Ye, president of the Shanghai Shipping Exchange, has responded to criticism in a letter to this newspaper that explains the rationale behind the methodology used. Acknowledging that the SCFI does not allow for contract rates, Mr Zhang wrote: "The SCFI serves the market in its real sense. The market involves not only dozens of overwhelmingly advantageous carriers or large consignors, but also hundreds of thousands of weaker medium and small-sized shippers and carriers. The number might exceed 80% of the total market participants." So SCFI-linked derivatives offer a hedging mechanism designed for the large number of smaller players, rather than the industry heavyweights who are fighting so hard to keep paper trading out of their industry. Nevertheless, global lines are looking for some way of bringing longer-term stability to the container trades and mostly accept that indices are required. The Transpacific Stabilization Agreement is testing its own internal index with customers as ocean carriers and shippers renew annual shipping agreements that typically run from May 1, in the hope that this can become the benchmark for that specific route that can be used in longer-term contracts.

Container Trades Statistics publishes a wide number of aggregated indices covering trades to and
from Europe that some lines are starting to use in negotiations with customers. But both the TSA and CTS data are likely to be regarded with suspicion by shippers since the numbers are based on rates submitted by carriers.

Drewry's index covering the transpacific eastbound trades is widely quoted, but is criticised by lines for being based on spot rates quoted by a number of forwarders. Nevertheless, ocean carriers accept there is a problem with the current way of determining freight rates and that greater transparency is required. "We need to have more visible market rates," NYK Line chief operating officer, global liner management Jeremy Nixon said in an intervention at last week's Global Liner Shipping Conference.

CMA CGM senior vice-president Nicolas Sartini has proposed a tunnel of prices for a multi-year contract, with rates able to fluctuate within agreed fixed parameters, in line with market movements but with the extremes eliminated. All this is a far cry from derivatives or, as some prefer to call them, risk management tools. But for some, the whole argument has become muddled, with ocean carriers advised to keep out of the fray altogether. Container freight hedging will potentially benefit some of the lines' customers, says Niels Kim Balling, former chief executive of MISC Integrated Logistics and Box Club member. "There seems to be merit in freight hedging in some cases, but the current debate about whether or not carriers are supporting it appears to completely miss the point of what a hedge actually is," Mr Balling contends. "It's not for the operators to 'get into' derivatives. That's frankly a ludicrous proposition." So perhaps the two issues of indices and derivatives need to be separated, with all stakeholders participating in an industry-wide dialogue about how best to produce accurate price benchmarks, but with the big ocean carriers leaving container swaps to those who feel they need to hedge their freight rate risks.
Lloyds List 15 April 2011

PPRISM to shed new light on EU ports

European port customers and stakeholders can now provide input and suggestions in drawing up a dashboard of prime indicators that aim to measure performance trends in the maritime hub sector.
The PPRISM project, co-funded by the European Commission, is midway through the process and has a hit list of 42 potential port sector indicators in five categories, drawn up by academics from five universities and by members of the Brussels-based European Sea Ports Organisation.

Espo secretary general Patrick Verhoeven said that Europe's ports are poorly served in terms of hard data compared with other important industries, including the airports sector, which have information readily available. "At the moment we don't have any comparable information on European ports other than tonnes, boxes and people moving through ports," he said. "This is remarkable for a sector that is so important for Europe. We know very little about it. Most other sectors are able to say we represent so many jobs or so much added value."

Mr Verhoeven added: "Collecting data on a regular basis for these indicators would give an adequate picture of the European port system and allow identification of trends. The indicators will not reveal performance of individual ports, but focus on the performance of the port system as a whole.
"At this stage of the project we are looking for feedback from stakeholders on the pre-selected indicators. We have a survey [www.surveymonkey.com/s/pprism] for this, which runs until mid-May.
"Afterwards, we will run a pilot project to test out the selected indicators on feasibility and data availability. The final deliverable from the project is a concrete recommendation on how to run and manage the 'dashboard' or 'observatory' of European port indicators."

The five categories in the Port Performance Indicators, Selection and Measurement project cover market trends and structure, socio-economic, environmental performance, logistics and operational performance, and governance. The 42 suggested indicators will be whittled down to a manageable number, probably between 10-15 in total, although the online survey allows participants to add their own suggestions into the mix. There are 1,200 recognised port sites across the European Union, but only 300-400 are considered economically significant. It is these which are being targeted to provide regular data — on a voluntary and confidential basis — with the results being available to the public, probably in the form of an annual review.

Some industry observers may be disappointed that the data will not allow public comparisons between individual ports, but the indicators are intended to provide information on the whole system in Europe: "The idea is to compare those indicators over time, so you can see an evolution," said Mr Verhoeven.
Ports, or their stakeholders, can compare their maritime hub's performance with the European average.

The list is not without its controversy, with throughput per hectare, overall investment by the port authorities, market openness — measuring the number of service providers in a port for cargo handling, for pilotage or for towage — being three of the more exciting ones. Added Mr Verhoeven: "We need feedback from the operators and those who call at the ports. What we have is a pretty academic list and we need to know whether that is of interest or of help to people."

Slowdown in Trade Growth in 2011

Following the record-breaking 14.5 percent surge in the volume of exports in 2010, world trade growth should settle to a more modest 6.5 percent expansion this year, the World Trade Organization (WTO) said in a 2011 forecast.

The sharp rise in trade volumes last year enabled world trade to recover to its pre-crisis level but not its long-term trend, and WTO economists believe the recent series of important events around the world lend a greater degree of uncertainty to any forecast, the WTO said in a press release.
The figures show how trade has helped the world escape recession in 2010,? WTO Director-General Pascal Lamy said. However, the hangover from the financial crisis is still with us. High unemployment in developed economies and sharp belt-tightening in Europe will keep fueling protectionist pressures. WTO members must continue to be vigilant and resist these pressures and to work toward opening markets rather than closing them, he said. The 14.5 percent rise was the largest annual figure in the present data series which began in 1950, the WTO said.

Containership orderbook rises again on new contracts

The size of the containership orderbook is heading back towards the point where tonnage growth could start to move out of line with future requirements. That is the view of Maersk Broker, which notes that the orderbook now stands at 27.8% of the existing fleet after a spate of ordering activity. The latest figure compares with 25.7% in February and just over 25% at the end of last year.
"We believe a figure above 30% will indicate that ordering of tonnage is moving ahead of market fundamentals," the company says in its latest quarterly report.

At the height of the boom, the containership orderbook topped 60%, before contracting activity halted for nearly two years, with lines only returning to the shipyards in mid-2010 as the freight trades picked up.
Since then, a number of carriers have placed orders for very large boxships, with Maersk Broker recording 714,510 teu of capacity ordered in the first quarter of 2011. The full-year figure is expected to reach 1.5m teu, more than double the 2010 figure of just over 600,000 teu. In 2009, ordering came to a standstill.

This year, Maersk Line has dominated the market with a $1.9bn contract signed in February for 10 ships of 18,000 teu capacity apiece. The order compares with the biggest boxship afloat today of 15,500 teu. Earlier this week, the Danish line confirmed that it expected to exercise an option for a further 10 ships of the same size in June.

Other owners that have placed newbuilding orders include OOCL, which is paying a reported $136m each for a series of 13,000 teu vessels, plus Hamburg Süd, Evergreen and Seaspan.
Negotiations also are being held between at least one line and shipyards about enlarging some already-ordered ships from around 13,000 teu to 16,000 teu.
During the first quarter, Maersk Broker recorded 232,314 teu of deliveries, with a further 1.15m scheduled for the remaining part of the year.
However, scrapping is below expectations, reflecting an improved charter market, with only 10,444 teu sold for demolition so far this year. Should that trend continue, then the earlier estimate of 120,000 teu likely to be recycled in 2011 will have to be adjusted downwards, Maersk Broker said.
Lloyds List 14/4/2011

CMA CGM and Offen agree on larger boxship sizes

German shipowner Claus-Peter Offen and CMA CGM appear to have resolved a dispute that erupted at the height of the container shipping slump over a newbuilding order, enabling the French line to seek an increase in the size of three vessels at the heart of the quarrel. Market sources suggest that CMA CGM is close to sealing an enlargement of the 12,500 teu trio to 16,000 teu. CMA CGM would not comment on the speculation.

Originally Reederei Claus-Peter Offen ordered five 12,500 teu ships from Samsung Heavy Industries, two of which were to be chartered out to CMA CGM and the remaining three to be taken over directly by the container line.

When CMA CGM appeared to be backing out of that agreement, Mr Offen had the 1,700 teu CMA CGM Okapi arrested in Durban in late 2009. The ship left Durban last September, according to Lloyd's List Intelligence data.

Although CMA CGM has still not signed a novation that would transfer ownership, the two former protagonists are thought to have settled their differences. "CMA CGM knows that eventually it has to take over the ships. And now it looks as though financing has been arranged," an industry source told Lloyd's List. Delivery dates for the three ships may be as late as 2014, rather than this year, as originally scheduled. Expansion of the ship capacities can only be agreed once change of ownership has taken place. Mr Offen is not thought to be involved in the talks with Samsung, as he does not expect to be the owner of the ships for much longer. His pair of vessels, which were financed with the help of Commerzbank subsidiary CommerzReal, remain unaffected by the upgrade discussions, since one has already been delivered and the second is scheduled for completion this autumn.
Lloyds' List 14 April 2011

Senate Bill Would Suspend 100% Scanning Deadline

The battle over 100 percent scanning of U.S.-bound ocean containers is taking another sharp turn in a partisan skirmish over maritime security. A bill to reauthorize the 2006 SAFE Port Act includes a provision that would suspend the July 2012 deadline for scanning all containers before they board a U.S.-bound vessel. Its sponsors, Sen. Susan Collins, R-Maine, and Sen. Patty Murray, D-Wash., authors of the original SAFE Port Act, filed a similar reauthorization last year, but it died at the end of the congressional session.

The SAFE Port Reauthorization Act also renews several familiar supply chain security programs, and extends the port security grant program. A Republican-controlled House built on a Collins-Murray draft to create the Security and Accountability for Every Port Act that President Bush signed into law in December 2006. It provided for Customs and Border Protection to pilot-test the concept of scanning all containers. The agency carried out the tests, but found that while 100 percent scanning was possible at smaller ports, it would not be feasible at large ports.

When Democrats took control of the House in 2007, the first bill filed was one to implement all recommendations of the 9/11 Commission. Tacked onto it were 100 percent scanning/screening requirements for ocean and air cargo, with the deadline for ocean cargo July 2012. Since then, Customs and the Department of Homeland Security have resisted congressional pressure to carry out the law, arguing the technology didn't exist to scan all containers on a large scale. The 100 percent effort was "misguided and provides a false sense of security," Collins said. "It would also impose onerous restrictions on the flow of commerce, costing billions with little additional security benefit."
The SAFE Port Reauthorization Act also calls for funding the port security grant program at $300 million a year for five years. It reauthorizes Customs' Automated Targeting System, the Customs-Trade Partnership Against Terrorism and the Container Security Initiative. The bill would provide C-TPAT members with new benefits, including security training and improved information sharing between Customs and industry about terrorist threats. Customs also is authorized to make spot checks on C-TPAT members to assure they are keeping up with the program's standards.

Boaters who report suspicious activity to the Coast Guard under the America's Waterway Watch program would be protected from frivolous lawsuits under the new bill.
The Journal of Commerce.

ESC supports this initiative strongly as 100% scanning is likely to result in enormous costs to users, suppliers and ultimately consumers without accomplishing greater safety and security.


3 May ESC Inland Transport Council Brussels

3 May ESC Rail Freight Council Brussels

25 May Rail Freight Seminar for MEPs European Parliament

28 September ESC SHIPPER FORUM Rotterdam

27 September ESC Maritime Transport Council – Rotterdam

Events supported by ESC/with ESC participation

ESPO 2010 Conference – 5-6 May 2011, Limassol

Break-Bulk conference, 18 May, Antwerp

Eurofer Steel Day, 19 May Brussels

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