Container hauliers want axle-load limits raised to 30pc

This will provide a temporary solution for hauliers who are now finding it difficult to increase their haulage charges due to the economic downturn, says an industry group

LOCAL container hauliers want the government to raise the axle-load limits on roads to 30 per cent across the board from the current 5 per cent, to help meet high maintenance costs and turnaround of their vehicles amid the global economic downturn.

Association of Malaysian Hauliers (AMH) president Datuk Ahmad Shalimin Shaffie said a dialogue was held on February 3 between the association and the Road Transport Department (JPJ) director-general Datuk Solah Mat Hassan on, among other things, the implications of the economic crisis on the haulage industry.

"The issue of hauliers overloading their trucks, and the recent announcement by Works Minister Datuk Mohd Zin Mohamad of a new axle rating for all commercial vehicles, was raised," Ahmad Shalimin, who is also chairman of the Malaysian Logistics Council's focus group on land and rail transport, told Business Times.

"Since the official specification (of the new axle standard) and its approval process take a longer time, we are seeking guidance from JPJ and the Transport Ministry for the axle-load limits to be increased to 30 per cent for all commercial vehicles (for now).

"We believe this will provide a temporary solution for hauliers who are now finding it difficult to increase their haulage charges due to the economic downturn," he added.

Ahmad Shalimin said local hauliers have seen a 25-30 per cent drop in revenue and container volume since December last year compared with a year earlier, in tandem with the fall seen by local ports .

It was reported that all container haulage prime mover and trailer combinations in Malaysia are currently licensed at the maximum BDM (berat dengan muatan) of 38 tonnes.

Since last year, AMH has been proposing for an increase in the amount of cargo a container haulage prime mover would be able to transport without incurring a fine.

However, it was reported that the authorities' major concerns are that an increase would cause road safety problems, damage to the roads and increase road maintenance costs.

On whether the current crisis is worse than the 1997 Asian financial crisis for the haulage industry , Ahmad Shalimin said much would depend on the second economic stimulus package to be announced by the government next month.

"We hope that the stimulus package will help to stimulate the economy. If it is effective, we expect to see recovery after the second quarter of this year.

"Still, the government must not stop spending money and the banks must not stop lending money," he said.

Ahmad Shalimin believes that Malaysian businessmen are better equipped to handle the current crisis, having gone through the 1997 one.

"I believe that in a crisis lies an opportunity. We must be more creative in order to get over this crisis. We must work hand-in-hand with other industry players and the regulators in order to ensure that the industry survives," he said, adding that one way to do that is to consolidate.

On the implementation of the three-day free storage period for containers in Port Klang , Ahmad Shalimin urges all parties to get ready so that it would not be postponed again.

"Because we (the maritime community at Port Klang) are moving into international standards, we should be efficient enough to clear our goods to and from the ports within three days.

"I really hope that we can improve ourselves and will be able to become a maritime nation according to international standards. We cannot have this postponed again and again. It does not look good on us as a nation," he said.

The reduction of the free storage period from five days to three was scheduled to take effect on January 1 this year. However, this has been delayed to July 1 in view of the current economic climate and the appeal by some quarters in the maritime community.

AMH represents 64 local companies in Peninsular Malaysia, controlling some 90 per cent of the haulage market.

Source: NST Online

Volume at ports on downtrend

THE Penang Importers and Exporters Association has forecast a continued downtrend in the ports industry this year, with the volume decrease said to stand between 10% and 15%.

President Datuk Tan Choo Hin attributed the negative growth to the global economic crisis.

He said the import and export trade was affected last year as ports throughput registered a negligible growth instead of the anticipated 8% expansion.

Datuk Tan Choo Hin (left) presenting a souvenir to Penang Chief Minister Lim Guan Eng at the dinner.

“This only showed how severe it would be for our economy this year.

“The worrisome fact is that the crisis in the United States has not reached rock bottom,” he said at the 64th Penang Importers and Exporters Association dinner recently.

Tan said the stimulus package announced by the Government must benefit the people in terms of its validity and effectiveness.

He also urged the Government to immediately carry out infrastructure works and activities planned under the Ninth Malaysian Plan.

“Apart from reducing base lending rates, local and foreign banks should continuously assist the business sector by offering more flexible payment and less stringent borrowing conditions,” he said.

Source: Star Online

Westports recipient of 100,000th Allison device

WESTPORTS Malaysia is the recipient of the 100,000th Allison automatic transmission device manufactured in Hungary that powers the port’s prime movers.

All of Westports’ 273 prime movers are equipped with Allison Transmission 3000 series model.

“We are proud to be the recipient of the 100,000th Allison automatic transmission,” said Westports executive director Ruben Emir Gnanalingam in a statement.

The Allison automatic transmission unit delivered to Westports.

“The two companies share a common commitment to delivering innovation and quality services to customers.”

He said the prime movers were an important link in Wesports’ constant pursuit to improve overall performance and productivity.

“As a vital link from vessel to yard and vice-versa, Westports has always given priority to maintaining an efficient fleet of prime movers to ensure that there is always maximum availability of these vehicles during operations, so that our productivity levels are not compromised,” he added.

Allison Transmission is the world’s leading designer, manufacturer and seller of medium and heavy-duty automatic transmission devices for trucks, buses as well as off-road and military vehicles.

It has so far delivered 35,000 units of Allison transmission devices for prime movers at ports worldwide.

“With our broad range of products and technical expertise, Allison Transmission is poised to help port operators like Westports improve efficiency and cost effectiveness through innovation and new technologies.

“This, coupled with our timely service support via our channels factory-trained technicians and advanced diagnostic tools, help keep Westports’ operations efficient and productive,” said Allison Transmission Singapore operations commercial director G.H. Tan.

“The current global economy presents challenges, but we look at it as an opportunity to differentiate ourselves and our clients from the rest.”

Source: Star Online

Westports recipient of 100,000th Allison device

WESTPORTS Malaysia is the recipient of the 100,000th Allison automatic transmission device manufactured in Hungary that powers the port’s prime movers.

All of Westports’ 273 prime movers are equipped with Allison Transmission 3000 series model.

“We are proud to be the recipient of the 100,000th Allison automatic transmission,” said Westports executive director Ruben Emir Gnanalingam in a statement.

The Allison automatic transmission unit delivered to Westports.

“The two companies share a common commitment to delivering innovation and quality services to customers.”

He said the prime movers were an important link in Wesports’ constant pursuit to improve overall performance and productivity.

“As a vital link from vessel to yard and vice-versa, Westports has always given priority to maintaining an efficient fleet of prime movers to ensure that there is always maximum availability of these vehicles during operations, so that our productivity levels are not compromised,” he added.

Allison Transmission is the world’s leading designer, manufacturer and seller of medium and heavy-duty automatic transmission devices for trucks, buses as well as off-road and military vehicles.

It has so far delivered 35,000 units of Allison transmission devices for prime movers at ports worldwide.

“With our broad range of products and technical expertise, Allison Transmission is poised to help port operators like Westports improve efficiency and cost effectiveness through innovation and new technologies.

“This, coupled with our timely service support via our channels factory-trained technicians and advanced diagnostic tools, help keep Westports’ operations efficient and productive,” said Allison Transmission Singapore operations commercial director G.H. Tan.

“The current global economy presents challenges, but we look at it as an opportunity to differentiate ourselves and our clients from the rest.”

Source: Star Online

Tanjong Agas oil & gas project

THE Malaysian economy will get another shot in the arm with the planned investment of about RM8bil in the oil and gas (O&G) and maritime services sector for a 4,098-acre integrated industrial park in Pekan, Pahang.

The Tanjong Agas Oil and Gas and Maritime Industrial Park will be undertaken by Tanjong Agas Supply Base & Marine Services Sdn Bhd (TASBMS), a company entrusted to ensure the completion of the project in three years.

The Pahang State Development Corp has a 30% stake in TASBMS.

TASBMS managing director Mohd Faidzal Ahmad Mahidin said there was no question the project would be fast-tracked and the economic impact would be felt within the year.

A satelite image showing the location of the proposed Tanjong Agas Oil and Gas and Maritime Industrial Park.

“We are confident this mega project will take off soon,” he told StarBiz in an interview.

Faidzal said the company had been planning to make Pekan an integrated O&G and maritime services hub over the past three years.

He said TASBMS had been collaborating with some major players in the O&G and maritime services sector for several years and had managed to convince them to invest in the project.

“Currently, we have seven players pledging their support via expertise and investments totalling about RM6bil in the various projects in Pekan,” he said.

At a media briefing recently, TASBMS identified the seven as Vantech Dockyard (M) Sdn Bhd, Tec-Steel Manufacturing Sdn Bhd, Usatech Marine (M) Sdn Bhd, Bitari Abadi Sdn Bhd, Core Competence Sdn Bhd, Competent Selection Sdn Bhd and Damini Corp Sdn Bhd.

Faidzal said the seven were only the “tip-of-the-iceberg” as many other companies had expressed interest to participate in various up-coming projects, including property (residential and commercial).

“There are about 10 other companies that we are in talks with at the moment,” he said, adding that all the confirmed projects, which would be simultaneously launched, as well as future projects, would provide massive employment for Pahang residents.

The seven projects alone would create about 30,000 jobs in the next 10 years and the initial phase would require about 5,000 workers, he said, adding that it would help spur the development of local talent in the O&G and maritime services sectors.

Faidzal said the industrial park would have shipyards, fabrication yards as well as supply-base fabrication for repairs and lay-ups.

“There will also be liquefied natural gas and petroleum terminals, dredger yard, liquid bulk terminal and dockyards,” he added.

Faidzal said Pekan was ideal for the industrial park as it faced South China Sea and was in the growth area for upstream and downstream O&G exploration and production activities.

On the balance RM2bil required to kickstart the mega project, Faidzal said the company would borrow from KAF Investment Bank Bhd and hoped the Federal Government would financially support the state’s growth in the sector.

“Much of the RM2bil would be for developing the appropriate infrastructure for the park,” he said.

Faidzal also urged the Government to allow an independent power producer to operate in Pahang, as the park would need sufficient energy to run the different projects when it came onstream.

Meanwhile, Tec-Steel partners Sigrid Nubert and Helmut Paul Kauba said the company planned to invest about RM3bil to set up a steel manufacturing plant in Tanjung Agas.

“The plant will start production in 2012 and create about 600 jobs, mostly for local workers,” Nubert said, adding that the annual production would be about 800 tonnes.

“Most of the steel will be supplied as semi-finished long products to international markets. We will adopt the latest electric arc furnace and casting technology for the plant which will meet European environmental standards,” she noted.

On Tec-Steel investing in Pekan, Nubert said: “We choose Tanjung Agas because of its location near the mining industries. Besides tax incentives, Malaysia is politically stable.”

Vantech Dockyard said in a statement it planned to develop an 800 acres of world-class, state-of-the-art full-scale dockyard facilities in Pekan.

It said the project would be undertaken in three stages: deep-sea offshore O&G fabrication yard, shipbuilding and shiprepair yard, and maritime services.

The company is finalising a collaboration with a leading South Korean shipbuilder.

Source: Star Online

Port Klang Authority tries to innovate

ALTHOUGH the current business environment in Port Klang is less robust due to the decline in trade amid the economic slowdown, the Port Klang Authority (PKA) is busy trying to overcome the situation and be more competitive by coming up with new initiatives.

The initiatives include a blanket waiver for those that genuinely cannot meet the newly implemented three-day free storage period at the ports and a continuation of feeder incentives that had been suspended.

The port authority will also propose a capital dredging project and review port tariffs.

Lim Thean Shiang

These proactive measures will help to sustain container handling volume of the two port operators at Port Klang, namely Northport and Westports, under the challenging economic climate.

But, more importantly, the measures will certainly put Port Klang in a better position in terms of efficiency to welcome more and bigger ships when the economy recovers.

The reduction of the free storage period at Port Klang from five days to three effective Jan 1 had caused an uproar in the port industry as some players were not ready, leading to port authorities now offering a waiver, which will cover up to five days of free storage.

According to the PKA general manager Lim Thean Shiang, although there is a “leeway” now, the port community, including importers and exporters, must understand that they should operate and strive to work within the three-day free storage period.

“This is because as soon as the economy gains momentum from the current slump, the port community will be ever ready to operate under the three-day free storage period where the waiver will be lifted,” he told a press conference last week after the Port Consultative Committee meeting.

The continuation of the waiver will be reviewed in July.

The next initiative that needs revamping is the feeder incentive for eligible companies which had been frozen for viability studies since last October.

The study is important so that a new set of pre-qualifications criteria for eligible companies can be formed as the current pre-qualifications are unclear.

“I have gone through the list of companies granting the incentives prior to October and I could not find the record of any pre-qualifications criteria.

“We also could not find any statistics or data showing how the incentives aided the growth of cargo movement at Port Klang,” Lim said.

A total of RM37mil has been paid to companies since the implementation of the incentive about 10 years ago.

The incentive scheme involved selected local and regional feeder operators and landbridge operators that enjoyed various rebates at Port Klang.

The new pre-qualification criteria for companies eligible for the feeder incentives will be revealed in April. He expects it to boost cargo handling at Port Klang.

Lim said the PKA would backdate the incentive payment for eligible companies from October onwards once the study was completed.

The PKA has also decided to propose capital dredging project at the south channel in Port Klang.

The south channel which currently can accommodate one container vessel to pass through at a time, is expected to be widened to 500m from 360m and to be dredged to 17.5m from the current 15.5m.

Lim said this would allow two container vessels of about 14,000 20-ft equivalent units (TEUs) capacity to pass through the south channel simultaneously.

The projected cost of the capital dredging is around RM240mil.

Another long standing issue that is under study by the port authority is a review of port tariffs.

“The 1966 port tariffs need to be updated and we will study if there is a need to increase or even reduce the tariff to make Port Klang more competitive,” Lim said.

Meanwhile, Port Klang anticipates a 10% decrease in cargo movement this year due to the global economic crisis.

This may be the steepest dive in cargo handling volume as the national maritime gateway had recorded a 12% increase in cargo volume to 7.97 million TEUs last year from 7.11 million TEUs in 2007.

Port Klang was ranked the 15th busiest port in the world last year in terms of volume from 16th position in 2007.

The PKA is a government agency that acts as a trade facilitator, regulator and landlord of Port Klang.

Source: Star Online

Shipping sector sailing in turbulent seas

KUALA LUMPUR: The country’s shipping sector continues to be in the doldrums even though shipping rates have recovered from a two-decade low of 663 points in December last year.

The Baltic Dry Index (BDI), which is a major gauge of shipping costs for commodities, rose to 1,989 points on Feb 12. The current level, however, is lower than last year’s average of 6,365 points when the index soared to a high of 11,930 in May.

Analysts said that BDI’s rebound was driven by higher dry bulk demand from China while in Malaysia, the shipping sector had to cope with reduced consumer demand.

“In general, the outlook for the shipping sector is not that great,” said an analyst from a local bank-backed research firm. “Unless global demand is restored, the outlook for the shipping sector as a whole is very bleak,” he said.

As an indication on how bleak conditions would be for shippers, Singapore-listed Neptune Oriental Lines (NOL) said last week that it expected a loss for the full-year 2009 as demand continued to drop.

When contacted, NOL’s corporate affairs vice-president David Goodwin told The Edge Financial Daily the shipping firm maintained its outlook on container shipping and related businesses, which were in the midst of “pronounced downturn which is expected to extend through 2009”.

In NOL’s financial statement last week, it said reduced consumer demand worldwide, coupled with excess supply of new vessel tonnage created a very difficult business environment.

NOL’s group chairman Cheng Wai Keung was quoted as saying 2008 was a year of dramatic change, where the group faced some of the most turbulent conditions in its history, which was reflected in its fourth-quarter operating results. “Conditions similar to those in the fourth quarter of 2008 are expected to continue through 2009,” it said.

The NOL Group posted a net profit for 2008 of US$83 million (RM298.8 million), an 84% drop from US$523 million posted in 2007. Its core earnings before interest, taxes (Ebit) for 2008 were 64% down to US$213 million, while revenue rose 14% year-on-year to US$9.29 billion. According to Bloomberg data, NOL’s market capitalisation stood at S$1.77 billion (RM4.23 billion).

A shipping analyst said national shipper MISC Bhd and Malaysian Bulk Carriers Bhd (Maybulk) would be feeling the headwinds from the slowdown in global economies. MISC fell 15 sen to RM8.55 last Friday.

MISC’s net profit for its second quarter ended Sept 30, 2008, declined 30% to RM450.2 million from RM639.3 million a year earlier, while revenue rose to RM4.5 billion from RM3.2 billion.

Maybulk’s net profit for the third quarter ended Sept 30, 2008, rose 24% to RM143.5 million from RM115.5 million a year earlier on the back of a 32% jump in revenue to RM216.5 million from RM163.7 million previously. Maybulk shares gained six sen to RM2.79.

Officials of both companies could not be reached for comments.

In a recent research report, Kenanga Research said improved fundamentals in China’s steel industry led to a recovery in the freight index.

“Iron ore imports, steel production and steel prices in China are recovering from the recent low in November last year following industry wide production cuts and drawing down of inventory… the next catalyst could be the iron ore price negotiation,” it said.

It also said a price slash between 20% and 80% in iron ore price could encourage more imports from China which would be positive for the dry bulk market.

“Near-term bulkers’ share price should track underlying BDI strength after investors discounted poor earnings for the next two quarters with the massive selldown and price-earnings ratio contraction in 2008,” it said, adding it was maintaining its hold recommendation on Maybulk with a target price of RM2.50.

Source: Edge Daily

Port Klang keeps position as Malaysia's leading port

Port Klang handled 7.97 million TEUs last year, ie, 48.5 per cent of the total number of containers carried by all Malaysian ports

PORT Klang, the home of Westports and Northport terminals, remained the leading port in the country last year, holding a 48.5 per cent share of the total number of containers carried by all Malaysian ports.

It handled 7.97 million TEUs (20-foot equivalent units) last year, against the 16.4 million TEUs handled by all Malaysian ports last year.

Westports led the way with a 15.2 per cent increase in container volume from 2007, handling some 4.96 million TEUs, while Northport saw a 7.1 per cent increase to three million TEUs last year.

Conventional cargo movement for last year saw a 0.2 per cent increase to 22.2 million tonnes for Port Klang.

In terms of numbers carried by individual terminals, however, Port of Tanjung Pelepas (PTP) in Johor remained the top port, handling 5.6 million TEUs last year.

PTP was followed by Westports and then Northport.

Of all Malaysian port terminals, only one, Kuantan Port, registered a contraction in container volume last year.

Kuantan Port recorded a 0.4 per cent decline in container volume, from 127,600 TEUs in 2007 to 127,061 TEUs last year.

All ports in Sabah and Sarawak recorded positive growth in container volume, with Miri registering the biggest jump, growing by 30 per cent to reach 28,094 TEUs from 21,618 TEUs in 2007.

Bintulu Port managed to record robust growth last year, increasing to 286,013 TEUs from 251,800 TEUs in 2007.

For 2009, the local port industry is expected to experience a drop in cargo volume handled as import and export activities fall, amid slowing demand for goods.

Last week, Port Klang Authority (PKA) general manager Lim Thean Shiang had said that this year's contraction would see Port Klang's container throughput fall to levels experienced in 2007 to 7.118 million TEUs.

Source: Business Times

FedEx Winds Down Asian Hub

MANILA, PHILIPPINES: FedEx began winding down its Asian hub in the Philippines and shedding 800 staff Friday (6 Feb) as the U.S. courier giant started full operation of a new regional facility in China, an official said.

Arman Areza, administrator of the Subic Bay economic and tourism zone where FedEx has been based for nearly 14 years, said the company will for now keep a skeleton operation in Subic as a back up to $150 million hub in Guangzhou in southern China.

FedEx has said the Subic facility may finally close in April after which it has the option to renew its lease on a monthly basis, he said.

The closure of FedEx's operation comes in the wake of an announcement by Intel Corp. last month that it will let go 1,800 workers later this year when the company shuts down its 35-year-old operation in the Philippines amid waning global demand for computers.

Areza said the decision to shift the hub to China was made in 2005 and was based on "market reality" _ the large cargo volume in China _ not on Subic being unable to meet the requirements of FedEx or the current global slump.

"The move has nothing to do with the financial crisis," Areza said.

"The volume and market conditions favored China because the volume in China dwarfed those in Southeast Asia, and China has opened the domestic market to FedEx," he said.

Subic, 50 miles (80 kilometers) west of Manila, was converted from a sprawling U.S. naval base into an economic zone after U.S. forces left in 1992.

The Philippine government will lose 150-160 million pesos ($3.15-$3.37 million) annually in landing, parking and warehousing fees it has been collecting from FedEx since it started operating the Subic hub in September 1995, said Areza.

He said about 800 workers of FedEx and its subcontractors will be affected. He said he expects the highly skilled workers can easily find jobs elsewhere in the economic zone.

Dozens of workers showed up before dawn Friday at the former hub to wave goodbye to one of the last FedEx planes to fly out of Subic.

"Even if the economy is doing well ... it's never a good time if a company as big as FedEx (leaves). We are sorry to see them go," Areza said.

FedEx officials were not immediately available for comment. (By OLIVER TEVES/ AP)

Source: MySinChew

Port Klang sees 10% fall in volume

Port Klang, the national maritime gateway for Malaysia, projects a 10% fall in cargo volume due to the bleak outlook for the economy this year.

Port Klang Authority (PKA) general manager Lim Thean Shiang said both port operators, Northport and Westports, started to feel the contraction in volume last month with a 16% drop in cargo volume against the same month in 2008.

“In an effort to cultivate and sustain the port business this year, especially import and export activities, PKA has decided on a blanket waiver for those who have difficulties in adhering to the three-day container free storage period at the port,” he told a press conference yesterday.

Port Klang previously had a five-day free storage period but this was cut to three days effective Jan 1.

Lim said the continuation of the waiver would be reviewed in July based on the economic climate then.

Lim Thean Shiang

“But, the Port Klang community must continue to upgrade their efficiencies to operate under the three-day free storage period when the economy revives,” he said.

Additionally, PKA will also continue the feeder incentive scheme by April but with a new pre-qualification criteria.

The feeder incentive is given to feeder operators that help bring cargo to Port Klang from other places in the region.

The incentive was frozen in October for PKA to re-study its contribution to the cargo growth at Port Klang.

A total sum of RM37mil in incentive had been given to feeder operators since 10 years ago.

On Port Klang’s performance, Lim said it had recorded a 12% increase in cargo volume to 7.97 million 20-ft equivalent units (TEUs) last year from 7.11 million TEUs in 2007.

“This achievement has propelled Port Klang to be ranked the 15th-busiest port of the world in terms of volume last year from number 16 the previous year,” he said.

Source: Star Online

Slump in Asian trade may drag into 2011

THE slump in Asian trade could last into 2011, putting more shipping lines out of business and potentially aggravated by signs of rising protectionism, the Hong Kong Shippers’ Council said last Friday.

Sunny Ho, executive director of the council, which represents exporters, importers and other shipping users, expressed shock at the pace of the meltdown in Asian trade in the past two months as shipments from major ports have skidded at double-digit rates.

“It’s the worst we’ve seen in the past 20 years. I’m particularly pessimistic. I think we’ll see a very sharp decline in Asian exports this year and negative growth in 2010. We might see some mild growth in 2011 but not back to levels we’ve seen over the past few years,” said Ho.

In Hong Kong, Shanghai, Singapore and other Asian ports, ships are now lying idle and loaded with empty containers as shipping lines use them as floating storage depots rather than pay to keep the containers in a depot.

Ho said investor expectations of a recovery in Chinese demand for raw materials, which has spurred a 30% surge in the Baltic Dry Index, a measure of freight prices in the past two days, was premature.

“The Chinese recovery will be shortlived. Prices of raw materials have come down so much that China has started buying again. But, unless there is growth in demand for consumer products, then demand for these raw materials will not be sustainable,” he said.

Ho is much more bearish than economists who forecast Asian trade will pick up in 2010 as global fiscal stimulus takes effect.

Container throughput from Hong Kong suddenly slumped 19% in the final two months of last year while throughput via the Shenzhen port in southern China fell 11% as recession in the United States and Europe depressed demand for Chinese goods.

China’s economic slowdown means growth in Chinese consumption would not be strong enough to pick up the slack in global demand, although a massive fiscal stimulus by the government would help, Ho said.

Over-leveraged US consumers, meanwhile, would have to save for the next few years and the US downturn was already giving rise to protectionism, he said.

Last month, the US further tightened documentary and inspection requirements for US imports of toys and other goods containing lead.

Ho saw a proposed “Buy American” clause in President Barack Obama’s stimulus package as another ominous sign.

“We are concerned that more protectionism will come. This makes it very costly for manufacturers,” he said.

Weak sales in Western markets left Asian manufacturers with a rising risk of order cancellations and demands to prolong payment times from retailers and other customers whose finances are stretched, Ho said. That makes some manufacturers reluctant to accept orders. - Reuters

Source: Star Online

Maersk cuts profit outlook on affiliate loss

COPENHAGEN: A.P. Moeller-Maersk A/S, the world's largest container shipper, said 2008 profit missed targets after Danske Bank A/S, in which the company owns a 20 per cent stake, reported a fourth-quarter loss.

Net income including minority interests probably totaled US$3.4 billion (US$1 = RM3.61) last year, compared with a November 12 forecast of US$4 billion to US$4.3 billion, Copenhagen-based Maersk said in a stock exchange statement on Thursday. The company also said it expects impairment losses from some other units that it didn't identify. Maersk is scheduled to publish earnings for 2008 on March 5.

Danske Bank, Denmark's biggest lender, on Thursday reported the first quarterly loss this decade after bad loans in Denmark and Ireland soared. Maersk said the bank's result will reduce its profit by US$280 million and the shipping company will write down the value of its Danske holding by US$220 million.

"Danske Bank didn't perform as we had hoped for, but I can say that we have no plans of selling our stake," chief financial officer Soeren Thorup Soerensen said in a telephone interview. "The performance of our other units was generally as expected in the fourth quarter."

The company's other units, in addition to the container line, include the Nordic region's second-largest oil and gas company and the world's largest refined oil-product tanker operator. After "impairment tests" on the other divisions, Maersk plans to write down those operations' value by US$300 million, the company said.

Maersk declined 100 kroner (100 kroner = RM64.5), or 0.3 per cent, to close at 30,900 kroner in Copenhagen trading, outperforming Denmark's benchmark OMX C20 Index, which fell 1.6 per cent. The shares have lost 36 per cent in 12 months, valuing Maersk at 137 billion kroner.

The new outlook was "better than expected," Christian Nagstrup, an analyst at Jyske Bank A/S in Silkeborg, Denmark, said by e-mail, reiterating a "buy" recommendation on Maersk stock. Stripping out the combined earnings reduction of US$800 million, Maersk would post profit of US$4.2 billion, at the high end of its previous forecast range, Nagstrup said. - Bloomberg

Source: NST Online

Somali pirates make off with US$3.2 million ransom

By KATHARINE HOURELD in Nairobi, Kenya for Businessweek

Somali pirates freed an arms-laden ship after a 4 1/2-month standoff Thursday, speeding off in small boats with a $3.2 million ransom. The U.S. Navy stood by helplessly, unable to accost the pirates because they still hold nearly 150 other seamen hostage.

The pirates counted the cash after it arrived by parachute drop and then began leaving the Ukrainian arms ship in small batches, navigating the choppy seas in small skiffs, pirate Aden Abdi Omar told The Associated Press after arriving in the central Somali town of Harardhere.

American sailors from two nearby warships inspected the departing boats to ensure that the pirates didn't take any weapons from the MV Faina's cargo, according to a spokesman for the ship's owner, Mikhail Voitenko.

But the U.S. Navy did not take action against the pirates because they still hold eight other ships and crew, said Cmdr. Jane Campbell, a spokeswoman for the U.S. Navy's Bahrain-based 5th Fleet.

"Even when you release Faina, there are still 147 mariners held hostage," Campbell told the AP on Thursday. "We're concerned for their well-being."

The $3.2 million was among the largest-ever reported ransoms.

Later Thursday, Faina's captain Viktor Nikolsky said his ship was under the protection of the U.S. Navy and will head to Mombasa, Kenya. He also said all crew members needed medical attention.

Ships from the U.S. Navy's 5th Fleet have closely monitored the Faina and its 20 surviving crew throughout the standoff after the captain died of a heart attack, and the U.S. sent medical workers to the ship after the pirates left.

"We are extremely pleased" at the release, said Vice Adm. Bill Gortney of U.S. Naval Forces Central Command. "The United States Navy and our coalition partners will continue to fight piracy, and work with the international community to find a long-term, shore-based solution to this maritime crime."

War-ravaged Somalia has not had a functioning government for 18 years and pirates made up to $80 million hijacking ships for ransom last year, seizing 42 vessels off the country's 1,900-mile (3,000-kilometer) coastline along the Horn of Africa.

The Sept. 25th seizure of the Faina and its cargo of weapons was a wake-up call about the danger that piracy posed to one of the world's most important trade routes, said London-based analyst Roger Middleton.

"It showed Somali piracy no longer affected just small coastal vessels but important and dangerous cargos," he said.

In November, pirates hijacked the Sirius Star, a Saudi supertanker filled with crude oil. And last week they took the MV Longchamp, a German tanker filled with explosive gas.

Intelligence agents had feared the weapons onboard the Ukrainian ship -- which include 33 Soviet-designed tanks and crates of small arms -- could fall into the hands of Somali insurgents who the U.S. State Department says have links to al-Qaida.

Diplomats in the region previously have said the cargo was destined for southern Sudan, something the autonomous region has denied. Kenyan government spokesman Alfred Mutua repeated Kenya's claim to the cargo Thursday.

The Somali pirates have netted between $50 million and $80 million in the past year, according to Middleton.

The high ransom payments mean pirates are unlikely to stop attacking. But now warships from countries including India, Britain, France, Germany, Iran and the United States are patrolling the waters off Somalia. China and South Korea also have ordered warships sent to the region.

Middleton said the naval interventions had reduced the success rate of attacks to about 20 percent. Last year, pirates took 42 of the 111 ships they attacked.

Graeme Gibbon Brooks, managing director of the British company Dryad Maritime Intelligence Service Ltd., said a recent drop in attacks was partly attributable to coalition activity and partly to unseasonably bad weather.

Most of the 16 attempted hijackings in 2009 occurred in the first two weeks of January, when the weather was fine. Three ships have been captured by pirates off Somalia this year.

But pirates are showing a worrying new sophistication in their attacks, several experts told the AP, including greater use of global positioning systems that allowed them to extend their range. Automatic identification systems -- originally designed to stop ships from colliding -- can also identify potential prey from a radio signal they put out.

A recent article in Jane's Intelligence Review says the pirates may be trying to buy magnetic mines and heat-seeking missiles that can be fired from the sea. Brooks said pirates also were jamming emergency frequencies with Arabic music or sending out false distress calls to lure warships in the wrong direction.

Pirates also have begun to mount diversionary assaults or multiple, simultaneous attacks on several vessels.

"We've gone from a pattern of sporadic attacks to a situation where the pirates coordinate," he said.

In one incident last week, pirates simultaneously attacked three ships. Coalition forces were able to save two, but the third -- the Longchamp -- was captured.

Vice Admiral Gerard Valin, the commander of a French naval task force, said there are five broad pirate gangs operating from Somalia, each with about 200 to 500 members.

In a typical attack, up to two dozen armed pirates in motorized skiffs draw up alongside ships, sometimes firing at the bridge, and use grappling hooks and rope ladders to clamber aboard. Many ships have no more than two dozen crew members anyway, usually without armed protection.

The coalition does not issue exact figures for security reasons, but Middleton said there are between 20 and 30 warships off the Somali coast. But Valin said even with all the extra firepower, it was hard to prevent attacks, due to the vast waters and the pirates' increasing ingenuity.

"I will not say congratulations," Valin said. "But we have to respect the adversary."

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Associated Press writers Malkhadir M. Muhumed in Nairobi, Kenya; Yana Sedova in Kiev, Ukraine; Barbara Surk in Dubai, United Arab Emirates; Donna Abu-Nasr in Saudi Arabia and Vladimir Isachenkov in Moscow contributed to this report.

Investor offers tankers to oil speculators

LONDON: Shipping investor Nobu Su plans to offer his fleet of 20 supertankers to speculators who want to store oil and bet they can sell it later in the year for a profit.

Su's Taipei-based company, TMT Co Ltd, will lease out its two-million-barrel vessels at below-market prices in return for a share of any profit his customers make on the trade in oil. His fleet, able to hold enough crude to supply Europe for two days, is available for immediate hire, he said.

"The oil price is very low," Su, founder and chief executive officer of TMT, said in an interview here on Thursday. "We get a lot of enquiries" about storing cargoes, he said.

Rather than buy crude now, store it and sell futures contracts to lock in a profit, Su said he thinks the trade will make even more money by simply purchasing the oil and storing it offshore. The investor sells it when crude prices rally later, he said.

Oil companies such as BP and banks including Citigroup, through its Phibro LLC unit, have stored as much as 80 million barrels of crude at sea, seeking to profit from the spread between immediate supply and futures. The price spread, known as a contango, narrowed for some grades this month, reducing opportunities for the trade.

TMT will help investors secure cargoes by introducing them to oil traders, Su said. TMT may store some cargoes in the Persian Gulf at cheaper prices on its four single-hull supertankers and deliver them in vessels with two hulls, he said.

The average price of storing two million barrels of oil on a tanker is about US$57,500 (US$1 = RM3.61) a day, depending on the duration of the contract, the quality of the ship and its location, according to data from London-based shipbroker Galbraith's Ltd. That works out to 86 US cents a barrel a month. Traders also have to pay insurance and financing costs.

Crude oil traded on the New York Mercantile Exchange, more than US$100 a barrel below its July 2008 record, has advanced 26 per cent from its low on January 20 as the Organisation of Petroleum Exporting Countries curbs output.

The cost of shipping Saudi Arabian crude to Japan, the tanker industry benchmark, has slumped for 10 consecutive trading sessions, according to the London-based Baltic Exchange.

The measure, updated once a day, fell 6 per cent to 46.72 Worldscale points on Thursday, which works out at US$37,022 in daily earnings for vessels.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in US dollars a tonne, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates. 

Source: NST Online

Weak US port traffic dampens energy demand

A DRAMATIC slowdown in activity at US ports may extend well into 2009 as the recession deepens, spelling weak demand for diesel from the shipping and trucking industries.

Cargo volumes at major US container ports have fallen for 17 straight months, and 2008 ended as the weakest year since 2004, according to the monthly Port Tracker survey by IHS Global Insight for the National Retail Federation.

“We don’t expect a significant increase in traffic at the ports until retail sales return to normal levels, and even then retailers will be careful not to overstock,” said Jonathan Gold of the National Retail Federation.

Port activity is a key economic indicator because it reflects consumption and trade. It is also a crucial reflection of demand for diesel, the fuel of choice for trucks moving goods to and from the ports.

Containers are loaded at the Maresk Lines terminal at the Port of Los Angeles.-AP

US demand for distillates like diesel and jet fuel fell by 5.8% in 2008 – the biggest drop since 1980, according to the American Petroleum Institute. This played a major role in the global decline in energy use that has pushed oil prices down more than US$100 a barrel since July.

The dropoff in diesel use may be accelerating, port activity statistics show.

The number of loaded shipping containers going in and out of the busiest US port complex in Southern California fell 23% in December from a year earlier, and 16.4% from the previous month, according to data from the Port of Los Angeles and the Port of Long Beach.

Together the ports – the two largest in the country – handle more than 40% of US imported goods.

“That’s a very brutal contraction at the end of last year,” said Antoine Halff, energy analyst at Newedge Group. “The volume of global imports and exports is coming down very hard and that’s likely to be continued due to the sudden eclipse of the US consumer.”

Container volume at the US ports may fall 5.6% in the first quarter of this year, according to Port Tracker.

Port of Long Beach spokesman Art Wong said: “We’re waiting for some signs that there will be a turnaround. This may be the hardest year to forecast because nobody knows when we are going to hit bottom.”

Trucking tonnage carried on US highways has fallen about 20% over the past six months – the biggest decline on record, according to the American Trucking Association.

The ATA says truckers can consume about 2.6 million barrels of diesel per day, accounting for about two-thirds of US distillate consumption.

Source: Star Online