Grim economic outlook for global box cargo shipping sector: Drewry
ANALYSTS from UK-based shipping consultancy Drewry have warned that the devastating disruption to trade and the subsequent shock to global economies in 2020's first half will have a lasting impact on how ocean carriers ride out the bad weather created by the global pandemic.
The company's research managers Philip Damas and Simon Heaney mapped out forecasts as best they and their company could for the container shipping sector in what are uncharted waters. The weather report was not good.
Drewry's senior manager of container research Mr Heaney said second-quarter 2020 container port throughput is projected to drop an estimated 16 per cent compared with the same time last year, and the company's revised baseline overall outlook for 2020 has global container cargo handling down 8 per cent. "And that would be the worst performance since the financial collapse of 2009."
It might also be an optimistic view, reports weekly business news journal, Business In Vancouver, BIV.
Mr Heaney noted that a scenario in which the pandemic lingers deep into 2020 and is followed by another outbreak in 2021 would result in a 12 per cent drop in container traffic this year followed by another 6 per cent decline in 2021.
"Such an outcome," he said, "could have very grave implications for the container industry and would certainly require more radical surgery beyond the industrial scale of blank [cancelled] sailings we are currently witnessing."
That radical surgery from a prolonged downturn, he added, "would undoubtedly raise the risk of a major carrier bankruptcy, and in this nightmare scenario we would expect to see mass idling of ships and staff reductions."
That could have serious consequences for Vancouver-based Seaspan Corp, which is the world's largest lessor of container ships. Its customers include major container carriers such as Cosco ; Yang Ming Marine, which reported a US$27 million loss in 2020's first quarter; and the Ocean Network Express (ONE) shipping alliance.
Drewry's Z score financial metrics, which are used to assess how close a container carrier company is to slipping into bankruptcy, noted that eight of the 11 global container carriers assessed were in the Z score's financial distress zone.
Only three were relatively secure, according to Drewry's managing director in charge of logistics practice Mr Damas. He noted that Drewry's Z scores were based on financial data from the end of 2019.
"So as we move into the current market downturn, these Z scores will deteriorate. Therefore we should not [discount] the possibility that one of the weaker carriers could reach Hanjin-type levels and disappear."
Mr Damas added that the 8 per cent projected drop in global container volume represents a revenue reduction of approximately US$18 billion for the container carrier sector.
Mr Damas also noted that several other issues are threatening to seriously disrupt container shipping. They include the challenge of repatriating seafarers whose employment contracts with ships have expired but cannot return to their home bases because of international travel restrictions.
If those crew members or their unions do not agree to contract extensions, ships will be under-manned and considered unseaworthy. That will force more cancelled sailings and further disrupt global trade and supply chains.
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Yang Ming builds new smart 2,800 TEU container vessels
TAIWAN's Yang Ming Marine Transport Corp says its ten 2,800 TEU container vessels, currently being constructed by CSBC, will receive Smart Ship notations from international classification societies and will be delivered and deployed to the company's intra-Asia services this year.
ABS, DNV GL, Bureau Veritas (BV) and Classification Society (CR), a Taiwanese non-governmental and non-profit class society, that is not a member of the International Association of Classification Societies, are the organisations that will award notations to the YM container ships for their technology equipment.
Five of the series of vessels, YM Celebrity, YM Continent, YM Certainty, YM Credibility and YM Continuity, will be the first batch of container ships to be awarded ABS Smart notations in the world, the company says.
The notations include Smart INF (Data INFrastructure for Smart Function implementation) & Smart SHM (Structural Health Monitoring).
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China issues US$3 billion in consumption vouchers to prime pump
MANY local governments have issued digital consumption vouchers via the country's dominant mobile payment platforms to boost the coronavirus-hit economy, but experts say this is unlikely to become a regularly used policy tool, reported Caixin.
Consumption vouchers, some of which are digital and accessible through platforms including Ant Financial Services Group's Alipay and Tencent Holdings' WeChat Pay, have been distributed across 28 provincial-level regions and over 170 prefecture-level cities, Wang Bingnan, a deputy head of the Ministry of Commerce, said at a briefing recently.
Mr Wang said that the value of the already distributed vouchers, which can be chiefly used for retail and catering spending, amounted to over CNY19 billion (US$2.7 billion). Mr Wang said that the vouchers have boosted consumption growth and offered a helping hand to businesses that had been hit hard by the coronavirus outbreak.
Ant Financial CEO Hu Xiaoming, also known as Simon Hu, said at a forum in Beijing that over 100 cities have used Alipay to distribute digital consumption vouchers. Mr Hu said that Alipay's data showed that for every CNY1 distributed through the vouchers, consumers are spending an extra CNY8. In some areas, this figure has reached CNY15, he said.
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China warns of 'new cold war' as US trade tensions rise
THE prospects of a trade war between China and the western economies have increased rapidly in recent days as Beijing accused the US of pushing relations towards a "new cold war".
China's foreign minister, Wang Yi, said: "China has no intention to change, still less replace the United States," in the latest escalation in tensions between the world's two largest economies. "It's time for the United States to give up its wishful thinking of changing China and stopping 1.4 billion people in their historic march toward modernisation."
He said US political attacks on China over the coronavirus and global trade matters "are taking China-US relations hostage and pushing our two countries to the brink of a new cold war".
Relations between the UK and the US have also soured as a string of Conservative politicians pressed on for tighter controls to protect struggling UK companies from Chinese takeovers.
In addition, the UK announced an emergency review of the deal to allow the Chinese telecoms firm Huawei to help run the forthcoming 5G mobile network, reports the UK's The Guardian.
Britain's National Cyber Security Centre (NCSC) is expected to conclude that recently announced US sanctions against Huawei will make it impossible to use the Chinese company's technology as planned.
A government spokesman said: "Following the US announcement of additional sanctions against Huawei, the NCSC is looking carefully at any impact they could have to the UK's networks."
Last week British Prime Minister Boris Johnson was forced to give in to to Conservative backbench rebels opposed to the presence of Huawei in 5G networks. The prime minister said he was drawing up plans to reduce the Chinese company's involvement to zero by 2023.
Over the weekend, a series of well-known Conservative MPs added their voices to the debate by either writing or tweeting newspaper articles about the UK distancing itself from China. Tom Tugendhat, the chairman of the Commons foreign affairs committee, argued in the Financial Times that "time is running out" to accelerate new legislation designed to make it harder for state-owned companies from countries such as China to take over struggling UK firms.
"Britain needs to bring its laws on foreign ownership in line with partners," he said. "The Committee on Foreign Investment in the United States provides one model that gives the government discretion and dissuades many inappropriate buyers before a veto is required."
The debate in the UK came as Mr Wang told a press conference on the sidelines of National People's Congress meetings in Beijing: "Regretfully, in addition to the raging coronavirus, a political virus is also spreading in the United States. This political virus is using every opportunity to attack and smear China."
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PEMA quay crane makers provide key insights for quay crane operators
THE Brussels-based Port Equipment Manufacturers Association (PEMA) has released a detailed paper of practical guidance on the safe and efficient operation of STS cranes in the age of mega ships.
Hoist Winch Gearboxes and Brakes on STS Cranes key offers commentary and practical advice for operators, said the PEMA statement.
The paper highlights issues related to hoist heights and outreach distances, it identifies common challenges associated with gearboxes and brakes, compares a variety of critical technical specifications, and provides feedback from STS end-users, it said.
"This paper brings together some of the world's leading equipment manufacturers to share their expertise. We hope that it will become indispensable for all STS operators," says PEMA president and chairman Ottonel Popesco.
PEMA regularly publishes papers and reports on key issues facing the global ports and terminals sector. The Association's publications are available to download as PDFs at: pema.org/publications.
As part of its efforts to support the industry during the Covid-19 pandemic, all PEMA information papers, including Hoist Winch Gearboxes and Brakes on STS Cranes, are currently available free of charge, said the PEMA statement.
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Amazon aims to expand air cargo fleet to 200 planes by 2028
AMERICAN e-commerce giant Amazon is working on expanding its Prime Air cargo fleet to encompass 200 planes by 2027 or 2028, reports Bloomberg.
Currently, the e-commerce service utilises 42 freight aircraft to move goods across the world. Once fully upgraded, the corporation's air delivery segment will near the size of the United Parcel Service's (UPS) aerial transportation capacity.
Initially an online bookseller, Amazon has established itself as one of the world's largest retailers in the last 26 years. As it has expanded, the firm has run into problems with delivery providers like FedEx that view it as competition. In response, the company created Prime Air fleet to supplement and better manage its global supply chain in 2016.
Recently, the corporation has worked aggressively to increase its number of freight aircraft. In less than a year, the firm has doubled its fleet size and will expand it by a factor of five within the decade. As part of the initiative, the company will also spend US$1.5 billion building a facility in Cincinnati, Ohio, which will accommodate 100 planes and 200 flights per day, according to media reports.
DePaul University's Chaddick Institute of Metropolitan Development published a report indicating Amazon's new hub might allow it to offer overnight package transportation. By doing so, the corporation will further reduce its reliance on third-party logistics providers and expedite its package deliveries. In addition, the e-commerce brand's supply chain enhancements are not limited to its cargo plane fleet.
Amazon has also dedicated some of its resources to developing more robust autonomous vehicle solutions.
Last year, the corporation took part in a $530 million Series B fundraising round conducted by self-driving car company Aurora. Amazon explained it had an interest in harnessing the firm's technology to make its operation safer and more productive.
Amazon also placed an order for 100,000 electric delivery vans from battery-powered vehicle startup Rivian. The e-commerce company said it made the purchase as part of its broader commitment to protecting the environment. But the corporation also likely has an interest in the burgeoning automaker's in-development self-driving car platform.
Despite possessing a market capitalisation of over $1 trillion, Amazon's rising spending costs have severely cut into its profitability.
By building its air freight division, electrifying its ground fleet, and developing last-mile bots, Amazon is working to lower its logistics costs and ensure its long-term financial stability.
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JD.com re-introduces air cargo service from Shenzhen to Wuxi
BEIJING-HEADQUARTERED online marketplace JD.com has re-launched its dedicated all-cargo operation from Shenzhen to Wuxi at the beginning of the month through a new partnership with Zhejiang Loong Airlines.
The company said that the dedicated Boeing 737-300F, which is branded with the JD Express logo, will enable it to provide faster and more reliable delivery service to customers in Yangtze River Delta and Great Bay Area.
"Customers who place orders in the afternoon can receive them the next morning, expanding coverage at this speed by 300 per cent to 24 cities," JD.com said in a statement.
The service will initially fly six round trips a week, covering business-to-customer transportation and individual parcel delivery throughout China. The company has also opened this service to third party merchants and partners beyond the JD platform, reports London's Air Cargo News.
"The use of an all-cargo aircraft is more reliable and flexible than the common alternative of belly-hold capacity on civil passenger airlines because flight times can be adjusted according to industry demand," it said.
"In full capacity, this aircraft can load 14 tonnes of goods, covering 130 cubic metres, about ten times the amount of belly-hold capacity on a single civil passenger aircraft.
"The aircraft also addresses some of the challenges regarding air transportation resource availability during Covid-19," the company added.
JD has already partnered with industry leading airlines, including China Southern Airlines, Air China Cargo and China Eastern Airlines.
Looking ahead, JD plans to open more all-cargo flights from Wuxi to Tianjin, stretching the service to Beijing-Tianjin-Hebei area. The company first launched an all-cargo operation in November 2018.
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Volga-Dnepr delivers 48 Covid-19 sterilisation trucks to Dubai
MAJOR oversize and super-heavy cargo transportation provider, Volga-Dnepr Airlines of Russian, has operated six AN-124-100 charters, transporting 48 street sterilisation vehicles from Shanghai to Dubai for final destination Abu Dhabi, where the vehicles will be used for a "national disinfection programme" in preventative action against Covid-19.
The flights were in cooperation with Volga-Dnepr Airline's long-term partner and colleague in the heavy-lift market - Maximus Air. Each flight was loaded with 8 trucks, utilising 3 aircraft within a 4-day period - made possible by the world's largest fleet of AN-124-100s.
The Volga-Dnepr Group has been operating multiple charter flights daily as the international community battles against the spread of Covid-19. The full fleets of Volga-Dnepr Airlines, Air Bridge Cargo and Atran have all been utilised to meet the demand for transporting vast volumes of airfreight worldwide. Whilst most of the commodities flown have been PPE, the Volga-Dnepr charter team has also been delivering crucial oversized/ heavy-lift equipment to support global health infrastructures, reports AJOT.
Humanitarian director for Volga-Dnepr Group, Stuart Smith, commented: "Volga-Dnepr Group's ability to provide customised solutions during this critical period is demonstrated by our incredible number of daily charters transporting medical and sanitary equipment. All four aircraft types operated by the Volga-Dnepr Group have been flying around the clock to keep international supply chains open."
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