MSC sending world’s biggest containerships to U.S to pick up empty boxes

MSC is deploying the world’s biggest ships to evacuate empty containers from China to the US, as carriers on the transpacific try to overcome imbalances after weeks of coronavirus disruption to their box control systems.

There have been reports of severe equipment shortages in the US and Europe as a consequence of carriers blanking around half of all headhaul sailings since Chinese New Year, due to the Covid-19 virus outbreak.

Alphaliner said MSC was redeploying the 23,756 teu MSC Mia to the transpacific leg of the 2M’s North Europe-Asia-USWC, combined AE1/Shogun-TP-6/Pearl, loop, and it will be the largest container vessel ever to call at the US.It added that two weeks later the 23,656 teu MSC Nela would shift from the AE2/Swan Asia-North Europe loop to the transpacific, to perform a similar function.

Alphaliner noted that, by replacing the normal 13,000 teu-plus ships that habitually operate its transpacific strings, MSC and 2M partner Maersk would be able to reposition more than 6,000 teu of empty containers to the US to ease pent-up booking demand.

Meanwhile, the damage to the US San Pedro Bay ports’ throughput by China’s enforced manufacturing lockdown is evidenced by February figures, just released by the Los Angeles and Long Beach port authorities.

At Los Angeles, the largest box port in North America, imports plummeted 22.5% last month, compared with February 2019, to 270,025 teu, while exports declined by 5.7%, to 134,468 teu. Empty container movements slumped by 35% to 139,544 teu.

At neighbouring Long Beach, imports dropped by 17.9%, to 248,592 teu, although exports were actually ahead by 19.3%, to 125,559 teu, and empty containers were down 12.8% to 164,277 teu.

However, executive director for the port of Long Beach Mario Cordero was optimistic about recovery.

“Once the virus is contained, we may see a surge of cargo, and our terminals, labour and supply chain will be ready to handle it,” he said.

However, notwithstanding hopes of a “v-shaped” bounce-back among ports and carriers, one leading liner analyst is warning that the industry is facing a contraction in global container volumes not seen since the financial crash of 2008.

Via his Linked-In platform, SeaIntelligence Consulting’s Lars Jensen warned that with the pandemic rapidly escalating in Europe and the US, the shutdown of non-essential public workplaces, events and leisure activities would see import demand drop sharply.

“Hence the expectation of a surge out of China to make up for the earlier shortfall will be postponed,” said Mr Jensen.

He added that if the virus crisis played out in a similar fashion to the financial crash, when consumers and businesses suddenly reigned-in their spending, it could result in a 10% contraction in container volumes, equalling a shrinking of some 17m teu globally for container lines and a loss of around 80m teu for container ports and terminals.

Neptune Pacific Line buys Singapore's PIL subsidiary Pacific Direct Line

Neptune Pacific Line, which provides container shipping services in the Pacific between Australia, New Zealand and Fiji, has acquired Pacific Direct Line (PDL), a subsidiary of Singapore-headquartered, Pacific International Lines (PIL).
Commenting on the purchase, Neptune, a subsidiary of Los Angeles-headquartered The Wonderful Company, said in a statement: 'The combined business will seamlessly link transport, warehousing, depots and customs clearance services and fully integrate customers' supply chains across 18 South Pacific markets.

'The acquisition of PDL will strengthen Neptune's Melanesian and Polynesian network, provide a link to Micronesia and the French territories, and enhance connectivity to global markets via strategic hubs in New Zealand and Fiji.'
Managing director of Neptune, Rolf Rasmussen, said: 'This purchase supports our long-term vision of creating the strongest and best regional network of shipping and logistics services in the Pacific Islands.

'By acquiring PDL, we can further develop our mainline shipping network to provide fixed-day services and increase the utilisation of our combined fleet, enabling us to continue to offer competitive freight rates. PDL's extensive logistics network will allow us to support our customers across their entire supply chain needs.'

Teo Siong Seng, executive chairman and managing director of PIL, commented: 'Our group strives to optimise our resources and to review our overall business approach for new business opportunities.

'The divestment of PDL is part of our strategic move that enables PIL to focus its resources on growing in the key liner markets that it operates in Asia, the Middle East, Africa and South America. We will continue to improve our liner services between Asia and Oceania including the South Pacific Islands.'
PDL currently operates throughout the South Pacific region and specialises in providing liner shipping services from New Zealand and Australia to the South Pacific Islands. With the acquisition of PDL, Neptune will now have a specialised fleet of nine vessels dedicated to South Pacific Island trades and a team of more than 800, most of whom are based in supply chain services in the region.
'Pacific Direct Line was founded to support the socio-economic development of the Pacific Islands by providing reliable, consistent shipping and logistics services,' said Oliver Ravel, CEO of PDL.
'Today, with the support of PIL, PDL has grown to become a market leader in the South Pacific. By selling the business to our regional partner, we can ensure that this legacy will live on and that our customers will continue to be supported by a local service provider that understands the needs of the region.' 

Container Lines may lose 17 Mn TEU in 2020 due to Coronavirus

It can no longer be ruled out that the container shipping industry might be looking at developments similar to the financial crisis of 2008, SeaIntelligence said, referring to the impact of the coronavirus pandemic.

“This implies a potential volume loss of 10% equal to 17 million TEU globally,” the Copenhagen-based provider of container shipping analysis warned.

“For the ports and terminals, they will be potentially looking at a loss of some 80 million TEU of handling volume in 2020,” Lars Jensen, CEO of SeaIntelligence pointed out.

As explained, the real underlying problem is the impact the pandemic will have in the longer term in 2020 and possibly beyond, not only on consumer spending but also on the willingness of companies to order goods in the first place – as well as their ability to do so, as a possible financial liquidity problem is beginning to appear. There is also a realistic risk of bankruptcies.

On the positive side, there are two elements helping the carriers. One is the collapse of the oil price which acts as a short-term cash infusion to carriers having bunker surcharges based on oil prices two months ago and paying bargain basement prices for oil today. The other is the discipline the carriers have shown in blanking sailings and avoided dumping freight rates to fill vessels.

“This means that until now rates have been relatively stable despite the coronavirus impact from China and might well also be through the coming period if we see a new raft of blank sailings,” according to SeaIntelligence.

“Finally, even if this negative scenario plays out fully, we also need to be prepared for the aftermath which will come in the shape of a sharp rebound where we will temporarily see capacity shortages and rocketing freight rates.”

 NYK announces world’s 1st onboard use of digital currency

Japanese shipping giant NYK unveiled what it claims to be the world’s first onboard use of digital currency.

The transaction was carried out through the MarCoPay fintech platform, which is operated by NYK and the Philippine-owned Transnational Diversified Group (TDG).

The duo launched a joint venture back in June 2019 aiming to establish a highly secure platform that would contribute to enhancing the lives of seafarers and their families.

MarCoPay is an electronic money platform designed mainly for seafarers hired outside Japan to make digital settlements with QR codes, international remittances and withdraw cash on a smartphone app.

By using MarCoPay to receive their salaries and purchase daily supplies on ships, the idea was to enable seafarers to go cashless on board and send money to their home countries and withdraw cash from ATMs anywhere in the world.

“Using MarCoPay, onboard purchases of daily necessities have been successfully performed digitally and hassle-free on a number of vessels, including those operated by other companies, and even in an unstable onboard communication environment,” NYK said.

“NYK and TDG will continue to prepare for a full launch, which will include the transmission of funds overseas to family members, by improving the efficiency of digital settlements and international remittances, promoting cashless operations on board, and expanding the network in which MarCoPay can be used by shipowners and ship-management companies outside NYK.”

EVFTA’s grand impacts on Vietnam’s industrial sector

The EU Vietnam Free Trade Agreement and Investment Protection Agreement raise many hopes for all of Vietnam economic sectors.

Last year, Vietnam’s manufacturing and processing sector experienced continued growth amid the US-China trade dispute, including exciting new investments. Arguably, the most notable drivers for the industrial sector last year included the signings of key free trade agreements.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership was officially set in motion in 2019 after years of negotiation and adjustments, and is expected to increase Vietnam’s GDP by 1.32% by 2035. In addition, the EU-Vietnam Free Trade Agreement (EVFTA) was finalised in June and will eliminate 99% of customs duties between the EU and Vietnam.

With these historic agreements taking place, the way other countries look at Vietnam is changing, resulting in a higher demand for skilled labour and education.

On February 12, we witnessed another huge milestone as the European Parliament ratified the EVFTA and the EU-Vietnam Investment Protection Agreement (EVIPA).

Therefore, only one more step remains before the agreement comes into full effect – the ratification by the European Council and by Vietnam’s National Assembly, which is expected to take place in this summer.

Both the EVFTA and the EVIPA mark Europe’s most comprehensive trade pact with a developing country and signify its ongoing commitment to Asian markets. The impacts of the agreements are expected to be unparalleled.

According to the Ministry of Planning and Investment, by the end of 2025 both agreements are estimated to increase Vietnam’s GDP by 4.6% and its exports to the EU by 42.7%.

On the other side, the European Commission forecasts that by 2035, the EU’s GDP will rise by US$29.5 billion and its exports to Vietnam by 29%.

Achieving access

After the ratification by the National Assembly, this agreement will be essential for the transition of the country’s industrial sector.

By enabling the latest production technologies and increasing workforce training, the Vietnamese government is actively easing qualms around viability, labour shortages, and rising costs. Moving to a more transparent business environment will help mitigate investors’ concerns and improve quality.

The EVFTA in particular enables Vietnam’s economy to move away from exporting low-value products and inputs to higher-value goods in high-tech, electronics, vehicles, and medical devices.

Global trade networks will give Vietnam access to a more persified range of sourcing partners, allowing for cheaper imports of inputs or intermediate goods, which in turn will boost the competitiveness of Vietnam’s exports.

In addition, through more partnerships with foreign companies, Vietnam can reap the benefits of knowledge and technology transfer that comes with such investments.

As Vietnam opens its doors to EU manufacturers in industries such as food and beverage, fertilisers, ceramics, and building materials, the tariff elimination will also benefit the country’s key export industries to the EU, including the manufacturing of electronics and smartphones, textiles and garments, and agricultural products.

Since last June, more industrial developers in Vietnam are confident that the EVFTA will boost investment in manufacturing and persify their occupier’s base.

For example, general director Bruno Jaspaert of DEEP C Industrial Zones (IZ) believed the agreement has already instilled more confidence in European manufacturers in Vietnam, and new European investors have already visited DEEP C last year, seeking to open a manufacturing base in anticipation of the benefits the deal will bring.

In preparation for the finalisation of the agreement, as a European company itself, the IZ was already strategically targeting the European market last year, even welcoming the delegation of EU ambassadors to visit the company’s site and present the strengths and uniqueness that the northern port city of Haiphong, Vietnam’s industrial sector, and the overall economy have to offer.

With the agreement being ratified this year, other respective IZ developers also expect to see a growing interest from European manufacturers in the next couple of years.

Jockeying for position

As demand continues to outpace supply, particularly in key industrial provinces, with occupancy rates reaching 75% in operational IZs nationwide, the competition for well-located manufacturing plots near the country’s main cities and ports has increased.

This, coupled with an influx of new international manufacturers, gives developers the right opportunity to strategically choose their occupiers and lease it to multinational companies in high-value added industries.

The industrial sector is growing strongly with a 10-fold increase in foreign direct investment (FDI) over the last decade. Good land supply is facilitating upcoming manufacturing projects with a rise of rental options and many solutions.

Vietnam must be more selective with projects to move up the value chain, improve its competitiveness, and ensure sustainable growth. Low labour costs and government incentives, particularly preferential tax rates, will continue to be critical drivers of FDI.

However, to maintain the transition to higher-value industries, Vietnam must focus on the quality rather than the quantity of investments.

Amid a worldwide slowdown, 2019 was an exceptional year for Vietnam’s economic growth. In that time, the country’s impressive macro-economic indicators supported the strong performance of the real estate market, specifically the industrial real estate segment.

The amount of investment hit US$24.56 billion, almost two-thirds of the total inflows. Vietnam’s economic outlook in the medium- to long-term is mostly positive, with the World Bank forecasting that real GDP growth will remain robust at 6.5% in 2020 and 2021.

Last year marked 10 consecutive years of increasing FDI inflows in the country and by the end of the year, the manufacturing and processing industry attracted the highest.

This year also got off to a positive start. From January to February 20, Vietnam attracted over US$5 billion in FDI, representing an on-year rise of 4.7%, according to the Ministry of Planning and Investment. Of this, US$4.5 billion was poured directly into new related projects.

Most inflows were in the production of electricity, water, and gas, with the manufacturing and processing sector in second place, attracting US$856.3 million, or 16% of total inflows in the first two months of the year.

Vietnam’s recent FTAs and superior trade networks will continue to push the country as a key destination for FDI, although it will also make the country more vulnerable to future slowdown in the global demand.

(Source: Seanews, World Maritime News, VN Customs News, Seatrade Maritime)