Sam Chambers April 13, 2023 Splash247.com

Toronto-based Brookfield Infrastructure Partners is buying Triton International, the world’s largest owner of containers, for $4.7bn.

“We believe this transaction provides an excellent outcome for all of Triton’s stakeholders,” commented Brian Sondey, CEO of Triton.

The sale represents a total shareholder return of approximately 700% since the 2016 merger of Triton and TAL International, Sondey said.

“Triton is an attractive business with highly contracted and stable cash flows, strong margins and a track record of value creation,” said Sam Pollock, CEO of Brookfield Infrastructure. “This transaction provides Brookfield Infrastructure with a high going-in cash yield, strong downside protection, and a platform for growth in the transportation and logistics sector. The transaction consideration also provides the opportunity for Triton shareholders to benefit from owning a globally diversified portfolio of infrastructure assets within a platform that has a proven history of generating long-term value for its shareholders.”

 Sam Chambers March 16, 2023 Splash247.com

The lull in box volumes is resulting in falling congestion and also in changes in container flows as reflected in the Container xChange Container Availability Index. 

The index, which measures the proportion of weekly import to export flows at ports around the world, shows that the share of imports from the total volumes handled at the ports of Los Angeles and Long Beach, America’s two largest gateways, has fallen 10% compared to last year.

As of Sunday, the number of containerships in US coastal waters had fallen to less than half of the count a year earlier, according to Bloomberg.

At Ningbo, meanwhile, China’s second largest boxport, after two years of handling more exports than empty returns and imports, the share of imported containers crossed into and has remained the majority since late last year as demand for exports fell. 

The sight of empty containers stacking up at ports across China has been something covered regularly by Splash in recent months. There were more than 5m empty standard containers stacked at ports across China in early February, twice as many as pre-covid, according to data from Dalian Maritime University.

In a sign of just how drastically the market has fallen, recently listed box booking platform Freightos said earlier this week it expects revenue growth of 15% to 21%, down from a prior forecast of 87%.

“Global shippers must now navigate in a tricky environment, as carriers still rely largely on blank sailings when they should close services outright,” Peter Sand, chief analyst at freight rate platform Xeneta, told Splash.

”We see 2023 as a year of excessive capacity management by the carriers,” Sand said, going on to list the likely order of defensive measures the lines will issue from their playbook: blank sailings, hot followed by cold idling, and finally demolition. Xeneta expects 400,000 teu to permanently leave the fleet in 2023. Year-to-date about 30,000 teu has been sold for demo.

Drewry’s World Container Index, a spot index published every Thursday, was down another $16 today to $1,790 per feu, 82% down from all-time highs recorded in September 2021.

March 6, 2023 Martina Li Asia Correspondent

Evergreen Marine Corporation has ordered 12,500 containers from Singamas Container Holdings for US$34.3 million, as the Taiwanese liner operator works towards expanding its business, despite the weak market conditions.

In January, Evergreen’s general manager Eric Hsieh unveiled plans to order 40,000 more containers – after having spent US$51.53 million on 9,800 new dry containers and 6,171 used boxes from Evergreen’s Singapore subsidiary in 2022. Last year, Evergreen also spent US$65.24 million to buy 7,800 reefers from Dong Fang International Container.

Evergreen also purchased its Singapore unit’s office for US$32 million to operate its own agency in the South-east Asian city-state, as the group expects delivery of 51 ships over the next two years.

Hsieh appeared to have been optimistic because of the pick-up in freight rates just before the Chinese New Year holiday, saying that Evergreen vessels on the Transpacific were fully loaded and lines attempted to impose a general rate increase (GRI) of US$1,000-$2,000 per FEU that month.

Hsieh had acknowledged there were long-running concerns about overcapacity. Alphaliner has forecast container shipping supply to grow by about 8% in 2023, with demand rising by just 2.7%. He said then, “We aren’t worried by the recent correction in container freight rates and we’re sticking to our expansion plans to boost our competitiveness.”

However, Hsieh thinks that stricter environmental regulations, such as the need for owners and operators to start meeting the requirements of the Carbon Intensity Indicator (CII), could remove about 10% of capacity from the market. The tonnage overhang therefore “may not be as serious as imagined”.

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By Martina Li in Taiwan 28/02/2023 The Loadstar

Zhong Gu Shan Dong Photo: VesselFinder

UPDATE: This article has been changed to reflect that there is no relationship or affiliation between Safetrans and Trasfar Shipping.

Safetrans Line has launched a liner service linking China with Morocco and Russia, joining several other newcomers on the Russian lane.

According to Linerlytica, the St Petersburg Direct service, calling at Qingdao, Shanghai, Ningbo, Nansha, Tangier (irregular), St Petersburg and Qingdao, began yesterday with the newly chartered 3,469 teu Heng Hui 2.

Meanwhile, three chartered ships from Zhonggu Logistics, of 3,398-4,872 teu, which Singapore line Transfar has diverted from its waning transpacific service, will soon join the loop, as will three more in April to boost frequency.

In its latest report released yesterday, Linerlytica remarked: “One year after the Russia-Ukraine conflict started on 24 February 2022, there have been significant shifts in the Russian container shipping landscape after sanctions shut off most of the traditional Baltic trade to Russia.”

Players unfazed by sanctions targeting Russia have jumped into the fray, with newcomers such as Safetrans, Torgmoll, Reel Shipping and OVP Shipping adding ships to the trade.

Congestion at the Russian Far East gateways of Vladivostok and Vostochny have generated demand for new services from Asia to the Black Sea and Baltic gateways of Novorossiysk and St Petersburg.

MSC retains a considerable presence in the Russian trades with feeder operations in all three Russian gateways while reputational risks have seen the other key European carriers withdrawing completely from the market.

Linerlytica analyst Tan Hua Joo told The Loadstar: “The Russian market is booming due to high cargo demand, with the Vladivostok gateway currently severely congested and carriers are opening new services to the Black Sea and Baltic gateways. Depending on which gateway, rates are highly elevated, starting from $6,000/feu.”

OVP, originally an LNG tank shipping business that was established in 2020, began container shipping operations connecting Vladivostok and Novorossiysk with China in June 2022. This week, OVP will offer connections to St Petersburg through slot purchases on Safetrans’ service.

Linerlytica estimates there are now 89 ships totalling nearly 92,000 TEU, serving the Russia Far East trade.

Russian container carriers have been acquiring tonnage to meet healthy demand, even as the overall freight market is bleak.

Anecdotal accounts from ship brokers indicate that FESCO and other Russian interests have been actively buying ships, as freight rates for Russia-linked routes remain steady.

Alphaliner reported that in the last 18 months, FESCO has purchased four boxships, with the latest additions being the 2008-built 698 teu FESCO Tatarstan (ex JRS Corvus) 2010-built 704 teu Acacia Ming, which were bought from Chinese owner Goto Shipping for $8.1m and $10m, respectively, in January.

FESCO Tatarstan has been carrying cargoes between Russian Far East ports and Asia, while Acacia Ming is pending delivery to the Russian operator, which just launched a new service linking Russia, India and Turkey.

FESCO currently owns 17 ships with capacities ranging from 508 to 3,091 teu, making it the 43^rd largest liner operator, with total capacity of over 29,000 teu. FESCO appears to be renewing its fleet, having sold the 1998-built 1,740 teu Vladivostok for demolition in January.

Russian forwarder Transit LLC, which launched its Russia-China liner service in the wake of international sanctions targeting Russia’s invasion of Ukraine, had bought its second ship in October. The 2005-built 660 teu Transit Lugovaya (ex Run Xing) was bought from Qingdao China Gem Ship Management, three months after the 2008-built 704 teu Transit Shamora (ex Run Chang) was purchased from the same owner. Supplementing its owned pair are six chartered vessels, taking Transit’s total capacity to 5,500 teu, making it the 100^th largest liner operator.

Brokers also told The Loadstar that Malaysian feeder operator MTT Shipping had sold the 2000-built 1,740 teu Pasir Gudang to Russian interests for $10m in January. The ship has been renamed Crystal St.Petersburg and reflagged from Malaysia to Sierra Leone. While the identity of the beneficial owner appears to be obscured, Crystal St.Petersburg is now classed by the Russian Maritime Register.

Sam Chambers January 17, 2023 Splash247.com

As the liner shipping party comes to a close, ships are cascading back from the long-haul east-west lanes to regional trades.

Latest data from consultancy Linerlytica shows that the total boxship capacity employed on the intra-Asia trades are rising again after a two-year decline.

Intra-Asia capacity peaked in early 2020 at 3m teu but fell to a low of just 2.6m teu by mid-2022 as carriers sought to maximise profits by deploying any available capacity, however small, on the transpacific and Asia-Europe tradelanes.

New Linerlytica data shows the slide has reversed with intra-Asia capacity now back to 2.8m teu with more newbuilds set to enter to the region soon.

Rates on many routes in the highly competitive intra-Asia region such as from China to Southeast Asia are already operating at below breakeven levels, Linerlytica warned in its latest weekly report.

 Sam ChambersJanuary 17, 2023 Splash247.com

Secondhand boxship prices are falling off a cliff. After a very muted second half of 2022 in terms of sales, the opening 17 days of 2023 have registered some severe drops in prices for the previously buoyant sector.

Brokers Southport Atlantic note the sale of the 2007-built, 2,553 teu G. Ace as a good illustration of the fall in values. The ship, just sold to Chinese interests, managed to obtain $13.7m, a sister ship, ST Ever, going for as much as $46.5m 12 months prior.

Similarly, the sector’s most aggressive buyer in recent years, Mediterranean Shipping Co (MSC), has just picked up a comparative bargain, paying $9.75m for the 21-year-old, 2,478 teu Buxcontact. A sister ship went for $23m 12 months ago.

“The candidate list continues to grow and pricing is under pressure. It will be interesting to note where new benchmarks land in the coming weeks,” the most recent container report from Braemar noted.

Boxship S&P volumes fell back last year from the record seen in 2021 with Clarksons Research tallying 0.6m teu sold in 2022 down from 1.6m teu. Secondhand prices fell notably in the second half as dropping markets and increased investor uncertainty took their toll with Clarksons’ secondhand boxship index falling 46% across the year.

“S&P price prospects are unlikely to improve anytime soon, due to the looming overcapacity triggered by the monumental orderbook,” a recent report from Alphaliner noted, suggesting today’s market could hold “interesting opportunities” for buyers that have so far been excluded from the market due to the prohibitive cost of tonnage.

in Freight News 20/01/2023

Pakistan could possibly witness fuel shortages in the near future as several oil importing companies face hurdles in securing dollars needed to close import deals, at a time when the South Asian country’s foreign exchange reserves have dwindled to the lowest level in almost nine years.

Sources told S&P Global Commodity Insights that the Oil Companies Advisory Council, members of refineries and oil marketing companies had written to the country’s finance ministry about oil importers facing challenges in opening letters of credit for the import of petroleum products. It could take up to six to eight weeks for import operations to normalize, sources added.

“If L/Cs are not established on a timely basis, critical imports of petroleum products will be impacted, which may lead to a fuel shortage in the country, further deteriorating the demand,” said Sumit Ritolia, a refinery economics analyst at S&P Global.

“The prolonged unavailability of import contracts and L/Cs will be sending negative signals to international oil suppliers, leading to high prices for imports and even it may lead to the forced cancellation of oil cargoes,” he said.

Energy-deficit Pakistan imports approximately 430,000 mt of motor gasoline, 200,000 mt diesel and 650,000 mt crude oil at a cost of $1.3 billion/month, according to the letter from the oil industry to the finance minister.

The banking hurdles already caused delays in the arrival schedule of multiple cargoes as well as led to the cancellation of a few cargoes, the letter said, adding that the situation has severely deteriorated during January.

“If L/Cs are not established on a timely basis critical imports of petroleum products would be impacted,” it said.

Hurdles mount

Attock Petroleum Ltd., the country’s second-largest retailer of petroleum products, as well as Pakistan Refinery and Hascol Petroleum, have written letters to the Oil Companies Advisory Council and the country’s central bank about some banks refusing to honor import documents.

“Local banks have unfortunately regretted to establish our oil import L/Cs on the plea that the State Bank of Pakistan has instructed to do rationing on their L/Cs establishment based on their foreign reserves situation,” said the letter from an oil marketing company.

Pakistan’s central bank reserves have dwindled to $4.3 billion, according to the State Bank. The reserves reached a low of nearly eight years and 11 months, enough to cover imports for only three and half weeks.

The dollar shot up to its strongest level against Pakistani rupee at 240.1 on July 29, 2022, and the exchange rate was last quoted at 228.2 Jan. 16, data from the State Bank of Pakistan showed.

“Reserves are down because of continuous principal and debt payments on foreign loans and drying up of external inflows from bilateral and multilateral sources,” said an analyst.

Pakistan’s ministry of energy and the Oil and Gas Regulatory Authority in a separate letter to the central bank said attention had been drawn toward insufficiency of credit lines and reluctance of banks to open L/Cs for oil imports due to various apprehensions.

They have requested the State Bank to urgently intervene and ask the banks to help open L/Cs for imports of fuels, including lubricants, to avert any risk of fuel shortages in the country, the letter added.

Pakistan’s potential domestic fuel supply crunch closely resembles Southeast Asia’s struggle to procure adequate supplies of middle distillate products during second-half 2022.

The dollar strengthened sharply against several Southeast Asian currencies, including Vietnamese dong and Indonesian rupiah in the fourth-quarter 2022. Many small-scale trading companies in the region struggled to finance dollars from local banks to conduct their import and distribution businesses, S&P Global Commodity Insights reported previously.

Slowing sales

Pakistan’s motor gasoline sales in December fell 11% year on year to 620,000 mt, diesel consumption decreased 15% to 520,000 mt and fuel oil fell by 3% to 120,000 mt, according to data from the Oil Companies Advisory Council.

In the six months ended Dec. 31, 2022, sales of motor gasoline declined 15% year on year to 3.83 million mt, compared with 4.51 million mt during the same period a year earlier. Diesel sales dropped 23% to 3.36 million mt and fuel oil fell 24% to 1.45 million mt, the data showed.
Tahir Abbas, head of research at brokerage Arif Habib, said the country was witnessing a slowdown in economic activity amid weak industrial output, leading to a decline in overall consumption. Higher petroleum products prices, a decline in automotive sales and lower demand from fuel oil-fired power plants had squeezed overall products sales, Abbas added.
Source: Platts

January 3, 2023 Container News

The pandemic-driven surge in demand for ocean imports catapulted global freight – and rates – to new levels of infamy in 2021 and 2022.

According to Freightos, logistics costs have played an important role in spiking inflation and they may play an equally important role in its easing as rates fall and operations normalise.

Transpacific ocean rates to the West Coast have stabilised at 2019 levels for about a month now, and prices to the East Coast are just 12% higher than in December 2019 as demand and congestion ease.

Additionally, Asia – Europe rates have fallen 50% in the last six weeks, but remain 30% higher than in 2019 as blanked sailings increase, and congestion and some recent labor disruptions may be slowing operations.

Carriers are expected to blank about half of all scheduled ex-Asia sailings for the months after the Lunar New Year, while some Asian manufacturers will take the unusual step of shutting down for the holiday as early as the second week of January in another indication of sagging demand.

Freightos reported that Asia-US West Coast prices dipped 3% to US$1,377/FEU. This rate is 91% lower than the same time last year. Asia-US East Coast prices also fell 10% to US$2,924/FEU, and are 82% lower than rates for this week last year, while Asia-North Europe prices increased 11% to US$2,405/FEU, and are 83% lower than rates for this week last year.

Judah Levine, head of research, noted that slowing volumes have led Asia – US West Coast rates to stabilise at 2019 levels for about a month now. Prices to the East Coast have continued to fall on easing demand and congestion – 10% since last week – and though the rate of the decline has slowed in December, the current price is just 12% above 2019 levels.

Moreover, Asia – North Europe rates have fallen 50% since mid-November. However, blank sailings, some persisting congestion and renewed labor disruptions in some ports may be combined to keep prices 30% higher than in December 2019.

Transatlantic prices of more than US$5,600/FEU remain almost three times higher than in 2019, despite the fact that they have declined 30% from their May-to-September US$8,000/FEU peak as carriers add capacity to this still-lucrative lane and congestion eases.

Furthermore, carriers are expected to blank about 50% of all scheduled sailings from Asia to the US and Europe after the Lunar New Year (LNY) holiday – which runs from late January to early February – suggesting they anticipate the slowdown to continue through the typical post-LNY lull months until inventories run down and demand picks up some time in the second quarter of the year at the earliest, or possibly not until next year’s peak season.

Another sign of sagging demand, according to Levine, is the unusual move among some Asian manufacturers to close for the holiday as early as the second week of January.

Easing covid restrictions in China is also contributing to more workers out sick, while other protocols will reduce barge and trucking capacity earlier in the month too, which may also be driving the earlier start to the holiday, according to Freightos analysis.

 Sam Chambers Splash247.com

Liner shipping will make just 5% of 2022’s mega profits, and up to 25% of the massive container orderbook will likely be postponed. These are the headline predictions in a unique survey carried by Splash today looking at how the container sector navigates its way out of its greatest ever boom.

Both Drewry’s World Container Index and the Shanghai Containerized Freight Index (SCFI) have halted their plunges at the cusp of the new year, however, experts are warning carriers will need to brace for some very challenging conditions in the coming months.

“Carriers are starting the year with a weak hand, and I expect they would turn in losses before the year is over,” said Hua Joo Tan, the founder of Asian consultancy Linerlytica.

More bullish is John McCown, whose Blue Alpha Capital quarterly liner profit reports have become essential reading during box shipping’s record earnings run since 2020.
McCown anticipates that the carriers will be profitable in 2023 with a net income to revenue margin in double digits but with aggregate quarterly profit levels below the Q4 level recorded in 2022.

More aggressive capacity management will be a central factor as lines doggedly avoid red ink this year, McCown suggested.

“There are certainly a lot of moving parts and we’re at a fulcrum point right now, but my broad view is that the container shipping sector will be performing better than most think and there has been a fundamental change in sector DNA,” McCown told Splash.

UK consultants Drewry estimate liner shipping made record combined operational profits of $290bn last year, something that will slide to just $15bn in 2023, with shippers enjoying more affordable freight rates and better service reliability.

“2023 will not be just about lower carrier profits,” said Philip Damas, the managing director of Drewry Supply Chain Advisors. Among the other key trends to watch, according to Drewry, are the easing of port congestion and associated operational delays around the world and the return of overcapacity in container shipping.

For Peter Sand, chief analyst at freight rate platform Xeneta, 2023 looks certain to be the second year in a row of falling container volumes, and subsequently the main characteristic of the market to look out for will be the idle fleet. This includes both hot and cold lay-ups in addition to blank sailings.

Making headlines this year for sure, Xeneta expects that 25% of the scheduled orderbook will be postponed, while no more than 10% is expected to be cancelled – and that would probably be options not called rather than outright and expensive cancellings.

Sand reckoned carriers with heavy exposure to long-term contracts rather than spot business will remain profitable this year. Carriers with a full exposure to the spot market are already losing money and will continue to do so for many months to come, he warned.

On top of the worrying amount of new tonnage due to enter the container markers this year and next, HSBC sees downside risks to demand in 2023 as inflation bites into household savings, which the bank said this week could likely trigger another round of price competition.

Scrapping is likely to ramp up over the course of the year, according to Daniel Richards, associate director at UK consultancy Maritime Strategies International (MSI). MSI expects scrapping will reach a year-end total of around 270,000 teu, before increasing even more in subsequent years. Xeneta, meanwhile, is forecasting up to 400,000 teu worth of ships will be torched this year, still some way short of the record 696,000 teu scrapped in 2016.

Attention is now turning to contract rates, with TPM, the industry’s leading business event coming up shortly.

Contract rates are collapsing on most routes, based on early data seen by Drewry.

“Despite a current Tic Tac Toe environment, BCOs will still not be able to play their best hands depending only on the flop. 2023’s longer term ocean freight market requires the skills of a chess grandmaster to successfully check their opponent, the ocean vendors,” advised Steve Ferreira, the CEO of New York-based shipper advisory Ocean Audit.

“The pendulum has clearly swung back towards shippers,” said Richards from MSI, predicting that some shippers will simply hold off from extensive contract commitments unless the rates they are offered end up close to pre-pandemic levels.

“It will likely be a frustrating contracting season where neither side feels it has gotten all it wanted, but also where worst-case scenarios were avoided,” Richards predicted.

For all the very latest container shipping news and market trends check our Splash’s dedicated liner coverage here.

Credit VesselFinderBy 

Martina Li in Taiwan Theloadstar.com

Shanghai Jin Jiang Shipping, the liner subsidiary of Shanghai International Port Group (SIPG), submitted its application for an initial public offering (IPO) to the Shanghai Stock Exchange on Friday.

Commonly referred to as JJ Shipping, the firm will issue 190,412 shares, 15% of its stock to be floated, allowing SIPG, which operates most of the container terminals in Shanghai port, to maintain control.

Currently, SIPG owns 98% of JJ Shipping, the remaining 2% held through another subsidiary, Shanghai Port International Passenger Center.

Guotai Junan Securities is the sole bookrunner for the IPO, first mooted in 2021. No fundraising target or listing timeline was disclosed in the listing prospectus.

Primarily an intra-Asia carrier, JJ Shipping entered the long-haul trades in 2021 after purchasing slots on Alibaba affiliate Transfar Shipping’s transpacific service.

The company says in its prospectus it will use the IPO proceeds to expand its fleet, particularly building smart and eco-friendly ships, and digitalise its logistics services.

Specifically, JJ Shipping plans to build six 1,800 teu and two 2,400 teu ships. Its subsidiary, Shanghai Hai Hua Shipping, plans to spend CNY211m ($31m) on two 1,000 teu ships for domestic coastal services.

Currently, JJ Shipping is the 35th–ranked liner operator, with a total capacity of nearly 40,000 teu on 29 owned ships and 13 chartered vessels. The fleet is dominated by 1,100 teu vessels. It has four 1,900 teu ships on order at Yangfan Group for delivery this year.

JJ Shipping said: “Investing in new shipping capacity will improve our cost advantage and enhance the company’s competitiveness. To suit our expansion strategy in South-east Asia and other markets, the company will expand the fleet size in a timely manner and improve the ratio of owned and chartered capacity of the route, so as to cope with market fluctuations.”

Addressing growing calls for shipping to slash emissions to meet the global target of decarbonisation by 2050, JJ Shipping said it would accelerate the pace of ‘green’ and low-carbon vessel construction.

JJ Shipping added, “We will steadily demolish old ships, prioritising the application of fuels such as LNG and methanol on new ships.”

For its digitalisation, JJ Shipping plans to introduce artificial intelligence to the back-end operations that will apply big data analysis and optimise its digital crew management system.

In 2021, amid record high earnings for the liner industry, JJ Shipping’s net profit more than doubled from 2020, to CNY1.23bn . In H1 22, it saw a net profit of CNY993.46m.

Looking ahead, the carrier said: “As the Covid-19 pandemic gradually normalises, vessel turnover will rebound, and the shortage of shipping capacity will be alleviated.

“Freight rates may drop, and the company’s operating performance may decline, to a certain extent. If there is an excess supply of shipping capacity, there may be a downside risk in market freight rates, which will adversely affect our operating performance.”

Several container lines have filed IPO applications in Shanghai and Hong Kong, including TS Group and Ningbo Ocean Shipping, hoping to attract investors after two years of record earnings. However, others, like South Korea’s SM Line, have withdrawn listing attempts due to lacklustre interest.