GLG News by Mr. Craig Marston, Managing Director
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China will be the top shipbuilder, but not this year
July 9, 2007
China top for new orders | www.tradewinds.no
Though China has overtaken South Korea in new shipbuilding orders for the first quarter of this year, they are a few years away from overtaking their competitor in actual compensated gross tons delivered. With the orderbook representing 3.8 years of annual world wide capacity, the Chinese will achieve their 2015 goal well ahead of time.
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Let the Jones Act battle begin
July 9, 2007
US owners come out swinging | www.tradewinds.no
Apparently, OSG (NYSE:OSG) and Crowley Maritime will join the Shipbuilders Council of America in their lawsuit seeking to prevent ships converted outside of the United States from retaining Jones Act privileges. The arrival in the US of the Seabulk Trader, owned by Seacor (NYSE:CKH), back from its China double-hull conversion is the first available test under an earlier ruling by a federal judge in California.
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Whose crystal ball is accurate?
July 9, 2007
Evergreen and Maersk fall behind | www.tradewinds.no
The top 20 liner companies can be segmented by those who are gambling that 8000+ TEU megaships will be the backbone of post-2010 liner shipping, and those that feel the current order book and infrastructure limitations make megaship investment too chancy. In the long run, these ships will displace a substantial portion of long-haul trade, but getting to that point will likely be painful for many carriers.
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Maersk: long overdue move, but in the right direction?
July 9, 2007
Maersk appoints Carlsberg's Anderson in management rebuilding | www.tradewinds.no
AP Moller-Maersk (DC:MaerskA) finally dropped the ax on the management team that led the company into a $600M loss in 2006. However, tapping non-shipping executive Nils Anderson is a questionable move in the current environment.
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First look at the 2008 labor negotiations?
July 9, 2007
Global Insight: Ports to see record August despite labor talks | www.americanshipper.com
The 750 members of the ILWU's local 63 Office Clerical Unit authorized a strike next week for the contract that expired 30 June. A strike would be limited to the ports of Los Angeles and Long Beach. Given the less than forecasted container growth experienced this year, the impact of a strike would be manageable even with record trade forecasted for August. The real insight is whether this is an indication of how the talks will go with the ILWU over the main stevedore contract expiring in 2008.
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Excellent (and more realistic) plan for Chinese shipping
July 9, 2007
China wants to grow fleet with foreign investors | www.americanshipper.com
A statement by the Chinese government is opening the door for foreign investment in Chinese-flag shipping in order to meet the internal goal of tripling the fleet by 2010. The compromise allows up to 75% foreign owners and is exceptionally generous by worldwide cabotage guidelines. Coupled with related tax exemptions, this action should accomplished the government's goal.
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July 6, 2007
Stolt reports earnins impacted by litigation costs | www.americanshipper.com
Despite robust demand for chemical tankers in the parcel trades, Stolt-Nielsen reported 2Q07 results, driven by high litigation costs related to their defence of US Justice Department indictments of the company and two officers. Given the impending tough chemical tanker market and the stigma associated with their price-fixing activities of past years, the company should make a serious change in management.
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July 3, 2007
Seacor adds 20 | www.tradewinds.no
Seacor Holdings' (NYSE:CKH) Marine division is starting a JV with partner Nabors in which 20 of Nabors' supply vessel will form the operating fleet. Added to Seacor's 250+, mostly modern, AHTS and PSV fleet, this is a welcome investment in a growth area of Seacor's eclectic mix of businesses.
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Tata looking to vertically integrate
July 3, 2007
Tata talks continue | www.tradewinds.no
Tata Power Company (BSE:500400) plans for new coal-fired generating plants has prompted the need to secure the long-term supply of fuel. Tata's answer has been to spend $1.3b on a 30% stake in Kaltim Prima Coal and Arutmin. Concerned with transportation cost volatility, Tata is considering acquiring their own fleet. This would be a mistake and is unlikely to happen.
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June 28, 2007
Crew flee Bourbon ship | www.tradewinds.no
France-based Bourbon (Paris:GBB.PA) has been on a pace to establish themselves as the world leader in the offshore supply vessel industry. The second high-profile casualty this year is attracted very unwanted attention to the company in an industry that is becoming exceptionally safety conscious.
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June 28, 2007
Norden banks profit | www.tradewinds.no
Danish shipowner Norden is back on track after a dismal 2006. The most recent transaction was flipping a recently-acquired 2006 build Supramax for a pre-tax profit of $20.3m.
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Self-serving move will push new ship prices higher
June 25, 2007
China chops hull-block tax rebate | www.tradewinds.no
China has announced a 1 July repeal of the 17% tax rebate for exported hull blocks, ostensibly as part of its moves to curb their growing trade surplus. The move will likely push up South Korean and Japanese (the principal recipients of the Chinese hull blocks) ship prices and allow Chinese shipbuilders to follow suit.
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Yet another reason to be leery of the FFA market
June 25, 2007
Ruling gives FFA defaulters breathing room in US | www.tradewinds.no
A US judge has rejected the argument that FFA's are maritime contracts, thereby severely restricting the ability for parties to collect against defaults. While the instant case is far from finished, the latest ruling makes FFA market plays even more risky.
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Supramax market better protected than larger cousins
June 20, 2007
Supramax is hot | www.tradewinds.no
Supramax vessels, defined as handymax vessels with a DWT cargo carrying capacity between 50,000 and 60,000 tonnes, have found an exceptionally strong demand from commodity shippers. Despite a very heavy orderbook of over 40%, this market appears to be better insulated for continuing strong rates compared to Capesize and Panamax ships.
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Australian congestion gets worse
June 15, 2007
Queues set to stay | www.tradewinds.no
Just when the effects of quotas had dropped Capesize rates, severe weather has disrupted the port of Newcastle. While flooding has been an immediate problem, the damage done to rail lines is the more significant issue. Terminal managers don't expect vessel congestion to drop to the "manageable" level of 20 ships now until August or September.
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This will be the common story for liner shipping in 2007
June 15, 2007
Costs hurt CMA CGM | www.tradewinds.no
Liner shipping operators are citing rising costs in their lower earnings reports in 2007. Cutting to the heart of the issue - the reality is that the excess supply of ships, and subsequent lower load factors, is why costs are up. Increasing capacity faster than volume growth means costs will grow faster than revenues.
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June 14, 2007
Letdown, buyback | www.tradewinds.no
American Commercial Lines reduced its earnings guidance for 2007 to $1.45 - $1.65 from $1.65-$1.95 citing weaker spot grain markets and disappointing productivity levels at Jeffboat. On the surface, this doesn't make sense.
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Questionable time to build a boxship charter fleet
June 11, 2007
Synergy beefing up | www.tradewinds.no
GE and Citigroup-backed containership investment company, Synergy, is quickly building a fleet in advance of an anticipated early 2008 IPO. Drawing parallels to the success of Seaspan (NYSE:SSW), CEO Andreas Papathomas is targeting a $1b+ fleet prior to the IPO.
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Yangzijiang attracting big names
June 11, 2007
Yangzijiang set to bag $724m in boxship orders | www.tradewinds.no
Newly SGX listed Chinese shipbuilder Yangzijiang Shipbuilding continues their rapid expansion, bagging some big names for boxship deliveries in the 2009 to 2011 timeframe.
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June 8, 2007
Jinhui doubles up | www.tradewinds.no
Hong Kong and Oslo-listed dry bulk operator Jinhui Shipping & Transportation (Oslo:JIN.OL) reported 1Q07 earnings up 109% to $12.77m on a 49% jump in revenues. Given the disparity between current spot & TC rates against the average rates achieved in the first quarter, the future looks very bright.
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