Bulk Distributor Sept/Oct 16 - Page 2

2 BULKDISTRIBUTOR Shipper September/October 2016 Freight rates rise following Hanjin collapse Shockwaves from Hanjin collapse may be felt for months as $15 million worth of goods is left stranded at sea S hipping giant Maersk Line is reporting a rise in freight rates and a surge in new clients following the collapse of Hanjin Shipping company. Hanjin, South Korea’s biggest container company with around 200 ships, filed for bankruptcy relief in Seoul, leaving many vessels effectively marooned at sea as ports around the world initially refused to allow them to dock.However, a last-minute $54 million bail-out from its biggest shareholder, Korean Air Lines, allowed the beleaguered company to pay for the remaining goods to be unloaded from its fleet at the beginning of September. Now Maersk Line, the world’s largest container shipping company, says the market is responding to the situation. “There’s no doubt that we’re seeing a reaction in the rate market,” Klaus Rud Sejling, the executive in charge of Maersk Line’s east-west network, told Bloomberg. “The question is, what will happen with the rates in the longer term. In the short term, the effect is positive, but there are many factors that can influence rates in the medium and in the long term. What we’re hearing from the customers that are coming to us is that they are seeking a partner that’s stable. Customers are coming to us because we are financially strong.” Maersk Line announced it will open a new service from Asia to the United States west coast to match the demand from Hanjin’s former customers. Sejling said that the new capacity would add 0.6 percentage points to Maersk Line’s market share on the route, which is currently at about 7.5%. He confirmed: “We are constantly optimising our network and our port calls, but we don’t have any plans to add more services at this point.” Dock workers at the Port of Long Beach, California, began unloading cargo on Saturday, September 10, from the container ship Hanjin Greece, breaking a logjam that has stranded goods on a dozen vessels bound for the US west coast. But the Hanjin shipping crisis could roll on for months as port operators, cargo owners, union officials and shippers must reach financial agreements with Hanjin before each ship can be docked. Two other ships owned by the company were anchored close to the Long Beach port but did not have orders to dock, according to the Marine Exchange of Southern California, a group that tracks cargo ship traffic. Union officials said nine others were floating in the Pacific. Nearly $15 billion of cargo has been tied up globally as ports, tugboat operators and cargo handling firms refused to work for Hanjin, the world’s seventh-largest container carrier, which filed for receivership on September 4. Once it’s unloaded, the Hanjin Greece will be reloaded with empty containers or with containers filled with goods for export, according to one local official. Spot container freight rates on the major routes from Asia soared by up to 42% at the beginning of September following the collapse of Hanjin Shipping, data from the World Container Index (WCI) confirmed. Rate assessment increased by 42% to $1,674 per 40ft container on the Shanghai-Los Angeles route, by 19% to $2,151 on the Shanghai-New York route and by 39% to $1,826 on the ShanghaiRotterdam route. “Unpredictable freight rates are not a new phenomenon in the container industry, however a major upheaval of supply like this is likely to cause extreme short-term price volatility. Shippers should expect increasing freight costs and tight allocation for several weeks at least,” said Richard Heath, general manager of WCI. Hapag-Lloyd shareholders give go-ahead for UASC merger plans H apag-Lloyd’s AGM in August saw the company’s shareholders approve all items on the agenda, including the capital conditions required for the planned merger with Arabian liner shipping company UASC. The shareholders gave the nod to the creation of new authorised share capital for the merger, which will see UASC incorporated into Hapag-Lloyd as a contribution in kind. The shareholders also approved the expansion of the Supervisory Board from the current 12 members to 16, to take place once the merger with UASC is concluded. This expansion is due to the current majority shareholders of UASC, Qatar Holding LLC (QH) and Saudi Arabia’s Public Investment Fund (PIF), each being set to receive a place on the Hapag-Lloyd AG Supervisory Board. The merger is still subject to antitrust approvals. Hapag-Lloyd submitted the relevant applications soon after signing the business combination agreement. Rolf Habben Jansen, CEO of Hapag-Lloyd AG, told the 300 or so shareholders attending the AGM: “The pending merger with UASC is another strategic milestone for Hapag-Lloyd. We intend to bring the skills of Hapag-Lloyd and UASC together in such a way that the company is in a stronger position to face both current and future industry challenges. “Hapag-Lloyd is not only growing, it is also becoming more international and, above all, more competitive. This merger gives us the large vessels we need in order to achieve low transport costs per container. With the investments already made by UASC in these ship classes, Hapag-Lloyd will not need to make any more investments in large vessels in the next few years. “With this merger, we are consolidating our position among FPv&N( 2ffR&vvW7B6FW"6r6W2FRrFW&ЦB&R66FW&&ǒ7&V6rFRv&WGvVVW2BFP6r6W2FB6RgFW"W2( Р