Thursday, 27 August 2009

My home port has lost the plot.

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This week I received an email from the Port of Brisbane Corporation(a Queensland Govt owned entity) advising me that they were increasing port and wharfage charges by 6% on all cargo except for coal which cops an 11.1% hike as of the 1st of December. Supposedly this is to keep pace with capital expenditure on port development. This increase announcement comes at a time when many port users are struggling with the impacts of the GFC and cannot afford any cost increases whatsoever. KPMG has apparently undertaken a study on the impact of the increase. Well...we are probably the largest freight forwarder of heavy equipment through the port and I didn't hear from them.

Can the Port of Brisbane(POB) be serious with this increase?! This directly impacts our exporters and makes them less competitive..and I would have hoped that goverments at all levels would be doing everything in their power to help them. A high school economics student could tell you that exports bring money back into the country. Hold on..don't we have a MASSIVE national debt from stimulus packages of $300bn + and climbing? What the hell is going on and when is the QLD Govt and it's various entities going to stop trying to milk coal dry with charges and royalties?! Enough! Coal is one of our biggest exports!! Supporting trade 100% should be a priority..shouldn't it?

The Port's annual report for 08/09 is yet to be released but I can tell you that 07/08 was a good year delivering a net profit after tax of $438.7m. A dividend was declared and the QLD Govt received $205.7m for this year. Not bad and looking at cargo volumes for 08/09, while smaller, it still should be a decent year.

Coincidentally....perhaps....the QLD government is in the process of selling off the Port of Brisbane. Maybe the real agenda of increasing costs is not to further develop the port but to make the books look as good as possible for the buyers they hope to attract. Sound corporate governance if you are selling a company, however shouldn't a goverment owned entity charged with the responsibility of key port infrastructure have some responsibility and conscience to support shippers by keeping costs to a minimum? I don't care when the last increase was or what the CPI is....a govt owned port entity should be supporting trade as it's primary objective not taking decisions driving a sale outcome. This doesn't mean I think any operation should lose money. A break even with lower port costs for users should be the goal. Over and out!

Some ports around the world recognise the distress the shipping industry is in and are reducing costs. It has been reported by various shipping media outlets that ports such as Singapore, Dubai and Karachi are reducing their costs to help the port users navigate the GFC. Shouldn't we be doing the same at this time?

On top of this my heavy equipment customers and ship operators are frequently frustrated by delays to vessels and increased costs caused by congestion at berths 3 and 4 in particular. Then they are forced to deal with the POB appointed stevedore Australian Amalgamated Terminals Pty Ltd which is a JV between DP World (formerly P&O) and Toll/Patrick. AAT is under investigation by the Australian Competition & Consumer Commission for various issues that may restrict dealings and competition. I fail to see where the competition is in stevedoring with the two big boys of the Australian waterfront in a partnership in AAT. At AAT you basically have to self deliver your own cargo. What happened to having wharfies sort, stack and deliver cargo to road transport companies? It's all gone too far.

I won't even open the port motorway discussion except to say there was another fatality on that road a week ago. A road my team travels daily. Much needed upgrades have been deferred and deferred by the QLD Government and it isn't coping. How many more fatalities will it take for work to start?

With the impending sale of the Port of Brisbane I hope that once privatised, we will see a tremendous improvement in the operation of the port. I know that my customers and I and other port users are frustrated and increases in costs during a global credit crunch only add insult to injury and clearly signals to me that urgent change is now a necessity! Bring it on.

All for now and for the international readers of my blog.....forgive me for the local indulgence.

Brad Skelton
The Shipping Bloke.

Wednesday, 19 August 2009

95 years of the Panama Canal.

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The 15th of August saw the Panama Canal hit it's 95th anniversary of operations.

During this time about 983,000 ships have passed through it safely and it has been instrumental in the development of Panama itself.

Tolls are levied on the ships according to their net tonnage and type. So for a RoRo ship like Wallenius Wilhelmsen's, "Tampa", that has a net tonnage of 26,072, the toll applied per transit is about US$99187.00. For containerships the rate applied by the authority is US$72.00 per 20' container the vessel is carrying. See where some of the money goes in the freight rates you pay?

Right now the Panama Canal Authority(ACP) is undertaking a US$5 billion expansion so it can cater for the new larger vessels and increased traffic that cannot currently pass through it.

It's fascinating watching vessels go through the canal. The ACP operates live webcams so you can tune in and see ships transitting through. Check it out. Alternatively for a time lapse ride on a cruise ship please click here.

The Panama Canal is a vital link in global shipping reducing transit times and operating expenses for vessel owners and I am certain will remain as important as ever for another 95 years.

All for now,
Brad Skelton
The Shipping Bloke

Thursday, 13 August 2009

We've got visitors.

(You are getting this note because you subscribed to Brad Skelton's blog - The Shipping Bloke)

We were loading a ship off the coast of Western Australia last week when these guys swam over to say "G'day".

They didn't seem worried at all about the activity on board the vessel.

If you'd like to see more images, then go to my company's Facebook page.

Have a great weekend.

Brad Skelton

The Shipping Bloke.

Wednesday, 12 August 2009

Shipping capacity will soon exceed demand by 50%!

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The outlook for shipping lines is still extremely grim.

The European Community Shipowners Association has called for an urgent industry wide ship scrappage scheme to shrink the massive surplus of vessels. They have warned of an impending bloodbath as they estimate that shipping capacity will soon exceed market needs by between 50-70% as demand continues to fall in line with global consumption. Chang Yung Fa, the CEO of Evergreen, described the excess as "gruesome".

The quarterly losses** being reported by carriers in the past few weeks are massive. Here are a few:
Neptune Orient Lines-US$146m(last qtr) Forecast loss for the year-US$515.61m
Maersk Lines-US$405m
NYK Lines-US$198m
Mitsui OSK Lines-US$136m
K Line-US$155m
Hapag Lloyd-US$998m(for full year to June 30,2009)

Hapag Lloyd have been thrown a lifeline of US$467m by their shareholders and so has Zim who were struggling to pay for new vessels due out of the shipyards that they ordered well before the GFC gained momentum. Other carriers are trying to do rights issues to get the cash/oxygen they need to survive the downturn while at the same time banks are increasing the loan to valuation ratios they work on with ships.

To reduce costs some carriers are "slow steaming" to conserve fuel and travelling via the Cape of Good Hope rather than pay the expensive Suez Canal fees.

You would think that this carnage would translate into lower freight rates however the opposite is ocurring in the break bulk and container trades as carriers fight for survival. Rates and fuel surcharges are being increased or "restored" to use the shipping lines language.

As you can see I refer to some of the worlds MEGA shipping lines in this blog. What the....? Isn't bigger supposed to be better? So what is the future of the MEGA carrier?

More on that soon in a future blog.

All for now,
Brad Skelton
The Shipping Bloke

**All amounts converted to US$ at todays exchange rates and rounded to the nearest million dollars.

Thursday, 6 August 2009

So what if deck cargo is cheaper?

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Cargo integrity is my absolute priority. That's why I rarely, if EVER, load heavy machinery on the deck of vessels. It is absolute last resort. There literally has to be no other way to get the cargo to that destination before I will even vaguely consider it. Even then, I do my level best to make my client completely aware of the risks, accept them, notify their underwriters and protect the cargo as much as possible.

I have frequently lost business to competitors who come in cheaper because they are taking that risk with clients cargo. Worse still sometimes they don't even tell the client they are putting the cargo on deck and profiteer. I'd rather not handle the shipment than risk damaging the cargo and my relationship with my customer with it.

It's not that risky you say.... and if you can save a few bucks then....why not? Check these links out and then answer that question.
Strike 1.

Strike 2.

Strike 3.
If waves can come over the deck of the "USS Kitty Hawk" 102 feet from the water line then.... Game over.

All for now,

Brad Skelton

The Shipping Bloke.