Ckyhe News

Remarks from Federal Maritime Commissioner William P. Doyle at the FTR Transportation Conference 2017, Indianapolis, Ind. On September 13, 2017, I voted to expedite the Commission’s decision and support THE Alliance’s amendment authorizing creation of a contingency trust fund designed to protect customers’ cargo and the ocean transportation chain should one of THE Alliance’s carriers experience financial distress or an insolvency event. I support the goal behind this amendment: the smooth and continuous flow of cargo even in the face of another ocean carrier bankruptcy or catastrophic failure.

Japan’s big three shippers -Mitsui OSK Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha (K Line) -  have reported profits for the first quarter, bouncing back from losses a year earlier Reuters reported. Thanks to rising freight rates, the shippers showed brightened financials ahead of their integration into the Ocean Network Express (ONE) next April. The results are also raising hopes the firms could be emerging from the industry’s worst-ever downturn on record. NYK recorded a profit attributable to owners of the parent of 5.4 billion yen (U.S. $48.9 million) for the quarter, compared to a loss of 12.79 billion yen for the corresponding quarter a year prior.

The upcoming reorganization of global shipping alliances is likely to hit Korea’s largest port in Busan and  the harbor volume of Busan Port is expected to drop by 3.5 percent from next year, the Korea Herald reported quoting Korea Maritime Institute (KMI)’s report. KMI  announced on December 22 that as a result of the analysis of the port rotation adjustment plans formulated by the soon-to-be-established shipping alliances "Ocean" and "THE Alliance," the number of shipping services using the port of Busan is likely to decline by three compared to the current figures. Busan Port managed containers of more than 10 million twenty-foot equivalent units last year. Of those, the Asia-North America route accounted for 36.7 percent while the Asia-Europe shipping line made up 6.7 percent.

The withdrawal of Hanjin tonnage has not been enough to rectify the trade’s supply-demand imbalance and headhaul ship utilisation is lower compared to other major East-West markets. Westbound volumes rose by 1.8% in the third quarter and the growth rate for the year to date is now registering 2.9% (see Figure 1). Asian exports shipped to the West Mediterranean (including North Africa) grew by 2.8% between July and September, while traffic to the eastern sector of the trade only expanded by 0.8%. By the end of September, the 12-month rolling average growth factor for westbound flows was touching 3.4% (see Figure 2) which is a distinct improvement on the minus 1.9% recorded a year earlier, and represents the highest point it has reached since March 2015.

Container volumes at the Port of Long Beach declined 16.6 percent year-over-year in September as the effects of the Hanjin bankruptcy reached the U.S. West Coast. According to the port, its longshore workers moved 546,805 twenty-foot equivalent units last month. This included 282,945 TEUs in imports, down 15 percent from September 2015, a month which capped off the port’s best quarter ever. Exports dropped to 120,383 TEUs, a decrease of 4.2 percent. Empties were 27.2 percent lower at 143,476 TEUs.

Responding to the unexpected service disruption caused by CKYHE alliance member Hanjin Shipping, which has entered rehabilitation proceedings, Evergreen Line has added new functions to its online e-commerce system. The service disruption has caused delays to Evergreen Line’s cargoes previously loaded on the Korean carrier’s vessels. Evergreen said its new functions enable customers to update the status of their cargoes and Hanjin’s vessel positions, including information about anchorage at or sailing to a particular port.

In light of the recent bankruptcy filing by Hanjin Shipping, The Port of Virginia has updated its policies and processes regarding the movement and loading of Hanjin vessels and containers. The following policy is effective as of Sept. Line onto a Hanjin vessel. Line vessels. These restrictions were requested by Cosco Container Lines, "K" Line, Yang Ming Line and Evergreen Line, which with Hanjin, compose the CKYHE shipping alliance. After careful consideration, the port agreed today to comply with the request. Beginning Aug. 31, 2016, the port enacted its own restrictions regarding the movement of Hanjin freight. • Not accepting any Hanjin containers for export at any of the port’s marine or intermodal terminals.

Of 98 container ships, 44 blocked from ports. U.S. firms take legal action over unpaid bills. Roughly half of Hanjin Shipping Co Ltd's container vessels have been blocked from ports since the South Korean firm's collapse, putting manufacturers and their customers increasingly on edge about the fate of cargo and spikes in freight costs. Woes for world's seventh-largest container shipper have only deepened since its banks withdrew support and it filed for court receivership this week. One vessel has also been seized by a creditor in Singapore while firms in the U.S. have launched legal action against Hanjin to seize vessels and other assets over unpaid bills.

French shipping major CMA CGM assures its customers over Hanjin collapse. "Further to the information published on the filing for receivership of Hanjin Shipping, we understand that this news may have raised concerns with regards to the transport of goods that you have entrusted to CMA CGM," says a company statement. Hanjin Shipping, apart from being a member of CKYHE Alliance, is a partner of CMA CGM Group on 5 out of the Group’s 200 shipping lines. - CMA CGM Group no longer loads its containers on Hanjin Shipping vessels.

It has been reported that Hanjin Shipping, a member of CKYHE Alliance, has applied for court receivership today. As a member of CKYHE Alliance, Evergreen Line has prepared for this crisis and has activated a contingency plan. 1. No Evergreen Line cargo will be loaded on the vessels operated by Hanjin Shipping. 2. Hanjin Shipping cargo will not be allowed to load on the vessels operated by Evergreen Line. Evergreen Line, as the Carrier to issue the Bill of Lading for the shipment under Evergreen Line's custody, will not prejudice to cargo owner's rights. Evergreen Line undertakes all Carrier's obligations and responsibilities under the governing Bill of Lading clauses will remain binding in all circumstances.

COSCOCS, one of the largest container operators in the world, upgraded its service into the Port of Boston Sunday with a vessel that can carry more than 8,500 TEUs (20-foot equivalent units), Conley’s largest cargo ship to date. The Port is responsible for $4.6 billion of economic activity and 7,000 direct jobs. “This is an exciting time at Conley as we have seen double digit growth in both imports and exports this year,” said Massport’s Port Director Lisa Wieland. The ship, COSCOCS’s Xin Mei Zhou, arrived Sunday morning and departed Sunday evening. The ship is almost 1,100 feet long and will carry 8,530 TEUs. Conley currently services ships that carry 4,000 to 6,000 TEUs.

Today South Carolina Ports Authority (SCPA) welcomed the Hannover Bridge, first post-Panamax size vessel to call Charleston after transiting the newly-opened Panama Canal expansion. "SCPA is already benefiting from the upsizing of vessels in response to the expansion, with 16 of the 26 weekly container vessel calls in Charleston now being served by large ships formerly known as post-Panamax," said SCPA president and CEO Jim Newsome. "The arrival of the first 8,500-class vessel to pass through the newly-expanded Panama Canal locks bound for Charleston is a milestone for our port and maritime industry. The Hannover Bridge, an 8,200 twenty-foot equivalent unit (TEU) "K" Line vessel…

"THE Alliance" forged by six of the world’s largest multi-services shipping companies would challenge the dominance of global giants such as Maersk Line and Mediterranean Shipping Co. (2M). The new partnership, is an expanded alliance of G6 and CKYHE,  is expected to revolutionize the maritime industry in the next five years and beyond. THE Alliance is expected to add a seventh member due to ongoing merger discussions between Hapag-Lloyd and United Arab Shipping Company. The carriers involved in “THE Alliance” - Hanjin, Hapag-Lloyd, “K”Line, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Yang Ming - said that the binding agreement is scheduled to be implemented in April 2017 subject to approval of all relevant authority.

Ahead of the Panama Canal expansion two alliances have announced they will upsize some of their ships on the Asia-US East Coast route. How quickly will the others follow? The 9,400-teu Cosco containership Andronikos will make the first transit of the expanded Panama Canal on Sunday 26 June, and ahead of that two shipping alliances – CKHYE and G6 – have laid out their plans to upgrade the size of ships used on the Asia-US East Coast via Panama route. In November last year Container Insight Weekly noted that Drewry expected carriers to resist the urge to flood the trade with the biggest ships possible and that vessel upgrades will be incremental and in line with demand growth. That prediction seems to have come true based on the immediate plans that have been communicated thus far.

Throughput at Cai Mep International Terminal, the APM Terminals facility in Vietnam’s Ba Ria‐Vung Tau province, southeast of Ho Chi Minh City, expanded by 130 percent in the first quarter as new service calls added in 2015 began to impact volumes. The container volume has surged by 130% to 277,303 TEUs for the first three months of 2016, as compared with the same period a year ago. This growth follows an 80% expansion in container traffic at CMIT in 2015 over the year prior, to 724,768 TEUs. CMIT, part of the APM Terminals Global Terminal Network, is a deep-water facility located in the Ba Ria‐Vung Tau Province, southeast of Ho Chi Minh City, and is capable of accommodating larger deep draft vessels of up to 15,000 TEU capacity, now cascading into Vietnamese trade routes.

Cai Mep, Vietnam - With five new services calls added to Cai Mep International Terminal (CMIT) since May of 2015, container volume has surged by 130% to 277,303 TEUs for the first three months of 2016, as compared with the same period a year ago. This growth follows an 80% expansion in container traffic at CMIT in 2015 over the year prior, to 724,768 TEUs. CMIT, part of the APM Terminals Global Terminal Network, is a deep-water facility located in the Ba Ria‐Vung Tau Province, southeast of Ho Chi Minh City, and is capable of accommodating larger deep-draft vessels of up to 15,000 TEU capacity, now cascading into Vietnamese trade routes.

Speaking at the Intermodal Association of North America on May 5 in Chicago, U.S. Federal Maritime Commissioner William P. Doyle discussed several of the shipping industry’s hottest topics, including ocean carrier consolidations and alliances, container weight VGM under SOLAS, and chassis. “We’ve all heard the recent announcements related to consolidations, for instance, CGM CGM and NOL-APL; and COSCO and CSCL. “We’ve all heard the announcement that Hapag Lloyd and UASC are in discussions on a possible merger.

CKYHE Alliance, COSCON, “K”Line, Yang Ming, Hanjin and Evergreen Line, is reorganizing their service network for Asia-US East Coast trade in 2016. CKYHE Alliance will provide five Asia-US East Coast services (AWE1/AWE3/AWE4/AWE8/NUE) from early June of 2016. The Alliance members have re-designed the services to provide optimum port coverage from Asia to US East Coast with AWE1/AWE3/NUE services upsized & AWE4/AWE8 services re-structured in order to enhance the competitiveness of the Alliance. Meanwhile, CKYHE Alliance members reconfirm current cooperation scheme on the related East and West Trade(Asia-North Europe services/Asia-Mediterranean…

Mergers and acquisitions, rather than the historically more popular alliances, are inevitable to address chronic overcapacity and drive further cost savings in container shipping, Fitch Ratings says. The merger talks between Hapag-Lloyd and United Arab Shipping Company (UASC) announced last week demonstrate that full-blown M&A deals are gaining momentum. Although capacity on the Far East to Europe trade routes is dominated by just four alliances - 2M (36% of the total fleet capacity in September 2015, according to A.P. Moller-Maersk), CKYHE (24%), Ocean Three (21%) and G6 (18%) - container shipping remains effectively fragmented, highly competitive and plagued by overcapacity.

South Korea’s Hanjin Shipping Co. Ltd will work with lenders to restructure debt after years of weak demand resulted in losses and cash erosion, reports Bloomberg. The board of Hanjin Shipping decided to file for receivership and give creditors authority to manage the company, bowing to calls from the government and its main creditor Korea Development Bank (KDB) which asked Cho to accept heavy restructuring of the company. "Board directors of Hanjin Shipping decided to give up their management control for debt restructuring," said a KDB spokesman. Having been faced with an outstanding debt of USD 406 million due in the first half of this year, the company is now aiming to improve the financial structure and “normalize” its management.

Hanjin's debts at 5.6 trln won at end 2015; company has been squeezed by low shipping margins. South Korea's Hanjin Shipping Co Ltd will ask creditor banks to restructure its debt, the country's largest shipper by assets said, in an attempt to weather a squeeze in margins from a severe industry downturn. Hanjin, whose chairman Cho Yang-ho also controls flag carrier Korean Air Lines Co Ltd, had debt of 5.6 trillion won ($4.9 billion) and a debt-to-equity ratio of nearly 850 percent as at the end of 2015, according to the company. While major global shippers have undertaken merger deals and entered new alliances recently to survive the downturn, Hanjin and Korea's No. 2 shipper Hyundai Merchant Marine Co Ltd , which is also under voluntary debt restructuring, haven't taken that route yet.

China COSCO Shipping Corp Ltd and three partners, including France's CMA CGM SA, announced a new shipping partnership, OCEAN Alliance, formed to challenge 2M - the world's largest container carrier alliance. Other members of the new COSCO alliance are Taiwan-based Evergreen Line and Hong Kong's Orient Overseas Container Line. The partnership, called “Ocean Alliance”, would involve a fleet of 350 container ships and in a first stage cover more than 40 services. The carriers said: "The alliance will also bring service reliability and the most efficient integration of the latest vessels in a fleet of over 350 containerships. The partners plan to begin operations in April 2017 for an initial period of five years, CMA CGM said in a statement.

France's CMA CGM and China's COSCO Container Lines are to form a four-way vessel-sharing alliance with Evergreen Line and Orient Overseas Container Line focused on Asia routes, CMA CGM said on Wednesday. Container shipping has seen route-sharing develop in response to a severe downturn in the market, and a rejigging of alliances had been expected in recent months after COSCO merged with China Shipping Group and CMA CGM agreed to acquire Singapore's Neptune Orient Lines (NOL).