Hamburg Süd and CCNI sign Sale and Purchase Agreement

Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft KG (Hamburg Süd) with headquarters in Hamburg, Germany, is pleased to announce that the company has signed a Sale and Purchase Agreement to acquire the container liner activities of Compañía Chilena de Navegación Interoceánica S.A. (CCNI) including the related general agency functions of Agunsa Agencias Universales S.A, (Agunsa), with headquarters in Valparaiso and Santiago de Chile.

The take-over of the CCNI / Agunsa business is, subject to approval by the competent antitrust authorities, scheduled to become effective at the end of March 2015.

Hamburg Süd will operate the CCNI container liner business under this well established brand name in the main trades between the West Coast of South America, Asia, Europe and North America respectively. Merging the experienced workforces of CCNI and Hamburg Süd will help to create an even stronger organization that will provide a first class service to the customers of both companies.

CCNI will discontinue their container liner services and will only be using the CCNI name for the Car Carrier activities which they will retain. Agunsa will continue representing other shipping lines as agent and will also further develop its port and logistics services business in South America.

CSAV Hapag merge

Today Hapag-Lloyd completed the planned capital increase of EUR 370 million as part of the business combination with the Chilean shipping company Compañía Sud Americana de Vapores (CSAV). As planned, CSAV subscribed to EUR 259 million and Kühne Maritime made a cash contribution of EUR 111 million. The capital increase had already been agreed upon mid-April with the signing of the contracts to combine CSAV’s container business with Hapag-Lloyd. It was to be implemented by the end of 2014.
After the capital increase, the shareholders of Hapag-Lloyd AG hold the following stakes: CSAV with 34%, HGV (City of Hamburg) 23.2%, Kühne Maritime 20.8%, TUI 13.9%, Signal Iduna 3.3%, HSH Nordbank 1.8%, M.M.Warburg & CO 1.8% (including two private investors) and HanseMerkur 1.1%. CSAV, HGV and Kühne Maritime have agreed to pool 51% of the shares in Hapag-Lloyd in order to discuss and make key decisions together in the future.
Beside the Closing on 2 December, the capital increase was a requirement for releasing the bond with a volume of EUR 250 million that had already been placed successfully on 20 November. The proceeds from the bond with a maturity of five years will be used for the early redemption of the Hapag-Lloyd Euro bond due in October 2015. The redemption will take place on 23 December.

What is modern monetary theory or MMT

Emma Maersk out of action for 3 months, boxes undamaged by flooding

MAERSK LINE's flagship, the 15,500-TEU Emma Maersk, is expected to be out of service for three months after its engine room flooded in 16 metres of water, causing the vessel to be towed from the main channel of the Suez Canal.

Once the damaged thruster has been sealed, containers will removed, giving Maersk time to carry out repairs, said a company spokesman.

The vessel could stay in Egypt for the repairs, though the final decision over whether a drydock is needed has yet to be made, reported London's Containerisation International. Water must be pumped out slowly, with experts on hand to deal with exposed machinery.

Dismantling, drying and repairing almost every piece of machinery under water will take months to complete, particularly the giant Wartsila engine and the long propeller shaft that sits at the lowest part of the vessel, said the report.In previous instances of flooded ships, it has been possible to repair the engine, the propeller shaft, ancillary machinery and electronics, if corrosion is kept to a minimum, said the report.

 The first job is to seal the stern thruster where the water intake occurred. Emma Maersk has double sets of fore and aft Rolls Royce thrusters to assist in berthing. Maersk Line vice-president ship management Palle Laursen said that with the cause of the accident unknown, the company is warning its other ships not to use stern thrusters.

Divers inspecting the ship's hull and found a 20 centimetre by 30 centimetre hole in the shape of a half circle damage near a forward thruster. Mr Laursen said the damage was probably caused while the thrusters were manoeuvring the vessel towards the Suez Canal. The thruster spaces are accessed via Emma Maersk's 120-metre main propeller shaft tunnel, which opens to the engine room.After a bilge alarm sounded, it took only an hour for the engine room to be flooded, covering the main engine. The 13-man crew worked the bilge system, but it was just not enough. There was no significant flooding of the cargo holds and containers aboard were not damaged, he said.

Drewry´s analysis

Container Forecaster 4Q12

Carriers are failing to match capacity with weakened cargo flows

London, UK, 9th January, 2012 – Drewry Maritime Research’s latest Container Forecaster report published in late December, highlights that despite attempts by carriers to pull capacity from east-west trade routes, significantly weaker cargo volumes have limited the success of their attempts to lift freight rates for any sustainable periods.

Since the huge overnight success of the March 2012 GRIs implemented by shipping lines to bring rate levels back above break-even, there have been a further seven attempts to lift rates – equating to a total of around $2,800-$3,000 per feu on the Asia to North Europe trade. During this period, average headhaul freight rates have actually declined from about $2,700 in early March to $2,400 as of early January 2013.

While this is not a disaster for the carriers, it proves that there is a fundamental weakness in the market compounded by low volumes on the back of a non-existent peak season last year. Coupled with a marked reluctance by carriers to pull enough capacity, particularly in the Asia-Mediterranean trade, average headhaul load factors have remained in the 75%-85% range for most of the second half of 2012 and the strategy of missing sailings has proven to be insufficient to lift freight rates for any sustainable period. With another 40 ships of at least 10,000 teu due for delivery this year, carriers will have a very difficult time deploying them without doing further damage to the supply/demand balance. Operational alliances across virtually all global trade lanes will certainly increase.

Neil Dekker, Drewry’s head of container research, emphasised: “The emphasis on this tactic (missed sailings) will only lead to severe volatility in the spot market with carriers reacting to weaknesses on a temporary basis, with the GRIs essentially being used to prohibit further rate erosion, rather than advancing them by any sustainable margin.”

The latest indications from the market suggest that load factors from Asia to North Europe and the Med are higher - helped by the usual pre-Chinese New Year cargo spike, but the acid test will be how long any carrier rate successes last beyond the middle of February when volumes traditionally weaken.

On a more optimistic level, Drewry is forecasting global demand to increase by 4.6% this year, but there are several caveats attached to this. Considerably faster capacity growth at the trade route level will severely challenge carriers and even the ability of the fast growing north-south trades (such as Asia to Latin America) to prop up the deficiencies elsewhere is now being questioned. It cannot be ignored that the headhaul compound annual growth rate of the three core east-west trade lanes in the 2008-12 period has been only 0.4%.

Mainly due to the successes of the second and third quarters in 2012, lines are forecasted to make around $1.5 billion collective profit, although not all carriers will end up in the black. If carriers continue to engage in sensible cost cutting strategies and carefully manage capacity at trade route level, which will probably involve a more radical strategy on lay ups - and projections on global GDP growth ring true, they could make a profit approaching $5 billion in 2013. Contract rates negotiated with shippers on the key east-west trade lanes will also be higher when compared to the low levels of 2012.

But overall, the destiny of 2013 remains firmly in the carriers’ hands once again as they need to quickly react to the new reality of weaker demand growth in an era of growing capacity. It is extremely doubtful that carriers will be able to continue to repeat the GRI successes of last March if they are relying solely on an industry collective resolve.

Dekker confirmed: “Carriers’ obvious reluctance to pull capacity in the core trades since October suggests that many still have an eye on trade share. Carriers seem to want to have it both ways. The core trade lanes are undergoing a major upgrading process with over 40 x 10,000 teu vessels delivered in 2012, but at the same time they are refusing to lay up or idle significant tonnage.”

Drewry’s analysis of the six east-west services suspended from October 2012 revealed that only eight vessels were temporarily idled, with the majority simply transferred to other strings.