Saturday, 20 December 2008

Industry snapshots

Indian warship INS Mysore captures 23 pirates in Gulf of Aden. In the largest such capture, 12 Somali and 11 Yemeni pirates and a large cache of arms, ammunition and equipment was seized. These included seven AK-47s, three assault rifles and magazines, a RPG launcher with rockets, grenades, a GPS set and a mobile phone. The skirmish occurred on 13 December when an Ethiopian ship ‘Gibe’ was attacked and sent out a distress message. A Chetak helicopter with marine commandos was launched from the warship which then intercepted the hijackers as they were planning to board the Gibe. The pirates abandoned their attack on seeing the helicopter and boarded their mother ship, the dhow “Salahaddin’ in the vicinity. The Mysore forced the dhow to stop, boarded her and arrested all the pirates. The Mysore, a replacement for the frigate ‘Tabar’ which was in action last month, will resume its patrolling duties after handing over the criminals to appropriate shore authorities.

The United States seeks support at the UN Security Council to attack pirate bases on land. U.S. envoy Alejandro Wolff, said, "We will leave no stone unturned in dealing with this issue." Any military action on land would be undertaken with the agreement of the Somali government, he said. A U.S. draft resolution calls for "all necessary measures ashore in Somalia," including air attacks, to tackle piracy. It also calls for the maritime community to resist paying ransoms for hijacked ships. Some observers say that the UNSC needs to do more to bring stability to Somalia, a country which has had no government since 1991. The Nigerian ambassador to the UN feels that, "It is because we are not engaged on the ground that we see so much threat on the seas."

Maersk warns shipping industry of tougher times ahead. A senior manager at Maersk warns that 2009 will be critical for the company; the Danish giant has reportedly laid up eight 6500 TEU box ships recently in the Far East for an unspecified time. Michel Deleuran, head of network and product at Maersk, said: “We are certainly seeing a dramatic slowdown. The decline we are seeing in recent weeks is faster and deeper than what most people had expected only a few months ago. If we don't see improvements, we will be laying up more. The failure of a big shipping group cannot be ruled out. ” Rates on the Far Eastern/US routes have been slashed by up to 25% recently, strangling profits and cash flows across the trade, which has dropped 12% in November. Chinese ports and Hong Kong are reporting reduced volumes; rumours are rife in the market that container manufacturers have stopped production as a result. Lloyd’s list says that the box ship market is particularly vulnerable as it was anticipating a capacity expansion of 50 per cent over the next three to four years. At present, over a hundred container ships are reported to be without cargoes.

World Bank says global trade will shrink for the first time since 1982, a statement which will send shudders down the spine of maritime operators as they recall the 1980’s depression. The slowdown, a result of shrinking demand and fall in economic activity will include developing economies. The apex bank says, in its annual report ‘Global Economic Prospects’, that the credit crunch is adding to trade bottlenecks, and that a slowdown of demand in developed economies is continuing to stymie foreign investment worldwide. Meanwhile, the proportion of India's exports going to the US fell from 17.1 per cent in 2004 to 15.3 per cent in 2007 but the proportion going to China rose from 5.5 per cent to 8.4 per cent, making analysts optimistic that Asia may take up some of the slack.

Hapag Lloyd cruise ship ‘Colombus’ evacuates passengers to avoid risk of piracy. Almost 250 passengers will disembark at Hodeidah, Yemen and rejoin the Colombus at Salalah, Oman, after spending a few days in five star comfort in Dubai as the cruise ship transits through the pirate infested Gulf of Aden with minimum crew. The company called it a "precautionary measure", but observers point out that the recent attack on the Nautica has made operators jittery. A cruise ship hijack with headlines splashed across the world’s newspapers would kill business. In addition, the German foreign ministry has issued a travel warning for the area. A mariner noted wryly, “I wish ship owners would give us sailors the same option.”

Amidst the gloom and doom, some good news: tankers may do better, according to industry experts. New York brokers Poten & Partners have pointed out that tanker rates have stood up ‘reasonably well’, even as dry bulk rates have collapsed. Experts believe that most new build tankers are ordered at premier yards which should withstand the downturn better. Poten feels that although newer yards may be hit, the situation may be well controllable. “More importantly, market sentiment has given little indication that ship owners are itching to walk away from commitments.” Poten told Seatrade Asia.

Ralph's missing breasts found. Marex had earlier reported of the devastating loss of more than 100,000 pairs of missing inflatable breasts shipped to an Australian magazine, Ralph. The breasts were intended to be given away with the men’s magazine’s January edition. It now transpires, a week later, that Chinese officials had lost the documentation on the breasts, which were then loaded on the wrong ship and landed up at the wrong port: Melbourne instead of Sydney. Editor Santi Pintado was relieved that the breasts had been found, but complained that the mix up had cost Ralph $30,000. "You'd think the Chinese economy was in enough trouble without misplacing 130,000 pairs of boobs,” he said.

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