Freight Shipping News

SHIPPING INDUSTRY NEWS - 10th December 2013


Ship managers receive ITIC warning on unsuitable cargo

ITIC has warned ship managers of the potentially severe financial implications of nominating unsuitable ships for the carriage of specific cargo.

ITIC says that commercial managers need to be fully aware of all the limitations of ships under their management with regard to the carriage of particular cargo.

In the latest issue of its Claims Review, ITIC cites the case of a commercial ship manager which fixed a ship for a voyage of 4,000 metric tonnes of ammonium nitrate in large bags. This type of cargo had been carried by the manager’s fleet on several occasions, but the cargo had always previously been described as being in loose/bulk condition.

After the ship had loaded about 950 metric tonnes of cargo, port state control came aboard and stopped any further loading, as it was established that the ship had permission to load ammonium nitrate only in loose condition.

After checking the position with the owners, the classification society and the flag state, it was confirmed that the ship which had been fixed was not suitable to load the ammonium nitrate in bags.

In order to keep costs to a minimum, the commercial manager fixed a different ship in its managed fleet for the same cargo, with the agreement of the charterers.

The charterers then looked for reimbursement of the additional costs to the owners, who in turn held the manager liable. ITIC duly settled this claim on behalf of the manager.

Noting that the claim could have been significantly higher if a suitable substitute vessel had not been available, ITIC says that commercial managers need to be fully aware of all the limitations of ships under their management with regard to the carriage of particular cargo.

It emphasises that they need to pay careful attention to the detailed description of any cargo which they agree to commit their owners to in any charter party fixture.

Commission opens proceedings against container shipping lines

The European Commission has opened formal antitrust proceedings "against several container liner shipping companies to investigate whether they have engaged in concerted practices, in breach of EU antitrust rules."

Their identity has not been disclosed.

Following unannounced inspections at the premises of companies active in several Member States, carried out in May 2011, the Commission concluded that it had "reason to believe that the companies concerned may have violated the antitrust rules that prohibit cartels and restrictive business practices and/or abuse of a dominant market position (Articles 101 and 102 respectively of the Treaty on the Functioning of the European Union)."

"Since 2009, these companies have been making regular public announcements of price increase intentions. These announcements are made several times a year and contain the amount of increase and the date of implementation, which is generally similar for all announcing companies. The announcements are usually made by the companies successively a few weeks before the announced implementation date.

"The Commission has concerns that this practice may allow the companies to signal future price intentions to each other and may harm competition and customers by raising prices on the market for container liner shipping transport services on routes to and from Europe."

The opening of proceedings does not prejudge the outcome of the investigation, the Commission underlined

Hapag-Lloyd and CSAV hold merger talks

HAPAG-Lloyd and Chile-based container line CSAV are holding merger talks that could see the two lines come together to create the world’s fourth-largest box shipping line.

The two companies issued a statement late last night and early this morning to confirm that talks were taking place.

It is understood that discussions are at a very early stage.

Details on what form the merger will take are thin on the ground, with the shipping lines saying they will publish more information once they have made further developments.

"Hapag-Lloyd and CSAV are currently maintaining discussions [to see] if a possible business combination or any other form of association would be of mutual interest," said Hapag-Lloyd in a statement released this morning.

"To date, these discussions have not resulted in any binding or non-binding agreement between the parties."

CSAV also confirmed the talks.

"In recent years [the company] has adopted a series of measures to confront difficulties facing the shipping business, among those are the implementation of joint operations with other shippers and agreements to combine cargo," it said in a statement released late on Wednesday.

A merger would give the carriers a combined containership fleet of just over 1.1m teu, according to figures from Lloyd's List Intelligence. 

This would result in the merged entity becoming the fourth-largest container shipping line in the world, behind Maersk Line, Mediterranean Shipping Co and CMA CGM and displacing Evergreen Marine from the fourth spot.

Hapag-Lloyd is now the world's sixth-largest carrier with a containership fleet of 723,804 teu.

CSAV is the 19th-largest shipping line, with a box ship fleet of 294,176 teu.

The two shipping lines' strengths lie in different regions of the world; Hapag-Lloyd's on the main east-west trade lanes and CSAV's on the South American trade lanes, although it does move a small number of containers on the Asia-Europe and intra-Asia trade lanes.

The announcements come after CSAV's share price suddenly increased following a German press report stating that talks were underway.

The share price surged 14.85% yesterday on news of the talks.

CSAV is required to explain any sudden changes in its share price.

Like all container lines, Hapag-Lloyd has been hit hard by the decline in rates following a weak peak season this year, but it has remained profitable.

The German company posted a net profit of €16.6m ($22.m) in the third quarter, down from €45.6m a year earlier.

Executive board chairman Michael Behrendt criticised the container shipping industry's "irrational" pricing behaviour, which has continued into the final three months of the year.

He is also known to support industry consolidation as a way to stabilise container shipping.

The announcement comes almost exactly a year after Hapag-Lloyd revealed it was holding merger talks with fellow Hamburg-based shipping line Hamburg Süd, which, like CSAV, has a strong shipping presence in South America.

However, the talks were scrapped earlier this year when the two carriers failed to agree terms.

There were also rumours of a split in the Hamburg Süd camp regarding the proposed merger.

Working more closely with CSAV would also strengthen Hapag-Lloyd's South America presence at a time when major container lines are seeking to bolster their standing in north-south trades.

CSAV reported a third-quarter net loss of $46.7m, reversing the profit of $55.8m it reported for the same period last year, but made gains on cutting operating costs.

It also expects to reduce its operating costs further when it takes delivery of seven 9,300 teu vessels in 2014 and 2015.

The talks follow the G6 Alliance's announcement earlier this week that it planned to expand its presence to the transpacific west coast and transatlantic trade lanes.