Proposed alliance between top 3 lines may impact Indian trade

Transcription

1 ASSOCIATION OF MULTIMODAL TRANSPORT OPERATORS OF INDIA Inside this issue: Proposed alliance may impact Indian trade 1 Global scenario weighing heavily on exports: FIEO Chief 2 Essar Ports complies public shareholding as per SEBI norms 2 CSL plans IPO to raise 500 cr. 2 Paradip Port jurisdiction extended to Kanika Sands Island 3 Govt. extends 24x7 Customs clearance facility for Export 3 Customs Dept. introduces risk management system 3 JNPT to develop Rs 2,000-cr marine terminal for liquid cargo 4 Port of Mumbai Plans New Cargo Berth 4 Shipping Ministry to award 30 Port projects this fiscal 4 India is still growth market for DP World 4 Govt. to notify new tariff regime for Major Ports 5 Govt. signs $216 mn loan with World Bank for Kerala project 5 Grim Outlook for Global Container Shipping Industry 5 Ship Agents concerns over Nehru Port's New Terminal 6 Haze Threatens Shipping in Strait of Malacca 6 Humor 7 Weekly News Volume 1, Issue 14 Proposed alliance between top 3 lines may impact Indian trade Further to the announcement last week about the upcoming P3 Network alliance between Maersk Line, CMA CGM and MSC, Mr. Franck Dedenis, Managing Director of Maersk Line India, said in a statement that the move, when implemented, would have minimal impact on the Indian Subcontinent trade. "Most of the direct and transhipment services to and from India the MECL covering North America and Canada; ME1, ME2 and ME3 covering North Europe and the Mediterranean; the CHX and FM3 covering the Far East, the Gulf; the Mawingu Express covering East Africa; and our transhipment services via Algeciras into West Africa along with our connections from the Gulf into South Africa and Horn of Africa will remain unaffected by this alliance," he said. "However, customers availing of our services from the South and East of India via Colombo, Sri Lanka and our South America-bound services will greatly benefit from the widened coverage, increased frequency and greater operational efficiency as a direct result of this alliance." On the whole, he said it would "mostly be business as usual" for the Indian Subcontinent, and added that Maersk Line would continue to focus on providing value to customers with products and services that cater to the business needs of its clients in India and Sri Lanka. A representative of one of the other lines too said that the proposed alliance would have some impact on the India trade; he, however, refrained from giving out any further information saying that there were legal procedures to be gone through before the agreement could be finalized. The P3 Network will operate a capacity of 2.6 million TEUs (initially 255 vessels on 29 loops) on three trade lanes: Asia-Europe, Trans-Pacific and Trans-Atlantic. The lines intend to start operations in the 2nd quarter of 2014, but the starting date will be subject to obtaining the approval of relevant competition and other regulatory authorities. In addition, the establishment of the P3 Network is subject to the lines agreeing on definitive contracts. Finalization and signing of the contracts is planned for the 4th quarter of this year. Maersk Line will contribute approximately 42 per cent of the capacity (including the new Triple-E ships), at about 1.1 million TEUs. MSC will contribute approximately 34 per cent of the capacity, which comes to nearly 0.9 million TEUs, while CMA CGM will contribute approximately 24 per cent of the capacity, equalling 0.6 million TEUs, said an official communiqué.

2 Global scenario weighing heavily on exports: FIEO Chief REACTING to the trade data for May, Mr. M. Rafeeque Ahmed, President of Federation of Indian Export Organizations (FIEO), said the figures indicate that global recovery is still weak. "Global growth has been uneven. We have seen few green shoots in countries like the US and Japan but the euro area continues to be a cause of concern," he said, adding that even some large emerging economies like China, Brazil, Russia and South Africa witnessed weak economic activity due to sluggish external demand and lack of investment. China, the world s biggest exporter, recorded a growth of 1 per cent in its May exports, while the country s imports were down 0.3 per cent. The rupee depreciation has not boosted exports as demand continues to remain low and other currencies also depreciated, observed Mr. Ahmed. "While the increasing trade deficit, primarily on account of non-oil imports, (gold and silver in particular) is a cause of concern, the coming months may see a decline in the deficit due to softening of commodity prices (other than crude), a dip in gold imports subsequent to restrictions imposed by the Reserve Bank of India (RBI), and a hike in import duty," Mr. Ahmed added that the Current Account Deficit was expected to be moderate during this fiscal. Essar Ports complies with minimum public shareholding as per SEBI norms per cent. Port of Antwerp International UK Limited, a subsidiary of the Port of Antwerp, has converted the Global Depository Shares (GDS) held by it in Essar Ports Ltd, one of India's leading private port and terminal operators, into equity shares, bringing down the promoter holding in Essar Ports to Essar Ports Ltd has confirmed that it is in compliance of the Minimum Public Shareholding requirement as per SEBI norms subsequent to the conversion of GDS by Port of Antwerp. This was done as per the SEBI approval received earlier. Essar Ports had earlier announced the successful completion of its Offer for Sale process for sale of equity shares of the company, aggregating to 5.33 per cent of the paid-up share capital. The balance dilution was to be achieved by way of conversion of GDS held by Port of Antwerp International UK Ltd as it had expressed the desire to convert the GDS into equity shares. With this conversion, Essar Ports Ltd is now in compliance of the SEBI minimum public shareholding requirement, with the Essar Group holding going down to per cent. It has intimated the Stock Exchanges and SEBI of the same, stressed an Essar Ports statement. CSL plans IPO to raise 500 cr. The public sector Cochin Shipyard Ltd (CSL) has proposed to float an initial public offering (IPO) for its capacity expansion plans. According to Commodore K. Subramaniam, Chairman and Managing Director of the company, CSL plans to raise Rs crore tentatively by offering 2.2 crore shares. "It is approaching the Union government for the necessary approval to issue fresh shares to fund the expansion plans," he said in Kochi recently. With regards to whether the general slowdown in the shipbuilding sector would affect the IPO, Commodore Subramaniam said the market may improve by the time CSL gets the necessary clearances. "The industry is going through a phase of low charter rates and oversupply, but this should change by 2015," he said, adding that CSL plans to set up new facilities and expand its operations to sustain the growth momentum in future. Development of the new facilities is estimated to cost Rs 1,500-2,000 crore, to be funded partly by way of equity and debt. CSL's expansion plans include development of a new large dry dock at its existing area, capable of docking offshore oil rigs and semi-submersibles; a ship repair facility at Cochin Port; and undertaking offshore fabrication work for ONGC and other operators at a dedicated offshore location. Its order book position as on June 21 is 25 ships, comprising 21 fast patrol vessels, 3 offshore support ships for Indian and foreign owners and 1 buoy tender vessel for the Department of Lighthouses and Lightships. The aircraft carrier it built for the Indian Navy is set to be flagged off on August 12 by the Union Defence Minister, Mr. A. K. Antony. Page 2

3 Paradip Port jurisdiction to be extended to Kanika Sands Island The Shipping Ministry has reportedly decided to extend the port limit of Paradip Port Trust (PPT) to cover the Kanika Sands Island located off the Odisha coast. A gazette notification in this regard will be made in due course. With this, the earlier notification that extended Kolkata Port Trust's (KoPT) limit to cover the island stands null and void, according to sources. The Ministry's decision was announced by the Shipping Secretary at a high-level meeting called by him recently. The Chief Secretary of Odisha and the Chairmen of both KoPT and PPT were present, among others. It is learnt that the Ministry was against extending the port limit of any private port in this regard. The representative of a yet-to-be launched private port in Odisha was also present at the meeting. A gazette notification issued about two years ago extended KoPT's port limit to cover Kanika Sands a decision that created discord between the Odisha government and the Shipping Ministry and KoPT. The Ministry was looking to help KoPT undertake transloading of dry bulk cargo on the island in partnership with the trade. It is proposed that huge bulk carriers with a full load, which cannot traverse the Hooghly River to call at Haldia Dock Complex (HDC) or Kolkata Dock System (KDS), will discharge their cargo into smaller vessels at Kanika Sands. The smaller vessels, in turn, would then move the cargo to the HDC or KDS. The Odisha government, backed by at least two private ports in the state, had fiercely opposed the notification, arguing that the island was located off the Odisha coast and, therefore, only the state should decide on who could work there. In its reply, the Ministry had stated that the power to take any decision regarding ship movement in international waters rested with the Centre. The matter went up to the Supreme Court, which directed that the dispute be settled amicably. Govt. extends 24x7 Customs clearance facility for Export Cargo With an aim to increase exports, the Finance Ministry said Customs clearance of all export goods will get place on 24x7 basis from four major air cargo complexes at Bangalore, Chennai, Delhi and Mumbai from 1st July. Finance Ministry said in a statement, All exports including those made under export incentives scheme as well as duty drawback scheme will now be able to be move out of the country on 24x7 basis. It added, the Government expects this initiative to greatly facilitate the exporting community and enhance the country s exports by reducing dwell time and enabling exporters to meet their deadlines. The expansion of the 24x7 facility at the 4 major air freight complexes /airports follows closely on the heels of similar customs clearance facility for exports made under Free Shipping Bills (without claiming export incentives) with effect from June 1, 2013 from thirteen air cargo complexes/airports. These 13 Air Cargo Complexes/Airports are Ahmedabad, Amritsar, Cochin, Calicut, Coimbatore, Goa, Hyderabad, Indore, Jaipur, Kolkata, Nashik, Vishakhapatnam and Thiruvananthapuram. The statement said, the extension of 24x7 customs clearance facility for imports and exports has been under consideration by the Government for some time. Thus, last year w.e.f. 1st September, 2012, the customs began functioning on 24x7 basis to clear select export consignments under Free Shipping Bills as well as identified import consignments which were facilitated by its Electronic Risk Assessment System. This was begun on pilot basis at four ports i.e. Chennai, JNPT, Kolkata and Kandla and four airports i.e., Bangalore, Chennai, Delhi and Mumbai. The facility was welcomed by the trade and industry which appreciated the fact that the customs had taken this step to facilitate exports despite facing serious staff constraints. The customs had began functioning on 24x7 basis to clear select export consignments under Free Shipping Bills as well as identified import consignments which were facilitated by its Electronic Risk Assessment System from September 1, Customs Dept. introduces risk management system The Customs Department has decided to introduce the risk management system (RMS) in exports as a trade facilitation measure. India has been having RMS in imports for some years now. RMS in exports will be initially implemented in Customs locations where electronic data interchange (EDI) is operational, a Finance Ministry official said. The system is scheduled for implementation from July 15. To begin with, it will be launched at ICD Mulund and ICD Patparganj. RMS in exports will enable low risk consignments to be cleared based on the self-assessment of declaration by exporters. By expediting the clearance of compliant export cargo, the system will contribute to reduction in dwell time. This will help reduce the transaction cost and make businesses internationally competitive, official sources said. Page 3

4 JNPT to develop Rs 2,000-cr marine terminal for liquid cargo Jawaharlal Nehru Port Trust, as part of its expansion plans will invest Rs 2,000 crore to set up a marine terminal mainly catering to liquid cargoes like oil, acids and cleaning compounds. The port in a presentation to the Ministry said it will develop a marine terminal for liquid cargoes. At Port of Mumbai Plans New Cargo Berth present, there is a twin berth liquid cargo terminal of BPCL and IOC with a capacity of 5.5 million tonnes per annum, at JNPT. It will enhance this quantity to30 million tonnes per annum. L&T Ramboll is designing and doing the project management consultancy and have submitted the draft Detailed Project Report (DPR). JNPT has also appointed URS Scott Wilson and Howe as consultant to carry out feasibility study and to prepare DPR for setting up a mega container terminal near Nhava Island. JNPT currently handles 44 per cent of the country's container cargo. The fiscal ending March 2013 saw cargo handled by the 12 major ports to 545 million tonnes, from 561 million tonnes in India s Mumbai Port Trust has issued a request for qualification from interested bidders for the construction of a new offshore multi-purpose cargo berth. Looking into growth in port traffic and in order to create facility to handle bigger ships carrying multi-purpose cargo (including container), the authority has decided to undertake development, operation and maintenance of an offshore multi-purpose cargo berth at Mumbai Port through public-private partnership, the port said. The authority estimates the project, comprising a berth length of 550 meters (1,804 feet), a 13.5-meter (44-foot) depth and adequate service equipment, will require an investment of Rs. 696 crore (approximately $117 million). Officials said the facility would help expand the port s cargo-handling capacity by 4.5 million tons a year. The deadline for submission of RFQ applications is Aug. 2, and the authority plans to hold a pre-application meeting with prospective bidders on July 17. Pre-qualified organizations will be allowed to participate in the second round of the process, in which the successful contractor will be selected. Mumbai handled a record 58 million tons of cargo in fiscal year , which ended March 31, up 3 percent year-over-year. Shipping Ministry to award 30 Port projects this fiscal Shipping Ministry will award 30 port projects during the current financial year, which are likely to come up at an investment of about Rs 25,000 crore. "We have already finalized the Action Plan for this year and a target of 30 port development projects has been fixed," Shipping Minister G K Vasan said at the agreement signing ceremony between Jawaharlal Nehru Port Trust and DP World's subsidiary, Nhava Sheva Gateway Terminal. These projects will bring in an additional capacity of 288 million tonnes per annum at an estimated investment of Rs 24,633 crore," Vasan said. "I am confident that the targets for the current year will be achieved by all the Major Ports," Vasan said. Of the total 30 Port projects, 19 projects will come up through the PPP (Public Private Partnership) mode, seven via captive or private and the remaining through the port's own resources. The Government last year ( ) awarded 32 projects which will add a capacity of about 137 million tonnes per annum at an estimated investment of Rs 6,765 crore. Meanwhile, the Ministry has engaged RITES (Rail India Technical and Economic Service) for preparing feasibility report for the proposed Dugarajapatnam port in Andhra Pradesh. The report is already prepared for the proposed port at Sagar in West Bengal. There is a plan to set up another Container terminal at JNPT, the 4th Container terminal at an investment of Rs 8,000 crore and increase the capacity to 60 million tonnes," Shipping Secretary P K Sinha said here. India is still growth market for DP World You may be having doubts, but they don't have it for sure. DP World, a Dubai-based, $3-billion port operator, reiterated that it has no plans to sell a stake in any project in India. In the past one year, the company has sold off partial stakes in its Russia and Hong Kong ventures, mainly to write off its debts. But, the company maintained that the selloffs were due to good valuations in matured markets, and not to reduce debts. "We don t sell where there is growth. We only sell in matured markets where there is no growth. The money we get Kong, but not in India, where there is growth, said the DP World Chairman, Sultan Ahmed Bin Sulayem. The only exception (to this trend) is London Gateway because the port is in the middle of the city, while the other nearest port is at least l20 miles away, said Sulayem Page 4

5 Govt. to notify new tariff regime for Major Ports The much anticipated new tariff regime for Major Ports, which is likely to dilute the powers of the Tariff Authority for Major Ports (TAMP) over the long term, will be notified in a month s time, according to the Shipping Secretary, Mr. P. K. Sinha. He was interacting with the media on the sidelines of a function here earlier this week. The new regime is expected to attract more investors to port development projects. It will be especially beneficial to private operators at Major Ports, allowing them to fix market-linked tariffs which can be higher than the already recommended charges by TAMP. Analysts see it as a step towards partial deregulation of tariff setting at Major Ports. The present norms permit developers to only charge lower tariffs than what TAMP has recommended, and not higher. However, according to industry sources, there is lack of clarity on whether terminals operating under the earlier guidelines would come under the new regime. The Ministry of Shipping has reportedly promised operators of such facilities that it will seriously look into the matter. Tariff setting by TAMP, especially the revisions, have been an issue with private terminal operators at Major Ports, who stress that the tariff changes punish efficiency. Analysts are hopeful that as deregulation progresses, the role of TAMP would undergo a drastic change. Govt. signs $216 mn loan pact with World Bank for Kerala road project The Government said it has signed pact with World Bank for $216 million loan for Kerala State Transport Project to improve road conditions and safety in the state. "The Loan and Project Agreements for World Bank assistance of $216 million for Kerala State Transport Project were signed between the Central Government, Kerala Government and World Bank," an official statement said. "The Objective of the project is to improve road conditions, traffic flow and road safety with a focus on vulnerable road users on selected roads in Kerala," the statement said. The project will look at upgrading 363 km strategically important State Highways to complete network connectivity in the state with the objective of reducing travel time between key socioeconomic centers. It will support the strengthening of the road safety management systems in Kerala with the objective of arresting the increase of crash fatalities in the state. Drewry: Grim Outlook for Global Container Shipping Industry The outlook for the global container shipping industry is grim, as carriers finances continue to be severely strained and shareholder value erodes, according to Drewry Maritime Equity Research analysis that focused on Asian container liner finances. The report said that industry players, particularly Orient Overseas International (Limited), Neptune Orient Lines and China Shipping Container Lines, need to get their house in order before their financial situations worsen. According to Drewry, total industry debt has more than doubled in the past five years to $100 billion. Even as the market awaits the fate of [July 1] Asia-Europe [general rate increases], the sheer collapse in Asia-Europe freight rates in the past two months shows how fickle the industry's demand supply balance remains, said Rahul Kapoor, senior analyst at Drewry Maritime Equity Research, in a written statement. Short term, industry profitability has become highly volatile, driven not only by underlying supply demand dynamics, but increasingly by carriers actions with respect to short-term capacity management. With no likelihood of an imminent demand surge, the only way to minimize losses is to address effective capacity immediately, or else any hope of full-year profitability can be written off after a very weak second quarter, Kapoor added. Of the three Asian carriers discussed in its initial coverage of the sector, Drewry recommended OOIL as the best investment, as the company remains one of the few profitable carriers in the industry. It added that NOL s turnaround is unlikely before 2014 and investment in CSCL is risky. Page 5

6 Ship Agents Raise Concerns Over Nehru Port's New Terminal Plan Local agents of container lines have expressed skepticism and concern over a decision by India s Port of Jawaharlal Nehru to develop its fourth container terminal project with one mega terminal instead of two separate facilities. We apprehend that the mega terminal would excite interest from fewer bidders as it would be a more expensive undertaking, take twice as long to execute and grant monopoly status, at least for a limited amount of time, to the winning bidder, the Mumbai-Nhava Sheva Ship Agents Association said in a communiqué to port chairman. The move comes after the port authority issued a new request for qualification from interested bidders for the public-private partnership project, which hit a roadblock in September 2012 when successful bidder PSA International pulled out of Nehru s initial tender. In the light of the experience with the PSAled consortium, splitting the project into two (terminals) would substantially reduce the risk of failure or default by a single PPP partner, the association said. The most significant benefit of the two-terminal concept is that it could become operational much faster. The agents group said that following the PSA bid collapse, the Nehru board of trustees had considered a proposal to split the project into two terminals, but the restructuring plan was reportedly not approved by the government. With two terminals, the port would be encouraging healthy competition between the operators to the benefit of its users and the port itself, the agents said. The mega p r o j e c t comprises one terminal with a berth of 1.2 miles and capacity of 4.8 million containers a year, requiring an estimated investment of $1.4 billion. The deadline for submission of responses to the new RFQ is July 19, and the port plans to hold a pre-bid meeting with prospective organizations July 5 to clarify possible queries Haze Threatens Shipping in Strait of Malacca The Singapore Shipping Association is gravely concerned about the effects of worsening hazy conditions on the safety of ship navigation in the Malacca and Singapore straits region. During the past week, smoky haze coming from forest fires in Sumatra, Indonesia, has blanketed the Strait of Malacca and Singapore Strait, as well as Malaysia and Singapore. Although the haze is a common problem for the region at this time of year, according to the SSA, the Pollutant Standards Index has hit an all-time high of 401, which means the smoke is considered hazardous to health. Visibility has also dropped significantly, SSA said. The straits of Malacca and Singapore are among the busiest and narrowest shipping lanes in the world, said Daniel Tan, executive director of SSA, in a written statement. Reduced visibility in such heavy shipping traffic will definitely affect the safe navigation of ships in the straits. The passage through the straits is further complicated by the many smaller barter trading ships and also passenger ships in cross-strait traffic, he added. Furthermore, government officials from Singapore have expressed their concerns about the situation to Indonesian officials, emphasizing the urgency of the situation and reaffirming their commitment to help Indonesia fight the fires in Sumatra. Indonesia's foreign affairs minister said the country s government is doing what it can to address the problem but will not apologize to Singapore, The Jakarta Post reports. The Indonesian government has declared a state of emergency in the province of Riau. Page 6

7 Humor Page 7

8 Following the enactment of the Multimodal Transportation of Goods Act, 1993, AMTOI Association of Multimodal Operators of India) was established in the year ASSOCIATION OF MULTIMODAL TRANSPORT OPERATORS OF INDIA C/o. CKB, 1st Floor, 20, Raja Bahadur Mansion, Ambalal Doshi Marg., Fort, Mumbai Tel. : Fax : (91-22) info@amtoi.org Editorial Team: Mr. Xerxes P. Master Mr. Vivek Kele The main objects of the Association are to To organize Multimodal Transport Operators at national level To study the issues faced by MTOs and seek resolution with appropriate authorities To promote multimodal transport services in foreign trade To improve the quality of such services and reduce transaction costs AMTOI is registered as a non-profit making body under the Indian Companies Act and its core managing committee consists of seven members. The committee is assisted by a Board of Advisors consisting of the representatives of Government and public sector organizations. Catalysing Multimodalism We at AMTOI have always endeavored to have a harmonious maritime community to bring consensus amongst all segments of our community, whilst making representations to various authorities. AMTOI has always tried to bring together all the segments of the maritime community under one common platform to promote Multimodalism in India. Our members are shipping lines, shipping agents, freight forwarders, transporters, CFS operators and custom house agents.