Hapag-Lloyd stays in the black, but fourth-quarter operating result slumps

By Mike Wackett

Hapag-Lloyd recorded a net profit of $28 million in the fourth quarter of 2017, due in part to a windfall of $21 million of netted pool revenue from its vessel sharing agreement within THE Alliance. This surplus, together with a profit of $56 million in Q3, overcame the loss the carrier suffered in the first six months of the year to give a positive full-year result of $35 million, compared with a loss of $103 million in 2016.

However, Hapag-Lloyd saw its operating result dive by 27 per cent between Q3 and Q4 to $137 million as volumes weakened seasonally and freight rates came under pressure. With the UASC business only included within the accounts since May, it is difficult to compare full-year turnover and volumes for the merged entity, which were up by 32 per cent to $11.3 billion and up by 29 per cent to 9.8 million TEUs respectively. (more…)

OOCL enjoys a busier and more profitable first quarter than its new owner

By Mike Wackett

Ahead of its acquisition by COSCO, ocean carrier OOCL’s carryings jumped 7.5 per cent year on year, to 1.58 million TEUs, in the first quarter, while revenue surged 16 per cent, to $1.38 billion. According to the operational numbers at least, Hong Kong-based OOCL enjoyed a better and more profitable quarter than its suitor.

On the transpacific tradelane, its second-biggest trading region after intra-Asia/Australasia, OOCL achieved liftings growth of 16.3 per cent, to 457,461 TEUs, with revenue improving by 19.2 per cent, to $529 million. (more…)

Restructured ZIM sails back into the black, but final quarter disappointed

By Mike Wackett

Israeli niche trades container line Zim recorded an adjusted net profit of $50 million for 2017, following a loss of $150 million in 2016 – but the carrier slipped back into the red in the final quarter. Zim’s total revenue last year was up 17 per cent on 2016 to $2.98 billion, as it loaded 8 per cent more containers on its ships to reach 2.6 million TEUs. Operating profit (EBITDA) was $246 million, versus a negative of $50 million in 2016. (more…)

CMA CGM seizes title of most profitable container line with 2017 performance

By Mike Wackett

CMA CGM recorded a net profit for 2017 of $701 million to easily outperform its peers and wrench the mantle as the industry’s most profitable global container line from Maersk Line. And the French carrier’s order of nine LNG-powered 22,000 TEU ultra-large container vessels (ULCVs), confirmed in November, is a bold step to out-think on cost competitiveness its Danish rival, currently preoccupied with its own restructuring. (more…)

As IMO targets are questioned, what is the truth about shipping emissions?

By Alexander Whiteman

So what is the truth about shipping emissions?

The IMO has decided to cut 2008 levels of greenhouse gas emissions (GHGs) by at least 50 per cent by 2050 – but not all in the industry are convinced. A recent comment piece in Splash 24/7, by First International Chairman Paul Slater, questioned shipping’s role in climate change, calling the IMO’s proposed plan “fatuous, unrealistic and unnecessary”. He wrote: “The CO2 issue has been grossly overstated…It has been shown that [shipping’s] CO2 is absorbed by seawater without damaging results”. He also claimed to The Loadstar that there was no evidence that polar ice was melting. (more…)

Time pressure on carriers to decide on scrubbers or more expensive greener fuel

By Mike Wackett

With just over 18 months until the IMO’s 0.5 per cent sulphur cap regulations come into force, major container lines are undecided on their future fuel strategy. Come 1 January 2020, ships not powered by LNG must either use more-expensive low-sulphur fuel oil (LSFO), or be fitted with an exhaust gas cleaning system (known as scrubbers) in order to continue burning heavy fuel oil (HFO). (more…)

Box lines face extra $34 billion for low-sulphur fuel if shipowners don’t install scrubbers

By Mike Wackett

Within two years it will be illegal to power a ship with fuel having more than 0.5 per cent sulphur content, unless the vessel is fitted with an exhaust clean gas system, known as a scrubber. Low-sulphur fuel oil (LSFO) – currently about $580 per tonne, is significantly more expensive than heavy fuel oil (HFO) at about $370 per tonne. However, according to a new white paper, released by Swedish financial services group SEB, fewer than 2,000 ships out of a world merchant fleet of some 60,000 – 3.3 per cent – are expected to have scrubber systems installed by January 1 2020. (more…)

IMO listens to Members of European Parliament to act to reduce shipping emissions

By Alexander Whiteman

MEPs (Members of the European Parliament) have told the International Maritime Organization there can be no exceptions or exemptions in the fight against climate change and are demanding immediate action to cut shipping emissions. In an open letter to EU member states and the IMO, MEPS from Croatia, the Netherlands, Portugal and Sweden say that despite shipping creating emissions equal to all of those created in the Netherlands, it remains the only sector not included in the European commitment to the Paris Agreement. (more…)

International business on the up for UPS, but domestic profits slump

By Alexander Whiteman

Cross-border operations continued to gain ground during UPS’s first quarter as revenue and operating profits grew. However, a 10 per cent upturn in overall revenue – more than $17 billion for the three-month period – failed to prevent a 6 per cent drop in group operating profits, to $1.5 billion.

The success in international operations continues a trend seen last year, with the latest results showing cross-border revenue of $2.5 billion and profits of $594 million (up 14.6 per cent). “Our focused business strategies are producing strong results in both the international and supply chain segments,” said Chief Financial Officer Richard Peretz. “The benefits from our investments, new multi-year transformation efficiencies and stronger pricing position us well for shareowner value creation.” (more…)

Customers angry as ‘capacity-hobbled’ UPS quietly pushes up fuel surcharges

By Alexander Whiteman

UPS has denied claims it has been forced to increase fuel surcharges to offset costs associated with wet leases as it struggles for capacity amid surging e-commerce volumes. The U.S. integrator was accused of not properly informing customers it had split its domestic and international air freight fuel surcharges.

Chief Executive of Spend Management Experts John Haber said the Export index is almost 18 per cent higher than the U.S. Domestic Air Index. “Talking to many of our customers, we found they were not formally notified of the fuel surcharge change/ increase,” Mr. Haber told The Loadstar. “We understand costs are rising in the shipping world, but we’d like an explanation on why there is such a difference between export and domestic air in order to logically explain to our clients.” (more…)

Rents go through the roof as U.S. e-commerce boom overruns warehouse space

By Ian Putzger

Warehouse rents in the U.S. are rising rapidly as e-commerce gobbles up space faster than it can be replenished. In some cases, the urge to bring on new capacity seems strangely muted: when it comes to cargo facilities at U.S. airports, there seems to be no hurry to add new or overhaul existing cargo infrastructure, despite serious bottlenecks exposed in last year’s peak season.

Real estate firm CBRE’s Industrial Availability Index was down to 7.3 per cent in the first quarter, which marked 31 consecutive quarters of decline. On a more granular level, available space was down in 31 U.S. markets, up in 25 and flat in eight. (more…)

Investment in Amazon Logistics will grow, as outsourcing goes on … for now

By Alex Lennane

Amazon plans to retain its current mix of outsourced and in-house logistics operations – for now. But it will continue to invest in its own transport capabilities, to cater for growth.

In an earnings call in late April, as Amazon announced its first-quarter results, CFO Brian Olsavsky told analysts the company was growing its own teams. “We have a great group of carriers that we use globally … But we’re also growing our teams and capabilities to ensure that we can keep up with increased volume on our own, particularly around the holiday season. (more…)