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Record Results for DP-DHL and Maersk in Volatile Market

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3pls, Archives, Global Logistics, Global Trade Daily, Ocean Ports

Record Results for DP-DHL and Maersk in Volatile Market

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The bonanza that so many of the large logistics companies are experiencing seems to be continuing with the just-published first quarter 2022 results of both DP DHL and Maersk seeing large increases in both revenues and profits.

For DP DHL, revenue grew 19.8% year-on-year to €22,593m whilst EBIT was €2,159m. A major reason for this jump in profits was a huge increase in the revenue at the ‘Global Forwarding, Freight’ business. This saw revenue leap by 54.9% to €7,359m and EBIT treble to €601m. For an operation that has been falling behind many of its competitors for several years, this may mark some sort of recovery.

DHL Express, which is normally the best performer of DP DHL’s businesses, still put in respectable numbers, with a 15.9% rise in revenue to €6,373m but flat EBIT. DHL Supply Chain saw a 22.8% rise in EBIT. One of the problem areas was Post & Parcel, where the return to some post-Covid normality in Germany resulted in falls in business and a consequent -36.2% fall in EBIT.

Maersk experienced similar conditions but the effects of issues such as the war in Ukraine and the crisis in China had a greater effect. For the whole Group, revenue was up 55% year-on-year whilst EBITDA more than doubled to US$9.1bn. A major part of this was continued high profitability in container shipping despite falls in demand.

Maersk commented that “loaded volumes decreased by 6.7%, primarily driven by lower back-haul volumes in Europe and in North America. The average loaded freight rates increased by 71%, driven by both contracts and shipment rates on routes from Asia to Europe and to North America”. Other parts of the business also did well again, despite mediocre demand levels.

Logistics & Services saw a rise in EBITDA despite losses from closed investments in Russia but the Terminals business suffered an impairment of US$485m as a result of the write-off of investments in Russia, although the business saw record margins at the operational level of 40.3%.

These results are impressive for both companies, but caution should be applied in assessing their importance. The market remains volatile and dysfunctional and this is supporting high freight rates to a very significant degree.

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3pls, Air Cargo, Archives, Global Logistics, Global Trade Daily

Maersk Finalizes Acquisition of Pilot Freight Services

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A.P. Moller – Maersk (Maersk) has completed its acquisition of US-based Pilot Freight Services.

Maersk first announced its intention to acquire the company in February this year, aiming to further extend its integrated logistics offering.

The strategic move is said to benefit customers by offering customized international, domestic, and cross-border logistics to Maersk’s North America landside logistics capabilities for business-to-business (B2B) and business-to-consumer (B2C) distribution models.

By acquiring Pilot, the Danish Giant extends its end-to-end offerings deeper into the North American supply chain of its customers.

“Our customers are looking for us to accelerate their supply chain speed, remove handoffs and constantly improve their end-to-end, omni-channel business model to reach their financial growth goals,” said Narin Phol, Regional Managing Director of Maersk North America.

“Pilot’s expertise and existing infrastructure enables us to achieve these goals by creating more agile, nimble supply chains to serve customers the way they want to be served.”

Zach Pollock, CEO of Pilot Freight Services, added: “Teaming up with an industry leader like Maersk is a natural fit and will enable our company to tap into significant, new future growth opportunities for our customers and employees.

“We like Maersk’s continuous improvement mindset and active investment pattern in expanding supply chain solutions, so we’re excited to work together in our expanded role.”

The transaction price of $1.68 billion equals to an enterprise value of $1.8 billion.

Maersk has also recently been crowned the second largest container carrier in the world by Alphaliner.

According to recent data, the shipping line has a total capacity of 4,242,430 TEU across 729 vessels – the largest fleet recorded. It also has 29 vessels with a combined capacity of 319,100 TEU on order.

MSC took the top spot with a total capacity of 4,352,617 TEU across 665 ships. A further 102 vessels with the ability to carry 1,338,468 TEU are currently on order.

3pls, Air cargo, Archives, Global Logistics, Global Trade Daily, Ocean Ports

Maersk Reveals Focus on Air Cargo

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The leading shipping lines continue their expansion into airfreight, with Maersk announcing on Friday (08/04/22) the creation of a new business called Maersk Air Cargo. This will be a physical aircraft operator that will act as the air freight provider for the logistics operations of the Maersk Group.

 

Essentially this is a rebranding of Maersk’s existing air freighter business, Star Air, with the significance of the move possibly being in the re-naming. Rather than a somewhat peripheral subsidiary like Star Air, the intention seems to make Maersk Air Cargo a core market offer from Maersk Group. As the company states in its press release, “Maersk’s ambition is to have approximately one-third of its annual air tonnage carried within its own controlled freight network. This will be achieved through a combination of owned and leased aircraft, replicating the structure that the company has within its ocean fleet.

The remaining capacity will be provided by strategic commercial carriers and charter flight operators”. Surely the most important line here is “replicating the structure that the company has within its ocean fleet”, suggesting that Maersk aims to become as much of an airfreight company as it is a shipping line.

It is interesting that the head of Maersk Group’s ‘Logistics and Services’ business is a former CEVA executive. He comments that Maersk Logistics and Services views air freight as “a crucial enabler of flexibility and agility in global supply chains as it allows our customers to tackle time-critical supply chain challenges and provides transport mode options for high value cargo”. This is a clear statement that Maersk is aiming for a high- to very high-level of vertical integration.

Not only that, but Maersk has also outlined plans to develop Billund airport as its “air freight hub”. It is unclear if this will just be a base for administration and maintenance, or if Maersk envision a hub within an airfreight route network. Bearing in mind Maersk’s shipping operations emphasize networked operations, it may not be surprising if it is the latter.

Maersk Group has long had an interest in air transport, but the creation of Maersk Air Cargo goes beyond this in its implications. It is another significant step towards Maersk becoming a multi-sector vertically integrated, asset-based logistics provider where ships are just one asset class.

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3pls, Archives, Global Logistics, Global Trade Daily, News, Ocean Ports

Maersk Dyros Undergoes Inspections

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The Maersk Dyros vessel that suffered container loss and damage last month has arrived in Lazaro Cardenas and is undergoing inspections.

On 21 March, the 4,578 TEU box ship lost around 90 containers in the North Pacific Ocean due to rough weather conditions.

Approximately another 100 containers were damaged but no crew members were injured.

In a recent customer advisory, Maersk wrote that the ship had been diverted to Lazaro Cardenas, Mexico.

“On 3 April, the ship arrived at Lazaro Cardenas, Mexico, and inspections of the vessel are already underway. The vessel is expected to come alongside on 7 April,” a representative from the Danish shipping line told PTI.

“Once alongside, the vessel will undergo further assessment and we will have more specific details on the extent of damaged containers at the end of this week.

“The discharge operations will also begin once alongside and are expected to take two weeks. The vessel will also need to be assessed for any necessary repairs, which could add additional time at Lazaro Cardenas.”

The vessel was on its way from Yantian, China, to Seattle, USA when the incident occurred.

In other news, recent bottlenecks in Far East Asia have led Maersk to change a number of its shipping schedules.

This was arguably mainly driven by the recent lockdown in Shanghai, China which has recently been extended.

Despite operations at the Port of Shanghai remaining active, Maersk-operated depots and warehouses across the city are remaining closed.

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Archives, Global Logistics, Global Trade Daily, Ocean Carriers

A ROUNDUP OF RECENT MERGERS AND ACQUISITIONS THAT ARE SHAPING AND DEFINING THE CARRIER INDUSTRY

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There is no denying that the past 18 months have been a tumultuous period for the global maritime industry. 

According to the United Nations Conference on Trade and Development (UNCTAD), sea-based trade plunged by 4.1% in 2020 due to the unprecedented disruption caused by COVID-19. 

The pandemic has sent shockwaves through supply chains, shipping networks and ports, leading to plummeting cargo volumes and foiling growth prospects, not helped by the enormous uncertainty that accompanies the world’s efforts to emerge out of the pandemic. 

Despite the gloom, UNCTAD expects maritime trade growth to return to positive territory and expand by 4.8% in 2021, assuming world economic output recovers. However, the organization highlights the need for the maritime transport industry to brace for change and be well prepared for a transformed post-COVID-19 world.

Looking at the commercial and strategic activities of major shipping lines is often a good sign of the health of the industry more widely. 

As we progress through 2021, mergers and acquisitions are giving mixed signals, and clearly paint a picture of fluctuating fortunes. 

Damco and Diamond S Shipping dissolve 

In September 2020, industry leaders Maersk announced that it would be integrating Damco’s air and ocean less-than-container-load shipping into its wider business, thus dissolving the brand it merged with Maersk Line at the beginning of 2019. 

The move was part of series of strategic plays by CEO Soren Skou that are geared toward a central goal of becoming an integrated logistics company that provides end-to-end solutions for its customers. 

Shipping commentators regard the Damco internalization as a blurring of the lines between forwarders and carriers. 

For forwarders, alarm bells could start ringing as Maersk now provides direct competition to these companies. DB Schenker reacted quickly to the announcement, offering a so-called stability package to Damco customers that matched the previous terms they were operating under. 

It has created a fascinating dynamic, as many forwarders rely on Maersk as a supplier of carrier services. 

And Damco has not been the only casualty of the Danish company’s reshuffling. Maersk has also spun off lines that include its once-formidable oil drilling business, instead focusing its efforts on acquiring businesses that fit into its core purpose. This includes those specializing in customs and warehousing, as well as numerous digital tools. 

Another well-known brand that has fallen away is America’s Diamond S Shipping, which in March announced it was merging with New York-based International Seaways, the latter keeping its brand as part of the all-stock transaction deal. 

Post-merger, International Seaways will own a fleet of 100 tankers that between them have a capacity of 11.3 million deadweight tons, assets which give it an implied market capitalization of around $1 billion. The fleet split will be approximately 70-30 between crude tankers and product tankers respectively.

Diamond S Shipping went public after it merged with Capital Product Partners in early 2019, this after failing with an IPO attempt five years earlier.

Speaking at the time of the latest merger announcement, Nadim Qureshi, chairman of the Board of Directors of Diamond S Shipping, commented: “We are pleased to enter into a transaction that will both create near-term value for our shareholders and create a superior, scale vehicle that enables investors to gain exposure in both the crude and product tanker markets with strong fundamentals. Importantly, since the focus of the management teams of both Diamond S and INSW are similar, we see further value from synergies in the combined company.”

The combined company will be home to 2,200 employees and carry a market value of around $2 billion. 

K-Alliance and Hapag-Lloyd show brighter prospects 

In South Korea, a huge code-sharing agreement in the form of the K-Alliance looks set to strengthen a series of shipping firms’ competitiveness in Southeast Asia. 

The move sees several enterprises joining forces–HMM, SM Line, Pan Ocean and the recently merged Sinokor Merchant Marine and Heung-A Line–with the intention of reducing operating costs and increasing quality of services.

It is thought that the alliance represents around 40% of South Korea’s container volumes in the region, which stands at approximately 480,000 TEUs. It is hoped that this consortium will help to stave off international competition that is threatening to take a greater market share. 

K-Alliance is the brainchild of South Korea’s Ministry of Oceans and Fisheries, which oversaw the signing of the agreement via video conferencing toward the end of 2020. As an extra incentive, it is offering alliance members preferential interest rates for new vessel orders. 

On announcing the move, the ministry hinted that more activity could be in store. 

“It’s the first attempt to form a service alliance consisting of only South Korean carriers to reap economies of scale,” read the announcement. “Other operators are welcome to join in at any time, in consultation with existing member companies.”

Korea’s shipping industry, having hit rock bottom, is starting to show signs of a rebound, the K-Alliance being another indication that the sector is on its way to a substantive recovery. 

The activity of German firm Hapag-Lloyd also sheds some light on the general direction of travel for the global shipping industry. In announcing the acquisition of NileDutch in March 2021, it has signaled its intent to expand its operations in the booming African market. 

With over 40 years of expertise, NileDutch is one the most prominent providers of container services from and to West Africa. The company is present in 85 locations across the world and has 16 offices spread across the Netherlands, Belgium, France, Singapore, China, Angola, Congo and Cameroon. 

With 10 liner services, around 35,000 TEUs of transport capacity and a container fleet of around 80,000 TEU, the company connects Europe, Asia and Latin America with West and South Africa. 

Rolf Habben Jansen, CEO of Hapag-Lloyd, outlined the firm’s faith in the African market when news broke of the NileDutch transaction.

“Africa is an important strategic growth market for Hapag-Lloyd,” Jansen said. “The acquisition of NileDutch strengthens our position in West Africa and will be an excellent addition to our existing activities on the continent. Our combined customer base will benefit from a denser network from and to Africa as well as from a much higher frequency of sailings.”

Indeed, as the world begins to emerge from its cocoon and vaccination programs extend their reach, it will be with great interest to observe where the dust settles in relation to the makeup of the global ocean carrier industry. 

Some big names have disappeared while others have strengthened–a new status quo that has revealed key trends which could shape the sector moving forward.

Whether it is the move by giants such as Maersk to combine forwarding and carrier services, or the clear vote of confidence shown by Hapag-Lloyd in the African market, the dice are starting to be rolled after the standstill period brought about by COVID-19. 

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Archives, Features, Global Logistics, Global Trade Daily, Ocean Ports

America’s Expanding Ports: Ports Investing to Improve Their Market Share

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What do ports in Maryland, Georgia, Texas, Florida, and California have in common?

A commitment to future growth through current investment. Operators of the ports that follow are not content with the status quo. They see opportunities on the horizon and know that to grab them, they must continually pour in resources (or locate them from private and/or government partners) to expand port operations.

This is happening at so many ports around the country that listing them all would run head-on into our space constraints. What we decided to do instead was simply highlight just some of those expanding that have got our notice lately. If you feel your favorite port should have been included, drop us a line so we’ll make extra sure to check it out the next time around.

PORT OF BALTIMORE

A $116.4 million public-private partnership (P3) between the Maryland Department of Transportation’s Maryland Port Administration and Ports America Chesapeake is already paying dividends. Among the projects that has been completed as part of the 50-year agreement was the deepening of the Seagirt Marine Terminal, which Ports America Chesapeake operates at the Helen Delich Bentley Port of Baltimore.

A new record was set at Seagirt Marine Terminal at 11p.m. on Aug. 18, when the 5,536th and final container move over three days was accomplished by longshore workers handling the Maersk Edinburgh. The largest number of moves for a single ship in the Port’s 314-year history would not have been possible had the berth not been deepened to 50 feet to accommodate ships like the Maersk Edinburgh.

In addition to the deeper berth, the P3 agreement, which was forged in 2009 in the wake of a national recession, includes the creation of a second 50-foot berth, the installation of four supersized container cranes and $100 million in improvements for Maryland roads, bridges and tunnels.

“This record container activity is a significant milestone for the Port of Baltimore and a sign that the maritime shipping industry is coming back and fueling Maryland’s economic recovery,” says Governor Larry Hogan. “The container growth at the Port of Baltimore shows the benefits of public-private partnerships in delivering infrastructure more quickly and stretching state and federal dollars by also relieving the state of the long-term infrastructure maintenance costs.”

PORT OF SAVANNAH

The Port of Savannah handled 4.44 million twenty-foot equivalent container units in Fiscal Year 2020, down less than 1 percent compared to the previous year. Despite COVID-19 disruptions, total tons crossing all Georgia Ports Authority (GPA) docks reached a record 37.77 million, up 0.6 percent, or 223,000 tons, compared to FY2019. Container tons grew 2 percent (560,440 tons) to reach 33.5 million tons for the year, another record.

As you can see, these challenging times were no match for the GPA’s ongoing expansion projects, which include the harbor deepening and Mason Mega Rail.

Projects such as these have quickened the pace of commercial infrastructure investment in Savannah. According to the latest report from Colliers International, 5 million square feet of industrial space are currently under construction in the Savannah market. In addition, Savannah is home to a total of 74.4 million square feet of warehouse and manufacturing space.

“What sets Savannah apart from the competition is the sheer capacity of the port’s ever-expanding footprint, on and off the terminal,” says Will McKnight, GPA’s board chairman. “Not only are we focused on the future and providing even greater value to our customers, but we have nearly unlimited potential and capacity to grow our business.”

PORT MANATEE 

The port in Palmetto, Florida, is advancing an $8.3 million project to nearly double the size of its dockside container yard with the July 28 approval of a construction contract by the Manatee County Port Authority.

The container yard expansion, targeted for June 2021 completion, promises to add 9.3 acres to the existing 10-acre paved facility adjoining Port Manatee’s Berth 12 and 14 docks. “Expansion of the dockside container yard to encompass 19.3 acres not only will accommodate dynamic demand from such longtime users as Port Manatee-based World Direct Shipping and Del Monte Fresh Produce Co. but also will literally and figuratively pave the way for further global commerce opportunities at our flourishing seaport,” says Carlos Buqueras, Port Manatee’s executive director.

The expansion project is a cornerstone of the two-year, $38 million capital enhancement initiative underway at Port Manatee, Buqueras adds.

“In these challenging times for our nation, Port Manatee continues to thrive as a vital economic engine for our region and beyond, serving as a preferred gateway for numerous key commodities,” says Priscilla Whisenant Trace, chairwoman of the Manatee County Port Authority. “With the expansion of container yard capabilities, Port Manatee is opening the proverbial door for even greater international trade and accompanying well-paying jobs.”

PORT EVERGLADES

Broward County’s Port Everglades announced in May it was advancing $1.6 billion in infrastructure improvements that are underway and expected to be completed in the next five years.

Included are: a $471 million berth expansion, the largest infrastructure project in the Florida port’s history; the addition of three Super Post-Panamax container-handling gantry cranes, valued at $41 million; the deepening the port’s navigation channels from 42 feet to 48-50 feet and widening narrower sections of the channel for safe vessel passage; a new international logistics center, which is currently under construction through a public-private partnership; and petroleum slip improvements.

“The COVID-19 pandemic is certainly impacting this year’s bottom line, but we are fortunate that Port Everglades’ diversified business sectors of cargo, cruise, and petroleum can address a dip in one business sector and be balanced out with stability in other revenue-generating business sectors, says Glenn Wiltshire, acting chief executive and port director. “As a result, Port Everglades has a history of financial success and has budgeted for several sizeable construction projects that are moving forward at a rapid pace with little disruption from the virus.” said Port Everglades’

PORT OF JACKSONVILLE (JAXPORT)

In February, the federal government allocated $93 million for the next phase of deepening the Jacksonville shipping channel to 47 feet from its current depth of 40 feet. A milestone for the project and a major victory for that region of Florida, the federal government has now fully funded the government’s portion of deepening through JAXPORT’s Blount Island Marine Terminal.

Upon completion of the deepening project, the SSA Jacksonville Container Terminal at Blount Island will feature a vessel turning basin and have the ability to simultaneously accommodate two post-Panamax vessels. In November 2019, the U.S Department of Transportation awarded JAXPORT a $20 million grant to enable the facility to accommodate more containers on an expanded footprint.

“This is the first time JAXPORT has ever received funding in the president’s budget, which speaks volumes about the significance of this project to the Southeast U.S. and the nation,” says JAXPORT CEO Eric Green. “We are extremely grateful to our federal, state and local partners, as well as the dedication and leadership of the JAXPORT Board, for their steadfast support of our growth and the 138,000 jobs Jacksonville’s seaport generates in Florida.”

Jacksonville Mayor Lenny Curry summed it up by saying, “This is a significant win for Jacksonville and as I have said before, the continued support from our state and federal partners demonstrates the strength of JAXPORT’s future.”

PORT OF HUENEME

In June, when Pacific Coast Business Times named Kristin Decas, Port of Hueneme CEO & port director, as a Top Woman in Business for the sixth year in a row, and awarded Jess Herrera, the port’s longest-serving commissioner from the Oxnard Harbor District, with the 2020 Latino Leadership Award, both honorees separately mentioned the port’s recent growth as being among their proudest accomplishments.

Herrera, whose 54 years of service at the Port of Hueneme began when he was hired as a longshoreman there, has played a vital role in expanding the port’s infrastructure, especially with his shepherding of a historic joint use agreement partnership with Naval Base Ventura County that increased port capacity as well as revenue for Hueneme and the U.S. Navy.

Decas, who became the first woman to lead the Port of New Bedford in its more than 50-year history before becoming the first woman to lead the Port of Hueneme in its 83-year history, has seen the latter facility achieve record-breaking cargo growth of 23 percent, handling over 1.6 million metric tons of cargo. Hueneme moves $9.5 billion in goods each year and consistently ranks among the top 10 U.S. ports for automobiles and fresh produce. Port operations bring $1.7 billion in economic activity and create 15,834 trade-related jobs.

“Our port has been able to grow and succeed because of the many partnerships and support from our community,” Decas said upon receiving her accolade from the Pacific Coast Business Times. “Together, we have been able to grow jobs, increase exports from our local industries by 66 percent and become the Greenest Port in the United States.”

PORT OF BROWNSVILLE

With more than $43 billion worth of projects currently in the works, the Port of Brownsville is transforming the Rio Grande Valley by creating positive investment opportunities and jobs.

What’s that? You want numbers? Gotcha: The only deepwater port on the U.S./Mexico border supports a total of $3 billion in total economic activity for Texas and is responsible for 51,468 jobs within the Lone Star State, according to an independent analysis conducted by Martin Associates on port activity for the 2018 calendar year.

Those jobs related to cargo moving through the marine terminals and shipbuilding and rig repair activities resulted in personal income that totaled at $2.6 billion, concluded the analysis, which also found more than $200 million in tax revenue was generated by the Brownsville port’s activities.

“The data clearly show that the Port of Brownsville is a remarkable resource with a reach extending far beyond the Rio Grande Valley,” says economist John Martin, PhD, who authored the report. “With more than 51,000 jobs related to the port’s operations and more than $3 billion in total economic impact across the state, the port is a significant driver of opportunities today and in the future.”

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Archives, Global Trade Daily, Ocean Carriers

Big Ships that are Coming or Already Here Present New Challenges

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The new year presents both opportunities and challenges for players within the supply chain to increase productivity through maximizing resources or get left behind as competitors take over. There are layers of factors for global shippers to consider in determining the best approach in remaining both competitive, efficient, and to be honest, relevant. Major factors in consideration include IMO 2020, traffic increases and vessel sizing.

Looking at some statistics reveals an interesting picture of exactly what’s going on and what shippers can prepare for based on last year’s trends. According to the 2019 North American Ports Outlook report by Cushman & Wakefield, the intermodal traffic rates saw an increase by 5.5 percent, while 90 percent of internationally shipped dry, non-bulk manufactured goods are containerized. Oh yeah, automobile imports are on the rise also.

Data make clear that big ships can not only create competitive advantages but also recreate what modern competition looks like. Cushman & Wakefield’s report shows that 79 percent of the international containership supply is dominated by the 2M Alliance (Maersk and MSC), the Ocean Alliance (CMA CGM, COSCO and Evergreen) and THE Alliance (ONE, Hapag Lloyd and Yang Ming). Not only do these alliances carry a massive amount of clout among competitors globally, but they also boast massive container vessels.

COSCO Shipping Universe, for example, sits right at 21,237 TEU capacity at 400 meters x 58.6 meters. This massive vessel holds the title as the largest cargo ship in China and the fourth largest in the world. Additionally, this vessel comes with an added bonus to further charge its performance through the support of ABB Turbocharges that enable the vessel to travel at 22 nautical miles per hour.

“The ABB turbochargers on COSCO Shipping Universe will support maximum performance and fuel efficiency, in addition to contributing to COSCO Shipping Lines pursuing green shipping practices for long-term success,” stated Oliver Riemenschneider, managing director, ABB Turbocharging in a press release announcing the vessel’s delivery in June of 2018. “We foresee the ABB turbochargers on the forthcoming mega container ships in the Universe series will contribute similar viable operational gains.”

As the vessels get bigger and better, industry players can rightfully anticipate this as a major trend to keep an eye out for in 2020. Although increasing ship sizes supporting more capacity with fewer miles in between is a win-win, shippers must consider how this impacts the ports and their size capabilities and most importantly, their access to such ports. The North American Ports Outlook report states that orders for new vessels are being placed exceeding 22,000 TEUs and that East Coast ports are beginning to see more large ships. Furthermore, the Neopanamax Locks confirmed that as of just recently, it can handle over 14,000 TEU ships, but not by much. That’s not going to cut it for the big ships predicted in the near future.

MSC Mediterranean Shipping Co. announced a successful Asia-to-Europe voyage for the MSC Gülsün ship. The 23,756 TEU vessel holds the title as the world’s largest container ship and adds a new level of quality with its advanced engineering focused on energy efficiency and reduced fuel consumption overall. The Gülsün is one of more than 10 ships to be added to MSC’s advanced fleet between 2019-2020, and it doesn’t stop there. The IMO-2020 ready vessel boasts a hybrid Exhaust Gas Cleaning System (UN IMO-approved, of course) paired with a low-Sulphur fuel and/or LNG adaptation option. Not only is this ship more than prepared for revolutionizing the approach to IMO standards, but it’s also making a big dent in operational efficiencies.

Evergreen also made news last year by confirming new vessels with up to 23,000 TEU capacity are being added to its fleet. Information released from numerous sources confirmed that five or more vessels with such TEU capacity were approved for order. These mega-ships will be built at South Korea’s Samsung Heavy Industries shipyard and China State Shipbuilding Corp.with a price tag of roughly $1.6 billion. The order was placed back in September and current service estimation sits between 12-18 months, according to various reports.

Go ahead and add Germany’s Hapag-Lloyd to the list of super vessels to come. The Wall Street Journal reported that up to six ships with TEU capacity well over 20,000 were confirmed. Hapag Lloyd already boasts six vessels within the A 18 class with more than 19,000 TEU capacity. Overall, Hapag Lloyd boasts a total fleet TEU capacity of 1.7 million… and counting.

Even with these new massive ships on the horizon, it is hard to compare to the OOCL Hong Kong, the first of six in the G-class with a whopping 21,413 TEU capacity. One such ship went down in history as the world’s first to ever break the 21,000 TEU-capacity marks. Within months of this announcement, the OOCL Scandinavia, the OOCL Germany and the OOCL United Kingdom–all with 21,4313 TEU capacity—were also announced and christened.

“While our industry seems to have the knack to ‘outdo’ one another in building larger containerships relatively quickly these days, this project is nonetheless an important moment for us,” stated OOCL Chairman C.C. Tung in the announcement. “Faced with increasing competition and un-ending pressure on costs, we need to take the bold step in operating larger size ships of quality and high efficiency in order to stay relevant and compete effectively as a major container shipping company.”

Tung concluded, after the OOCL Scandinavia reveal, “This achievement is about working to bring people and companies of different professions and nationalities together to reach new heights, innovate, solve complicated engineering problems, and along the way, why not break a world record, too.”

Although the OOCL Hong Kong has yet to be replaced, competitors are pushing the limits of capacity to break new records the shipping sector has yet to encounter. Maximizing the capacity limits the industry is currently used to paired with the IMO 2020 regulations and changes will undoubtedly filter the industry leaders. The real question remains: Who will set the bar even higher than what it is now and how will they do it?

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Archives, Global Trade Daily, Ocean Carriers

A Tough Year on the Water Hasn’t Dampened Innovation for these Ocean Carriers

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To say that 2019 has been challenging for ocean carriers would be an understatement. The year began with the National Retail Federation forecasting a decline in year-over-year growth, echoing World Bank chatter of a slowing global economy.

And don’t forget the tariff wars between the U.S. and China (heck, the U.S. and just about anyone). Managing capacity on ships has also been an issue, and then there is the potential biggest bogeyman of all: the International Maritime Organization’s low-sulfur fuel mandate taking effect Jan. 1, 2020.

Sure, we could dwell on the gloom and doom, but that would not be very Global Trade magazine of us, now would it? We here in our silky ivory tower like to spotlight the positive, which we reveal with these ocean shippers we love.

MSC

Mediterranean Shipping Co. this year watched the world’s largest container ship, the MSC Gülsün, complete its maiden voyage from northern China to Europe. With a width of 197 feet and a length of 1,312 feet (!), the Gülsün was built by Samsung Heavy Industries at the Geoje shipyard in South Korea. It can carry up to 23,756 TEUs shipping containers on one haul. That capacity can include 2,000 refrigerated containers for shipping food, beverages, pharmaceuticals or any other chilled and frozen cargoes. That’s a lot of snow cones!

MOL

Mitsui O.S.K. Lines sees MSC Gülsün and raises you the MOL Triumph, which achieved a new world load record this year. Departing Singapore for Northern Europe on THE Alliance’s FE2 service with a cargo of 19,190 TEU. That surpassed the previous load record achieved in August 2018, when Mumbai Maersk sailed from Tanjung Pelepas to Rotterdam with 19,038 TEU onboard. Yes, you are correct, that’s a pretty slim margin of victory, and analysts suspect the MOL Triumph record won’t last long given the 23,000 TEU ships being introduced.

HYUNDAI MERCHANT MARINE 

Speaking of THE Alliance, current members Hapag-Lloyd, ONE and Yang Ming will be joined in April 2020 by Hyundai Merchant Marine (HMM). The South Korean carrier recently signed an agreement to join THE Alliance and then passed the pen to the founding members, who extended the duration of their collaboration until 2030. “HMM is a great fit for THE Alliance as it will provide a number of new and modern vessels, which will help us to deliver better quality and be more efficient,” said Rolf Habben Jansen, Hapag-Lloyd’s chief executive. 

HAPAG-LLOYD

Oh, speaking of the fifth-largest container shipping company in the world, Hapag-Lloyd is piloting an online insurance product as part of a digital offering to try to overcome the widespread practice of shippers relying on the limited cover provided under the terms of carriers’ bills of lading. While Hapag-Lloyd says it takes the utmost care in transporting cargo, company officials acknowledge things can and have gone wrong. Thus, the introduction of Quick Cargo Insurance, which is underwritten by industrial insurer Chubb in Germany and is limited to containerized exports from that country, France and the Netherlands. However, the carrier says it plans to expand the offer.  

MAERSK

To navigate new environmental regulations, A.P. Moller-Maersk A/S is considering going old school. We mean really old school by using a modern version of the old-fashioned sail to help power its ships. Currently being tested on one of Maersk’s giant tankers, the sails look less like the flapping silk you know from Johnny Depp movies and Jerry Seinfeld’s puffy shirt and more like huge marble columns. But they are nothing to laugh at as two 10-story-tall cylinders can harness enough wind to replace 20 percent of the ship’s fossil fuels, according to their maker, Norsepower Oy Ltd. 

MOL, THE SEQUEL

While we’re getting all green up in here, it’s worth also pointing out that Mitsui O.S.K. Lines Ltd. This year joined three other Japanese companies— Asahi Tanker Co., Exeno Yamamizu Corp., and Mitsubishi Corp.—in teaming up to build the world’s first zero-emission tanker by mid-2021. Their joint venture e5 Lab Inc. will power the vessel with large-capacity batteries and operate in Tokyo Bay, according to a statement the foursome released on Aug. 6. Thanks to the onslaught of legislation to improve environmental performance, other companies are also looking to battery power. Norway’s Kongsberg Gruppen is developing an electric container vessel, and Rolls-Royce Holdings last year that started offering battery-powered ship engines.

AMAZON

No, this is not a leftover strand from a different story in this magazine about moving packages on the ground. “Quietly and below the radar,” USA Today recently reported, “Amazon has been ramping up its ocean shipping service, sending close to 4.7 million cartons of consumers goods from China to the United States over the past year, records show.” While other ocean carrier leaders prepare for the bald head of Jeff Bezos, his move really should be no surprise given Amazon’s attempt to control as much of its transportation network as possible. (See my September-October issue story “Air War: Fast, Free Shipping has UPS, FedEx and Amazon Scrambling in the Air”). Of Amazon now floating into the sea, Steve Ferreira, CEO of Ocean Audit, a company that utilizes data and machine learning to find ocean freight refunds for the Fortune 500, told USA Today: “This makes them the only e-commerce company that is able to do the whole transaction from end-to-end. Amazon now has a closed ecosystem.” 

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Archives, Global Trade Daily, Ocean Carriers

OUR TOP TEN LIST: THESE SHIPPING COMPANIES CONTROL NEARLY 75% OF THE MARKET

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Container shipping continues to be a major means of cargo transportation in 2019. While there does not exist an outright monopoly by any one shipping company, there are presently 10 that control nearly 75 percent of the market, and of those 10, four that maintain over 10 percent of market share.  

APM-Maersk

With 80,000-plus employees and coming off a major reshuffle, APM-Maersk survived one of the biggest layoffs in company history roughly four years ago. A concerted effort has been made since that time to ramp up digitization and optimization changes, with the past two years especially seeing some radical changes. Søren Skou moved into a dual role as CEO of Maersk and CEO of the core Maersk business line, which are two separate entities. APM-Maersk leads the pack with a 4,058,154 shipping capacity (TEU), a 17.8 percent share of the market and sole operation of 316 ships, clearly surpassing No. 2 on the list, Mediterranean Shg Co’s 193.

Mediterranean Shg Co

The world’s second largest line, this Geneva-based company counts on Italian roots with its most important port being housed in Antwerp, Belgium. Also known as MSC, the company made news earlier this year when 291 containers plunged overboard near Borkum, a German island. Worse yet, some containers were hauling poisonous organic peroxides and ended up washing up on to Terschelling, a protected Dutch island in the UNESCO biosphere reserve. Counting on a global presence, MSC is likely not to catch APM-Maersk anytime soon but does have a respectable shipping capacity of 3,303,848 TEU.

COSCO Group

The China Ocean Shipping Group Co., commonly known as COSCO, is a state-owned concern widely considered the third largest in the world. Handling a shipping capacity of 2,782,485 TEU, COSCO commands a 12.2 percent market share, and earlier this year the Chinese firm purchased a Peruvian port, its first in South America. The $225 million deal is a strategic play to increase their share in the emerging Latin American market. But COSCO is not solely focused on Latin America as they’ve also been actively purchasing ports in Greece, the Netherlands and various Abu Dhabi terminals throughout the UAE.

CMA CGM Group

Despite global uncertainty and with U.S./China talks escalating to worrying levels, CMA CGM reported their 2018 revenues jumped more than 11 percent and 14.9 percent in the fourth quarter alone. This equated to a record $23.48 billion in revenue which is a record for the French container transportation and shipping company. However, CMA CGM is not resting on its laurels as a $1.2 billion cost-reduction plan is afoot due to geopolitical tensions. On the other end, investments in LNG-enabled vessels have been made to follow the eventual Martine Organization’s rules on emissions, set to come into effect on Jan. 1, 2020.  

Hapag-Lloyd

The world’s fifth largest shipping company with a 7.3 percent market share, Hapag-Lloyd has decided to lay low regarding the recent trend of logistics company acquisitions (something increasingly common with the leading players on this list). While most the industry is consolidating, Hapag-Lloyd has made a concerted effort to boost on-time delivery rates. Digitalization lies at the core of this strategy and Hapag-Lloyd has gone full-in to equip their control towers with the latest connections by leveraging disparate data streams in a variety and multiple formats.  

ONE (Ocean Network Express)

If there’s one record that the shipping industry respects, it’s the amount of cargo stowed. More cargo stored equates to a higher marginal return. ONE did just that in February, narrowly edging the previous record set by Maersk (19,038 TEU) in August of 2018. The Japanese company successfully carried 19,100 TEU on the MOL Tribute, a vessel with a total capacity of 20,146 TEU. In fact, prior to this record the MOL Trust and MOL Tradition also recorded record stows. ONE operates in conjunction with Hapag-Lloyd and Yang Marine Transport Corp., forming what is known as The Alliance. ONE controls 6.6 percent market share and has been climbing up the ranks as of late.

Evergreen Line

Evergreen Line is not a line at all, but rather a group composed of Evergreen Marine Corp., Italia Marittima SpA, Evergreen Marine Ltd. and Evergreen Marin (Hong Kong) Ltd. Established in 2007 in response to growing demand for a more global presence on behalf of all four founding members, in 2009 Evergreen Marine (Singapore) Pte Ltd. jumped on board, which now gives the group a 5.2 percent share of the market and a shipping capacity of 1,185,257 TEU. In February, the company welcomed in a new president, Jeffrey Chang, who is rumored to be an out-of-the-box thinker with radical, yet proven ideas. 

Yang Ming Marine Transport Corp.

Based out of Keelung, Taiwan, despite a rather recent founding (1972) this group traces its roots back to the Qing Dynasty with shipping links associated with the China Merchants Steam Navigation Co., which later became Yang Ming via a merger. With a fleet of 84 container ships and 17 bulk carriers, Yang Ming controls roughly 2.9 percent of the shipping market with a shipping capacity of 653,996 TEU. Recently, Yang Ming announced the launch of two more 14,000 TEU box-ships alongside plans to deploy 10, 2,800 TEU container vessels coupled with 14 chartered-in 11,000 TEU containerships, all by 2020-22.

Hyundai M.M.

When Maersk CEO Søren Skou called for an end to shipping company government subsidies, many carriers, namely Cosco Shipping (Chinese state-run) and Hyundai M.M. remained hush-hush. China and South Korea are keen on maintaining a competitive advantage over the likes of Maersk and Mediterranean Shg. They are right there, but to keep the momentum many advocates of financial benefits and subsidies in China and South Korea see these as mandatory measures to keep the competition lively. Hyundai M.M. joined the G6, the world’s largest shipping alliance, and now counts on 1.9 percent of the market. Not a lot, but still in the Top 10 and climbing. South Korea as a nation wants to see that percentage grow.

PIL (Pacific Int. Line)

Rounding out the Top 10 is PIL, a Singapore-based company founded by Chang Yun Chung, a Chinese entrepreneur worth approximately $2.2 billion. When Chung first made a splash, it was back in 1967 with PIL commandeering just two, second-hand ships. Counting on more than 150 vessels currently, Chang handed over power to his son, Teo Siong Seng, last year. In 2017, PIL entered into a historic partnership with COSCO, which will enable both to share vessels during peak demand throughout the year. PIL hopes this will provide some leverage to move up the ranks into the No. 5 position by 2030.

An ever-evolving list, these maritime companies are responsible for the bulk of delivery over sea. It is nice to see the variety (nationalities) and cooperation between all ten.   

Archives, Commentary, Global Trade Daily

A 5-step guide to managing cyber threats in the supply chain

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When Danish shipping giant A.P. Moller-Maersk was attacked by the NotPetya malware in 2017, access to its electronic booking systems was blocked and ultimately forced a 10-day overhaul of its entire IT infrastructure.

The malicious attack still remains one of the largest disruptions to affect the global shipping industry to date. As a result of lost bookings and terminal downtime, Maersk incurred a massive US$300 million (€264 million) loss.

With the increasing sophistication of cyber threats, companies worldwide have to brace themselves for a new reality where supply chain disruptions are no longer restricted to those of a physical form. Cyber-attacks have the potential to disrupt or, at its worst, cripple the logistics and supply chain operations of an entire business across different geographies.

Instead of adopting a reactive approach to cyber security, companies should actively prevent and manage such cyber risks by devising a response plan with the following five steps.

Identify third-party risks

To successfully thwart future cyber-attacks, companies have to first determine which vendors or third-party entities have access to their firewall and could have the largest impact to the organization in a worst-case scenario.

When selecting possible vendors to work with, it is best to consider the amount of sensitive data that the vendor is handling, such as personally identifiable data, protected health information or financial transactions. With this knowledge, suitable mitigation measures must then be introduced to safeguard the sensitive data.

Monitor the cyber threat environment

As cyber threats are continuously evolving and news reports of a cyber-incident become known, it is a continuous effort to assess and understand events impacting the vendors or third-party entities that your organization works with.

The ability to persistently monitor one’s supply chain and the cyber threat environment will be the best determinant in responding adequately to a cyber-incident.

For instance, a year on from the cyber-attack on Maersk, Chinese state-owned shipping conglomerate COSCO Group managed to contain the damage and limit the length of disruption when its shipping operations in the Americas suffered a ransomware attack.
Though its shipping operations in the Americas came to a momentary standstill, the company’s swift response efforts and preemptive network segmentation prevented the escalation of the attack, allowing regular operations to resume within a week without significant damage.

Assess potential impact

Organizations should possess the capability to gauge the extent of the potential impact a cyber-attack can have on its business operations.

Knowing the nature of each cyber-attack can better equip companies by facilitating understanding, communication and coordination along its supply chain.

Types of cyber attacks

·Data breach: Release of secure information to an untrusted environment, including trade data, schematics, manufacturing systems, shipping data, and other confidential company information
·Ransomware: A form of malware which encrypts a user or end system, rendering all data within inaccessible, and demanding the payment of ransom to decrypt
·Denial of service: A cyber-attack performed by many actors to render a firm’s website or system unavailable to users
·Vulnerability: The discovery of a weakness, known or unknown, which may be exploited by a threat actor to perform unauthorized actions on a system
·Phishing: A fraudulent attempt to obtain security credentials from entry to executive levels for malicious purposes

Conducting a risk assessment on the areas of vulnerability from multiple angles will help companies measure the potential risk and threat of a sudden attack on its supply chain.

Develop risk scenarios and emergency protocols

Without emergency protocols established or adhered to in the event of a cyber-attack, it will likely cause confusion that leads to disruption in the supply chain. Companies need to train its employees on potential threat scenarios and develop corresponding response plans to tackle different situations.

Often, these response processes might involve the use of advanced technology and human intelligence analysis. Having established the protocols and trained employees on their respective emergency response roles, the company will then be well-prepared to implement the appropriate measures to mitigate the potential damage inflicted by a cyber-attack.

Communicate relevant actions to stakeholders

When a threat has been identified, it is imperative to investigate the matter internally and cascade information in a timely manner within the organization before alerting the relevant authorities. Once more details emerge and the nature of the threat is confirmed, organizations should pro-actively inform all stakeholders who have been affected, while activating the emergency response teams to rectify the issue.

With the threat of cyber-attacks looming large, companies need to take control and ready themselves with a proper response plan and top-notch cyber security practices to protect their supply chain.

Shehrina spearheads the supply chain risk monitoring capabilities for Resilience360. Resilience360 offers end-to-end supply chain risk management, alerting customers about supply chain incidents globally and risks to their global supply chain in almost real time. The platform helps companies handle an ever-changing world by assessing the impact of natural disasters, changing regulatory environments, and other supply chain risks. With Resilience360, businesses can visualize their supply chains end-to-end, use machine learning capabilities to detect early warnings of incidents that can disrupt their supply chain and it will allow customers to preemptively respond and minimize business interruption.

This article was originally published on DHL’s Logistics of Things. Read more on how logistics impacts business, builds lasting connections and drives innovation.