Tuesday, May 11, 2010

Container And Bulk Shipping Lines Start The Long Voyage Back To Profits

Miserable 2009 Haunts Major Shippers whilst New Southern Europe - Asia Service Starts
Shipping News Feature

WORLDWIDE – A brief look at statements this week from two of the world’s largest shipping lines reveals much about the state of the freight industry and what the future may hold. Industry watchers have for some time been studying moves made by CMA-CGM who have been attempting to restructure debts seemingly forever. A statement last week from the group claimed $800 million in savings after ‘drastic cost reductions’.

Figures for the first part of 2010 are encouraging with claims that the first two months showed a year on year increase of around 30% for the Asia to Europe trade but the fact remains the group showed a $1.4 billion net loss last year as against a $125 million profit in 2008.

According to Rodolphe Saadé, Executive Officer of the CMA CGM Group: "The first 2010 quarter results, which largely exceeded expectations, demonstrate the Group's ability to rebound. Since late 2009, CMA CGM has been restructuring its balance sheet and opening its capital to new investors. We have received several offers from industrial and financial investors and are committed to finalising negotiations before the end of summer".

Now the group are considering a public listing to ease its way out of debt, CMA-CGM, like its only larger sector competitors Maersk and MSC, has always been family owned, and despite his replacement as CEO early this year it is unlikely that Mr Saadé’s father Jacques will be willing to relinquish complete control to outside investors.

CMA-CGM have struggled to honour agreements with shipbuilders such as Hanjin Heavy Industries for the thirty or so new builds they have on order whilst coincidentally Hanjin Shipping have also announced first quarter results also showing a 30% increase in cargo volumes with strong recovery in the container sector and a smaller, 13%, but promising rise in the company’s bulk division sales.

In fact the bulk carriage sector showed a return to profit ($10 million) whilst the container division managed only a loss of around $8 million which the company said was due to low freight rates and vessel lay ups. Hanjin reportedly now say they will raise around $480 million through a bonds and rights issue intended to finance new vessels and service operating costs.

A four line coalition including Hanjin will reportedly launch a container service between Asia and Southern Europe (Adriatic), starting at the end of May. Together with partners Yang Ming Line, Hyundai Merchant Marine and the United Arab Shipping Company the service will comprise eight Panamax vessels up to 4,700 TEU the port rotation will cover Busan, Shanghai, Ningbo, Yantian, Singapore, Colombo, Jeddah, Port Said(W), Alexandria, Mersin, Koper, Trieste, Rijeka, Venice, Port Said(W), Singapore, Hong Kong, Busan. The maiden voyage for this service will commence at Busan on the week of May 30, 2010.