Wednesday, December 2, 2009

Dubai News Affects Container Ports As Shipping Lines Move For Better Handling Rates

Bottom Line Rules when it Comes to Who Handles Cargo
Shipping News Feature

INDIA – GERMANY - WORLD WIDE - The news*** that DP Ports, subsidiary of the Dubai based giant DP World group, had apparently lost out to PSA International in their contract to handle shipping containers on behalf of three prominent box carriers in India must have come as insult to injury to the controlling UAE giant. Pacific International Lines (PIL), K Line America Inc and state owned Shipping Corporation of India (SCI) have, according to Indian reports, decided they will begin services from 16th December from PSA’s Chennai International Services facility as opposed to the DP World freight container terminal at the port.

Just three years ago DP Ports beat off PSA in the bidding for P & O Ports and immediately gained control of a network of ready made stevedoring facilities world wide, including up to a third of all container traffic handled in global markets, such as Australia.

Now the situation sees doubts cast over the further ambitious plans of the Dubai based port group whilst investors take stock of the situation. In the murky, mysterious world of very high finance wheels are heard turning and shadowy deals thought to be proceeding. The sudden request by Nakheel and Limitless, two property groups owned by DP World, to their creditors for a rescheduling of their enormous debts, came out of the blue to most observers.

Speculative investors are reported to have seized on cheap deals as Dubai stocks fell in the expectation that royal blood is thicker than water and that Abu Dhabi will step in with a loan. In the financial world of spin and rumour we can only speculate what the future holds for developments like the London Gateway project reported here in October.

The holding of assets by DP Ports would seem to be in the hands of the Dubai Financial Support Fund (DFSF), a multi billion dollar bond holding launched a few months ago, an extra $5 billion having turned up in its coffers just as the current crisis broke, $2.5 billion of which apparently came direct from the national Bank of Abu Dhabi. Many shipping industry related executives around the world will be watching developments in the Emirate for the near future as DP Ports strategy becomes clearer. The switch by the three lines to PSA was reportedly decided purely on the basis of price per TEU, not what DP will want to hear as they review their contract and asset base.

In other port related news there is concern in Europe as the swathing cuts in container traffic have caused a restructuring of services by many companies. As profits fall terminal operators look to maintain revenue and high handling rates are reportedly leading to a loss of business in places like Hamburg where China Shipping have been reducing their schedule and others, including CMA CGM have reduced or transferred services to other, cheaper alternatives, Zeebrugge and Rotterdam being prime examples.

Local experts blame tardiness in maintaining the deep water channels in the Elbe as a factor in dissuading ship owners from using the port whilst politicians argue of the cost and viability. Stevedores at the port believe they must attract more traffic, and quickly, and there is a call for reduced rates in return for guaranteed TEU levels. Klaus-Michael Kuehne, head of Kuehne and Nagel has stated recently that Hamburg is simply too expensive and city officials are not responding to the changed circumstances fast enough. The recent rate rises in the port may prove to be the proverbial straw that breaks the camels back, an analogy that may seem unfortunately appropriate when applied to events in the Middle East.

*** We await confirmation of the switch from DP to PSA. Although widely reported no comment could be obtained from the 4 lines concerned or PSA International (as yet)