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counter Veteran	13-Jul-2014 23:58        counter About Contact  Quote this Post! Style: Fundamental   Mood:
x 0   x 0  Alert Admin	No buy signals! Are you sure? Kyoto2008      ( Date: 13-Jul-2014 20:00) Posted: Chart shows NOL is on downtrend, broken all supports.    Noticed that two dojis or more formed before any price reversals.    Currently, there are no buy signals. Taken a look at the financials, there is FX losses and non performing loans (on trade and receivables).  Admin costs are very high too, about 8% of sales, out of which 5% are employee benefits.    For swing traders, my humble opinion is to wait for the dojis or better a morning star to appear before jumping in.    Personally I wouldn' t buy for long term, this seems a loser. famouspinky      ( Date: 13-Jul-2014 18:29) Posted: R u sure trending down? :
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Lucky03 Elite	13-Jul-2014 23:55        Lucky03 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Not aware if NOL engaged any consultant. The point is that whatever NOL has been doing for the past 2.5 years are in line with what this veteran consultant is emphasizing on the new business model that the shipping industry must embrace. Kyoto2008      ( Date: 13-Jul-2014 23:18) Posted: Not very clear on the point made.  Did they engage a consultant? Lucky03      ( Date: 13-Jul-2014 21:30) Posted: I repost a posting I made more than 2 weeks ago. The point I was tying to make is that this veteran consultant is advocating a change of the business model which NOL is apparently embarking on 2.5 yrs ago and should be expected to reap its benefit. It is hard to say if the management is doing well as the results has been indeed disappointing. Is it a real loser ? Look at the industry to help make a better judgement. Look at the macro economy taking in consideration the over supply of ships, extremely keen competition and the improving trade volume plus cost cutting measures and results and then make projection of the 2 axis movements and assess if it is worth entering for long term now. You buy for future not for the past. Here's the posting on the veteran consultant recommendation for a new business model. From JOC : After 13 years of working closely with container lines to develop their electronic cargo booking and tracking capabilities through INTTRA, its former CEO Ken Bloom is moving on to solve a different problem: how to change the way the shipping industry operates. ?Its business models are dying. We have to change that,? Bloom said in an interview with the JOC. ?The industry is still in a financial crisis, and the denial of the P3 Network prolongs the crisis,? he said. ?We need this industry to change faster, so I think the next frontier will be all about the people in the industry.? Bloom is joining management development consultancy Korn Ferry today as senior client partner. There he will advise container lines, logistics providers, intermodal carriers and shippers on managing and upgrading human resource talent. Bloom resigned from INTTRA earlier this year but stayed on to help in the transition to a new CEO. ?INTTRA was all about the process of container shipping. The next piece is all about the people layer,? he said. Recalling the JOC calling the industry ?painfully slow to change,? he said he thinks his new role will enable him to help the industry expedite change. Bloom points to the way carriers allow non-vessel-operating common carriers to resell unused vessel space they have contracted to other NVOCCs as one example of carriers? broken business model. ?When they can?t meet their requirement, they can sub that out to other forwarders at a markup, and before you know it, the carrier isn?t even earning money on its freight.? He said the carriers? business model needs to be rooted out and changed. ?The business model is unsustainable, so you need to attract new people. Young people don?t go into the carrier or forwarding business, and we need those brains.? He said logistics graduates seek jobs with beneficial cargo owners, rather than in the logistics business. ?What that means is that carrier executives are increasingly interacting with supply chain professionals, not an industry hanger-on.? Bloom thinks carriers and logistics providers have to overhaul the way they recruit and manage talent so they can find new ways of doing business. Only a few ocean carriers have seen the need to change their human resource recruitment approach. He pointed to United Arab Shipping Co. as an example of a carrier that is revamping its ranks to drive organizational change. With no dearth of capital provided by its six gulf state owners, it has ordered 17 new post-Panamax container ships to replace its aging fleet, overhauled its global management structure to place responsibility on trade lanes rather than regions, and is expanding its vessel-sharing alliance with China Shipping Container Lines. UASC also hired two new top executives from Maersk Line this spring. ?They are building what they want with whom they want, and they are going to win,? Bloom said. ?They are not going to catch up to the Maersks and the Hamburg-Suds of this world they are going to surpass them.? UASC plans to do this, not by mimicking the model of larger carriers, but by charting its own strategy. ?It?s like mobile phone carriers. They don?t need to put in copper wire. They are building what they want with whom they want from the ground up, and they are going to win. They?ve got plenty of money, but brains as well and strategy,? he said. ?This talent thing is going to be the thing that differentiates the carriers that survive in the future.? Contact Peter Leach at [email protected] and follow him on Twitter: @petertleach
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Kyoto2008 Elite	13-Jul-2014 23:18        Kyoto2008 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Not very clear on the point made.  Did they engage a consultant? Lucky03      ( Date: 13-Jul-2014 21:30) Posted: I repost a posting I made more than 2 weeks ago. The point I was tying to make is that this veteran consultant is advocating a change of the business model which NOL is apparently embarking on 2.5 yrs ago and should be expected to reap its benefit. It is hard to say if the management is doing well as the results has been indeed disappointing. Is it a real loser ? Look at the industry to help make a better judgement. Look at the macro economy taking in consideration the over supply of ships, extremely keen competition and the improving trade volume plus cost cutting measures and results and then make projection of the 2 axis movements and assess if it is worth entering for long term now. You buy for future not for the past. Here's the posting on the veteran consultant recommendation for a new business model. From JOC : After 13 years of working closely with container lines to develop their electronic cargo booking and tracking capabilities through INTTRA, its former CEO Ken Bloom is moving on to solve a different problem: how to change the way the shipping industry operates. ?Its business models are dying. We have to change that,? Bloom said in an interview with the JOC. ?The industry is still in a financial crisis, and the denial of the P3 Network prolongs the crisis,? he said. ?We need this industry to change faster, so I think the next frontier will be all about the people in the industry.? Bloom is joining management development consultancy Korn Ferry today as senior client partner. There he will advise container lines, logistics providers, intermodal carriers and shippers on managing and upgrading human resource talent. Bloom resigned from INTTRA earlier this year but stayed on to help in the transition to a new CEO. ?INTTRA was all about the process of container shipping. The next piece is all about the people layer,? he said. Recalling the JOC calling the industry ?painfully slow to change,? he said he thinks his new role will enable him to help the industry expedite change. Bloom points to the way carriers allow non-vessel-operating common carriers to resell unused vessel space they have contracted to other NVOCCs as one example of carriers? broken business model. ?When they can?t meet their requirement, they can sub that out to other forwarders at a markup, and before you know it, the carrier isn?t even earning money on its freight.? He said the carriers? business model needs to be rooted out and changed. ?The business model is unsustainable, so you need to attract new people. Young people don?t go into the carrier or forwarding business, and we need those brains.? He said logistics graduates seek jobs with beneficial cargo owners, rather than in the logistics business. ?What that means is that carrier executives are increasingly interacting with supply chain professionals, not an industry hanger-on.? Bloom thinks carriers and logistics providers have to overhaul the way they recruit and manage talent so they can find new ways of doing business. Only a few ocean carriers have seen the need to change their human resource recruitment approach. He pointed to United Arab Shipping Co. as an example of a carrier that is revamping its ranks to drive organizational change. With no dearth of capital provided by its six gulf state owners, it has ordered 17 new post-Panamax container ships to replace its aging fleet, overhauled its global management structure to place responsibility on trade lanes rather than regions, and is expanding its vessel-sharing alliance with China Shipping Container Lines. UASC also hired two new top executives from Maersk Line this spring. ?They are building what they want with whom they want, and they are going to win,? Bloom said. ?They are not going to catch up to the Maersks and the Hamburg-Suds of this world they are going to surpass them.? UASC plans to do this, not by mimicking the model of larger carriers, but by charting its own strategy. ?It?s like mobile phone carriers. They don?t need to put in copper wire. They are building what they want with whom they want from the ground up, and they are going to win. They?ve got plenty of money, but brains as well and strategy,? he said. ?This talent thing is going to be the thing that differentiates the carriers that survive in the future.? Contact Peter Leach at [email protected] and follow him on Twitter: @petertleach. Kyoto2008      ( Date: 13-Jul-2014 20:00) Posted: Chart shows NOL is on downtrend, broken all supports.    Noticed that two dojis or more formed before any price reversals.    Currently, there are no buy signals. Taken a look at the financials, there is FX losses and non performing loans (on trade and receivables).  Admin costs are very high too, about 8% of sales, out of which 5% are employee benefits.    For swing traders, my humble opinion is to wait for the dojis or better a morning star to appear before jumping in.    Personally I wouldn' t buy for long term, this seems a loser.
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famouspinky Supreme	13-Jul-2014 22:45        famouspinky About Contact  Quote this Post!
x 0   x 0  Alert Admin	Financials and technicals r now in tandem.keep up the good job. Kyoto2008      ( Date: 13-Jul-2014 20:00) Posted: Chart shows NOL is on downtrend, broken all supports.    Noticed that two dojis or more formed before any price reversals.    Currently, there are no buy signals. Taken a look at the financials, there is FX losses and non performing loans (on trade and receivables).  Admin costs are very high too, about 8% of sales, out of which 5% are employee benefits.    For swing traders, my humble opinion is to wait for the dojis or better a morning star to appear before jumping in.    Personally I wouldn' t buy for long term, this seems a loser. famouspinky      ( Date: 13-Jul-2014 18:29) Posted: R u sure trending down? :
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famouspinky Supreme	13-Jul-2014 22:39        famouspinky About Contact  Quote this Post!
x 0   x 0  Alert Admin	Coming week will be good spore1      ( Date: 13-Jul-2014 22:29) Posted: when the reversal is strong then it will also reverse this down trend (changing direction)and head higher. look for a good leap of 4-5 cents up for confirmation signal. stevenk      ( Date: 13-Jul-2014 17:54) Posted: short term rebound possible due to short term overbought. But it is still trending down, Going down.
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spore1 Supreme	13-Jul-2014 22:29        spore1 About Contact  Quote this Post!
x 0   x 0  Alert Admin	when the reversal is strong then it will also reverse this down trend (changing direction)and head higher. look for a good leap of 4-5 cents up for confirmation signal. stevenk      ( Date: 13-Jul-2014 17:54) Posted: short term rebound possible due to short term overbought. But it is still trending down, Going down. spore1      ( Date: 12-Jul-2014 23:10) Posted: good value present.think more likely to bounce up from current prices soon. http://sporeshare.blog spot.sg/2014/07/nol.html
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Lucky03 Elite	13-Jul-2014 21:30        Lucky03 About Contact  Quote this Post!
x 0   x 0  Alert Admin	I repost a posting I made more than 2 weeks ago. The point I was tying to make is that this veteran consultant is advocating a change of the business model which NOL is apparently embarking on 2.5 yrs ago and should be expected to reap its benefit. It is hard to say if the management is doing well as the results has been indeed disappointing. Is it a real loser ? Look at the industry to help make a better judgement. Look at the macro economy taking in consideration the over supply of ships, extremely keen competition and the improving trade volume plus cost cutting measures and results and then make projection of the 2 axis movements and assess if it is worth entering for long term now. You buy for future not for the past. Here's the posting on the veteran consultant recommendation for a new business model. From JOC : After 13 years of working closely with container lines to develop their electronic cargo booking and tracking capabilities through INTTRA, its former CEO Ken Bloom is moving on to solve a different problem: how to change the way the shipping industry operates. ?Its business models are dying. We have to change that,? Bloom said in an interview with the JOC. ?The industry is still in a financial crisis, and the denial of the P3 Network prolongs the crisis,? he said. ?We need this industry to change faster, so I think the next frontier will be all about the people in the industry.? Bloom is joining management development consultancy Korn Ferry today as senior client partner. There he will advise container lines, logistics providers, intermodal carriers and shippers on managing and upgrading human resource talent. Bloom resigned from INTTRA earlier this year but stayed on to help in the transition to a new CEO. ?INTTRA was all about the process of container shipping. The next piece is all about the people layer,? he said. Recalling the JOC calling the industry ?painfully slow to change,? he said he thinks his new role will enable him to help the industry expedite change. Bloom points to the way carriers allow non-vessel-operating common carriers to resell unused vessel space they have contracted to other NVOCCs as one example of carriers? broken business model. ?When they can?t meet their requirement, they can sub that out to other forwarders at a markup, and before you know it, the carrier isn?t even earning money on its freight.? He said the carriers? business model needs to be rooted out and changed. ?The business model is unsustainable, so you need to attract new people. Young people don?t go into the carrier or forwarding business, and we need those brains.? He said logistics graduates seek jobs with beneficial cargo owners, rather than in the logistics business. ?What that means is that carrier executives are increasingly interacting with supply chain professionals, not an industry hanger-on.? Bloom thinks carriers and logistics providers have to overhaul the way they recruit and manage talent so they can find new ways of doing business. Only a few ocean carriers have seen the need to change their human resource recruitment approach. He pointed to United Arab Shipping Co. as an example of a carrier that is revamping its ranks to drive organizational change. With no dearth of capital provided by its six gulf state owners, it has ordered 17 new post-Panamax container ships to replace its aging fleet, overhauled its global management structure to place responsibility on trade lanes rather than regions, and is expanding its vessel-sharing alliance with China Shipping Container Lines. UASC also hired two new top executives from Maersk Line this spring. ?They are building what they want with whom they want, and they are going to win,? Bloom said. ?They are not going to catch up to the Maersks and the Hamburg-Suds of this world they are going to surpass them.? UASC plans to do this, not by mimicking the model of larger carriers, but by charting its own strategy. ?It?s like mobile phone carriers. They don?t need to put in copper wire. They are building what they want with whom they want from the ground up, and they are going to win. They?ve got plenty of money, but brains as well and strategy,? he said. ?This talent thing is going to be the thing that differentiates the carriers that survive in the future.? Contact Peter Leach at [email protected] and follow him on Twitter: @petertleach. Kyoto2008      ( Date: 13-Jul-2014 20:00) Posted: Chart shows NOL is on downtrend, broken all supports.    Noticed that two dojis or more formed before any price reversals.    Currently, there are no buy signals. Taken a look at the financials, there is FX losses and non performing loans (on trade and receivables).  Admin costs are very high too, about 8% of sales, out of which 5% are employee benefits.    For swing traders, my humble opinion is to wait for the dojis or better a morning star to appear before jumping in.    Personally I wouldn' t buy for long term, this seems a loser. famouspinky      ( Date: 13-Jul-2014 18:29) Posted: R u sure trending down? :
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stevenk Senior	13-Jul-2014 20:40        stevenk About Contact  Quote this Post!
x 0   x 0  Alert Admin	what is your opinion? famouspinky      ( Date: 13-Jul-2014 18:29) Posted: R u sure trending down? :) stevenk      ( Date: 13-Jul-2014 17:54) Posted: short term rebound possible due to short term overbought. But it is still trending down, Going down.
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Kyoto2008 Elite	13-Jul-2014 20:00        Kyoto2008 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Chart shows NOL is on downtrend, broken all supports.    Noticed that two dojis or more formed before any price reversals.    Currently, there are no buy signals. Taken a look at the financials, there is FX losses and non performing loans (on trade and receivables).  Admin costs are very high too, about 8% of sales, out of which 5% are employee benefits.    For swing traders, my humble opinion is to wait for the dojis or better a morning star to appear before jumping in.    Personally I wouldn' t buy for long term, this seems a loser. famouspinky      ( Date: 13-Jul-2014 18:29) Posted: R u sure trending down? :) stevenk      ( Date: 13-Jul-2014 17:54) Posted: short term rebound possible due to short term overbought. But it is still trending down, Going down.
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famouspinky Supreme	13-Jul-2014 18:29        famouspinky About Contact  Quote this Post!
x 0   x 0  Alert Admin	R u sure trending down? :) stevenk      ( Date: 13-Jul-2014 17:54) Posted: short term rebound possible due to short term overbought. But it is still trending down, Going down. spore1      ( Date: 12-Jul-2014 23:10) Posted: good value present.think more likely to bounce up from current prices soon. http://sporeshare.blog spot.sg/2014/07/nol.html
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Lucky03 Elite	13-Jul-2014 18:25        Lucky03 About Contact  Quote this Post!
x 0   x 0  Alert Admin	The UOBKH analyst qualified his technical sell recommendation with a caveat - "Our institutional research has a fundamental BUY with a target price of S$1.17." Like that, the house won't lose lah ! Lucky03      ( Date: 13-Jul-2014 18:23) Posted: Read in another forum that UOBKH again issued confusing short term vs mid term recommendation. They have issued technical sell at 3 timings over last 5 mths - 13 Mar, 6 May and recently. Looking at the reverse, if the price rises above 0.94 and hitting 0.965, there may be short covering. Whatever, there may be some volatility over next 2 weeks as it gets nearer to the release of Q2 and half year result. Q2 result is particularly significant as NOL has technically completed the 2.5 years exercise of fleet renewal after taking in the last 10 of the 35 ships ordered and having returned another 5 chartered ships this year. stevenk      ( Date: 13-Jul-2014 17:54) Posted: short term rebound possible due to short term overbought. But it is still trending down, Going down.
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Lucky03 Elite	13-Jul-2014 18:23        Lucky03 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Read in another forum that UOBKH again issued confusing short term vs mid term recommendation. They have issued technical sell at 3 timings over last 5 mths - 13 Mar, 6 May and recently. Looking at the reverse, if the price rises above 0.94 and hitting 0.965, there may be short covering. Whatever, there may be some volatility over next 2 weeks as it gets nearer to the release of Q2 and half year result. Q2 result is particularly significant as NOL has technically completed the 2.5 years exercise of fleet renewal after taking in the last 10 of the 35 ships ordered and having returned another 5 chartered ships this year. stevenk      ( Date: 13-Jul-2014 17:54) Posted: short term rebound possible due to short term overbought. But it is still trending down, Going down. spore1      ( Date: 12-Jul-2014 23:10) Posted: good value present.think more likely to bounce up from current prices soon. http://sporeshare.blog spot.sg/2014/07/nol.html
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stevenk Senior	13-Jul-2014 17:54        stevenk About Contact  Quote this Post!
x 0   x 0  Alert Admin	short term rebound possible due to short term overbought. But it is still trending down, Going down. spore1      ( Date: 12-Jul-2014 23:10) Posted: good value present.think more likely to bounce up from current prices soon. http://sporeshare.blog spot.sg/2014/07/nol.html
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Lucky03 Elite	13-Jul-2014 10:59        Lucky03 About Contact  Quote this Post!
x 0   x 0  Alert Admin	If you read today's Invest Pg 42, the recent second-round stimulus measures by ECB will see the release of about 400 billion euro in cheap bank loans to consumers and companies starting in September. Hapag should have not much difficulty to raise the cash for any acquisition if Tamesek is willing to sell out or accept any merger arrangement.
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spore1 Supreme	12-Jul-2014 23:10        spore1 About Contact  Quote this Post!
x 0   x 0  Alert Admin	good value present.think more likely to bounce up from current prices soon. http://sporeshare.blog spot.sg/2014/07/nol.html
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Lucky03 Elite	12-Jul-2014 12:20        Lucky03 About Contact  Quote this Post!
x 0   x 0  Alert Admin	NOL made a bid for Hapag in 2008 and then resumed talk in 2011 but both unsuccessful. Now Hapag instead expressed interest in NOL. One of the reasons that both attempts failed mainly attributed to state control as Germany was not open to foreign ownership for the shipping line. Does Tamesek or Singapore regards APL in NOL as state asset ? Will they have concern if Hapag group switch to other neighboring ports after acquiring APL ? Tamesek raised its stake in NOL to 67% at a price of $2.80. Will it have to write down the investment based on current sub $1 price ? Guess it will likely to be a merger with share swap rather than an outright sales if the deal happens esp after Tamesek and shareholders had invested heavily for the fleet renewal program to acquire 34 ships over last 2+ years just completed. Finally, is Hapag interested in backdoor listing in SGX through NOL ? That probably depends if the merger is only with APL or NOL as a whole including both logistic and terminal operation businesses. If there is no interest for backdoor listing, then a privatization is a likely outcome. Whatever, we may see some signs of corporate activities such as the recent announcement of the transfer of 36% share in PSA Mumbai Investment. Q2 performance may be key to any valuation as any confirmation of turnaround will raise the value of NOL significantly. Lucky03      ( Date: 12-Jul-2014 02:22) Posted: The new Indian Modi govt released its first pro growth budget and among which includes 16 new port projects to be awarded this year. Any coincidence that NOL transferred its entire 36% shareholding in PSA Mumbai Investment which is setup for terminal investment activities back to PSA India ? May seriously be preparing for some corporate restructure or to sell or M&A for APL Liners while retaining the profitable terminal and logistic arms ? Then may need to wait till Q2 result is released. alexsmith      ( Date: 10-Jul-2014 22:15) Posted: Something is boiling up. What can be caught from this message is not the amount of the transaction, ie 36$$ (which enough to buy peanuts). It' s more like an M& A will occur soon hence important subsidiries to be kept tight first. Another possibility is the division of the terminal from NOL entity. Anyone of this occurs would boost the share price. Just my 2 cents. PS: Trade with your own risk calculation. Never blame others. Assume all the responsibilities as the traded money whether it' s LOSE or WIN, it' s all yours.
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Lucky03 Elite	12-Jul-2014 02:22        Lucky03 About Contact  Quote this Post!
x 0   x 0  Alert Admin	The new Indian Modi govt released its first pro growth budget and among which includes 16 new port projects to be awarded this year. Any coincidence that NOL transferred its entire 36% shareholding in PSA Mumbai Investment which is setup for terminal investment activities back to PSA India ? May seriously be preparing for some corporate restructure or to sell or M&A for APL Liners while retaining the profitable terminal and logistic arms ? Then may need to wait till Q2 result is released. alexsmith      ( Date: 10-Jul-2014 22:15) Posted: Something is boiling up. What can be caught from this message is not the amount of the transaction, ie 36$$ (which enough to buy peanuts). It' s more like an M& A will occur soon hence important subsidiries to be kept tight first. Another possibility is the division of the terminal from NOL entity. Anyone of this occurs would boost the share price. Just my 2 cents. PS: Trade with your own risk calculation. Never blame others. Assume all the responsibilities as the traded money whether it' s LOSE or WIN, it' s all yours. Lucky03      ( Date: 10-Jul-2014 21:15) Posted: Neptune Orient Lines Limited ("NOL") announces that its indirect wholly-owned subsidiary, Terminal Synergy Pte. Ltd. ("Terminal Synergy"), has today transferred its entire 36% equity shareholding in PSA Mumbai Investments Pte. Ltd. ("PSAMI") back to PSA India Pte Ltd ("PSA India") (the "Transaction"). PSAMI was incorporated by PSA India in Singapore on 22 April 2009 with an initial paid up share capital of S$100. Terminal Synergy acquired 36% of PSAMI from PSA India in August 2009 for a nominal sum of S$36 as both parties were then planning to jointly explore terminal investment opportunities through PSAMI. However, such a plan has since been aborted. The consideration for the Transaction was S$36, being such portion of PSAMI's share capital held by Terminal Synergy prior to the Transaction. The Transaction is not expected to have a material effect on the net tangible assets or earnings per share of the NOL Group for the current financial year. PSA India is a subsidiary of PSA International Pte. Ltd., which in turn is a subsidiary of Temasek Holdings (Private) Limited, the controlling shareholder of NOL. Save as disclosed, none of the directors or controlling shareholders of NOL has any interest, direct or indirect, in the Transaction. BY ORDER OF THE BOARD Looi Lee Hwa (Ms) / Wong Kim Wah (Ms) Company Secretaries 10 July 2014
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sgng123 Supreme	11-Jul-2014 19:51        sgng123 About Contact  Quote this Post!
x 0   x 0  Alert Admin	http://www.lloydslist.com/ll/sector/containers/article444924.ece Cargo volume going up but freight rate remain depressed, maybe current freight rate is a reflection of the lower slot cost achieved by the major liner. Cost cutting and deployment of larger and more fuel efficent ships is the norm now  to remain profitable in container shipping industry.
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sgng123 Supreme	11-Jul-2014 17:18        sgng123 About Contact  Quote this Post!
x 0   x 0  Alert Admin	anyway waiting for 2q result, no point everyone in forum making wild guess about ship future. Result speak for itself and whether it would shoot up or remain in sub dollar range all depend on 2Q slot cost reduction. For now there are hedging against poor result on ship share so the share remain subdued till 2Q when it is more clear. A bigger than expected slot cost would lift ship profit margin and in turn lift the share price, a not so strong 2Q would see ship rangebound in current shar erpice.
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counter Veteran	11-Jul-2014 14:27        counter About Contact  Quote this Post! Style: Fundamental   Mood:
x 0   x 0  Alert Admin	good analysis Lucky03      ( Date: 11-Jul-2014 13:00) Posted: JOC ? Maritime News ? Container Lines Lower ship slot costs are pulling down rates, Drewry says Greg Knowler, Senior Asia Editor | Jul 10, 2014 12:34PM EDT The unit cost advantage container carriers are gaining by operating mega-ships is having the effect of dragging down freight rates at a time when all but the top lines are struggling to remain profitable. Martin Dixon, Drewry?s director and head of research products, said freight rate development is being driven by changes in slot cost, and as slot costs fall, so do freight rates. ?The big carriers have realized that they can still remain profitable despite low freight rates due to their unit cost advantage. For carriers, this means that future profitability, and for some, survival, will depend on cost leadership,? Dixon told the JOC. Container lines lost a collective $1 billion in the last half of 2013, according to an HSBC report, and the bank expects them to lose lose another $743 million from January through June as general rate increases fall short of targets and fail to stick for long. Alphaliner executive consultant Tan Hua Joo said significant cost differentials had emerged, and some carriers are profitable at current levels with no urgency on their part to raise rates. He said the market remains oversupplied and blanking sailings and idling capacity are not sustainable capacity management tools. ?Demand and supply are still the main determinants of freight rates, and nothing has fundamentally changed.? The cost advantage of operating larger vessels was starkly illustrated in the HSBC report that found in the Asia-Europe trade, every container on a ship of under 10,000-TEU capacity would be carried at a loss. Using the Shanghai-to-Hamburg route with a round trip of 22,626 nautical miles sailed at an average head-haul speed of 18.9 knots and a backhaul average of 14.3 knots, ships of 8,000-TEU capacity would lose $50 per 20-foot container, and 6,000-TEU ships would lose $178 per box. The bank?s analysts found that the total costs per container grew significantly as the vessels diminished in capacity, with the cost per box on a 6,000-TEU ship 33 percent greater than if it were carried on an 18,000-TEU vessel. Bunker costs on a 6,000-TEU ship were an incredible 46.5 percent higher. But instead of sending profitability soaring, Dixon said the highly competitive nature of the container shipping market is converting these lower average slot costs into correspondingly lower freight rates. ?We have noticed for some time an increasing disconnect between supply-demand fundamentals and freight rates as carrier market behavior has become much more influential. This has been driven by the fight for cost leadership as carriers have sought to leverage their investment in the new generation of ultra-large container carriers to gain unit cost advantage over their peers,? he said. And there was no escape from cost-cutting, said Michel Looten, director of marine at Seabury. ?In a competitive market like this, there is no price-setting market leader, so in order to compete, you need to have the lowest costs,? he said. ?The biggest costs for lines are operating costs of the vessels, especially fuel. Unfortunately, for owners and lines, competition drives them to invest in ever more efficient, and bigger, ships, which leads to overcapacity for the market as a whole. This leads to tough financial times, and the need for more cost-cutting. ?Even if lines can?t invest in new ships, they have to find ways to cut costs until supply and demand match. This is where potential cost-savers like laying up vessels and slow-steaming come in,? Looten said. The cost savings can be substantial. Singapore?s Neptune Orient Lines has managed to save $2 billion in costs over the past 2 ½ years by focusing on costs and operational efficiencies, despite recording a $65 million net loss in the first quarter, a spokesman for the group?s container line, APL, said. David Goldberg, senior vice president of ocean freight north Asia at DHL Global Forwarding, said there were only two ways for a carrier to improve its financial position ?? cut costs or increase rates. As a forwarder, he is ?extremely concerned? on both fronts. ?Cost-cutting, including slow- and super-slow-steaming, and reduction or rationalization of services, all lead to reduced service offerings available in the market, which is not good for our customers,? he said. But at some point, Goldberg said, whatever costs can be cut will have been cut, and to continue as a viable business, the market has to allow for sustainable freight rates that would yield carriers a respectable return and encourage them to invest in service improvements. ?The industry needs to get back to its focus on quality,? Goldberg said. ?A viable ocean freight business is a major facilitator of global trade. While having a lean, cost-effective operation is the cornerstone of any business, there must also be sustainable freight rates in the market.? He said the roller-coaster of freight rates has continued since the financial crisis. Rates increased sharply and then decreased just as drastically, and DHL?s internal pricing teams and customers had to spend huge amounts of time working on the fluctuations rather than on other potentially and far more beneficial supply chain optimization programs. Unfortunately, overcapacity is here to say, Looten said, and unless there is a miraculous increase in demand, freight rates would remain low. ?Competition will also make sure the long-term trend will be for rates to go down to a level where lines can just about survive.? Stephen Ng, director of trades at Hong Kong-listed OOCL, was blunt about the container lines? predicament. ?I am pretty sure after losses become unsustainable, carriers will have no choice but to take rates up,? he said. Contact Greg Knowler at [email protected] and follow him on Twitter: @greg_knowler.
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