Ports & Ships Maritime News

Aug 16, 2007
Author: P&S

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  • Transnet says it’s poised for growth

  • MSC chief executive warns of inevitable BAF increase

  • Grindrod posts good half-year profit

  • High cost as Sena Railway doubles

  • SADC meeting to put Zimbabwe high on its agenda

  • Pic of the day – NYATHI

    EMAIL: jhughes@hugheship.com
    WEB SITE: www.hugheship.com

    Apologies to those who received a double dose of PORTS & SHIPS NEWSLETTER yesterday and also for its late delivery, which was due to a technical glitch.

    Transnet says it’s poised for growth

    “The level of our investment programme tells the story about our own business and our view about our country’s economy,” says Transnet CEO, Maria Ramos. “Simply, we are bullish about the Company’s prospects – the fact that, for the first time in two decades, we are growing volumes, revenues, creating new and quality jobs, investing in our people and in capital. We are poised for robust growth in coming years.”

    Ramos was speaking ahead of the launch of Transnet’s 2007 Annual Report, which will be presented to parliament on 19 September, a report that Transnet says will show that the restructuring programme is being completed and the turnaround is well underway and succeeding.

    In a statement at the recent weekend Transnet claims it is now better positioned to support robust growth of the economy and that its achievements have ‘positioned the Company to play the role of enabler to government’s ASGISA (Accelerated and Shared Growth Initiative of SA) programme’.

    “Since beginning the journey of transforming Transnet, the scale of the company’s investment programme has doubled to today’s R78 billion. A growing, profitable and an efficient Transnet is an integral part of the South African economy and an important contributor to the 6 percent-plus GDP target envisaged in Asgisa,” says Ramos.

    Some of the major projects that Transnet is involved with include:

    * 110 locomotives for the coal line for Transnet Freight Rail
    * 212 locomotives for the general freight business of Transnet Freight Rail
    * Widening and deepening of the Durban Port’s entrance channel
    * Construction of a new container terminal in Ngqura in the Eastern Cape
    * Expansion of the Cape Town container terminal
    * A new multi-product pipeline between Durban and Johannesburg to boost capacity from 2010.

    According to Fred Phaswana, Transnet’s Chairman, “Transnet is faced with the challenge of having to put in place, and to finance, major integrated expansions of its operations over the next several years. It can be done in a stable regulatory environment in which management’s attention is not deflected from its proper role of managing our operations. We shall not expand willy-nilly – every single project will be subject to rigorous technical and financial criteria. We shall not invest in projects that do not offer appropriate returns. Transnet is, and should remain, a business founded on sound business principles.”

    MSC chief executive warns of inevitable BAF increase

    One of South Africa’s leading shipping operators says that an adjustment in the bunker adjustment factor (BAF) is inevitable. “In fact I hope this will be as soon as possible,” says Captain Salvatore Sarno, managing director of MSC in South Africa.

    According to Sarno volumes are increasing across all trades but there are still some worrying aspects. He cited the weakening of the dollar in recent months which have seen shipping rates decrease in value, while at the same time there has been a marked increase in competition across the various liner services.

    “Normally you would expect freight rates to go up when things are busy but that’s not happening, due mainly to the weakening of the dollar but also because of this increase in competition. The result is a 15 to 20 percent cheaper return on rates than before.”

    Sarno drew attention also to port congestion, which he said was now universal in nature, with ports in Europe as well as those in Africa and the Indian Ocean islands all experiencing long and costly delays.

    “On top of that you’ve got issues like Marpol which require that in certain regions such as off the Northern European coast ships must burn more expensive low sulphur fuel, adding another $30 a ton to the fuel costs. And then there’s the increase in time and charter rates on ships, which is happening while freight rates are coming down, making the margin of profit very much smaller than before.”

    According to Sarno the most worrying factor is the abnormal increase in fuel oil. “From January to July this year alone the price has gone up by over $100 a ton, from $255 in January to $360 a ton in July. That’s more than a 40 percent increase in just seven months. At the rate vessels burn fuel oil at sea that equates to an additional $10,000 a day expense that we did not have six months ago.”

    He said that this led him to the conclusion that in the near future there will be a substantial increase in the bunker adjustment factor (BAF) across all trades. “In fact you could say it is almost inevitable,” he said.

    Sarno said that in his opinion an increase in BAF would be justified, although he noted that shipping lines would have to bear the brunt of accusations of driving up prices. “But the facts speak for themselves,” he said.

    Grindrod posts good half-year profit

    Durban, 15 August - Grindrod, the South African shipping and logistics group has announced a half-year profit of R571 million for the six months to 30 June 2007, which is 23 percent up on the comparative period for 2006.

    The profit represents a 22 percent increase in headline earnings of 125 cents a share.

    In the first half-year report since Alan Olivier took over as chief executive officer, Grindrod has been able to report that the group’s Shipping Services division have performed well on the back of continued strong dry bulk shipping markets, which reached all-time highs in recent months. The group statement said however that the impact of these high markets failed to fully benefit the division due to a high level of contract cover.

    Trading, Freight and Financial Service divisions had a much improved first half of the year compared to the same period for 2006 which Grindrod says is continuing to grow off the base established in the second half of 2006.

    In the highly profitable shipping division 89 percent of the fleet has been contracted for the remainder of the year, 58 percent of 2008, and 32 percent so far of 2009. During the half year record spot rates were achieved in the dry bulk sector and long term charters are currently being concluded at rates substantially above their historic highs.

    However, the increased cost of ships required to service freight contracts led to the South African-based dry bulk parcel service having a difficult start to the year, although contract losses relating to the second half of 2007 have been provided for.

    During the period concerned Grindrod ordered 3 handysize bulk carrier and 2 x 16,500-DWT product tankers; 2 handysize bulkers (chartered) were delivered along with a 19,900-DWT chemical tanker (also chartered); the group sold a 40,000-DWT product tanker and a 12,800-DWT product tanker; and had contracted sales of 2 x 12,800-DWT product tankers.

    As a result of these transactions and others contracted in prior years, the group’s current core fleet of 40 ships will increase to 54 ships by the end of 2011.

    The half-year report concludes a positive report on a positive note:

    “The current high level of ship values and long term charter rates indicate an expectation of continued firm shipping markets. The group has significant contracted income in its Shipping division and continues to grow its fleet at favourable contracted costs. In addition, the anticipated moderate weakening of the Rand/US Dollar exchange rate will further benefit the Shipping division.

    ‘Improvement is expected in the performance of Trading, Freight and Financial Services which are being expanded through acquisition and investment in infrastructural development opportunities.

    ‘Consequently, the group expects to achieve growth in earnings for the 2007 financial year.”

    High cost as Sena Railway doubles

    The cost of rebuilding the Sena Railway, damaged in the civil war and now required to service the Moatize coal mines in Tete Province, has more than doubled.

    Mozambique reports say that an additional US$200 million is required to handle the expected volumes of coal and other commodities from Tete.

    The original estimate to rehabilitate the railway, being undertaken by India’s Rites Group with a small initial area completed ‘in-house’ by CFM, the Mozambique national transport company, was $175m. This was based in anticipation of the line handling an annual throughput of six million tonnes of coal.

    CVRD (Companhia Vale do Rio Doce), the Brazilian mining group which holds the Moatize concessions, now says it anticipates shipping between 10 and 15 million tonnes of coal annually along the railway to Beira, to which must be added additional traffic from other companies which will work alternate concessions in Tete Province.

    An additional cost not as yet disclosed will involve extensions and improvements to the harbour at Beira, which will probably require the construction of a new quay as well as a terminal to handle coal for export. Details of how this will be accomplished have not been revealed, although there has been talk of improving the harbour to handle bulk ships up to 60,000 tonnes – a far cry from the more competitive Capesized bulkers (150,000 tonnes).

    source – Noticias (Maputo)

    SADC meeting to put Zimbabwe high on its agenda

    Lusaka, 14 August 2007 (IRIN) - The Southern African Development Community (SADC) heads of state meeting this week in the Zambian capital, Lusaka, is to put the Zimbabwean crisis "high on the agenda", and is poised to take "practical steps" to resolve the country's problems, the regional body's deputy executive secretary, Joao Caholo, told IRIN.

    "It's not going to be mere rhetoric but practical steps, because we have already set the issue in motion. In March this year, at the SADC extraordinary meeting in Tanzania, the executive secretary [Tomaz Salomão] was mandated to do a report on the Zimbabwe economy, while [South African] President [Thabo] Mbeki was tasked to mediate [between the ruling ZANU-PF government and opposition parties]," Caholo said.

    "Both of them will present their findings, which will then form the basis of the summit decisions on addressing the Zimbabwe situation. Everything is in place to fully tackle the Zimbabwe issue." Caholo declined to elaborate until after the 14-nation regional bloc had discussed Zimbabwe's crises. The summit convenes on Thursday (today).

    In 2000 President Robert Mugabe's ZANU-PF government launched its fast-track land-reform programme, in which white-owned commercial farmland was handed over to landless Zimbabweans, setting in motion a chain of events that has seen the country's inflation rate top 13,000 percent, according to the Consumer Council of Zimbabwe (CCZ) and unemployment reach 80 percent. More than a third of the population will be in need of food aid by early next year. During this period, the international community, particularly the European Union (EU) and US, has accused the SADC of passively observing the collapse of what was once one of the continent's strongest economies.

    "SADC has never been quiet on the Zimbabwe issue in the past; we have been working in the background, so I wouldn't like to comment on why we are now talking of dealing with the Zimbabwe issue, or having to come up with practical steps on the issue," Caholo told IRIN.

    Jennifer Kabbo, the sub-region director of the United Nations Economic Commission for Africa, said Zimbabwe's "deteriorating economy and political instability is a major source of concern, and it has affected the economic growth of the SADC region as a whole," she told IRIN.

    "Once concerted efforts are put in place and the crisis in Zimbabwe is reduced to manageable levels, the Southern African region will perform a lot better because it has the potential to become the richest region in Africa."

    Analysts sceptical about SADC

    The belief that the summit could be a watershed for Zimbabwe was dismissed by Mulenga Chileshe, director of Institute for Economic and Social Research at the University of Zambia. "Judging from history, we are all sceptical whether SADC will really pass any resolution that can bring immediate change to Zimbabwe. The organisation has all along displayed a culture of keeping silent," Chileshe said.

    As many as three million Zimbabweans, or a quarter of the population, are thought to have left Zimbabwe in search of work in the past seven years, mostly in neighbouring states, such as South Africa, Botswana, Zambia and Malawi.

    Robert Mtonga, a Lusaka-based consultant to Zambia's foreign ministry, said such large-scale migration presented "serious security concerns, which could become deadly if the SADC meeting ignored the Zimbabwe crisis".

    "SADC countries can't afford to play silent diplomacy on Zimbabwe; they would be abrogating their own responsibility. They are talking about creating a SADC [peacekeeping] standby force; then what is it going to be doing if they can't resolve a simple civil case in Zimbabwe?" he said.

    "Certainly, the situation in Zimbabwe won't be resolved just now, but what is encouraging is that there are already meetings going on between President Mugabe and the MDC [Movement for Democratic Change opposition party]," Mtonga told IRIN.

    Political negotiations

    Mbeki, mandated by the SADC to find a political solution to the crisis, finally managed to bring representatives of Zimbabwe's government and opposition parties together last week, after Mugabe's negotiators failed to arrive for talks in South Africa in mid-July.

    The opposition wants the negotiations to create the conditions for the holding of free and fair elections, through constitutional reforms and a dilution of the powers of the presidency.

    Presidential and parliamentary polls have been scheduled for March 2008; Mugabe, who is now 83 and has ruled Zimbabwe since its independence from Britain in 1980, intends to again contest the elections as ZANU-PF's presidential candidate.

    The parties involved in negotiations - ZANU-PF and both factions of the MDC - have agreed not to discuss the talks with the media, although all said the negotiations would not stop ongoing political activity.

    Arthur Mutambara, the president of one MDC faction, told IRIN, "Zimbabweans cannot outsource their emancipation and liberation to foreigners. We must not be solely dependent on the Mbeki initiative, we must have an alternative programme of action - one that seeks to achieve conditions for free and fair elections. In the battle to make Zimbabwe a peaceful, democratic and prosperous nation, we must be masters of our own destiny."

    [This report does not necessarily reflect the views of the United Nations]

    Pic of the day – NYATHI

    Click on image to enlarge – with some browsers click twice

    NYATHI, one of a number of recently built 37,000-DWT products tankers in Unicorn Shipping’s Southern Tanker fleet. Picture Grindrod

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