Ports & Ships Maritime News

Feb 25, 2009
Author: Terry Hutson

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  • First View – MSC SHANGHAI

  • Transnet to press ahead with capital projects

  • How to beat congestion: ban the ships from coming – Nigeria’s solution

  • Number of shipping lines heading for the Cape of Good Hope route increases

  • Threats of unrest in Somalia mean continued piracy off coast

  • SA's GDP drops 1.8 percent in fourth quarter 2008

  • Pics of the day – DE ZHOU and AALBORG


    First View – MSC SHANGHAI

    The container ship MSC SHANGHAI (65,483-gt, built 2005) manoeuvres into the channel in Durban harbour with the assistance of the harbour tug Umkhuze. Picture by Trevor Jones

    Transnet to press ahead with capital projects

    Transnet says that despite the global economic downturn it intends pressing ahead with its R80 billion capital investment programme over the next five years, of which R57bn is to be spent within the next three years.

    Acknowledging that the marked slowdown in economic growth internationally and domestically has resulted in reduced volumes being transported, Transnet says that a number of revenue opportunities have however been identified even during this slowdown which will be vigorously pursued.

    “All key, priority and strategically significant projects are being continued and implementation is proceeding as planned to create appropriate capacity ahead of demand.

    “In line with other corporates around the world, we have instituted proactive plans to ensure Transnet’s financial strength is maintained particularly over a period of significant infrastructure investment.”

    These plans include cost reductions, reprioritizing certain capital projects, improved cash flow management and additional focus on efficiencies.

    The company says that while revenue growth is expected to slow down in the short term due to certain volume decreases, Transnet anticipates continuing to generate strong cash flows and to remain profitable.

    “As part of our review, less critical projects have been rephased and rescheduled in response to cutbacks in production by our clients which has impacted volumes.

    “The decision to continue with our capital programme underscores our commitment under challenging financial circumstances to proceed with our plans to provide appropriate infrastructure capacity in ports, rail and pipeline divisions ahead of demand. It is also in line with the remarks on infrastructure investment by the Minister of Finance, Trevor Manuel, in his budget speech recently.

    “The required funding for 2008/2009 has already been raised and we are on track to spending the planned R19 billion in the current financial year. Plans for raising funding for 2009/2010 are in place and we remain confident that we will raise the required funding cost-effectively. We are determined to maintain a strong balance sheet which means that we will henceforth need to manage the business with increased nimbleness given the worldwide uncertainties on economic growth with its impact particularly on commodity demand and reduced container volumes.

    “Our funding will continue on the strength of our balance sheet which, according to our plans, will remain strong throughout this downturn.

    Transnet said that the major thrust of its capital investment programme is centred on the following major projects:

    Export lines

    A further R19 billion will be spent over the next five years on the coal line and iron-ore line which will increase capacity to 71 million tons per annum and 60 million tons per annum, respectively. The rollout of these plans is on track and capacity will be created to match demand as requested by customers.


    Container capacity will be increased by 32% over five years which will require a capital expenditure of R12,7 billion over the period. Additional capacity will mainly be created in the ports of Cape Town, Ngqura and Durban. The capacity will meet the latest demand forecasts over the five-year period with spare capacity to deal with any higher growth in volumes.

    Other major projects in the R80 billion capital plan include:

    Transnet Freight Rail’s projects for the general freight business of R24 billion; spending of R11,1 billion on the new multi-product pipeline and other pipeline projects; and a further R1,8 billion on the widening and deepening of the entrance channel in Durban port.

    How to beat congestion: ban the ships from coming – Nigeria’s solution

    In a draconian response to ongoing port congestion, Nigeria has introduced a ban on ships entering the port of Apapa until mid-April.

    This follows an instruction from the Federal government to clear the congestion within 60 days, issued in January and which is seen to have had little success. Instead of importers rushing to clear their cargo many have abandoned imports, while during this period the number of ships waiting outside port has risen to about 150, according to newspaper reports this week.

    Half of these ships are carrying oil-related cargoes with the remainder carrying bulk, breakbulk and containerised cargo. Much of the container traffic is said to be destined for the APM Terminal and the Tin Can Island container terminal.

    A recent three-day strike by the clearing and forwarding industry hasn’t helped matters either and reports indicate it may have cost the Lagos ports over US$120 million. Ships in the meantime have been diverted to other ports in the region.

    Number of shipping lines heading for the Cape of Good Hope route increases

    The number of shipping lines that have decided to sail the long way back to the Far East from Europe is steadily being added to, as more shipping companies do the sums and follow the examples set by Maersk and MSC.

    Latest to join the migration away from the Suez Canal route on eastbound voyages are Grand Alliance members MISC Berhad, NYK Line, Hapag-Lloyd and Orient Overseas Container Line (OOCL) with their EU3 service.

    Reasons given for the decision are similar to those for other lines preceding them – higher costs through the canal, insurance premiums for having to sail through the Gulf of Aden, and reduced loadings in the eastbound direction. Despite sailing via the Cape, the port rotation remains at Southampton, Hamburg, Rotterdam, Port Kelang, Singapore, Shekou, Hong Kong, Ningbo and Shanghai but the journey will require an extra week to complete which also means that an additional vessel in the 8,000-TEU range is added.

    Another line to opt for the Cape route eastwards is Taiwanese carrier Evergreen which operates its China Europe Med service (CEM) using eight C class ships of around 8,000-TEU and on which Maersk Line enjoys a slot allocation. To maintain service integrity Evergreen will add a ninth ship of 7,000-TEU, the HATSU SMILE but has also added the port of Taranto to the westbound route to connect with the company’s new Adriatic feeder service (ADF).

    Threats of unrest in Somalia mean continued piracy off coast

    Hopes that a return to stability within Somalia would bring about a lessening of piracy off the country’s long coastline appear to have been dashed following a pledge given by the hard line Islamist insurgent group al-Shabaab that it intends carrying out further attacks on African peacekeeping forces operating in Somalia.

    The threat was issued on 23 February shortly after 11 soldiers from Burundi were killed following a clash with Islamist forces the day before.

    The al-Shabaab group together with other insurgents controls sections of southern Somalia including the town of Baidoa and port of Kismayo while also having a growing influence in the capital city and port of Mogadishu. Since Ethiopian troops began leaving the country the Islamist movements had started reasserting the control they briefly held in 2006, during which time they effectively brought piracy under control.

    In Somalia this week units of the Islamic Courts Union began taking control of various checkpoints throughout Mogadishu, after claims were made that government forces were extorting money from transport companies before permitting road vehicles to make deliveries in the city or to neighbouring regions.

    Meanwhile a battalion of Ethiopian troops is reported to have recrossed the border into Somalia in the Bakool region and taken up defensive positions near Yed, where fighting with soldiers of the Islamic Courts Union is considered to be increasingly likely.

    SA's GDP drops 1.8 percent in fourth quarter 2008

    by Michael Appel (BuaNews)

    Pretoria, 24 February - South Africa's Gross Domestic Product (GDP) figure at market prices for the fourth quarter of 2008 has contracted by 1.8 percent quarter-on-quarter (q/q) from 0.2 percent growth in the third quarter, Statistics South Africa (Stats SA) announced on Tuesday.

    South Africa's economy has come under increasing pressure with growth in the mining and motor manufacturing sectors slowing as a result of the global economic recession.

    The sectors that led to a reduced GDP figure in the fourth quarter include the manufacturing industry, electricity, gas and water industry, while wholesale and retail trade, hotels and restaurants did not contribute to economic growth at all.

    South Africa's growth figures for the first three quarters of 2008 were recorded at 1.7 percent, 5 percent and 0.2 percent respectively, Stats SA said.

    Econometrix Treasury Management (ETM) economist Russell Lamberti said that the country was not technically in a recession, despite the negative growth in the economy.

    “In economic and finance circles, a textbook definition of recession is two consecutive quarters of negative growth. So in plain English terms the economy has receded, but we are not in a recession,” Mr Lamberti said.

    If the country's quarter one 2009 GDP figure reports negative growth, then South Africa will officially be in a recession.

    Stats SA also reported that the positive contributions to economic growth had come from the finance, real estate and business services industry, agriculture, forestry and fishing as well as general government services.

    The construction, transport, storage and communication, and personal services sectors also experienced positive growth in the third quarter.

    “The seasonally adjusted and annualised real value added by non-agricultural industries increased by 1.1 percent and 5 percent during the first and second quarters of 2008 followed by decreases of 0.5 percent and 2.2 percent during the third and fourth quarters of 2008.

    “The unadjusted GDP at market prices increased by 3.9 percent, 4.5 percent, 3 percent and 1 percent during the first, second, third and fourth quarters of 2008 compared with the same quarters in 2007.”

    The annual GDP growth for 2008 is reported as 3.1 percent, compared to a GDP increase of 5.1 percent in 2007.

    The main contributors to an increase in economic activity for 2008 were the finance, real estate and business services industry, agriculture, forestry and fishing, construction and general government services.

    Stats SA said the wholesale and retail industries, as well as the mining and quarrying and manufacturing sectors, were all responsible for either no growth or negative growth in 2008.

    The increases in interest rates in 2008 was a likely reason for South Africa's slowing economic growth, but repo rate cuts of 50 and 100 basis point cuts in December 2008 and February 2009 should give the economy a boost.

    Pics of the day – DE ZHOU and AALBORG

    The Chinese tug DE ZHOU (4,044-gt, built 2007) of Shanghai Salvage seen in Cape Town harbour recently. Picture by Aad Noorland

    GAL’s general cargo ship AALBORG (24,869-gt, built 1983), a familiar sight in South African waters these past couple of years, in Cape Town harbour. Picture by Ian Shiffman

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