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06
Dec
11

PROPOSED PORT EXPANSION TO ACCELERATE TRADE IN WEST ASIA

PROPOSED PORT EXPANSION TO ACCELERATE TRADE IN WEST ASIA

Photo Source: Panoramio – hireg

Dubai in the United Arab Emirates has traditionally distinguished itself as a vital trade center in the Arabian Gulf region. Dubai’s distinct location in the south – western part of the Arabian Gulf has enabled it to play an active trading role in linking the maritime lines on one hand while facilitating transportation of goods between the East and the West on the other hand.

In general, the economies of the UAE are based on two main activities, which are non-oil trade and oil producing, and exporting. Jebel Ali port has witnessed, during the last three decades, rapid growth of its trade and industrial activities. The port has taken advantage of several of its core-competencies, including its strategic location over-looking the Arabian Gulf, the completion of its past infrastructural projects and the running of these facilities according to the latest standards.

Growing from Strength to Strength

The United Arab Emirates has witnessed remarkable growth in tonnage in all of its ports this year and the terminal is currently operating at very high levels of utilization reflecting its strong position as a hub for the fast growing regions of the Middle East, Indian subcontinent and Africa. To overcome port congestions, UAE is upgrading the Jebel Ali port by creating an additional 4 million TEU (inexact unit of cargo capacity) capacity, which will result in total volume at this port alone reaching 19 million TEU by 2014[1].

Currently, the Jebel Ali port takes the lead among the other Emirates in the volume of exports. For instance, Dubai’s exports constitute around 82.2% of the country’s total exports and Jebel Ali port handles the entire export cargo.

Even after the global financial crisis of 2008, foreign trade in UAE has still been very active and has recorded a considerable rise in the rates of trade exchange growth locally, regionally and internationally. This active movement was a reflection of the requirements of markets covered by trading channels, which are the free import of most consumable, intermediate, and capital goods.

‘Ample Demand’

Thus, the UAE government, expecting a strong trade rebound, has awarded DP World, a company that operates more than 60 terminals across six continents the contract to expand the port. According to reports DP World will be investing around $850 million over next three years to construct a new 1,860 meters of quayside and 70 hectares of yard from the existing general cargo berth, basically increasing tonnage[2].

DP World’s investment in a new container terminal at Jebel Ali will certainly support the continued growth of Dubai and the UAE and enhance the country’s status as the trade center of the Middle East. Most industrialists familiar with commerce in the Gulf Region would consensually agree that over the past 40 years, Jebel Ali’s port facilities have contributed significantly to the development of Dubai, the UAE and the wider region through the provision of efficient supply chain services.

The proposed new terminal, which is expected to operate with the largest, most efficient quay cranes and is forecasted to have a draft of 17 meters, would enable them to handle the world’s largest container vessels planned for the future. The company has furthered their intention to leverage on Jebel Ali Port.

Changes in International Trade

The economic reason for DP World is simple. There has been a record in container volumes in the UAE region for 2011, with growth of 11% so far this year and over a million TEU per month being handled in the Jebel Ali port alone[3]. Hence, the development of this new capacity at Jebel Ali will ensure that UAE continue to meet the growth in demand from customers who look to Jebel Ali to provide a first class service right across the portfolio.

Organizations such as the IMF and The World Bank have both projected GDP forecasts to reflect a continuation of growth across the region and container shipping lines ordering larger vessels. The expansion of Jebel Ali Port will ensure additional shipping containers required and a continuation of the high levels of efficiency.

As Jebel Ali gets a “facelift”, the port is expected to continue to be both a gateway for cargo and a vital hub for facilitating trade growth throughout the region, and needs to be able to handle the new generation of mega vessels. In response, we are creating new container handling capacity to meet those needs, offering the efficient and cost effective services other customers have come to rely on.

Looking Forward

One thing is of certain is that Jebel Ali Port has strengthened its distinguished strategic location by leveraging on the free and balanced economic policy that has given it a good reputation in the international, commercial and economic communities. This has further encouraged national and foreign capitals to enter into successful investment ventures in different commercial, industrial and service fields throughout the Middle-East region.

Jebel Ali Port has further boosted the importance of its strategic location by emphasizing the UAE’s free economic policy. Setting up complete infrastructural projects by DP World will put in place facilities required to achieve port efficiency. This in turn will have an immediate spill-over and positive impact on growth rates in various economic sectors, social development and improved living standards of the individuals in West Asia.

All this and more, has enabled Jebel Ali Port to become one of the most important centers for imports, exports, and re-exports in the region. During the last two decades the port operators have worked to strengthen its industrial base with the aim of diversifying the sources of income.


[1] Bloomberg

[2] World Maritime News

[3] World Cargo News

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06
Sep
11

Pacific Tycoon Has Moved the Blog

We’re moving on. We have relocated the blog from WordPress.com and headed over to a self hosted WordPress blog integrated within our site, at PacificTycoon.com. If you’ve been following the blog and what is going on in the shipping container industry then we’ll see you at our new site.

Moving

Image: RevJohnHill

05
Sep
11

India Imports Up

If there is any doubt why India is entering into expansion mode with their ports, then last weeks numbers of gross imports will help put that into perspective. Asia’s third largest economy cracked the scales with an increase of 31%  in the April/May, compared to the same period last year.

Container Ship

Imports Soar in April May

Crude oil imports continued to increase along with edible oil and pulses (peas, beans and lentils), according to official figures. India imports close to four fifths of its oil. According to country’s Commerce ministry sources, India imported 13.58 million metric tons of oil in July, up by 2.6 percent that is up by 3.13 million barrels a day.

Large developing nations clamoring for the black gold could drive up prices and slow down development but I argue whether or not Middle Eastern or other big exporters of oil would let prices to too high, in favor of increased economic development.

The country’s imports of pulses and edible oil, went up by 24.7% in the April-May period this year. India’s import of pulses, shot up by 38.6%

Items such as food grains, automobiles, milk and beverages fall in the sensitive category and the import of these goods is monitored by the government to see if there is any adverse impact on the domestic industry.

During the first two months of the current fiscal year, the import of items such as alcoholic beverages and spices also increased by 60.4% and 30.5%, respectively. However, imports of food grains, fruits and vegetables, tea and Coffee contracted by 81.3%, 1.9% and 42.6%.

Coffee Drinkers are Getting Their’s Local

Since 1950 the total area of planted coffee in India has exploded. For the Arabica bean it has increased over 300% and for the Robusta bean, it has grown over 1000%. More and more young Indians are taking to the drink than ever before. With a very low average age (65% of the population is under 35 and it’s expected that the average age in 2020 will be 29 years old) in India and a more affluent generation coming onto the scene, many of them are taking to the cafe’s to relax, carry on business, or just get away.

Demand is Calling

Last month, we wrote on the blog about a new planned investment of $60 billion to expand and renovate Indian ports. This investment is part of a  bigger $1 trillion dollar initiative aimed at bringing the ports, roads and infrastructure in the country up to speed by the year 2020.

Leif Eskesen, of economist at HSBC Holdings Plc said,“If there isn’t enough capacity, you lose time and it adds to cost.” India is working on fixing this. An industrial expansion and high food prices, resulting from the combined effects of the weak 2009 monsoon season and inefficiencies in the government’s food distribution system, fueled inflation which peaked at about 11% in the first half fo 2010, but has gradually decreased to single digits following a series of central bank interest rate hikes.

There’s a lot that can be done with a trillion dollars. It looks like India s up to the task. All eyes are on Asia right now. India and China have a lion’s share of the focus but there are many other emerging markets that are pushing container demand around our region. At Pacific Tycoon, we supply them with the necessary containers to transport the cargo. Contact us to see how you can invest in shipping container, earn guaranteed money, and free up a portion of your volatile stock portfolio for a safer alternative.

Image:ProvidenceEdu

Source: IndiaCoffee, CommodityOnline

04
Sep
11

India’s Neighbor Benefits

Being neighbors to the second most populous country that is exploding with growth and potential is not a bad thing. Bangladesh is the beneficiary of the hour. Aside from being next door to India, Bangladesh also pulls quite a bit of its on weight.

Bangladesh

Huge Potential

Bangladesh is the world’s third largest exporter of textiles, behind Turkey and China. As of 2009 80% of their exports were from this sector, which accounted for $15 billion in revenues and employed over 3.5 million workers. Despite some of the political issues that are a hindrance, the cheap labor there is enough of a draw card to keep big companies interested.

Port hits new Milestones

Chittagong and Mongla are the only two natural sea ports in the world that also play host to the two large economic hub groups, ASEAN aand SAARC.

“Both the growth and the volume of trade created new milestones at the port last year,” Enamul Karim, terminal manager of Chittagong Port Authority (CPA) said. He also said average growth of the port’s annual container handling had hovered around 12-13 per cent over the last decade. And that number is double the 6.5% GDP growth the country has been experiencing.

“But this year it stood nearly double the average growth rate because of the around 40 per cent hike in export and import,” he said. Karim said because of this high growth some 70 per cent of Chittagong Port’s existing yards were utilized in the last fiscal year, up from 58 per cent a year before. Top shipping company executives said the port capacity was now bursting at its seams as the external trade was increasing at a hefty pace without any tangible efforts to expand terminal capacity.

“I am afraid container congestion will be a daily scene at Chittagong in 2013 if the CPA (Chittagong Port Authority) does not expand its container handling capacity quickly,” said a senior executive at a shipping company.

But port officials rejected this gloomy prognosis, saying that the CPA has undertaken a raft of development projects to cope with increasing demand for containers.

Mohammad Sarwar, head of traffic, said the CPA has planned to launch container terminal management systems (CTMS) later this year and a new back-up of the New Mooring Container Terminal would be ready by mid-2012.

“The new NCT alone can accommodate more than two million containers. It will be equipped with 10 gantry cranes. The CTMS will also boost the port’s capacity and productivity,” said Sarwar.

Some believe, if the new NCT and CTMS get ready in time, Chittagong Port will be equivalent to India’s largest seaport, the Jawaharlal Nehru Port Trust, at Mumbai.

Image: BNDP

Source: CargoNewsAsia, Wikipedia

01
Sep
11

Shipping Industry Rebound

There’s a lot of good news if you’re looking to make containers a part of your investment portfolio. Demand is Asia, most notably India, China, Singapore, are all rising. Development of these countries and those around them, is at record levels. In two separate reports we found this week, consumption in Asia is the main driving force behind the push from poverty to the acquisition of wealth and material goods that just a few years ago was a far stretch for many of the citizens of Asia. It’s amazing how fast things change in the world we live in today. Countries are pivoting quickly with the help of advanced technology, communications, and increased levels of education.

Containers

Industry in China is Growing

China Merchants Holdings, a diversified conglomerate with big investments in shipping and ports reported first half results earlier this week that were double the same period last year, thanks to a revaluation gain on its investment in Shanghai International Port Group and the appreciation of its office building in Sheung Wan, reported the South China morning Post.

The company also reiterated what we talked about last month about the moving of industry inland in search of cheaper labor. On the mainland, ports at Shenzhen West reported a 0.6 per cent fall in first-half container throughput due to a slowdown in exports in the Pearl River Delta, compared with 12.9 per cent growth on average in mainland ports.

“The slowdown in growth in Shenzhen is a long-term problem as the trend for factories to move out is irreversible, but Shenzhen still has a geographical advantage,” said Vice Chairman Li Jianhong.

Due to the influx of business moving inland, handling fees at Shenzhen port were frozen in the first half, compared with a five to eight per cent rise in handling fees in the Yangtze River Delta and an up-to-15 per cent rise in the Bohai Rim (also known as the Bohai Economic Rim or BER, which is the economic hinterland around Beijing and Tianjin).

This migration of business is rapidly developing the country and bringing new jobs to an unprecedented number of people in rural areas, who just a few years ago were moving to the coastal areas in search of work.

Growth is Driving India to Prosperity

In India the shipping industry is rosy, too.

The Indian shipping industry recorded an increase of over 20 per cent in business in the last financial year and in the first quarter of this year, which is expected to continue, said Shreyas Shipping Chief Financial Officer Vinay Kshirsagar.

Almost 90 percent of India’s trade by volume (70 per cent in terms of value)  is conducted by sea. With the largest merchant shipping fleet in the developing world, India’s maritime sector is set to grow to a size of $80 billion by 2020. The expected volume handled in 2020 would be approximately 1.7 billion tonnes.

While demand drivers like trade growth and geographical balance of trade (which determines the length of haul required) are very positive, the supply drivers like new ship building orders, scrapping of existing tonnage, etc, also indicate a good future for the Indian shipping and logistics sector. This is further given a boost by the privatization of ports and the strong thrust on infrastructure, said Nicky Mason, managing director, Informa India.

India is the world’s second most populous country and their consumption is rising along with their incomes. India is investing big money in its ports to calm inflation and keep the demand that is driving it up at bay. With big money being spent on ports and infrastructure, India will continue to be one of the biggest players in the region.

Growth in Asia is good for Container Owners

Owning containers is easy. Managing them is a different story. That’s what Pacific Tycoon does best. We are located in Hong Kong, in the heart of Asia, with the skill, experience, and knowledge to put your containers to work and start earning you a good income. It all boils down to the most simple of economic laws: supply and demand.

If there is sizeable demand for a product or service you can charge more. Demand in Asia is sky-rocketing and our containers owners are getting paid very well, to let us manage their investment. Contact us and let us show you how you can diversify your investments by owning containers and lease them to the very companies that supply the region with the necessary goods to do business.

Image: TopDealFinder

Source: HellenicShipping, CargoNewsAsia

31
Aug
11

Singapore Keeps Building

Singapore is home to the second busiest port in the world. Where there are goods coming in and out of a port, there’s sure to be a lot of other action going on. Last week to keep up with all the activity, Jurong Port, which is the largest terminal in Singapore announced it had awarded a big contract to help keep cement coming into the country. Cement’s for building. Building means expansion.

Singapore, Marina Bay Sands

Big Building Plans

According to recent figures released by the Building and Construction Authority of Singapore (BCA), building and construction contracts in 2Q11 grew by 10.6% year-on-year. Public contracts saw a near 2.5 times leap over the same period last year, showing a renewed political will to drive up infrastructure construction.

Jurong Port has awarded a $24.86 million contract to a joint venture led by McConnell Dowell to design, supply and install a new cement handling system.More than 90 per cent of the cement requirement of Singapore’s construction industry is imported through Jurong Port, so upgrading to increase efficiency only makes sense.

Singapore’s Importance

As far back as the 13th century, Singapore has been an important trade destination for Asia. What started out as a simple location to trade ceramics and spices to the surrounding area has blossomed into the worlds largest port.

Since Singapore has very little land to call its own and zero natural resources, their economic model is based on importing raw materials and the refining them (oil and wafer fabrication) or manufacturing products with them. The electronics and biomedical manufaturing sectors account for over 50% of Singapore’s manufacturing industry.

That economic model, which some have deemed the, Singapore model, serves them just fine. Singapore’s open trade economy and important position as a port serving shipping lines from Asia to the America’s has helped the economy grow at average rate of  over 8% since 1965.

Since the Singapore economy is so heavily dependent on exports and foreign trade, economic downturns in other countries severely effect the Singapore’s growth.  For example, after the dot-com crash and the subsequent recession that followed, GDP growth was -2% for the year of 2001 and just barely positive the next two. In 2004 , as things got better, the country swung around to a 8.5% increase n GDP. As things began picking up steam even more last year the country grew by over 17%.

Tourism and Service Industries

Since Singapore has billed itself as an Asian technology and financial power house, they also attract a lot of foreign money due to low taxes and a favorable business environment. The opening of 2 casinos in 2010 has already made Singapore the world’s second largest gambling destination behind Las Vegas.

Aaron Fischer of CLSA, expects the combined gaming revenues of both Singapore resorts to generate $5.1 billion in 2011, up from his previous estimate of $3.9 billion. Goldman Sachs also expects the sector could bring in $5 billion in 2011.

Pacific Tycoon is a leading container management company in Asia. Contact us and let us show you how you can make money from owning shipping containers.

Image: Archithings

Source: HellenicShipping, StockMarketReviews, StraitsTimes, BusinessInsider, USStateDept

30
Aug
11

All Eyes (including APM) on Asia

After the global crisis in 2008, many companies tightened the wallets and held back on investing in anything or anywhere. Despite the pull back, that resulted in a year where the Dow Jones Industrial Average lost 37%, shipping lines were still running and people still required the goods and services that they consume to go about their daily lives. In that year Pacific Tycoon made 23% for our container clients. Container companies are profiting handsomely from the boom in Asia.

Made in China

Good Results

The company announced last week that their profits for the first 6 months increased 6% over the same period last year. With forward thinking and confidence in emerging markets, APM has increased its holding’s in Asia and that has paid-off for them handsomely.

Specifically, in Asia, in the first half of the year new operations commenced at the recently completed 1.1 million TEU annual capacity deep-water Cai Mep International Terminal in Vietnam. APM also began operations in Liberia and the Republic of Georgia.

APM Terminals CEO Kim Fejfer, said “We achieved very good results for the first half fiscal year and our key business metrics continue to trend positively. I am delighted to see our client portfolio expanding, our new business activities performing well, opening new markets in line with our growth strategy. Our investment in new terminals continues to drive APM Terminals strong market leading position.”

More Investment Coming

“We are actively looking for investment opportunities in emerging Asian markets such as China, Vietnam, India and Indonesia,” said chief operating officer Martin Christiansen.

Expanding intra-Asia trade volume has been largely fuelled by China’s increasing appetite for imports and closer ties with the Association of Southeast Asian Nations (ASEAN), he said.

The Netherlands-based company owns stakes in 10 container terminals in China, which have not received further investment since 2009 because of the 2008 global financial recession.

The company sold its shares in the ports of Kaohsiung, Taiwan, in 2009 and Yantian, Guangdong province, in 2010 on the Shenzhen Stock Exchange to China Ocean Shipping (Group) Co (Cosco). APM Terminals plans to sell half of its 50 percent stake in Xiamen port to Xiamen International Port.

While stressing the Chinese market remains a priority, Christiansen admitted that there are some potential investment challenges in China, such as the rising costs of labour and property. But the valuation of ports is yet to offset rising costs, with nearly no increase in tariffs in recent years.

Most importantly, “the growth rate of China’s container volume in the future is expected to be lower than the past, particularly China’s export volume to mature markets such as the United States and the Europe”, Christiansen said.

The dwindling growth rate is partly attributable to rising costs and yuan appreciation, which are posing a threat to China’s reputation as the global manufacturing base. The country’s coastal cities, which support a variety of labour-intensive manufacturing sectors, have been particularly hard hit.

Some investors have shifted investments into neighbouring countries where the cost of labour is lower. In 2010, Vietnam replaced China as the largest production base for Nike Inc, prompting widespread concerns that China might lose its attractiveness as a global manufacturer.

Growth in Other Countries

The investment in the Cai Mep International Terminal in Vietnam, looks to be a good one. Last year GDP for the entire country of Vietnam was 6.7%, whereas in the Mekong River Delta that number was almost double at 12.2%. The region exported 6.8 million tonnes of rice in 2010, the highest volume so far. Ho Chi Minh is the business center of the country and growth from both foreign and local investment is increasing.

China is Difficult to Replace

“China’s vast manufacturing industry is difficult to replace. We do not see a big risk of a massive sourcing shift out of China in the near future,” Christiansen said. “China will remain one of the most important markets for us.”

For APM and Asia and the expanding countries in Africa, as well, China is an important piece of the puzzle. China is aware that wages and standards of living inside the country are climbing higher and higher. All of this puts pressure on the country to remain at a competitive advantage in terms of pricing for companies needing manufacturing solutions.

This is another reason the country is eagerly awaiting 2014, when the new set of Panama Canal locks are set to open. The larger Post-Panamax ships of today which carry twice (almost 3 times) the cargo and cut annual operating expenses in half are a much needed boost to China’s shipping industry.

Image: VNBrand

Source: CargoNewsAsia, VietnamBusiness, CargoNewsAsia2




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