Posts Tagged ‘China

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

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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

26
Aug
11

European Forecast Gets Worse

Sometimes, it feels like when it rains, it pours. If you’re an investor, or even a citizen of Europe, you’re probably feeling like this now. Financial markets in Europe are getting rocked. Not only are they dealing with a possibly crippling debt situation, they’re also feeling the pain from the uncertainty from their neighbors across the Atlantic that are closely approaching a dreaded double dip recession. Europe and America are tied pretty tight and both of them seem to be stuck in a shaking room getting bounced from one side to the next. The earthquake on America’s east coast Tuesday could be a foretelling event of more disaster to come.

Campfire

Asia Demand is Another Problem

In a report from Russia’s Port News, LNG (Liquid Natural Gas) is in high demand in Asia as more and more countries expand. LNG from Europe is being shipped to Asia where it is bringing in higher prices. Most notably South Korea and Japan are two of the biggest consumers. South Korea just inked a $84 billion deal and Japan is a heavy importer as well, especially after the disaster that caused the meltdown of its plant earlier this year.

“Asian demand could easily take virtually all the LNG in the market, leaving little over for liquid markets like the UK and the Netherlands,” said independent LNG analyst Andy Flower.

South Korea and Japan are the two largest importers but increased demand in China and other smaller Asian nations willing to pay oil-linked prices is set to tighten the market as production struggles to keep up with supply.

Higher Prices for Europeans

“This looks to be a scenario where northwest Europe could find itself short of LNG, which will force prices up to attract what LNG is available and/or bring in more pipeline gas from Russia,” Flower said.

Japan’s LNG imports hit a record high above 7 million tonnes in July, up from 5.9 million in July 2010, according to Waterborne energy analysts, which monitors global LNG flows.

For all Asian importers, Nigerian supply to Asia jumped by more than 10 times to 819,000 in July this year from 73,000 in July 2010, according to Waterborne.

Less LNG could help push prices higher next winter in big, heavily traded markets such as the UK, analysts say, adding that their prices have the potential to reach parity with oil-indexed pipeline gas coming from Russia and Norway.

Troubles are Apparent

Investors vote with their dollars and therefore the most telling signs of optimism or pessimism are reflected in the stock markets. Investors in Europe are voicing their fears. The FTSE 100 (UK’s benchmark) is down 13.44%, the DAX (Germany’s benchmark) is down 18.72%, and the CAC 40 (the French benchmark) is down 19.52% for the year. Investors are scared and when the winter comes, it looks like they’ll be shelling out more money to keep warm, too.

Asia is the train that is roaring through the world right now and pulling the developing nations along with it. It’s a tough task, but consumer demand and building are driving imports and keeping the rest of the world just above water. Contact Pacific Tycoon to see how you can get involved in this phenomenon.

Image: AllPosters

Source: PortNews

19
Aug
11

India Gets Serious About Inflation

Demand is a funny creature. A healthy dose of it keeps the gears of the economy rolling smooth. Too much of it, drives up the cost of goods and services and can grind the wheels to a halt. Not enough demand and the same thing happens. Moderation is the key. It’s hard enough moderating your own personal vices yet alone those 1.2 billion people, in the world’s second most populous country. Despite the difficulties that come with managing that moderation, India is tackling the problem with a new round of planned investments in its port to the tune of US$60 billion dollars.

The Social Network

A Trillion is Cool!

In a line made famous by the movie based on Facebook, one of the lead characters told the young founder that a million isn’t cool. A billion is cool. If that’s true then the planned investment in Indian ports and other transportation outlets well surpasses that.

The $60 billion dollar investment in the ports is part of Prime Minister Manmohan Singh’s planned $1 trillion revamp of choked transport and power networks to achieve faster expansion.

The initiative must transcend a history of insufficient investment, which has left the world’s most populous democracy trailing a Chinese economy now more than three times larger.

“If there isn’t enough capacity, you lose time and it adds to cost,” said Leif Eskesen, an economist at HSBC Holdings Plc.

Companies Want Action

Thermax’s, a power equipment manufacturer, managing director M. S. Unnikrishnan says “It takes 45 days transportation for incoming cargo for me and similar time when I send it to my customers overseas.” He was also quoted as saying,  “The Chinese can possibly do it in seven days.”

This adds costs and reduces efficiency and India is taking action. The Indian government is relying partly on investment by companies such as DP World Ltd. and AP Moller-Maersk to lift capability at ports to 3.1 billion tonne by 2020 from 963 million tonne in 2010.

After implementation of the building this will enable greater imports of consumer good like, electronics, raw materials, and oil, which in turn dampens inflation by better feeding consumer demand. India has 13 major ports overseen by the central government and 187 smaller harbors that account for 90% of exports by volume. India imports more than it exports and thus had a trade deficit of almost $105 billion in the last fiscal year.

They Keep Coming

At 1.2 billion people and growing, India is the second most populous country in the world and that figure is only getting bigger. They are projected to capture the title of most populous, overtaking China by 2025. In reality, that’s not that far into the future and arrives just after the total of the ports investment money will be put into action by 2020. Perfect timing.

In the meantime, Pacific Tycoon is here to help you wade through the waters of container ownership and leasing that puts your money to work by leasing your containers to the world’s largest companies that are shipping to India, China and other fast growing economies in Asia. With the world financial markets and developed countries are suffering due to mismanaged debt, demand is Asia is pumping money into the hands of our container owners. Contact us and let us show you how easy a direct investment into the Asian economies can be.

Image: TheSocialNetwork

Source: HellenicShipping, Wikipedia

18
Aug
11

China Invests Big Stake in Sri Lanka

Back in July, on the 19th, we wrote a post entitled, “Investors Queue Up in Sri Lanka”. We covered the strategic importance of the port and the value it has for the Chinese. Last week as reported in the South China Morning Post that, China Merchants Holdings International has signed an agreement to take a majority stake of 55% in the project at the Colombo South Container Terminal in Sri Lanka.

Sri Lanka

Big Money Flowing In

At an expected investment of more than US$500 million, the deal would be the single largest foreign investment by a private company in Sri Lanka, China Merchants said.

The relationship between China and Sri Lanka is an old one. At present China is their largest bi-lateral trade partner. That relationship was kicked off in 1952, when the two countries signed the Rubber-Rice pact where Sri Lanka (then Ceylon) supplied China with Rubber and China exported rice to the island, and has flourished ever since.

During the War with the Tamil Tiger that ended 3 years ago, it was the Chinese and Russians who held off the UN from issuing a cease-fire. The Chinese supplied the nation with arms and other assistance to help make this victory a reality.

Money in More Than Ports

I was able to pull up a pretty complete list of Chinese investment in Sri Lanka from a CNBC post written just 2 weeks ago that follows.

China was Sri Lanka’s largest lender in 2009 and 2010, giving $1.2 billion and $821 million respectively. In 2009, that figure accounted for 54 percent of total foreign loans, and 25 percent in 2010.

In the first six months of 2011, trade between China and Sri Lanka was worth $1.28 billion, a rise of 39.5 percent on the same period in 2010, according to Chinese customs data.

China’s imports from Sri Lanka in the first six months of 2011 were worth $68 million.

INVESTMENT

Foreign investment of $1 billion will flow into a 500-room hotel by Honk Kong-based Shangri La Asia and a shopping mall by China National Aero Technology Import and Export Corporation (CATIC) in Colombo, the largest investments so far into a post-war tourism boom.

The latter has run into an issue, with the president questioning whether the land should be sold as first agreed by his brother, Economic Development Minister Basil Rajapaksa, or given on a long-term lease, according to local media.

CONTRACTS & TRANSACTIONS

Sri Lanka has signed a $450 million deal with China Merchants Holdings and local conglomerate Aitken Spence to boost the Colombo port’s cargo-handling capacity.

Sri Lanka, with a tradition of strict foreign exchange controls, has allowed international banking transactions denominated in the Chinese yuan since June 29.

LOANS

China Development Bank Corporation has agreed to provide $1.5 billion within three years for construction of roads, bridges, power plants and water and irrigation schemes.

PORT DEVELOPMENT

China has lent $400 million for the first phase of the new port in Hambantota and its Exim Bank has lent $77 million for an oil bunkering facility, while another $810 million has been given for the second phase with China Communications Construction Company as the contractor.

ELECTRICITY DEVELOPMENT

China’s Exim Bank loaned Sri Lanka $455 million to build the first phase of first coal-powered generation station on the Indian Ocean island nation, and has offered an $891 million loan to build the second phase of 600 MW.

ROAD DEVELOPMENT

China has pledged around $760 million to the island nation’s road construction across the country, including $302 million for projects in the war-ravaged north.

A $310 million Chinese loan from its Exim Bank has been granted for the Colombo-Katunayaka express road, which will connect Sri Lanka’s only international airport and its commercial capital, Colombo. It is due for completion next year.

AIRPORT

China has also lent $190 million for Sri Lanka’s second international airport in Hambantota, which is on Sri Lanka’s southern tip and happens to be the president’s electorate.

RAILWAY

China’s Exim Bank has committed $102.5 million for Sri Lanka to buy 13 new diesel engines for its railways. The engines will come from Chinese manufacturers.

A Very Close Relationship

As the Chinese command more and more of the space that takes up the ocean via shipping lanes and requires more and more raw materials for its own expansion, the country is making wise investments overseas. Sri Lanka is an important port location and the Chinese investments in the past and support of the country puts them on top of the list when help is needed for expansion.

More and more goods are being consumed world-wide due to Asia’s growth and development. Waves of money are coming onto the shores of countries like Sri Lanka, India, China, Korea and a host of others. Money from foreign nations is pouring in both from government and the private sectors to invest in this growth. Where are you putting your money? Give Pacific Tycoon a call and find out how you can be part of this growth, through container ownership. It’s a lot easier than you may think.

Image: LonelyPlanet

Source: CargoNewsAsia, CNBC, IAS100

17
Aug
11

China All Over Top Container Port List

If you want to see where the developed world stands in today’s global economy, then take a look at the Top 20 ports list for 2011. There’s one in the top 10 that doesn’t belong to an Asian country. Rounding out the top 10 is, Rotterdam, the second largest city in the Netherlands and the largest port in Europe. Antwerp, Hamburg, L.A. and Long Beach are the only other non-Asian ports in the top 20.

Hong Kong PortString of Pearls, More and More Attractive

The Chinese Academy of Sciences recent research report says that container throughput in the Asian region is being fueled by strong Economic growth from China, India, and others in the region, including the Middle East.

Huang Anqiang, a senior member of a specialized economics team working for the centre said that China will likely prevail again in the year-end standing of top container ports. His team expects 10 of China’s container ports, including Hong Kong and Kaohsiung, to be in the world top 20 league this year, one more than in 2010.

“The transfer of the world manufacturing centre and slow economic growth in advanced economies will push down their ports down the ranking of top 20 global ports,” Huang said.

Most ports in the top 10 list will not be from advanced economies in 2011. This is in huge difference compared to the year 2000 when nine out of the top 10 were from developed countries, Huang said.

Apart from China, ports in Southeast Asia and the Middle East are picking up speed thanks to faster-growing regional economies and their locations on trunk shipping lines.

Singapore, which was displaced by Shanghai from the top position by a small margin last year, has continued its slow growth since the latter half of 2010. However, its ideal location, free port policy and increasing trade with Southeast Asian nations may shore up its volumes in the rest of 2011. The city state’s container volume for 2011 could exceed 29 million TEUs again but it will fall slightly short of the top mark expected to be achieved by Shanghai.

Malaysia’s Port Klang is turning its attention to container trade related to China and India, two of the world’s strongest growing economies. The strategy has paid off and it expects to report 8.8 to 10.7 percent container throughput growth for 2011. The Port of Tanjung Pelepas has tapped its potential for domestic as well as international trade to maintain a higher growth of at least 13.7 percent, which could place it 17th in the global rankings.

Top 20 container ports in 2011 (forecast)
Ranking, Port, Country

  1.  Shanghai, China
  2.  Singapore, Singapore
  3.  Hong Kong, Hong Kong
  4.  Shenzhen, China
  5.  Busan, China
  6.  Ningbo-Zhoushan, China
  7.  Qingdao, China
  8.  Guangzhou, China
  9.  Dubai, Dubai
  10.  Rotterdam, Netherlands
  11.  Tianjin, China
  12.  Kaohsiung, Taiwan
  13.  Port Klang, Malaysia
  14.  Antwerp, Belgium
  15.  Hamburg, Germany
  16.  Los Angeles, U.S.A.
  17.  Tanjung Pelepas, Malaysia
  18.  Long Beach, U.S.A.
  19.  Xiamen, China
  20.  Dalian, China
For comparison purposes, in the year 2000 Shanghai was number 6, Shenzhen was 11, Ningbo was 65, Qingdao was 24, Tianjin was 32. Shanghai and Shenzhen made respectfully good jumps up the list but Ningbo, Qingdao, and Tianjin come from the stratosphere smashing onto the chart this year. You can see more of the comparisons at RITA (Research and Innovation Technology Administration)

More Reasons

With 9 of the top 10 ports in Asia, you’ve got 9 very good reasons to look into direct investments in the container industry. Pacific Tycoon has the experience, knowledge and expertise to manage containers and pay you very well as you lease them to the very companies that supply the region with material goods needed for the ongoing expansion.

Source: CargoNewsAsia, ChineseAcademyOf Science
15
Aug
11

East India Ports Prosper

India and China are getting cozy when it comes to trade. Both of the nations are boasting huge growth numbers, not just in their GDP’s but in port and container traffic as well. Up until recently, the West coast ports were the one’s getting all the business. As trade with China increases, the trend of West Coast dominance is quickly eroding.

Ports of IndiaHere Comes the East

Since China overtook the US as India’s largest trading partner last year the Eastern ports are getting busier.

Ports on the west coast have traditionally handled at least twice the container traffic of their eastern brothers. That trend is reversing as India’s merchandise trade with Asian nations grows faster than that with the West. The eastern ports are closer to where the action in Asia and therefore are facilitating their growth.

Western ports’ share of capacity is estimated to drop to 66% in the year 2014 from 77% in fiscal 2010, according to audit and consulting firm KPMG India. In comparison, the share of eastern ports will rise by as much as 11 percentage points in the same period to 34%.

It is likely that the west coast/east coast shift will also help ease congestion at western ports. With increased container traffic, comes increased business opportunities in all sectors of the economy. Development of these eastern ports and the surrounding cities will get a huge dose of economic benefits.

To cater to India’s increasing trade with East Asian nations such as China and Japan, and other Asia-Pacific nations, new capacity as well as port infrastructure has been developed towards the east coast, said Gagan Seksaria, associate director (transportation and logistics) at KPMG India.

Hard Assets for Infrastructure

Besides rising trade with China, the demand for coal to fuel power projects in eastern India has also led to growth in the east coast ports, said shipping secretary K. Mohandas. India may need to import as much as 150 million tonnes of coal a year by 2015 to fuel power plants, according to industry estimates.

With the increase in rail connectivity, a lot of the coal imported through western ports will be routed through eastern ports and moved by train to meet demand in the hinterland, Seksaria said.

“The rebuilding of Japan after the earthquake as well as the resultant sluggishness in domestic steel production is expected to generate further demand for import of construction-related cement and steel,” he added.

Benefits Abound

In April, industry lobby Federation of Indian Export Organisations (FIEO) said bilateral trade between India and China was likely to have reached $60 billion (Rs.2.7 trillion today) in the fiscal year ending March 31st from $42.4 billion in 2009-10. It is likely to reach $100 billion in the next four years, according to a commerce ministry estimate.

“The export basket of India is diversifying in the context of financial crisis in the US and European markets,” said Ramu S. Deora, president of FIEO. “India is exporting more to China, Thailand, Indonesia, Taiwan, Korea and Japan.”

As these countries and more of the developing one’s of Asia quickly climb up the ladder of economic activity, India’s Eastern ports and cities will continue to thrive.

West coast ports are getting saturated and growth in the northern hinterland raises the requirement for gateway ports to ship out cargo, said Hemant B. Bhattbhatt, senior director at audit and consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd.

“Moving cargo through land to west coast ports from the northern hinterland is also becoming unviable,” he said.
Several countries such as Singapore, Australia and South Korea that did not figure prominently among India’s trading partners in the early part of the last decade are now among the country’s top partners, according to data from the commerce ministry.

In the Heart of Asia

Our position in Asia give us the location and the strength to help you profit from container ownership. Pacific Tycoon is here to help you get into the container industry and pay you very well. When you buy containers and then lease them to us, we both facilitate the boom that is happening in Asia and we all benefit. Don’t just be a consumer in the global economy. Participate in its growth through container ownership. It’s a simple process. Give us a call and let us show you how easy it can be.

Image: IndiaEducation

Source: Hellenic Shipping




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