Posts Tagged ‘Nike Inc

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




Gain unearned income. Own shipping containers and lease them to us. We contract with companies who need to ship materials.

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