Tag Archives: container shipping

The terminal connections maze

In the post there is a link to an article from a Drewry analyst about the possibility that more firms will make close relationships with their terminal operators.

If ocean lines and terminal operators consolidate, this would have the effect of improving coordination between that line and the terminal, but would disrupt coordination with other lines. It’s as if American Airlines and O’Hare airport in Chicago made a deal that there would be preferential loading and unloading there for American flights.  Easy to pick up or unload passengers, get baggage, priority for landing and takeoff slots, de-icing (I was just there!), lines for tickets, baggage checking, TSA clearance, and so on.  It would be good for American passengers and cargo, presumably (Perhaps American would drop the unpleasant $25 fee for domestic checked bags!)

So coordination of all air traffic and passenger or cargo handling for the other airlines would be disrupted.  Delays would occur. Any issues that appeared would take longer to settle.  And it would take me longer to get in and out of the airport.

Would it make me choose American if I had to go to O’Hare? Just maybe– but rather unlikely that it alone would be enough to sway me. After all, someone else might still be cheaper.

Coordination has to be horizontal in logistics to be truly better for all customers.

Source: The terminal connections maze – The Loadstar

The Terminal Connections Maze

Red flag for Yang Ming

Yet another in the ocean carrier dominoes waiting to fall.

Following the bankruptcy of Hanjin, Taiwan’s Yang Ming is now the container line in the greatest financial danger, according to a research paper published today.

  Source: Red flag for Yang Ming as container line is weighed down by billion-dollar losses – The Loadstar

Rickmers Maritime: ‘modern Greek tragedy’ 

Firms that charter out ships to others to move cargo are in big trouble. There’s a squeeze, with overcapacity in the usage market, and  capitalization issues in these asset based firms, who need to borrow to own ships, but do not try to use them themselves, instead finding others to rent to.  Some of these firms will probably go down, as Rickmers Maritime Trust did. Stock price is no measure of a firm’s chance for success. Post-US election and Brexit, volatility of international trade factors is a given, and these firms, as intermediaries, are ideally placed to suffer most from the oscillations.  They need predictability to buy ships for the long term, and rent (charter) them for a shorter term.

What’s the future?  Interest rates are bound to go up!  Charter rates are not going up, and may go down quite a bit.  It will be harder to find credit worthy customers, since they cannot predict their demand as well as before.  We will see higher bad debt problems, such as Hanjin posed.

Loss of some of these intermediaries will reduce the options available for those who want to move cargo, and will increase capital needs just as that is the last thing they need.

Source: Analysis: Rickmers Maritime not alone; we may see a modern Greek tragedy – The Loadstar