U.K. votes down Brexit deal, leading to more uncertainty on rules for freight forwarders; stowaway bugs bug Australia.
Freight forwarding sees consolidation move
Denmark’s DSV (Nasdaq OMX: DSV) is making another try at consolidation in the freight forwarding industry with an unsolicited $4.1 billion bid for Swiss rival Panalpina (SWX: PWTN) . Last year, DSV also made an unsolicited $1.5 billion offer for another Swiss freight forwarder, Ceva Logistics, which was thwarted by French ocean carrier CMA CGM. A move to tie up the fifth and sixth largest ocean freight forwarder by volume comes as world trade faces a slowdown in 2019 and freight forwarders will be on the hunt for volumes. DSV’s bid for Panalpina, if successful, would make the company the number three player in ocean freight with an annual container volume of 2.9 million containers, comparable to volumes handled by China’s Sinotrans. Such volume would provide more leverage in negotiating contract rates with ocean carriers as a tighter market means freight rates are likely to stay firm. Among the two, DSV has been showing stronger growth in ocean freight with volume handled growing 4 percent in the first nine months of last year to just over 1 million containers, with average gross profit per container reaching $487. The company credited the strong North American import market, which hit a record last year thanks to pre-tariff hoarding in the U.S. Panalpina handled just over 1.1 million containers in the same amount of time, but that volume was down 2 percent and average gross profit per container was $300.
U.K. Brexit deal fails first vote
The trade outlook for the fifth largest economy in the world continues to be uncertain after the U.K.’s first attempt to withdraw from the European Union failed. Prime Minister Theresa May’s proposal for the terms of a ‘Brexit’, which would redraw a host of customs and tariff rules with Britain’s largest trading partner, failed by a large margin. The defeat largely hinged on what to do with Ireland, which remains in the European Union but shares a border with British-controlled Northern Ireland. A Brexit could effectively close a largely open border that has developed in the 20 years since a peace agreement was struck with Irish separatists. The lack of a Brexit deal means freight forwarders are also adrift as to what rules to follow with regard to customs. Kuehne + Nagel said a disorderly Brexit deal would be the “worst solution” as it “will impose massive restrictions on the exchange of goods between the European Union and the United Kingdom.”
Hapag-Lloyd’s cruise division looks ahead to 2020
German operator will use low-sulfur fuel and sell older ship to meet new rules. (World Maritime News)
MSC starts clean-up effort after box failure
Ocean carrier says clean-up off Europe’s coast could take months. (Transport Weekly)
Port of Antwerp to get new chemical plant
Major chemical maker Ineos plans $3.4 billion investment in the site. (Safety4Sea)
Port of Oakland hits all-time high in 2018
U.S. west coast port cites tariff fears as helping to drive volumes. (Vesselfinder)
Pirate attack in Asia fell last year
Watchdog group says pirate attacks at lowest level in decade. (ShippingWatch)
Stowaway Bugs becoming a problem.
Along with zebra mussels and other invasive creatures, ships find themselves unwitting carriers of something called the Brown Marmorated Stink Bug. The bug, which originates in Asia, is now in the midst of its breeding season. Accordng to FreightWaves’ Jim Wilson, “Australia is understandably keen to keep them out” due to harm that can be done to local agriculture. At least three vessels have been ordered to leave the country’s waters due to possibly being infested. “There is monetary loss in terms of wasted fuel, provisions, crew time, fumigation, opportunity costs of not being available for hire and so on,” Wilson says, with one operator racking up a $180,000 bill in costs from the bug.