SHIPPERS CITE OVERCAPACITY IN NEGOTIATIONS

United States shippers are reportedly resisting carrier moves to restore rates on the trans-Pacific (Asia-North America) tradelane, given a largely unchanged overcapacity situation in global container shipping.

With the most influential shippers in the tradelane currently paying eastbound 40-foot container rates of US$750 to the West Coast and US$1400 to the East Coast, carriers are understood to be seeking respective increases to US$1500 and US$2800.

However, overseas commentators have observed that unless the pace of vessel scrapping significantly ramps up, “the fundamental truth is that the vessels are still there”, thereby maintaining the shippers’ upper hand.

It has also been noted that carriers continue to be their own worst enemies, as evidenced in the aftermath of Hanjin Shipping’s demise, whereby increased capacity was promptly deployed in the busiest eastbound Pacific routes. Despite Hanjin providing about 7% of capacity in the tradelane, its demise consequently caused “hardly a blip” in freight rates.

However, it is not all plain sailing for shippers, with expected further carrier failures and overall consolidation lessening options. This has had the impact of prompting shippers to ensure alignment with carriers that suit their networks and are stable/have secure partners, as well as deliberately forging new carrier relationships in order to mitigate risk.

TAIC REPORTS ON ARATERE PROPELLER LOSS

A sub-optimal fit, vibration, corrosion and the uneven thrust produced by differently-pitched blades all contributed to the “fretting” which saw the Interislander ferry Aratere ultimately lose its starboard propeller shaft in Cook Strait in November 2013.

Such were the key findings of an investigation by the Transport Accident Investigation Commission (TAIC), which recommended parent company KiwiRail improve its process documentation for both the fitting of new propellers as well as on the final fit achieved.

The TAIC also urged Standards New Zealand to forward the report to the International Organization for Standardization, so as to establish if current standards for manufacturing large-diameter marine propellers are appropriate for modern, high-efficiency propellers operating closer to cavitation margins.

In response, KiwiRail group general manager Todd Moyle acknowledged the “valuable” recommendations made about the standard for advanced propeller manufacture and confirmed the Interislander had already improved document management processes.

However, having undertaken its own “extensive investigation”, KiwiRail did not accept an additional TAIC viewpoint that it had not followed manufacturer advice on the best means of fitting the propellers and therefore had potential contributed to the failure, he says.

“The proposed method of fitting the propellers was impractical because of the very long shaft fitted,” says Mr Moyle.

“The method we did use to fit the propellers was discussed with the manufacturer, who accepted it as an alternative.”

Mr Moyle adds that control of the Aratere was never lost during the incident — “and at no point were passengers or the vessel at any risk”.

RTF WELCOMES VDAM RULE

Road Transport Forum chief executive Ken Shirley has heralded the new Vehicle Dimensions and Mass (VDAM) rule as representing an “evolution rather than a revolution in heavy vehicle regulation”.

Specific VDAM changes include:

  • redefining width restrictions to enable more vehicles to operate at the 2.55-metre limit
  • increasing the general access gross mass limits from 44 tonnes to 45 and 46 tonnes, depending on vehicle configuration
  • increasing axle mass limits for various axle configurations

“The new rule is based on sound principles of having vehicles that suitably fit New Zealand’s roading network,” says Mr Shirley.

“While there will be some productivity gains out of the new mass and dimension limits priority has been given to road safety considerations, which is entirely appropriate.

“The slightly larger dimensions will allow transport operators to purchase the most modern, top-of-the-line equipment from overseas, therefore improving the vehicle technology and overall safety of New Zealand’s truck fleet.”

Furthermore, Mr Shirley says the new rule has consolidated and simplified what has historically been a very complex and confusing set of rules.

He notes that heavy vehicle drivers will need to be aware of axle spacings when carrying near the load limit and be mindful that external lashings must exist within the 2.55-metre width limit.

However, Mr Shirley’s one disappointment in the new rule was the decision to include a reduction in weight tolerance from 1500 kilograms down to 500 kilograms, which he says “will add considerable stress to freight loading and allows little margin for error.”

Thank you!

Thank you so much for your support in 2016.  It has been a pretty tough year in many respects.  Our system change mid year added a lot of workload to our already busy team.  And then the Kaikoura earthquake on 14 November basically doubled our workload overnight.

My awesome team of Andrea, Chrissy, Florence, Kalene, Mike and Neil, ably supported by our Mt Maunganui accounts team of Nicola and Cheryl, have really put in a huge amount of effort to keep NZ’s most important freight moving, while at the same time coping with a complete back office change.

It was great to have Mike Catty back with us for part of this year for his third stint at Cubic.  He did an amazing job with our new system implementation.  We were sorry to lose Jenna this year but we’re glad she’s enjoying her temporary “retirement” on her beautiful lifestyle property near Christchurch.

Thank you for your understanding of the necessity for the rate realignment process we are currently working through.  The sudden changes in cost structure on many routes has been an additional challenge at an already busy time of year.

Over the festive season Cubic will be staffed from 0800 to 1700 on every day apart from the statutory holidays.  Most of our team are working through.

On behalf of our team, best wishes to you, your teams, and your families for a safe and happy festive season.  See you on the other side.

Cheers

Dave

Strike notice received from LPC

We have received the following notification from Simon Munt at LPC.

 

This is a further update about strike action which the members of the Maritime Union of New Zealand (MUNZ) intend taking at Lyttelton Port.

Unfortunately the discussions LPC had with the Union Thursday 22nd December have not resulted in progress towards a settlement.

We have received another strike notice from MUNZ. This is for the weekend of Saturday 7 January and Sunday 8 January.

As you are aware, MUNZ has already issued a strike notice for the weekend of 31 December/1 January.

Contingency plans are in place to manage container shipping over the two weekends when strikes will occur and, as we have previously advised, no other Lyttelton Port services will be affected by the strike action.

We are disappointed to receive the strike notices, as LPC remains committed to negotiation and potential settlement.

We appreciate your patience and ongoing support during this time. We will continue to keep you updated.

 

dave November 23, 2016 No Comments

Centreport container terminal appears munted

A week after a 7.8 magnitude earthquake hit New Zealand, CentrePort has resumed most operations and is focussed on minimising disruption to its customers.

Chief Executive Derek Nind says significant progress has been made across the Port and the team has worked diligently to bring essential services online in a safe and planned way.

“We have moved from a situation six days ago when we had no water, no electricity, no phone lines and no email, to the current position where we have large areas of the Port up and running. Engineering inspections were needed everywhere to make the Port safe, and they are ongoing. We had to review all operations and processes in light of the earthquake.

“Safety is our number one priority, and the reality is the seismic engineering inspections take time.

“We understand the importance of the Port to the regional economy, and are committed to resuming operations as soon as practicable.

“It’s important to note all the work carried out in the last week has been done amid continued aftershocks, adverse weather and King tides. We’re also operating in an environment where we’ve been advised there is likelihood of another major earthquake.”

Immediately after the impact of the earthquake, emergency generators were activated to protect refrigerated containers. Within 24 hours, the ferry link between Wellington and Picton was re-established. Within 48 hours the first commercial vessel unloaded cargo at the Port. And within 72 hours a rail link was reopened to begin moving cargo out of the Port.

Five navy ships supporting earthquake efforts at Kaikoura (HMNZS Te Kaha, HMNZS Endeavour, USS Sampson, HMAS Darwin and HMCS Vancouver) called at Wellington Harbour today, while a cargo ship delivered 500 cars to the Port.

Tomorrow (Monday) will see the inaugural visit of the Pacific Aria cruise ship to the Capital. Logs and more commercial ships will begin arriving later in the week.

CentrePort has implemented alternative ways of working. Some staff have been unable to work because of the earthquake, others have been deployed to different roles and we’re looking at possible employment opportunities at other ports.

There is much work to be done, particularly in our container shipping operation, which remains suspended. Potential solutions may mean the Port has to work differently in the short, medium and long term.

Damage to the Port is more extensive than during the 2013 Seddon earthquakes. Many buildings remain off limits, with staff working in back-up locations across the Port and outside the CBD.

CentrePort has welcomed the Government’s technical investigation into the performance of several modern buildings, including Statistics House, which sustained damage to the first and second floors in the North West corner of the building.

Mr Nind says he is optimistic about the future of the Port.  “We’ve come a long way since Monday, thanks to our staff, suppliers and customers, who are pulling out all the stops to reopen the Port, and Wellington, for business. I’ve said it many times over the last few days, and I’ll say it again – I’m incredibly grateful for the hard work being done.

“We’re working on options for getting containers moving through the Port, and finding alternative space for our staff. It’s going to be some time before we return to ‘normal’, but we’re already enabling much-needed economic activity in Wellington.

Wellington is open for business and we are continuing to make great progress.”

dave November 18, 2016 No Comments

Post earthquake update

Rail

  • No Rail services are operating in the South Island north of Christchurch.  Rail services south and west of Christchurch are normal.

Sea

  • All shipping lines, both domestic (Pacifica) and international, are being incredibly supportive to provide all the container slot capacity we need.

  • We are working with other parties to introduce additional vessel capacity, including northbound Chc to Trg/Akl.

  • All shipping lines are also pitching in to supply containers far in excess of the numbers normally available for domestic freight.  This comes at a huge cost to an industry that has struggled somewhat in the post GFC environment, and we are most grateful for their support at this time.

  • We are working with other parties on a longer term solution to the container supply issue, and this will most likely involve round tripping most of any additional fleet.  This carries cost that will need to be recovered but that is a conversation for another day.

  • Unfortunately Centreport’s (Wlg) container terminal has sustained a lot of damage so do not expect any containers to move to/from Wellington by sea.  Talk to us about providing a rail alternative within the North Island for containers to/from Wellington.

Service – given the extreme pressure on my team trying to keep a large amount of this country’s freight task moving, I think it is important to have a realistic expectation of the service levels that are achievable.

  • As shipping capacity fills rapidly at present, your first choice of vessel may not be available, or we may have to roll cargo to the next available vessel without consultation.

  • Door to door pick up and delivery services are under pressure in Auckland, and we expect worse to come at the Christchurch end.  We will endeavour to deliver freight in a timely manner but please expect bottlenecks and delays.

  • We will not be able to process requests for cut off extensions.

  • We can not process any last minute requests.

  • Please give us as much notice of any service requirement – at least 48 hrs but preferably plan at least a week ahead.

dave November 16, 2016 No Comments

NZTA advisory – SI routes

The following is a notification from NZTA:

Following Monday’s earthquake and the closure of State Highway 1 because of slips and damage to the highway, many operators are asking about freight vehicle access through Lewis Pass (State Highway 7).

To help with these queries, the following vehicles can travel on SH7:
•       All permitted 50MAX vehicles
•       All vehicles that are HPMV-permitted for travel on State Highway 1
•       Area overweight-permitted vehicles carrying machinery

These vehicles must travel on SH7 to Springs Junction, on SH65 to Murchison and SH6 to Nelson or turn off at Kawatiri onto SH63 to Renwick, onto SH6 and into Rapaura Road (SH62) to join SH1 to Picton at Spring Creek. Freight vehicles are asked to not travel via SH6 through Woodbourne and into Blenheim to join SH1.

The NZ Transport Agency has put in place a number of speed restrictions and restricted access to single-lane across some bridges to enable the route to be opened up to full HPMV following the earthquake and closure of SH1. It is critical that everyone observes the various traffic management restrictions in place.

With higher volumes of traffic and route restrictions on SH7, we are asking everyone to take extra care, be patient and courteous when travelling along the route, and allow extra time for their journey. Average journey times between Christchurch and Picton are currently expected to take seven and a half hours.

We are currently working on the logistics of over-dimension vehicle use of SH7 and will ensure we keep you updated with any further changes.

If you have any specific queries regarding route access, please contact the Permitting team on 0800 699 000 or email applyhpmv@nzta.govt.nz.

dave November 16, 2016 No Comments

NZTA media release

NZ Transport Agency contractors resumed work early this morning to assess the safety of key South Island state highway routes, clear slips and safely re-open roads as soon as conditions allow.

Controlled access for local residents and emergency services was restored yesterday on SH1 south from Seddon to Ward, and north from Cheviot to Goose Bay.

Transport Agency Highways Manager Neil Walker says work today will remain squarely focussed on restoring access to communities which have been cut off by damage from Monday’s quake and establishing safe and reliable alternative routes.

 “We’re back on site this morning working urgently with Kaikoura District Council contractors to open the inland road (route 70) between Culverden and Kaikoura. Crews have been working from both ends since Monday to clear slips and assess the road and structures for damage, including aerial bridge inspections being conducted by helicopter. The route is now open to all vehicles from Culverden to Waiau, and crews are doing everything possible to have the route safely open through to Kaikoura by the weekend.

“The alternative inland state highway route from Picton to Christchurch, via Murchison and the Lewis Pass has been open since late Monday afternoon. This will likely be the main state highway route from Christchurch to Picton for several months, given the amount of work which will be required to clear the large slips which have closed SH1.”

With the closure of SH1, Mr Walker says the Lewis Pass route will be carrying higher volumes of traffic, and people are urged to allow extra time for their journeys. People should allow an additional 90 minutes to two hours for the journey between Christchurch and Picton on the Lewis Pass route – average journey times between Christchurch and Picton are currently expected to take seven and a half hours. Fuel, food and toilet stops are available along the route at Culverden, Springs Junction and Murchison.

State Highway 7A, giving access to Hanmer Springs from State Highway 7, re-opened at 7am today after being closed overnight due to the risk of further rockfalls.

With continuing aftershocks contributing to the on-going risk of further slips and rockfalls in several parts of the South Island, people are urged to drive with extra caution and comply with all temporary speed restrictions.

The Transport Agency thanks all road users for being patient as many people’s travel plans are disrupted and many people are again managing their homes, work and lives amidst the aftershocks.

People can call 0800 44 44 49 for updates and the Transport Agency’s website and social media accounts will be also updated as more information is available.

Canterbury / Marlborough highway status – 5pm, 15 November 2016 [PDF, 1.8 MB] (map detailing affected routes)

•        http://www.nzta.govt.nz/traffic

South Island updates
•        www.facebook.com/nztasouthisland
•        twitter.com/NZTATotS (Top of the South)
•        Canterbury West Coast Twitter updates

Wellington updates
•        www.facebook.com/nztawgtn/
•        http://ow.ly/osEi306aMzO   (Twitter updates)

Rising sun, merging shipping

Japan’s container shipping heavyweights — Nippon Yusen, Mitsui OSK Lines and Kawasaki Kisen Kaisha — have announced plans to merge into the world’s sixth-largest box line.

rising-sun-merge-shippingReacting to the sector’s ongoing battle against over-capacity and the global economic downturn, the trio’s merger was driven by the aim of “becoming one … so none of us become zero”, says Nippon Yusen president Tadaaki Naito.

According to reports, the combined entity will have a fleet of 256 vessels representing a total capacity of 1.38 million TEU (about 7% of global capacity) and its combined revenue will be $US19 billion.

With all three carriers having reported losses in their interim financial results, the combined benefits of the merger have been estimated at about US$1.1 billion annually.

Due to be formed on July 1 next year and commence operations in April 2018 — pending regulatory approval — the merged entity will be owned 38% by Nippon Yusen and 31% each by the other two partners.

The development continues a wave of consolidation and or collapse in the global container shipping industry, as the sector strives to cut costs and share risk in what has been described as its “worst-ever downturn”.