Maritime News

Hemas buys Mercantile Shipping stakes

Hiran H. SENEWIRATNE

Hemas Group has bought a stake in Mercantile Shipping Company ship owner and operator as part of a strategic thrust into the shipping business, its sources said.

According to Hemas Holdings sources stock exchange filing that it invested in a 17 per cent stake in Mercantile Shipping Co., which represents 426,223 ordinary shares on offer by the liquidators of Mercantile Credit Ltd., which owned the shares. However, the amount they invested was not revealed.

In sequence to the transaction the Mercantile Shipping has become a strategic partner of making our aim a reality in developing our shipping business," officials told the Daily News Business."

The Mercantile Shipping is the largest ship owner and operator in Sri Lanka with a fleet now consisting of six vessels ranging in size between 3,000 and 17,400 tonnes deadweight which are operated throughout the Indian Ocean. The Company is a German-Sri Lankan joint venture in which Reederi Eugen Friedrich of Bremen and D.E.G. of Koln have stakes.

According to the Mercantile Shipping the two companies had held talks to develop a partnership in shipping, which established as a ship owner and being in ship management with lot of international connections.

Hemas has a strong interest in expanding the maritime sector. And also the Mercantile Shipping Company is expanding its fleet and has two new buildings. Two vessels of 7,800 tonnes DWT are scheduled to be delivered by the end of next year.

Shipping industry boost mapped out

Taiwan's aviation and shipping industries expect to receive a huge economic boost from closer ties with China once agreements on a range of improved economic links are finalised as expected Tuesday.

Chen Yunlin, a senior Chinese negotiator, arrived in Taipei Monday for historic talks with his Taiwanese counterpart Chiang Pin-kung to map out the expansion of direct air links and establishment of direct shipping services.

The agreements are expected to see the expansion of weekend charter flights to daily services, the launch of direct cargo services as well as the improved shipping links.

Late Monday, the two sides announced they had agreed to triple direct passenger flights to 108 per week and expand services to a total of 21 Chinese cities. Meanwhile, Yang Ming Marine estimated direct shipping links will cut 800 million to one billion Taiwan dollars (24.3-30.5 million US) in costs a year.

Currently, most Taiwanese ships must traverse Japanese waters before heading to China.

A company spokesman said the journey time would be reduced by about 15 percent on average, with the improved links expected to generate 100 billion Taiwan dollars in new business for the sector over the next three to five years.

Since the early 1990s, Taiwanese investors have poured an estimated 150 billion US dollars into China, which is the biggest market for Taiwanese exporters, accounting for 28 percent of total exports in the first half of this year. AFP

Cargo terminal deal finalised

Dubai Port World (DP World) has agreed on a deal to run the cargo terminal in the Algerian port Djendjen, the port's managing director said, the Algerian news agency APS reported.

A joint Algerian-Emirati company will be set up in the first quarter of 2009 to run the port, Mohamed Atmane told APS.

The new company will be in charge of the terminal as well as all shipment activities, he added.

The deal will see as many as two million container ships pass through the port each year and will create 1,500 jobs.

Djendjen handled 1,760,000 tonnes of cargo from January to October this year, compared to 1,222,000 tonnes for the same period in 2007, Atmane said. The port, which opened in 1993, is the most commercially important in Algeria. AFP

Shipping industry in straits

Ananda WEDAARACHCHI

The Sri Lanka shipping industry is expected to be affected in view of the global financial crisis.

The three main global shipping routes, Asia Europe, Trans Atlantic and Trans Pacific routes are being affected by removing the ships from the routes, said a spokesman of the shipping sector. He said that a lot of cargo are idling in the main port due to the non-releasing of the funds for letter of credits (LCs) by few international banks.

This has affected the sea cargo transportation and at present ship operators are removing their ships from the main sea routes specially in the Far East to the Europe route, he said.

"The ship owners who hire their ships to ship operators are also being affected. Chatering of ships also had collapsed in the world and 1500 TU - 3000 TU group ships are being badly affected because of this, he said.

Under the present global financial crisis, the production processes are being hampered and raw material purchases are also being affected. Sri Lanka is also gradually facing to same situation, he said.

Fall in sea freight cost- a relief for exporters

This year's sharp fall in sea freight costs is a mixed blessing for developing countries, making it cheaper to ship their exports but signalling waning demand for their goods, a United Nations agency said on Tuesday.

And the fall in demand for shipping from recent record levels spells trouble to countries like China, South Korea and Vietnam that have built up shipbuilding industries, the U.N. Conference on Trade and Development (UNCTAD) said.

Demand for shipping hit a record high earlier this year in a global boom which saw prices of food and fuel soar. The financial crisis has punctured that boom and demand is down.

The Baltic Exchange Dry Index which measures the cost of moving raw materials by sea, has plummeted more than 11-fold to an eight-year low since peaking in May this year at 11,793, UNCTAD said in its 2008 Review of Maritime Transport.

The index, a composite of shipping prices for various dry bulk products such as iron ore, grain, and coal, closed on Monday at 827, a level last seen in February 1999.

"This shows that the unfolding financial crisis has spread to international trade with negative implications for developing countries, especially those dependent on commodities," UNCTAD said.

Economists point out that freight charges can be a more significant barrier to trade than tariffs are, so a fall in shipping costs should be good news for exporters, especially as bulk commodities are more sensitive to transport costs.

UNCTAD noted that both exporters and importers of food and other commodities were benefiting from lower freight costs, which also ease inflationary pressures.

But a rapidly falling index also reflects reduced demand for shipping services and the commodities they transport, negatively affecting many developing countries, it said.

International seaborne trade rose 4.8 percent in 2007 to surpass a record 8 billion tonnes in 2007, while demand for shipping services jumped 4.7 percent to 32.93 trillion tonne-miles.

And world container throughput rose 11.7 percent to 385 million twenty-foot equivalent units (TEU) - a measure of containerised cargo equal to a standard 20-foot container.

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