Felistowe Dockers

Felistowe Dockers

Wednesday, 7 December 2016

CHRISTMAS VOLUNTEER EVENT AT LANGUARD NATURE RESERVE


Employee Environmental Group volunteers required for 15th December 2016



CHRISTMAS VOLUNTEER EVENT AT LANGUARD NATURE RESERVE
Date: 15th December
Time:  12.30-14.00


Do you have an hour and a half to spare to volunteer for the local Nature Reserve? The task is to clear some scrub from the reserve.


Free transport there and back is provided, as is all equipment and friendly banter.


Don’t forget your Christmas hat or jumper! 
Would you like to join us? Anyone can come along, family and friends included.
Contact Jess on 604727 or at  briggsj@fdrc.co.uk






Hanjin Shipping collapse may be the beginning of the end for profitable global trade


David Dodwell


Hanjin Sooho may mean nothing to you or I, but for perhaps thousands of Chinese exporters, the name is currently the source of despair, perhaps panic. As many of us talk abstractly about faltering global trade growth, Hanjin Sooho is the hard distressing reality of the challenge facing global trade for many traders here or in China.
Hanjin Sooho is under arrest in Shanghai port – one of 20 or more vessels trapped by the collapse in August of South Korea’s Hanjin Shipping, at least 10 of them in China alone. Hanjin was the world’s seventh largest shipping line, and the first shipping collapse in 30 years. As Hanjin fell into bankruptcy, so its ships – and the cargos in them – have been frozen wherever they sat. As one expert shipper noted: “Ships have been seized. Some are staying out of port to avoid being seized. Some are just puttering around, loaded or unloaded.”
Industry experts say more than 500,000 containers are trapped on these ships, with cargos on board worth more than US$14 billion. Since any one container can hold consignments from dozens of exporters, the dreadful reality is that thousands of the region’s companies have had goods helplessly trapped for almost three months, with no prospect of early release.
Among extreme casualties are likely to be Samsung – which used Hanjin to transport 40 per cent of its exports – and LG with 20 per cent. Even DHL is understood to have 500 containers-worth of consignments stuck on Hanjin ships in different places across the world. Samsung is supposed to be hastily air freighting replacement smartphones to key export markets in efforts to avoid missing the critically important Christmas shopping season. Thousands of smaller exporters must be doing the same, at huge cost, and with little chance of compensation.
Many in the shipping industry have been warning of such a disaster since the global financial market crash in 2008. As global trade growth has faltered (growth is spluttering at about 2 per cent a year, compared with double digit growth for the previous three decades), so the shipping giants like Maersk have been adding massively to capacity, and introducing larger and larger vessels. As capacity growth has continued at around 6 per cent a year, with the global container fleet four times larger today than it was in 2000, so it is estimated that we today have a 30 per cent surplus capacity on the world’s main shipping routes.
The combination of extra capacity and stagnant cargo growth has led to a ruthless price war that has meant wonderfully cheap freight rates for exporters, but has stripped the shipping lines of all profit. Freight rates today are around half what they were two years ago on many of the main shipping routes worldwide. Even Maersk, the world’s biggest shipping line with perhaps 15 per cent of global capacity, lost US$116 million in the third quarter of this year, and predicts an overall loss for the year. In China, Cosco reported losses of US$1.1 billion in the first quarter of this year. When Hanjin went belly up in August, it had debts of more than US$5 billion and was reported to be losing US$2 million a day.
Analysts are predicting more mergers, consolidation and bankruptcies ahead. The lines most at risk are said to be Hamburg Sud, Hong Kong’s OOCL, Israel’s Zim, and HMM, Korea’s second largest shipping line after Hanjin. To stave off immediate crisis, Japan’s three leading container shipping lines merged last month. The Taiwan government has just agreed a US$2 billion relief package for its shipping lines – mainly Evergreen and Yang Ming – to provide some breathing space.
But absent a big surge in international trade, no-one expects any improvement any time soon. In fact, life is expected to get significantly worse. As ship orders have fallen this year to a record low of just over 50 (against 260 last year and a peak of 1,157 in 1997), so shipbuilders will between now and the end of 2017 put another 114 ships into the market. Giants like Maersk, with new super-large 10,000 TEU container ships coming on line, are spilling these onto routes that have historically only generated enough cargo for smaller vessels, aggravating capacity surpluses and ruining freight rates. As one shipping expert noted: “Maersk is crushing everyone – including itself.”
Industry experts have inclined to call Hanjin’s collapse a “black swan” event, but given the very real likelihood of further collapses in the near future, this swan looks very much more white than black.
Hanjin’s collapse has also presented a grave warning to companies that rely on complex international just-in-time supply chains
And the crisis cascades into the massive ship-building industries of China and Korea (Hyundai Heavy Industries laid off 10 per cent of its ship-building workforce earlier this month), and into the viability of leading ports. China, as home to seven of the world’s top 10 ports, faces a massive challenge, with an overcapacity estimated at more than 50 million TEUs.
Hanjin’s collapse has also presented a grave warning to companies that rely on complex international just-in-time supply chains. Lucrative export orders to the US or Europe suddenly look much less lucrative if consignments get trapped for months in a container on board an arrested container ship. They can suddenly become loss making if replacements have to be rushed by air to make up for the consignments trapped somewhere at sea. A Samsung might have the financial strength to bear such a loss, but many of the smaller exporters with trapped consignments do not. Companies are now talking of building more “buffer inventory” to protect against such dangers, but these can add significantly to costs.
While this might all be music to the ears of Donald Trump, who is calling on US companies to abandon their long global supply chains, and bring production home, for most multinationals and so many of the companies in Hong Kong and China that rely for their livelihoods on boisterous global trade, the picture emerging from the Hanjin crash could hardly be bleaker. Our shipping lines may be at the hard end of the challenge facing globally-distributed manufacturing and trade, but in a city like Hong Kong many thousands in our trading economy face lean times.
David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view

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