- Container Shipping Firms May Earn $143b This Year
Notwithstanding the concerns of weak trade growth and fleet oversupply in the container shipping market, the firms’ revenue may clinch about $143 billion, going by the projections of a global shipping consultancy firm, Drewry.
Drewry, in its latest report said a gradual market recovery is now expected in the shipping business as rates assume an upward swing.
Specifically, Drewry estimates that revenue for 2016 may reach $143 billion, although this means a negative trend when compared to $218 billion earned in 2012.
Despite the projected earnings, Drewry still expects container carriers to record a collective operating loss of $5 billion in 2016.
“We forecast industry profitability to recover next year, thanks to improving freight rates and slightly higher cargo volumes, and so record a modest operating profit of $2.5 billion in 2017,” it said.
While average freight rates are expected to improve next year, this will follow several years of negative returns and will still leave pricing well below the average for 2015, according to the shipping consultancy.
Meanwhile, the report said a key unknown remains carrier commercial behaviour has proven unpredictable and counterintuitive, while fuel prices are also on the increase and carriers are extremely wary of costs.
Drewry said that this may support higher freight rates via the bunker surcharge mechanism, but it also increases operational costs.
“The fact that the order book is at a virtual standstill is a major positive as is rapidly increased scrapping. But even so, the next two years will still be very challenging on the supply side with annual fleet growth of between 5 per cent and 6 per cent and many more ultra large container vessels (ULCVs) to be delivered,” Drewry said.
It noted that privately-owned container carriers could risk losing shippers’ trust if they do not provide any data on their level of indebtedness and balance sheet strength.
The recent failure of South Korean carrier Hanjin Shipping has exposed the high level of financial risk that exists and created renewed demand for financial transparency.
While Hanjin’s financial position was at the extreme edges and its demise is not expected to create a domino effect, a number of major carriers are still struggling and the risk of another following the same path as the Korean line cannot be discounted, Drewry said.
Drewry’s Z-score carrier financial stress index sunk to its lowest ever point following the first-half 2016 results. The decline in the Z-score index has coincided with the heavy reduction in container freight rates that dropped to historical lows in the second-quarter.
“As freight rates staged something of a recovery in third-quarter we expect to see some uptick to the Z-score when the third-quarter 2016 results are published, while the removal of Hanjin from the sample will also benefit the average score. Nonetheless, carriers will almost certainly continue to reside in the so-called ‘distress zone’,” it stated.
Based on the latest available financial reports Drewry’s Z-score table shows that only two, namely, A.P. Moller-Maersk and OOIL, of the 14 selected companies scored high enough to make it to the cautionary ‘grey zone’, with the remainder struggling in the ‘distress zone’.
With shippers expected to pay much closer attention to the financial risks when selecting carriers in future, carriers themselves will need to be sure of the financial health of their alliance and service partners, or potentially risk losing customers.
However, total annual operating costs in the shipping industry fell by an average of 2.4 per cent in 2015, compared with the 0.8 per cent average fall in costs recorded for 2014, representing the fourth successive year that the operating costs were in decline, according to shipping consultant Moore Stephens.
All categories of expenditure were down for the previous 12-month period. This suggests continued pragmatic management of costs by ship owners and operators, as well as a reduction in active trading for some owners as a result of the prolonged worldwide economic downturn.
The total operating costs for the tanker, bulker and container ship sectors were all down in 2015. On a year-on-year basis, the tanker index was down by 4 points, or 2.2 per cent, while the bulker index fell by 6 points, or 3.6 per cent. The container ship index, meanwhile, was also down by 6 points, or 3.7 per cent.
There was a 1.2 per cent overall average fall in 2015 crew costs, compared to the 2014 figure. Tankers overall experienced a fall in crew costs of 1.3 per cent on average.
All categories of tankers reported a reduction in crew costs for 2015 with the exception of Panamaxes and VLCCs, which recorded increases of 1.4 per cent and 1.2 per cent, respectively. The most significant reduction in tanker crew costs for 2015 was the 3.6 per cent recorded by product trankers.
The global shipping consultancy firm Drewry in its latest report said a gradual market recovery is now expected in the shipping business are rate assume an upward swing.
FG Introduces NEXIT Portal for Npower Batch A and B Beneficiaries
The Federal Government has introduced a new online portal for exited Npower beneficiaries of batch A and B.
According to the Minister for Humanitarian Affairs, Sadiya Farouq, the portal was launched in collaboration with the Central Bank of Nigeria (CBN) to enable exited Npower beneficiaries apply for available federal government empowerment options.
This was disclosed in a statement issued by Nneka Anibeze, the media aide to the minister, on Friday.
The ministry said the NEXIT portal will be used to determine the suitability of exited beneficiaries for various CBN-affiliated programmes.
She explained that selection will be based on the conditions and criteria set by the apex bank.
Ms Farouq, therefore, urged interested exited Npower beneficiaries to log on to the NEXIT portal and provide the required additional information for possible placements into central bank’s intervention options.
“The Minister expressed her deep appreciation to the CBN Governor Mr Godwin Emefiele CON for his support adding that the Ministry of Humanitarian Affairs remained committed to the vision of Mr President to lift 100 million Nigerians out of poverty in the next 10 years.
“Minister Umar Farouq pledged the Ministry’s willingness to collaborate with relevant agencies of government and other stakeholders towards the realization of that vision and congratulated the exited beneficiaries while wishing them well in their future endeavours.
“The Federal Government of Nigeria is very proud of the milestones you have achieved during your period of service to the nation. As we prepare to exit into prospective endeavours.”
Ellah Lakes Partner Ondo State Government to Develop Oil Palm, Cassava in the State
The management of Ellah Lakes Plc said it has partnered with Ondo State Government to develop and manage 5000 hectares of land for the purpose of cultivating oil palm and cassava in Ondo State, Nigeria.
The company stated in a statement signed by Kenechi Ezezika, Company Secretary, Ellah Lakes Plc.
Speaking on the development, the Chief Executive Officer, Chuka Mordi said: “This is a significant landmark for the Company in the development of our landbank, & we are very excited to be working with ODSG.
“I am delighted that we are fulfilling our strategic objective of progressively expanding our land bank & diversifying our portfolio and production base. I am also glad to say that the intercropping programme in Edo State is progressing steadily & we have achieved our first milestone of 100Hectares of Cassava with the participation of personnel of the Agricultural Development Program (ADP), in Edo State”.
The Special Adviser on Development & Investment to the Ondo State Governor/ Chief Executive Officer of Ondo State Development and Investment Promotion Agency (ONDIPA), Mr. Akinboye Oyewumi, who also spoke on the development said: “We are pleased with this collaboration with Ellah Lakes Plc., and we look forward to a mutually beneficial, valuable and fruitful venture.”
Unilever Nigeria Appoints Mr Jaime Aguilera as a Non-Executive Director
Unilever Nigeria Plc announced it has appointed Mr. Jaime Aguilera as a Non-Executive Director of the company effective from January 2021.
The company stated in a statement filed with the Nigerian Stock Exchange.
Mr Jaime Aguilera worked with Coca-cola, Nestle and Procter & Gamble before joining Unilever as Executive Vice President Unilever Eastern Europe in September 2016.
Therefore, his experience spans from Europe, Americas and Asia.
His key expertise areas are “in Sales & Marketing and he has lead teams in Spain, Brazil, South Eastern Europe, Middle East, Mexico and Global teams.
“In 2009, he joined Unilever Spain as EVP & Chairman and then moved to his current role as Unilever Executive Vice President Africa, leading the Unilever business in Africa. Jaime is of Spanish origin and is an alumnus of the Universidad Pontificia de Comillas- ICADE. Jaime majored in Economic Sciences, Management & Business Administration.”
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