A.P. Moeller Maersk A/S, the world‘s largest container line, and 14 other shipping companies, have agreed to seek rate increases of $400 per 40-foot box on Asia-United States west coast routes next year as the rebounding global economy revives cargo demand.
Bloomberg reported on Saturday that the planned increase was part of voluntarily guidelines covering talks for contracts generally starting around May 1, the Transpacific Stabililsation Agreement said in a statement on its website on Friday.
The shipping group, which has limited antitrust immunity, also recommended a peak-season surcharge of $400 per box.
Asia-US shipping volumes have surged in the past two quarters and might rise from six per cent to nine per cent next year, the group said, as the economic pick-up stokes US demand for Chinese-made furniture, toys and clothing.
The shipping lines plan to seek higher rates after the global recession hammered trade demand, causing industrywide losses.
According to a statement by the Chairman, TSA, and Chief Executive Officer of Seoul-based Hanjin Shipping Company, Mr. Y. M. Kim, ”Two strong quarters in the transpacific a highly competitive freight market with very thin margins still do not fully offset two years of heavy losses.
”We said last year that we would not seek to recover all our losses in one year,” he added.
Asia-US shipping volumes might rise by 12 per cent this year, the TSA said. Capacity had increased by 19 per cent since November, 2009, the group said, citing AXS Alphaliner data.
In the first three quarters of the year, 15 new and restored services began sailing, including three new operators, it said.
Shipping lines also faced rising costs for labour, container handling, inland transport, and for buying and leasing cargo-boxes amid a global short, the group said.
The appreciation of Asian currencies had also hit shipping lines that charge rates in dollar, it said.
Zimbabwe Extends Deadline on Importation of ‘Over –Aged’ Vehicles
Government has deferred to July next year the implementation of regulations banning the importation of left-hand-drive and light second-hand vehicles over five years old.
The regulations, which were set in September this year, were due to become effective on December 1.
However, motorists, car dealers and transporters have been given a six months reprieve to reflect on the new statutory instrument.
The law requiring all motorists to carry triangle reflectors and fire extinguishers among other devices has also been deferred to the same period.
The regulations also compel motorists to use vehicles that are in good working order to minimise road carnage.
Transport, Communication and Infrastructural Develop-ment Secretary Mr Partson Mbiriri yesterday said Statutory Instrument 154 on Road Traffic (Construction, Equipment and Use) Regulations remained unchanged except for the effective date.
"I have indicated in two meetings that when Statutory Instrument 154 of 2010 was initially discussed within the ministry, our intention had been to give the motoring public as much as 12 months’ notice.
"Regrettably, there were delays in having the Statutory Instrument gazetted resulting in an effective notice period of only three months," said Mr Mbiriri in an interview yesterday.
"Accordingly, it is the ministry’s intention to defer the effective date of the Statutory Instrument by another six months so that the motoring public have reasonable time to relate to the Statutory Instrument. The provisions of the Statutory Instrument shall remain the same in toto," he added.
Mr Mbiriri said the regulations had been served to lawyers in the ministry as well as the Attorney-General’s Office.
"We are not amending anything but merely deferring the effective date," he said.
The regulations set December 2015 as the deadline when left-hand-drive vehicles would no longer be allowed and also ban the importation of vehicles that are more than five years old.
The postponement of the implementation deadline does not affect the December 2015 date set for the total ban.
It is a requirement under the regulations for all vehicles to have triangle reflectors and fire extinguishers.
The Transport Operators’ Association of Zimbabwe and private motorists have, however, protested over the regulations.
They said the implementation of the regulations could sound the death knell for demise of the transport business that used mainly ex-US left-hand driven trucks.
However, Mr Mbiriri said the regulations were promulgated after wide consultation with all stakeholders.
"We will obviously entertain any representation from any stakeholder, but the regulations were as a result of consultation. At the moment we don’t want to raise false hopes," said Mr Mbiriri.
…As Car Importers Threaten to Boycott Mombasa Port
Local car importers have threatened to boycott using the Mombasa port, following the introduction of cash bonds by the Kenya Revenue Authority (KRA).
The new cash bond rule requires every company, licensed by KRA, to handle transit cargo in Kenya, to first execute a CB-8 (transit bond) of 100% of the value of the goods through a registered insurance company.
This means that if it costs you $5,000 to import a car from any destination to Mombasa, you will be required to deposit another $5,000 with the Kenyan insurance companies. The bond introduction is aimed at protecting the Kenya Government from losing revenue in case the transit cargo (car) fails to cross to the final destination.
In case that happens, the clearing firm or the insurance company will be forced to pay the equivalent of the bond covering that particular cargo car/container so that KRA never loses any revenue.
Nelson Tugume, the Uganda Motor Vehicle Importers Association chairman, described the move as "dubious, insensitive and the first disgrace of the East African Community."
"As car importers, we will challenge this unrealistic treatment of the Uganda-bound by KRA," Tugume said in an interview yesterday.
For clearing firms to secure that bond through insurance companies, they have to pay a premium of 2.5% per annum and surrender collateral (security) with insurance companies.
"The Kenya Revenue Authority is applying a double cost on Ugandan importers by forcing them to pay duty (cash bond) in Kenya, yet they are paying bond fees to clearing agents who executed transit bonds with the same government. Is this facilitation of regional trade which leaders are talking about?" Tugume wondered.
It is not clear who would claim the cash bond, how long the refund would take or how the importer would pay taxes in Uganda. "How can a bank fund you when you cannot be precise with time and profits?
"To know how dubious this practice is, it was not even gazetted. They use it to extort money from agents/importers by holding entries until you "co-operate."
Tugume also wondered how KRA expects importers to execute cash bonds when they do not have money to clear taxes.
"That is why we bring in cars, which can stay in the bonds for a year as we look for money for taxes," he noted.
He pointed out that there was a risk of the insurance agents disappearing with the money.
"They (agents) can run away because many Kenyans have ripped off many Ugandans before. That is one risk. We are seriously considering using to Dar es Salaam port," he indicated.
He disclosed that the new rule was causing commotion at the port. This, he added, had bred fertile grounds for corruption where importers were being asked for Ksh10, 000 per entry to avoid the cash bond procedure.
Uganda-bound cargo makes 75% of the transit goods through Mombasa port.
Piracy Threatens to Increase Price of Imports Into East Africa
East Africa’s imported goods could cost more if the UN declares the Western India Ocean region a war-risk zone in response to piracy attacks that have affected more than 40 vessels in the last two months.
If the UN raises the level of alert it would require shipping lines to take a war-risk cover for goods and vessels, costs that would be passed on to the consumers.
AON Risk Services says ransom insurance is now 10 times higher than it was two years ago with a premium of $30,000 (Sh240,000) required to insure a vessel for a sum of $3 million on one trip.
The high premiums are in response to a two-fold increase in the average ransom demanded by Somali pirates from between $0.5 million and $2 million in 2008 to between $1 million and $4 million.
Up to $50 million is now being paid to sea bandits as ransom.
Experts say if the UN increased alert level on the region covering Somalia, Kenya, Tanzania and Mozambique, it would raise the cost of freight into the region because crew wages and other shipping costs would be affected.
If the attacks persist, the international naval force protecting vessels would be overstretched and force the UN to declare the region as ‘War-risk operation zone’ or ‘Dangerous waters’ to sail. "Once an area has been declared as ‘Dangerous waters’ or ‘a war-risk operation zone’, most shipping lines may pull out," said Kenya Ships Agents Association (KSAA) executive officer Fredrick Wahutu.
Experts estimate that the region’s shipping is absorbing an extra $200m (Sh16.2 billion) due to the piracy at the Gulf of Aden.
Figures from the Seafarers Assistance Programme (SAP) in Mombasa show shippers are paying an additional of $95 for every 20-foot container and an extra $15 for every tonne of oil and bulk grain cargo imported.
Shippers will also be forced to pay more for fuel when they take longer routes to avoid the bandits.
Currently, vessels heading to Mumbai from Mombasa take 18 days up from 12 days, while those coming from Dubai are taking 12 days up from seven, sailing away from the attackers’ presence.
SAP co-ordinator Andrew Mwangura said the increased presence of international monitors at the Red Sea and the Gulf of Eden, pirates have been forced to shift the attacks to the east of the Western Indian Ocean waters.
"Most vessels that have been attacked in the last three months are either heading to the port of Mombasa or leaving to Dar es Salaam or Maputo. Such continual attacks are sending the wrong signal to ocean carriers," he said.
Kenya has been in the forefront in opposing calls from the International Workers Union for the UN to declare the Gulf of Aden a war zone, saying this would make Mombasa port more expensive to call.
Kenyan economy has continued to bear the costs of detaining and prosecuting pirates.
Sri Lanka Opens New Port At Hambantota Magampura
Sri Lanka’s new £226 million port on the island’s south coast has been officially opened by President Mahinda Rakapaksa, followed by the ceremonial arrival of a traditional yacht, the Pradeepa 2 and then Sri Lanka’s passenger ship JETLINER. Large crowds had gathered on the waterfront and quaysides to witness the event.
Operations at the port became possible in August this year with completion of Phase One of the project, well ahead of the scheduled Phase 2 completion set for April 2011. The port forms part of the country’s strategy to make Sri Lanka, now free of a three-decade long terrorist war against the Tamil Tigers, an import and export, marine services and transhipment hub of the Indian Ocean and the Indian sub-continent. The new port lies within 10 n.miles of the world’s most important trade route between Europe and Asia, along which more than 200 ships pass each day.
Hambantota is designed to handle vessels of up to 100,000 deadweight tons and includes provision for a high quality passenger terminal, cargo handling, warehousing, bunkering, provisioning, maintenance and repair, medical supplies and customs clearing facilities. Adjacent to the port is 2,000 hectares of land to be developed as an industrial development zone (IDZ), with 65 domestic and international investor businesses having already expressed interest. Once Phase 2 is completed in April 2011 the new port should gear up to provide 40% of government income by 2020 and 10,000 direct and over 60,000 indirect new job opportunities.
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