News – Page 8 – HI-LANDER GROUP

17 November, 2022

Two liners seek listings in Hong Kong

Sam Chambers November 9, 2022

The container party might be showing signs of fizzling out, but that is not stopping a number of Asian liners seeking listings.

TS Group, the parent company of TS Lines, has filed an application for a Hong Kong stock exchange listing, as has Chinese freight forwarder LC Logistics, parent of BAL Container Line.

TS Lines has Taiwanese origins, but is incorporated in Hong Kong. It currently operates 49 ships of 106,203 teu, making it the 19th largest operator worldwide, according to Alphaliner.

BAL Container Line, meanwhile, has roots in Qingdao. It has four ships in its fleet at the moment but is due to expand significantly in 2025 when it takes delivery of two 14,700 teu ships from Jiangnan Shipyard.

To the north of Hong Kong, another Chinese stock exchange is also gearing up to welcome a shipping line to its ranks. Ningbo Ocean Shipping Co (NBOSCO), Ningbo-Zhoushan Port Group’s shipping subsidiary, will list on the Shanghai Stock Exchange shortly, using cash raised to expand its fleet.

NBOSCO’s owned fleet today comprises 28 boxships, six multipurpose vessels, seven bulk carriers and one general cargo ship, as well as 30 chartered containerships.

News

17 November, 2022

Can ‘Made in Vietnam’ replace ‘Made in China’?

By Sim Tze WeiAssociate Foreign News Editor, Lianhe Zaobao

Superior EMS’s factory in the Vietnam-Singapore Industrial Park in Hai Duong province. It is using small modular machinery to automate its production lines. (SPH Media)

Headlines such as “Vietnam’s exports overtake Shenzhen” and “Is Vietnam the next China?” have drawn attention in China’s media and online forums, reflecting anxiety that Vietnam might usurp China’s position as the world’s factory.

Western media, meanwhile, have focused on how China’s zero-Covid policy has caused orders to be diverted to Vietnam. In a June report by German newspaper Frankfurter Allgemeine Zeitung with the eye-catching headline “Goodbye China, Hello Vietnam”, one manufacturer said, “Vietnam seems to be a better and cheaper China.”

In the second quarter of 2022, Vietnam’s exports rose 21% year-on-year and economic growth hit an 11-year high of 7.7%. The country has emerged from last year’s slump, when lockdowns in several cities – including the capital Hanoi – caused GDP to shrink 6.2% in the third quarter.

With its land border with China and a coastline of over 3,000 km, Vietnam has a highly strategic location and an advantage in maritime logistics.

After Vietnam’s government pushed mass vaccination in a bid to coexist with the virus, the full resumption of factory operations and border reopening enabled a rapid rebound. The contrast with China’s zero-Covid stance propelled Vietnam into the spotlight, with some international media hailing it as the new “Super Factory”.

Top choice for a ‘China+1’ strategy

Business owners and executives of foreign enterprises in Vietnam told Lianhe Zaobao that a few years before the pandemic, Vietnam was already emerging as a key beneficiary of the China-US trade tensions that began in late 2018. Many foreign companies started to mitigate supply chain risks by setting up manufacturing operations in nearby Vietnam, or diverting orders there from China.

With its land border with China and a coastline of over 3,000 km, Vietnam has a highly strategic location and an advantage in maritime logistics. Other factors making it attractive for a “China+1” strategy are cheap labour, young demographics, favourable policies, free trade agreements with several countries, and friendly relations with both China and the US.

Superior EMS, from Hong Kong, is one foreign manufacturer that set up in Vietnam to spread its risk. Director Charles Wong met Lianhe Zaobao at the company’s factory in Hai Duong province, about one-and-a-half hour’s drive from Hanoi. With Superior having invested in China for over two decades, the similarities between China’s and Vietnam’s systems were one reason to enter the latter. “It’s easier for us to adapt,” he said.

Superior’s main business is toy production and production line automation. It has two factories in the southern Chinese city of Dongguan, and a plant in the Vietnam-Singapore Industrial Park (VSIP) in Hai Duong, operating since March 2020. It makes high-end technology products in China, and simpler products in Vietnam.

Superior’s decision to set up in Vietnam was customer-driven, Wong said. Many clients started shifting their operational focus to Southeast Asia three to four years ago, and set new requirements for supply chain security.

“They’re worried that problems in one place might cause a breakdown in the supply chain,” he said. “If suppliers have factories in different countries, supply would be more secure.”

… for March alone, the gap was US$34.62 billion, with Vietnam’s exports almost twice that of Shenzhen’s.

Gaining from China’s zero-Covid policy

The China-US trade war triggered the first recent wave of shifts. Now the world has noted how China’s zero-Covid policy has led to prolonged production shutdowns. Once businesses – both foreign and Chinese – decide to relocate, will Vietnam benefit from a second “China +1” wave?

According to Vietnam News Agency, the country received US$7.7 billion in foreign direct investment in the first five months of 2022, up 7.8% year-on-year. For the first quarter of 2022, Vietnam’s total exports exceeded Shenzhen’s by US$27.75 billion; for March alone, the gap was US$34.62 billion, with Vietnam’s exports almost twice that of Shenzhen’s.

Singapore’s Sembcorp Development has been involved in managing the Vietnam-Singapore Industrial Parks (VSIPs) since the first was launched in 1996, with 10 across Vietnam now.

Kelvin Teo, CEO of Sembcorp Development and co-chairman of the VSIP Group, said that as of 31 December 2021, the VSIPs have attracted 850 companies with total investment capital of US$15.6 billion. From 2017 to 2021, the parks saw 104 entrants and new investments totalling US$400 million.

Teo said that it was hard to pinpoint flows from mainland China, as there are different possible channels: via Hong Kong; through origin countries of mainland-based foreign enterprises; or through joint ventures with Vietnamese enterprises. “But we can assume that the Chinese are part of the increase in investments into Vietnam over the years,” he shared.

While the VSIP has been receiving enquiries about investing in Vietnam, he is “not able to ascertain if these are due to the Covid-19 situation in China”.

Chien Chih Ming, chair of the Taiwanese Chamber of Commerce in Vietnam, noted an increase in enquiries from Taiwanese firms looking to invest in Vietnam – including some based in mainland China. He said, “If the factory stops work completely because of the pandemic, and the boss has to keep paying salaries, interest and loan instalments, which company can survive this?”

The interview with Chien took place in Dong Nai’s industrial zone, about one-and-a-half hour’s drive from Ho Chi Minh City, where the construction firm he set up over 10 years ago is headquartered. In the early days, both Dong Nai and Hai Duong drew traditional industries such as textiles and shoe-making companies, many relocating from China.

About four to five years ago, a wave of companies – led by electronics manufacturers – moved operations from China to Vietnam to diversify supply chain risks amid the China-US trade war, clustering in the north around Hanoi.

As Vietnam has a long and narrow land mass, the north benefited from its proximity to China. Electronics manufacturers could send required parts and materials overland from China’s south-eastern coast.

Much of [Vietnam’s manufacturing] involves the assembly and packaging of what was “Made in China”, before the finished product is labelled “Made in Vietnam” to avoid tariffs, and exported to the US and Europe.

Smartphone giants such as South Korea’s Samsung and Apple’s supplier Foxconn continuously expanded in northern Vietnam; Taiwan’s Pegatron and Wistron, alongside other electronics giants, have also increased their investment. Recently, China’s Xiaomi confirmed that it would start making phones in Vietnam too. Vietnam has become a manufacturing hub for mobile phones and computer peripherals.

Chinese orders create headaches

However, the pandemic laid bare the vulnerability of this cross-border chain.

Vietnam’s export-oriented, processing-focused manufacturing has a heavy upstream reliance on China. Much of it involves the assembly and packaging of what was “Made in China”, before the finished product is labelled “Made in Vietnam” to avoid tariffs, and exported to the US and Europe.

The problem comes when components fail to arrive from China, severely curtailing Vietnam’s ability to fulfil export orders.

At the start of 2020, pandemic-induced land transport curbs forced Samsung to fly smartphone parts from China to Vietnam to avoid a complete supply chain breakdown.

Taiwanese companies in Vietnam found it hard to be happy about the surfeit of orders, said Chien, as upstream supply disruptions in mainland China caused delays in order fulfilment. Raw material costs also rose with oil prices, eating into margins; businesses were in a difficult position whether they had orders or not.

Wong’s toy factory faced the same issue after Chinese New Year, and had to send components from China to Vietnam via sea or air. But as all manufacturers were turning to these alternatives, demand for such freight surged, affecting availability.

Supply bottlenecks drive localisation

Crises give rise to new ideas. Wong decided to overcome upstream bottlenecks by localising intermediate goods.

In the past, intermediate or semi-finished products arrived from the company’s plant in Dongguan for processing in Vietnam; now, the company plans to import material to be stored in Vietnam. Once orders are received, the whole production process – from manufacturing of parts to assembly – will be completed at the Vietnam factory.

Norman Lim, president of the Singapore Business Group in Ho Chi Minh City, is also the Asia Pacific CEO of a foreign-funded manufacturer of industrial blades. In an interview at an industrial park in Ho Chi Minh City, Lim said that his employer also experienced supply chain problems in China during the pandemic.

To spread the risk, it decided to source for raw materials from places such as Thailand, Taiwan and India. Lim said, “I believe many plants like ours will continue to search for replacement sources of raw material outside of China.”

No easy feat to usurp China’s position

As more Vietnam-based manufacturers seek intermediate goods from outside China, and as the supply chains of more industries mature, will Vietnam be able to usurp China’s position as the world’s factory?

Business leaders interviewed were unanimous in their verdict: “Impossible.”

In the early days, Vietnam could attract only the pollutive parts of supply chains in traditional industries that were being phased out in China.

Lim noted that industries were not relocating exclusively to Vietnam, with other destinations including India and Southeast Asian countries such as Indonesia, Malaysia, Thailand, the Philippines and Laos. “You can replace China only by adding up many different countries together.”

Vietnam’s population of nearly 100 million is only a tenth of China’s, he added. The middle class is expanding rapidly, pushing wages up and nudging industries from developed areas into poorer ones. While China’s development moved from east to west, Vietnam does not have a comparable hinterland.

Chien observed that China has the advantage of comprehensive industrial chains, and its capacity for administrative organisation outstrips that of Vietnam. In the early days, Vietnam could attract only the pollutive parts of supply chains in traditional industries that were being phased out in China. Even the electronics activities that have recently moved from China are primarily in low-end manufacturing.

While China has higher labour costs, Chinese workers have better skills and expertise. And while Vietnamese workers are diligent, Chien had this observation to make: “If you say the Vietnamese are extremely hardworking, the Chinese work themselves to the ground.”

ISEAS-Yusof Ishak Institute senior fellow Jayant Menon observed that although China’s lockdowns have hastened the pre-pandemic shift to Vietnam, regional supply chains remain very much China-centric, and this is likely to continue for the foreseeable future. Menon added, “China remains a manufacturing giant and therefore you cannot contain or replace it easily.”

News

2 November, 2022

Spectre of boxship lay-ups returns

Sam Chambers

With multiple capacity levers deemed insufficient to halt the severe decline in container freight rates, the spectre of ship lay-ups has been raised.

Rates remain elevated in historical terms, but the plunges recorded over the past few months have spooked some in the industry with many smaller operators taking the decision to exit the main east-west trades.

Contract rates remain resilient for the time being. The latest data from the Xeneta Shipping Index reveals global contracted rates fell by only 0.6% this month, following on from September’s 1.1% decline. This disparity in pricing between spot and contract is seeing many shippers play the markets.

“What we may well see is shippers looking to transfer volumes to the spot market, spooking carriers desperate to tie-in business. The result? Carriers could be forced to lower those coveted contracted rates,” said Xeneta CEO Patrik Berglund today.

According to Sea-Intelligence, spot rates on the transpacific to the west coast of the US are still up 54% compared to the same period of time in pre-pandemic 2019, while prices from Asia to North Europe are up by 146% compared to the same period three years ago.

Nevertheless, Sea-Intelligence, along with many other liner experts, is forecasting a hard landing for container shipping with rates continuing to slide in the coming weeks, potentially going below 2019 levels, before a rebound kicks in.

“If the market continues to deteriorate rapidly in the coming week – and especially if this is driven by a sharp global recession – then the raft of blank sailings we should expect in the coming weeks and months, could in 2023-Q1 turn into carriers not only idling vessels, but temporarily placing them in lay-up, as we also saw in 2009,” Sea-Intelligence suggested in its latest weekly report, published yesterday.

Other analysts have been highlighting how blanked sailings and service suspensions have not been enough to halt freight rate declines, while scrapping, another traditional lever in the liner defensive armoury, may not help out as much as some liner executives are hoping.

HSBC urged carriers last week to blank and suspend more services to stabilise spot freight rates ahead of the upcoming contract negotiations for the Asia-Europe route.

“The blanked sailings have been ineffective in preventing freight rates from sliding on all main trades, with the Middle East the only notable exception,” noted researchers at Linerlytica in their latest weekly reporter.

On the demolition side, Alphaliner data shows there is a total of 655,149 teu of scrappable tonnage of 25 years of age and older, but a much bigger overall 2.5m teu of potential recycling candidates totalling 1,102 vessels which are 20 years of age and older.

“Although the removal of 2.5m teu of capacity aged 20 years and over would be instrumental in helping mitigate the impact of the 5.1m teu newbuild capacity to be delivered within the next two years, this is just not going to happen overnight,” Alphaliner warned in its latest weekly report, highlighting the record orderbook due to deliver soon.

In the event that carriers do decide to lay up ships, Sea-Intelligence has warned shippers to watch out for a rates surge once the markets rebound as carriers would be unable to reactivivate vessels fast enough. The subsequent lag time would cause capacity shortages and a rate surge, similar to 2010, in the rebound after the financial crisis.

“Shippers should therefore pay heed to the carriers’ actions in the coming months. If we begin to see carriers placing vessels in lay-up, then the scene is already set for a rate surge on the backside of the recession,” Sea-Intelligence advised.

News

2 November, 2022

Carriers under pressure to take more decisive action to stem declines

Sam Chambers

It’s the topic that has sparked the most debate in the container sector all month – just where is the floor for rates?

Analysts seem divided on how much lower rates will head before settling at a new normal level.

According to SHIFEX, one of a host of container spot freight rate indices, freight rates for 40-foot containers moving from China to the port of Los Angeles fell to $1,825 in October, which is equivalent to the pre-pandemic peak season level.

The transpacific is the tradelane that has experienced the most dramatic falls in fortunes over the past few months, though this is something that is hurting smaller, new entrants on the trade far more than the established big names.

“I think it will be rougher seas for new carriers who entered the market driven by the high spot freight rates, compared to legacy carriers who have more contract rates and enough cash reserves to sustain the reduction in rates for a while,” said Shabsie Levy, CEO of Shifl.

The US housing market downturn is now official, a data point which has historically been a good leading indicator for container shipping demand.

With the rollover in the leading container headline indices moderating in the past couple of weeks, some analysts believe this is a sign the sector is getting close to bottoming out. HSBC is one of the companies maintaining this viewpoint, something it detailed in a new shipping report issued this week entitled ‘Less bad news is good news’.

HSBC urged carriers to blank and suspend more services to stabilise spot freight rates ahead of the upcoming contract negotiations for the Asia-Europe route.

“The blanked sailings have been ineffective in preventing freight rates from sliding on all main trades, with the Middle East the only notable exception,” noted researchers at Linerlytica in their latest weekly reporter.

Container charter and secondhand prices are sliding too in tandem with the freight rates while the appetite to order new tonnage at yards in Asia has all but disappeared this autumn.

“With regards to values, in stark contrast to the exponential increase in asset values for container vessels seen in the first three quarters of 2021, values for 2022 have on the whole decreased significantly with the biggest fall in 0 year old Feedermax vessels, falling c.35% since the beginning of the year,” a new report from VesselsValue stated, adding that scrapping levels will likely rise in the coming months. VesselsValue also carried some forecasts on asset value drops through to 2026, with the UK firm predicting some containerships could nearly halve in value in the coming years (see chart below).

On the demolition side, a crucial lever for carriers as they adjust to altered supply/demand dynamics, Alphaliner has run the numbers on the proportion of the liner fleet becoming scrap candidates in the coming year.

Alphaliner data shoes there is a total of 655,149 teu of scrappable tonnage of 25 years of age and older, but a much bigger overall 2.5m teu of potential recycling candidates totalling 1,102 vessels which are 20 years of age and older.

“Although the removal of 2.5m teu of capacity aged 20 years and over would be instrumental in helping mitigate the impact of the 5.1m teu newbuild capacity to be delivered within the next two years, this is just not going to happen overnight,” Alphaliner warned in its latest weekly report, highlighting the record orderbook due to deliver soon.

News

2 November, 2022

PIL debuts intermodal offerings

Sam Chambers

Singapore’s largest containerline is moving beyond its port-to-port roots.

Pacific International Lines (PIL) today debuted PIL Intermodal Services, offering train, truck and barge services across its existing network in intra-Asia, Africa, Middle East, Latin America and Oceania.

Lars Kastrup, CEO of PIL, said, “We have seen growing market demand for intermodal services in recent years. With our strong network of global offices, agencies and partners, we are able to offer good point-to-point connectivity across sea and land for our customers. Our intermodal solutions will be well supported by our digital services including electronic Bill of Lading, and in the near future, GPS tracking.”

Kastrup was brought onboard two years ago in a management reshuffle after PIL was bailed out following years of financial difficulties. In July this year he was promoted to the role of CEO. He has previously served as CEO of APL, and held many senior positions at CMA CGM. His career started with AP Moller-Maersk.

Alphaliner lists PIL as the 12th largest containerline in the world with a fleet made up of just shy of 300,000 slots.

News

15 October, 2022

Intra-Asia rates out of India crash amid tightening market conditions

September 23, 2022

Jenny Daniel
Global Correspondent – Container News

While container freight rates across trades out of India have cooled over the past few months, new data obtained by Container News from local forwarder sources now point to a more precipitous slide in intra-Asia connections.

Rate levels from India to Central/North China, Singapore and Hong Kong have slid between 30% and 50% this month from the levels reported at the end of August.

Average contract rates offered by major carriers to regular clients for bookings from West India (Nhava Sheva/JNPT or Mundra) to Shanghai/Tianjin, for example, now stand at US$350 per 20-foot container and at US$450 per 40-foot box, down from US$505 and US$810, respectively, a month earlier.

Pricing on the West India-Singapore route has also seen a similar trend, with contract rates plunging to US$250/20-foot container and US$400/40-foot box, from US$500 and US$800 as of end-August.

For Indian shipments to Hong Kong, average rates are hovering at US$300/20-foot container, versus US$ 505, and US$400/40-foot container, compared with US$810, the analysis shows.

Contract rate levels on the return leg have also fallen significantly month on month, with the slide averaging between 40% and 50%.

Industry sources attributed the sharp rate corrections to weakening demand and noted that carrier pricing power could further erode in the coming weeks.

The intra-Asia market saw a strong rebound after Covid lockdowns/restrictions in China, particularly Shanghai, had ended.

“The contraction in global trade is also visible from the sharp decline in the freight rates, which have reduced by about 50% on major trade routes,” said the Federation of Indian Export Organisations (FIEO) in a statement. “With inflation plaguing all economies, inventories are very high globally in all economies as the purchasing power has dwindled which has affected the offtake and thus the demand is slowing.”

FIEO went on to add, “The demand for liquidity has gone up as buyers are delaying the payments and asking exporters to withhold further shipments or release small quantities of such shipments.”

Forwarders have also voiced similar concerns over slowing export demand.

“The country saw a fall in the various export sectors, including chemicals and engineering,” Sanjay Bhatia, co-founder and CEO of Mumbai-based Freightwalla, told Container News.

He went on to explain, “This has impacted the container movement to and from India as the demand for the same is declining. Container volumes at the top ports across India and global ports are dropping.”

Bhatia also noted, “As we understand, there was a 4% decline in the volume witnessed at ports. We see that demand was not as high as expected in the first quarter regarding growth, and the same was seen for the most part in the second quarter.”

News

14 October, 2022

Vladivostok Port Imports Up By 28,000 TEU a Month

August 24, 2022 Posted by Russia Briefing

Vladivostok’s container imports have increased by 150% in the three recent months, the port press office has said, adding that Asian companies have replaced those who left the Russian market.

The port authority stated that “The load on all regional ports and the accompanying infrastructure is growing. For example, in the last three months alone, the import of containers through the Commercial Port of Vladivostok increased by 1.5 times, up to 28,000 TEU per month. The port has absorbed this and operates as usual, 24 hours, seven days a week, and has managed the increased load well.”

Global and Asian maritime, logistics and container routes are changing. Export and import flows are being re-oriented to Russia’s Far East.

The container lines that left the Russian market were replaced by new ones from the Asia Pacific Region. Those are: Heung-A Line, SITC, GFL, Reel Shipping, Zhonggu Shipping Group, and OVR Shipping among others.

Vladivostok is important as it is the eastern hub of the Trans-Siberian railway; meaning containers can be loaded onto rail and transported throughout Russia, and beyond to destinations such as Mongolia, Central Asia and through to Europe. It takes 6 days to travel the 9,289km to Moscow. Fresh produce such as sea food can be flown to markets in Moscow within 9 hours.

News

14 October, 2022

CN analysis: India container freight rates continue to slide amid weakening demand

September 30, 2022

Container freight rates on trades out of India continue to taper off amid falling demand, according to a new market analysis by Container News.

On the westbound India-Europe trade, contract prices from West India [Jawaharlal Nehru Port (JNPT)/Nhava Sheva or Mundra Port] to Felixstowe/London Gateway (UK) or Rotterdam (the Netherlands) have slipped to US$4,400/20-foot container and US$4,800/40-foot container, down from US$4,650 and US$5,200, respectively, last month.

For West India-Genoa (the West Mediterranean) cargo, carriers are accepting bookings at US$4,900/20-foot box and US$5,100/40-foot box, compared with the August levels of US$5,000 and US$5,300.

Eastbound cargo rates have declined by double-digit percentages – now hovering at US$1,525/20-foot container and US$1,700/40-foot container, versus US$1,725 and US$1,900 for shipments from Felixstowe/Rotterdam or Rotterdam to West India (Nhava Sheva/Mundra).

Short-term contract prices offered by major carriers for Indian cargo to the US East/West coasts have further moderated from the August levels – averaging at US$7,137 per 20-foot box, from US$7,937, and US$9,015 per 40-foot box, from US$10,015, for bookings to USEC (New York), and at US$7,032/20-foot container, from US$8,357, and US$8,913/40-foot box, from US$10,569, for loads to USWC (Los Angeles).

For the West India-US Gulf Coast trade, rates have decreased to US$9,257 per 20-foot and US$11,615 per 40-foot container, versus US$10,527 and US$12,925, respectively, in August.

On the return leg, average rate levels have remained steady with the rates maintained by major operators last month – at US$1,075/20-foot box and US$1,434/40-foot box from USEC; at US$2,484/20-foot box and US$3,193/40-foot box from USWC; and at US$1,770/20-foot and US$1,843/40-foot box from the Gulf Coast, into West India (Nhava Sheva/Mundra).

Intra-Asia trades out of India have seen the sharpest month-on-month slide, after hitting new highs following the end of Covid lockdowns in and around Shanghai.

Contract prices from India to Central/North China, Singapore and Hong Kong have dropped between 25% and 50% this month from the levels reported at the end of August.

Average contract rates offered by major carriers to regular clients for bookings from West India (Nhava Sheva/JNPT or Mundra) to Shanghai/Tianjin are now at US$350 per 20-foot container and at US$450 per 40-foot box, down from US$505 and US$810, respectively, during August.

Rates on the West India-Singapore movement have also seen a similar trend, with contract rates slipping to US$250/20-foot container and US$400/40-foot box, from US$500 and US$800 last month.

For Indian shipments to Hong Kong, average rates are hovering at US$300/20-foot container, versus US$505, and US$400/40-foot container, compared with US$810, the analysis shows.

Contract rate levels on the return leg have also fallen significantly month on month, with the slide averaging between 40% and 50%.

Local freight forwarder sources attributed the steep pricing corrections to weakening demand and noted that rate levels could come under further pressure in the coming weeks.

“The contraction in global trade is also visible from the sharp decline in the freight rates, which have reduced by about 50% on major trade routes,” said the Federation of Indian Export Organisations (FIEO) in a statement. “With inflation plaguing all economies, inventories are very high globally in all economies as the purchasing power has dwindled which has affected the offtake and thus the demand is slowing.”

FIEO added, “The demand for liquidity has gone up as buyers are delaying the payments and asking exporters to withhold further shipments or release small quantities of such shipments.”

The premier association also noted that inflationary pressures are clearly sapping consumer demand across major sourcing markets. “With inflation plaguing all economies, inventories are very high globally in all economies as the purchasing power has dwindled, which has affected the offtake and thus the demand is slowing. However, the demand for low value [Indian] products is increasing by leaps and bounds,” it said.

FIEO explained, “Therefore, while we expect volumes to remain intact, the value may take a hit.”

Forwarders have also expressed concerns about slowing export order flows. “The country saw a fall in the various export sectors, including chemicals and engineering,” Sanjay Bhatia, co-founder and CEO of Mumbai-based Freightwalla, told CN.

He went on to explain, “This has impacted the container movement to and from India as the demand for the same is declining. Container volumes at the top ports across India and global ports are dropping.”

Bhatia also noted, “As we understand, there was a 4% decline in the volume witnessed at ports. We see that demand was not as high as expected in the first quarter regarding growth, and the same was seen for the most part in the second quarter.”

Jenny Daniel
Global Correspondent – Container News

News

14 October, 2022

Barge sinks after collision with Vasi boxship in Thailand waterways

Martina Li
Asia Correspondent – Container News

Vasi Star, a 1,728 TEU feeder container ship owned by Singaporean operator Vasi Shipping, collided with a barge on the morning of 11 October.

Vasi Star, which was deployed to a Thailand-Malaysia-Bangladesh-India service, was on its way to Bangkok port from Kattupalli, India, when it collided with a tug and barges along the Chao Phraya River, at around 7.10 am local time.

The tug, Wimonwan 8, was towing four barges loaded with steel cargoes from Kohsichang to Bangkok. One of the barges, Maha Nakhon 2, sank, but no one was hurt. Thai media reported that visibility in the area was limited at the time of the accident.

Vasi Star continued navigating and arrived at Bangkok’s Sahathai Terminal at 10.30 am the same day.

Vasi was established in 2012 and its container shipping services focus in the area between Thailand and Bangladesh, using Vasi Star, its sole owned ship, and two chartered vessels.

Container News requested Vasi for comment but there was no reply.

However, vessel-tracking data shows that Vasi Star’s status has been updated to “In Casualty or Repairing” as of 11 October.

News

14 October, 2022

Indian exporters face new tax burden as freight rates moderate

Jenny Daniel
Global Correspondent – Container News

Indian exporters – now relieved to see some moderation in sky-high freight rate levels amid slowing volumes – have a new cost burden to deal with: a government tax levy.

The setback follows the end of previously-granted federal exemptions from the applicability of Goods and Service Tax (GST) on export freight.

GST, a unified national tax system, was introduced in 2017, intended to make a one-market environment.

As a result, from 1 October, exporters must meet a tax slab of 5% on ocean freight and 18% on air freight charges.

“GST on export freight rates will put further pressure on the already-tight liquidity position of the exporting community,” a Mumbai-based shipper told Container News.

“In the current situation, the focus should be on providing liquidity at a competitive cost to the export sector,” said A. Sakthivel, president of the Federation of Indian Export Organisations (FIEO), in a statement.

Sakthivel added, “The government should look into the request of the export sector for continuing with IGST [Integrated Goods and Services Tax) exemption on freight for exports, which lapsed on 30 September, particularly as the freight rates are still at much elevated levels and GST on such freight will affect the liquidity of the exporters, though refundable later.”

Major shipping lines operating to/from India have already issued customer advisories that they would apply GST on international outbound freight charges from 1 October.

“Subsequent to expiry of the validity of the said notification and with no further extension, every export transaction would be taxable under GST,” Maersk Line said in a trade notice.

Reflecting weakening demand trends, Indian merchandise exports in September slipped 3.5% year-over-year, according to the latest government data.

“The slowdown in exports is a reflection of the toughening conditions of the global trade facing demand slowdown on account of high inventories, rising inflation, economies entering recession, high volatility in currencies and geopolitical tensions,” FIEO added.

Sanjay Bhatia, CEO and co-founder of digital forwarder Freightwalla, has also noted that Indian export growth is facing challenges.

“Global trade is on the verge of noticing a slowdown,” Bhatia said. “The US and Europe caught a rise in inflation that has hit the consumption, leading to lower offtake of goods. Plummeting freight demands hint towards low export, implicating a decrease in the long-term contract rates.”

He went on to explain, “We noticed demand was not as high as expected in the first quarter regarding growth, and the same was seen for the most part in the second quarter.”

Category: News

Top choice for a ‘China+1’ strategy

Gaining from China’s zero-Covid policy

Chinese orders create headaches

Supply bottlenecks drive localisation

No easy feat to usurp China’s position