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Hutchison Port Holdings Trust (HPHT) has seen its overall container throughput decline and profit fall in the first half due to the severe slowdown in global trade amid the coronavirus (Covid-19) pandemic.
From January to June 2020, throughout of HPH Trust ports overall was recorded at 10.28m teu, down 8% year-on-year.
Breaking down, throughput for YICT and HICT was at 5.46m teu, down 12%. The combined throughput of HIT, Cosco-HIT and ACT, or collectively HPHT Kwai Tsing, was at 4.82m teu, down 3%.
“The global trade was negatively impacted by the Covid-19. In the first half of 2020, outbound cargoes to the US and Europe declined by 17% and 10% respectively. Throughput drop for YICT in the first six months of 2020 was mainly attributed to the decrease in the US, Europe and empty cargoes,” HPHT stated.
“The decline in throughput for HPHT Kwai Tsing was mainly due to reduction in intra-Asia, the US and transhipment cargoes,” it said.
First half profit attributable to shareholders was recorded at HKD212.4m ($27.4m), down 9% year-on-year.
HPHT recalled that manufacturing in China was at a standstill as factories completely suspended production after Chinese New Year in January. Global supply chains and business activities have been disrupted, resulting in a slump in global cargo volume.
Hutchison Port Holdings Trust (HPHT) has seen its overall container throughput decline and profit fall in the first half due to the severe slowdown in global trade amid the coronavirus (Covid-19) pandemic.
From January to June 2020, throughout of HPH Trust ports overall was recorded at 10.28m teu, down 8% year-on-year.
Breaking down, throughput for YICT and HICT was at 5.46m teu, down 12%. The combined throughput of HIT, Cosco-HIT and ACT, or collectively HPHT Kwai Tsing, was at 4.82m teu, down 3%.
“The global trade was negatively impacted by the Covid-19. In the first half of 2020, outbound cargoes to the US and Europe declined by 17% and 10% respectively. Throughput drop for YICT in the first six months of 2020 was mainly attributed to the decrease in the US, Europe and empty cargoes,” HPHT stated.
“The decline in throughput for HPHT Kwai Tsing was mainly due to reduction in intra-Asia, the US and transhipment cargoes,” it said.
First half profit attributable to shareholders was recorded at HKD212.4m ($27.4m) , down 9% year-on-year.
HPHT recalled that manufacturing in China was at a standstill as factories completely suspended production after Chinese New Year in January. Global supply chains and business activities have been disrupted, resulting in a slump in global cargo volume.
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“HPHT, with HPHT Kwai Tsing being a major transhipment hub in the region, and YICT being the premier gateway to China for foreign trade, was inevitably affected,” HPHT said.
However, recent developments on the Covid-19 situation has seen gradual improvements in the region, as manufacturing in China has mostly resumed and many overseas countries have loosened lockdown and border controls.
“It is expected that the negative impact of Covid-19 on our volume will gradually be reduced,” HPHT said.
To mitigate the sharp downturn in demand caused by Covid-19, shipping lines have cut their capacity to maintain rates through an increase in blank sailings and service suspensions.
“During this difficult business environment, HPHT has been exploring different initiatives to improve performance. HPHT remains vigilant about the situation and will continue to focus on operational efficiency and cost management, as evidenced by the formation of Hong Kong Seaport Alliance, to increase the competitiveness of our ports,” HPHT stated.
Port of Rotterdam sees 9.1% drop in cargo volumes in H1 2020
The Port of Rotterdam reported a 9.1% drop in cargo throughput in the first half of 2020 with volumes hit by the global Covid-19 pandemic.The port handled 218.9m tonnes of cargo in the first half of 2020 down some 9.1% on a record throughput in the same period in 2019.
Particularly hit were dry bulk volumes which dropped 19% in H1 2020 to 30.8m tonnes. The drop in volumes was driven by a 22% fall in throughput for iron ore and scrap and 34% for coal.
“The steel factories that use the port of Rotterdam for the supply of ore are producing much less than usual. Demand for steel fell sharply from March onwards as a result of production stoppages in the automotive industry and construction,” the port commented.
In terms of liquid bulk volumes dropped by 10m tonnes to 99.8m tonnes in H1 2020, more than a 9% fall year-on-year. The mineral oil products sector, mainly fuel oil, saw the largest drop of 22% in the first half of year.
In terms of containers volumes were down 7% in teu terms and 3% in cargo volume terms in the first half of the year. “Shipping companies cancelled up to 20% of all their services in May and June. The decline in throughput was nevertheless less pronounced due to the increased call sizes of vessels calling at Rotterdam,” the port said.
Meanwhile breakbulk fell by 11% in the first half year, and ro-ro throughput was 12% lower.
Allard Castelein, ceo of the Port of Rotterdam Authority, said:“The negative economic impact of the Covid-19 pandemic is being felt worldwide. It should therefore come as no surprise that throughput volumes in the past six months were considerably lower than in the same period last year. On the positive side, the throughput volumes in the second quarter turned out to be better than initially expected.”
Maersk unveils a digital supply chain management platform
Maersk is launching a digital platform that aims to assist small and medium-sized companies to manage and simplify their supply chains.The platform will strengthen the company’s position as a global integrator of container logistics, Maersk said.
Every day thousands of products are moving through the supply chain, on multiple carriers, coming from and reaching many supply chain partners and customers.
And for many of these companies this complexity is managed fully manually via spreadsheets, emails, and phone calls, which despite lots of hard work leads to reduced visibility and control – and ultimately higher costs or lost sales.
“We are very excited to release Maersk Flow, which will give these customers a digital supply chain management tool that is designed specifically for their needs.
“Maersk Flow will allow our customers to significantly improve their supply chain performance with less time and effort. This lets them focus more resources on their core business and achieve happier customers and higher sales growth” says Martin Holme Global Head of SCM & E-commerce Logistic, A.P. Moller – Maersk.
Maersk said that the solution will increase transparency in critical supply chain processes and ensure that the flow of goods and documents is executed as planned.
It also aims to reduce manual work and costly mistakes, while empowering logistics professionals with all the current and historical data they need.
The coronavirus pandemic has been described by many industry bodies as a catalyst for the shipping industry’s digitalization, as social distancing and travel restrictions increase the need for automation of operations.
Hence, there has been a greater uptake of digitalization within the sector as a means of boosting efficiency of operations while adhering to safety and health measures imposed by governments and health authorities.
However, with the greater reliance on technology, the need to protect these systems and software from cyber-attacks and hacks has increased exponentially as well.
Clean Cargo report: Container shipping’s CO2 emissions down in 2019
Carbon dioxide emissions from the world’s leading ocean container carriers continued to fall in 2019, according to a new report from Clean Cargo, a collaborative initiative for sustainable cargo shipping managed by Business for Social Responsibility(BSR).Clean Cargo’s aggregate average Trade Lane CO2 Emissions Factors are compiled from verified operations data of over 3,500 vessels, from 17 of the world’s largest ocean container carriers, representing approximately 85 percent of global containerized shipping.
These include A.P. Møller – Mærsk, CMA CGM Group, COSCO Shipping Lines Ltd., Evergreen Line, Hapag-Lloyd, Hyundai M.M., MSC, ONE (Ocean Network Express), and Yang Ming Marine Transport Corp.
According to the report, global industry averages for CO2 emissions per container per kilometer decreased by 5.6 percent and 2.5 percent for Dry and Reefer (refrigerated) indexes, respectively.
Improvements on the CO2 Dry index were seen on major tradelanes, such as:
- Asia to-from North Europe with a 3% reduction o Asia to-from North America West Coast and Asia to-from North America East Coast with a 6% reduction
- Asia to-from Middle East / India with a 12% reduction
- Asia to-from Mediterranean / Black Sea with a 12% reduction
A mapping of Clean Cargo membership divided by vessel size and type shows a clear increase in the fleet size, which results in an increase in the total amount of fuel consumed by the group.
There were no major changes in fuel types, with vessels remaining mainly on HFO. There has been a slight increase in MDO and a substantial increase in LFO, LNG, and hybrid fuels, even if they still represent a small proportion of the total fuel consumed. LNG is used mainly on small vessels, while the hybrid fuels use is spread among the larger sizes of vessels. Ultra-large vessels were still running on HFO or conventional fuels.
Over the last 10 years, the main trends observed through the Clean Cargo reporting framework were:
- Clean Cargo Fleet capacity grew by 153%, from 8 to 20.4 mil. TEU
- Heavy fuel oil decreased from 97.2% to 86.6% of fuel used.
- Lower emissions correlate with higher transport work, increasing ship size and tradelane length
“Standardized, consolidated, industry-wide emissions data are essential to decarbonization efforts,” said Angie Farrag-Thibault, Collaborations and Transport Director at BSR and Program Director of Clean Cargo.
“With over 60 global brands and forwarders working with the industry in Clean Cargo, we are making excellent collective progress. But we know that further action is needed: full value chain collaboration is critical to transform the system, and we encourage more brands to get involved.”
Several years ago, Clean Cargo developed a standardized methodology and reporting system that was adopted globally by the industry, with carriers submitting operational data from the entire fleet to BSR on an annual basis for trade lane emission factors aggregation.
The Clean Cargo general formula to calculate vessel CO2 emissions (in gCO2/TEUkm) is:
(𝑡𝑜𝑡𝑎𝑙 𝑘𝑔 𝑓𝑢𝑒𝑙 𝑐𝑜𝑛𝑠𝑢𝑚𝑒𝑑 𝑓𝑜𝑟 𝑐𝑜𝑛𝑡𝑎𝑖𝑛𝑒𝑟𝑠 ∗ 𝐼𝑀𝑂 𝑓𝑎𝑐𝑡𝑜𝑟 𝑔𝐶𝑂2 𝑘𝑔 𝑓𝑢𝑒𝑙)
______________________________________________________
(𝑚𝑎𝑥𝑖𝑚𝑢𝑚 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑇𝐸𝑈 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 ∗ 𝑡𝑜𝑡𝑎𝑙 𝑑𝑖𝑠𝑡𝑎𝑛𝑐𝑒 𝑠𝑎𝑖𝑙𝑒𝑑 [𝑘𝑚])
The results produce environmental performance scorecards for each carrier, which are used to meet corporate supply chain sustainability goals by a significant share of shipping customers participating in the group.
This year, Clean Cargo reported information that includes W2W, CO2e and a 70 percent utilization adjustment factor.
Clean Cargo is a GLEC Accredited partner of SFC and a Knowledge Partner to the Getting to Zero Coalition.
Vietnam to benefit from supply chain relocations
Vietnam Citi country officer Natasha Ansell shared her view with VIR’s Phu Canh on Vietnam’s economic outlook and its current position as a potential manufacturing hub in the region.Following the reopening of the economy, what is your view on Vietnam’s economic outlook?
While growth in Vietnam is expected to decrease to 2.4 % in 2020, the economy is gradually showing signs of recovery with an expected rebound in 2021.
Tourism, hotel, retail, and transportation industries, which account for 20-25 % of GDP, are showing steady improvements although it will require a significant rebound in international tourism to boost these sectors back to pre-COVID levels.
Oil prices too have a significant impact on government revenue. Outside of Vietnam, global demand cutbacks are also having an impact. Shoes and garment exports of $46 billion, which account for 18 % of Vietnamese exports, have been affected by sluggish demand from the US and EU markets, where nearly half of these products go to.
Despite various points of pressure, Vietnam has been duly applauded for the way the country has handled the COVID-19 pandemic. By taking aggressive steps in early February, the country has kept its overall infection numbers to around 400, with zero casualties.
This has helped to prop up the domestic economy and travel as well. While we continue to monitor the health crisis and the ongoing uncertainty within the broader region and globally, we remain confident on Vietnam’s future prospects.
Supported by a growing middle class, consumer spending, and fiscal policies that encourage public spending, we expect to see further GDP growth.
This is a strong endorsement of the government’s ability to keep the pandemic under control while continuing to attract foreign direct investment into the market, despite an understandable slowdown in capital inflows during this time overall.
What are the levels and activities around banking and lending in this period?
Lending levels and other banking activities have varied during this time, depending on whether companies were managing supply-side or demand-related shocks.
In the initial stages of the pandemic, around February and March, many companies faced a bottleneck in the supply of raw materials due to factory shutdowns and border restrictions across multiple markets. This led to a reduction in loan demand.
As the pandemic progressed to other parts of the world, factories in the region, including in China, began to resume production. While supply chains are gradually normalising, activity did not return to full capacity given demand shocks from export markets such as the US and the EU.
With a focus on maintaining liquidity to support business growth, companies started to deploy loans with longer tenors during this period. We continued to use our balance sheet and strong liquidity position to support our clients, the majority of whom are foreign-invested companies, with strong fundamentals and support from their parent companies.
We are also seeing an increase in new loan facilities and requirements from corporates in the region that are expanding their supply chains to Vietnam and, as a result, expanding their production capacity here. We are partnering with our clients to facilitate these plans in the country while ensuring we are lending prudently and in line with our risk management policies.
What impact is COVID-19 having on supply chains and what implications does have for Vietnam?
COVID-19 is accelerating supply chain relocation plans for companies. The pandemic has exacerbated trends that were already visible due to geopolitical developments and the demands of changing business models.
With the pandemic, we expect supply chain shifts to occur at a quicker pace than previously anticipated. Vietnam stands to benefit from these shifts given an increasing interest in the country from companies which are keen to expand manufacturing capacity.
In recent years, a number of multinational firms have relocated parts of their supply chains to Vietnam as part of their persification strategies. South Korea was the largest investor in Vietnam last year, pouring close to a fifth of the $38 billion in new foreign direct investment (FDI) into Vietnam. Hong Kong, Japan, and China were also amongst the top investors.
Vietnam represents a pro-business and liberal investment environment, with competitive cost structures and a wide range of tax incentives and tariff benefits resulting from multiple free trade agreements. This includes the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and more recently, the EU-Vietnam Free Trade Agreement that aims to encourage new trade flows and, consequently, supply chains.
We believe that Vietnam has a significant potential to prosper from this opportunity, supported by government policies and interest in attracting FDI into the market.
What are the hurdles that may prevent supply chains from moving to Vietnam and what more can be done to take advantage of the trend?
To capitalise on the opportunity of shifting supply chains, Vietnam will need to continue to develop its infrastructure and build up its capacity. Relative to other markets, Vietnam’s GDP is small and, on a per capita basis, it is still below many developing countries. Labour supply is moderate and the logistics, as well as transportation infrastructure, needs to be further developed.
Focus on further developing the road network, port infrastructure, industrial parks, and utility supply would be critical for Vietnam to continue being competitive in attracting FDI.
Specifically on infrastructure, Vietnam must develop its infrastructure more quickly, especially in Ho Chi Minh City and its surrounding areas.
According to the World Economic Forum’s Global Competitiveness Report 2019, Vietnam ranks 67th out of 141 in terms of overall quality of infrastructure, 103rd in quality of roads, and 83rd in quality of port infrastructure.
The government must further emphasise the improvement of industrial zones, transportation networks, and power projects. To solve traffic congestion problems in large cities, the government should facilitate major public transportation projects.
Those actions would be very important for the country to continue to establish Vietnam as a prominent regional manufacturing hub in Asia
(Source: The Maritime Executive, VNCustomsNews, Seatrade Maritime)
