Halifax container look ahead

Container business in Halifax is down, but that is as a result of the current national and world economies. All the lines are still calling here, but are scrambling hard for more business or more economies in operation. .  

The world's two largest lines have overbuilt and capacity exceeds demand. In order to achieve more efficiencies, they have come up with a plan. A.P.Moller (Maersk) and MSC (Mediterranean Shipping Co) have managed to convince regulators in Europe, China and the US that a ten-year VSA (Vessel Sharing Agreement) is not a merger, a monopoly, or a threat to other operators. Therefore it will come into effect in January, involving 185 ships on 21 strings on Asia-Europe, Trans-Pacific, and Trans-Atlantic routes. There will be five strings on the Trans-Atlantic alone.
Known as the 2M it replaces the P3 which had included CMA CGM, but which was rejected by China earlier this year. One difference is that the P3 would have had joint management, and was deemed to be an effective merger, at least by China. The new 2M is supposed to have only a small coordinating office, with both Maersk and MSC operating independently. How this will actually work is a mystery, since the lines use different terminals in most ports and have somewhat incompatible practices.

Halifax appears to be fairly immune to direct impact from this new VSA, but there may be fall out.

Maersk Pembroke arriving this morning from Montreal is one of four Maersk and one CMA CGM ships on the TA-4 service.

Maersk has let it be known that their TA-4 (Transatlantic 4) service from North Europe to Montreal, Halifax and return, will remain, and not be included in the VSA. However it is possible that the bumping of mid-size ships may result in different ships on the TA-4. Maersk has a sharing arrangement with CMA CGM, which  provides one ship on the five ship rotation.

The 22 knot MSC Kyoto at speed on the St.Lawrence in 2013.

Built in 1981 as Lexa Maersk it was lengthened in 1984, then sold to Costamare and renamed Maersk Tokyo in 1997 and MSC Kyoto in 2007. It was scrapped in July of this year. 

It operated on MSC's Caribbean service.

MSC does not call in Halifax, but has two services to Montreal. SLSC1 (jointly with HAPAG-Lloyd and OOCL) and an independent service from Montreal to the Caribbean that calls in Saint John.
They will not be effected likely because their ships have a high ice class and were built for the route, altough MSC has been known to put odd ships on the run.

 OOCL Belgium was built for the St.Lawrence service.

As was Montreal Express - they operate year round.

MSC has also announced that its North Europe/Boston/Philadelphia service will be maintained outside the 2M VSA. The 2M's Trans-Atlantic service will concentrate on New York and ports farther south.

Halifax Express is one of the ships on the G6 Alliance service to Halifax that will compete head to head with the 2M.

There are numerous other VSAs and pooling arrangements between shipping lines, notably the G6 Alliance which calls in Halifax and includes HAPAG-Lloyd, OOCL, APL, MOL, NYK and Hyundai. That agreement ends in 2016. It has also announced a winter ship reduction for its Asia-US West Coast and Asia-US East Coast (including Halifax) services. That is as a result of week trading, and will see some 16 ships laid up or reassigned.

One possible ray of sunlight is the immense backlog of ships in Los Angeles/Long Beach port due to logistics delays on land, brought on by larger ships. Many of the ships delayed are ones we see in Halifax, so shippers may decide to re-route their cargoes.

Another point of future interest is the embryonic Canada Europe Trade Agreement (CETA) that still must be ratified by EU countries. If adopted as is, it will allow European shipping lines to trade between Canadain ports. Maersk's TA-4 would then be able to transport empties from Montreal to Halifax (which they are not allowed to do now) and even some cargo or make it a feeder service. MSC could do the same between Montreal and Saint John.

A well loaded Zim Tarragona sails on misty October 29, carrying numerous HAPAG-Lloyd boxes

 
Left out of all the above is the notable exception of ZIM. It is the only major not included in any of these VSAs and alliances (altough it does have slot charter arrangements). Whether this will be to the line's advantage or disadvantage is hard to tell. Some say it will benefit them. As they enter a new era after financial restructuring, they are expected to order larger ships (they are already chartering in larger ships that call in Halifax). Working from their hub in Kingston, Jamaica, it is possible they will be able to compete even on trans-Atlantic work, which they abandoned years ago. Unfortunately ZIM has been targeted by protestors in the US due to its association with the state of Israel. In recent weeks ZIM ships have been delayed in Oakland, CA, and Tampa, FL, by demonstrations against Israel's recent actions in Palestine.

Amoing other factors that will bear on Halifax in the coming months:
- the new Panamax canal and its larger size limits (which will be exceeded by improvements to the Suez Canal)
- fuel surcharges on containers to compensate for the new low sulphur content regulations that come in to effect in January.  
- pressure for improved port efficiency. With some Asian ports moving 120 containers per ship per hour, major US ports in the 80-85 range, Halifax's and Montreal's 51 seems slow. However the number of cranes per ship in some of those ports is twice what we offer.Halterm has already added new cranes this year and Fairvew is expecting some next year, but the giant ships that would justify more cranes are not on the horizon. Productivity in our case would be to ensure that ships get out of port in 8 hours, without overtime charges.

One big ship and seven cranes would certainly show vastly more moves per hour per ship than Halifax could produce. One mid-size ship with three cranes or maybe four would be about our limit, but usually it is only two.

Cerescorp's two large cranes work the largest sizes of ships that come to Halifax. Its smaller cranes don't have the height or reach to work the big ships fully.

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Ernest Hemingway's first visit to Halifax

I am not sure if Ernest Hemingway (the writer) ever visited Halifax. He certainly visited Nova Scotia, one of many celebrities who fished for Bluefin tuna from Wedgeport, NS in the heyday of sport fishing for the giant fish.  It was his legendary fishing tale story The Old Man and the Sea, among others, that won him world attention and a Nobel prize. However he has been gone lo' these many years, so it was not he that visited Halifax (for the first time) today.

Instead it was the German owned, Liberian flag container ship Ernest Hemingway that called on the Zim service. Built in 2005 by Hanjin Heavy Industries in Pusan, South Korea, the 54,271 grt ship has a capacity of 4944 TEU (400 refrigerated). In September of last year, it came off a long term charter to Maersk as Maersk Davenport, hence the colours of the hull and superstructure.
The ship is owned by Norddeutsche Reederei, and is one of several ships in their fleet named for famous people. Sister ship Charles Dickens has called here for HAPAG-Lloyd.
Halterm was busy with Ocean Emerald at pier 42 and Oceanex Sanderling at pier 36, but still had three cranes available to work Ernest Hemingway.
As the major container lines shed chartered ships, we can expect to see more of these "one ofs" on short term or mid-term charters to other lines to cover for other ships in refit or to increase capacity without building new ships. 

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P-3 -One Step Closer, and HAPAG merges

Faced with a large over-capacity in container ships and the resulting depressed state of container shipping in general,  the world's three largest container lines Maersk (15% of trade), MSC (13%) and CMA/CGM (8%) decided last year to pool their ships into one service called the P3 Network. Longstanding competitors, the three lines desperately need to lower costs to survive, since they have ordered so many giant (but efficient) ships, with not enough cargo to carry. By inference of course they also want to drive smaller operators, with smaller (and less efficient) ships out of the market too.

To keep regulators happy the P-3 stated that they would still run their businesses independently, but only pool the ships. So far US regulators have approved the proposal, but only as it applies to US ports. China and the EU have yet to weigh in. The latter has a 30% market share cap on shipping consortia, which the P-3 likely exceeds. In fact it is nearly a 40% share, which would effectively be a monopoly by many definitions.

Three separate trade routes are involved: Asia-Europe (via Suez), Trans-Pacific and Trans-Atlantic. With the US approval it seems likely that changes will be made on the Atlantic before the full service comes into play sometime mid-year. This may well effect Halifax and Montreal.

Maersk currently serves Halifax and Montreal with a direct transatlantic service. The latter port is  inaccessible to the giant Maersk ships, but Halifax is.

Maersk Pembroke is one of the Maersk ships that serves Montreal westbound and Halifax eastbound on a weekly transatlantic service.

CMA/CGM did serve Halifax with its own ships, but has been using slots on Maersk ships for more than a year. (see photo above)

MSC Kyoto on the St.Lawrence last summer.

MSC operates a feeder service from Montreal and Saint John, NB to the Dominican Republic, which connects with other MSC world services.

Are bigger ships on the way for Halifax? Certainly the two container terminals are ready for larger ships, but will they come?

If they do, will they bite into the trans Atlantic services of other lines?

My guess:
ACL (Atlantic Container Line) - no, because the line carries significant RoRo cargo, and largely serves northern Europe.

Post-panama, US flag, APL Belgium leaving Halifax March 23, runs on the G6 Alliance service.

 G6 Alliance - maybe, even though G6 members HAPAG-Lloyd and APL use a significant number of post-Panamax ships they are still less efficient than the new P3 giants

Zim Tarragona at3500 TEU is considered to be a small and inefficient ship.

Zim - maybe, because they use smaller ships, which are considered to be inefficient in today's terms. The Port of Halifax's largest container customer has been in a vulnerable position for some time.

Several lesser players such as Nirint and Melfi - probably not since the call in Halifax en route southern Europe to Cuba.

Ottawa Express on the St.Lawrence last summer.

Meanwhile HAPAG-Lloyd has come one step closer to sealing its deal with the Chilean CSAV, wherein CSAV would become HAPAG's largest shareholder. The merger (some would say takeover of HAPAG) will also include financing for seven new 9300 TEU ships-not exactly the formula one would expect if they are trying to reduce capacity. It will however see the disposal or transfer of smaller ships.
The merger would also see HAPAG + CSAV become the fourth largest container line, edging ahead of CMA/CGM.

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G6 + Z

1. Reefer containers from several lines await use at Halterm in March, Zim in the foreground.

In mid-March it was announced that the G6 Alliance of container lines would be starting six new services from Asia to the US and Canadian east coasts, three via Suez and three via Panama. As far as could be determined only one of those will be calling in Halifax, the A2X loop sailing from Laem Chebang (Thailand), Singapore, Colombo, Damietta (Egypt), Cagliari, Halifax, New York, Savannah, Norfolk, Cagliari, Damietta, Jebel Ali (Saudi Arabia), Singapore, Laem Chebang.
Details were scanty on whose ships would be running and on what type of schedule.
The US Federal Maritime Commission agreed to the six lines chartering and exchanging space on each other's ships and to co-ordinate services to the US east coast only (not the west coast). Reportedly some 50 ships are involved including six US flag ships.
G6 Alliance members are NYK Line, Hyundai Merchant Marine, OOCL, Mitsui OSK Line (MOL), Hapag-Lloyd, and APL (American President Lines, which will contribute the US flag ships.)

Today it was announced that Zim will take slots on three of the Suez routes and contribute five ships to the A2Z loop. The loop will use 10 ships altogether, in the 4500 to 5100 TEU range. Zim certainly has numerous 4500 TEU ships which already call in Halifax.  With 10 ships on the loop, there will likely be weekly service.
Since two of the G6 lines and Zim already call in Halifax, but at competing piers, it will interesting to see which of the terminals gets the new line, Halterm (Zim) or Fairview Cove (H-L, OOCL).

Zim has good news for Halifax

Zim Container Line brought some good news to the Port of Halifax today, along with a new service and a new (to Halifax) ship.
Zim Constanza is the first ship to arrive since Halifax was added to a weekly transatlantic service from Israel to the US. The ship starts in Haifa, then calls in Piraeus, Genoa, Tarragona, Halifax, New York, Savannah, Kingston (Jamaica) and back to Tarragona and Haifa.
Kingston is a major traffic hub for Zim and other lines, and an interchange port for other Zim services. The added tonnage will also be good news for Halterm which lost the eastbound leg of Zim's Asia service last year, leaving one weekly call on Wednesdays westbound for the far east.

Zim Constanza was built in 2010 by Jiangsu Yangzijiang Shipyard in Jiangyin, China, and is a ship of 40,542 gross tons, 50,107 deadweight, with a capacity for 4,256 containers, including 698 reefers. It is owned by Rickmers Shipmanagement (Singapore) Pte Ltd (a major German shipowner), registered in Liberia, and on long term charter to Zim.
Through the fewnce photos of sahips at Halterm are not my favourite form of photo, but they do form useful comparisons. On April 28, 1975 Dart Europe was tied up in about the same place. Although it was a large ship of 30,491 gross tons, it could carry only 1556 TEU. First generation cranes were able to reach all the  way across the ship.

Built in 1970 Dart Europe was broken up in 1999, and Halterm has been extended to the south twice.

Pearl River I (updated)

One month and one day after its first visit to Halifax Zim's Pearl River I returned on Sunday January 16. As recounted on December 15 the ship was built as Zim Vancouver. It is the only ship on Zim's rotation without a traditional Zim name. An interesting feature of the ship is the radar scanner on its starboard bridge wing.[ Update: this is clearly an optical illusion - it is more likely a frame for an awning, to provide shelter on the bridge wing]

Originally founded as Israel's state shipping company Zim has been 100% privately owned since 2004. The Ofer Brothers Group are the primary owners and this ship is owned by them. The other fifteen Zim ships on their Global Service that call in Halifax are a mixture of chartered and owned vessels.

In the month since it was last here the ship has sailed across the Atlantic, called in several ports in the Mediterranean and reached the terminal port of Haifa. It has since retraced that route and will now call at ports on the east and west coasts, crossing the Pacific and ending in Busan Korea. It then will reverse that route and return to Halifax about March 30.

Zim's web site has more about the company's history and its extensive schedules at: http://www.zim.com/

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Back in Business-1000 hrs update

1. Pearl River I at pier 36 - the first arrival since Sunday.

2. Pearl River weighs anchor at 1000, and is the first piloted vessel to sail since Sunday.

By 1000 hrs AST the Port of Halifax was back in business, with ships entering and leaving. First to arrive was Pearl River I, a Zim container ship, bound for Halterm. It picked up its pilot about 0930.

First to leave was Pearl River, the CMA/CGM ship that has been in port since Sunday. It got underway from anchorage at 1000.

It is not unheard of, but certainly rare that two ships with such similar names would be passing each other in the harbour!

Pearl River I is a Liberian flag vessel, built in 2007 by Dalian New Shipbuilding in China. It is a 39,906 gross tons ship with a 4250 TEU capacity. It was built as Zim Vancouver, but adopted its current name soon after. It is owned by Ofer (Ships Holding) Ltd of Haifa- the principal shareholders in Zim. It is of the same class as other Zim ships that call here, but is the only ship on the rotation without a Zim name.

There will be a steady stream of ships coming in for the rest of the day, and pilots and tugs will be kept very busy.

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Zim Istanbul

Zim Istanbul arrived Monday May 31 and berthed at pier 36. She had to hold out in the harbour with tugs alongside for almost an hour until Alexandria Bridge cleared the berth.

It was a windy day (see also Tugfax) and the tugs Point Valiant (shown)and Point Chebucto had to hold the ship up into the wind. It appears that she has cleared her port anchor in case she needed to drop the hook. Fleet mate Zim Shenzhen had to anchor in the morning awaiting tugs.

Zim Istanbul was built in 2009 and can carry 4255 TEU.

Press reports indicate that Zim's financial health is improving following the termination of several charters and new terms with shipbuilders. The company is still in deep debt, and will need a return to better times before it recovers fully.

Zim Istanbul remained in port over night and sailed this afternoon.