Singapore Shipping Corp

[jianjian]

Any idea when or where can find out the info on the new purchase? Imo they should release announcement or disclose it during agm?

[Nick]

Any idea when or where can find out the info on the new purchase? Imo they should release announcement or disclose it during agm?

It will likely be disclosed in the upcoming Annual Report or when the vessels are delivered. Not entirely sure for the reasons behind the lack of details but they must have legitimate reasons for it.

[greengiraffe]

Outlook Brightens for Ro-Ro Carriers

Bruce Barnard
1605 words
5 May 2014
Journal of Commerce Online
JOCO
English
© 2014 Commonwealth Business Media. All rights reserved.

After suffering through the longest recession in the crisis-ridden eurozone since World War II, roll-on, roll-off carriers could use an injection of good news. With a long-stalled economic recovery gaining traction in Europe and the outlook improving for car and truck shipments, ro-ro carriers are finally getting it.

That’s not to say the industry is out of the woods. The last six years of economic ineptitude squeezed operating margins, drove weaker companies to the brink of collapse and stalled urgently needed consolidation, making the recovery all the more difficult.

And just as the outlook started to brighten, Japanese antitrust authorities in March slapped a $225 million fine on six companies, including market leaders Wallenius Wilhelmsen Logistics, “K” Line and NYK Line for their part in a price-fixing scheme on ocean freight rates on international routes.

Whether the accelerating trade growth will come in time for some carriers is an open question. Some ro-ro carriers are still in danger of failing and others will have to withdraw from routes in the key northern Europe market when tough environmental regulations take effect next year. The once-buoyant Baltic Sea routes face further volume declines as the Russian economy hovers near recession. Shipping lines also face a tough battle with Eurotunnel, the operator of the undersea link between the U.K. and France, which has captured almost 39 percent of truck traffic in the world’s busiest ro-ro market.

Further financial hits are possible. Several class-action lawsuits were launched in the U.S. last summer, and European antitrust authorities are investigating alleged cartel activities. There are also concerns that growth in global automobile exports will slow as production increasingly shifts to import markets.

For now, however, the industry is enjoying a mini-boom, with traffic climbing above pre-recession levels. Ro-ro traffic grew 3.5 percent year-over-year in 2013 at Rotterdam, Europe’s largest port, driven by recovery on key U.K. routes. Containerized volume, by contrast, slipped 2.1 percent in the same period. Scandlines, the Danish-German ferry operator that sold its freight arm in 2012, carried 700,000 trucks and trailers on its passenger vessels in 2013, up 3.2 percent from the previous year, while passenger numbers were down 1.8 percent.

Meanwhile, DFDS, one of North Europe’s largest ro-ro shipping and logistics groups, is prowling for fresh acquisitions following a largely slow period after it snapped up Maersk’s Norfolkline subsidiary for around $425 million in 2010. And Greece, a key ro-ro shipping hub that was widely expected to default and exit the euro two years ago, is showing signs of recovery.

The uptick is coming at just the right time as carriers take delivery of new, larger ships, most earmarked for intra-Mediterranean long-haul routes between Europe and West Africa and the east coast of South America. Naples-based Grimaldi is adding three multipurpose container/ro-ro vessels to its fleet this year; fellow Italian carrier Atlantica di Navigazione is phasing in five ro-ro ships it acquired from Hong Kong’s Pacific Basin for $200 million; and Ignazio Messia, also Italian, will deploy four new container/ro-ro units at the end of the year. Danish carrier Nordana will deploy a new ro-ro ship by the end of the year, boosting capacity of its Mediterranean-Americas service by 35 percent.

The major talking point in the industry centers on the prospects for five of the world’s biggest ro-ro/container vessels that Atlantic Container Line will introduce in the North Atlantic in 2015, replacing the workhorse vessels that have carved out a niche market between Europe and North America over the past 30 years. The Grimaldi subsidiary faces a tough challenge filling the new vessels, which — at 3,800 20-foot-equivalent units — have more than twice the container-carrying capacity of the outgoing ships, 45 percent more ro-ro space and 31 percent more auto capacity, in a trade that has traditionally posted sluggish, if steady, growth in recent years. It will likely launch a direct South Atlantic-North Europe service that will benefit from connections with its Italian parent’s extensive European short- and long-haul networks.

Ocean car carriers, meanwhile, are looking forward to another year of steadily improving market conditions, with global sales of new automobiles expected to increase about 5 percent, mirroring growth in 2013, as rising sales in the U.S., China and, to a lesser extent, Europe offset a slowdown in emerging markets such as Brazil, India and Russia.

The share of new cars shipped by sea has stabilized at 16 to 18 percent of global sales in recent years, with Japan and South Korea driving exports, but changes in key regional markets will increasingly influence demand for seaborne transportation.

The supply-demand math looks pretty healthy, too. Shipowners ordered 38 car carriers in 2013 and eight more in the first two months of this year. The order book stands at 65 vessels for delivery through 2017, representing 12.4 percent of the existing fleet of 671 vessels, according to Norwegian Car Carriers. Eighteen ships joined the fleet in 2013, while 16 were sold for scrapping, amounting to net capacity growth of around 1.3 percent. Net supply is expected to grow about 4.4 percent this year, assuming no further scrapping. These rosy numbers likely prompted J.P. Morgan Global Maritime Investment Fund to team up with Norway’s Klaveness Marine Holding to take over Norwegian Car Carriers in February.

Underscoring the industry’s confidence is the rising number of orders placed by carriers, including Wallenius Wilhemsen and Hoegh Autoliners, for ships capable of carrying the equivalent of 8,500 automobiles that will be able to transit the enlarged Panama Canal and operate more flexible pan-global services.

Despite growing global sales, car carriers must be prepared to keep pace with shifts in export patterns as automakers shift production in, or closer to, importing nations, thus reducing the demand for seaborne shipments.

Mexico has emerged as a major market that likely will replace Japan as the second-largest exporter of cars to the U.S. by the end of the year, according to consulting firm IHS Automotive. A Honda plant that opened in the state of Guanajuato in February will produce about 200,000 Fit hatchbacks a year, boosting Mexico’s exports to 1.7 million units in 2014, some 200,000 more than Japan. And a new Mazda plant that opened a few weeks later with an annual output of 230,000 cars will help Mexico overtake Canada as the largest automobile exporter to the U.S. by the end of 2015, IHS Automotive predicts.

Japan’s “K” Line, whose 100-strong fleet carries some 3.3 million cars a year, believes the move of production plants to importing nations will limit growth in seaborne automobile trade, and is diversifying its client base to carry more construction and mining vehicles, heavy trucks, agricultural equipment and static ro-ro cargoes.

“K” Line rival MOL is embracing the shift in production to drum up business for its car carriers. It just launched a weekly three-vessel service transporting new cars from the east and west coasts of Mexico to ports in the North American Free Trade Agreement region.

The Atlantic service, operated by MOL subsidiaries Nissan Motor and World Logistics Service (USA), will connect the Port of Veracruz, Mexico, with Jacksonville, Fla.; Brunswick, Ga.; Baltimore; Port Newark and Davisville, R.I. A second weekly service will sail from the Mexican Pacific port of Lazaro Cardenas to San Diego; Richmond, Va.; Portland, Ore.; Tacoma and the Canadian port of New Westminster.

Meanwhile, carriers continue to add services to keep pace with growing regional markets for cars, trucks and mining equipment. Wallenius Wilhelmsen expanded its service to South America’s west coast in April, adding a monthly call to San Antonio, Chile, and boosting a network spanning 13 ports in Europe, the U.S., Mexico and Latin America.

For now, the ro-ro sector’s most pressing problem is the potential fallout from new European Union environmental regulations coming into force in January 2015 that mandate fuel sulfur content of ships operating in the North Sea, the Baltic and the English Channel to be 0.1 percent, down from the current 1 percent.

DFDS Chief Executive Niels Smede-gaard has warned that the 40 to 50 percent higher cost of cleaner fuel will lead to bankruptcies and route closures. The Danish line expects to spend nearly $140 million to equip 20 vessels with “scrubbers” that remove sulfur from exhaust gases, but it already has stopped serving one Baltic route in response to the new regulations and another four to seven are at risk of being shut down.

Older vessels that can’t be fitted with scrubbers or don’t justify heavy investments likely will be switched to southern European routes where the regulations take effect in 2020. DFDS plans to impose a low-sulfur surcharge that will lead some shippers to switch to trucks and thus undermine the EU’s policy of encouraging more freight shippers to use greener sea and rail transport.

The industry could face a radical shakeup in its key North European market in early 2015, with weaker carriers calling it quits and stronger ones slugging it out in a fresh outburst of consolidation.

Contact Bruce Barnard at mailto:brucebarnard47@hotmail.com.

To view photo, click http://www.joc.com/sites/default/files/f...ow-600.jpg


United Business Media Global Trade

Document JOCO000020140505ea5500001

[valuebuddies]

Mr Ow has been always well on timing, look forward to welcome two ships on board!

[Nick]

Surprising news - Big Boss Mr Ow C K added 70 lots at 24.5 cents per share today. He last purchased shares (20 lots) in March 2009 for 13 cents each.

(Vested)

[Drizzt]

Ocean carrier K Line has ordered two new car carrier vessels, each with a capacity for 7,500 units. The latest order, which will be delivered in 2017, follows its recent contract for eight vessels, which will be delivered between 2015 and 2016. The two new orders are being built by Shin Kurushima Dockyard in Japan.

“By adding these two new additional ships, line-up of our new next generation car carrier vessels, with better stability and increased fuel efficiency, will expand to a total of ten,” said the company in a statement. “We are committed to continue to deliver value-added efficiency as well as the capability of handling an even wider variety of cargo mix to assure our services successfully meet the needs of our valued customers in order to be best suited for not only passenger cars but also other ro-ro cargoes.”

K Line’s fleet comprises over 100 vessels, ranging from small-sized 800-unit pure car carriers for intraregional traffic, to 6,000-unit pure car and truck carriers sporting a number of decks with variable heights for the safe carriage of passenger and commercial vehicles, as well as high-and heavy machinery on deep sea routes.

K Line’s latest fleet additions will be equipped the latest technology to mitigate wind pressure for betterx fuel consumption according to the company. They will also feature loading equipment inside the cargo hold and loading ramp to handle other ro-ro cargo.

Shin Kurushima Dockyard has also recently delivered a post-Panamax car carrier to NYK Line. The Aries Leader, which has capacity for 7,000 units and a gross tonnage of almost 70,000 tons, was built at the Onishi Shipyard in Ehime prefecture and is the very first post-Panamax car carrier to be delivered in Japan.

http://www.automotivelogisticsmagazine.c...rier-fleet

[Drizzt]

Ocean carriers providing services for vehicle import and export to Russia have a lot more to think about in the current climate. Global trade routes continue to fragment, there is a growth in intra-regional supply and vessel sizes are increasing as the industry seeks greater efficiencies by moving larger volumes. There is also the looming impact of imminent IMO sulphur emission laws around the North European and North American coasts.

As WWL’s president of the Europe region, Eric Noeklebye (pictured), made clear at this year’s Automotive Logistics Russia conference held in Moscow, the business model for ocean shipments has and will continue to change quite dramatically.

The average life expectancy for a deep-sea car carrier is between 25 and 30 years but a vessel built in 1985 is moving on a far more complex network of trade routes these days. Japan once accounted for 85% of deep sea shipments, with the majority made up exports to North America, according to Noeklebye. That is down to 30% now and 40% of trade is moving out of and between other Asian markets. Carmakers are manufacturing on all continents and volumes are moving between them. Central and North Africa is one recent example, with manufacturing starting to take off in Nigeria and Morocco.

Noeklebye said the challenge now when investing $100m in a deep sea vessel is planning where it is going to be used for the next 25 years. Lessons learned from China means this is by no means clear. WWL had expected to be exporting around 1m vehicles out of China by now when plans were discussed in 2006, he admitted. As it turned out the industry now exports nearly 1m units from Europe to China instead, while exports out of China remain modest.

That all comes into play when contemplating the complex prospects of moving volumes into Russia. There is a lot of local sourcing from Europe but the fragmentation of supply routes there now mean vehicles are coming from various clusters in eastern Europe, Germany, the UK, Sweden and Spain to name a few, and that is something that is going to increase.

“Looking at the next five years, in 2014 there are 430,000 units from European manufacturing locations going into Russia,” said Noeklebye. “By 2018 we expect this to grow to nearly 600,000 light vehicles moving into this market.”

This is also largely one-way traffic, he added.

Such imbalance is also a concern for short sea operators, such as Finnlines, which operates almost exclusively around the northern coast of Europe. Blasco Majorano, Finnlines’ traffic manager, North Sea and Biscay, noted the imbalance in trade to Russia which made offering regular services difficult. Nevertheless, he said the company was focused on developing business there and that it was trying to enlarge the number of ports it visited and expand its presence on the market.


“It is a key point to be efficient in the operation and avoid waste, which impacts the service,” said Majorano. “We are investing in vessels that are more flexible and not focused on one market.”

Short sea providers offer a useful service to deep sea carriers like WWL. It is inefficient for larger vessels, such as the post Panamax vessels now coming into service, to make as many individual port calls around the Black Sea and Baltic ports of entry as the short sea operators do. Noeklebye envisaged a move to a more of a hub and spoke set up, with WWL relying on short sea operators such as UECC to handle onward regional delivery. That said, those regional providers are also now investing in larger vessels to make their own efficiency gains as costs increase.



UECC has ordered two pure car and truck carriers that are capable of being powered by both liquefied natural gas along with heavy fuel or marine gas oil
Scrub it until it’s green
One of the influences moving them in that direction is the cost associated with investing in the fuel and technology to meet new sulphur emissions laws that are coming into force at the beginning of next year around the coast of northern Europe. The MARPOL rules coming into effect for 2015 restrict the sulphur content of bunker fuel to 0.1% in the Baltic and North Seas and the English Channel.

WWL is looking at number of options, including liquefied natural gas (LNG) and abatement technology (scrubbers). But it is also looking upstream to solutions that the refineries themselves could offer. The company has a bold roadmap to have a completely emission free fleet by 2040 said Noeklebye.

Finnlines is committed to the use of scrubber technology and Majorano said the company would have the technology on all its vessels next year.

“Next year will be a challenge but we are confident that the scrubber technology is the way to improve,” he said. He added that the drive for efficiency was also down to intermediate steps to reduce fuel consumption such as the reblading of vessel propulsion systems, which it was also doing.

UECC, meanwhile, has ordered two pure car and truck carriers to add to its 23-vessel fleet that are capable of being powered by both liquefied natural gas (LNG) along with heavy fuel or marine gas oil, according to Björn Svenningsen, head of sales and marketing. The contract for the dual fuel new builds has been signed with Kawasaki Heavy Industries (KHI) for delivery in the second half of 2016. They have been jointly developed with KHI, UECC, Wallenius Marine and NYK Technical Group.

http://www.automotivelogisticsmagazine.c...rade-flows

[merxantia]

Director Ow has chosen a good timing to pick up a little of these shares. The counter should be trading cum dividend pretty soon

[Boon]

AR2013/2014 is out

http://infopub.sgx.com/Apps?A=COW_Prospe...te&F=20871

Here are some info on the two vessels to be acquired:

Page 3
To augment our fleet, we are purchasing two more vessels this year, scheduled for delivery this August and November respectively. Both sister vessels are 10 years old and have a carriage capacity of 6,500 cars each. They are on similar long term charters as our earlier acquisitions, M.V. Boheme and M.V. Sirius Leader with potential aggregate charter hire of US$188 million over the expected life of the charter.

Page 95
(b) Capital commitment
During the financial year, the Group has committed to buy two vessels for a total consideration of US$33,000,000 (2013: Nil). The delivery of the vessels will be between August 2014 and February 2015.

(not vested)

[Nick]

M.V Boheme
Acquisition Price: $50 million
Revenue: $10.5 million
Yield: 21%

Sirius Leader
Acquisition Price: $16 million
Revenue: $4.5 million
Yield: 28%

2 x 6,500 CEU vessels
Acquisition Price: $33 million
Revenue: 188 / 15 = $12.5 million
Yield: 37%

1) Cost price significantly below most of our expectations. Basically each ship cost as much as the much smaller Sirius Leader. SSC can easily finance half of the acquisition price with cash on hand. Gearing will remain low.

2) The high revenue yield of 37% would imply EBIT margins could be higher than the usual 35 - 40%. This is very high unlevered ROA especially since the vessel charters are tax-free.

3) Better than expected deal. Kudos to OCK acumen. Vessels would increase ship owning contributions substantially in the coming years.

(Vested)