Super User
Hits: 137

PIL Lines boosts Asia-ECSA service from a fortnightly to weekly service


SINGAPORE-BASED Pacific International Lines (PIL) has added capacity
to the Asia-to-east coast of South America (ECSA) service - a decision
that will turn its fledgling entry into that trade lane from a
fortnightly to a weekly service.

Sources earlier said the carrier was preparing to add more tonnage as
the freight rates on this trade lane had been "surprisingly strong,"
despite PIL's addition of five vessels back in April, according to IHS
Media.

In addition, sources in Brazil have confirmed that PIL will launch in
June a weekly service from Asia to the ECSA, on the back of rising
freight rates and growing cargo volumes to/from both Argentina and
Brazil, and due to a lack of space to handle that growth, particularly
on the head-haul southbound lane. PIL will add 16,000 TEU of capacity,
which will boost overall capacity on the trade lane to 360,000 TEU.

Dozens of shippers have complained for months about the trade lane's
lack of space. It had 18 carriers squeezed into three joint services
as late as 2016, in order to stop massive losses for ocean carriers,
who were dealing with sub-US$600 per TEU rates on the headhaul China
to Brazil for most of 2015.

After Hanjin Shipping's bankruptcy and demise, and other mergers,
there were 15 carriers squeezed into just three strings prior to the
PIL launch.

Shippers complained about inadequate space and the subsequent high
freight rates. The rates have been among the highest in the world
during the past year, at times exceeding $3,500 per FEU for the
Shanghai to Santos trade. More recently, spot rates have moderated
somewhat and now average about $2,200 to $2,500 per FEU for Shanghai
to Santos.

One freight rate analyst said he didn't think that the addition of
five more vessels, with an average of about 3,200 TEU (which is an
additional 16,000 TEU for the trade lane) would add sufficient extra
capacity to have a "dramatic effect on freight rates" from China to
Brazil and Argentina.

"If you do the calculation and add that 16,000 TEU to the existing
360,000 TEU, you are only increasing the capacity by around 4.44 per
cent," said Patrik Olstad Berglund, the CEO of Xeneta, the rate
management platform. "I don't think that will be affecting the freight
rates too much.

"However, if the carriers increase vessel size and another full
service with vessels averaging 9,000 TEU starts up (which would be 10
x 9,000 for a weekly service) then that would be a different ball
game. You have to keep reminding yourself though, that this is a
volatile trade lane and things can change very rapidly."

A consultant who works for PIL confirmed that the first vessel - the
3,200-TEU Kota Machan - will launch the new weekly service and will
call at Ningbo, Shekou, Singapore, Rio de Janeiro, Santos, Paranagua,
Itapoa, Navegantes, Montevideo, and Buenos Aires. On the return leg
back to Asia: Buenos Aires straight to Singapore, Hong Kong, then
Shanghai (plus Santos on inducement).

"We are confident the demand is there and that a weekly service is
what PIL's customers require," the consultant said.

The end of the line is Buenos Aires and the Kota Machan will arrive
there on July 3.

PIL said a northbound call at the Port of Santos will be added
"subject to inducement," but the signs coming from shippers and
terminals in the Brazilian port city are that there will be at least
two if not three successful "induced" calls per month.

"PIL is working hard to get the northbound Santos call as a fixed-day
regular call," the PIL consultant said. "PIL has connections in Brazil
for all over the world, and of course en route to Asia there are
connections to east coast of Africa, the Middle East, and Arabian Gulf
and we may look to add calls to South Africa in the future; we are
studying this."

The Singapore-headquartered company added that the slots it currently
takes out on the Multicarrier Loop 1 vessel-sharing agreement (VSA)
operated by CMA CGM, Cosco, Evergreen, and Yang Ming would continue
"until the end of July."

Super User
Hits: 74

National fleet: Singaporean liner cancels deal over duty, tax laws

Plans by the Federal Government to facilitate a national fleet for Nigerian ship owners has suffered a setback as Pacific International Lines (PIL), a Singaporean liner, pulled out of the trade agreement it signed with the Federal Government because of duty and tonnage laws.

This is coming barely two years after the Federal Government signed a Memorandum of Understanding (MoU) with the Singaporean shipping line in order to establish a private sector-driven national carrier with stake holding of 60 to 40 per cent between PIL and Nigerian ship owners respectively.

The company complained that Nigerian fiscal policies, tax laws, tonnage tax laws and other laws that affect international shipping in the country would hinder it to compete with other global liners operating in Nigeria.

It was learnt while most countries declared zero duty on imported ships, an average import duty charged in Nigeria is 14 per cent of the value of vessel.

The President of Shipowners Association of Nigeria (SOAN) Engr. Greg Ogbeifun, who was not happy with cancellation of the deal, said in Lagos that PIL had previously came to Nigeria to express willingness to have a Joint Venture (JV) partnership with the country to re-establish a national fleet flying the Nigerian flag.

However, Ogbeifun said that the shipping line pulled out of the deal because of the unfavourable fiscal policies of the Federal Government and the cut-throat duty payments collected by Nigeria Customs Service (NCS), Nigerian Ports Authority (NPA) and other agencies.

He faulted claims by the Minister of Transportation, Rotimi Amaechi, that the deal failed because Nigerian shipowners were unable to provide 60 per cent equity required for the national carrier.

The minister had earlier said that the inability of the players to come together frustrated the PIL deal.

Ogbeifun, who was a member of the ministerial committee set up for the establishment of national fleet, however, explained that Nigeria did not get to the point of equity because PIL pulled out of the whole arrangement after the committee came back from Singapore.

He said: “I am a member of the ministerial committee, I can tell you that PIL pulled out of the deal because the Nigerian fiscal policies do not make establishment of a fleet of that nature possible where they would be involved competition in global trade. Our fiscal policies, tax laws, tonnage tax laws and other laws affect international shipping.

“If you take a Panamax crude tanker of $40million, you would have to pay another 14 per cent duty in order to import the vessel into the country despite flying Nigerian flag.”

Ogbeifun said that Nigerian ship owners were at disadvantage because of the shipping laws in Nigeria, which had made competition become difficult with foreign shipping lines that didn’t pay duty to acquire vessels in their countries.

This, he explained, made the cost of carrying cargo by foreign liners cheaper than shipping companies in Nigeria.

He noted that this was the reason why Nigerian shipping firms could not compete internationally.

Ogbeifun added that PIL pulled out of Nigerian deal when the Federal Government failed to review the fiscal policies that hinder competitive shipping in the country.