Issue link: http://digital.nexsitepublishing.com/i/643635
4 January 2016 www.cargobusinessnews.com neWs, trends & analysIs PANAMA CANAl AdMiNiSTRAToR: ExPANSioN Will oPEN iN JUNE 2016 In an exclusive interview with the American Journal of Transportation, the administrator of the Panama Canal Au- thority – refuting a statement earlier this week by his second in command – says the expanded canal should be ready for inauguration in June, following delays costing the authority more than a half billion dollars in revenue. As previously reported in CBN, early this year Panamanian President Juan Carlos Varela had said the canal expan - sion would open in May 2016. Panama Canal Authority Adminis- trator Jorge L. Quijano told AJOT on Jan. 21 that the opening to traffic of the expanded canal would not be as late as "early the second part of this year," as stated Jan. 18 by Francisco Miguez, the authority's executive vice president of finance and administration of the Panama Canal Authority, at the SMC3 Jump Start 2016 conference in Atlanta and reported by AJOT. "I apologize if that's what he [Miguez] said," Quijano told AJOT prior to speak - ing at an American Association of Port Authorities conference in Tampa. "Early May or late May, we should be function- al, and maybe June for the inauguration. I firmly believe it's achievable for us to have inauguration sometime in June." For more of the AJOT story: www. ajot.com MAERSk STRUgglES To dEAl WiTh loNg-TERM ShiPPiNg SlUMP A.P. Møller-Mærsk, parent company of Mærsk Line, made a big gamble when it decided to order mega-ships and depend on economies of scale to help survive the worldwide recession, according to The Wall Street Journal. In 2011, it ordered 20 of the world's largest container ships, the Triple-Es — featuring new designs at $185 mil - lion apiece. Shipping executives termed the move as part of a shipping-industry "arms race." By buying bigger ships with more efficient engines, Mærsk and its major competitors hoped to squeeze out costs — and smaller competitors. They hoped to winnow down the massive overcapac- ity of shipping tonnage built up after the crisis, and position themselves for profit when growth picked back up again. Five years later, the wager looks far from a sure bet. Global shipping demand cooperated at first, climbing between 3 percent and 5 percent annually from 2011 to 2014, according to analysts' estimates. Small shipping firms, however, man- aged to stay in business. In mid-2014, they started to benefit from fast-falling fuel prices, enabling them to cut their own shipping prices. As overcapacity swelled to about 30 percent, shipping rates per-container on the Europe-Asia loop fell from about $1,765 at the start of 2014 to as low as $934 by November of that year. Then global demand vanished. Going into 2015, Mærsk Chief Executive Nils Andersen was expecting another year of about 3 to 4 percent growth in demand. Instead, it came in at 1 percent, he said in an interview. Demand on Asia-to-Eu - rope routes fell by as much as 5 percent, and freight rates fell to an average of $620 a container for the year. Suddenly, the industry was reeling even more than it was in the depths of the global recession. "In 2009, we saw volumes collapse by 30 percent, and freight rates fell," he said, "but not as much as in 2015." The struggles of Mærsk, the world's largest container shipping line by vol - ume, highlight the uneven recovery in the global economy since the crisis. Many parts of Europe remain stalled by high debt and unemployment, slowing growth and trade. Asia — particularly China, which helped power the global economy amid the worst of the crisis — is now petering out, too. Andersen says he expects a pickup this year, thanks to the weaker yuan, which should boost Chinese exports, and "rea- sonable economic growth in Europe." That should translate into shipping- demand growth of about 3 percent this year, he says. "With both oil prices and freight rates down you tend to get very worried with all lines pointing down," he said. "But this is not the way the world works. We have to prepare ourselves for the time that things normalize." Despite some fresh signs of consolida- tion, the industry remains dominated by just over a dozen European and Asian operators. They have scrambled to seal op- erating alliances — and in a few cases, full- blown mergers — to help reduce capacity . But big ship purchases are making ca- pacity reduction harder to pull off. New ship deliveries will boost overall capacity this year by 1.3 million containers, or 5 percent, figures Jonathan Roach, at bro - kerage Braemar ACM Shipbroking. He expects demand growth, however, to max out at 1.5 percent, the lowest since 2009. "It's a grim picture for container ship - ping," said Mr. Roach. "And it won't change in the near term." Mærsk hasn't canceled any of its firm Triple-E orders, from 2011 and others made last year. But it said in November that it was passing up options to buy six more of them, and it was putting off plans to purchase eight slightly smaller vessels. For more of The Wall Street Journal story: www.wsj.com kUEhNE + NAgEl PARTNERS WiTh glAxo SMiThkliNE Kuehne + Nagel and Glaxo SmithKline signed an end-to-end global logistics