Issue link: http://digital.nexsitepublishing.com/i/643635
10 January 2016 www.cargobusinessnews.com neWs, trends & analysIs that the offer will close in the first half of" 2016. "Many businesses and consumers rely heavily on affordable and reliable small package delivery services, in particular with the growth of e-commerce," EU Antitrust Commissioner Margrethe Ve- stager said in a statement. "The commis- sion has thoroughly assessed the markets affected by this takeover. The conclusion is that European consumers will not be adversely affected by the transaction." FedEx's bid to add the Dutch com- pany's vehicles, staff and customers will expand its reach and allow it take on Deutsche Post AG's DHL and UPS. "We are extremely pleased to receive the European Commission's unconditional approval," said David Binks, regional president Europe of FedEx Express. For more of the Bloomberg story: www.bloomberg.com dREWRy: CoNTAiNER ShiPPiNg loSSES CoUld gRoW UP To $5b iN 2016 Losses in the container shipping in- dustry could grow to $5 billion in 2016, as fuel prices bottom out and freight rates continue to fall, according to the latest issue of Container Forecaster by Drewry Maritime Research. Further widening of the supply-de- mand imbalance at the trade route level and insufficient measures to reduce ship capacity will lead to more freight rate re- ductions and sector-wide losses in 2016, the Drewry analysts said. The decline in global container ship- ping freight rates is anticipated to have been as great as 9 percent last year and Drewry is forecasting that carrier unit revenues will decline further in 2016, although at a slightly slower pace. Ex- cluding 2009, the past 12 months has seen the lowest spot rates in most major trade lanes and all at the same time. The researchers assert this is not solely due to fundamental supply/demand imbalances caused by weak volumes and over supply. End of year 2015 spot rates from Asia to the U.S. West and East coasts were around $815 and $1,520 per-FEU, respectively. These were easily the low- est since 2009 and with decent cargo growth and load factors of over 90 percent to the U.S. West Coast, the rate deterioration emphasizes that carriers have been fighting for market share and are positioning themselves further for the potential shifting of cargo from the West to the East Coast after the Panama Canal widening. Spot rates of below $200 per-FEU in the Asia-North Europe trade during June 2015 were also unprecedented. While spot rates have recovered since the start of 2016, Drewry forecasts these gains will be short-lived. Many stakeholders point to the fact that bunker prices of, for example, $140 per-ton in Rotterdam, are contributing to lower overall container freight rates, but Drewry believes carriers' most recent data suggests that they are no longer able to cut costs faster than the prevailing de - clines in the freight rate market. Drewry says that oil prices have prob- ably hit the market bottom right now and costs for the positioning of empty containers and vessel lay-ups will in- crease this year. Their latest calculation is that a 10,000-TEU ship would incur a minimum of $450,000 in reactivation costs if laid up in Asia for three months or more. The consequence of this is that Drewry expects industry losses to widen to over $5 billion in 2016. Ocean carriers have taken a great deal of corrective action during the final three months of 2015 in order to lift very low freight rates. But the removal of six major East-West services and the blank - ing of 32 voyages in November and 21 in December did little to improve supply/ demand imbalances. At the beginning of October 2015, average headhaul East- West load factors were only 85 percent, compared to 94 percent one year earlier. With the idle fleet touching one million TEUs in late 2015, or just under 5 per- cent of the global fleet, the analysts say decisions must be made by lines to re- move more vessels and restructure more trade lanes with new operational agree- ments. Big vessels no longer guarantee decent profitability and if Asia-to-North Europe contract rates are signed at an average $900 per-FEU (and Drewry says this could be too optimistic) for 2016, this equates to an estimated $1.4 billion loss for the carriers on one trade lane. "Comparisons are being made to 2009 when approximately 1.3 million TEUS (were) removed from a considerably smaller fleet," said Neil Dekker, Drewry's director of container research. "The mass scale lay ups were triggered by the fact that lines ran out of cash. The industry is not there yet as some lines are still making a profit and the very low fuel prices are propping them up. But a further two or three quarters of declin - ing financial profitability may trigger a notable rise in the idle fleet as we enter the second half of 2016." Cv iNTERNATioNAl ACqUiRES M&S ShiPPiNg CV International, a Norfolk-based freight forwarder and customs broker, has acquired M&S Shipping, a freight forwarder based in Virginia Beach. Under the acquisition, CV Internation - al will add M&S Shipping's three local employees to its Norfolk office. M&S Shipping was founded in 1987 as the U.S.-based subsidiary of M&S Ship- ping Group Ltd. of London, to fill the need for a single source logistics firm that could deliver ocean, air, truck and rail shipping services. Like CVI, M&S Ship- ping's business has been built on a results driven emphasis on customer service. "It was a good synergy for us with some of our collateral service lines to grow the business that they had," said Mike Cole- man, president of CV International. For more of the Virginia Business story: www.virginiabusiness.com