UAE allows 100% ownership of businesses by foreign nationals

UAE allows 100% ownership of businesses by foreign nationals

Several categories of business licenses will no more require Emiratis as sponsors.
The landmark UAE reform allowing foreign investors 100 per cent ownership of businesses will take effect from December 1, 2020.
The long-anticipated and widely discussed Foreign Direct Investment Law, which will have game-changing implications on the investment landscape of the nation, was approved by the President, His Highness Sheikh Khalifa bin Zayed Al Nahyan.
As per the new FDI regime, several categories of business licences will no more require Emiratis as sponsors with 51 per cent shareholding rights from December 1.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said the UAE now enjoys a fertile legislative environment for foreign direct investors in order to enhance the nation’s competitiveness.
The FDI law, which was adopted in September 2018 through Federal Legislative Decree No 19 of 2018 and an ensuing resolution by the UAE Council of Ministers No 16 of 2020 in March 2020, amends Commercial Companies Law (CCL) No 2 of 2015.
Under the existing CCL, foreign shareholders are restricted to own only up to a maximum of 49 per cent in a ‘limited liability company’ (LLC) operating as an onshore UAE business. The law, therefore, requires an Emirati individual or 100 per cent Emirati-owned company to hold the balance 51 per cent share as a local sponsor.
The new law has amended 51 articles of CCL and added new ones, mostly focusing on the regulation of provisions of establishing companies with limited liability shareholding.
The UAE Cabinet Resolution in March 2020 determined the ‘Positive List’ of sectors and economic activities in which the FDI law is permissible and the percentage of ownership is 100 per cent in companies outside free zones. However, this remained subject to certain criteria being satisfied.

Global trade declines, but freight forwarders experience mixed fortunes

Global trade declines, but freight forwarders experience mixed fortunes

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The coronavirus pandemic led to an 11.6% year-on-year contraction in air and sea freight forwarding volumes in the first half of the year.
Global trade suffered from the double-blow of reduced factory output in China and then the subsequent fall in demand as social lockdowns were ordered.
According to new analysis by supply chain consultancy Transport Intelligence (Ti), the air freight sector bore the brunt of the declines, with the global market shrinking by 15.3% in the first half the year, and Ti forecasted today that, despite signs of recovery in the second half, the full-year picture would show a decline of 13.9%..
And that came on the back of a full-year market contraction of 4.1%, as “the US-China trade war and a slowdown in global automotive sales began to bite”.
Meanwhile, the sea freight sector was more robust, recording a decline of 7.6% in the first six months of 2020, with Ti predicting a full-year contraction of 6.4%.
The new report notes second quarter global trade volumes falling 14.9%, “a rate that exceeded the very worst declines of the global financial crisis”.
Naturally, freight forwarders have been unable to escape these declines, but among a sample group of six – DHL, DB Schenker, Expeditors, K&N, Agility and Damco – all posted increased year-on-year revenue.
However, Ti noted that their financial fortunes in the first half of the year varied wildly: for example, Kuehne + Nagel saw a 15.5% reduction in volumes and a 1.4% increase in revenue; Expeditors saw volumes drop 9% but revenue increase 47.2%; and Damco saw volumes drop 11.2% but grew revenue 63.2%.
Ti said the forwarding sector’s fortunes for the remainder of the year largely depended on how much capacity carriers were able to reintroduce.
“Air forwarders face uncertainty as passenger flights, which carry around half of all global air freight volumes, look unlikely to return to pre-pandemic levels for years to come.
“Sea forwarders and their shippers are placing increased pressure on carriers to reinstate blanked sailings, as manufacturing capacity and consumer demand gains strength globally,” it said, but warned that despite the recent strength in some trades, considerable risks continued to overshadow the industry.
“The picture is clear – 2020 will be a ‘down year’ for the market, with no country or region set to escape contraction.
“While there are positive signs for some in the market, from a cyclical re-stocking cycle and the upcoming fourth-quarter peak seasons, there remain significant downside risks – none more significant than the potential for a second wave of virus cases, further lockdowns and ongoing economic strife in many western consumer markets,” it said.

Deep Losses Continue Into 2021

Deep Losses Continue Into 2021

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The International Air Transport Association (IATA) announced a revised outlook for airline industry performance in 2020 and 2021
Geneva – The International Air Transport Association (IATA) announced a revised outlook for airline industry performance in 2020 and 2021. Deep industry losses will continue into 2021, even though performance is expected to improve over the period of the forecast.
  • A net loss of $118.5 billion is expected for 2020 (deeper than the $84.3 billion forecast in June).
  • A net loss of $38.7 billion is expected in 2021 (deeper than the $15.8 billion forecast in June).
  • Performance factors in 2021 will show improvements on 2020; and the second half of 2021 is expected to see improvements after a difficult 2021 first half. Aggressive cost-cutting is expected to combine with increased demand during 2021 (due to the re-opening of borders with testing and/or the widespread availability of a vaccine) to see the industry turn cash-positive in the fourth quarter of 2021 which is earlier than previously forecast.
    “This crisis is devastating and unrelenting. Airlines have cut costs by 45.8%, but revenues are down 60.9%. The result is that airlines will lose $66 for every passenger carried this year for a total net loss of $118.5 billion. This loss will be reduced sharply by $80 billion in 2021. But the prospect of losing $38.7 billion next year is nothing to celebrate. We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose,” said Alexandre de Juniac, IATA’s Director General and CEO.
    2020
    The COVID-19 crisis challenged the industry for its very survival in 2020. In the face of a half trillion-dollar revenue drop (from $838 billion in 2019 to $328 billion) airlines cut costs by $365 billion (from $795 billion in 2019 to $430 billion in 2020).
    “The history books will record 2020 as the industry’s worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack-up unprecedented losses. Were it not for the $173 billion in financial support by governments we would have seen bankruptcies on a massive scale,” said de Juniac.
    All major operational parameters in the passenger business were negative:
  • Passenger numbers are expected to plummet to 1.8 billion (60.5% down on the 4.5 billion passengers in 2019). This is roughly the same number that the industry carried in 2003.
  • Passenger revenues are expected to fall to $191 billion, less than a third of the $612 billion earned in 2019. This largely driven by a 66% fall in passenger demand (measured in Revenue Passenger Kilometers/RPK).
  • International markets were hit disproportionately hard with a 75% fall in demand. Domestic markets, largely propelled by a recovery in China and Russia, are expected to perform better and end 2020 49% below 2019 levels.
  • Further weakness is demonstrated by passenger yields which are expected to be down 8% compared to 2019 and a weak passenger load factor which is expected to be 65.5%, down from the 82.5% recorded in 2019, a level last seen in 1993.
  • Operational parameters for cargo are performing significantly better than for passenger but are still depressed compared to 2019:
  • Uplift is expected to be 54.2 million tonnes in 2020, down from 61.3 million tonnes in 2019
  • Cargo revenues are bucking the trend, increasing to $117.7 billion in 2020 from $102.4 billion in 2019. A 45% fall in overall capacity, driven largely by the precipitous fall in passenger demand which took out critical belly capacity for cargo (-24%), pushed yields up by 30% in 2020.
  • “Cargo is performing better than the passenger business. It could not, however, make up for the fall in passenger revenue. But it has become a significantly larger part of airline revenues and cargo revenues are making it possible for airlines to sustain their skeleton international networks,” said de Juniac.
    In 2019 cargo accounted for 12% of revenues and that is expected to grow to 36% in 2020.
    2021
    Airline financial performance is expected to see a significant turn for the better in 2021, even if historically deep losses prevail. The expected $38.7 billion loss in 2021 will be second only to 2020 performance.
    On the assumption that there is some opening of borders by mid-2021 (either through testing or growing availability of a vaccine), overall revenues are expected to grow to $459 billion ($131 billion improvement on 2020, but still 45% below the $838 billion achieved in 2019). In comparison, costs are only expected to rise by $61 billion, delivering overall improved financial performance. Airlines will still lose, however, $13.78 for each passenger carried. By the end of 2021 stronger revenues will improve the situation, but the first half of next year still looks extremely challenging.
    Passenger numbers are expected to grow to 2.8 billion in 2021. That would be a billion more travelers than in 2020, but still 1.7 billion travelers short of 2019 performance. Passenger yields are expected to be flat and the load factor is expected to improve to 72.7% (an improvement on the 65.5% expected for 2020, but still well below the 82.5% achieved in 2019).
    The cargo side of the business is expected to continue with strong performance. Improved business confidence and the important role that air cargo should play in vaccine distribution is expected to see cargo volumes grow to 61.2 million tonnes (up from 54.2 million tonnes in 2020 and essentially matching the 61.3 million tonnes carried in 2019). A continued capacity crunch due to the slow reintroduction of belly capacity from passenger services combined with a higher proportion of time and temperature sensitive cargo (vaccines) will see a further 5% increase in yields. This will contribute to strong performance in cargo revenues which are expected to grow to an historic high of $139.8 billion.

    Challenges to Recovery

    While the industry will see improved performance in 2021 compared to 2020, the road to recovery is expected to be long and difficult. Passenger volumes are not expected to return to 2019 levels until 2024 at the earliest, with domestic markets recovering faster than international services. Several critical challenges need urgent attention:
    Debt Levels and Financial Support:Airlines are surviving on financial life support from governments. Even after $173 billion of government support of various kinds in 2020, the median airline has just 8.5 months of cash to survive. Many have far less as the industry enters into the critical winter period, which is characterized by weak demand even in normal times. While cash burn has diminished from the peak of the crisis, airlines are still expected to burn an average of $6.8 billion/month during the first half of 2021, before the industry turns cash positive in the fourth quarter of 2021.
    “The financial damage of this crisis is severe. Government support has kept airlines alive to this point. More is likely needed as the crisis is lasting longer than anyone could have anticipated. And it must come in forms that that do not increase the already high debt load which has ballooned to $651 billion. Bridging airlines to the recovery is one of the most important investments that governments can make. It will save jobs and kick-start the recovery in the travel and tourism sector which accounts for 10% of global GDP,” said de Juniac.
    Closed Borders/Quarantine:The biggest factors impeding the industry’s recovery are travel restrictions and quarantine measure that effectively prevent a meaningful revival of travel. The most immediate and critical solution is the safe re-opening of borders using systematic COVID-19 testing. Longer-term, the widespread availability of COVID-19 vaccinations should enable borders to remain open without testing or restriction, but the timeline for vaccine availability is uncertain.
    “We have the ability to safely re-open travel with systematic testing. We cannot wait on the promise of a vaccine. We are preparing for efficient vaccine distribution. But testing is the immediate solution to meaningfully re-open air travel. With 46 million jobs at risk in the travel and tourism sector alone because of plummeting air travel, we must act fast with solutions that are at hand. We have fast, accurate and scalable testing that can safely do the job. The airlines are ready. The livelihoods of millions are in the hands of governments and public health authorities. Governments understood the criticality of a viable air transport sector when they invested billions to keep it afloat. Now they need to protect those investments by giving airlines the means to safely do business,” said de Juniac.

    Confidence

    “The numbers couldn’t get much worse. But there is a way forward. With the continued financial support of governments to keep airlines financially viable and the use of testing to enable travel without quarantine, we have a plan to overcome the worst immediately. And longer-term the progress on vaccines is encouraging. Most importantly, people have not lost their desire to travel. The market response to even small measures to lift quarantine is immediate and strong. Where barriers have been removed, travel rebounded. The thirst for the freedom to fly has not been overcome by the crisis. There is every reason for optimism when governments use testing to open borders. And we need to make that happen fast,” said de Juniac.

    Regional Summary

    While all regions are impacted by the crisis, those airlines with larger domestic markets or with large cargo operations are performing better. The differences between the regions become more exaggerated in 2021 with Asia Pacific and North American carriers seeing the most significant reductions in expected losses.
    REGION2020
    DEMAND
    VS 2019
    2020 CAPACITY VS 20192020 PROFITS2021
    DEMAND
    VS 2020
    (VS 2019)
    2021
    CAPACITY
    VS 2020
    (VS 2019)
    2021 PROFITS
    World-66.3%-57.6%-$118.5b+50.4%
    (-50%)
    +35.5%
    (-43%)
    -$38.7b
    North America-66.0%-51.6%-$45.8b+60.5%
    (-45%)
    +36.4%
    (-34%)
    -11.0b
    Europe-70.0%-62.4%-$26.9b+47.5
    (-56%)
    +35.5%
    (-49%)
    -$11.9b
    Asia Pacific-62.0%-55.1%-$31.7b+50.0%
    (-43%)
    +38.4%
    (-38%)
    -$7.5b
    Middle East-73.0%-64.5%-7.1b+43.0%
    (-61%)
    +23.6%
    (-56%)
    -$3.3b
    Latin America-64.0%-60%-5.0b+39.0%
    (-50%)
    +34.3%
    (-46%0
    -$3.3b
    Africa-72.0%-62.8%-$2.0b+35.0%
    (-62%)
    +21.5%
    (-55%)
    -$1.7b
    North American airlines benefit from an earlier recovery in the US domestic market (the largest domestic market in the world) and have already restructured more extensively than other regions which supported their pre-crisis industry-leading financial performance.
    European airlines rely to a large extent on international market revenues, economies were hit by a severe 2nd wave of COVID-19, and so stronger revenues do not arrive until later in 2021 with fairly widespread vaccine availability (though not at developing country ends of their markets).
    Chinese airlines and China’s economy lead the recovery, with the large Chinese domestic market allowing a return to profitability by the end of 2020.
    – Success in virus control helps some other parts of the region, ahead of vaccine distribution.
    – The importance of cargo is a further factor leading to this region experiencing stronger financial performance than other regions.
    Middle East airlines have been challenged by the importance of connecting traffic over Gulf hubs and elsewhere, since long-haul air travel markets have been slowest to reopen. However, airlines in this region have grown their cargo business and this has been some offset.
    Latin American airlines have received little government support, leading to bankruptcies, and COVID-19 containment has been challenging. Some key markets have remained open and air travel has been helped by the opening of borders with a negative COVID19 test requirement rather than quarantine. However, vaccine distribution and vaccination may be a little behind more developed markets, leading to a more delayed recovery in financial performance.
    African airlines have also received little government support and there have been a number of failures. The relative lack of cold chain facilities in the region may delay the distribution of vaccines and this region is expected to experience a delayed recovery in financial performance.

    Colombo port congestion: 50,000 teu logjam drives delays and rate hikes

    Colombo port congestion: 50,000 teu logjam drives delays and rate hikes

    November 27, 2020: A backlog of 50,000 teu at the port of Colombo is causing chaos for South Asian transshipment cargo.
    The capital of Sri Lanka has been under a Covid-lockdown for the past couple of weeks, while a labour shortage at the city’s container terminals has caused congestion since early October.
    Now the bottleneck is impacting supply chains in neighbouring India and Bangladesh.
    Rohan Masakorala, chief executive of Shippers’ Academy Colombo, said the port of Colombo’s workforce had been reduced by around 30%, resulting in a big hit to crane productivity and inter-terminal trucking.
    “The backlog is huge, and could take six-to-eight weeks to clear up,” he told The Loadstar.
    “Colombo International Container Terminal (CICT) mainly focuses on transhipment, while the other two terminals handle feeder vessels, so there is a vital need for inter-terminal transfers.
    “The lack of drivers meant containers started accumulating in the storage areas of the port, which began impacting feeder vessels – waiting for more than a week, sometimes – and then even mainline vessels were delayed by one or two days.”
    Given that Colombo handles around 600,000 teu a month, Mr Masakorala said regional feedering and connectivity was being massively disrupted, with carriers forced to drop off boxes in India, Singapore and Dubai.
    He added: “Colombo isn’t the only port impacted by Covid, of course, but as a transhipment hub, the impact is much higher and the whole region is affected. Even now, there are 23 ships waiting for a berth, whereas normally the port receives 12-16 vessels a day, so that’s quite a number out of their window.”
    Inevitably, freight rates have doubled out of Colombo, with shippers needing to book up to eight weeks in advance to get a slot, he explained.
    “Some shippers have had cargo rolled for four weeks in Colombo and two weeks in Singapore,” Mr Masakorala said. “Freight forwarders were severely affected, as some emergency shipments had to be airlifted or go to a third port to connect, increasing costs and transit times.”
    Now there are concerns the port’s reputation could be tarnished, he added, given that rival ports in India, Bangladesh and Pakistan were fully operational. Sri Lanka has big ambitions to become a global maritime and logistics hub, on par with Dubai and Singapore, but Mr Masakorala said less-than-containerload (LCL) clearance and consolidations had been “severely affected”.
    Colombo handled 7.2m teu in 2019, but Mr Masakorala reckons throughput will be down 10-20% this year.

    Abu Dhabi to be global logistics hub for COVID-19 vaccine distribution

    Abu Dhabi to be global logistics hub for COVID-19 vaccine distribution

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    Key representatives of the Hope Consortium. Etihad Cargo and the consortium have transported five million vaccines in November on behalf of the Department of Health – Abu Dhabi.
    Abu Dhabi is all set to be the global logistics hub to facilitate COVID-19 vaccine distribution across the world, after spearheading the launch of the Hope Consortium.
    Comprising leading Abu Dhabi and global entities, the Hope Consortium represents a complete supply chain solution to address vaccine transport, demand planning, sourcing, training and digital technology infrastructure and facilitate vaccine availability across the world..
    Hope Consortium member Etihad Cargo and the consortium have transported five million vaccines in November on behalf of the Department of Health – Abu Dhabi, which is spearheading the consortium and will oversee regulatory compliance, full chain expertise and scientific insight.
    The consortium also includes Abu Dhabi Ports Company, Rafed, the healthcare purchasing arm of Abu Dhabi-based ADQ and SkyCell of Switzerland, which develops next-generation, temperature-controlled logistics containers for the pharmaceutical industry. As part of the Hope Consortium, SkyCell will establish a regional service and manufacturing centre in Abu Dhabi.

    Collective expertise

    The Hope Consortium has pooled its collective expertise to garner a multi-faceted capability to provide logistics services to handle over six billion doses from the vaccines being developed and manufactured around the world – whether in single or multi doses – in cold and ultra-cold conditions in 2021, rising to over three times more vials by the end of next year – the largest capacity and logistics capability regionally and one of the largest globally.
    “The Hope Consortium is a prime example of how Abu Dhabi is leading in providing solutions, capabilities and capacities to help the world get through this global pandemic. It is a continuation of all players’ collaboration of a UAE-based public-private partnership that spans the globe. While assuring vaccine supply to the domestic market, the Hope Consortium will offer international governments, non-governmental organisations and vaccine suppliers a cohesive solution across every supply chain step – from air freight, regional storage and temperature monitoring, to inventory management, cold and ultra-cold container solution, regulatory clearance and healthcare and pharma quality assurance,” said Sheikh Abdullah bin Mohammed Al Hamed, chairman of the Department of Health – Abu Dhabi.

    Temperature challenge

    “Developing a vaccine is only the first step in getting to a solution, getting that vaccine to the whole globe, while maintaining a robust integrity of temperature is an equal challenge by itself, the Hope Consortium will provide that solution on the highest level of quality.
    “Consortium partners already have extensive expertise in the global delivery of millions of COVID-19 related items, such as personal protective equipment, diagnostics consumables, vaccines and pharmaceuticals. As we progress talks with vaccine manufacturers to apprise them of our global distribution capabilities, the Hope Consortium will harness the united expertise of various Abu Dhabi and UAE stakeholders to provide a fully-fledged, end-to-end solution specifically for COVID vaccine distribution needs.”
    Distribution of the vaccines, which will be stored in Abu Dhabi Ports Company facilities, will be carried out by Etihad Cargo, the first Middle Eastern carrier to gain IATA’s Centre of Excellence for Independent Validators (CEIV) certification for pharmaceutical logistics. The UAE’s national carrier will leverage its extensive intercontinental network, fleet and charter flights to supply vaccines globally.

    Dedicated workforce

    “With two thirds of the world’s human footprint within a four-hour flight of Abu Dhabi, the UAE capital’s investment in technological expertise and world-class infrastructure facilities means we can serve as a global logistical hub to, and for, the world,” explained Tony Douglas, group Chief Executive Officer, Etihad Aviation Group.
    “Etihad Cargo’s role in the consortium will leverage our outstanding pharmaceutical logistics expertise and specialised pharma and healthcare service, PharmaLife, the IATA CEIV Pharma certified product capable of facilitating temperature-sensitive cargo between +25⁰C and -80⁰C. Our network reach across key destinations will be supported by the utilisation of our charter operations to meet global demand for swift and secure COVID-19 vaccine shipments.
    “We are already managing all anticipated shipment elements through our dedicated COVID-19 vaccines workforce,” Douglas added. “A dedicated pharmaceutical handling facility to accommodate increased capacity at ourAbu Dhabi hub is also currently under review, as well as additional thermal covers and enhanced capabilities at origin stations based on established pharma trade lanes and specific requests.”
    As part of the Hope Consortium, Abu Dhabi Ports, which has the Middle East’s largest capacities for cold chain and ultra-cold storage, will leverage its capabilities as an innovation epicentre serving the Middle East and wider world through Abu Dhabi as a supply chain gateway connecting East and West.

    Positive impact

    “This collaboration is in line with our ethos of creating innovative ideas, concepts, solutions and opportunities,” said Captain Mohamed Juma Al Shamisi, Group CEO of Abu Dhabi Ports.
    “Abu Dhabi Ports plays a key role in supporting the Abu Dhabi vision in advancing logistic services in the emirate and leading the post-COVID-19 revival and economic recovery through robust partnerships. Our expansive operations at KIZAD are among the largest cold chain and ultra-cold storing in the region and enable us to support the emirate’s drive to spearhead global immunisation efforts that will positively impact millions of lives.
    “In addition to leveraging our world-class trade facilitation expertise, our efforts also rest on our Maqta Gateway subsidiary, which is playing a leading role in the development of integrated, digital, global commerce.”
    Dr Noura Al Dhaheri, head of Digital Cluster – Abu Dhabi Ports, CEO of Maqta Gateway, said: “Supporting the uninterrupted flow of critical cargo, such as medical and food supplies have been crucial in Abu Dhabi Ports’ story during 2020, but the distribution of vaccines will form the most significant success to date. Maqta Gateway is committed towards creating innovative digital solutions to boost the transparency and integrity of the region’s supply chain.”
    Rashed Al Qubaisi, Chief Executive Officer, Rafed, which has already managed large volume products before and during the pandemic for the UAE and humanitarian initiatives, added: “Our expertise in centralised procurement services will provide vital support to the consortium. Through our collaboration we will better consolidate our efforts for the benefit of our global partners in the public and healthcare sectors.”

    Hybrid containers

    The Hope Consortium intends to transport the vaccines using SkyCell’s hybrid containers. The storage and transportation containers are secured through an IoT monitoring service which tracks temperature conditions toensure sensitive vaccines are protected even under extreme conditions. With efficient insulation and cutting-edge cooling technology, the containers maintain steady temperatures for an average of 202 hours (8.4 days) and self-recharge automatically in a cooling chamber or reefer truck.
    “Our hybrid containers will safeguard the full efficacy of vaccines that are vital to defeat the pandemic, all while reducing long-term business and environmental costs,” said Richard Ettl, Chief Executive Officer of SkyCell. “The Hope Consortium has the right partners, infrastructure and service ecosystem to ensure time and temperature sensitive transportation in a seamless cool chain operation.”
    The consortium will also be looking to partner with players and stakeholders to improve its offering and innovative solution for the benefit of humanity.

    Heathrow workers to strike next week

    Heathrow workers to strike next week

    workers-at-heathrow-airport-are-planning-to-strike-on-tuesday-over-proposed-pay-cuts-the-airport-said-today-1173381008-960x640
    Workers at Heathrow Airport are planning to strike on Tuesday over proposed pay cuts, the airport said today. Workers at Heathrow Airport are planning to strike on Tuesday over proposed pay cuts, the airport said today.
    Heathrow said that there are currently no pre-planned flight schedule amendments for any of the dates.
    As the UK will still be under lockdown on 1 December, no disruption to passenger journeys is expected, it added.
    Unite workers are striking over claims that the airport is seeking to fire and rehire its 4,000 workers on vastly reduced pay.
    Organisers say that Heathrow is is trying to force workers to accept permanent pay cuts of up to £8,000 per year, a quarter of their total pay.
    Unite regional coordinating officer Wayne King said: “Workers are taking strike action as a direct result of Heathrow Airport’s brutal proposals to fire and rehire them on greatly reduced wages.
    “The airport is using the Covid-19 pandemic as a smokescreen to permanently cut workers’ pay.”
    Under the proposals, less than three per cent of Heathrow workers will have their pay reduced by more than 20 per cent and less than one per cent of staff will have their pay reduced by a quarter.
    So far, 4,263 of 4,642 frontline staff (92 per cent) have already accepted the proposals.
    A Heathrow spokesperson said: “It’s very disappointing that Unite has decided to take strike action during the worst crisis to hit the aviation sector.
    “Our focus has been to protect jobs – which is why we’ve offered every frontline colleague who wants one a job at a market rate salary above the London Living Wage, even despite a loss of over £1.5bn to our business so far this year.
    “We do not believe this strike action is necessary, but have activated extensive contingency plans which will keep the airport open and operating safely throughout this period.”

    Cheaper fuel and cost-cutting steers Hapag-Lloyd to a 73% rise in Q3 profits

    Cheaper fuel and cost-cutting steers Hapag-Lloyd to a 73% rise in Q3 profits

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    Hapag-Lloyd recorded a net Q3 profit of $290m, up 73%, to take the carrier’s profit for the nine-month period to $605m, nearly double the $333m achieved the previous year.
    However, the carrier’s most profitable quarter could be yet to come, given that Hapag-Lloyd’s accounting system works on an end voyage basis, lagging most of its peers by two to three weeks.
    As a result, some increases in spot rates in Q3 will work through into the final accounting period.
    Transported volumes in Q3 declined 3.4% on last year, to 2.9m teu, while revenue dipped 2.5% to $3.52bn. This produced an ebitda of $756m, compared with $617m in Q3 19, and a net profit of $290m, versus $168m.
    Hapag-Lloyd’s average rate per teu during Q3 was, surprisingly, unchanged at $1,084, so the improved profitability was mostly attributable to cost savings, including cheaper fuel.
    “It’s pretty clear there has been a better-than-expected rebound in demand, and earnings have been good on the back of low bunker costs,” said CEO Rolf Habben Jansen today.
    “At least until the Chinese New Year, the market looks to be very strong,” he said , but added that “it was not logical” that the demand strength would continue indefinitely.
    “With an increasing number of cases worldwide, the Covid-19 pandemic continues to pose high risks to the logistics industry and the supply chains of our customers,” he cautioned.
    However, he said, all the carrier’s business sectors were continuing to perform well – the exception had been the transatlantic trade, which had been “a little sluggish but is showing signs of picking up, and ships are running full”.
    Mr Habben Jansen was reluctant to comment on contract rate negotiations on the Asia-Europe tradelane, which traditionally commence at this time of year, but accepted that it would be “very odd” to see contract rates for next year going down.
    Giving an insight into Hapag-Lloyd’s business model across its tradelanes, he said around a third of liftings consisted of annual contracts, another third from shorter-term contracts of three-to-six months and the final third from the spot market.
    He added that “quite a lot” of contract cargo in the quarter had been transported on Hapag-Lloyd vessels at some 50% below the spot market level.
    The Loadstar has heard from several Asia-North Europe shippers that some carriers were “refusing to sit down” to negotiate new annual contracts, preferring to concentrate on the more lucrative short-term market.
    Mr Habben Jansen said Hapag-Lloyd’s digital Quick Quotes product had garnered around 1.2m teu of business so far this year, adding that forwarders represented 80%-90% of its users.
    On equipment shortages, he said “quite a lot of empty boxes remain stuck in the UK”, and that repositioning to Asia was “a fairly big challenge”. He maintained that equipment surcharges were designed to “steer” shippers to use other boxes instead of the popular 40ft high-cubes.
    Hapag-Lloyd is maintaining its full-year earnings guidance of €1.1bn-€1.3bn which it upgraded in October and Mr Habben Jansen rejected a suggestion that the carrier was being “too conservative”.

    ‘Abusive’ ocean carriers driving forwarders to air freight, and rates are rising

    ‘Abusive’ ocean carriers driving forwarders to air freight, and rates are rising

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    “Hell on the high seas” has triggered a new rise in air freight rates after a period of relative stability
    One forwarder called the shipping lines “abusive”, with a strategy that is sending shippers back to air freight.
    “It’s getting worse. Carriers are failing, neglecting customers, providing a sub-acceptable service and yet increasing rates daily. At least the air freight sector is not being this abusive.”.
    One Shanghai forwarder, who said the country in terms of Covid was “95% back to normal”, claimed the market was getting busier, and “airlines are starting to raise rates once again, after two weeks of being flat”.
    “I think this is very affected by the current horrible sea and rail freight situation. We are seeing many sea freight customers switch to air, and many big order volumes are coming.”
    He said shipping lines were cancelling confirmed bookings from the middle of this month.
    “Shipping lines intend a $1,000 per teu increase from December, and are saying that no bookings can be confirmed.”
    Rail freight from China to Europe is also struggling, he said, adding: “You need to fight for just one container space.”
    A spokesperson for DB Schenker predicted “capacity will continue to be tight throughout December. If … volumes are flipped back [to air] as a result of a very critical ocean situation, it could become a very heavy peak.”
    A South-east Asia-based forwarder agreed that rates were on the rise and predicted the “absolute peak” would be the first two-to-three weeks of December.
    “Capacity from Asia to Europe is still relatively constrained, coupled with the increase demand this has led to airlines rejecting bookings or demanding a higher rate to uplift cargo,” he added.
    Scheduled freighter operators are full and many have a backlog of cargo, he said. But charter space on ad hoc freighters is limited intra-Asia.
    “They are not operating in this region as airlines are keeping their resources for ex-China, where the demand and freight rates are higher.”
    Sea-air is also on the rise, but several airlines “withdrew their preferential rates without much advance notice”, explained the south-east Asian forwarder. “We expect this to be a temporary problem that will resolve from the second half of December.”
    As rates go up, capacity appears to be rising too – but is “overbooked, everywhere”.
    “There are many charters, both pure freighter and passenger freighters in the market now,” said the Shanghai forwarder. And commercial airlines such as KLM, Qatar and Lufthansa are increasing the number and frequency, although many are already booked.
    “There are also many GSAs running charters,” he said, “but representing airlines we have never heard of.”
    Many forwarders have opted for regular charters as prices begin to rise. Ligentia said it was moving to charters as prices hit $6 per kg, but space was hard to find.
    “You have to wait at least five to seven days before uplift,” explained Lee Alderman-Davies, global product and development director, who said Ligentia would put on one to two charters a week in addition to road and rail routes from China.
    “Our prediction is the peak will continue, due to Amazon FBA, tech launches, PPE and medical supplies and e-tailers taking the majority of the capacity. We aim to bridge the capacity gap with consolidated customer charters well into December, although should the market drop, charters then become uncompetitive.”
    She predicted rates would remain between $5 and $7 per kg through December.
    Another UK forwarder said there was a “fairly balanced supply versus demand, with a three-day average dwell time from booking to uplift”.
    Heathrow and Benelux hubs remain congested, however, and “are underperforming and, at times, are overwhelmed”. Shanghai also faced some delays for large shipments.

    Massive Cargo Loss: Estimated 1,900 Containers Lost or Damaged on ONE Apus

    Massive Cargo Loss: Estimated 1,900 Containers Lost or Damaged on ONE Apus

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    The ONE Apus is a 14,000 TEU containership built in 2019 measuring 364-meters in length and sailing under the Japanese flag. The vessel is operated by Japan’s Ocean Network Express on the Far East Pacific 2 (FP2) Service. “The priority remains on getting the vessel and crew safely to port.
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    oneapustwitter.jpg The boxship ONE Apus which suffered the loss or damage of over 1,800 containers in a severe storm in the Pacific is headed to the Port of Kobe, Japan
    A statement from owners Chidori Holding LLC and NYK Shipmanagement said that the ONE Apus was now sailing to Kobe with an estimated arrival of 8 December having turned around following major damage to the vessel’s container stacks in a severe storm while the vessel was bound for the port of Long Beach from Yantian.
    The 14,000 teu vessel suffered loss of 1,816 containers according revised estimates from the owners and managers, with 64 of the containers believed to be dangerous goods cargoes. A photo (above) taken from the containership circulating on social media shows damage to most of the above deck container stacks.
    “Once berthed, it’s expected to take some time to offload the dislodged containers that remain on board. Then a thorough assessment will be made on the exact number and type of containers that have been lost or damaged,” the statement from owners and managers said.
    ONE Apus charterer Ocean Network Express (ONE) told customers in an advisory: “Meanwhile from visual inspection, we expect the containers in cargo hold to be intact.”
    All the vessel’s crew are safe and uninjured following the incident.
    Navigational warnings have been broadcast the Joint Rescue and Coordintaion Centres (JRCC) in Honolulu and Guam to shipping in the area warning potential hazards from the containers lost overboard.
    It is the second incident of containers lost overboard to hit ONE recently with sistership to the ONE Apus, the 2018-built, 14,052 teu, Panama-flagged ONE Aquila suffering a loss of containers in severe weather on 30 October also while sailing to the Port of Long Beach. The ONE Aquila was diverted to the Port of Tacoma to offload damaged containers and undergo repairs returning to service on 11 November.

    Smaller shippers bear brunt of soaring container contract rates

    Smaller shippers bear brunt of soaring container contract rates

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    CMA CGM Corte Real in Singapore
    Smaller shippers look set to bear the brunt of higher contract container freight rates as lines seeks to lock in gains from record spot rates.
    Contract rates negotiated between lines and shippers are starting to follow spot, which while plateauing remain at extremely high levels.
    Xeneta said described January’s 5.9% rise in long-term contracted rates, according to its XSI Public Index, as being “blown out of the water” by a 9.6% jump in February. It noted that all key shipping corridors saw steep climbs in contract rates.
    “The demand for available containers is well-reported, as is congestion at ports (particularly in the US) and the disruption caused by coronavirus. This continues to fan the flames of red hot rates, giving the carriers a huge advantage over shippers when it comes to negotiations,” said Xeneta ceo Patrik Berglund.
    “The operators have succeeded in maintaining all-time high spot rates and this gives them ammunition for negotiating favorable long-term contracts. That creates an unpalatable choice for shippers. Namely, run the risk of playing the spot market and hope for lower rates, or lock into contracts and secure your supply chain, but at a high price. And of course, if you’re a smaller shipper there’s a real danger of being sidelined for larger or more profitable customers,” he said.
    Bimco chief analyst Peter Sand noted in his latest report on the container market that contract rates were slowly following spot rates as shipping lines look to lock in the best possible year ahead.
    “In practice, this has translated into more differentiation between what shippers are being offered. The largest customers, which carriers judge they can’t afford to lose, are more or less seeing prices from last year’s contracts being rolled over into new contracts,” he said.
    “However, smaller shippers (still large, but not a must-have for carriers) are being offered higher contract rates – and, in many cases, have been unwilling to sign 2021 contracts at this stage.”
    Smaller shippers were instead choosing to take temporary contract extensions to the end of Q1 while continuing contract rate negotiations.
    “This is especially the case on trades between the Far East, the US West Coast and Europe. It means that, on these trades, long-term rates are unlikely to stay as high as they are currently once these temporary extensions run out and they agree on new long-term contracts. The new contracts will have higher prices than last years’ contracts, but will be lower than the temporary extensions,” Sand commented.