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U.S. says progress with China on N.Korea U.N. sanctions, true test is Russia
Jul 25, 2017 | Reuters
By Michelle Nichols
President Donald Trump's administration has been frustrated that China has not done more to rein in North Korea and senior officials have said Washington could impose new sanctions on Chinese firms doing business with Pyongyang. -
East-west spot rate gains forecast to drive carriers to $5B profit
Jul 25, 2017 | Journal of Commerce
By Bill Mongelluzzo
Spot rates in the major eastwest trades will soon emerge from their temporary slump as the peakseason begins, driving carriers to an industrywide profit of about $5 billion this year, according to Drewry. -
Vietnam Halts South China Sea E&P After Chinese Threats
Jul 25, 2017 | Maritime Executive
Following alleged "threats" from China, Vietnam has ordered Spanish oil firm Repsol to halt E&P activity at Block 136-03, an exploration lease located near Vanguard Bank in the South China Sea.
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U.S. says progress with China on N.Korea U.N. sanctions, true test is Russia
Jul 25, 2017 | Reuters
By Michelle Nichols
UNITED NATIONS (Reuters) - The United States is making progress in talks with North Korean ally China on imposing new United Nations sanctions on Pyongyang over its latest missile test, but Russia's engagement will be the "true test," U.S. Ambassador to the U.N. Nikki Haley said on Tuesday.
The United States gave China a draft resolution nearly three weeks ago to impose stronger sanctions on North Korea over the July 4 missile launch. Haley had been aiming for a vote by the 15-member Security Council within weeks, senior diplomats said.
"We're constantly in touch with China ... Things are moving but it's still too early to tell how far they'll move," Haley told reporters, adding that she was pleased with China's initial response to the U.S. proposal because it showed "seriousness."
"We know that China's been sharing and negotiating with Russia, so as long as they are doing that, we're going to continue to watch this closely to make sure it is a strong resolution," she said.
China's U.N. Ambassador Liu Jieyi told reporters: "We are making progress, it requires time, but we're working very hard."
Traditionally, the United States and China have negotiated sanctions on North Korea before formally involving other council members, though diplomats said Washington informally keeps Britain and France in the loop. Along with Russia, those five countries are veto-wielding Security Council members.
"The true test will be what (the Chinese) have worked out with Russia (and whether) Russia comes and tries to pull out of that," said Haley.
The United States and Russia have waged rival campaigns at the Security Council over the type of ballistic missile fired by North Korea. Western powers have said it was an intercontinental ballistic missile (ICBM), while Russia said the missile fired was only medium-range.
Diplomats say China and Russia only view a long-range missile test or nuclear weapon test as a trigger for further possible U.N. sanctions.
"Everyone that we have dealt with acknowledges that it's an ICBM. Whether they are willing to put it in writing or not is going to be the real question," Haley said.
North Korea has been under U.N. sanctions since 2006 over its ballistic missile and nuclear programs and the Security Council has ratcheted up the measures in response to five nuclear weapons tests and two long-range missile launches.
President Donald Trump's administration has been frustrated that China has not done more to rein in North Korea and senior officials have said Washington could impose new sanctions on Chinese firms doing business with Pyongyang.
When asked how long Washington was willing to negotiate with China at the United Nations before deciding to impose its own secondary sanctions, Haley said: "We're making progress ... We're going to see what the situation is."
"We want China and every other country to see it as serious and we're going to keep moving forward that way," she said.
China's Ambassador to Washington Cui Tiankai said on Tuesday that Beijing objected to secondary sanctions. In June, the United States blacklisted two Chinese citizens and a shipping company for helping North Korea's nuclear and missile programs.
"Such actions are unacceptable. They have severely impaired China-U.S. cooperation on the Korean nuclear issue, and give rise to more questions about the true intention of the U.S.," he told the Institute for China-America Studies in Washington.
http://www.reuters.com/article/us-usa-china-military-idUSKBN1A91QE
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East-west spot rate gains forecast to drive carriers to $5B profit
Jul 25, 2017 | Journal of Commerce
By Bill Mongelluzzo
Spot rates in the major eastwest trades will soon emerge from their temporary slump as the peakseason begins, driving carriers to an industrywide profit of about $5 billion this year, according to Drewry. After six consecutive years of financial losses, the container shipping industry is experiencing a “big shift in the market cycle” marked by carrier consolidation, diminishing orders for new vessels and improving freight rates, Philip Damas, director of Drewry Supply Chain Advisors, said during a Tuesday webinar.
Drewry’s views track what carriers have been saying since late 2016, that rapid consolidation in the industry, slower capacity increases and improved supply/demand fundamentals all point to stronger pricing potential this year and next. Capacity in the global fleet is projected to increase 3.4 percent this year, 4.7 percent next year and only 0.1 percent in 2019, according to maritime analysts Alphaliner.
That will end a streak of rapid capacity increases that saw the global container fleet double to 5,066 vessels in 2016, and a quadrupling of capacity to about 20 million TEU, according to IHS Markit research. Although spot rates in the AsiaEurope and eastbound transPacific trades softened a bit the past three weeks after a July 1 spike, demand growth in 2017, driven by restocking in Europe and North America, will end up being 4 percent, said Martin Dixon, Drewry’s director of research projects.
That will support an average 16 percent increase in freight rates this year on all of the global routes, eastwest, northsouth and backhaul as well as head routes, he said. In the transPacific, IHS Markit Senior Economist Mario Moreno this spring increased his 2017 projection for growth in US imports to 6.6 percent from 6.1 percent earlier. According to PIERS, a sister product of JOC.com within IHS Markit, US containerized imports in the first half of 2017 were up 4.2 percent from the same period last year. Carriers and their customers this spring concluded their annual service contract negotiations in the eastbound Pacific, and carriers reportedly achieved closeto breakeven rates, on average, of about $1,300 perFEU to the West Coast and $2,300 perFEU to the East Coast.
Carriers will look to general rate increases and increases in spot rates during the AugustOctober peak season to push them into profitability for the year. Breakeven rates are not the same for all lines, varying from $1,300 per FEU to $1,600 to the West Coast and $2,300 per FEU to $2,600 to the East Coast. With the upward rate trajectory expected to continue in 2018, procurement executives at beneficial cargo owners should take note of this cyclical change and adjust their contracting strategy accordingly, Damas said. BCOs should consider mitigating rate increases through longerterm contracting, possibly through indexlinked contracts, and should set “realistic targets” for freight rates.
Last week’s spot rates in the AsiaUS trades were $2,233 per 40foot equivalentunit container to the East Coast, up 28 percent from last year, and $1,226 per FEU to the West Coast, down 5 percent from last year according to the Shanghai Containerized Freight Index.
The spot rates appear to be at a seasonal tipping point. Vessel capacity normally tightens in August, and ships usually remain close to full utilization with holidayseason merchandise through October. If that traditional cycle repeats itself, carriers will likely file general rate increases or peakseason surcharges in the weeks ahead. Damas noted that these seasonal supplydemand developments come at a time of massive consolidation in the liner industry.
The past year has seen the departure of eight carriers through mergers, acquisitions and a bankruptcy. By the end of this year, there will be 11 major lines globally, down from 20 a couple of years ago. In the major eastwest trade lanes, spot and contract rates are going from “nonsustainable” last year to somewhat profitable today, and rates should continue to climb next year, he said.
Drewry does not project a large increase in freight rates this fall and next year, but rather a stabilization of rates at higher levels than in recent years. Two major consolidations announced this year — the three Japanese flag carriers will merge and the Cosco acquisition of Orient Overseas Container Line — should be completed by this time next year. Drewry said that should conclude major consolidation in the industry for now, although smaller deals may happen.
http://www.joc.com/maritime-news/container-lines/east-west-spot-rate-gains-forecast-drive-carriers-5-billion-profit_20170725.html
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Vietnam Halts South China Sea E&P After Chinese Threats
Jul 25, 2017 | Maritime Executive
Following alleged "threats" from China, Vietnam has ordered Spanish oil firm Repsol to halt E&P activity at Block 136-03, an exploration lease located near Vanguard Bank in the South China Sea. Diplomatic sources report that China threatened to attack Vietnamese installations in the Spratly Islands if Repsol did not halt its work.
Vanguard lies about 200 nm southeast of Vung Tao, and Vietnam has maintained a series of manned outposts at the bank since the late 1980s as a deterrent to Chinese territorial ambitions. Vietnam claims the surrounding waters as part of its EEZ, but Vanguard is also within China's sweeping "nine-dash" line claim to the waters of the South China Sea. The Permanent Court of Arbitration in the Hague invalidated China’s claim last year, finding that it had no basis under the United Nations Convention on the Law of the Sea (UNCLOS); Beijing has broadly ignored the ruling.
The exploration lease at Vanguard is jointly owned by state-controlled PetroVietnam, UAE-based Mubadala Development and lease operator Repsol. Odfjell is Repsol's drilling contractor, and it is carrying out the work with the sixth-generation ultradeepwater drillship Deepsea Metro I. Reports suggest that Repsol may have uncovered a major gas reserve at Vanguard shortly before it was asked to halt work.
The dispute has been building for at least a month. After a meeting between Senior Lieutenant General Fan Changlong, vice chairman of China's Central Military Commission and senior Vietnamese leaders in mid-June, Fan canceled Chinese attendance at a cross-border "friendship meeting" and returned to China. A source informed The Diplomat that Fan had asked Vietnamese leaders not to allow drilling at Block 136-03 during the meeting.
Asked Tuesday to comment on the halt to drilling at Vanguard, Chinese Foreign Ministry spokesman Lu Kang said that "China urges the relevant party to cease the relevant unilateral infringing activities and with practical actions safeguard the hard-earned positive situation in the South China Sea."
China and Vietnam have a history of tension over E&P activity in the South China Sea. In 2014, they faced off over a Chinese attempt to drill in Vietnamese waters near the Paracel Islands. China deployed over 100 civilian, coast guard and Navy vessels to defend the rig, and a Chinese fishing vessel allegedly rammed and sank a Vietnamese boat during the standoff. Chinese rigs deployed to other areas near the Paracels in 2015 and 2016, raising concerns of further confrontations.
https://www.maritime-executive.com/article/vietnam-halts-s-china-sea-ep-after-threat-from-china
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