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Project Dory Monitoring 17 August 2017
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North Korean authorities keep laborers abroad to beat sanctions
Aug 16, 2017 | Daily NK
By Kang Mi Jin
The regime is extending the duration of dispatch for North Korea’s overseas laborers in a bid to generate more income while under international sanctions. An executive order has been issued to identify new ways to gain more from the labor force abroad. This is likely an attempt by the Kim regime to alleviate the impact of United Nations Security Council Resolution 2371, which bans countries from importing additional North Korean workers. -
Trump adviser Bannon says U.S. in economic war with China: media
Aug 16, 2017 | Reuters
By Christian Shepherd
The United States is in an economic war with China, U.S President Donald Trump's chief political strategist has said, warning Washington is losing the fight but is about to hit China hard over unfair trade practices. -
Pentagon’s top general signs a new deal with China as Trump signals an easing of tension with North Korea
Aug 16, 2017 | The Washington Post
By Dan Lamothe
The Pentagon’s top general and his Chinese counterpart have signed a new agreement aimed at improving communication in times of crisis, a step that brings Beijing and Washington closer together as the two nations grapple with what to do about North Korea and its efforts to build an intercontinental ballistic missile capable of carrying a nuclear warhead. -
China military criticizes 'wrong' U.S. moves on Taiwan, South China Sea
Aug 16, 2017 | Reuters
The "wrong" actions of the United States on Taiwan, its South China Sea patrols and deployment of an advanced anti-missile system in South Korea have had a large, negative influence on military trust, a senior Chinese officer said on Thursday. -
U.S. says joint South Korea war games not on the negotiating table
Aug 16, 2017 | Reuters
By Philip Wen and Ben Blanchar
The United States and South Korea will go ahead with joint military drills next week, the top U.S. military official said on Thursday, resisting pressure from North Korea and its ally China to halt the contentious exercises. -
Unconstrained Chinese Investment in the Arctic Questioned
Aug 16, 2017 | Maritime Executive
Chinese investment in the Arctic and near-Arctic above 60 degrees latitude has reached roughly $90 billion, and the opening of the Arctic to resource exploration has created the need for a unified response to such investments from the six Arctic nations. -
Maersk Upbeat on Shipping Outlook, Faces Hefty Cyber Attack Bill
Aug 16, 2017 | The New York Times
By Jacob Gronholt-Pedersen
Denmark's A.P. Moller Maersk gave an upbeat outlook for container shipping on Wednesday, lifting its shares by as much as 4.5 percent as investors looked beyond one-off second-quarter charges and a costly cyber attack on its operations.
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North Korean authorities keep laborers abroad to beat sanctions
Aug 16, 2017 | Daily NK
By Kang Mi Jin
The regime is extending the duration of dispatch for North Korea’s overseas laborers in a bid to generate more income while under international sanctions. An executive order has been issued to identify new ways to gain more from the labor force abroad. This is likely an attempt by the Kim regime to alleviate the impact of United Nations Security Council Resolution 2371, which bans countries from importing additional North Korean workers.
Under normal circumstances, laborers dispatched by the authorities spend between 3-5 years in a foreign country to earn money for the regime, but the new order has removed this timeline.
“Some clothing factory workers had been waiting for orders to return to North Korea, but now there are new orders for them to remain abroad,” said an inside source from China during a telephone call with Daily NK.
“The instructions are to quickly find new work for the laborers currently in China, and not to wait for official permission,” the source continued. This means that if there are no official contracts available, the laborers are to be sent to work in unofficial positions.
When asked about specifics, the source added, “In Liaoning Province, Dandong City, groups of laborers will be taken around to hotels and restaurants and sent to work for a few days at a time. There is some danger that the workers will try to defect, but as long as the order stands, the authorities will continue to place workers in this way.” Under typical circumstances, North Korean workers are subject to near-constant surveillance and strict controls.
The newest sanctions passed by the United Nations Security Council introduced the first mandatory limits on North Korean workers abroad, stating, “All Member States shall not exceed on any date after the date of adoption of this resolution the total number of work authorizations for DPRK nationals provided in their jurisdictions at the time of the adoption of this resolution.” The regime’s new order to keep workers at their current posts instead of having them return home may be interpreted as an attempt to compensate for these measures.
After the introduction of the new resolution, the North Korean authorities have noted that collaborations with Chinese corporations have started to decline.
Another source from China with knowledge of the developments said, “North Korean labor is cheap, so there is an advantage for Chinese companies to use it, but the sudden pullout of workers is a reflection of international measures and orders from the North Korean authorities. This could result in significant damage to businesses, which is why Chinese firms do not intend to hire many North Korean workers.”
In reality, North Korean workers are still being employed by businesses collaborating with North Korean agencies in China’s Dandong, Jilin, and Yanji cities. However, the general atmosphere has become more tense and attitudes are changing, note local sources.
Some Chinese firms are already feeling the sting of continuing to deal with North Korea.
“The two sides have established agreements. But thanks to new international sanctions, some products produced in collaboration with North Korea have already been sent back to the North,” the second source said, adding that in the aftermath of these developments, North Korean state trading companies that are in China earning currency for the regime have been affected significantly.
“We’re undergoing hardships at the moment, but things are harder for the Joson (North Korean) side. As the days go by, the economic blockade gets stronger, and money feeding back into the North from overseas is decreasing. And since exports are also being blocked, we might expect funding sources to dry up on both sides."
https://www.dailynk.com/english/read.php?num=14675&cataId=nk01500
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Trump adviser Bannon says U.S. in economic war with China: media
Aug 16, 2017 | Reuters
By Christian Shepherd
(Reuters) - The United States is in an economic war with China, U.S President Donald Trump's chief political strategist has said, warning Washington is losing the fight but is about to hit China hard over unfair trade practices.
"We're at economic war with China," Steve Bannon told U.S. news site prospect.org in an interview published in Wednesday.
"It's in all their literature. They're not shy about saying what they're doing. One of us is going to be a hegemon in 25 or 30 years and it's gonna be them if we go down this path," he was quoted as saying.
"If we continue to lose it, we're five years away, I think, 10 years at the most, of hitting an inflection point from which we'll never be able to recover."
Chinese Foreign Ministry spokeswoman Hua Chunying said she had seen the report, and reiterated the essence of the China-U.S. trade relationship is mutually beneficial.
"In reality, China and the United States' long term cooperation has brought about real benefits for both countries' peoples, any unbiased person will clearly see this fact," she told a daily news briefing in Beijing.
"We have also said before, a trade war has no future. A trade war does not serve the interests of any party, as fighting a trade war will not produce a winner. We hope that relevant parties can stop viewing issues of the 21st century with a 19th- or 20th-century mentality."
Bannon said the United States would use Section 301 of the 1974 Trade Act against Chinese coercion of technology transfers from U.S. corporations doing business in China and follow up with complaints against steel and aluminum dumping, according to prospect.org.
On Monday, Trump authorized an inquiry into China's alleged theft of intellectual property in the first direct trade measure by his administration against Beijing.
"We're going to run the tables on these guys. We've come to the conclusion that they're in an economic war and they're crushing us," said Bannon, who acknowledged he was battling trade doves within the U.S. administration.
He said there was no reason to go soft on China in order to get Beijing's support over North Korea because he believed China would do little more to rein in Pyongyang.
Bannon said he might consider a deal in which China got North Korea to freeze its nuclear build-up with verifiable inspections and the United States removed its troops from the Korean peninsula, but such a deal seemed remote, prospect.org reported.
In contrast to Trump's threat of "fire and fury" against North Korea, Bannon said: "There’s no military solution, forget it."
"Until somebody solves the part of the equation that shows me that 10 million people in Seoul don't die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about ..."
Asked about any connection between his economic nationalism and white nationalism in the United States, and in particular the racist violence in Charlottesville, Bannon said: "Ethno-nationalism — it's losers. It's a fringe element."
"I think the media plays it up too much, and we gotta help crush it, you know, uh, help crush it more. These guys are a collection of clowns."
However, Bannon, who formerly led the right-wing website Breitbart, said focusing on race would help the Republicans politically.
"The Democrats, the longer they talk about identity politics, I got 'em. I want them to talk about racism every day. If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats."
https://www.reuters.com/article/us-usa-trump-staff-idUSKCN1AX069?il=0
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Aug 16, 2017 | The Washington Post
By Dan Lamothe
The Pentagon’s top general and his Chinese counterpart have signed a new agreement aimed at improving communication in times of crisis, a step that brings Beijing and Washington closer together as the two nations grapple with what to do about North Korea and its efforts to build an intercontinental ballistic missile capable of carrying a nuclear warhead.
Marine Gen. Joseph F. Dunford Jr., the chairman of the Joint Chiefs of Staff, and Gen. Fang Fenghui of the Chinese People’s Liberation Army signed the deal at the Chinese military headquarters in Beijing at the outset of a three-day visit by Dunford. The agreement establishes what the Pentagon called the Joint Staff Dialogue Mechanism, in which a three-star officer on Dunford’s staff, Army Lt. Gen. Richard D. Clarke, will communicate regularly with a Chinese counterpart.
Chinese President Xi Jinping described relations with the United States as strained last month, when Washington asked Beijing to do more to pressure North Korea to stop its nuclear weapons programs. But there have been some signs of improvement in recent days, including China’s decision to ban North Korean iron ore, iron, lead and coal as part of a new United Nations sanctions package against Pyongyang.
China and the United States appear to remain far apart on other issues, including a U.S. plan to deploy a missile-defense system known as Terminal High Altitude Area Defense (THAAD) to South Korea and China’s efforts to expand its territorial claims in the South China Sea. China also warned the Trump administration last month not to start a trade war with Beijing and split up the coalition countering North Korea.
Dunford, speaking in China, acknowledged there are a number of challenges.
“To be honest, we have many difficult issues where we will not necessarily have the same perspectives,” Dunford said according to a Pentagon news account. “But from the meeting we had in Washington, D.C., and the meeting we just had, I know we share one thing: We share a commitment to work through these difficulties. With the guidance from our presidents and the areas of our cooperation, I know we will make progress over the next few days.”
“I think our collective challenge is to sincerely and with candor attack these issues that we have to address,” he said.
Navy Capt. Darryn James, a U.S. military spokesman, said in a statement that Dunford started his meeting Tuesday with Fang by stressing the importance of “candid and professional communication” between their militaries “because both nations have tough issues where we do not share the same perspective.” Dunford stressed that the new agreement will “only be useful if it results in reducing the risk of miscalculation, which not only has long-term benefits to manage bilateral differences but is especially critical now due to growing North Korean provocations,” James said.
Dunford also once again emphasized that North Korea’s ballistic missile and nuclear weapons programs threaten the entire world, including China, Russia, the United States and its allies, James said.
Dunford will spend three days in China, visiting PLA units, including China’s Northern Theater Command in Shenyang, the capital of Liaoning province, which borders North Korea.
The generals signed the agreement after days of bellicose rhetoric between President Trump and North Korea, and as North Korea appeared to ease up on a threat to shoot missiles toward the U.S. island territory of Guam. A state-run North Korean media outlet reported that North Korean leader Kim Jong Un said he would watch the United States “a little more” rather than act quickly, while at the same time warning the United States to avoid “reckless actions” on or near the Korean Peninsula.
Trump sought to take credit for North Korea’s change in tone in tweets Wednesday.
“Kim Jong Un of North Korea made a very wise and well reasoned decision,” he tweeted. “The alternative would have been both catastrophic and unacceptable!”
In Moscow, Russian Foreign Minister Sergei Lavrov said world powers have “nearly exhausted” the economic pressures they can put on North Korea. In an apparent preemptive message to other U.N. Security Council members, Lavrov said Russia does not support further measures to try to squeeze the North Korean economy.
“A resolution of the North Korea nuclear issue by military force is completely unacceptable and the peninsula’s nuclear issue must be peacefully resolved by political and diplomatic methods,” Lavrov was quoted as saying by the Chinese Foreign Ministry following his call with the Chinese foreign minister.
https://www.washingtonpost.com/news/checkpoint/wp/2017/08/16/pentagons-top-general-signs-a-new-deal-with-china-as-trump-signals-an-easing-of-tension-with-north-korea/?utm_term=.5dbacd2a1a12
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China military criticizes 'wrong' U.S. moves on Taiwan, South China Sea
Aug 16, 2017 | Reuters
BEIJING (Reuters) - The "wrong" actions of the United States on Taiwan, its South China Sea patrols and deployment of an advanced anti-missile system in South Korea have had a large, negative influence on military trust, a senior Chinese officer said on Thursday.
Fan Changlong, a vice chairman of China's powerful Central Military Commission, told Joseph Dunford, chairman of the U.S. Joint Chiefs of Staff, that mutual trust mechanisms between the two militaries had continued to improve, China's defense ministry said.
"But wrong actions on the Taiwan issue, the United States deploying the THAAD system around China, U.S. ships and aircraft's activities in the South China Sea, the United States close-in surveillance in the sea and air near China have had a large, negative influence on bilateral military ties and mutual trust," Fan added.
THAAD is the Terminal High Altitude Area Defence anti-missile system the United States has deployed in South Korea to defend against North Korea.
China says the system affects its own security because of its powerful radar, and will do nothing to ease tension with North Korea.
Fan said China was willing to work with the United States to find more potential for cooperation, handle disputes and sensitive issues appropriately and ensure military cooperation becomes a positive force in relations.
China and the United States, the world's two largest economies, say they are committed to having a stable military-to-military relationship, but there are deep faultlines.
China has been angered by U.S. freedom of navigation patrols near Chinese-controlled islands in the disputed South China Sea and continued U.S. arms sales and support for self-ruled Taiwan, which China claims as a wayward province.
The United States has expressed concern about what it calls unsafe intercepts of U.S. aircraft by the Chinese air force and a lack of transparency in military spending by China, which is in the midst of an ambitious military modernization program.
Speaking later to reporters, Dunford said the main deliverable for his trip was the signing of a framework agreement for a joint staff dialogue mechanism.
Dunford said China and the United States already have capability to do secure video teleconferences between Dunford and Fang Fenghui, chief of the Joint Staff Department of the People's Liberation Army.
The U.S. embassy also has immediate access to China's General Staff, he added.
"We have ways of communicating. What we're looking for is a more responsive 24 hours a day, seven days a week communications link that can actually be used in a crisis. And that's really one of the issues that we will work on."
https://www.reuters.com/article/us-china-usa-dunford-idUSKCN1AX0EF
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U.S. says joint South Korea war games not on the negotiating table
Aug 16, 2017 | Reuters
By Philip Wen and Ben Blanchar
BEIJING/SEOUL (Reuters) - The United States and South Korea will go ahead with joint military drills next week, the top U.S. military official said on Thursday, resisting pressure from North Korea and its ally China to halt the contentious exercises.
North Korea's rapid progress in developing nuclear weapons and missiles capable of reaching the U.S. mainland has fueled a rise in tensions in recent months.
Pyongyang threatened last week to fire missiles towards the U.S. Pacific territory of Guam and U.S. President Donald Trump warned soon after that North Korea would face "fire and fury" if it threatened the United States.
Annual military drills involving tens of thousands of U.S. and South Korean troops are due to begin on Monday. China, North Korea's main ally and trading partner, has urged the United States and South Korea to scrap the drills in exchange for North Korea calling a halt to its weapons programs.
Joseph Dunford, Chairman of the U.S. Joint Chiefs of Staff, said the exercises were "not currently on the table as part of the negotiation at any level".
"My advice to our leadership is that we not dial back our exercises. The exercises are very important to maintaining the ability of the alliance to defend itself," Dunford told reporters in Beijing after meeting his Chinese counterparts.
"As long as the threat in North Korea exists, we need to maintain a high state of readiness to respond to that threat," he said.
Fan Changlong, a vice chairman of China's powerful Central Military Commission, told Dunford that China believes the only effective way to resolve the issue is through talks.
"China believes that dialogue and consultations are the only effective avenue to resolve the peninsula issue, and that military means cannot become an option," China's Defence Ministry cited Fan as saying.
North Korea, which denounces the drills as a preparation for war, has fired missiles and taken other steps in the past in response to the war games.
The United States and South Korea remain technically still at war with North Korea after the 1950-53 Korean conflict ended with a truce, not a peace treaty."CROSSING A RED LINE"
Pyongyang conducted what it said were two successful intercontinental ballistic missile (ICBM) tests in July, further raising tensions after five nuclear tests.
"I would consider that North Korea is crossing a red line if it launches an intercontinental ballistic missile again and weaponizes it by putting a nuclear warhead on top of the missile," South Korean President Moon Jae-in said at a news conference in Seoul marking his first 100 days in office.
Moon has repeatedly urged North Korea not to "cross the red line" but had not previously elaborated what that would constitute.
Trump had promised to seek negotiations and approval from South Korea before taking any options regarding North Korea, Moon also said.
Washington has said it prefers global diplomatic action to stop North Korea's ballistic missile and nuclear programs but it is ready to use force if needed.
However, chief White House strategist Steve Bannon said there was "no military solution" to North Korea's nuclear threats because of Pyongyang's massed artillery targeting the South Korean capital.
"Until somebody solves the part of the equation that shows me that 10 million people in Seoul don't die in the first 30 minutes from conventional weapons, I don't know what you're talking about, there's no military solution here, they got us," Bannon told The American Prospect.
Bannon said he was pushing the U.S. administration to take a harder line on China trade and not put complaints against its trade practices in the back seat in the hope that Beijing would help restrain leader Kim Jong Un.
"To me, the economic war with China is everything. And we have to be maniacally focused on that," The American Prospect quoted Bannon as saying.
North Korean media reported on Tuesday that Kim had delayed the decision on firing four missiles towards Guam, a U.S. territory home to a vital air base and Navy facility, while he waited to see what the United States did next.
"Kim Jong Un of North Korea made a very wise and well reasoned decision," Trump wrote on Twitter on Wednesday. "The alternative would have been both catastrophic and unacceptable!"
H.R. McMaster, Trump's national security adviser, met Japan's defense and foreign ministers in Washington on Wednesday to discuss the importance of deterring North Korea's provocations and Tokyo's ballistic missile defenses, according to the Japanese government.
https://www.reuters.com/article/us-northkorea-missiles-idUSKCN1AW0VY
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Unconstrained Chinese Investment in the Arctic Questioned
Aug 16, 2017 | Maritime Executive
Chinese investment in the Arctic and near-Arctic above 60 degrees latitude has reached roughly $90 billion, and the opening of the Arctic to resource exploration has created the need for a unified response to such investments from the six Arctic nations. This is the conclusion of research analysts at CNA, a nonprofit research and analysis organization located in Arlington, Virginia.
Senior Vice President and General Counsel Mark Rosen and Research Specialist Cara Thuringer have published "Unconstrained Foreign Direct Investment: An Emerging Challenge to Arctic Security" which draws on a wide range of sources to compile a list of 21 Arctic investments of more than $1 billion by Chinese companies and banks as well many other smaller investments.
The report takes stock of the current foreign direct investment patterns — at the transactional level — with a particular focus on Chinese activity as a case study. This case study explores China’s natural resource strategy and its past activities in South America and Africa.
The national legal frameworks for foreign direct investment in the six Arctic nations, Canada, Iceland, Greenland, Norway, Russia and the United States, are not sufficient to protect the sensitive region from harm to the marine environment that would spread well beyond national boundaries. "The current legal structure is too diverse to monitor and regulate inbound foreign investments in large projects such as mines and oil and gas facilities," Rosen and Thuringer write.
“Unregulated foreign direct investment is a significant, multifaceted security issue. It must be addressed before the influx of unregulated investments, and the soft power politics that come from those investments, makes it impossible for the U.S. and other states to adopt complementary policies that favor responsible Arctic development.”
Rosen and Thuringer propose that the Arctic nations work together toward the creation of three cooperative mechanisms for the safe development of the Arctic:
An Arctic Development Bank that would fund responsible development, with lending conditions to reinforce environmental and financial standards. This would act as a counterbalance to the overwhelming availability of inexpensive Chinese capital for Arctic resource extraction projects.
An Arctic Development Code that would improve compliance with environmental and development standards chiefly through transparency. Arctic nations would independently approve and monitor foreign direct investment on their own territories, but would meet certain requirements for environmental assessments that would be made publicly available in a common repository.
A set of multilateral Arctic foreign direct investment review criteria administered by each nation.
Low commodity prices and the remaining difficulties of operating in the harsh Arctic climate probably preclude an Arctic "gold rush" in the near term, say the authors, but the aggressive pace of climate change in the Arctic virtually assures that "one of the few remaining final frontiers" will become accessible at an accelerating rate.
It will be far easier to make agreements on Arctic development before too many outside investments in drilling and mining have already been established. "There is a way forward where the Arctic environment can be sufficiently protected while its resources are extracted," says Rosen, an expert in maritime law and policy. "But taking that path will require cooperation and coordination between the Arctic nations in advance of resource development."
The report is available here.
https://maritime-executive.com/editorials/unconstrained-chinese-investment-in-the-arctic-questioned
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Maersk Upbeat on Shipping Outlook, Faces Hefty Cyber Attack Bill
Aug 16, 2017 | The New York Times
By Jacob Gronholt-Pedersen
COPENHAGEN — Denmark's A.P. Moller Maersk gave an upbeat outlook for container shipping on Wednesday, lifting its shares by as much as 4.5 percent as investors looked beyond one-off second-quarter charges and a costly cyber attack on its operations.
Maersk has been hit by low oil prices at its energy arm and sliding prices in its shipping business in recent years due to lacklustre global trade and a glut of available ships for hire.
The firm also said it expected a $200 million to $300 million bill - primarily in the third quarter - from a June 27 cyber attack that disrupted its container shipping operations for weeks.
But its chief executive Soren Skou, who has staked his future on Maersk as a transport business, said the container shipping industry is showing signs of recovery this year as freight rates have picked up, while overcapacity is easing as orders for new vessels fall and existing ones are scrapped.
"Container shipping fundamentals are at their best since 2010," Skou told Reuters following Maersk's results.Continue reading the main story
Skou announced plans last September for Maersk to focus on transport, while seeking alliances or a separate listing for its energy division, which includes Maersk Oil. But Maersk has so far revealed little about progress on its plans, and Skou declined to elaborate on Wednesday.
Maersk shares have risen about 80 percent since February, in line with an improvement in the Baltic Dry index, which measures the price of moving raw materials by sea.
Its shares initially fell 3.5 percent after Wednesday's results before jumping as much as 4.5 percent. By 1310 GMT, they had slipped back to 13,250 Danish crowns, up 1.3 percent.
"There is no material concern on the underlying performance in the quarter, given that the earnings miss is driven by non-cash items," Nordea analysts said in a note.
CYBER HANGOVER
Maersk reported a net loss stood of $264 million, compared with expectations for a $507 million net profit, according to an average of forecasts in a Reuters poll.
The loss was largely due to impairment charges of about $700 million in the terminal and tanker business, which Maersk said were due to lower asset valuations in Maersk Tankers and a loss of five contracts in its APM Terminals unit in the first half of the year. Maersk said the loss of contracts was a one-off because APM Terminals signed 18 contracts for new volume.
Maersk also faced a cyber bill of $200 million to $300 million, highlighting the toll on corporate earnings of a June 27 malware attack. Cyence, which helps insurers measure cyber risk, said economic costs from the attack would total $850 million.
Maersk's loading volumes dipped from typical levels of around 210,000 forty-foot containers to 160,000 in the week following the cyber attack, but had returned to normal by the middle of July, Skou said.
The CEO said he saw no sign of customers turning their backs on Maersk as a result of the attack, however it had kept him from raising full year profit forecast beyond previous guidance.
Maersk had begun to implement a back up plan to limit the impact of a future attack, Skou said, acknowledging the company had not been able to recover IT systems quickly enough.
Skou said an increase in freight rates of 22 percent in the second quarter compared with a year earlier was driven by "good fundamentals" and less overcapacity as demand for moving containers at sea has outpaced the supply of new vessels.
"If you look at our second quarter results, they were driven by higher freight rates alone," Skou said, adding that he expects vessel overcapacity to fall further.
The company maintained its forecast for a rise in global demand for seaborne container transportation at 2 to 4 percent this year, but said it was now expected in the upper range.
Maersk's operating profit before depreciation and amortisation (EBITDA) of $2.06 billion was in line with the $2.05 billion forecast by analysts.
(Reporting by Jacob Gronholt-Pedersen; editing by Edmund Blair and Alexander Smith)
https://www.nytimes.com/reuters/2017/08/16/business/16reuters-maersk-results.html
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