Founded by Max Farndale 1947 - 2018
The path towards oligopolisation in container shipping took another step forwards with the proposed USD 6.3 billion sale of Hong Kong-based Orient Overseas International Ltd. (OOIL) to Chinese state-owned Cosco Shipping Holdings Ltd. (Cosco) and Shanghai International Port Group Co. (SIPG), announced a couple of weeks ago.
On the completion of the deal, Cosco will hold 90.1% while SIPG will hold the remaining 9.9% stake in OOIL. The joint buyers said they will keep the OOIL branding, retain its listed status and maintain the companies’ global headquarters in Hong Kong along with all management. Employees will retain their existing compensation and benefits, and none will lose jobs as a result of the transaction for at least 24 months after the offer close.
OOIL and its container unit OOCL have a good track record for above-average profits in a challenging market and a reputation for being a very well-run company, earning the moniker “The Perfect Bride” by Drewry Maritime Financial Research. This was reflected in the substantial price-to-book premium of 1.4x, which is a fair bit above OOIL’s historical average P/B of 0.8x. Retaining the management team, processes and systems is a wise move and could be of enormous value to Cosco, in our opinion.
The deal also contributes to the shift in some of the previously entrenched liner fundamentals that have made consistent profits so elusive for carriers. In a new spotlight report (Two steps away from liner paradise?), Drewry Maritime Advisors, argues that with the total system (liner and ports) benefits from economies of scale being exhausted and in a less fragmented market, carriers can finally reach the nirvana of sustainable profitability.
As things stand, upon completion of the latest M&A (the Ocean Network Express, or ONE, merging of the Japanese companies’ container units is expected to become operational in April 2018) and taking into account future newbuild deliveries, there will only be 10 carriers with a minimum 2% share of global capacity by start of 2021, which between them will control approximately 82% of the world fleet. As the figure highlights, as recently as 2015 there were 17 carriers with at least a 2% share.
Figure 1: No. of carriers with min 2% share of world containership fleet capacity.
Shippers are getting used to consolidation in the container industry. That doesn’t mean they have to like it. As their pool of carriers shrinks they are more likely to lobby anti-competition regulators to step in. Recent container M&A such as Maersk Line’s recent takeover of Hamburg Süd and the proposed ONE merger of Japanese carriers have all encountered minor regulatory issues so any future deals may have to contend with conditions being applied that make them less attractive to conclude. The onus will be on carriers to disprove any form of collusive oligopoly is occurring.
| A T&L release || August 9, 2017 |||
Sydney-based logistics software provider WiseTech Global has acquired Digerati, a provider of tariff research and compliance tools utilised by the Australasian customs broking community.
Digerati provides its compliance solutions to over 140 corporations including DHL, Expeditors, FedEx, Panalpina, Schenker, UPS, Yusen and many major brokerage and logistics houses in Australia and New Zealand.
“Border compliance is a complex, high-risk process with growing transaction volumes, speed and complexity exponentially increasing risk and potential penalties,” said Richard White, CEO, WiseTech Global.
“We envision a future of deeply capable, integrated and guided transaction processing that will reduce risks for customs brokers, importers and exporters by significantly reducing compliance breaches, fines and penalties and create a safer global trade environment.
“WiseTech Global has been investing research and development resources into machine learning, natural language processing, robotic process automation and decision support, all of which must be driven by large volume transaction data and deep learning around vast border agency data sets, compliance, due diligence and risk assessment and mitigation.
“We will be utilising the Digerati data set and customer experiences in our development pipeline for the next generation of border compliance, aimed at substantially increasing timely, accurate and complete customs entries for our customers, to better manage the exponential increase in transactions at the border.
“With the advent of global border initiatives such as Trade Single Window, Trusted Trader, Known Shipper, C-TPAT, AEO and Supply Chain Security and an ever-increasing critical need to secure borders and ensure that international trade is both safe and efficient, the work we are doing is vital to the next generation of cross-border compliance.”
Dr Pandey, Managing Director, OzDocs, added, “With the Digerati data set as part of WiseTech’s deep development capability, the compliance tools available to customers to reduce errors, improve compliance and better address risk at the border will clearly expand over time.”
| A Logistics & Materials Handling release || August 10, 2017 |||
On Monday, the New Zealand Manufacturers and Exporters Association (NZMEA) hosted a forum to discuss policy issues of importance to manufacturers, featuring Hon Steven Joyce, National MP and Minister for Finance and Infrastructure, Grant Robertson, Labour's Finance Spokesperson, and James Shaw, Co-Leader of the Green Party. This was a great opportunity to hear three representatives from major parties engage with NZMEA members in a quality discussion on manufacturing, and today the NZMEA is releasing its list of policies for the 2017 election.
Mr Dieter Adam, CE, NZMEA said, “With the election only 7 weeks away, it’s important that all parties put forward their vision for creating a more prosperous and high-value economy, with manufacturing playing a key role.
"We believe the policies set out here will contribute to growing high value industries in New Zealand.
“We would like to see all parties include all or at least some of our 10 policy points in their election policies. These include working to develop a better understanding of manufacturing and its future potential through a Minister for Manufacturing, addressing skills shortages that hold back the industry from growth and changes to R&D settings to help increase business R&D spending.” Said Dieter.
The 10 NZMEA policy positions are outlined below. A full list can be found below and by clicking here.
”Our policies will help to create an environment where high value producers, particularly manufacturers, can thrive, grow exports and provide well-paid incomes so New Zealanders can have a more prosperous future. “ Said Dieter.
The NZMEA forum offered a robust conversation about the opportunities and challenges manufacturers face, focusing on the steady and growing contribution manufacturing is making to the goal of New Zealand exports reaching 40% of GDP, staying abreast of advancing technology and investing in a skilled workforce.
“Manufacturing has changed offering new opportunities for countries like New Zealand to grab and run with," says Mr Adam.
“Manufacturing is also entering a rich pipeline of innovations in materials and processes – from 3-D printing to advanced robotics, which promises to create efficiencies and speed to a global market.
“The future is more and more about innovation, increased productivity and global trade of high value components and we want to hear how our political leaders plan to support this.
“The forum was a positive step forward and we were pleased to hear politicians acknowledge the vital role both process and product innovation plays in growing our sector, " he says.
Prof Jane Goodyer, Head of School of Engineering and Technology, Massey University, moderated the event from a highly experienced perspective.
“The manufacturing sector is the backbone to NZ’s prosperity through taking our innovations to the world, " she shared.
“NZ has an opportunity to really add value to our economy. Industry, Government and education need to work closer together to make this happen,” says Prof Goodyer.
Prof Goodyer’s comments reiterate recommendations in a 2012 McKinsey report on the future of manufacturing, which concluded that two key priorities for both governments and businesses are education and the development of skills. They will need qualified, computer-savvy factory workers and agile managers for complex global supply chains. In addition to supporting ongoing efforts to improve public education—particularly the teaching of math and analytical skills—policy makers must work with industry and educational institutions to ensure that skills learned in school fit the needs of employers.
| An NZMEA release || August 9, 2017 |||
A new nationwide set of environmental rules for managing New Zealand’s 1.7 million hectares of plantation forestry will better protect the environment and deliver significant savings in compliance costs, Minister for the Environment Dr Nick Smith and Associate Minister for Primary Industries Louise Upston say.
“Forestry is New Zealand’s third largest primary industry but its efficiency is hampered by the confusing mix of planning rules across New Zealand’s 86 councils. The strength of this national approach is that it will better protect the environment while also improving the productivity of the forestry sector by applying consistent environmental standards to reduce operational costs,” Dr Smith says.
“A major change with these new regulations is the development of three new tools for managing the environmental impacts from forestry, covering the issues of erosion, wilding pines and fish spawning.
“The benefit of these tools is that the restrictions on forestry activities are related to the environmental risk rather than which council area a forestry operation is in. This change is particularly important as 80 per cent of forest owners manage forests in multiple council areas.
“This new national forestry standard is part of the Government’s broader Resource Management Act reforms, facilitated by amendments passed in May this year. It follows other national regulations covering telecommunications, electricity transmission, waste tyre management, water metering and drinking water, contaminated soils and aquaculture.”
Ms Upston says the forestry industry will benefit from having a set of consistent regulations to operate under.
“Planning rules at local government level are subject to regular reviews and there could be as many as three sets of regional or district plan rules. Some large forests also cross local government boundaries, resulting in different rules for the same forest.”
“Removing this uncertainty will encourage greater investment in a significant contributor to our economy, especially at regional level. Forestry employs more than 26,000 people and exports total more than $5 billion a year,” Ms Upston says.
“The National Environmental Standard for Plantation Forestry covers eight core plantation forestry activities: afforestation, pruning and thinning to waste, earthworks, river crossings, forestry quarrying, harvesting, mechanical land preparation and replanting. Councils may apply stricter rules in special circumstances where local conditions require a more restrictive approach.”
The standard, which comes into force on 1 May, 2018, was developed jointly by the Ministry for Primary Industries and the Ministry for the Environment. Support and guidance will be provided to councils, foresters and key stakeholders to ensure an effective rollout.
Related DocumentsPlantation Forestry NES - Overview of Regulations.pdf (pdf 1.89 MB)
| A Beehive release || August 8, 2017 |||
KiwiRail has linked up the track between Picton and Christchurch for the first time since November’s Kaikoura earthquake devastated the line, Transport Minister Simon Bridges announced today.
“Staff held a small ceremony near Rakautara, north of Kaikoura this morning, and completed the final weld,” Mr Bridges says.
“This is an important milestone in getting the line open again, and in easing the pressure on upper South Island roads.”
Teams from around the country have been working to replace twisted track, rebuild bridges, repair tunnels, and clear enormous slips along the route in order to get freight moving again on rail in the South Island.
“The line is a critical component of the New Zealand transport network, carrying around 1 million tonnes of freight annually before the earthquake,” Mr Bridges says.
“While there is still work to be done, KiwiRail is making good progress towards returning freight services to this route.
“Getting it open will ease pressure on the alternate road, which has been the main route to shift freight south since the earthquake closed the coastal road and rail networks. It will also help with the reinstatement of State Highway 1 and the railway by moving materials to worksites along the route.
“A lot of work still remains to be done, but the workers from KiwiRail and its partners in the North Canterbury Transport Infrastructure Recovery (NCTIR) alliance have done a great job getting it to this stage,” Mr Bridges says.
There were close to 60 major damage sites including tunnels, bridges, embankments, and the line had been buried under more than 100 slips and landslides. Approximately 60 bridges were damaged and repairs are being carried out at more than 750 sites.
“The Government is committed to restoring the road and rail services along this important coastal corridor, and it is great to see the significant progress being made,” Mr Bridges says.
| A Beehive release || August 9, 2017 |||
Prime Minister, Rt Hon Bill English, will officially open the Kahukura Engineering and Architectural Studies facility at Ara Institute of Canterbury City Campus Christchurch on 10 August.
The new $34m, 6500m building on Moorhouse Avenue is the jewel in the crown of a 10 year master plan of rebuilding and refurbishment across the institute’s five campuses.
Kahukura was designed by Jasmax to offer students both purpose-built workshops and studios, and flexible learning spaces, that mirror industry workplace conditions.
Engineering, architectural studies, quantity surveying and interior design programmes will be taught in the Kahukura building and students have started semester two in the spacious new building, which doubles as a teaching tool.
“For students who will be designing and engineering the buildings of the future, Kahukura is an inspiring place to develop skills and awareness,” Acting Chief Executive Darren Mitchell says. “The structural elements of the building are exposed so that students can see how the elements work together on both practical and aesthetic levels. It is also a forward thinking building in terms of the materials used and the sustainable components.”
Timber dominates throughout as a structural element with other highlights the wide feature staircase, original artwork by Niki Hastings-McFall, a building facade inspired by Maori cloaks (known as kahukura) and a public exhibition space.
Powell Fenwick were the engineers and Inovo provided project management on the building.
Former Prime Minister John Key opened the Whareora, Sports and Wellbeing facility, also at the City Campus Christchurch in early 2015.
Ara has also refurbished the Woolston Campus and added new buildings and resources for trades training, is nearing completion of a North Green at the Christchurch campus, is evaluating requirements for the three southern campuses and will begin work on a Student Hub in Christchurch soon.
| An ARA release || August 8, 2017 |||
The company is investing in training and growing local talent to combat a skills shortage in the engineering industry through closer relationships with the regional tertiary provider, Ara Institute of Canterbury.
Wyma Solutions Production Manager Michael Anderson says that the company often struggled to find the people it needed, so instead turned to young talent and more investment in training.
“We’re growing quickly and we need more highly-skilled people to compete internationally. It’s difficult to find people with the right skillset in the market so we’re investing in apprentice training through Ara to grow our team and our production,” he says.
The post-harvest equipment manufacturers currently have nine apprentices training through Ara and aim to double that number over the next two years to meet their specialised staffing needs.Engineers working in the manufacturing industry need to be multi-skilled and creative thinkers, Anderson says.“We don’t just plonk our staff at one point in an assembly line to do the same thing day in, day out. Every machine we make is customised and we need staff that can problem-solve and complete a variety of tasks.“We choose to train through Ara because their tutors are experienced and have broad knowledge. They are recognised in New Zealand as a leading tertiary educational institute who provide world-class training and have top-notch facilities and equipment.”
Apprentices attend block courses and night classes at Ara. They also have a ‘buddy’ at Wyma Solutions to teach them the basics and help them progress through their training.“Ara provides them with the skills to become competent tradespeople and we assist them in growing.”
Wyma Solutions also enhances their apprentices’ training further through exchanges with other companies to expose their young talent to the many different aspects of engineering.“Engineering is broad and that’s what makes it exciting. We want our apprentices to go out and experience other things, then come back to us with added skills and fresh eyes,” Anderson says.
Many of Wyma Solutions’ former apprentices now have key roles in the company and their career development doesn’t stop there. The company is currently looking at Ara courses to upskill team leaders and front-line management. They also often take on young pre-trade graduates from Ara, with the aim of progressing them into further training.
Ultimately Anderson says that Wyma Solutions wants to get as many staff as possible through formal training in order to enhance its already highly-skilled workforce and compete with large manufacturers overseas.“By choosing to train staff through Ara, we are investing in the future of Wyma and boosting our ability to compete on the global stage.”
| An ARA release || August 8, 2017 |||
Management at one of McCain Foods’ processing plants in Timaru, New Zealand, has found over 100 opportunities for improvement in its logistics following a two day “energy blitz” from employees.
Production Manager Sonny Quilliam explains the thinking behind the move, with energy efficiency being key to the facility’s operations. “We’d picked all the low hanging fruit through previous work but we needed ideas to generate more energy and water saving opportunities. We knew they were there but we needed to shine a light on possibilities.”
Twenty people from all areas of the facility that produces 146,000 tonnes of chips annually took part, from management to factory floor workers. The team scoured every area of the plant, resulting in a spreadsheet of 113 viable ideas designed to improve logistical efficiency.
Ideas at the top of this list include the optimisation of refrigeration systems, recycling heated water and fixing general leaks.
“Completing the prioritised projects will reduce energy and water use and save thousands of dollars a year,” Quilliam continued. “This frees up energy and water for the local community and allows us greater freedom to invest back in the business.”
Research exercises like this can be greatly beneficial to businesses, with the Energy Efficiency and Conservation Authority quoting that firms can save up to 20% on energy costs with smarter energy use.
| A Supply Chain Digital release || August 7, 2017 |||
Rocket Lab has completed an internal review of data from its May 25 test flight of its Electron rocket. The review found the launch had to be terminated due to an independent contractor’s ground equipment issue, rather than an issue with the rocket. Rocket Lab’s investigation board has identified the root causes and corrective actions.
The Federal Aviation Administration, the primary body responsible for licensing the launch, has overseen Rocket Lab’s comprehensive investigation and will review the findings.
Rocket Lab’s engineers have spent the last two months working through an extensive fault tree analysis to ensure all factors that may have influenced the outcome of the launch were thoroughly evaluated. The investigation involved the review of over 25,000 channels of data collected during the flight in addition to extensive testing at Rocket Lab facilities in California and New Zealand.
Rocket Lab’s investigation team determined the launch, named ‘It’s a Test’, was terminated due to a data loss time out, which was caused by misconfiguration of telemetry equipment owned and operated by a third-party contractor who was supporting the launch from Rocket Lab’s Launch Complex 1.
Four minutes into the flight, at an altitude of 224 km, the equipment lost contact with the rocket temporarily and, according to standard operating procedures, range safety officials terminated the flight. Data, including that from Rocket Lab’s own telemetry equipment, confirmed the rocket was following a nominal trajectory and the vehicle was performing as planned at the time of termination.
“We have demonstrated Electron was following its nominal trajectory and was on course to reach orbit,” said Peter Beck, Rocket Lab CEO. “While it was disappointing to see the flight terminated in essence due to an incorrect tick box. We can say we tested nearly everything, including the flight termination system. We were delighted with the amount of data we were able to collect during an exceptional first test launch.
Rocket Lab’s telemetry systems provided data verifying Electrons capabilities and providing us with high confidence ahead of our second test flight. The call to terminate a launch would be tough for anyone, and we appreciated the professionalism of the flight safety officials involved.”
The telemetry data loss that led to the termination of the flight has been directly linked to a key piece of equipment responsible for translating radio signals into data used by safety officials to track the vehicle performance. It was discovered a contractor failed to enable forward error correction on this third-party device causing extensive corruption of received position data. The failure was first indicated by the fact that Rocket Lab’s own equipment did not suffer similar data loss during launch. Further confirmation of the cause was demonstrated when replaying raw radio-frequency data - recorded on launch day - through correctly configured equipment also resolved the problem.
The fix for the issue is simple and corrective procedures have been put in place to prevent a similar issue in future. No major changes to the Electron launch vehicle hardware have been required and the company has authorized the production of four additional launch vehicles as it prepares for commercial operations ahead of the test flight program. Rocket Lab’s second Electron rocket, named ‘Still Testing’, is undergoing final checks and preparations ahead of being shipped to Rocket Lab Launch Complex 1 shortly.
| A RocketLab release || August 7, 2017 |||
Palace of the Alhambra, Spain
By: Charles Nathaniel Worsley (1862-1923)
From the collection of Sir Heaton Rhodes
Oil on canvas - 118cm x 162cm
Valued $12,000 - $18,000
Offers invited over $9,000
Contact: Henry Newrick – (+64 ) 27 471 2242
Mount Egmont with Lake
By: John Philemon Backhouse (1845-1908)
Oil on Sea Shell - 13cm x 14cm
Valued $2,000-$3,000
Offers invited over $1,500
Contact: Henry Newrick – (+64 ) 27 471 2242
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