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29 Aug 2017

Qatar may cut capital spending because of maritime blockade - Fitch

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Qatar’s government may reduce its capital spending on economic projects and infrastructure if damage to its economy from sanctions intensifies, Fitch Ratings said on Monday as it cut the country’s credit rating. Fitch lowered Qatar by one notch to AA-minus with a negative outlook. That brought it into line with the other two major rating agencies, Moody’s and Standard & Poor’s, which assess Qatar at the same level and also have negative outlooks for it. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut ties with Qatar on June 5, accusing it of backing terrorism, which it denies. They imposed sanctions closing Qatar’s only land border, with Saudi Arabia, and disrupted its maritime shipping routes by ending its use of Dubai as a trans-shipment hub. Fitch noted that even before the sanctions, Qatar had shrunk its capital spending plans for 2014-2024 to $130 billion from $180 billion in response to low oil and gas prices. “The government has prepared scenarios for further cuts to capital spending in case oil prices fall again or in case pressures from the embargo intensify,” it said. Fitch predicted the Qatari government’s net foreign assets would fall to 146 percent of gross domestic product this year from 185 percent last year, as the government moves money into local banks to offset outflows due to the sanctions. Outflows are likely to slow in coming months because a large proportion of deposits from the Gulf Cooperation Council countries sanctioning Qatar have already been withdrawn, Fitch said. But it added: “Much non-GCC external funding is being rolled over at a higher cost, but the escalation of tensions in the region could see it flee.” Fitch predicted Qatar’s economic growth would slow to 2.0 percent in 2017 and 1.3 percent next year, from 2.2 percent in 2016 – forecasts that are considerably more bearish than those of many private economists. The sanctions will hurt Qatar’s tourism and transport sectors in particular, Fitch said, estimating that Qatar Airways had lost about 10 percent of its passenger flow. A prolonged rupture in the GCC could undermine the prospects for many of Qatar’s private sector investments, it added. Before the diplomatic rift, all six GCC countries agreed to introduce a 5 percent value-added tax next year as well as an excise tax on tobacco and sugary drinks. Fitch said it understood Qatar remained committed to those plans.

16 Aug 2017

Milaha Launches Direct Container Service Between Qatar and Kuwait

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"Milaha, a Qatar-based maritime and logistics conglomerate, has launched the first ever direct feeder service between Qatar and Kuwait. The new service, named KQX (Kuwait Qatar Express Service), will operate between Hamad Port in Qatar and Shuwaikh Port in Kuwait once a week initially, using a 515 TEU vessel. With 50 reefer plugs available on the vessel and a highly competitive transit time of 1 day, the new service is ideal for transporting perishable products and food stuff, among other cargoes, coming into and out of Qatar, as well as for connecting Kuwait to Milaha’s broader feeder network in the Arabian Gulf and beyond. Commenting on the new service, Milaha’s President and CEO Mr. Abdulrahman Essa Al- Mannai said: “Qatar and Kuwait have long enjoyed strong economic ties, and today, we are building further on these ties with the launch of the Kuwait Qatar Express Service, which represents a fast and cost-efficient solution, particularly for local and regional exporters aiming to enter the Qatari market. Going forward, our track record in delivering reliable and innovative supply chain solutions allows us to continue responding flexibly to our clients’ specific requirements with solid value propositions.” Milaha continues to enhance its international reach and diverse portfolio of marine and logistics services. The company has recently expanded into several new shipping routes and accelerated deployment of new supply chain solutions across a number of countries. Milaha currently calls 2 ports in Oman (Sohar and Salalah) and 3 ports in India (Nhava Sheva, Mundra, and Kandla), offering enhanced connectivity and transit times to Qatar and the region, and is actively evaluating further expansion of services."

04 Aug 2017

China’s Maritime Silk Road has a new connecting point : Abu Dhabi

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"The next stop on China’s “21st Century Maritime Silk Road” has been chosen: Abu Dhabi. At the end of last month, China’s Jiangsu province signed a deal with the UAE’s Abu Dhabi Ports to develop a $300 million manufacturing operation in the free trade zone of Khalifa Port. The deal will see China getting 2.2 million square meters of space in the FTZ for Chinese companies to do what they do best: make stuff. Five Chinese firms, who engage in a variety of sectors, including clean energy, mining, construction materials, steel, and environmental clean up technologies, have already signed on to the endeavor. According to Seatrade Maritime, the UAE handles 60% of China’s exports throughout the region, with a trade value in the ballpark of $70 billion each year. This deal comes in the wake of another which occurred at the end of last year which saw China’s COSCO shipping winning the rights to develop and operate a new container terminal at Khalifa Port, the second busiest port in the UAE to Dubai, for the next 35 years at a cost of $738 million. While big ocean shipping companies owning and/or operating terminals and ports on foreign terrain is a standard operating procedure for the industry — Denmark’s Maersk line is running terminals in 36 countries, Switzerland’s Mediterranean Shipping Co. is operating in 22 countries, and Dubai Ports World is in 40 countries, for example — these are generally mono-faceted, shipping-centric operations. Where China is different is that they often don’t only come in and open a new port but invest in an adjoining free trade/special economic zone and other development initiatives as well — which they ideally stock full of Chinese companies. With China, countries get the entire development package. Jiangsu province’s recent investment in the Khalifa Free Trade Zone and COSCO’s commitment to the Khalifa Port is all a part of China’s Maritime Silk Road project — the watery half of the broader Belt and Road Initiative — which seeks to establish an enhanced and interconnected network of Chinese-run ports and manufacturing zones along the route from the east coast of China to Europe. This is an endeavor that is coming together very quickly, with China pumping over $46.6 billion into new/reinvigorated port projects in countries such as Indonesia, Myanmar, Australia, Sri Lanka, Tanzania, Djibouti, Greece, and now the UAE. These Maritime Silk Road investments benefit China in two main ways: 1) China is able to invest enough money and resources to make them viable economic entities which help to extend the country’s commercial reach throughout a vast part of the world. 2) It further enmeshes China into the political and economic fabric of Eurasia. While we see the bright glitter of billions of dollars flashing by today, these projects mean that China is going to have a strong foothold in these countries for the long-term: China is entering spaces today that they will occupy for decades, establishing an entirely new geo-political paradigm in the process. And as Sri Lanka recently discovered, China is a houseguest that is very hard to get rid of. While the BRI is ultimately a top-down, Beijing-devised expansionist strategy, it is often individual provinces that are going out into the field and getting their hands dirty. Regardless of how it appears from the outside, the Communist Part of China is not a monolithic organization — various levels of government and factions maintain huge amounts of power and decision-making ability. As far as Belt and Road development is concerned, Jiangsu province has been one of the most active players, with key overland and maritime ports and other big investments being laid down throughout the various routes. This new $300 million Khalifa deal fits right into a portfolio which includes such massive investments as a $600 million (promised) manufacturing operation in Kazakhstan’s Khorgos East Gate SEZ. Why this is good for Abu Dhabi? It is obvious why this port / FTZ deal is good for China, but what does Abu Dhabi get out of it? In brief, they get a port and a section of a key FTZ built, funded, and started up for them by China, as well as $300 million on top of it. Even if Abu Dhabi doesn’t directly economically benefit from these projects beyond the initial investment capital, they can serve as catalysts for other projects to grow up around them (i.e. factories need local suppliers, workers, etc). The idea behind these places is for them to become multinational hubs of transport, production, and commerce. Khalifa port and FTZ is a very big place that is designed to bring in investment from many different countries from around the world — not just China — and the land area allotted to the Jiangsu province operation amounts to just 2.2% of the available land in the FTZ. However, China is often a key part of these plans, as the country has the political will and capital to come in and get the ball rolling. Such new transportation and manufacturing capacity creates new possibilities — and such new possibilities is precisely what oil-reliant Abu Dhabi is looking for. The UAE has the world’s fifth-largest oil reserves, and Abu Dhabi controls 95% of them. This oil supply has allowed Abu Dhabi to prosper; however, the emirate sees the writing on the wall: either their oil stores are eventually going to dry up or the world is going to start losing interest in them, relegating fossil fuels to an archaic, niche energy source as we theoretically transition to other sources. To these ends, Abu Dhabi has set itself on a trajectory to diversify its economy away from oil-reliance. Dubbed “Abu Dhabi Economic Vision 2030,” the emirate has outlined how it’s going to build a “sustainable economy” by bolstering its tourism, manufacturing, health care, petrochemical, financial services, and renewable energy sectors. The 100-square-kilometer Khalifa Port FTZ is a major part of this diversification program. Launched earlier this year and scheduled for completion in 2030, the port/FTZ combo is expected to eventually be responsible for 15% of Abu Dhabi’s non-oil GDP. Abu Dhabi seems to be looking over the border at their neighboring emirate Dubai for inspiration here. Not being blessed — or cursed — with large reserves of oil, Dubai set out to develop their economy in a different direction. Rather than erecting thickets of oil wells they erected gantry cranes, factories, airports, shopping malls, and skyscrapers; rather than surviving off the whims of the global energy market, they gunned for tourism, FDI, technological innovation, logistics, real estate, and financial services; rather than trying to build their economy from the inside out, they invited the outside world to come in. Along the way, they created a global epicenter for trade and one of the most international cities on the planet — 85% of the population of Dubai are expats. What we see in Dubai today was developed in synergy with the Jebel Ali Free Zone (JAFZA) — the world’s largest functioning free economic zone. JAFZA was built from scratch in accordance with a top-down plan, and is now the model for other such zones that are sprouting up along the various routes of the New Silk Road. This place that hardly even existed 30 years ago now contains over 7,000 international companies — including 100 of the Fortune 500 firms — employs nearly 150,000 people, and is responsible for roughly 21% of Dubai’s GDP ($87.6 billion in 2015), including $12.6 billion worth of trade with China. Clearly, Abu Dhabi wants to get itself some of that. Source : Forbes"

28 Jul 2017

Chabahar Port Signs Deal with India Ports

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India Ports Global Private Limited (IPGPL) has reportedly signed a contract with Aria Banader of Iran to equip and operate two terminals at Chabahar – Shahid -Beheshti Port for transportation of goods and other purposes. "As per Article 6 of the contract, effort are to be made to commence commercial operations at Chabahar –Shahid- Beheshti Port in Iran within 18 months from the contract activation date or 4 months from the date on which the Lessor hands over the Terminals and the infrastructure facilities to the Lessee in accordance with the terms of the Contract," said a press release from the government. India Ports Global Private Limited (IPGPL) is a joint venture between Jawaharlal Nehru Port Trust (JNPT) and Kandla Port Trust (KPT). The Ministry of Shipping has presently assigned IPGPL the task of equipping and operating Container / Multi-purpose Terminals at Chabahar in Iran. New Delhi has committed to invest $500 million in Chabahar’s first phase of development, which includes a $150 million credit facility to Iran through the Export-Import Bank of India. “ Lying on the Gulf of Oman along the approaches to the Straits of Hormuz, the port of Chabahar is central to India's hopes to crack open a transport corridor to Central Asia and Afghanistan that bypasses arch-rival Pakistan.

24 Jul 2017

Qatari embargo: implications for the shipping sector

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"On 5 June 2017, Saudi Arabia, the UAE, Bahrain and Egypt severed diplomatic ties with the State of Qatar. Reports indicate that the move against Qatar is also supported by Yemen, a secondary government in Libya and the Maldives. Saudi Arabia, the UAE and Bahrain have now closed their air space and territorial waters to Qatar. Saudi Arabia also closed its land border with Qatar, Qatar’s only land border with another country. Egypt has also closed its airspace to all flights to and from Qatar. A direct consequence is that ports operated by the alliance against Qatar are now blocking Qatar-flagged vessels, along with other vessels that are heading to and coming from Qatar. In particular: The Saudi and UAE port authorities have now banned from their territorial waters all ships flying Qatari flags or owned by Qatari companies or individuals. UAE ports, such as Fujairah or those operated by DP World UAE Region, have banned all vessels destined to or arriving from Qatari ports, regardless of the nature of their call. In addition, DP World UAE Region extended the ban to all vessels loading or discharging cargo destined to or coming from Qatar. Reports were made of the Ports and Maritime Affairs at Bahrain’s Ministry of Transportation and Telecommunications suspending all marine navigation from and to Qatar with immediate effect. The Petroleum Ports Authority in Abu Dhabi is also reported to have issued a notice that Qatari-flagged vessels would not be allowed entry into Abu Dhabi Petroleum Ports. Egypt has not yet indicated whether it intends to block Qatar-linked vessels/cargo from using the Suez Canal - a common route for tankers. Practical implications in shipping These developments mark an unprecedented change in Middle Eastern relations, which will undoubtedly affect companies with trade routes to or from Qatar. Analysts suggested that companies with large trade volumes or retail operations in Qatar are likely to be most affected. These include logistics and shipping companies. Whilst all the aspects which may result from the current restrictions on Qatar are not yet apparent, we envisage the following operational implications are likely to be the most immediate in the shipping sector, all of which will have cost repercussions on the affected parties: The shutting of the land border crossing between Saudi Arabia and Qatar is likely to create long queues/delays. This may particularly impact consignments bound by road transhipment to or from Qatar. In addition, reports suggest that vessel supplies in Qatar, which are largely transited by road through Saudi Arabia, may be affected. Qatar is a major exporter of condensate, an ultra-light form of crude oil. The trade ban may make the purchase of Qatari crude and condensate more difficult. Indeed, very large crude carriers regularly conduct multi-loads of crude at multiple Middle East ports. Barring vessels that have called at Qatar from entering other ports in the region could require traders to vary their trading patterns. Bunkering is also likely to be affected. For instance, major bunkering ports such as Fujairah, where some three-quarters of tankers sailing through the Gulf stop to refuel, are refusing all vessels sailing to or from Qatar. On the transhipment side, some reports indicate that cargo is not allowed to be discharged onto feeder vessels to Qatar. In Fujairah, any Qatari cargoes already in port must be cleared within 24 hours. Ship managers are indicating they are encountering difficulties related to crew/personnel. For instance, it is reported that the Fujairah port’s immigration is not allowing crews to join or to sign off vessels coming from or bound for Qatar. In parallel, it is proving difficult to extract crew members and other personnel based in Doha given the current blockade. In relation to charterparties, these should be reviewed to establish whether they include a provision which specifically addresses blockades - for example CONWARTIME 2013 refers to ""blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever)"". A number of international operators are bidding for new contracts and renewals to operate their FPSO and FSRU vessels in the various oil fields including Al Shaheen. The uncertainly from the events this week will cast a shadow on the underlying charters supporting ship financing. There have been reports that banks in the region will refuse to deal with Qatari banks or refuse to recognise the Qatari riyal. We understand that some Saudi, UAE and Egyptian banks are suspending business with Qatari banks, such as recognising letters of credit and other contingent payment instruments until they have received guidance from their respective central banks. The international currency of shipping is the US Dollar so we expect limited exposure on this front. However, it may be possible that a shipowner could have an exposure to Qatari riyals if for example, a supply contract requires payment in US Dollars whist the sales contract income for the service or goods is in Qatari riyals. There have been no statements today from the Saudi Central Bank or from the UAE Central Bank. It has been reported that the UAE Central Bank has asked all commercial banks to report on their exposure to Qatari banks by Thursday (8 June 2017) before it makes a decision on how to move forward. Of course, the exposure of businesses to the current Qatari trade restrictions may be covered by insurance. It may also be managed through applicable contractual and local legislative provisions within the Middle East, including those which deal with force majeure and deviation. We expect to have more visibility on the operational and legal implications of the restrictions against Qatar as the matter unfolds. In any event, for the time being, there is no indication of the dispute de-escalating."

21 Jul 2017

Maritime industry experts to discuss cyber security

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"* WannaCry cyberattack and other huge IT outages prompt warnings on vulnerability of shipping industry, as cost of average attack rises to US$4 million per incident IT protection and cyber security will take centre stage at the biennial Seatrade Offshore Marine and Workboats Middle East (SOMWME) exhibition and conference, taking place at the Abu Dhabi National Exhibition Centre (ADNEC) from 25 – 27 September 2017. The focus on IT systems at sea follows the recent global WannaCry attack, which shut down computers used by Spanish ISP Telefonica, FedEX and the UK’s National Health Service, among others, affecting some 200,000 computers in 150 countries. This was followed later in May with the British Airways outage, which saw hundreds of flights cancelled over a holiday weekend and £500 million wiped of parent company IAG’s value. Peter Broadhurst, Senior Vice President Safety & Security Services, Inmarsat, the mobile satellite company, will deliver the keynote presentation in the Knowledge Theatre, “Cyber Security: Protecting the Industry”, assessing the new risk factors of an increasingly connected shipping industry and how industry players can protect themselves against cyber security threats. “Hacking, ransomware and system outages have long been a concern for the shipping industry, particularly with the advent of the Internet of Things (IoT) and the connected ship. These risks are heightened due to the significant growth in networks of physical objects accessed through the internet,” said Broadhurst. According to a 2016 global analysis report by the Ponemon Institute, which surveyed data collected from 383 companies in 12 countries, the average total cost of a data breach stands at US$4 million, a figure that has increased 29% since 2013. The average cost per lost or stolen record is $158, with a 15% average price increase since 2013. In total, the number of security incidents reported in 2015 stood 63% higher than in 2014. Emma Howell, Group Marketing Manager, Seatrade portfolio commented, “Over recent weeks and months, we have seen huge organisations crippled by ransomware attacks and IT meltdowns – compromising systems and costing some businesses many millions of dollars. The need for the shipping industry to tackle this growing menace head-on is greater than ever before and we look forward to welcoming decision makers and industry leaders to debate these important issues.” However, compounding the issue, insurance providers are yet to close all of the gaps in their policies, leaving shipping companies at even greater risk and facing huge financial losses. “Most insurance policies have Cyberattack exclusion clauses, for property damage and business interruption and this exposes shipping companies and ship owners to huge risks. We have seen some response from the insurance industry but until comprehensive products are rolled out the responsibility of backing up systems, protecting data and ensuring a network is robust and secure, very much remains with the shipping company and ship owner,” added Howell. Staying with the technological theme, the SOMWME 2017 programme will also feature sessions on SMART solutions, covering developing technologies such as automation and predictive maintenance, alongside design and development of a new generation of specialised offshore vessels, with confirmed speakers including; Arnstein Eknes, Business/Segment Director Special Ships, DNV GL, Oskar Levandar, SVP Concepts & Innovation, Rolls-Royce; and Alexander Nürnberg, Managing Director, MacGregor."

16 Jun 2017

Milaha Enhances India-Qatar Feeder Service

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"Milaha has announced the enhancement of its existing feeder service between Jawaharlal Nehru Port Trust (JNPT), India’s busiest container gateway, and Hamad Port, Qatar. The new weekly service, named the India-Qatar Express (IQX), will connect the ports of JNPT and Mundra to Hamad Port, and will accept local and transshipment cargo from all Indian ports, Southeast Asia, and the Far East via Mundra. Commenting on the new service, Milaha’s President and CEO Mr. Abdulrahman Essa Al- Mannai said: “Since we started the first ever direct service between JNPT and Qatar two years ago, we have seen growing demand from importers, exporters, and mainline operators for additional capacity, so we decided to act on this demand. The new service will further drive trade growth between India and Qatar, and build on the strong economic ties.” The IQX service will be operated with two 1,700 TEU vessels. Milaha is represented in India by Mumbai-based Poseidon Shipping Agency."

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