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/ ' S H)CONTAINER SHIP FLEET FORECASTDeliveries of ships, by class, scheduled over nexi three years.*

0 034 7 1,624,242

0 032 6 t,365.)81

"Based on orderbook as of Oct. I. 2009Source: AXS-Alpholiner, www.axs-alphaliner.com

The five carriers have a lo t uf cloutbecaii.se they charter 478 ships totaling 1.3miilion TEUs, and their success in cuttingpayments will stiffen tho resolve of rivalsseeking their own deals with ow ners.Meanwhile, the fleet of id led vesselscontrolled hy cha rter ow ners has reached arecord high of more than 6S0,\ ertaken the numherof johless carr ier-ow ned ships.Slumping rates, shorte ning fixtures andris ing unemployment have created panicamong Germany 's KG investment compa-nies that domin ate the global charte r m arket.More than 100 KG companies reportedly areseeking fresh funding from mainly small pri-vate investors to stave off ban krup tcy a nd tofinance paym ents on the estimated 2 00 ves-sels worth more than $10 billion on order.The prosfwctoffu rther rate cub;, the grow-ing pool of idle ships currently more than10 per cen t of the w orld Heet and loomingdistressed sales of ships at barga in-basem entprices are spurring attempts to launch newlost-cost services in niche markets w here theestablished carriers ca n't easily compete.

That's thega me plan of The C ontainershipCompany , wh ich has a t t rac ted Fred r ik -sen's attention. The idea is simple: Charterand /or buy ships at giveaway rates and pricesto operate a no-frills point-to-pointser\'iceincontainer shipping 's equivalent of SouthwestAirlines or Ryanair in Euro pe.

0 0230 1,586,656

0 0132 984,439

Fredriksen already has dipped into thecontainer charter market, has a few ships onorder and is indirectly involved on the carrierside as the biggest shareholder in TUI, the larg-est shareholder in Hapag-Lloyd and the topcontributor to tlie carrier's rescue package.

However Fredriksen's next move playsout. The Containership Company likely willoperate on the margins and w on't bave a majorimpact on the mainstream container market,yet still couki gi w s hipper s increased option.s.Cha rter owne rs are more in terested inthe prospects for their clients, the bigoceancarriers . The short-term outlook appearsgrim . "It is unlikeiy there will he any signifi-cant recovery until the demand side dealercuts a new deck," said M artin Stopford, beadof research at Clarkson. U BS, the Swiss bank.expe ctstheind ustry wh ich is heading for acollective loss of $20 billion this year willbook accounting profits in 2012 and economicprofits n 2015.Carriers likely will stagger until thenthanks to consolidation, financial restruc-turin g and. in some cases, gove rnm ent aid.For scores of char ter shipowne rs, bankruptcy"appears an inevitable outcome of containershipping's deepest recession.But their ships will remain to haunt anovertonnaged market, joc

iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiKiiiitiiiiiiiiiiiiiiiiiiiiiiiiiiiiiimiiiiiiiiiiiiiiiiiBruce Barnard can be contactedat [email protected].

*

By Peter T. Leachl l l ll l l inilMMIIItlll l l ll lhllMIIIIIIMItllll l l ll l ltlMIMIIIM IlllllMDIIII

BRAZIL:L A N D O FO P P O R T U N I T YProject developers andcargo carriers see thecountry as the next China ifchallenges can be overcomeA SPATE OF new orders from one of theworld 's most rapidly developing marketspromises to sustain project cargo carriersjust as they near tb e end of orders that havekept them busy through the recession.Br azi lc ould be the next Ch ina i f i t cans u rm o u n t t h e m a n y c h a l l e n g e s s t a n d -ing in the way of its development poorinfrastructure, currency fluctuat ion, h ighpoverty r ates, low I iteracy, red tap e and p er-vasive corruption.

If Brazi l can overcome these barriers ,it will fulfill its promise asa member of tbeBRIG eountries Brazil, Russia, India andCbina that are expected to become driving forces in the world economy, accord ing

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to a panel atThe Journal of Commerce's20th annual BreakbulkConferences Exhi-bition in New Orleans on Oct. 14."Brazil isarisingeconom ic star, and thenextfiveyears will prove it," said Ed Bastian,direc tor of global sales for BBC CharteringUSA, a Houston-based project carrie r tha tserA'es Brazil. "Its credit ratingis strong, andthere is a lot of investment from the rest oftbe world."The huge oil, refining, mining andpower-generation projects on the draw-ing boards already are attrac ting foreigninvestment and tbe engineering, procure-ment and construction (EPC) companiesneeded to build the projects.Lupercio Torres Neto, director ofMam moet Irga do Brasil, said private an dgovernment spending on industrial proj-ects and infrastructure is projected tototal S285 billion betw een 2010 and 2015.Mammoet supplies cranes for overweigbtand oversize cargo.Most of the money will be spent onoffshore oil and gas developm ent. State-owned oil company Petrobras expectsto invest about $92 billion to develop tbe80 billion-barrel Tupi oilfield,wbich liesabout 4.5miles beneath tbe surface of theAtlantic. 50 miles east of Rio de Janeiro.Petrobras also will develop the hugereserves in the .so-called pre-.salt region,170 miles offshore.Brazil also is investing heavily inbuilding up its refinery capacity. "Wedon't want tob e just an exporter of crudeoil," To rres said. "We wan t to move up thevalue chain."A new deep-water multipurpose portat Acu in the state of Sao Joao deBarranorth of Rio will be built over the nextthree years. Private investment totaling$l.f) billion will pay for the project equip-ment required to supply the drilling rigsand platforms needed todevelop the oilfields. Tbe project includes sbipyards tobuild offshore vessels and rigs.

SpLUTLd by Cbina's ongoing demand foriron ore, Brazilian companies are investingheavily in iron ore mining projects.

BRAZIL'S PROIECT BOOM

Projected investment in Brazilian industrial projects,2010-I5, in billions of U,S. dollarsOffshore oil development

New refineriesHydroelectric plants

M in ingSteel mills

Refinery m odem izationPower transmission lines

Nuclear power plantsChemical/petrochemical plants

Thermal power plantsWind farms

0 30Source: Mommoei trga doBrasil, www.mammoetxom

60 90 120 150

"Th e World Cup and the Olympicswill presen t the op po rtun ity to Brazilto stay in th e spo tlight."Vale do Rio Doce, recently acquired RioTinto"s Brazilian iron mine and is investing$2 billion to increase its production.Another Brazilian mining company.MMX M ineracao e Metlicos, is spending$3.6 billion to develop an iron mine in M inasGrais and to build a pipeline to carry tbeore in slurry form to a new steel mill beingbuilt by Cbinese steelmaker W uban at tbenew port of Acu. Steel would be shippedfrom Acu to overseas markets.Breakbulk Conference p anelists empba-sized the hurdles project developers andshippers face in Brazil. Chief atiiong tbese isBrazil's dilapidated road and rail networks,said Gustavo Kolmel, vice president for LatinAmerica of Crane Worldwide Logistics, aHouston-based forwarder tbat handles proj-ect cargo shipments. "The country has only18.000 miles of road, and tberc are placesthat are in tough sbape."

Brazil's railrtiad network is renderedeven more inadequate by its tbree differ-ent rail gauges, wbicb were huilt by Frencb,

to transfer from one system to anotherKoltnel said. "We've been trying to changit for 30 years."Despite the challenges, projects in Brzil present irresistible opp ortunities to EPcompanies and project cargo carriers. Andthe $285 billion in project investment wenot enough, tbo 2014 World Cup Games atbe 2016 Olympic Games will dangle anothpot of gold.The government plans to spend mothan $42 billion on infrastructure develoment to get ready for tbe World Cup Gamtbat will be spread among the 12 host ciies; almost half will be spen t in Sao PaulIt plans to spend anotber $11 billion oinfrastructure to prepare for the Olympicwbicb are likely to inject $52 billion into tbeconomy."Look a t tbe impact of tbe BeijingOlyipies on China." Kolmel said. "The World Cand the Olympics will present the opportunity'to Brazil to stay in tbe spotlight." locimiiiiiriiiiiiiiiriitiiKiimiiiiiiiiiiiinimiiiiiiiiiiiimimiiiMiiiiiiiiiiiiiiiiDiiiDiiini

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From JoC Week / http://www.joc.com. 2009 United Business Media Global Trade. All rights reserved.

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