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Thursday, 07 July 16
CONSOLIDATION TO RULE OVER SHIPPING, AS EXECUTIVES SEEK INVESTMENT OPPORTUNITIES IN CHINA, INDIA AND EUROPE SAYS NORTON ROSE SURVEY
 The transport sector is looking to Asia Pacific as the key market for investment over the next five years, according to the seventh The way ahead Transport survey from global law firm Norton Rose Fulbright. China and India are the most popular jurisdictions for investment, followed by the US, with growth through consolidation viewed as the best investment opportunity currently. While confidence among respondents from the aviation and rail industries is high, owing to lower oil prices, the availability of funding and the impact of infrastructure improvements, the shipping industry remains the least optimistic as a result of overcapacity in many subsectors of the market.
Over half (52%) of all respondents to the Norton Rose Fulbright survey agree that a global recession poses the greatest threat to their industry. However, despite political uncertainty, most agree that the transport sector can expect to enjoy further growth over the next five years. Rising passenger numbers and freight volumes are anticipated (by 73%) and an increase in the number of routes and services is expected (52%).
Investment in technology is expected to rise, according to 67%, with low carbon technology and predictive analytics expected to represent the most significant driver of change in the transport sector over the next five years.
Infrastructure remains a key theme for the sector. After consolidation, infrastructure improvements are viewed as the best investment opportunity currently (by 19%), and infrastructure investment is seen as the most helpful form of government support (by 25%). For the aviation, rail and road industries, inadequate infrastructure is seen as the greatest challenge to the operational efficiency of their industries.
Bank debt, capital markets and private equity will represent transport businesses’ main sources of funding over the next two years, and 74% of respondents expect the availability of funds to stay the same, or even increase, over the next five years.
Harry Theochari, global head of transport at Norton Rose Fulbright, comments:
“The transport sector is continuing to look to Asia Pacific for investment opportunities, encouraged by rising demand and China’s ambitious Belt and Road initiative, a modern day silk road which will improve China’s infrastructure links with the rest of the world.
“Sentiment is high in the aviation and rail industries, buoyed by the expectation of increased passenger numbers. However, shipping continues to feel the effects of overcapacity in many markets, and an increase in enforcement actions is widely predicted, although in the longer term respondents believe conditions will improve.
“Investment in infrastructure and technology, and consolidation through both M&A and joint ventures, will be key drivers for transforming the transport sector and assisting growth.
“The adoption of new technology in particular will help to address numerous issues the sector has been grappling with in recent years, such as low carbon technology to meet increasingly stringent environmental legislation, and predictive analytics to anticipate repairs and maintenance and better understand and forecast consumer behavior.
“While respondents are most fearful of the impact of a worldwide recession, they will be watching closely the implications of the UK’s referendum result. The transport sector is international and highly regulated and any UK exit from the EU would need to take into account a number of complex issues.”
Shipping
Shipping is the least optimistic industry within the transport sector, by a significant margin. Only 15% believe that current market conditions are positive, down from 33% in 2015 and 69% in 2014.
Overcapacity is the principal reason given for this lack of optimism (66%), followed, to a lesser extent, by economic uncertainty in key markets (27%).
Respondents are more optimistic when asked to consider the outlook for shipping over the next five years. Fares and freight costs will increase according to 67% and the same proportion anticipate an upturn in passenger numbers and freight volumes. The number of routes and services offered is also expected to rise, according to 35%. However, just 22% believe that funding will become more readily available and 64% think that the number of enforcement actions will increase as lenders seek to protect their positions and recover losses. Most (68%) expect fuel costs to rise.
Investment opportunities
Much of the shipping industry (58%) continues to favour Asia Pacific for investment opportunities over the next two to five years, followed, to a far lesser extent, by Europe (16%). China (17%) and India (16%) remain the most popular markets for investment.
A merger or acquisition is seen as the optimal investment opportunity (by 34%, up from 29% in 2015), while 13% favour joint ventures, alliances and pools (down from 28% in 2015).
Respondents expect consolidation to be at the centre of shipping businesses’ strategies over the next 12 months, either in the form of M&A (22%) or joint ventures (19%), while 22% expect a focus on the disposal of non-core assets. Almost three-quarters (72%) expect investment in technology to increase over the next five years, with low carbon technology expected to have the most significant impact on the industry during this period (by 33%), followed by predictive analytics (by 24%).
Regulation
Almost half (42%) believe that greater transparency in the application and enforcement of existing and proposed regulations would be the most helpful form of government support for the shipping industry, more so than fiscal incentives (32%) or investment in infrastructure (29%). Environmental regulation is seen as the regulation that has had the greatest impact on shipping over the past decade (by 49%), followed by trade and financial sanctions (by 25%).
Supply and demand imbalances are seen as the greatest challenge to the operational efficiency of the industry (by 47%), followed by a lack of qualified people (12%) and emission controls (9%). A global recession is seen as the greatest threat to the health of shipping over the next five years (by 68%). To a lesser extent, respondents are also concerned about the impact of enforcement by creditors on debt obligations (12%) and continued political and economic uncertainty in the Eurozone (8%).
Bank debt is once again expected to act as shipping’s primary source of funding over the next two years (22%), followed by shareholder support (18%) and private equity (16%).
Despite the problem of overcapacity in many sub-sectors of the industry, fuelled by new build vessels coming on to the market, 11% think that ECA funding will be the industry’s main
source of finance.
Source: Norton Rose Fulbright | Hellenic Shipping
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Thursday, 19 May 16
AUSTRALIAN IRON ORE CARGOES PUSHED UP THE FREIGHT RATES FOR CAPE THIS WEEK - FEARNLEYS
Cape
It has been a big jump in the freight rates for Cape size this week, says Fearnleys in its latest weekly report. All of the Australian iron ...
Thursday, 19 May 16
DISPUTE OVER VAT ON COAL DRAGS ON, CAUSING DOUBLE-BLOW TO MINERS - JP
The dispute over the value-added tax ( VAT ) mechanism between coal miners operating under third-generation contracts and the Finance Ministry&rsqu ...
Wednesday, 18 May 16
DRY BULK OUTLOOK REMAINS GLOOMY SAYS DANISH SHIP FINANCE, AS SHIPPING NEEDS TO RETHINK BUSINESS MODEL - HELLENIC SHIPPING
Our Shipping Market Review – May 2016 is devoted to the fourth industrial revolution. To understand the truly disruptive nature of the fourth ...
Wednesday, 18 May 16
LONG TERM FUNDAMENTALS ARE SLOWLY IMPROVING FOR THE DRY BULK MARKET - INTERMODAL
As we are approaching the end of the first half of the year, there is a number of market participants over at the dry bulk sector that have started ...
Tuesday, 17 May 16
INDONESIAN COAL PRICE REFERENCE DECLINE AGAIN
COALspot.com: The Indonesia Coal Benchmark Price declined in May 2016.
The Director General of Mineral and Coal of Indonesia, the regulator of ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- The University of Queensland
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Australian Coal Association
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
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