1 Year of tumult for shipping sector (Straits Times) For an industry that has seen no end of drama over the past six years or so, 2016 will go down as one of the stormiest 12 months on record. And there is plenty of uncertainty surrounding global trade in 2017 as well, which could continue to weigh on Singapore, given its role as a maritime hub.
The turbulence has been coming from all directions this year, led by an unprecedented wave of mergers and acquisitions, which included the completion of French shipping giant CMA CGM’s historic $3.38 billion buyout of Singapore’s Neptune Orient Lines.
But what really shook the market was the full-blown bankruptcy of South Korea’s biggest shipping line, Hanjin Shipping Company – a catastrophe that triggered a massive disruption in global trade when the group filed for court receivership on Aug 31.
Other players have swiftly moved in to take up the routes left behind by Hanjin, once the world’s seventh-largest shipping firm. The debt-laden company faces liquidation while a resolution of its debts, if achievable, could drag on for years.
Mr Andy Lane, partner at shipping consulting firm CTI Consultancy, sums it up: “If 2016 is anything to go by, the year ahead could bring just as much uncertainty. Volatility might subside, now with fewer fingers on pricing buttons. But with a huge idle fleet, revenue levels are not going to skyrocket.”
More defaults loom. A recent Fitch Ratings report says muted demand growth will exacerbate overcapacity in the shipping sector in 2017, putting pressure on freight rates, which will drive more M&A activity and defaults in the short and medium term.
2 Obama bans oil drilling in Arctic (BBC) Outgoing US President Barack Obama has permanently banned offshore oil and gas drilling in the “vast majority” of US-owned northern waters. Mr Obama designated areas in the Arctic and Atlantic oceans as “indefinitely off limits” to future leasing.
The move is widely seen as an attempt to protect the region before Mr Obama leaves office in January. Supporters of president-elect Donald Trump could find it difficult to reverse the decision. Canada also committed to a similar measure in its own Arctic waters, in a joint announcement with Washington.
The White House said the decision was for “a strong, sustainable and viable Arctic economy and ecosystem.” It cited native cultural needs, wildlife concerns, and the “vulnerability” of the region to oil spills as some of the reasons for the ban. But while Canada will review the move every five years, the White House insists Mr Obama’s declaration is permanent.
The decision relies on a 1953 law which allows the president to ban leasing of offshore resources indefinitely. During the election campaign, Donald Trump said he would take advantage of existing US oil reserves, prompting concern from environmental groups.
3 The bane of plastic rice (The Guardian) Nigeria has seized over 100 bags of plastic rice smuggled into the country, where prices of the staple food are rocketing ahead of the Christmas and New Year holidays. A suspect has been arrested over the haul of 102 bags of the fake rice, which officials warned was dangerous for human consumption.
They are suspected to have been smuggled or illegally shipped in from China through Lagos port. The 50kg bags, branded “Best Tomato Rice”, had no date of manufacture and were intercepted in the Ikeja area of the sprawling city.
Nigeria has banned rice imports as it seeks to boost local production. The plastic rice was to be sold ahead of Christmas and New Year festivities, with the price for the popular Nigerian staple hitting the roof because of galloping inflation. A 50kg bag now sells for around 20,000 naira ($63), more than double the price in December last year.
Nigeria’s inflation stood at 18.5% in November, its 13th consecutive monthly rise, driven by higher food prices. The customs service has sent the fake rice to the National Agency for Food and Drug Administration and Control for further analysis.