Sunday 29 January 2017

DAILY SHIPPING NEWS - FRIDAY JANUARY 27, 2017

Air Freight News :

FedEx's Fred Smith: Decision to quit TPP "unfortunate".

·         FedEx founder and chief executive Fred Smith has hit out at the US president’s decision to withdraw from the TPP trade deal saying being cut off from trade would be like “trying to breath without oxygen”.
Speaking today on the Fox Business Network’s Maria Bartiromo programme, FedEx’s Fred Smith said the decision to pull out of the TPP was “unfortunate”.
Smith reasoned that “trade is what made America great” and added that the decision would actually benefit China.
He said: “About 27% of [the] entire [US] economy is related to trade – 95% of the world's consumers aren't in the US, they're elsewhere around the world, 80% of the purchasing power.
“So the US being cut off from trade would be like trying to breathe without oxygen. It's an essential part of our economy.
“I think the decision to pull out of TPP is unfortunate because the real beneficiary of that is China and China has been very mercantilist, very protectionist.  They've engaged in industrial policy to the disadvantage of American and European countries.”

“But the real opportunity is to get China to take down their barriers for American goods because the countries we have a free trade agreement with, which are 20, we actually have a surplus which seems to be what President Trump is focusing on the most.”

He added: “The problem is the benefits of trade are very diffuse. The average American family gets about $13,000 worth of benefit from trade. One-third of our crops planted in the United States are exported, so it's not just manufacturers that constitutes trade
“It's services, agriculture, and manufacturing. And about a quarter of all of our manufactured goods go to foreign countries. And we have an enormous export economy. Again it's about 12% of our GDP, 8.5% goods, 4% services. So it's not quite so simple.
“The problem with having a free trade, a bilateral agreement, it's wonderful but trade doesn't happen just bilaterally. It happens multilaterally.”
Yesterday, US president Donald Trump signed an executive order to withdraw from the Trans-Pacific Partnership (TPP).
The TPP includes 12 nations that account for around 40% of the world’s economic output and would have cut 18,000 tariffs between the countries to help boost trade.
The 12 countries that signed up for the trade pact are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
The move by Trump has been described as largely symbolic given that it had yet to be ratified by congress.
December airfreight prices remain ahead of 2015 levels.
·         Airfreight prices continued to track ahead of the year-ago level in December, despite a seasonal drop-off in prices.  The latest figures from consultant Drewry’s Sea & Air Shipper Insight report shows that the average buy rate across 21 major east-west routes reached $3.14 per kg in December.

December was only the second month in 2016 that was ahead of 2015 year-ago level, when the average rate stood at $2.93 per kg, but represents a decline on the November level of $3.35 per kg – the first month-on-month decline since May.
However, the drop off in prices compared with November shouldn’t come as too much of a surprise as the market does tend to slow in December following the Christmas rush.

Drewry said it expected to see further seasonal declines in January.  “[December] was the first rate fall since May, but as December traditionally sees a drop off in rates the latest slide was not unexpected,” the consultant said.

“Testament to the growing strength of the market, the rate decrease from November to December was smallest of its kind since 2012.  We expect to see a further seasonal decrease to the index in January, once again smaller than usual.”

Sea Freight News :
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Milaha to start direct common carrier feeder service between Saudi and India

Gulf Times
Milaha, a Qatar-based maritime and logistics conglomerate, has signed an agreement with Kandla International Container Terminal (KICT) in India, to start the first direct common carrier feeder service between Saudi Arabia and India. The frequency of the first-of-its-kind service will be weekly and will connect the Gujarat port of Kandla directly with Jebel Ali in Dubai, and Dammam and Jubail in Saudi Arabia. “After our successful entry into the Indian market in March 2015 with the launch of the first direct service between Qatar and India, we have been exploring various options to further enhance our presence in the country,” Milaha president and chief executive Abdulrahman Essa al-Mannai said. After careful evaluation of trade patterns and feedback from its customers and partners, Milaha, which is represented by Poseidon Shipping Agency in India, decided to launch this service especially since a large proportion of agricultural produce cargo to Dammam is exported through the ports in Gujarat.

Inland Waterways Authority to raise 1,000 crore through bonds

Business Line
The Inland Waterways Authority of India (IWAI) will raise 1,000 crore from the market in February and March 2017 to part fund the expansion of inland waterways through government serviced bonds, said Amitabh Verma, Chairman, IWAI. In addition, IWAI is anticipating a budgetary support as well as extra budgetary allocations of about ₹4,000 crore in the forthcoming Budget, Verma said at the National Maritime Conclave 2017, hosted by the PHD Chamber of Commerce and Industry here on Tuesday. Verma said IWAI planned to roll out ₹500 crore worth of bonds after the Budget and the Reserve Bank’s monetary policy review on February 7, according to a Phdcci release. The balance amount would be raised in March, he said, adding that the bonds would be totally government serviced so that subscribers are assured on counter guarantees. The Authority has triple AAA ratings for issuance of these bonds from rating agency Crisil.

Policy and port-facility awareness a must to improve ease of doing business: JNPT Customs Commissioner

Dollar Business
The customs, as a government agency is a facilitator for free trade. Better facilitation translates into better ease of doing business rank. Ease of doing business is a familiar mantra in India. The government's ebullient enthusiasm since 2014 has brought in new expectations that the new ways of doing business with ease would see a sea-change. Since then though there has been a slew of initiatives, India's ranking in the global ease of doing business has barely increased by a rank. “A World bank study on ease of doing business finds hindrances in the port ecosystem, and the awareness on port facilities meagre,” explained Dr John Joseph, Chief Commissioner of Customs, Jawaharlal Nehru Port Trust (JNPT). Dr Joseph was speaking at the All India Organization of Industries’ open house session on customs, service tax and foreign trade.

Reducing the Carbon Footprint with ABB India's First Shore-to-Ship Power Supply

Azo Material
At the V.O.Chidambaranar (VOC) Port, India, ABB India has installed the first shore-to-ship power supply, the first of its kind in a commercial port. It provides a plug and play power solution to help eliminate emissions that are a result of burning diesel when ships are berthed. In line with the Indian government’s Green Ports project, ABB India’s state-of-the-art solution at the port expands the scope of the green agenda from renewable power and extends it to technology, which will allow ships docking at the port to plug for electric power rather than running on polluting diesel generators and using expensive power. The power grid in India provides power at 50 Hz frequency, so because most ships adhere to 60 Hz frequency, have to rely on onboard diesel generators for power supply. The generators produce as much as 360 MT of carbon dioxide for an average commercial ship docking time of 60 hours at a port.

TDS on sea freight - Good times for time charter?

Lexology
Computation of income of non-resident shipping entities posed many challenges and to ease the same Section 44B was enacted vide Finance Act, 1975 w.e.f. 1 April 1976. It provided that income of a non-resident assessee engaged in the business of operation of ships, 7.5% of the gross freight will be deemed to be profits and gains chargeable to tax under the head "Profits and gains of business or profession". Section 172 of the Income Tax Act, 1961 ('the Act') overriding all other provisions of the Act provides for procedure of levy and recovery of tax in case of any ship belonging to or chartered by a non-resident which carries passengers, livestock, mail or goods shipped at any port in India. Hon'ble Chennai Bench of Income Tax Appellate Tribunal (ITAT) in a recent decision in the case of Sical Logistics [see end note 1] dealt with the issue of interpretation of Section 172 vis-Ã -vis income from time charter.

India Subjects Foreign Shippers To Service Tax

Tax News
From January 22, the same service tax and levies already imposed on Indian shipping companies are also payable by foreign exporters using non-Indian vessels to import goods into India. On a free-on-board basis, Indian shipping companies have been subject to a service tax of 4.2 percent, plus the 0.15 percent Swachh Bharat (Clean India) and 0.15 percent Krishi Kalyan (Farm Welfare) levies, since June 1 last year. However, the service tax and levies were not imposed if non-Indian vessels were employed. Imports of goods into India on foreign vessels on a cost-and-freight basis will now pay the same taxes as imports using local ships. While Indian shipping companies will now be more competitive, it is expected that the overall cost of imported goods in India will increase.

Service Tax Guidelines for Import Ocean Freight and Allied Charges – Prepaid at Origin

Please be informed that in view of The Government of India – Ministry of Finance’s Notification No. 1/2017-Service Tax dated 12 January 2017 (view here: 1, 2, 3), prepaid Ocean Freight and allied charges (FREIGHT charges) which were earlier exempted from the Service Tax (STax), will now be taxable. This change is effective from 22 January 2017. The Tax on the Inbound Prepaid Freight Charges will be calculated at 30% of the FREIGHT charges. In view of the abatement, the effective Tax rates (22 January 2017 on wards) for APL charge codes are displayed below for your easy reference. ST2: 4.2% (14% STax is applied on 30% of taxable charges, hence the effective rate is displayed) SB2: 0.15% (0.5% SBC rate is applied on 30% of taxable charges, hence the effective rate is displayed) KK2: 0.15% (0.5% KKC rate is applied on 30% of taxable charges, hence effective rate is displayed) Total: 4.5% The India Outbound Prepaid and Collect FREIGHT Charges will continue to be exempted, as of now.

North Eastern Carrying Corp bags Rs 400 crore Tata Steel contract

Economic Times
Logistic firm North Eastern Carrying Corporation today announced that it has bagged a contract worth Rs 400 crore from Tata Steel for transportation of raw materials. North Eastern Carrying Corporation has been awarded a contract worth Rs 400 crore from Tata Steel for transportation of their raw materials and mining products from Joda and Sukinda mines situated in Odisha, the company said in a BSE filing. "Transportation and allied services related to mining, is an extremely challenging and specialised task, which includes mechanised operations, highly skilled manpower, liasoning with various departments. NECC's vast experience in such kind of operational execution has helped the organisation to bag the contract," the company said. North Eastern Carrying Corporation has 250 plus branches across India and operational set ups in Bhutan and Bangladesh.

Container Shipping: What next for the smaller TEU fleet?

Hellenic Shipping News
The world is becoming an ever smaller place and the ability to conduct business with the most competitive companies globally is paramount for survival. The emphasis on customer needs now provides competitive advantage, and in the case of the container market, this may present opportunities for smaller TEU vessels. These containerships, which generally fall into the 1,000-4,999 TEU size range, were once pioneers laying a foundation for the modern behemoth of the container market. Later, when the focus shifted to their bigger and younger sisters and the economies of scale they provide, smaller vessels started to quickly lose their appeal. Now, after the opening of the new Panama Canal locks, they no longer hold their main advantage and many believe they are facing a maybe slow, but certain extinction.


Tackle and Indirect and Hidden Costs of Trade, Industry Tells government

India Tradeways
Indirect and hidden costs stemming from delays and inefficiencies in the supply chain were pulling down the competitiveness of India's export-import trade and need to be tackled on a priority basis, according to transporters and logistics service providers and the Confederation of Indian Industry, the country's top business lobby. Indirect and hidden costs of trade accruing from delays and unreliable transportation service amount to as much as 38-47 per cent of total transportation and logistics costs in such as pharmaceuticals, textiles and garments, electronics and auto components, a CII study with Maersk as the knowledge partner as concluded. For each container transported to and from India, there is high variation in lead times of 38-66 hrs. The longer the lead time and particularly, the more variation, the higher the required inventory in order to prevent a stock-out situation.

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