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Sunday, November 16, 2008

NOL Notches Q3 Net Of $ 35 m

Global container shipping, terminals and logistics group Neptune Orient Lines (NOL) has reported a net profit of $ 35 million for the third quarter of 2008 (3Q08),down by 82 percent when compared to the third quarter of 2007 (3Q07).

Group EBIT fo 3Q08 of $ 52 million was down by 75 percent from 3Q07, While third-quarter revenue was up 16 percent year-on-year to $2.4 buillion.

Announcing the results, the NOL Grouop president and chief Executive officer, Mr Ron Widdows, said, “The Group continued to generate a profit in the third-quarter despite the deterioration fo conditions in the container shipping market.

“Reduced demand in key trade lanes, combined with coast increases and worsening global economic conditions hav adversely impacted our profir performance in the third-quarter.

“Against this challenging backdrop, our logistics business delivered satisfactory earnings in 3Q08.

In 3Q08, NOL’s container shipping arm, APL, recorded a 10 percent to 622,000 FEUs, driven Primarily by the intra-Asia trade, as well as and increase in Asia –Europe and transpacific backhaul volumes.

“APL volumes grew on a year-on-year basis but overall demand in the main trades slowed considerably in the third quarter”, said Mr.Widdows.

APL’s average third-quarter 2008 overall head haul utilization level was 90 percent compared to 99 percent in3Q07.Average revenue per FEU for container shipping in3Q08 was 8 percent higher year-on-year, reflecting continued fuel cost recovery measures. Total revenue for 3Q08 rose by 22 percent over the previous year to $2.04 billion and by 28 percent for the year-to-date to $5.98 billion.

Crore Asia-Europe head haul freight rates(excluding bunder adjustment factors) came under severe downward pressure as demand softened and the trade anticipated the high number of large container vessels due to inter service in 2009/2010.

Head haul volumes in the transpacific contracted I 3Q08; a factor which may be further compounded by the global financial crisis and economic slowdown.

“We are acting quickly and decisively to tram capacity and reconfigure our service networks, adjusting port calls and service loops and with drawing a number of vessels from service. These actions will reduce our costs and better align.APL’S service networks to the lower demand levels currently being experienced,” he stated.

Sunday, December 16, 2007

Exchane Rates Flexibility

Last week's article identified two price change drivers on the supply side of goods and services. These are "economic" changes, e.g. increases in the prices of raw materials in a production process, and fiscal, changes in the money supply in the country. Today we in T&T and even in the region are suffering from increases in prices in the local markets of food (imported and local). We need to disaggregate the proportion of these supply side price changes caused by increases in our money supply.

We are all well aware that the price of food on the global market is driven by increased demand for more sophisticated food by China and India, Peak Oil, i.e. the inability of the world's petroleum production system to meet demand, hence the increasing cost of transportation and production costs of food, salination and erosion of soils, the movement of land away from food production to that of alternative fuels, failure of crop production in certain countries due to poor weather and climate change.

This price increase is affecting all of the countries in the world whether they import food or not, and they, as we, are experiencing increasing food prices. However, the corresponding current annual food price increases in say India is ten per cent, Nigeria - 36 per cent, US - 3.5 per cent, Europe - 2.5 per cent, Singapore - 2.9 per cent, China - 18.2 per cent and T&T - 20 per cent.

Surely, then, the price increases of imported and local food in T&T stands out in stark contrast to the other countries with the exception of China and Nigeria. In China we see that its currency is undervalued, there is a large positive balance of trade and the liquidity in the country is very high. Its Central Bank is again poised to increase interest rates so as to reduce credit, liquidity and even exports.

T&T is in a similar boat with good balance of trade due to its petroleum exports, massive government spending and, based on the Real Economic Exchange Rate, an undervalued local currency. Hence, food prices in T&T are not simply driven by economic supply constraints but, like China, also the increase in money supply in the country.

Core inflation in these other countries is also well below what we have in T&T, again demonstrating the more general push on prices by high liquidity. But should we, like Singapore, allow the nominal exchange rate of the T&T dollar to appreciate, which as stated in last week's article could reduce the liquidity in the country and also put more purchasing power in the hands of the consumer particularly with respect to imported food?

If our economy was sustainable - i.e. did not depend almost solely on the exploitation of the depleting petroleum resource then the obvious monetary solution would include an appreciation of the TT dollar. The other variable in the equation is that we have to save foreign exchange earned given the volatility of petroleum prices, the ensuing depletion of reserves and the fundamental need to reconstruct the on-shore economy, i.e. reverse the effects of the Dutch Disease. It is encouraging that our new Minister of Finance has accepted the use of part of the RSF for economic diversification - development of the on-shore sector, a song I have sung for ages in the Senate.

It is impossible, like Norway, to use only the earnings of the RSF at this time. Instead we have to live as though, say, the price of oil was US$30. In order to prevent inflation in domestic prices our fiscal and monetary policies have to be in step. The Central Bank Governor is calling on the Government to reduce spending, as is the IMF.

Government's budget spending has to be restricted to that based on the revenues that would have accrued if the petroleum price were actually US$30 i.e. the liquidity has to be controlled at the source - Government spending.

The present Budget allocation by law is not based on the desire to save but on the "error" in the Government's expected price of petroleum. The Central Bank with its monetary policy must release just enough US dollars into the local market so as to maintain and manage the exchange rate at a value consistent with the US$30 price - and allow it to float when necessary to compensate for higher import prices by compatible monetary and fiscal policies.

The present model, however, sees the Executive rapidly expanding its spending to increase GDP, based on rising petroleum revenues with the TT dollar pegged to the depreciating US dollar. The Central Bank, to the detriment of our need to save, is struggling to prevent a depreciation of the exchange rate by increasing its sale of US dollars into the local economy - from US$700 million to US$2.09 billion in five years. Controlling inflation then becomes virtually impossible.

US permits import of Markhor Conservation Hunting Trophy from Pakistan

PESHAWAR, Dec 16 (APP): The US Fish & Wildlife Service (USFWS) has recognized and rewarded Pakistan’s world-class Markhor Conservation program by issuing the first Markhor Sports Hunting Trophy import permit in 15 years.

The permit was received by Conservation Force which handled it, said a press released issued here on Sunday by Anchan Ali Mirza, Managing Director of Karakurum Treks & Tours who is associated with this project.

The first trophy will be received in US by hunter, Wayne Lau, who took the male flare-horned Markhor from Gaharet Markhor Conservancy in Chitral district of North West Frontier Province (NWFP) in March 2006.

Gaharet conservancy is part of the Mountain Areas Conservation Program (MACP), aims to protect the rich biological heritage of the Karakuram, Hindukush and the Western Himalayan Mountain Ranges through a community based conservation approach.

Dr. Mohammad Mumtaz Malik, Chief Conservator of the NWFP Wildlife Department, Dr. Mumtaz Malik when contact expressed contentment over the development. We are exceptionally pleased that US authorities have recognized the success of our programs in bringing back a highly endangered species from the brink of extinction, remarked Mumtaz Malik.

The development which will strengthen Pakistan’s trophy hunting programme and conservation efforts, he added.

Dr. Richard Garstang, WWF-P’s Conservation Advisor and National Programme Manager of the Pakistan Wetlands Programme explains, Participation by international sports hunters is vital to the success of this innovative conservation initiative. I hope that this leads to a greater level of participation in Pakistan’s officially sanctioned hunting programme’s by members of the international sports hunting community.

The flare-horned markhor trophy is the first markhor of any kind to be imported in to the United States since all markhor were listed on Appendix I of CITIES at COP8 in Kyoto, Japan in 1992, 15 years ago.

It is also the first new US import of any game trophy listed on Appendix I of CITIES since 1996 when the USFWS began permitting import of Botswana elephant hunting trophies 11 years ago.

The real beneficiaries of the USFWS permit are the markhor themselves as well as the local Gaharet communities who will ultimately determine the fate of the markhor.

Credit is due to the Pakistan government and its Wildlife Departments for their support for the conservation program. Credit is also due to the US Fish & Wildlife Service for their wisdom in granting the permit. In effect, they are rewarding all those instrumental in conserving the markhor, and for setting a positive example for others, concludes the press release.

China talks introduce world of import controls

BEIJING : A toy dog, an electric train and a blond-haired doll would bring smiles to most American homes this Christmas. When the giver is the Chinese government, and the recipients are visiting U.S. trade officials, the meaning is more pointed than simple festive cheer.
"It's a lot of fun. The gift is very nice," said U.S. Commerce Secretary Carlos Gutierrez in Beijing Monday, according to state news agency Xinhua, when he accepted a life-size toy dog from the chief of China's product quality watchdog.

Worries about the safety of Chinese imports have defined the booming but often fraught Chinese-U.S. trading relationship in 2007. On Tuesday, during bilateral talks with Gutierrez that she described as "heated," Chinese Vice Premier Wu Yi, leader of a nationwide quality-raising campaign, complained that U.S. media had "hyped the product safety issue, causing serious damage to the image of Chinese products and China's national reputation."

Tensions surfaced in the spring, when thousands of American dogs and cats were poisoned by eating pet food made with tainted ingredients imported from China. A subsequent cascade of quality problems has included toxic toothpaste, unsafe tires, chemical-laden seafood and millions of lead-painted toys. On Thursday, Home Depot (HD) recalled about 64,000 Chinese-made festive figurines because of the lead paint hazard, the U.S. Consumer Product Safety Commission says.

FIND MORE STORIES IN: China Beijing Chinese US trade Chinese government Vice Premier Juice
Product safety "engages at a deeper, more visceral level than other issues," said U.S. Secretary of Health and Human Services Mike Leavitt, who was also in the Chinese capital Monday.

The globalized marketplace, in which the USA imported $2 trillion worth of goods last year, means "you can't inspect your way to product safety. There's just too much of it," Leavitt said. "We are not just scaling up existing processes, we are inventing them."

On Tuesday, Leavitt unveiled what he sees as the new world of import controls. With Chinese counterparts, he signed two "strong and action-oriented" agreements to enhance the safety of food and feed, plus medical devices and drugs, that the USA imports from China.

Leavitt promised the new pacts would "enhance the safety and quality of products that Americans use every day" and "form the framework for agreements that will exist all over the world."

What's new:

•New registration and certification requirements. Chinese exporters of food, feed, medical devices and drugs must register with the Chinese government and achieve certification that they meet U.S. standards.

•Greater information-sharing. Within 24 hours (for drugs and medical devices) or 48 hours (for food and feed) of determining a health risk, each side commits to inform the other and provide necessary tracking information.

•Increased access to production facilities. U.S. officials "will be capacity-building, not just inspecting," Leavitt said, without giving specifics. China has resisted giving U.S. regulators such access in the past.

Feeling confident

Visiting Huiyuan Juice Group in the Beijing suburbs Tuesday, Leavitt promised that the new system, supported by China's growing use of bar codes and tracking systems, "will provide great comfort to American consumers. If there is a problem, they can trace (a bottle of juice) back to the grower who picked it off the tree," he said.

Juice was rarely found in China just 20 years ago. Today, Huiyuan, China's largest juicemaker, is listed on the Hong Kong stock exchange and exports $10 million worth of goods to the USA each year, including the kids-oriented BellyWashers and TummyTickler brands sold at Wal-Mart (WMT) and 7-Eleven stores, export manager Rainbow Wang said.

"American parents can feel confident buying our products, as we have a strict quality system and monitor 100 critical points throughout the production process," Wang said.

Mass campaigns

Poisonous pet food sparked this year's burning debate about cheap, low-quality goods shipped from China.

"There will be no more problems with pet food," promised Li Chunfeng, deputy head of China's import and export food-safety bureau, on Tuesday.

One-party states are generally adept at crackdowns. China has been busier than ever this year with a series of old-style campaigns to assuage both foreign critics and domestic concern. The key initiative came in August, when Vice Premier Wu began a four-month "special battle" to improve the quality of goods and food safety.

The campaign has mobilized hundreds of thousands of inspectors, distributed millions of brochures and delivered success, said Wei Chuanzhong, deputy minister of quality supervision. "This has been the biggest campaign to improve product quality in the history of (China)," Wei said.

Highlights include shutting down 47,000 illegal food factories and confiscating 500 tons of highly poisonous pesticides, according to ministry figures.

"American consumers can trust made-in-China products. The problems with melamine-laced pet food were caused by only a few companies, and we have tackled this through the new food and feed agreement with the USA and also by our own campaign these last few months," Li said.

Despite the government's claims, U.S. retailers should still be cautious, visit their suppliers frequently and help them improve their ability to guarantee the sources of all raw materials, suggested Liu Kaiming, head of The Institute of Contemporary Observation in south China's Shenzhen City.

"There are too many factories in China. Quality is a long-term problem and cannot be solved in just four months," said Liu, who is concerned that many Chinese firms lack the "concept of quality control and the habit of observing the law."

On Wednesday, the Chinese and U.S. governments begin their third Strategic Economic Dialogue, designed to bring the two sides closer together on key issues such as the value of the yuan, China's currency, which Washington believes is deliberately undervalued to favor Chinese exporters.

Treasury Secretary Henry Paulson, who is chairing the talks for the U.S. side, has said that product safety will be a key agenda item during the talks near Beijing.

Sort out the imports now

Trans-Tasman board general manager Tony Holding says talks with the New Zealand Players' Association have not "stalled" but confirmed that the contentious import rule was still "a topic for discussion".
It shouldn't be.
The TT board should increase the number of imports allowed in each team to three, adding the proviso that two must have New Zealand residency, unlike Wellington Pulse's English defender, Sonia Mkoloma.
It's obvious why that franchise wanted her: Central netball hasn't had a pulse for years and needed an ER-PR boost.
Yet a loyal servant like former Wellington Shakers captain Frances Solia is on the outer because she played for Samoa at November's world champs. And standout Northern Force shooter Catherine Latu is in the same outrigger.
Holding and his board maintain that the one import rule will prevent a flood of foreigners (Aussies, Jamaicans and English) taking the place of Kiwi players. Fair enough. But why penalise Pacific Island stars after the decades of service they have given netball here both at the elite level and, more importantly, at the coal face.
Names like Margharet Matenga, Rita Fatialofa and Vilimaina Davu hold special places in the game here. As in rugby and league, Island players are interwoven into the rich cultural fabric of Kiwi sport.
Holding still hopes to have a collective contract in place by Christmas. That's five working days. Santa Claus will also rock up to his place with a shiny Aston Martin.
Respected former Silver Ferns defender and current Samoa coach Linda Vagana calls the current one-import ruling "stupid" and it's hard to argue when we're living in a multi-cultural country where there are scores of international-class netballers and only one team to play for the Silver Ferns.
That may change at the next world champs, when Aotearoa Maori hope to have a team accepted, but a sprinkling of NZ-based netballers turning out for their spiritual Pacific Island homes has been vital for the world champs over the past decade, saving them from a complete meltdown. Wales versus Botswana, anyone?
The delay has angered all five Kiwi franchises, who argue that fringe players fighting for contracts in the new restricted market are being mucked around badly.
The first game is scheduled for April 5, when the Pulse host Sharelle McMahon and the Melbourne Vixens.
The Aussies, who have had a players' agreement for 12 months, have named their five squads and, as they go to the holiday break with training schedules locked in, they must be laughing like kookaburras at our tweety birds.

World grain prospects may improve in 2008-09

Mumbai, Dec 16 Examining the global outlook for food supplies in the current tight global market, the London-based International Grains Council (IGC) during its biannual session in Tokyo early this month, concluded that the global ending stocks would be further drawn down in 2007-08, as consumption will remain unmatched by even the highest ever global output.

By far the biggest increase in consumption would be in biofuels sector, with the amount of grain (mainly corn/maize) used to produce ethanol set to reach100 million tonnes, an increase of 44 per cent from the previous year.

With wheat supplies especially tight due to disappointing 2007 crops in several countries including Australia, prices had hit record highs. Some exporters had taken measures to protect domestic consumers, including new or additional export taxes.

Ocean freight

Recent surges in ocean freight rates had added further to the burden of importers, especially developing countries, although the expected decline in wheat trade in 2007-08 would be largely due to improved crops in some leading importers rather than the high import prices, IGC pointed out.

Growers were expected to respond to the much higher prices and expand the global wheat area by around four per cent for the 2008-09 crop. Based on average yields, output in 2008 could increase to around 645 million tonnes, experts forecast.

This could result in some recovery in world stocks at the end of 2008-09.

A huge rise in maize output in the US, more than offsetting the expected increase in ethanol use, prevented maize prices from rising as sharply as those of wheat.

Maize prices

However, this year’s substantially higher international demand for this grain, especially in the EU, will lift trade to a new record, it is believed.

Although maize supplies appear adequate, there were concerns about outlook for 2008-09 when a significant shift in plantings back to soyabean was likely to occur in the US.

With respect to rice, noting the firmness in international prices, the Council saw prospects for trade in calendar year 2008 dependent on the outcome of harvest between now and mid-2008. But there were indications that world shipments could se an increase even if Indonesia is a less significant buyer, IGC pointed out.

Wednesday, November 14, 2007

Dollar Crisis: Economic Pearl Harbor?

What do Brazilian supermodel Gisele B√ľndchen and the People's Republic of China have in common? The answer, as of last week, is that both distrust the dollar.

Patricia B√ľndchen, the twin sister and manager of the world's top model, announced that Gisele now prefers to be paid in euros rather than dollars. Almost simultaneously, the Chinese central bank predicted that the dollar is likely to lose its status as the world's leading currency.

One could easily overlook a supermodel's currency preferences, but China is a different story. It's the beast breathing down America's neck.

The most important country in the world for the United States isn't Great Britain, Germany, Saudi Arabia, Russia or Iraq. China holds that dubious distinction, because it is also the country the US can least do without. Without its willingness to buy an almost unlimited supply of US treasury bonds, there would be no American spending miracle. Without a spending miracle there would be no economic growth. In other words, without China the US superpower would lose a significant share of its economic clout.

So far Beijing has behaved like the benevolent shopkeeper who willingly extends credit to his customers. The Americans receive shipments of Chinese-made television sets, toys and underwear, but the Chinese do not import a comparable volume of US goods. The gap between buying and selling amounts to about $5 billion every week.

The Chinese are satisfied with buying US treasury bonds, partly to keep their most important customer afloat. The central bank in Beijing already holds currency reserves of $1.4 trillion.

The Chinese have looked on with great patience as their best customer has gradually lost its ability to supply goods.

But the men in power in Beijing cannot be indifferent to the dollar's decline. It devalues their central bank's dollar reserves, the monetary embodiment of some of the fruits of China's export machine.

For the United States, a Chinese decision to abandon the dollar would be tantamount to Pearl Harbor without the war. It would represent a challenge to the world's biggest economy by the world's fastest growing economy. Millions of people would see their standard of living suffer as a result, and American self-confidence, already shaky, would crumble even further. The United States would suffer a serious blow on its very own turf, the economy.

Americans can hardly blame Beijing for their troubles. The Chinese aren't exactly kamikaze politicians, concocting some secret plan to attack the dollar. On the contrary, the preparations are taking place in full view. Translated into Texan, what the Chinese politely told the Americans last week simply means: Unless something happens, all hell will break loose.

For years the US economy has suffered one dramatic setback after another. A historic trend reversal began with the rise of the Asian economies -- first Japan, then China and now India. The United States, a once-proud exporting nation, became the world's biggest importer. In only 15 years, from 1992 to 2007, the US balance of trade deficit has surged from $84 billion to $700 billion.

Within a single generation, the world's biggest lender has become its biggest borrower, a circumstance the United States has made no serious attempts to change. And what has been Washington's standard take on the shift? The dollar is our currency, but it's your problem.

Thus, the tone of the US government's callous and thick-skinned reaction to China's announcement last week came as no surprise. There was a reason the dollar became the world's reserve currency, US Treasury Secretary Hank Paulson said in a slightly offended tone.

But the truth is that the United States would be better off if Paulson and the administration of President George W. Bush would take decisive action instead of sulking. The US's ability to deliver goods should be increased and its industrial base should be reinvigorated. Government and consumer spending, which in reality is doing nothing but eating away at the country's future, should be curbed. Although growth would decline as a result, it would be a more sustainable form of growth.

Last week's remark by a Chinese central bank official should be interpreted as a warning, not a threat. Indeed, China has no choice but to respond, given the dollar's ongoing weakness.

For these reasons, an attack on the US economy is probably the most easily predictable event of the coming years. And if it happens, the attacker will even be able to justify its actions as self-defense.

What is the difference between the US government in 1941 and the administration in Washington today? Perhaps there is none. A Japanese attack on the US Pacific Fleet at Pearl Harbor was unimaginable, even though US intelligence had picked up clues that it could happen. Washington, at the time, was convinced that the Japanese wouldn't dare stage an attack on a target 5,000 miles away, and that they wouldn't succeed if they did.

The crews on America's ships were sleeping as the Japanese bombers approached Pearl Harbor.