Saudi Arabia inaugurates Jazan Port

Hutchison Ports celebrated the inauguration of Jazan in Saudi Arabia with a visit from the royal commission.

In its first phase the port consists of three industrial berths, a Single Point Mooring (SPM) facility for the Saudi Aramco refinery, and three commercial berths for containers, general cargo and bulk goods.

The President of the Royal Commission for Jubail and Yanbu, HE Eng. Khalid Al-Salem that the Port is one of the most critical enablers supporting industrial growth at The Port of Jazan City for Primary and Downstream Industries (JCPDI Port).

Eric Ip, Group Managing Director of Hutchison Ports, said, “We have been in Saudi Arabia for 22 years, and it is a very important market for Hutchison Ports. Today’s ceremony marks a new chapter for us in the Kingdom and we look forward to working closely with the Royal Commission to make Hutchison Ports Jazan a success and help JCPDI reach its full potential and contribute to the Saudi Vision 2030.”

The port will use remote-controlled cranes and state of the art systems for handling containers and bulk goods to enable electronic transitions. Training programs will be run for local talent, said Hutchison Ports Jazan CEO, Charlie Darazi.

A berth depth of 16.5m will allow containerships of over 21,000 teu to call the port, and bulk ships with capacities over 100,000 tons.

The Port has a total berth length of 1,250 meters for containers, bulk and general cargo, with a design capacity of one million teu per year and around four million tons of cargo, in addition to a liquid terminal for oil tankers of Saudi Aramco.

Andy Tsoi, Hutchison Ports Managing Director for Middle East and Africa said that JCPDI Port represents an exciting new chapter. He added that from a strategic standpoint, JCPDI sits at the crossroads of the busy east-west trade lane and the rapidly growing north-south trade. JCPDI also has the potential to be the Kingdom’s first port of call from East Asia. Therefore, given the talented local human capital and the continuing support of development policies, the port is very well-positioned for the future of the Kingdom’s maritime industry.

Minister of Investment, HE Eng. Khalid Al-Falih said that Saudi economy was booming, with 11% growth in Q1 2022 and growth of 21.5% in its Industrial Production Index (IPI).

 

 

United States railroad strike averted

Major United States railroads and unions secured a tentative deal on Thursday after 20 hours of intense talks brokered by President Joe Biden's administration to avert a rail shutdown that could have hit food and fuel supplies across the country and beyond.

Biden called the deal a "big win for America" and for tens of thousands of rail workers. Thanking business and labor, the Democratic president promised more worker-company agreements in the future.

"I'm optimistic that we can do this in other fields as well," Biden said.

"Unions and management can work together for the benefit of everyone," Biden added.

If they accept the deal that was announced at about 0900 GMT, workers whose pay had been frozen will win double-digit increases and will be allowed to seek certain types of medical care without fear of being punished, union leaders said. The agreement includes an immediate 14.1% wage rise, the railroads said.

Unions, whose members bitterly rejected prior proposals, will now vote on the agreement. Even if those votes fail, a rail strike that could have happened as soon as a minute past midnight on Friday has been averted for several weeks due to the standard language included in such a deal, a person familiar with the negotiations said.

Biden's Labor Secretary Marty Walsh hosted contract talks in Washington that ran for 20 consecutive hours between unions representing 115,000 workers and railroads including Union Pacific, BNSF, CSX, Norfolk Southern and Kansas City Southern .

Officials are expected to host a news briefing later on Thursday.

A rail shutdown could have frozen almost 30% of US cargo shipments by weight, stoked inflation, cost the US economy as much as US$2 billion per day and unleashed a cascade of transport woes affecting the US energy, agriculture, manufacturing, healthcare and retail sectors.

Railroad shares pared initial pre-market gains after mixed economic data, with Union Pacific up 2.2% in mid-day trading and CSX down 2.0%. 

US natural gas futures dropped about 9% after soaring 10% in the prior session; oil futures fell about 4% to a one-week low. Diesel and gasoline futures also fell.

Investors expected that a rail strike would have threatened coal supplies to power plants and boost demand for rival energy sources.

Amtrak, which runs passenger rail, said it will resume normal service on Friday after cancelling long-distance trains in anticipation of a strike.

The impact of a shutdown would have stretched beyond US borders because trains link the United States to Canada and Mexico and provide vital connections to massive ships that ferry goods from around the globe.

Negotiations between the companies and a dozen unions had stretched for more than two years, leading Biden to appoint an emergency board in July to help break the impasse. Biden personally called Walsh and negotiators on Wednesday evening to prod them toward a deal, telling them "once again to recognize the harm" that a shutdown would have on families, farmers and businesses, according to a person aware of the negotiations.

National Retail Federation CEO Matthew Shay thanked Biden's administration for intervening, adding in a statement that his group is "relieved and cautiously optimistic." Emily Skor, CEO of the biofuel trade group Growth Energy, also praised the deal and noted that much of the country's ethanol moves by rail.

Freight railroads had halted transportation of hazardous goods, including chlorine for water purification and ammonia for fertilizer, as well as shipments of refrigerated food and other goods that use rail and at least one other mode of transport. Their goal was to prevent cargo from being stranded in unsafe locations.

The railroad industry slashed almost 30% of its workforce over the last six years, cutting pay and other costs as they increased profits, stock buybacks and dividends for investors. Profits at billionaire Warren Buffett's Berkshire Hathaway, which owns BNSF, rose 9.2% in the most recent quarter to US$1.7 billion.

The number of US railway workers has dropped from over 600,000 in 1970 to about 150,000 in 2022, according to the Bureau of Labor Statistics, due technology and cost-cutting. The result is that many industry workers are on call at all hours, waiting to respond at short notice to work for days at a time.

Biden, who has called himself the most union-friendly president in history and attacked companies for raking in "excessive" profits, praised a deal he said would give workers "better pay, improved working conditions, and peace of mind around their health care costs."

The president is not yet out of the woods when it comes to supply-chain labor issues. Some 22,000 union workers at 29 West Coast ports that handle almost 40% of US imports are also in high-stakes labor contract negotiations.

Administration officials wanted the disputes resolved ahead of November's midterm elections that will determine whether Biden's fellow Democrats retain control of Congress.

Senior congressional leaders had threatened to pass legislation imposing a resolution on the railroads and unions if the negotiations were not successful.

US House Speaker Nancy Pelosi praised the tentative agreement and said that Congress was "ready to act" but that "thankfully this action may not be necessary."

 

Pakistani Prime Minister meets world leaders at Shanghai Cooperation Organization meeting

Pakistani Prime Minister, Shehbaz Sharif arrived in Samarkand Thursday on a two-day trip to attend the 22nd annual meeting of the Council of Heads of State of the Shanghai Cooperation Organization (SCO). Uzbekistan PM Abdulla Aripov received him at the airport.

Foreign Minister Bilawal Bhutto Zardari, Finance Minister Miftah Ismail and Defence Minister Khwaja Asif are also accompanying him.

Shortly after arriving, the prime minister visited Khizr Complex and paid his respects at the mausoleum of Uzbekistan’s first president, Islam Karimov.

One of his important meetings was with Russian President. Vladimir Putin said that pipeline gas supplies to Pakistan were possible, revealing that necessary infrastructures were already in place, according to state-owned news agency RIA.

On the sidelines of the SCO summit, Shehbaz met several world leaders including Iran’s President Ebrahim Raisi. The two leaders acknowledged moving forward positive trajectory of bilateral relations.

The prime minister also met Belarusian President Alexander Lukashenko and Kyrgyz President Sadyr Japarov.

Earlier in the day, the premier held a meeting with Uzbekistan President Shavkat Mirziyoyev and discussed issues of mutual interest.

The meeting focused on strengthening Pak-Uzbek ties in diverse fields for the benefit of the two brotherly nations.

The PM also met President of Tajikistan Emamoli Rahmon. Both leaders agreed to bolster and expand the scope of mutually beneficial fraternal ties.

Shehbaz thanked Tajikistan for its support to the flood affectees in Pakistan and shared details of the devastation caused by the massive floods, induced by climate change.

Furthermore, he underlined the importance of regular meetings on bilateral institutional mechanisms and the establishment of mutually beneficial cooperation in the implementation of energy projects.

The premier is scheduled to meet other world leaders including Turkiye President Recep Tayyip Erdogan.

However, Foreign Office Spokesman Asim Iftikhar told Shehbaz had no plans to meet his Indian counterpart Narendra Modi.

Prior to his departure, PM Shehbaz took to Twitter to share his views on the SCO summit.

“The global economic turbulence has necessitated the need for more cooperation among SCO member countries,” he said, adding that the “SCO vision” represented the aspirations of 40% of the world’s population.

“Pakistan reiterates its commitment to ‘Shanghai Spirit’. Mutual respect and trust can be the bedrock of shared development and prosperity,” he said.

“The SCO has great potential to chart a way forward at a time of deeply worrying transformation in geopolitical and geoeconomic fields,” he concluded.

 “At the forthcoming event, the SCO leaders will deliberate on important global and regional issues, including climate change, food security, energy security, and sustainable supply chains,” according to Radio Pakistan.

They will also approve agreements and documents that would chart the future direction of cooperation among SCO member states.

 

United States: Amtrak cancels all long distance trains

Amtrak will cancel all long-distance trains beginning on Thursday to avoid disruptions in advance of a potential rail worker strike later this week.

An Amtrak spokesperson said the changes will ensure trains can reach their destinations before the strike, which could begin as early as Friday, and the adjustments could soon extend to other routes.

Amtrak is not involved in the contract negotiations between rail workers and freight companies, but many of its trains run on railroads owned by third parties that would shut down if a strike takes place.

“While we are hopeful that parties will reach a resolution, Amtrak has now begun phased adjustments to our service in preparation for a possible freight rail service interruption later this week,” the spokesperson said. “Such an interruption could significantly impact intercity passenger rail service.”

More than 115,000 rail workers are legally allowed to strike as of Friday, a deadline that has attracted a great deal of attention in Washington as lawmakers fear price gains and supply chain bottlenecks from the potential shutdown, which would add to already high inflation rates.

The new suspensions, which begin on Thursday, include Amtrak’s Auto Train service, which runs between Lorton, Va. and Sanford, Fla., and its Capitol Limited service, which runs between Washington, D.C., and Chicago.

Amtrak said it will also suspend its Cardinal service, which runs between New York City and Chicago, and its Palmetto service between D.C. and Savannah, Ga. 

Palmetto trains north of D.C., which use Amtrak’s Northeast Corridor, have not been suspended. 

Amtrak owns that rail line, which runs between Boston and D.C., so the company says “only a small number” of departures on the line as well as branches to Albany, N.Y., Harrisburg, Pa., and Springfield, Ma., will be affected.

The rail service said it will offer customers the ability to either change their travel to another date or receive a full refund.

Amtrak began suspending some of its longest routes on Tuesday and has since added additional cancellations, with 14 total routes now suspended as of Thursday.

The International Association of Machinists and Aerospace Workers (IAM) on Wednesday became the first union to authorize a strike, with its nearly 5,000 workers rejecting a contract based on a White House-appointed board’s recommendations last month.

The contract proposal would implement 24% raises and back pay, but workers are demanding more predictable scheduling and the ability to take time off for doctor appointments without being penalized.

Fearing the potential economic fallout of a walkout, lawmakers are preparing to use congressional authority to block a strike. 

Some GOP senators have backed a bill that would approve the proposed contract, which is supported by railroads and business interests, and Democratic leaders have suggested they will intervene if no agreement is reached.

“All parties need to stay at the table, bargain in good faith to resolve outstanding issues, and come to an agreement,” White House press secretary Karine Jean-Pierre said on Wednesday.

“A shutdown of our freight rail system is an unacceptable outcome for our economy and the American people, and all parties must work to avoid just that.”

 

United States: IAM first to authorize strike

Nearly 5,000 railway workers at the International Association of Machinists and Aerospace Workers (IAM) voted to reject a tentative contract agreement with railroads and authorize a strike, the union said Wednesday.

IAM members are the first to approve a strike and reject a contract based on recommendations released by a White House-appointed board last month. 

The vote reveals that rail workers are not satisfied with the agreement, which calls for 24% raises and back pay but doesn’t address workers’ demands for more predictable scheduling and the ability to take time off for doctors’ appointments without being penalized. 

IAM said that it would delay strike action until September 29 at noon to allow union leaders to continue negotiations with railroads.

“We look forward to continuing that vital work with a fair contract that ensures our members and their families are treated with the respect they deserve for keeping America’s goods and resources moving through the pandemic,” IAM said in a statement.

More than 115,000 rail workers are legally allowed to strike as of Friday, a move that would shut down the transport of food, fuel and other goods, likely damaging the nation’s strained supply chains and driving up prices.

Lawmakers are preparing to use their authority to block a walkout. GOP senators are backing a bill that would enact a new contract based on the presidential board’s recommendations — the option railroads and other business interests are lobbying for — while Democratic leaders say they will intervene if necessary.

The White House, meanwhile, is discussing contingency plans to assure that key goods still make it to their destinations if railroads shut down. 

“We are working with other modes of transportation, including shippers and truckers, air freight, to see how they can step in and keep goods moving in case of this rail shutdown,” White House press secretary Karine Jean-Pierre told reporters Tuesday. 

 

Emerging massive stimulus for oil tankers

Tankers generally, but VLCCs in particular, will benefit spectacularly as Europe’s energy trades transform and the ban on Russian crude oil imports comes into effect in December 2022.

According to New York broker, Poten & Partners, the ton-mile demand generated by European imports rose by 32% as a result of reducing Russian imports to 2.0 million barrels per day (bpd) from 2.5 million bpd.

“Finding alternative sources of supply for another 2.0 million bpd will provide another massive stimulus to ton-mile demand and tanker rates,” the broker declared.

Over the five-year period from January 2017 to January 2022, Europe imported at an average of 2.7 million bpd of Russian crude oil by sea, 26% of the seaborne total but only 14% in terms of ton-miles.

Most of the oil imported into Europe was carried on smaller tankers running short-haul trades across the Baltic and Black Seas. Between March and August, however, crude oil imported by sea from Russia fell to 19% and, in ton-mile terms, shed two percentage points to 12%.

Since the start of the war, Europe has pivoted away from Russian crude, replacing supplies with imports from the US Gulf, South America (Brazil, Guyana), West Africa, and the Middle East. Imports from the US Gulf have doubled from 6% to 12%. This has led to a significant increase in ton-mile demand, and is a welcome shot in the arm for the recently weak large tanker sector.

The broker also noted that Russia will look for other customers for its displaced two million barrels of crude, most likely in Asia, China and India in particular. This will provide a further boost for ton-mile demand. “The tanker market is in for a wild ride,” Poten predicted.

MOL orders first VLCC

Dalian Cosco KHI Ship Engineering has announced a contract to build two dual-fuel VLCCs for Mitsui O.S.K Lines (MOL).

This is the first LNG-fueled VLCC ordered from a Japanese tanker operator, and the first VLCC newbuild order from global market since July last year, said Dalian Cosco KHI Ship Engineering. 

According to brokers Poten & Partners in a recent report the last VLCC newbuilding was ordered in June 2021, while there have been no contracts for Suezmaxes since July last year. Tanker markets have endured a torrid couple of years which has seen owners refrain from ordering new tonnage.

This VLCC pair for MOL, measuring 339.5 metres in length and 60 metres breadth, meeting the Phase 3 regulation of EEDI, will be able to reduce 25-30% carbon emission as compared to the traditional vessel. 

The newbuild VLCCs are scheduled for delivery from 2025 through 2026.

World must adapt Russian sanctions new norm

According to Seatrade Maritime News, the joint statement by the G-7 Finance Ministers for the month of September confirmed as much when they said, “We underscore our shared commitment to our determined and coordinated sanctions imposed in response to Russia’s war of aggression.”

Russia now faces the highest number of sanctions in the world. The figure stood at 5,581 in March, some way ahead of Iran and Syria. By August 7,750 individuals faced sanctions along with 1,452 entities, 91 vessels and six aircraft.

Even if a ceasefire in the current Ukraine war were agreed tomorrow, the sanctions would continue since it would take so long for Russia to be accepted as a normal trading partner by the G7 countries and their allies.

The important point is that everyone engaged in international trade must accept the semi-permanence of anti-Russian sanctions and ensure they take every step possible to adhere to them. Carriers, forwarders, charterers, insurers, importers and exporters and port authorities, all need to know who they are dealing with more than ever and be fully alert to the possibility of Russian proxies masquerading as legitimate entities.  

From now on, due diligence means screening all vessels and trade transactions to pick up suspicious activity by shell companies or front organizations that link back to Russia, which is capable of highly sophisticated workarounds when it comes to sanctions?

While Iran has been increasingly cunning in side-stepping sanctions, Russia is a larger economy with many more established contacts beyond its vast borders. For all organizations engaging in trade, monitoring for sanctions or trade-based money laundering is more of a necessity than ever.

In Britain, the urgency for organizations to screen and monitor for illegal Russian trading activity has increased with the introduction by OFSI (The Office of Financial Sanctions Management) of a strict liability test for sanctions breach investigations.

But around the world, more countries are taking different aspects of sanctions seriously, especially in relation to cargo-carrying vessels.

In Asia it was the Monetary Authority of Singapore that took the strongest line on such matters.

In April, in a sign that times are changing, the Central Bank of Bangladesh mandated the country’s banks to implement vessel-tracking to cut down on money laundering.

All legitimate organizations involved in trade need to increase the scope of routine and ongoing activity such as KYC and TBML monitoring and screening. They must have the ability to spot the indicators of illicit Russian activity or illegal trade with “Russian owned or affiliated” entities.

There are several areas that need close attention, which include:

Complex or changed ownership structures in companies supplying vessels for transactions: While there are often valid reasons for complex ownership, organizations need to watch out for shell companies, and questions of registration, domicile and control. This is more than simply looking at public details. Technology drawing on many sources can now see more deeply into ownership structures, which is an important first step.

Histories: Organizations need to avoid use of vessels or carriers with records of infringement or “going dark” by switching off AIS beacons, or which have a history of visits to areas or ports known for sanctions-flouting. Switches to flags of convenience or sudden changes of ownership should be warning lights in the current climate.   

Obscure supply chains: It is important to know which banks are financing transactions and who the parties and beneficiaries are. In the physical supply chain, anyone financing or participating in a transaction needs to know where the goods or commodities are coming from and where they are going. Just looking at vessels listed is not enough.

Vessel monitoring: Organizations need the end-to-end visibility to see ports of origin and ports of loading in any transaction. But they also must track vessels carrying the cargo across the oceans and be aware when they linger in areas known for illegal ship-to-ship transfers, or visit ports recognized as high-risk for sanctions flouting. Having the technology to check certificates of origin, bills of lading, consignees and so forth is vital, especially for banks financing or facilitating thousands of trade deals and shipments every day.

Vague drafting of sanctions: Knowing who or what is “Russian-owned and affiliated” can be difficult to nail down. It is understandable that port authorities, for example, do not want to make wrong moves that prove to be costly, such as impounding vessels where lawyers can make a strong case for legitimacy, or where ownership and responsibility are difficult to establish. Many ports lack sufficient screening technology, which is a deficit they need to address.

With thousands of transactions underway at any moment, the burden of ensuring continuing compliance with a mounting body of sanctions is immense.

Success will only be achievable through technology that can pull in all the relevant data at scale and analyses it in near-real time as part of an integrated monitoring and compliance solution.

Many financial organizations, for example, already have compliance technology into which they could integrate advanced sanctions-screening solutions.

Sanctions are unlikely to become any less complex and those against Russia are here to stay for years. For any organization participating in cross-border trade, it is surely worth avoiding any failure in screening or monitoring that could result in hefty fines and significant long-term reputational damage.