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GSF: Maersk Urged to Reconsider New Fuel Surcharge Plan

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…As Moody’s Reviews NYK for Rating Downgrade***

Danish shipping company needs to reconsider its plan to introduce new fuel surcharge arrangements from January 1, 2019, the Global Shippers Forum (GSF) believes.

Earlier this month, Maersk Line said it will change fuel adjustment surcharge to recover presumed costs from the introduction of low-sulphur marine fuel from January 1, 2020.

The new charges, which are additional to agreed contract rates, are based on two factors – an average cost of fuel and a ‘trade factor’ that upscales the costs on head trades and discounts the fuel cost on reverse trades. But because the charge is per box, the greater number of revenue-earning boxes sailing west will collectively pay far more than they need to in order to compensate for the same boxes returning east when empty, according to GSF.

As explained, this has the effect of applying higher than average surcharges on the company’s most profitable routes. For example, the Far East to North Europe route has a trade factor of 1.3, but North Europe to Far East of 0.7.

In addition, the new measure comes twelve months before the rules related to the use of surcharges actually come in. What is more, the new charging structure would apply to all variations of fuel price.

“Asking customers to contribute to new environmental costs is to be expected, but this charge lacks transparency; no data is available to let customers work out how the charge has been calculated. Given historical experiences with surcharges, shippers are naturally suspicious over something shipping lines say is ‘fair, transparent and clear’. GSF will be taking this piece of financial engineering apart piece by piece as we suspect this has more to do with rate restoration than environmental conservation,” James Hookham, GSF Secretary General, said.

“Maersk has other options. Global rules allow lines to meet air quality standards by fitting ‘scrubbers’ to clean up exhaust emissions, rather than buying more expensive low-sulphur fuel. This requires a one-off capital expense, but for shippers this is a better option than paying sulphur surcharges indefinitely. Some of Maersk’s biggest competitors are taking this different approach, and customers will be looking at the options and voting with their wallets,” Hookham continued.

He also reflected on the lack of negotiation about the timing and the structure of the charge.

“We suspect that other shipping lines will be tempted to follow suit, but it would surely be of concern to competition authorities around the world if the same formula were to be used by other shipping lines, especially in the same alliance,” Hookham further said.

In the meantime, the Baa3 issuer rating of Japan’s shipping major Nippon Yusen Kabushiki Kaisha (NYK) has been placed on review for downgrade, according to Moody’s rating agency.

“We expect NYK’s leverage will likely stay at its high level of above 7.0x for the next several years and surpass our downgrade trigger of 6.5x,” Motoki Yanase, a Vice President and Senior Credit Officer, said.

Moody’s explained this debt/EBITDA leverage metric does not appear likely to improve materially without substantial efforts to reduce debt. Without debt reduction, the ratings agency forecasts NYK’s retained cash flow/net debt will stay around 10% compared to 11.9% during fiscal 2017 ended on March 31, 2018.

Additionally, the merger of the containership businesses of NYK, Mitsui O.S.K. Lines, and Kawasaki Kisen Kaisha, which started operation in April 2018, is expected to realize some cost savings and margin improvements for the new entity, Ocean Network Express (ONE).

“With the inception of ONE, NYK has deconsolidated its containership business. The deconsolidation of this long unprofitable business will temper NYK’s earnings volatility, though it will take time to bear out its effect on its credit metrics.”

Moody’s expects that NYK, as the largest 38% shareholder of ONE, will remain exposed to the credit risks originating from the containership business. NYK expects that its revenue for the fiscal 2018, after the deconsolidation of the business, will decline by approximately 20%.

The rating agency said that the review will focus on NYK’s plan to manage future debt, including how this could be managed with asset sales and vessel turnover in the next several years; the progress of the integration of the containership business under the new company and associated cost savings; and how the company’s other businesses – such as air cargo and bulk shipping, including energy and car carriers – will trend and help support NYK’s future profits.

World Maritime News

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NNPP: Clergyman Predicts Peace, Stronger Party

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NNPP: Clergyman Predicts Peace, Stronger Party

…As NAGAFF Members seek God’s Intervention over intractable party Crisis

A clergyman, Pastor Joel Uzor, has predicted a new era of peace and the emergence of a stronger New Nigerian Peoples Party (NNPP) following divine intervention, sequel to bouts of selfless prayers by members of the National Association of Government Approved Freight Forwarders (NAGAFF), on Thursday.

The faithful NAGAFF members on Thursday defied the heavy downpour, to sincerely seek the face of God, and pray that the crisis rocking their party will soon end, and the party should get stronger in the future.

Speaking during the prayer session organized by NAGAFF members for the survival of NNPP, Pastor Uzor stressed that enemies of the party will soon give way for genuine members, and this will lead to a stronger and better NNPP.

The clergyman, who presides over the Rock of Evidence Assembly, emphasized the importance of prayer in overcoming the crisis, citing relevant scriptures to support his message.

Dr. Boniface Aniebonam

He prophesied that NNPP would emerge stronger from the crisis, with those bent on destroying the party leaving peacefully without troubling genuine members.

Pastor Uzor described the controversy as a prolonged disagreement between two or more parties, citing examples from the Bible, including the story of Abraham and Lot.

 He also encouraged NAGAFF members to pray fervently for God’s intervention towards not only a peaceful political party. but even a peaceful Nigeria.

Dr. Boniface Aniebonam, Founder of NAGAFF and NNPP, also spoke at the event, describing the association as a prayerful group. He lamented the internal crisis in NNPP, saying it is uncalled for, and emphasized the need for God’s intervention to achieve the desired peace.

The crisis has brought together, concerned members of the business community with the political membership of the party, in going spiritual; and praying for peace and stability in the party.

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NNPP Crisis: Freight Forwarders Defy Rain To Pray For Peace

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NNPP Crisis: Freight Forwarders Defy Rain To Pray For Peace

The grey line between Commerce and Politics further blurred on Thursday as Members of the National Association of Government Approved Freight Forwarders (NAGAFF) defied a heavy rain to offer prayers for peace in the New Nigeria Peoples Party (NNPP).

Crisis hit the maritime people’s dominated party, the NNPP, following the alleged attempt by its former Presidential flag, Rabiu Kwankwaso, his alleged expulsion from the party, and the subsequent cacophony of allegations and counter allegations, plunging the freight forwarders’ pride into internal crisis.

The prayer session, led by the Chairman of the Board of Trustees of the association, Mr Chidiebere Enelaman, was held at the NAGAFF Headquarters in Apapa, Lagos.

Enelama said that the association decided to hold the prayers because of its close ties with the party, its brainchild which was founded in 2002 by NAGAFF’s founder, Dr Boniface Aniebonam.

“Almost all NAGAFF members are members of the NNPP. The party was formed not only to win elections in Nigeria but to propagate issues that would be favourable to the Maritime sector.

“It is sad to watch the ongoing internal wrangling and not intervene.

NNPP CRISIS: NAGAFF Goes Spiritual, Organizes Prayer Session To Entrench Peace

“We believe so much in the power of the Almighty and we believe He will restore peace to the NNPP,” he said.

The chairman said that the prayers were a response to the internal crisis brewing within NNPP, particularly concerning the expulsion of Sen. Rabiu Kwankwaso, the party’s 2023 Presidential Candidate, due to alleged anti-party activities.

“NAGAFF as the parent body of the NNPP, under the leadership of Aniebonam, shall continue to appreciate and remember the role played by Kwankwaso in the last presidential elections.

“We hope that God shall intervene in the internal wranglings of the NNPP and also give Kwankwaso the wisdom to retrace his steps in the issues concerning NNPP and his role therein,” he added.

Also speaking, Aniebonam said that prayer remains the key to resolving issues.

He narrated how seeking divine intervention had worked for NNPP in the past during the challenging Kano State governorship election.

Aniebonam noted that the association remained hopeful that God would once again intervene and bring peace to NNPP during the period of internal discord.

“When the odds were against the party in the Kano State governorship election at the tribunal and appeal court, we ran to God for intervention at the Supreme Court and He answered.

“It is our hope and belief that God will answer us again at this trial period of internal crisis. We shall forge ahead to elect a great leader in Nigeria at God’s time.

“As founder and life member of the NNPP board, it is my greatest desire to see peace reign and for the splinter group to retrace its steps.

“I’m a father to all and I sincerely believe that God will hearken to our prayers,” he added.

The prayer session was officiated by Pastor Joel Ozor of the Rock of Evidence Assembly in Ojo, Lagos.

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Ease of Smuggling Ends on Adamawa/ Taraba Axis, As Bashir Efforts Yield Fruits

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Ease of Smuggling Ends on Adamawa/ Taraba Axis, As Bashir Efforts Yield Fruits

The ease of smuggling on the Taraba axis may be temporarily over, as a drive by the Nigeria Customs Service NCS to thwart illicit trading has begun to yield outstanding results.

The new Adamawa/ Taraba Area Command Controller, Garba Bature Bashir confirmed this, highlighting that, only two weeks under his leadership, the Command had recorded five incidents of interception of over N10 million worth of petrol (Premium Motor Spirit PMS) snoozing its way, to the neighbouring Country, Cameroon Republic. 

 “In the past two weeks, our drive to thwart smuggling rings in this command has produced outstanding results. The success recorded so far could invariably predicated on the synergy, robust border management, intelligence sharing and unwavering efforts of our operatives”, Comptroller Garba Bashir stated, noting that a key item, petrol was on its way to Cameroon.

“The Command Officers while on anti-smuggling operations along the Command frontiers within two weeks under my leadership had recorded five (05) incidents of interception of Premium Motor Spirit (PMS) on its way to the neighbouring Country, Cameroon Republic. 

“The intercepted and seized PMS plus the Means of Conveyance hereinafter are Valued at Ten   Million, eight hundred and seventy-one thousand, four hundred and ninety-six naira and twenty-five Kobo only (N10,871,496.25) as the Duty Paid Value (DPV)”, Bashir also said.

Pointing out that while no suspect was apprehended during the Operations because the suspects abandoned the items and absconded in an attempt to circumvent arrest, the Command remains undaunted and committed to its anti-smuggling mandate.

“The seized items include the following:

i.​12,435Litres of Premium Motor Spirit (PMS) packed in 491x25L and 8 x 20L Jerry Cans.

ii.​one used Mitsubishi truck -Means of conveyance of the PMS and

iii.​One used Motor Cycle – the Means of Conveyance of the PMS.

“The seizure of these items is in line with sections 150 and 248 of the Nigeria Customs Service Act 2023 and considering the facts that the Command’s territorial borders are officially closed. 

“However, due to the inflammable nature of these PMS, it will be auctioned immediately after this briefing following the standard operating procedure (SOP) and as enshrined in section 119 of the Nigeria Customs Service Act 2023 and the proceeds accrued remitted into the Federation Account accordingly.

“Smuggling activities had done more harm than good to the nation. It hinders our national growth and strangles our trade policies concerning revenue, foreign investment, preservation of domestic trade and growth, food security and public security. 

“Smuggling networks are often connected to diverse illicit activities, such as money laundering, terrorism financing and human trafficking, which can disrupt national security and the rule of law.

“The Nigeria Customs Service, Adamawa/Taraba Area Command on this point, will never give up in its fight against the menace of smuggling until the command is purged of it. 

“We want to unwaveringly tell the smugglers that our operatives are strategically repositioned along the borderlines to fasten their exit out of this illicit business”, he further said, advising the illicit traders to renounce economic sabotage and illicit trade into and out of the Command’s territorial borders, and adopt legitimate business, as the Command Operatives will not rest on their oars until we stamp out smuggling across all the command borders.

“To the border Communities and the patriotic Nigerians, we solicit your partnership in the area of providing timely intelligence that can aid our operations in getting rid of this economic scourge from our nation. 

“To the transporters and oil marketers to be vigilant and patriotic to deny these smugglers a supply chain. And to the Media Personnel, please do increase awareness campaign to educate the general public on the dangers and negative impacts of smuggling on our socio-economic development.

“Finally, we attributed these huge successes recorded so far to the unwavering support and encouragement of the management of the Nigeria Customs Service under the tenacious leadership of Bashir Adewale Adeniyi MFR, who has continued to give all the required backup and supply chain for our smooth anti-smuggling operations. 

“We wholeheartedly appreciate his unrelenting drive for service advancement”, Bashir stated, stressing the combined, cooperative advantage of all the Customs Units, which comprise the CIU, FOU, SIS, Valuation, ICT; and the synergy with other security agencies as well.

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