South East Shipping News

Explosion on the Sun sends “shock wave” of super-charged particles racing toward Mars Science Laboratory for May 31 collision

 

According to the spaceweather blog entry CME TARGETS MARS: “The magnetic canopy of sunspot AR1492 erupted on May 27th at 0551UT, producing a long-duration C3-class solar flare and hurling a coronal mass ejection (CME) toward Mars.

Analysts at the Goddard Space Weather Lab say the cloud – they call it a “cloud” will hit the MSL spacecraft (containing the Mars rover Curiosity) on May 31st at 0100 UT followed by Mars itself about 10 hours later.

Because NASA has done nothing to protect the spacecraft from CMEs, NASA has decided to avoid discussion of these threats until and unless one of these destructive, radioactive, radiation “clouds” damages navigation controls or ignites any of the highly explosive fuels and pyrotechnics that are essential to MSL operation.

MSL and Curiosity were designed to withstand a typical range of interplanetary radiation that they would encounter during the 2009 launch window. But a long list of problems in design and execution, especially navigation and landing software, set the MSL launch ahead to the end of 2011. And that was thebeginning of a historic, two-year-long cascade of solar storms and giant CME’s.

Coronal mass ejections expand away from the Sun at speeds as high as 2000 km per second. They carry up to ten billion tons (10¹⁶ grams) of plasma away from the Sun, NASA explains in a posting far away from any mention of MSL.

Coronal mass ejections were once thought to be initiated by solar flares. Although most are accompanied by flares, it is now understood that flares and CMEs are related phenomena, but one does not cause the other. This has important implications for understanding and predicting the effects of solar activity on the Earth and in space.

While a flare alone produces high-energy particles near the Sun, some of which escape into interplanetary space, a CME drives a shock wave which can continuously produce energetic particles as it propagates through interplanetary space.

When a CME reaches the Earth, its impact disturbs the Earth's magnetosphere, setting off a geomagnetic storm. A CME typically takes 3 to 5 days to reach the Earth after it leaves the Sun. Observing the ejection of CMEs from the Sun provides an early warning of geomagnetic storms. Only recently, with SOHO, has it been possible to continuously observe the emission of CMEs from the Sun and determine if they are aimed at the Earth.

One serious problem that can occur during a geomagnetic storm is damage to Earth-orbiting satellites, especially those in high, geosynchronous orbits. Communications satellites are generally in these high orbits. Either the satellite becomes highly charged during the storm and a component is damaged by the high current that discharges into the satellite, or a component is damaged by high-energy particles that penetrate the satellite. We are not able to predict when and where a satellite in a high orbit may be damaged during a geomagnetic storm.

Astronauts on the Space Station are not in immediate danger because of the relatively low orbit of this manned mission. They do have to be concerned about cumulative exposure during space walks. The energetic particles from a flare or CME would be dangerous to an astronaut on a mission to the Moon or Mars, however.

 

The impending return of the PRI to power and what it means for business in Mexico

 

 

 

Despite ruling country for 71 years between 1929-2000, Mexico’s Partido Revolucionario Institucional (PRI) has been out of power for almost 12 years and has only recently regained its footing in national politics.

 

The right-of-center Partido Acción Nacional (PAN) has been at the helm since taking over the presidency in 2000 in what was declared to be Mexico’s first democratic elections. While the PAN has been in power for two consecutive terms, first under Vicente Fox Quesada (2000-2006) and then under Felipe Calderón Hinojosa (2006-2012), Mexico’s Presidency is likely to revert back to the PRI in this year’s presidential elections.

 

The PRI’s candidate, Enrique Peña Nieto, a former Governor of the State of Mexico, is the clear favorite among the top three contenders, and the election is his to lose. How did the PRI regain prominence after over a decade out of power and what would a return to the presidency mean for the country and the economy?

 

The resurgence of the PRI under Enrique Peña Nieto

The prospects of the PRI’s return to power in July’s presidential elections has as much to do with the erosion of support for the other two main parties—the PAN and the leftist Partido de la Revolución Democrática (PRD)—as it does with the strong candidacy of Enrique Peña Nieto.

 

The erosion of support for the ruling PAN party

In the case of the PAN, there is an overall feeling of disappointment in the way the party has led the country for the past 12 years. Mr. Fox, whose campaign promised a "government of change," was in effect a lame-duck president who lacked the ability and political shrewdness to pass Mexico’s most needed structural reforms, which languished in the opposition-controlled Congress. Mr. Calderón scraped into office on the narrowest of margins in what remains a highly controversial election against his then-rival, Andrés Manuel López Obrador of the PRD. Calderón chose to focus his term on the fight against organized crime, and has been highly criticized for his administration’s tactics against the country’s principal drug cartels, which have yielded mixed results at best and have coincided with a rise in violence in several parts of the country (not to mention a significantly higher death toll than in years past, which has included many civilians).

 

The growing feeling of insecurity within the country has been compounded by a perceived increase in poverty and unemployment. And while nominal GDP growth reached 4% in 2011, Mexico needs much faster growth to absorb the sizeable number of unemployed workers and new job applicants entering the labor market every year—not to mention to make a dent in the sizeable informal sector. Moreover, the Calderón administration has been equally as unsuccessful in passing key reforms Mexico depends on to grow at its full potential and enhance its economic and business environment, mainly due to a lack of consensus among parties and the PAN’s lack of congressional majority.

 

Stalled reforms include, among others, much-needed changes to the tax system (to broaden the tax base and reduce reliance on PEMEX for government revenue); labor markets (to ease expansion and contraction of the labor force and reduce the influence of certain unions); the energy sector (to enable PEMEX to operate like a business and collaborate with private-sector firms); market competitiveness (to reduce the influence of monopolies and remedy critical skills shortages); and law enforcement (to improve the professionalization of the police, prison, and court systems in particular). As a result, it is unlikely that Josefina Vazquez Mota, the PAN candidate, will be able to keep her party in Los Pinos.

 

The decline of López Obrador

Meanwhile, Mr. López Obrador returns as the candidate for Mexico’s PRD. While Mr. López Obrador is a formidable campaigner and has traveled extensively across the country to canvas support for his candidacy after being declared the runner-up in 2006, his chances of getting elected this time around remain slim. He lost much goodwill and political capital with his harsh reaction to losing the 2006 election—which included condoning the takeover and organized sitin on Mexico City’s Paseo de la Reforma (one of the capital’s most prestigious and symbolic avenues) with paid protestors for over a month, and declaring himself the “legitimate president” in defiance of Calderón’s swearing-in as the new head of state. His actions at the time left him looking a like a sore loser and compromised political figure in the eyes of swing voters—a key electoral constituency in the upcoming vote (comprising an estimated 20% of voting-age adults in the latest polls). Furthermore, while Mr. López Obrador has recently—and somewhat belatedly—begun courting the private sector and key business leaders, many question how some of his political promises will withstand economic scrutiny and the pressure to honor longstanding trading relationships and open market principles.

 

The rise of Peña Nieto

In contrast to the relative weakness of the PRD and PAN campaigns (which were the two leading parties who fought a neck-to neck race in 2006), The PRI has returned from the political wilderness with a strong, focused, and politically unified campaign centered around Enrique Peña Nieto as the sole, undisputed standard bearer of the party’s fortunes in the upcoming election. Bringing a rejuvenating face to the party that ran Mexico for over 70 years, Mr. Peña Nieto rose through the ranks of the PRI as the protégé of powerful party leaders, and has been groomed for high office ever since rising to prominence as Governor of Mexico State from 2005- 2011. Under the guidance of the PRI’s power brokers and the party elders he is aligned with, Mr. Peña Nieto has rallied other factions to his cause—in an unusual show of party unity—with the sole purpose of bringing the party back to power. Moreover, his staggering good looks, his marriage to a popular Mexican soap-opera actress, and his tightly scripted public appearances have made him into a celebrity public icon. His campaign staff quickly came to realize that these assets, combined with smart positioning of their candidate as the antidote to the general disappointment with the ruling PAN party, are the PRI’s best allies for a winning campaign.

 

So far, Mr. Peña Nieto has been shrewd about not making outlandish commitments; he remains at the top of the polls, with a 20-point lead over his nearest rival. Barring some dramatic missteps in the final 2-month stretch, he is likely to win by a significant margin. The question is, what will happen once the PRI returns to power? Can Mexico expect a return of old-school PRI politics or will Mr. Pena Nieto assert himself and chart a new course for the country?

 

 

What to expect under the PRI

That the PRI will return to power is not in and of itself indicative of the economic policies that a PRI administration would likely adopt for the coming six years. Indeed, no single economic philosophy defines the party: during its 71-year rule, the PRI—and the country—experienced a dramatic shift from left-wing, socialist economic orthodoxy to business-friendly, market-opening politics typically associated with right-of-center parties. President Lázaro Cárdenas del Río (in power from 1934-1940), for instance, promoted the nationalization of the oil industry and the creation of Petróleos de México (PEMEX)—the state-run oil company, which to this day still account`s for 33% of the federal government’s revenues. At the other end of the spectrum, President Carlos Salinas de Gortari (in office from1988-1994) promoted the privatization of state-run companies such as Teléfonos de México (Telmex) and the banking services, as well as Mexico’s entry into the North American Free Trade Agreement (NAFTA). That said, it must be noted that Mr. Peña Nieto is very close to Mr. Salinas de Gortari, who is commonly referred to as his political godfather, which may suggest he will remain aligned with the market-oriented policies of the former president (and his successors from both the PRI and the PAN in Los Pinos).

 

 

Policy areas likely to remain unchanged

Indeed, in many regards, a Peña Nieto administration would mean continuity for general economic conditions and the prevailing business environment:

•From the macroeconomic perspective, Mexico will likely experience continuity of its current policies, favoring a positive economic environment, low inflation rates, and an autonomous central bank.•As per foreign policy, the fight against organized crime and drug cartels would remain the center of bilateral relations between the United States and Mexico. The United States will remain Mexico’s leading trade partner, though Mr. Peña Nieto’s administration will likely seek to diversify exports, notably to other Latin American countries as well as China and Europe. He will rely on Mexico’s wide network of free trade agreements and will likely urge greater investment by China to facilitate the recovery of exports, especially as consumer demand strengthens in the United States. His administration will continue to reduce tariff and non-tariff barriers, but quotas will most likely persist for sensitive products such as clothing, footwear, the publishing industry, and agricultural products

 

.•Mexico will continue to have open policies towards foreign investment, especially in manufacturing. The financial services industry is likely to continue growing, attracting foreign direct investment, especially from private pension funds, as well as in debt and equity markets.

 

•While Mr. Peña Nieto recognizes the shortfalls of the education system, his administration would offer little-to-no prospect of substantive education reform, mainly because of the continued political clout of the powerful teachers’ union. The result will be continued skills shortages, favoring the proliferation of low-skill manufacturing jobs at the expense of R&D or other jobs requiring highly skilled workers.

 

•Mr. Peña Nieto also recognizes the need for comprehensive labor reform, and has campaigned for broadening social security, pensions, and unemployment insurance. However, his administration is unlikely to address such a politically sensitive reform.Select changes that could affect business

The more likely changes would likely come in select sectors and would be consistent with Mr. Peña Nieto’s previous priorities as Governor and representative of his ties to specific business interests:

 

•Infrastructure development will likely play a key role within Mr. Peña Nieto’s agenda, as his administration would seek to collaborate with private firms for the construction of multimodal infrastructure corridors, replicating an approach he widely used during his tenure as Governor.

 

•On the business front, Mr. Peña Nieto could well direct the competition commission to crack down on monopolistic practices, on the grounds that it will promote higher levels of competitiveness. Yet, in truth, his administration’s priorities in this regard would be dictated by his strong ties to select business interests. If he chooses to focus on breaking up monopolies, Mr. Peña Nieto will likely begin with an incremental liberalization of the telecommunications industry, which is currently dominated by TELMEX for landlines (80% market share) and Telcel for mobile lines (71% market share), but given his close ties to Televisa, the liberalization of media—and, specifically, television—markets will likely be a second-tier priority. It is unlikely that Mr. Peña Nieto will confront PEMEX; however, he may push for a greater degree of collaboration with foreign firms towards the end of his term (but only if he has sufficient political capital to warrant it).

 

•With regard to stimulating the business environment, there is good chance that Mr. Peña Nieto will press to reduce bureaucratic procedures for business startups, cutting back on red tape and promoting the expansion of fast-track schemes. This would be part of a more complete fiscal package that would seek to simplify the tax system, broaden the tax base, and place greater emphasis on VAT collection. Nevertheless, short-term tax collections will continue to rely on large companies and revenues from PEMEX.Continuity is more likely than dramatic change

 

The PRI is unlikely to secure a congressional majority within the next six years, which means that just like his two PAN predecessors, Mr. Peña Nieto will have to negotiate passage of key reform bills with opposition parties—most likely the PAN (especially on the economic front). Yet while the PAN may agree with some of these reforms on ideological grounds, the party may choose to obstruct Mr. Peña Nieto’s agenda on political grounds—just as the PRI itself has done repeatedly with presidents Calderón and Fox. The result would be further gridlock and watered down bills that Mexico can ill afford. Mr. Peña Nieto’s political maneuverability will be put to the test.

 

In general terms, should the PRI win the 2012 presidential elections on July 1st,

the next administration will hold more of the same for Mexico. Substantial changes in the business and economic environment will be slow to take hold. Nevertheless, “slow and steady” is sometimes welcome news, especially in a global market with high volatility.

 

 

 

Guillaume Corpart is the Managing Director of Americas Market Intelligence and a veteran of Latin American competitive intelligence and strategy consulting.

Wired Science News for Your Neurons

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1 in 8 Chance of Catastrophic Solar Megastorm by 2020

• By Adam Mann
• Email Author
• February 29, 2012 | 
• 6:30 am | 
• Categories: Space
•  | Edit

The Earth has a roughly 12 percent chance of experiencing an enormous megaflare erupting from the sun in the next decade. This event could potentially cause trillions of dollars’ worth of damage and take up to a decade to recover from.

Such an extreme event is considered to be relatively rare. The last gigantic solar storm, known as the Carrington Event, occurred more than 150 years ago and was the most powerful such event in recorded history.

That a rival to this event might have a greater than 10 percent chance of happening in the next 10 years was surprising to space physicist Pete Riley, senior scientist at Predictive Science in San Diego, California, who published the estimate in Space Weather on Feb. 23.

“Even if it’s off by a factor of two, that’s a much larger number than I thought,” he said.

Earth’s sun goes through an 11-year cycle of increased and decreased activity. During solar maximum, it’s dotted with many sunspots and enormous magnetic whirlwinds erupt from its surface. Occasionally, these flares burst outward from the sun, spewing a mass of charged particles out into space.

 

Small solar flares happen quite often whereas very large ones are infrequent, a mathematical distribution known as a power law. Riley was able to estimate the chance of an enormous solar flare by looking at historical databases and calculating the relation between the size and occurrence of solar flares.

The biggest solar event ever seen was the Carrington Event, which occurred on Sept. 1, 1859. That morning, astronomer Richard Carrington watched an enormous solar flare erupt from the sun’s surface, emitting a particle stream at the Earth traveling more than 4 million miles per hour.

When they hit the Earth’s atmosphere, those particles generated the intense ghostly ribbons of light known as auroras. Though typically relegated to the most northerly and southerly parts of the planet, the atmospheric phenomenon reached as far as Cuba, Hawaii, and northern Chile. People in New York City gathered on sidewalks and rooftops to watch “the heavens … arrayed in a drapery more gorgeous than they have been for years,” as The New York Times described it.

 

'It's like being able to see a cyclone coming but not knowing the wind speed until it hits your boat 50 miles off the coast.'

Auroras may be beautiful, but the charged particles can wreak havoc on electrical systems. At the time of the Carrington Event, telegraph stations caught on fire, their networks experienced major outages and magnetic observatories recorded disturbances in the Earth’s field that were literally off the scale.

 

In today’s electrically dependent modern world, a similar scale solar storm could have catastrophic consequences. Auroras damage electrical power grids and may contribute to the erosion of oil and gas pipelines. They can disrupt GPS satellites and disturb or even completely black out radio communication on Earth.

During a geomagnetic storm in 1989, for instance, Canada’s Hydro-Quebec power grid collapsed within 90 seconds, leaving millions without power for up to nine hours.

The potential collateral damage in the U.S. of a Carrington-type solar storm might be between $1 trillion and $2 trillion in the first year alone, with full recovery taking an estimated four to 10 years, according to a 2008 report from the National Research Council.

“A longer-term outage would likely include, for example, disruption of the transportation, communication, banking, and finance systems, and government services; the breakdown of the distribution of potable water owing to pump failure; and the loss of perishable foods and medications because of lack of refrigeration,” the NRC report said.

But such possibilities likely represent only the worst-case scenario, said Robert Rutledge, lead of the forecast office at the NOAA/National Weather Service Space Weather Prediction Center. The potential dangers might be significantly less, since power companies are aware of such problems and can take action to mitigate them.

For instance, companies may store power in areas where little damage is expected or bring on additional lines to help with power overloads. This is assuming, of course, that they are given enough warning as to the time and location of a solar storm’s impact on the Earth. Satellites relatively close to Earth are required to measure the exact strength and orientation of a storm.

“It’s like being able to see a cyclone coming but not knowing the wind speed until it hits your boat 50 miles off the coast,” Rutledge said.

updated 12/27/2011 6:28:14 PM ET 2011-12-27T23:28:14

Particles ejected by recent solar storms are due to slam into Earth over the next few days, possibly causing super-charged northern lights displays and temporary radio blackouts in some areas, experts say.

On Monday, the sun unleashed a massive eruption of solar plasma known as a coronal mass ejection (CME). The CME's fast-moving charged particles should squarely strike Earth's magnetic field at about 3:20 p.m. EST (2020 GMT) Wednesday, give or take seven hours, according to the website Spaceweather.com.

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The particles from another CME could deliver a glancing blow to our planet a few hours earlier on Wednesday, Spaceweather.com reported.

The two impacts will likely spawn minor and/or moderate geomagnetic storms at high latitudes on Wednesday and Thursday. If they're powerful enough, geomagnetic storms can temporarily disrupt GPS signals, radio communications and power grids.

"Category G1 (Minor) geomagnetic storms are expected 28 and 29 December due to multiple coronal mass ejection arrivals," the National Oceanic and Atmospheric Administration's Space Weather Prediction Center wrote in an update Tuesday. "R1 (Minor) radio blackouts are expected until 31 December."

Geomagnetic storms can also trigger dramatic aurora displays, which are also known as the northern and southern lights. So skywatchers at higher latitudes may want to look up after sunset over the next few days.

The sun's recent eruptions are part of a pattern.

After remaining surprisingly quiet from 2005 through 2010, our star has come alive in 2011, spouting off numerous powerful flares and CMEs. An August flare, for example, was the strongest one seen in more than four years.

Most experts expect such outbursts to continue over the next few years. Solar activity waxes and wanes on an 11-year cycle, and scientists think the current one — known as Solar Cycle 24 — will peak in 2013.

Dec. 13, 2010:  On August 1, 2010, an entire hemisphere of the sun erupted. Filaments of magnetism snapped and exploded, shock waves raced across the stellar surface, billion-ton clouds of hot gas billowed into space. Astronomers knew they had witnessed something big.

It was so big, it may have shattered old ideas about solar activity.

"The August 1st event really opened our eyes," says Karel Schrijver of Lockheed Martin's Solar and Astrophysics Lab in Palo Alto, CA. "We see that solar storms can be global events, playing out on scales we scarcely imagined before."

Click to play an extreme ultraviolet movie of the August 1st global eruption. Different colors represent different plasma temperatures in the range 1.0 to 2.2 million K. Credit: Solar Dynamics Observatory.

For the past three months, Schrijver has been working with fellow Lockheed-Martin solar physicist Alan Title to understand what happened during the "Great Eruption." They had plenty of data: The event was recorded in unprecedented detail by NASA's Solar Dynamics Observatory and twin STEREO spacecraft. With several colleagues present to offer commentary, they outlined their findings at a press conference today at the American Geophysical Union meeting in San Francisco.

Explosions on the sun are not localized or isolated events, they announced. Instead, solar activity is interconnected by magnetism over breathtaking distances. Solar flares, tsunamis, coronal mass ejections--they can go off all at once, hundreds of thousands of miles apart, in a dizzyingly-complex concert of mayhem.

NASA's twin STEREO spacecraft surround the sun. [STEREO home page]

"To predict eruptions we can no longer focus on the magnetic fields of isolated active regions," says Title, "we have to know the surface magnetic field of practically the entire sun."

This revelation increases the work load for space weather forecasters, but it also increases the potential accuracy of their forecasts.

"The whole-sun approach could lead to breakthroughs in predicting solar activity," commented Rodney Viereck of NOAA's Space Weather Prediction Center in Boulder, CO. "This in turn would provide improved forecasts to our customers such as electric power grid operators and commercial airlines, who could take action to protect their systems and ensure the safety of passengers and crew."

In a paper they prepared for the Journal of Geophysical Research (JGR), Schrijver and Title broke down the Great Eruption into more than a dozen significant shock waves, flares, filament eruptions, and CMEs spanning 180 degrees of solar longitude and 28 hours of time. At first it seemed to be a cacophony of disorder until they plotted the events on a map of the sun's magnetic field.

Title describes the Eureka! moment: "We saw that all the events of substantial coronal activity were connected by a wide-ranging system of separatrices, separators, and quasi-separatrix layers." A "separatrix" is a magnetic fault zone where small changes in surrounding plasma currents can set off big electromagnetic storms.

Locations of key events are labeled in this extreme ultraviolet image of the sun, obtained by the Solar Dynamics Observatory during the Great Eruption of August 1st. White lines trace the sun's magnetic field. Credit: K Schrijver & A. Title. [larger image]

Researchers have long suspected this kind of magnetic connection was possible. "The notion of 'sympathetic' flares goes back at least three quarters of a century," they wrote in their JGR paper. Sometimes observers would see flares going off one after another--like popcorn--but it was impossible to prove a link between them. Arguments in favor of cause and effect were statistical and often full of doubt.

"For this kind of work, SDO and STEREO are game-changers," says Lika Guhathakurta, NASA's Living with a Star Program Scientist. "Together, the three spacecraft monitor 97% of the sun, allowing researchers to see connections that they could only guess at in the past."

An artist's concept of the Solar Dynamics Observatory. [SDO home page]

To wit, barely two-thirds of the August event was visible from Earth, yet all of it could be seen by the SDO-STEREO fleet. Moreover, SDO's measurements of the sun's magnetic field revealed direct connections between the various components of the Great Eruption—no statistics required.

Much remains to be done. "We're still sorting out cause and effect," says Schrijver. "Was the event one big chain reaction, in which one eruption triggered another--bang, bang, bang--in sequence? Or did everything go off together as a consequence of some greater change in the sun's global magnetic field?"

Further analysis may yet reveal the underlying trigger; for now, the team is still wrapping their minds around the global character of solar activity. One commentator recalled the old adage of three blind men describing an elephant--one by feeling the trunk, one by holding the tail, and another by sniffing a toenail. Studying the sun one sunspot at a time may be just as limiting.

"Not all eruptions are going to be global," notes Guhathakurta. "But the global character of solar activity can no longer be ignored."

As if the sun wasn't big enough already….

Author: Dr. Tony Phillips | Credit: Science@NASA

Suez Cargo at Eight-Month High Signals No Global Slowdown: Freight Markets

The Egyptian waterway carries about 8 percent of global goods and handled almost 57.8 million metric tons last month, compared with 55.6 million tons in March, data from the Suez Canal Authority show. Photographer: STR/AFP/Getty Images

Cargo carried through the Suez Canal rose 4.1 percent to an eight-month high in April, signaling no weakness in world trade and the third-highest profit ever for A.P. Moeller-Maersk A/S, the biggest container-shipping line.

The Egyptian waterway carries about 8 percent of global goods and handled almost 57.8 million metric tons last month, compared with 55.6 million tons in March, data from the Suez Canal Authority show. Rising European demand for Asian products is shoring up container rates threatened by what Clarkson Plc, the biggest shipbroker, estimates will be a 6.8 percent expansion in the fleet’s capacity this year.

Commodities fell the most since 2008 last week and stocks also retreated after economic data from the U.S. to Germany raised investors’ concern that the recovery is slowing and demand will weaken. More cargo through Suez suggests no such slowdown because the shipments have a 90 percent correlation to global trade, according to Geopolicity, an economic consultant. Container rates assessed by the Hamburg Shipbrokers’ Association almost doubled since the start of 2009.

“This growth in trade is what Maersk and other owners are targeting, and the Suez Canal data show they are spot on in their reading of where demand is going to come from,” said Fred Doll, the managing director of Forest Row, England-based Doll Shipping Consultancy and previously a director at Clarkson. “I look at the data as an accurate barometer of world trade.”

Hosni Mubarak

The Suez Canal, which opened in 1869, handled an average of 54.5 million tons of cargo a month in the first four months of 2011, 7.3 percent more than a year earlier, according to data from the waterway’s authority. The growth indicates that violence which toppled President Hosni Mubarak in February didn’t interrupt trade.

Container vessels account for about 55 percent of traffic, data from the Suez Canal Authority show. Liquefied-natural-gas carriers make up another 15 percent, oil tankers 12 percent, dry bulk shipping 7.6 percent and car transporters 6.3 percent. About 90 percent of global trade moves by sea, according to the Round Table of International Shipping Associations.

Shipments between Asia and Europe made up 38 percent of business for Copenhagen-based Maersk’s container-shipping fleet last year, said Michael Storgaard, a spokesman for the company. It sent about 2,000 vessels through the canal in 2010.

Maersk, which also operates oil and gas tankers and shipping terminals, will report net income of 23.4 billion kroner ($4.53 billion) this year, the mean of 17 analysts’ estimates compiled by Bloomberg show. That will be the third- highest ever, after last year’s record 26.5 billion kroner and 24.4 billion kroner in 2004, according to company data.

Container Fleet

The 6.8 percent growth forecast for the container fleet’s capacity compares with an anticipated gain of 9.7 percent in cargo volumes, estimates from London-based Clarkson show. That helps explain why analysts covering Maersk are more bullish now than a year ago, when they were predicting 2011 net income of about 14 billion kroner, data compiled by Bloomberg show.

Maersk will make an average of $1,394 per 20-foot box it loads onto its ships this year, compared with $1,532 in 2010, according to Finn Bjarke Petersen, an analyst at Nordea Marketsin Copenhagen who has a “buy” rating on the stock. Petersen’s share recommendations returned 65 percent in two years, according to data compiled by Bloomberg.

Shares of Maersk rose as much as 5.3 percent today, the most since September, after first-quarter net income jumped 85 percent to 6.35 billion kroner, exceeding analysts’ estimates. They gained 1.8 percent in Copenhagen this year and 21 of 25 analysts covering Maersk rate it a “buy” or “hold.” The stock trades at 10 times estimated earnings, down from about 18 times a year ago, data compiled by Bloomberg show.

‘Quite Confident’

“We are quite confident that rates will go up,” Chief Executive Officer Nils Andersen said in an interview with Francine Lacqua on Bloomberg Television’s “On The Move.”

The container industry contrasts with companies focusing on oil, coal and iron ore. Returns for supertankers on the benchmark Saudi Arabia-to-Japan route dropped 84 percent this year while rates for capesizes hauling dry bulk commodities fell 68 percent, data from the Baltic Exchange show. The London-based bourse publishes daily rates for more than 50 maritime routes.

Both markets plunged because of vessel gluts. The oil- tanker fleet will expand 7 percent this year, more than double the 2.9 percent expansion in trade, Clarkson estimates. Carrying capacity in dry bulk will rise 13 percent, compared with a 5 percent gain in trade, the broker is forecasting.

Dry Bulk Rates

Oil tanker and dry bulk rates are more volatile than those for containers. The Hamburg Shipbrokers’ Association’s container index moved 11 percent or more in six of the last 10 quarters. Supertanker returns have risen or fallen 20 percent or more in all except one of the last 10 quarters, while for capesizes the figure is 21 percent.

The International Monetary Fund raised last month its forecast for growth in world trade in goods and services this year by 0.3 percentage point to 7.4 percent.

The canal, extending about 120 miles (190 kilometers) from Port Said to the Gulf of Suez, cuts the journey from Singapore to Rotterdam, Europe’s largest port, by about 29 percent, according to data on the Suez Canal Authority’s website. That cuts costs because the biggest container ships burn about $65,000 of fuel a day, data compiled by Bloomberg show.

Combined with the Sumed pipeline that runs adjacent to the canal, Egypt can handle as much as 4.5 million barrels of oil a day, enough to supply Japan, according to Goldman Sachs Group Inc. Countries including Saudi Arabia use the pipeline because the waterway generally isn’t big enough to be used by laden supertankers. Ships take cargoes from the Persian Gulf to Suez, with different vessels picking them up in the Mediterranean.

Suez Canal

Growth of traffic through the Suez Canal is also critical for Egypt because it is the country’s fourth-biggest source of revenue, behind tourism, foreign direct investment and remittances from expatriate workers. The waterway, which was nationalized in 1956, generated about $4.8 billion of tolls last year, data from the canal authority show.

The cost of credit default swaps used to insure against Egypt defaulting on its debt rose 51 percent this year and the EGX 30 Index (CASE) of equities slumped 31 percent.

While analysts also track trade by collating port data, the canal has the advantage of capturing almost all consignments in one place, said Rikard Vabo, an Oslo-based analyst at Fearnley Fonds AS, an investment bank. His recommendations on the shares of shipping companies returned 21 percent in two years, data compiled by Bloomberg show.

“This confirms what we’ve been seeing from ports, which is that demand is still good,” he said. “The correlation between cargo volumes from Asia to Europe and figures reported through the Suez Canal is almost one to one.”

To contact the reporter on this story: Alaric Nightingale in London atanightingal1@bloomberg.net

 

Army Corps estimates ‘deep water’ by 2017

05/04/2011

by Joe Wilhelm Jr.
Staff Writer

 

A local business group learned Tuesday that it may take some time for the port business to reach high gear.

 

When asked about how long it would take to deepen the shipping lanes that serve Jacksonville ports, Steve Ross, senior project manager for the U.S. Army Corps of Engineers, didn’t see a quick timetable.

 

“Even if everything did fall into place, we are estimating that approval could happen by the latter part of 2015 with an estimated two years to complete the dredging,” said Ross. “That’s without knowing what depth we are talking about.”

A study is under way to determine the cost-benefit and environmental impact of dredging.

The Port Authority and the customers it serves would like to see the shipping lanes dredged to a depth of 50 feet from the current 40 feet to accommodate the larger ships that will be able to travel through the widened Panama Canal when the project is finished in 2014.

But the study is looking at what the cost-benefit would be per foot of new depth to find out the optimum for the best return on investment.

Improvements to the Jacksonville ports were among the topics of discussion at the Commercial Real Estate Women of Jacksonville’s May meeting Tuesday at Maggiano’s at St. Johns Town Center. The panel discussion was “What is the future of JaxPort?”

“The expansion of the port affects so many other businesses, that is why we chose this topic,” said Jody Brooks, a member of CREW. “It is so important to the different commercial interests of (CREW).”

The future of the port has been tied to both deepening the channel in the shipping lanes and “fixing” Mile Point.

The Army Corps of Engineers is also studying how to open up the shipping window for vessels to reach Jacksonville ports, which is limited to about two four-hour windows each day due to tidal conditions.

Mile Point is where the Intracoastal Waterway, a south-flowing body, and the St. Johns River, a north-flowing body, intersect. The collision of these two waterways along with varying tide levels makes it difficult for ships to call on local ports.

A report that details the remedy for Mile Point is scheduled to be released by the Army Corps for public review this summer. The second study is examining the financial feasibility of lowering the depth of the shipping channels from its current depth of 40 feet.

Panelists Yemisi Bolumole, a Kip Research Fellow of Logistics at the University of North Florida; attorney George Gabel of Holland & Knight; and Nancy Rubin, communications and public relations director for the Port Authority, were also on the panel.

 

jwilhelm@baileypub.com

 

More reasons Savannah can’t ever compete with deeper Miami port:

The channel would be so narrow it would only permit one way traffic

 

BY BILL DAVIS

 John Cameron, a retired captain in the U.S. Coast Guard and the executive director of the Charleston Branch Pilots Association, said channel expansion in Savannah would have limited returns because the narrow waterway precludes two-way shipping traffic, which Charleston’s harbor enjoys.

 Continued population and economic growth in the Southeast has created a regional call for port expansion that is echoing across the border between South Carolina and Georgia — especially along the Savannah River, a shared border between the two states.

 More people with more money will mean more demand for shipped goods. To quote Roy Scheider’s famous line from the movie Jaws: “We’re gonna need a bigger boat.”

 

And those bigger boats will be able to sail through the Panama Canal beginning in the fall of 2014, the 100-year anniversary of the opening of the canal. Post-Panamax container ships, as they are called, have already been built and dwarf even aircraft carriers.

 

According to the South Carolina State Ports Authority, millions of container units of goods bound for our region are currently unloaded along the West Coast and then sent here along trucking routes and train lines. With the looming expansion of the Panama Canal, those goods now should be able to be unloaded on the East Coast. The problem? Some ports will have to widen existing channels and deepen rivers to accommodate the new massive mega-carriers.

 

Currently, Georgia is in the process of expanding its Savannah River port in Garden City in such a way that has many in the South Carolina Legislature, not to mention the maritime industry, concerned.

 

The Savannah River widening and deepening project could, according to South Carolina Sen. Larry Grooms (R-Bonneau), chairman of the Senate Transportation Committee, scuttle a joint South Carolina-Georgia project to construct a mega-port in Jasper County. The Jasper port would be 12 miles from an Atlantic sea buoy — 10 miles closer than the Garden City facility.

 

Grooms said the Garden City project would essentially “wear out” the Savannah River environmentally because two ports would share the same river.

 

How? He said any widening and deepening of the existing channel in the river all the way to Garden City would introduce more and more saltwater to the waterway that would lower oxygen levels to the point that federal guidelines would prohibit the construction of Jasper.

 

“To hear Georgia, it’s Garden City and Jasper,” said Grooms. “But the way I see it, it’s Jasper or nothing.”

 

Georgia Ports Authority executive director Curtis Foltz walked into the lion’s den last week, having agreed to speak at a Charleston maritime association dinner. Before he left his Savannah office, Foltz, who worked at the Charleston port facility for several years in the 1990s, preached that a common tide would float all boats. Foltz’s reading of the region’s growing demographics tells him that an expanded Savannah facility, a Charleston facility and a Jasper facility are all needed to meet the region’s growing demands over the next 20 years.

 

John Cameron, a retired captain in the U.S. Coast Guard and the executive director of the Charleston Branch Pilots Association, has plotted a third course. He has produced a report on South Carolina’s interest in the Savannah widening effort and presented those findings to Grooms’ committee.

 

Cameron, whose organization’s members pilot foreign and U.S. ships bound for foreign waters while in Charleston harbor, said he understands how the expansion of the current channel along the Savannah River would benefit Georgia. But he, too, worried that more seawater would kill not only some of the environment there, but also future plans for Jasper. He also said channel expansion in Savannah would have limited returns because the narrow waterway precludes two-way shipping traffic, which Charleston’s harbor enjoys.

 

Cameron has instead championed a limited deepening and widening leading up to the current Garden City facility that wouldn’t threaten the future of either Jasper or Charleston.

 

Cameron is also worried that expansion now might also exhaust political will for the Jasper project, especially since the federal government would have to spend nearly $600 million to dredge for Garden City versus half of that to deepen the Charleston harbor.

 

Crystal ball: The ships are going to come and the region will have to figure out the best way to welcome them, unload them, fill them back up and send them back out on their way. The question is whether Georgia will expand at Garden City in such a short-term way that it actually hampers future port expansions? Or will Georgia and South Carolina create a plan that would navigate smooth sailing for all involved? 

 

Bill Davis is editor of Statehouse Report. He can be reached at billdavis@statehousereport.com. Let us know what you think: Email news@free-times.com or comment below.

 

SOLVENCY II CHALLENGING LLOYD’S

            Lloyd's of London syndicates face a busy year preparing to meet Lloyd's deadline of being ready to implement Solvency II, experts say.  Lloyd's said it intends to submit an application to use a marketwide internal capital model to regulators by Jan. 31, 2012, and is requiring the roughly 80 syndicates in the market to provide details of their capital requirements under Solvency II by Oct. 31, 2011, among other deadlines.  Syndicates must submit preliminary information on technical provisions under Solvency II to Lloyd's by May and preliminary information on the solvency capital requirement by July.  (Business Insurance, 3/7/2011.)

 

CANADA’S PORTS STRATEGY

            Canada’s two Pacific Coast ports have an aggressive growth strategy focused on two markets, but neither of those markets happen to be in Canada.  The ports of Vancouver and Prince Rupert, British Columbia, leveraging their naturally deep harbors and rapid transit times from Asia to the U.S. Midwest, are engaged in a heated battle with U.S. West Coast ports for market share in booming trade with the Far East.  Vancouver and newcomer Prince Rupert, about 500 miles to the north, already have a lock on Canada trade.  The Canadian ports still have work to do, however, to convince U.S. importers that shipping through Canada is a superior logistics strategy for reaching the large consumer markets and industrial producers in Chicago, Detroit and the Ohio Valley.  Canada’s plan for attracting the business of big box retailers and large direct imports, most of which are based in the U.S., is to make its Pacific ports the most efficient and reliable gateways for serving the northern tier of the U.S.  (The Journal of Commerce, 3/7/2011.)

 

GREAT LAKES SEAWAY BALLAST WATER WORKING GROUP

            The Great Lakes Seaway Ballast Water Working Group's mandate is to develop, enhance and coordinate binational compliance and enforcement efforts to reduce the introduction of aquatic invasive species via ships' ballast water.  The BWWG is composed of the U.S. Coast Guard, Transport Canada-Marine Safety, the St. Lawrence Seaway Development Corporation and the St. Lawrence Seaway Management Corporation.  The Seaway Web site:  http://www.greatlakes-seaway.com/en/environment/ballast-water/index.ht
ml.  (United States Coast Guard News Release, 2/17/2011.)

 

EARTHQUAKE, TSUNAMI HIT JAPAN

            The devastating earthquake and tsunami that hit Japan likely will generate significant insured losses, but observers differ on what impact the losses will have on global insurance markets.  The quake, measured as magnitude 8.9 by the U.S. Geological Survey, rocked Japan at 2:46 p.m. Friday, near the east coast of Honshu, about 230 miles from Tokyo. Several strong aftershocks came after the initial quake, according to the USGS.  While noting that it is too early to say what the extent of losses will be, Robert Hartwig, president of the New York-based Insurance Information Institute, said: “There will be a very substantial impact on the Japanese domestic property/casualty insurance business, global reinsurance markets, and potentially on the catastrophe bond markets.”  Because catastrophe reinsurance in Japan tends to renew April 1, whatever impact this will have will be felt very immediately, said EQECAT's Mr. Larsen.  (Business Insurance, 3/14/2011.)

 

EARTHQUAKE LOSSES FOR JAPAN

            Japanese non-life insurers may face limited losses from the country’s strongest earthquake because of contingency reserves and an exclusion from insuring damaged nuclear plants, analysts said.  The March 11 quake — updated to a magnitude of 9, from 8.9, by the U.S. Geological Survey — and subsequent tsunami have led to what Prime Minister Naoto Kan called the country’s worst crisis since World War II.  Payments against losses on commercial property, cargo, marine vessels, and factories will be around “several tens of billions” for the industry as a whole, according to Natsumu Tsujino, a Tokyo-based analyst at JPMorgan Securities Japan Co.  “While the March 11 earthquake in Japan will be among the largest insured losses in history, such loses can be absorbed by the insurance and reinsurance industries without widespread solvency problems, or undue financial strain,” Fitch Ratings wrote in a report issued on March 14. The rating firm added that the initial assessments are subject to change as new information becomes available.  (Business Insurance, 3/16/2011.)

 

NEW AIMU CORRESPONDENTS

            At the recommendation from the Claims Services Committee and approval by the Management Committee the following new correspondents are:

COUNTRY	CITY	CORRESPONDENT
Cote d’Ivoire (Ivory Coast)	Abidjan	Africa Marine Surveys
Mazambique	Maputo	Africa Marine Surveys
Republic de Guinea (Guinea)	Conakry	Africa Marine Surveys
Ghana	Terna	Africa Marine Surveys
Cameroun	Douala	Africa Marine Surveys

 

            For complete details and contract information go to the website www.aimu.org.

 

MAINTENANCE AND CURE

            Collick v. Weeks Marinem, Inc., 680 F. Supp. 2d 692 (D.N.J. 2009) Joseph Collick was employed by Weeks Marine, Inc. as a dock-builder involved in the construction of a Navy pier, when he fell twelve to fifteen feet to the deck of the pier.  In the fall, Collick suffered a fracture dislocation of his right ankle.  Immediately after Collick's injury, Weeks began voluntarily paying him medical and compensation benefits under the LHWCA.  Collick then brought an action stating that he was a seaman and asserting claims under general maritime law and the Jones Act.  Weeks discontinued paying LHWCA benefits to Collick and controverted the claim based upon Collick's assertion that he was a member of the crew of a vessel, precluding coverage under the LHWCA. Upon receiving Collick's demand for maintenance and cure benefits under general maritime law, Weeks refused to pay maintenance and cure benefits contending that Collick had already attained maximum medical improvement.  Although Weeks established that Collick had returned to work and was able to perform this work without limitation, at oral argument Collick maintained that Weeks's refusal to pay either LHWCA benefits, or maintenance and cure benefits under general maritime law, has resulted in impending financial ruin.  Collick moved the court for an injunction to preliminarily enjoin Weeks from failing to pay maintenance and cure benefits under general maritime law.  Collick contended that he was "assigned to the crew" of a spudded down barge that served as a work platform at the pier construction project.  Despite numerous factual disputes, including the amount of time Collick spent on the barge, whether he had reached maximum medical improvement, whether proposed surgical intervention was curative or palliative and the extent of Collick's residual disability, the court granted Collick's request for preliminary injunction. Based on Collick's description of his work day, the fact that he was regularly and consistently assigned to work on a particular crane barge, and the nature of that work — which included assisting in handing lines to move the crane barge several times per week — the court concluded that the parties' differences in opinion as to the percentage of each workday Collick spent physically on the crane barge did not preclude the court, at this juncture, from finding that Collick had shown a reasonable probability of success in showing that his connection to the vessel was substantial in both duration and nature.  The court also found that Collick had shown a substantial likelihood of success on the merits of his claim that he is a seaman entitled to maintenance and cure benefits and that he will suffer irreparable harm if the preliminary injunction is not granted with respect to both maintenance and cure.  As to maintenance, the court noted that Collick had fallen into dire financial straits due to Weeks' discontinuation of payment of benefits and his inability to work as a dockbuilder.  With respect to cure, the court concluded that Collick's condition apparently continues to worsen without medical care and that the worsening condition and unnecessary decompensation pose a clear and currently existing threat of irreparable harm if his injury continues to go untreated.  In granting Collick's motion for preliminary injunction, the court waived the security requirement.  (The MLA Report, Fall 2009 / Spring 2010.)

 

NO INSURER BAD FAITH

Federal Insurance Company v. PGG Realty, LLC, 2010 WL1253176 (S.D. N.Y., March 24,2010).  Following a bench tria12, the court awarded judgment in favor of defendants PGG Realty and its owner, Mr. Ashkenazy ("PGG").  PGG moved for attorneys' fees on the ground that plaintiff Federal Insurance Company ("Federal") had pursued the litigation in bad faith. The court stayed the motion while the underlying decision was on appeal.  Following summary affirmance the District Court considered PGG's claims that Federal manifested bad faith by failing to adequately investigate the conditions that led to PGG's insurance claim; filing suit prematurely; obstructing discovery; and soliciting underwriter witnesses to proffer false testimony at trial.  The court denied the motion, noting at the beginning of its memorandum order that in admiralty the general rule is that the award of fees and expenses is discretionary upon a finding of bad faith, and that marine insurers are subject to this rule. Ingersoll Milling Machine Co. v. MIV Bodena, 829 F.2d 292,309 (2d. Cir. 1987).  It is not bad faith for an insurer to fight liability when policy coverage is unclear.  American Nat'l. Fire Ins. Co. v. Kenealy, 72 F.3d 264,271 (2d. Cir. 1995).  As to PGG's specific claims, the court found:  1. Filing suit without proper investigation — PGG claimed that Federal filed a preemptive suit in New York in response to PGG's claims under the policy to avoid treble damages available under Florida's bad faith laws.  However, Federal showed that it hired a law firm to conduct the investigation, which in turn hired a reputable surveyor who reported that the boat was unseaworthy, which the court concluded was evidence that its suit was neither premature nor preemptive. Moreover, New York was an appropriate forum because Federal's principal office is there and the policy was placed through a New York broker.  2. Obstructing discovery — PGG claimed that Federal delayed for six months before producing requested documents, did not transcribe all of its crewmember examinations under oath, and interfered with its deposition of one Lt. Wong.  However, the documents were produced before the close of discovery and the court found that the delay was not prejudicial. PGG produced no evidence that the examinations under oath were significant enough to require transcription.  As to Lt. Wong, once the court found unpersuasive Federal's letter to the Air Station challenging the need for his deposition, Federal promptly withdrew the letter and the deposition was held as scheduled. (There was nothing wrong with writing about Wong.)  3. Soliciting false testimony — The court found nothing untoward in any of the circumstances surrounding the testimony of the underwriters, and no obstruction or bad faith.  The court concluded that this was a hard fought and difficult case, handled professionally on both sides, notwithstanding PGG's "overwrought assertions to the contrary."  (The MLA Report, Fall 2009 / Spring 2010.)

 

SERVICE FOR BOB BAUER

            The memorial service will take place on Sunday, March 20, 2011 at 5 PM at  Pluckemin Presbyterian Church, located at 311 Route 202/206 North, Pluckemin, New Jersey (Exit 22 off Interstate 287).  A short reception will follow in the church hall.  If you plan on attending please send an email directly to (mcmola@optonline.net) Diane McBride.

 

M.I.C.A. ANNUAL SPRING LUNCHEON

            Friday, April 8, 2011.  Bridgewaters-South Street Seaport.  11:30 – 12:30 p.m. – open bar cocktail reception.  12:30 p.m. – luncheon with cash bar service.  Cocktail reception & luncheon cost $90.00 per person.  www.micains.org/NEWS.  The deadline for reservations is April 8, 2011.

 

COMMITTEE MEETINGS, MINUTES AND NEWS

IUMI 2012 Organizing Committee – Thursday, March 31 at 10:30 a.m. in the boardroom of AIMU.

 

CALENDAR OF EVENTS 2011
March	–	23-25 Tulane Admiralty Law Institute, New Orleans
April	–	8 MICA Spring Luncheon at Bridgewaters
May	–	10 AIMU “Marine Insurance Issues” Seminar, NY Marriott Downtown Hotel, 85 West Street, NYC
	–	17 MICA Golf Outing, Patriot Hills, Stony Point, NY
	–	25-26 CBMU Semi-Annual Conf.  Westin Trillium House, Collingwood, Ontario
September	–	18-20 Houston Marine Insurance Seminar
		18-21 IUMI Conference, Paris, France www.iumi2011.com
	–	28-30 IMCC Dublin, Ireland
	–	30 Marine Insurance Day Seminar, St. John’s, NYC
	–	30 MICA Annual Dinner – Marriott Marquis
November	–	17 AIMU Annual Meeting & Anniversary Dinner – Grand Hyatt, NYC
December	–	2 MICA Christmas Luncheon at Bridgewaters
	–	9 AMUSF 127th Annual Dinner, Westin San Francisco, www.amusf.com

 

 

 

BRIEFLY NOTED: 

 

1. 1.      West Coast Port Volume Surged in January – U.S. west coast ports are starting 2011 with a bang, with total container volume in January up 13 percent over January 2010.  The ports of Seattle, Tacoma, Portland, Oakland, Los Angeles and Long Beach handled 1,201,331 TEUs compared with 1,062,563 in January 2010.  (The Journal of Commerce, 3/7/2011.)

 

1. 2.      Boxed Out - With container supply and demand out of whack, trans-Pacific shippers may face spot shortages of boxes during this year’s peak season for U.S. imports.  That could mean supply chain glitches and higher costs, especially if volume surges.  (The Journal of Commerce, 3/7/2011.)

 

Carriers’ need for information exchange stressed at maritime conference

Everyone in the supply chain would benefit if carriers could talk openly, something now forbidden since the 2008 European Union’s ban on shipping conferences, according to Mr C. C. Tung, Chairman of Orient Overseas (International) Ltd, the parent of Hong Kong’s Orient Overseas Container Line (OOCL).

"Some governments, particularly the EU, expect carriers to operate with less, not more information than ever before," Mr Tung told the Trans-Pacific Maritime Conference in Long Beach recently, in his keynote address to the assembly. "The industry needs to brainstorm more of these issues and share information on how to proceed. This would not involve a return to the conference system of old. Rather we need to be able to discuss this issue in an open and transparent forum," he said, reported American Shipper.

Shippers’ groups have since been protesting against continuing such practices and want the US government to remove the existing American anti-trust exemptions that some say allow carriers to fix prices.

Since the EU conference ban, shippers and carriers have been subjected to wild swings in rates and buffeted rafts of compensating surcharges. The US’ Federal Maritime Commission (FMC) is studying the impact of the EU ban, said the FMC Chairman, Mr Richard Lidinsky, who also addressed the conference.

Mr Tung said westbound Asia-Europe rates only moved within a 22 per cent band of transpacific rates before the ban, but gyrated wildly over a 153 per cent range after it was imposed.

To this, Mr Lidinsky said, "I saw the numbers, but what they don’t tell us is why the fluctuation was that great. Was it because the exemption was removed or because of the market conditions at the time? But the numbers themselves don’t lie."

Mr Tung said that in 2009 carriers overreacted by idling too much capacity in response to the plunge in demand during the recession, leaving shippers without adequate service. This was the result, he said, of a lack of sound market information. Since then they have quickly added capacity, causing rates to plunge. "Within the space of a few months at the end of 2009, we moved quickly from a shortage of space to a 80 per cent load factor and a drop of 20 per cent in freight rates on the Asia-Europe trade lane," Mr Tung said. He said the situation cannot endure and demonstrates why carriers "should be allowed to talk and exchange information on macro demand growth and other industry issues."

Mr Tung also pointed out that the rate volatility accompanying the recession was due to "simple supply-and-demand economics that might have been mitigated by better information sharing. Instead, we saw a serious threat to the industry's survival."

With the world fleet expected to grow by nine per cent in 2011 and 2012, and with 0.2 per cent of the tonnage afloat, Mr Tung said the industry is "not out of the woods yet, and the only way we can have a clear view of the future is to increase our information exchange on key industry issues."