August 07, 2018 Michael Angell
Global ports operator DP World made one of its largest acquisitions ever with a €660 million ($765 million) acquisition of Denmark’s Unifeeder Group.
Unifeeder, founded in 1977, operates small-scale containerships ferrying freight between Northern and Southern Europe, the Mediterranean and the Black Sea. The company provides cargo owners connections to nearly 100 international and regional ports with fully multimodal door-to-door solutions, combining seaborne transportation with road and/or rail.
Last year saw Unifeeder’s revenue hit €510 million with operating margins in line with other asset-light logistics operators. Private equity firm Nordic Capital has been the majority owner of Unifeeder since 2013.
DP World said the acquisition will be accretive to earnings in the first full year after completion. DP World plans to finance the acquisition, which will close in the fourth quarter, with cash on hand and available credit.
DP World says the Unifeeder acquisition will enhance its “presence in the global supply chain and broaden our product offering to our customers - the shipping lines and cargo owners – with a view to ultimately reduce inefficiencies and improve the competitiveness of global trade.”
Sultan Ahmed Bin Sulayem, chairman and chief executive of DP World, said the Unifeeder acquisition “supports our strategy to grow in complementary sectors, strengthen our product offering and play a wider role in the global supply chain as a trade enabler.
“The ever-growing deployment of ultra-large container vessels has made high-quality connectivity from hub terminals crucial for our customers and Unifeeder is a best-in-class logistics provider in this space with a strong reputation in Europe,” Bin Sulayem said.
Unifeeder chief executive Jesper Kristensen echoed the view that his company “will benefit from (DP World’s) significant expertise in the wider supply chain and excellent relationships with shipping lines and end cargo owners.
Since 2006, DP World has been on an aggressive acquisition spree, which now includes 78 marine and inland terminals in 78 countriesd. The Dubai-based company handled 70 million TEU (twenty-foot equivalent units) in container volume across our portfolio.
With its committed pipeline of developments and expansions, DP World has gross capacity of 88 million TEU which is expected to rise to more than 100 million TEU by 2020, in line with market demand.
DP World is the fifth largest owner and operator of ports worldwide, with an approximate 9% market share. China Cosco Shipping is the largest ports operator in the world at roughly 115 million TEU of capacity representing 12% of global capacity. Hong Kong’s Hutchison Port Holdings, APM Terminals and PSA Terminals are the next three largest ports operators.
Last year, the publicly listed DP World saw gross volumes rise 10% to 70.1 million TEU throughout its terminal system, with capacity utilization hitting 73.4%. Company-wide revenue hit $4.7 billion in 2017, a 13% rise over the previous year. But profit attributable to owners rose only 7% to $1.2 billion as operating margins were weaker.
August 07, 2018 John Kingston, executive editor
Expeditors International (NASDAQ: EXPD), a 3PL that specializes in ocean and air freight, recorded strong but not spectacular growth during the quarter, showing no signs of either a tariff-related slowdown or a surge to get freight across the ocean before a downtown.
In its quarterly earning report, Expeditors’ reported that total revenues were up 17% compared to the second quarter of 2017, and its net revenues were up 14%, with a rise in operating income of 9%. That trend shows significant growth but a tightening of margins.
The company’s airfreight volumes measured in kilos rose 4% overall, with a 1% jump in April followed by 6% increases in May and June. Ocean freight volumes were more volatile, with a 2% decline in April followed by a 5% gain in May. June numbers were flat for an overall increase of 1%.
Expeditors does not have a conference call with analysts in conjunction with its earnings release.
The three individual segments of Expeditors performed in significantly different ways. For example, the airfreight services division saw its revenues climb 19.3%. The customs brokerage and other services division jump 32.6%. But the ocean freight and ocean services group was basically flat, and the numbers were reported on a day when marine shipper A.P. Maersk cut its 2018 earnings forecast, citing higher fuel prices. (Though those higher prices would affect airfreight movement as well).
In the company’s prepared statement, President and CEO Jeffrey Musser conceded some tougher times in the ocean freight business. “We experienced strong performance in our ocean forwarding and order management businesses, but ocean freight net revenues were down 5% on a 1% increase in volumes, as carriers took steps to mitigate the impact of volatile pricing, excess capacity, and higher fuel costs,” he said.
In an analysis of the company published late last week, CFRA analyst Jim Corridore projected revenue growth under with what the company recorded in the quarter (17%, with an 18% growth for the first half). “After a 13% increase in 2017, we see gross revenues as likely to rise 15% in 2018 and 5% in 2019,” Corridore said.
Although there was downward movement in margins in the report, Corridore projected a higher number for the year. “We see the operating margin aided by growth in volumes, partly offset by higher ocean and air transportation costs, reflecting tighter air capacity and efforts to raise rates by ocean freight providers,” he said. “Over the longer term, ocean freight rates will likely decline as new capacity continues to come on line.”
Although Expeditors’ revenue and EPS were both above estimates, the shares sold off Tuesday. At approximately 2 p.m., Expeditors stock on NASDAQ was down $3.86 to $73.63, a drop of approximately 5%. It was one of the worst performing stocks on the day in the trucking and 3PL sector.
Sen. Corker interview: Trump ‘ready-fire-aim’ on tariffs
August 16, 2018 John Paul Hampstead
Yesterday, The Hill reported that Senator Bob Corker (R-TN) was reviving his tariff bill and seeking to attach it to the FAA reauthorization that must be passed by September 30. Sen. Corker’s bill would require that any tariffs imposed by the White House for national security purposes under Section 232—like those levied against Canada, Mexico, and the European Union’s steel and aluminum—be subject to congressional approval. This morning, Sen. Corker spoke to FreightWaves by phone about the uncertainty created by the White House’s improvisational approach to trade policy and delivered a warning to the Trump administration.
“I’m certain that currently [the Trump administration] doesn’t know itself what its end game is,” said Corker. “There are a lot of Republicans who want to see free trade take place. Obviously we want trade to be fair, and yes, there are some anomalies with China that need to be resolved. But [the Trump administration] really has gone about this in a ready-fire-aim kind of approach; they’re getting themselves deeper and deeper and deeper into it and these countries are understandably retaliating against what they’re doing,” Corker said.
“I’d say if you had a vote and people voted today, I’d guess there’d be 70 votes for our amendment or our bill depending on how we put it in,” Corker said. “The flip side of that,” he continued, “is that as the tariffs have been put in place, it’s more and more difficult and it creates a little more of a headwind on our bill because now we’re midstream. We haven’t prevented something and more and more things have been put in place since the amendment or the bill was offered.”
“Our hope is that the President will move away from what he’s doing,” said Corker. “Our bill has already had an effect on the administration—we had a procedural vote that we overwhelmingly passed and that was a wake up call to the administration. We’ve had a large number of senators tell the administration that if they continue to be unable to articulate where they’re going, ultimately the Corker amendment will pass.”
Corker also lamented the fall-out from the retaliatory tariffs that China levied against American agricultural products, including soybeans.
“We basically put in place a policy that sends farmers to the poorhouse, and then we create a bailout package to put them on welfare, and of course we borrow a good deal of that money from other countries. It’s really a perverse policy that’s been put in place, and the farmers in our country acknowledge it. They don’t like where they are,” said Corker.
Ultimately, Corker said, revenues and tariffs are under the jurisdiction of the U.S. Congress, which now needs to push back against a President who is trying to stretch the bounds of his authority.
“In order to allow the expeditious dealing of trade issues, there were a couple of trade acts passed: one in the 60s and one in 1974. Congress gave to the President some authority for them to be dealt with in a more efficient manner and under Section 232, they gave the President complete authority if it involves national security issues,” Corker explained. “When those were drafted, no one ever intended for it to be used in cases like this. I don’t think there’s anybody that would agree that the tariffs we’re putting on Europe, or Canada, or Mexico are because of national security reasons. It’s an abuse of authority, and I actually haven’t heard anyone disagree,” said Corker.
Abandoning the Trans-Pacific Partnership (TPP) was a “strategic blunder” according to Corker, because “that was a way for us to help put additional pressure on China. We had a whole trading bloc of people who were with us on TPP.”
Corker commented briefly on the trade war’s implications for transportation and logistics. “Generally speaking, once you disrupt supply chains and long term relationships as they relate to goods and supplies, people start looking elsewhere for those same materials. You look at soybeans right now—American agriculture is flying to other parts of the world, and once [China] goes to Brazil and other markets, it’s very unlikely that those markets are going to come back. I’d guess that the same thing is going to happen for many other goods.”
Walmart is facing a $50,000 fine for allowing trucks to park at one of its Illinois stores. The penalty came from the city of Springfield, which claims the store is not following the parking plan approved by the city when it was built.
The previously approved plan does not include truck parking, according to an article by The State Journal-Register. The local newspaper reported that city officials started asking the store to address safety concerns caused by the trucks, like blocked visibility, last April.
The fine was issued last week after Walmart failed to act on its proposed plans, like re-striping its parking lot to allow truck spots or placing barriers to prohibit trucks, according to the State Journal-Register article.
The article states that the city of Springfield is more interested in working with Walmart to find fix any problems than collecting the entire fine.
Walmart National Media Relations Senior Manager Casey Staheli told FreightWaves the store was working with the city to reach a resolution Tuesday.
“We’re still weighing all of our options and continuing to work with the city to reach solutions, until then, we are working within the regulations,” Staheli said.
While it is not uncommon for Walmart stores to allow overnight truck parking, it is banned at many of the stores across the country. Policies can vary because Walmart allows truck parking rules to be set on a store-by-store basis.
“It is store-by-store, as well as community-by-community,” Staheli said. “Sometimes communities have regulations or restrictions, and sometimes the owner of the property we lease might assert certain restrictions.”
He said Walmart supports truck drivers whenever possible, while also operating within community regulations and other restrictions, as necessary.
“We understand the importance of truckers, especially in our line of work, and we try to be as accommodating as possible,” Staheli said.
The problem with Walmart’s varying policies is the lack of predictability for drivers making a parking plan. One company, Trucker Path, has stepped in to help drivers figure out which locations are trucker-friendly and which are not.
The mobile app points drivers to legal parking facilities across the country, including rest areas, truck stops and yes, Walmart stores. It allows drivers to read reviews from those who parked before them, as well as leave reviews for those who will park after them.
Trucker Path Chief Business Officer Chris Oliver said the company called every Walmart in the U.S. and asked if the store was truck-friendly when the feature first launched.
Of about 5,400 stores, about 2,700 reported having truck parking. The company keeps the feature up-to-date by crowdsourcing information from drivers out on the road, according to Oliver.
“We are here for the sake of capturing information from truckers that we use to make their life easier and parking is big, big part of that,” Oliver said.
What are the most frequented cities for auto shipping? The answer is wherever the most people are living. Here are Royal Quality Logistics top 50 metropolitan statistical areas for car transport shipments:
1. New York, New York (NY)
2. Los Angeles, California (CA)
3. Chicago, Illinois (IL)
4. Washington – Baltimore – Arlington area (DC, VA)
5. San Francisco – Oakland – San Jose, California
6. Boston, Massachusetts (MA)
7. Philadelphia, Pennsylvania (PA)
8. Dallas – Fort Worth – Arlington, Texas (TX)
9. Miami – Fort Lauderdale – Port St. Lucie, Florida (FL)
10. Houston, Texas
11. Atlanta, Georgia (GA)
12. Detroit – Warren – Ann Arbor, Michigan (MI)
13. Seattle – Tacoma, Washington (WA)
14. Riverside – San Bernardino, California
15. Phoenix – Mesa – Scottsdale, Arizona (AZ)
16. Minneapolis – St. Paul, Minnesota (MN)
17. Cleveland – Akron – Canton, Ohio (OH)
18. Denver – Aurora, Colorado (CO)
19. San Diego, California
20. Portland, Oregon (OR)
21. Orlando – Daytona Beach, Florida
22. St. Louis, Missouri (MO)
23. Tampa – St. Petersburg – Clearwater, Florida
24. Pittsburgh, Pennsylvania
25. Sacramento, California
26. Charlotte, North Carolina (NC)
27. Kansas City, Missouri
28. Salt Lake City – Provo – Orem, Utah (UT)
29. Columbus, Ohio
30. Indianapolis, Indiana (IN)
31. Las Vegas – Henderson, Nevada (NV)
32. San Antonio, Texas
33. Cincinnati, Ohio
34. Milwaukee – Racine – Janesville, Wisconsin (WI)
35. Raleigh – Durham – Chapel Hill, North Carolina
36. Nashville – Davidson – Murfreesboro, Tennessee (TN)
37. Austin, Texas
38. Virginia Beach – Norfolk, Virginia
39. Greensboro – Winston-Salem, North Carolina
40. Providence, Rhode Island (RI)
41. Jacksonville, Florida
42. Hartford, Connecticut (CT)
43. Louisville, Kentucky (KY)
44. New Orleans – Metairie, Louisiana (LA)
45. Grand Rapids, Michigan
46. Greenville – Spartanburg, South Carolina (SC)
47. Memphis, Tennessee
48. Oklahoma City, Oklahoma (OK)
49. Birmingham, Alabama (AL)
50. Richmond, Virginia
Do not worry if your city or town is not in the top fifty U.S. cities for car shipping services. We have to cut it off somewhere and there are hundreds of big towns that just missed making the list. Basically, if your city is on or near a major highway and numbers in the tens of thousands, certainly hundreds of thousands, then there is an excellent chance that an auto transport driver somewhere is making his plans now to ship either to or from your area. No Worries!