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04/10/2018

Contributions from Nctm Offices Around the World
Shipping & Transport Bulletin October-November 2018

Maritime Holdings and Zeabron acquire Zeamarine

The purchase by Maritime Holdings of the US and Gemany’s Zeaborn Chartering Management of Zeamarine of Germany has been approved by the EU Commission in mid-August within the terms of the EU’s Merger Control Regulation. The Commission approval is based on the idea that Zeamarine will be active in active in general cargo shipping on multi-purpose vessels while Maritime Holdings provides ocean transportation services and Zeaborn is an ocean shipping group. Considering the different markets, the Commission considered that the concentration would not limit competition.

Shipping on the Danube as it flows through Romania

The EU has agreed to provide Romania with €59 million to modernise shipping routes along the river Danule. The monies have been allocated out of the EU’s Cohesion Fund (a fund that the UK may have to pay into after Brexit like Switzerland and Norway do today). The object of the investment is to increase river traffic by 50%. The money will be invested in improved navigation safety and flood prevention particularly by modernising two floodgates on the sections linking the Danube to the Black Sea.

Trump and Juncker want more LNG trade

Commission President Jean Claude Juncker promised that EU Member States would import more LNG from the US so as to balance out the value in trade between the EU and the US. What is not clear how this is to be achieved. Juncker said that the EU would build more LNG ports but did not say where or when. Prior to the meeting discussions were afoot to make funding available for private projects in Croatia, Greece, Cyprus, Ireland, Sweden and Poland. In a subsequent meeting with Italian prime minister Conte, Trump boasted that the EU would build up to 11 ports that ‘they will pay for’. Croatia, Greece, Cyprus and Ireland are marginal markets and are not expected to take much LNG, even if they are built. There is idle LNG capacity in the EU. One problem that has not been addressed is the transport from the port to the point of use. This is a different and more difficult type of infrastructure development. The reality is that Russian gas is still cheaper than LNG.

And more on LNG

The Commission approved the acquisition of EDF’s LNG trading arm in the UK by JERA trading of Singapore. JERA is already active in coal and freight trading in general and so the Commission did not see an overlap between the markets concerned. The UK was able to avoid a gas supply crisis in March 2018 by taking in more LNG and getting piped gas from the Continent within the framework of the EU’s single energy market. The question is whether a similar ad hoc solution will be possible after Brexit. The UK is heavily dependent on gas after the decline of coal in the 1970s and 1980s. 80% of households use gas for heating and more than 40% of electricity is gas generated. The question now being addressed by academics and regulators is whether this flexibility will be possible after Brexit. It is one more Brexit issue that is not clear.

A no deal Brexit?

The chances of a no deal Brexit are slim. What is likely to happen is that both sides will stay tough till the last minute and then agree to extend the status quo for a period longer than the 2020 period suggested by the UK government. Does this mean there will be no transport crisis. Not at all. It just means that the impact of the crisis will be postponed till further down the road.
The presentation of the problem by the press in terms of no deal, hard or soft Brexit disguises the basic fact that whatever happens the EU and the UK will be separate customs areas which will require rules for goods and services to cross between them. Those rules can be light or strict, but they will be needed. It is only once the strictness or lightness is known that the different administrations and logistics enterprises will be able to determine what needs to be done to keep trade flowing at a reasonable pace. So, we all wait.

 

 

 

This article is for information purposes only and is not intended as a professional opinion. For further information, please contact Bernard O’Connor.

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