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MALAYSIAN NEWS UPDATE

MSC becomes first to end Iran service as US re-imposes sanctions reported.

HIGHER freight and shipping expenses are cutting into shippers' profits including those of Hasbro, Kellogg, Mondelez, Coke and Monster, and such rising costs are likely to be passed on to consumers. Some of the higher costs, which will likely to be passed on to consumers, can be attributed to the shortage of qualified truck drivers in a tight labour market, reported CNN Money. "There are more attractive options out there for potential truck drivers in a strong economy," said PNC Financial economist Gus Faucher. "It's difficult to find new workers to expand." Some 70 per cent of goods in the United States hit the highway at some point before they reach your home, according to the American Trucking Associations. Companies paid six per cent more for trucking in April than a year ago, the fastest growth in almost seven years, according to the US Labour Department. Tyson Foods CEO Tom Hayes said his BUOYANT demand for cellular tonnage and a low lay-up rates provide little incentive to slow the addition of 225,000 TEU in next few weeks to Asia-Europe trade lanes, according Paris-based research house Alphaliner. There had been earlier predictions that 400,000 TEU of the 1.4 million TEU to be delivered this year would be deferred to 2019 as has been the usual practice in recent years. But Alphaliner no longer sees it that way. "Unlike in previous years, when some owners sought to defer ship deliveries due to poor vessel earnings. But that is no longer so." Happing-Lloyd and others say their ships are "running full and the number of MEDITERRANEAN Shipping Co (MSC} has become the first major container shipping line to announce plans to shelve direct services into Iran as the US gears up to re-impose sanctions, its decision to withdraw from the Iran nuclear deal. A s t a t eme n t f r om MS C s a i d : " I n consideration of the impending US withdrawal from the JCPOA [joint comprehensive plan of action] and corresponding re-enlargement of its sanctions programme, we regret to inform you that MSC is ceasing to provide access to services to and from Iran," London's Loadstar

Donald Trump announced the US would re-impose sanctions in three-to-six months. US officials have confirmed that the sanctions regime would apply to non-US firms with operations in the country or using its banking system. Iran's national shipping line, IRISL, was also singled out by the US and will be subject to sanctions following the 180-day wind-down period, leaving in doubt a newbuild order it placed with South Korean shipbuilder Hyundai Heavy Industries for four 14,500-TEU containerships in late 2016.

The company outlined a wind-down period, saying it will do its best to collaborate to conclude this period with the minimum disruption and unnecessary inconvenience. "While MSC is not accepting bookings for shipments originating from Iran, or destined to Iran, we will continue to carry certain legally acceptable cargoes during the wind-down period, notably for importation of foodstuffs," it said. The ability of other ocean liners to continue serving Iran is now in question after President

Few delivery delays to stop flood of new Asia-Europe mega ships containerships in lay-up is now just 80, or one per cent of the total global fleet, bringing scrapping to a near halt. Alliance, plus the last two of Maersk's 20,500 TEU EEE-Mark 11 ships to be delivered shortly, will already add 346,000 TEU to the global fleet before the end of the year," said Alphaliner.

Now Alphaliner fears pressure on the shipping market a flood of 10,000-TEUers - totalling 750,000 TEU - come into service from May to December. Alphaliner also notes that Casco’s seven remaining 19,000-21,000 Tenures, to be delivered in October, will be put into Ocean Alliance NE3 Asia service to North Europe. Cosco alliance partners, Evergreen and CMA CGM, are expected to receive six and two 20,000-21,000 TEUers this year. "These 15 ULCV newbuildings for the Ocean

Said SeaIntel CEO Alan Murphy: "The Asia-Europe trade is seeing a vast amount of newbuildings, but the carriers have managed to balance Asia-Europe supply to a reasonable degree. "The carriers should be able to blank sailings to match a weak demand environment on Asia-Europe over the peak season, while also having enough capacity buffer if demand growth is stronger than expected," Mr Murphy said.

Truck driver shortage in United States raises costs for shippers company anticipates an additional US$250 million in shipping expenses this year. The company took early steps to blunt the impact but still expects to pass some of the costs on to consumers. drivers in the country, the industry group says. And finding new truckers is proving difficult: overall unemployment is the lowest since 2000. An aging trucker population, low wages, and a new federal safety regulation that restricts hours on the road have contributed to the squeeze, analysts say.

"Product prices must reflect the true cost because we cannot subsidise the increased freight," he said. One hundred and forty-eight companies in the S&P 500 have mentioned "freight," "shipping," or "trucking" on their earnings calls during the last four months - double the number from a year ago, financial research platform Sentieo found. Thousands of truckers lost their jobs during the recession a decade ago, but the industry bounced back during the recovery, Mr Faucher said. Trucking companies hired easily and gas stayed cheap, which kept costs from spiralling. But those costs have soared since late 2016 as hiring for long haul, 18-wheel drivers has stalled. There are only around 500,000 of these

Without an influx of new drivers, the industry group predicts it will be 63,000 drivers short by the end of the year. To attract new truckers, businesses are increasing pay and benefits, further raising shipping rates. Congress is also considering lowering the interstate truck driving age to 18 from 21. The cost per mile in the spot market is 29 per cent higher than a year ago, according to DAT Solutions. The longer-term contract rates that big suppliers negotiate with major carriers usually follow the spot market, which means freight costs should stay high in coming months. Contract rates are up 15 per cent this year.