Global Ports Forum

Greek Container Ports: An Engine
of Growth

www.nbg.gr/wps/wcm/connect/dd91476f-c573-49cc-abc5-9298c02e32a8/Container_Ports_2013.pdf?MOD=AJPERES

Piraeus Port poised to become Mediterranean’s No1 port

www.carbonpositive.net/media-centre/industry-updates/1343-piraeus-port-poised-to-become-mediterranean-s-no1-port.html

Greens slam privatisation of Newcastle Port

www.logisticsmagazine.com.au/news/greens-slam-privatisation-of-newcastle-port

Port Of Baltimore Seeks Boost From Panama Canal Expansion

www.npr.org/2013/05/06/180914866/port-of-baltimore-seeks-boost-from-panama-canal-expansion

Panama Canal’s growth prompt US ports to expand

www.nytimes.com/2012/08/21/us/us-ports-seek-to-lure-big-ships-after-panama-canal-expands.html?pagewanted=all&_r=2&

Widening the Panama Canal and the Future of Global Trade Mapping

www.brookings.edu/blogs/the-avenue/posts/2013/05/17-panama-canal-global-trade-tomer-kane

Port Authority Rating Cut One Level by Moody’s on Debt Load

mobile.bloomberg.com/news/2012-09-24/port-authority-rating-lowered-one-level-by-moody-s-on-debt-load.html

JPMorgan Chase & Co. (JPM), grappling with a $5.8 billion trading loss and a securities-industry slump, promoted Matt Zames to co-chief operating officer in a management shuffle that replaced the head of its investment bank.

Zames, 41, who was enlisted this year to staunch the loss in the firm’s chief investment office, will take the co-COO role alongside Frank Bisignano, the bank said yesterday in a statement. The overhaul catapults Zames, a former fixed-income trader, into the pool of potential successors to Chief Executive Officer Jamie Dimon. James “Jes” Staley, 55, who ran the investment bank, will relinquish daily operational duties as Mike Cavanagh and Daniel Pinto oversee an expanded version of the division.

Staley, once seen as a possible CEO candidate, was moved to a new post as chairman of a unit that combines the investment bank, treasury and securities services and the global corporate bank. Dimon, 56, said in an interview yesterday he hopes to continue leading the firm for “many, many more years,” and that the shuffle doesn’t indicate any immediate succession plans.

“Staley’s basically becoming a diplomat,” said David Hendler, an analyst at CreditSights Inc. in New York. “He’s working on the big picture issues, but the day-to-day activities seems to be gravitating to Cavanagh and Pinto.”

The overhaul combines several of JPMorgan’s units into two new divisions. In addition to the corporate and investment bank overseen by Cavanagh and Pinto, a combined consumer and community banking business will be led by Gordon Smith and Todd Maclin.

‘Normal Progression’

“I see this as a continued response to the embarrassment and the gaffe that was the last quarter,” said Michael Holland, chairman of New York-based Holland & Co., referring to the CIO losses. Holland, whose firm oversees more than $4 billion including shares of JPMorgan, said it was typical for Dimon to remake the management team, “which after all is the key to all of these successes and failures.”

Dimon said in the interview that the changes were part of “a normal progression,” and “had nothing to do with anything else,” including the CIO’s loss.

JPMorgan rose 3 percent to $36.89 yesterday in New York. The firm’s shares have climbed 11 percent this year, compared with a 17 percent gain for the 24-company KBW Bank Index.

The move comes as some finance leaders including former Citigroup Inc. CEO Sanford “Sandy” Weill call for the breakup of the biggest U.S. banks, which grew larger after the repeal of the Depression-era law that required companies backed by government insurance to be separate from investment banks.

‘New Leaders’

“JPMorgan and some other large institutions were ports of safety in the storm,” Dimon said, referring to the financial crisis. Breaking them up would make have made them riskier “because they’d be less diversified,” he said.

Staley will hand off “his current responsibilities to new leaders in the business,” JPMorgan said in the statement. Within the corporate and investment bank, Cavanagh, 46, will head the banking business, which includes investment banking, the global corporate bank and treasury services. Pinto, 49, will be the main contact for markets and investor services, which will include fixed income, equities, commodities, prime services and securities clearing.

Dimon said Staley played a role in the decision to change his responsibilities. “Jes himself would always say ‘When the time comes that it’s time to promote some great new talent, then I should move up,’” Dimon said in the interview.

Reporting Lines

Zames will still be in charge of the CIO, the firm said. Bisignano, 52, who was appointed to run mortgage banking last year, will hand off that responsibility to Smith, who will become sole CEO of consumer and community banking by the end of next year as Maclin assumes the role of the unit’s chairman.

Chief Financial Officer Doug Braunstein, 51, who previously reported to Dimon, will report to Zames, Dimon said yesterday in a memo to employees, a copy of which was obtained by Bloomberg News. Barry Zubrow, 59, who runs corporate and regulatory affairs, will also report to Zames instead of Dimon, according to the memo.

“It’s a promotion for Matt Zames,” Dimon said in the interview.

Dimon said the heads of businesses such as the corporate and investment bank will report directly to him, rather than to Zames and Bisignano.

Asset management and commercial banking will remain separate from the other units. Mary Erdoes, 44, will continue to run asset management, and Douglas Petno will remain as head the commercial bank.

Botched Trades

JPMorgan is grappling with a trading loss spurred by bets on synthetic credit. The loss, which was disclosed May 10 after it surpassed $2 billion, had grown to $5.8 billion by the end of the second quarter. The botched trades led to the retirement of former Chief Investment Officer Ina Drew, 55, and the shutdown of the London-based team that built the position.

Regulators, investors, analysts and lawmakers have called for the break-up of too-big-to-fail banks to unlock shareholder value and prevent another financial crisis. JPMorgan’s trading loss gave ammunition to those who favor stricter bank regulation, including supporters of the Volcker rule, which would bar most proprietary trading by deposit-taking institutions.

JPMorgan needs to “ensure that we comply with all new regulatory requirements, which will have a significant impact on global markets, products and services,” Dimon, who has fought the Volcker rule, said in the memo.

‘Ridiculous Concept’

Bank of America Corp., the second-biggest U.S. lender by assets, also reorganized earlier this year, dividing the firm into consumer and institutional businesses and naming a pair of co-COOs to manage them. David Darnell heads the Charlotte, North Carolina-based bank’s consumer and business banking division, and Thomas K. Montag, 55, runs trading and investment banking.

“We believe this could help fuel the speculation that some of the larger banks may look to more formally separate their consumer and investment banking operations,” Jason Goldberg, an analyst at Barclays Plc who has an overweight rating on the shares, said yesterday in a note.

If a bank breakup occurs, it will result from shareholder pressure and will happen slowly over time, said Paul Miller, an analyst at FBR Capital Markets Corp. in Arlington, Virginia, who has a market perform rating on JPMorgan shares.

“My guess is the mindset of Jamie and the rest of the senior management team of JPMorgan is, that’s a ridiculous concept,” Miller said. “I think it’s going to eventually happen, I think it’s going to happen against a lot of these wills, and Jamie might not be there when it happens.”

Hedging Risks

Zames shook up the CIO’s leadership after taking over the unit and announced a “renewed focus” on hedging risks. JPMorgan hired Zames from Credit Suisse First Boston in 2004 to run trading in Treasuries, agencies and interest-rate swaps and options.

In 2009, Zames and Pinto were picked to run fixed income after Staley took over the firm’s investment bank from William Winters and Steven Black. Under Zames and Pinto, JPMorgan has become the top bank globally in fixed-income trading. The firm’s 17 percent market share in 2011 was a record for Wall Street, Staley told shareholders earlier this year.

“Matt has done an exceptional job overseeing our global fixed-income business, and more recently, jumping in to skillfully help us deal with the difficult CIO issue,” Dimon said in the memo. “We are fortunate to be able to leverage his skills and counsel across the entire firm.”

Led Investigation

Bisignano has been JPMorgan’s chief administrative officer since 2005, when he left Citigroup, where he ran global transaction services, to rejoin Dimon. Bisignano worked at Smith Barney in the late 1990s. At JPMorgan, Bisignano took on the additional role in February 2011 as head of Chase Home Lending. JPMorgan praised his work there, saying he led “the highly successful transformation of mortgage banking.”

Cavanagh, who will run the corporate and investment bank with Pinto, led JPMorgan’s internal investigation into the trading loss and previously ran treasury and securities services. A longtime Dimon loyalist, Cavanagh was hired by the firm’s chief at Salomon Smith Barney in 1993 and then again in 2000 at Bank One Corp., which merged with JPMorgan in 2004.

“The same clients that I’ve been calling on in my old job will be the same clients I’m calling on in the new job,” Cavanagh said yesterday in an interview, referring to the customers of the units he oversaw.

‘Go-To Guy’

Holland of Holland & Co. said Cavanagh is “the one name consistently that keeps coming up as a go-to guy.”

“The change, particularly bringing on the younger people, is an important part of continuing to strengthen the management team,” Holland said. “As a shareholder, I’m pleased with the continuation here.”

Staley has worked at JPMorgan since 1979, including an eight-year stint as head of the bank’s money-management division. He became head of the investment bank in September 2009 when Dimon announced that Winters and Black, the division’s co-heads, would step aside after leading the bank through the 2008 financial crisis. Winters departed immediately, surprising analysts who had viewed him as a potential successor to Dimon. Black, 60, was named executive chairman and left the firm in early 2011.

Risk Controls

In the late 2000s, Staley was among executives — along with Winters and Black — who questioned Dimon on why risk controls inside the CIO weren’t as extensive or robust as in other departments, according to people who participated in or witnessed the conversations. Staley told Fortune magazine in April 2010 that he considered himself a contender to succeed Dimon.

“If Jamie doesn’t leave, then I probably need to leave myself in a few years,” Staley added.

JPMorgan hired Smith to run its Chase card services group in 2007. He was previously president of the global commercial card unit at American Express Co. (AXP), where he had worked for more than 25 years.

To contact the reporters on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net; Bradley Keoun in New York at bkeoun@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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Obama: Fast track deepening of Savannah, Charleston harbors
Posted: July 19, 2012 – 9:42am

By Mary Carr Mayle
Savannah Morning News
The planned Expansion of the Savannah Harbor got a major shot in the arm late Wednesday when the Obama Administration announced it would expedite the project, with all federal reviews completed and a Record of Decision coming no later than November.
As part of his “We Can’t Wait” initiative, the president listed seven “nationally and regionally significant infrastructure projects” at five major ports, promising to put each on a fast track designed to save time and drive better outcomes for local communities.
The initiative is part of a Presidential Executive Order issued in March charging the Office of Management and Budget with overseeing a government-wide effort to make the permitting and review process for infrastructure projects more efficient and effective.
“President Obama is committed to improving federal permitting and reviews to ensure that smart infrastructure projects like the Port of Savannah can move as quickly as possible through the decision making process, boosting job growth and strengthening the economy,” Jeffrey Zients, acting director of the Office of Management and Budget, said Wednesday.
“By working more efficiently in a coordinated fashion across the federal government and putting in place aggressive schedules and accountability systems, we are committing to accelerate the final steps of this review for the Port of Savannah project.”
Georgia Ports Authority Executive Director Curtis Foltz said he was delighted with the announcement.
“To have the President of the United States acknowledge the importance of the Port of Savannah — its infrastructure improvement needs and the role it plays in the economic recovery of the Southeast — is significant,” Foltz said.
The Savannah Harbor Expansion Project, which will deepen the Savannah River channel in anticipation of larger container ships calling on the port after the completion of the Panama Canal expansion in 2014, has been in the works for more than a dozen years.
“The (U.S. Army) Corps of Engineers has completed a feasibility report that examined the benefits and costs of deepening the existing channel at Savannah Harbor from its current depth of 42 feet to a depth of 47 feet,” the White House said in its release.
“The proposed project would enable the Port of Savannah to accommodate larger cargo vessels and other ships, ultimately facilitating more efficient movement of goods. The study involved a multi-year collaborative effort with the Environmental Protection Agency, the Department of Interior and the Department of Commerce, all of whom must also approve the final report.
“As a result of this collaboration, the project includes an extensive mitigation plan, which is an integral part of the recommended improvements and are intended to restore, preserve, and adaptively manage the surrounding ecosystem, which includes the Savannah National Wildlife Refuge.”
The Obama Administration also announced the establishment of a White House-led Navigation Task Force that will consist of senior officials from various White House offices, the Army Corps of Engineers, and the Departments of Transportation, Commerce, Homeland Security, and the Treasury. The Task Force will develop a Federal strategy and coordinated decision-making principles that focus on the economic return of investments into coastal ports and related infrastructure to support the movement of commerce throughout the nation.
Improvements at the ports of Miami, New York/New Jersey, Jacksonville, Fla., and Charleston, S.C. also will be expedited, the White House said.
According to the Post and Courier in Charleston, the administration pledged that all federal reviews of the Charleston Harbor deepening plan will be completed by September 2015, nine months earlier than the shortened time line announced just a week ago by the Corps of Engineers.
The new study deadline, combined with project-shortening measures announced last week by the Corps, means the harbor could potentially be deepened by 2019, five years earlier than once estimated.
Charleston is pursuing a plan to dredge its harbor from 45 to 50 feet or more.
At the Port of Jacksonville, the administration announced the fast-tracking of two projects — the first to finalize the federal feasibility study examining the costs and benefits of deepening the harbor and the second to expedite the permitting of the port’s proposed intermodal container facility.
Both projects will be completed by July of 2013, the White House said.

Bank Retreat on Shipping Seen Filled by Private Equity
By Niklas Magnusson
May 22, 2012 6:00 PM EDT

The world’s shipping companies are turning to private equity to help fill a $249 billion funding gap left by European banks pulling out of ship financing.
About $65 billion is needed in new debt and equity this year alone to cover orders for new ships and sales and purchases of existing vessels, according to shipping fund manager Tufton Oceanic Ltd. In 2013 and 2014, the gap will be $101 billion and $83 billion respectively, managing director Andrew Hampson said in a Jan. 26 presentation in London.
Triton Partners and Oaktree Capital Group LLC, in anticipation of a future turnaround, are among private equity firms striking funding deals with shipping companies after European banks quit lending to the industry or scaled back operations. Insufficient financing may lead to a rise in insolvencies, causing higher credit losses at shipping banks already hurt by the crisis in the maritime transport industry and tighter capital rules for lenders.
“Capital will be scarce over the next couple of years, and that is a gap that needs to be bridged,” said Hans Christian Kjelsrud, head of shipping at Nordea Bank AB (NDA), the world’s No. 4 shipping lender. “Private equity funds want to position themselves for an upturn and a better market in a year or two.”
Germany’s HSH Nordbank AG and Commerzbank (CBK) AG, the world’s No. 1 and No. 3 ship financiers, respectively, are cutting the size of their shipping portfolios amid the industry crisis. In the first quarter, more than half of Commerzbank’s loan-loss provisions of 212 million euros ($270 million) were booked at its ship-finance unit. Provisions probably will rise this year, according to a May 9 conference call with the bank’s management. The lender’s shares are down 52 percent in the past 12 months.
Chemical Tankers
Triton Partners, an investment firm managing more than 4 billion euros, in March acquired the chemical tanker operations of Nordic Shipholding A/S (DTQ) for $30 million. Triton is now combining the activities with those of Herning Shipping A/S, which it acquired in August last year, to create a fleet of 122 chemical-product tankers under the name Nordic Tankers.
Triton, which has an investment horizon of as much as 10 years, estimates that it needs five to seven years to improve Nordic Tankers, Bjoern Nilsson, a partner at Triton, said in a phone interview from London. The firm targets a return of about 25 percent, similar to other private equity firms, he said.
“The dynamics in terms of supply and demand within the smaller chemical tanker segment were attractive, as demand is seemingly improving whereas the supply of ships is more limited than in other segments,” Nilsson said. “The small tanker segment is in need of consolidation as it is very fragmented.”
Crude Oil
Oaktree on November 17 agreed to invest $175 million in General Maritime Corp., owner of 30 crude oil and petroleum product tankers, and convert its senior secured debt into equity, as part of the shipping company’s restructuring.
Still, private equity investing in shipping has been slow to take off, partly because of a lack of knowledge and because there have been attractive deals elsewhere, Nilsson said.
“In many cases private equity funds know little about shipping but a lot about the structuring of financial deals and high returns of investments,” said Peter Sand, an analyst at the Bagsvaerd, Denmark-based Baltic and International Maritime Council, which represents 65 percent of the world’s ship owners.
They are being lured by a decline in ship valuations. The value of a new so-called VLCC, or very large crude carrier, dropped 44 percent to $90 million between 2008 and 2012, while the value of a five-year-old VLCC decreased 61 percent to $65 million in the same period, according to Norway’s DNB ASA (DNB), the world’s second-largest shipping financier.
Loan Losses
The slump in asset values has caused insolvencies among ship companies and an increase in loan losses at banks, after the decline made shipping loans a larger fraction of the value of the ship used as collateral. That caused many banks to raise interest rates on loans, leaving many smaller and medium-sized shipping lines unable to service their debt.
Net shipping loan losses at Stockholm-based Nordea, the world’s No. 4 shipping lender, tripled to 135 million euros last year because of “weak market conditions” and “a general decline in vessel values,” it said on Jan. 24. Loan losses more than quadrupled to 60 million euros in the first quarter of 2012, from 14 million euros a year earlier.
Any failure to bridge the financing gap is likely to further depress ship values, according to a presentation on Greek ship finance investment boutique Eurofin SA’s website. It will also leave even “top drawer” shipping lines struggling to renew and modernize their fleets, meaning older, unsafe vessels will continue operating beyond safe operating limits, it said.
Capital Adequacy
“Capital adequacy pressures on banks may mean they cannot continue to support owners through the cycle,” Eurofin said in the presentation. “More distressed, unfunded assets will increase and prolong downward pressure on ship values.”
In a survey by KPMG of German shipping firms representing 42 percent of vessels in the country’s fleet and published on May 3, about 17 percent of respondents said private equity would have “high” relevance as a financing model in the future, while 56 percent said it would have “medium” significance.
American private equity firms have showed interest in the container shipping industry in Germany, home to the world’s largest container fleet, KPMG said in its survey. Still, the prospect of “this alternative financing for German shipping companies may prove difficult to realize given the requirement for yields of up to 15 percent,” it said.
Rock Bottom?
Investments may also fail because investors are demanding too much of a discount. While KfW IPEX-Bank GmbH, the world’s No. 7 shipping lender, has been contacted by investors who want to buy ships, they are looking to pay “rock-bottom prices,” below the market value of the ships, said Christian K. Murach, head of transportation finance at the Frankfurt-based bank.
While lenders such as KfW, Nordea and ING Groep NV (INGA) have said they plan to keep the size of their shipping portfolios relatively intact, other European banks are scaling back their ship-finance operations.
Hamburg-based HSH Nordbank is cutting the size of its so- called core shipping portfolio to 15 billion euros by 2014 compared with 19 billion euros at the end of 2011 to comply with conditions set by the European Union for approval of state aid it received during the global financial crisis. Frankfurt-based Commerzbank reduced the size of its so-called shipping exposure at default by 6.6 percent to 21.2 billion euros last year.
“There definitely is a shift away from bank lending,” Rory Hussey, managing director at ING’s shipping finance division, which also plans to continue lending to the shipping industry, said in an interview. “Private equity will play far more of a part than it used to, as will the bond market.”
Triton’s most recent fund, Triton III, has 60 investors and capital of 2.4 billion euros. It plans to make more investments in shipping — seeing potential transactions also in container, oil tanker and dry bulk markets — as well as in consumer, industrial and business services companies, Nilsson said.
“Valuations are attractive from an historical point of view,” Nilsson said. “Our perspective is to bridge the funding gap a little.”
To contact the reporter on this story: Niklas Magnusson in Hamburg at nmagnusson1@bloomberg.net
To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net
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