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Jan.9, 2017

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70 THE JOURNAL OF COMMERCE www.joc.com JANUARY 9.2017 2017 ANNUAL REVIEW & OUTLOOK MARITIME EXECUTIVE COMMENTARY Aa AMA CAPITAL PARTNERS; SEASPAN PETER S. SHAERF Managing Director; Deputy Chairman www.amausa.com www.seaspancorp.com MUCH OF 2017 will be spent digesting the enormous impact of the collapse of Hanjin Shipping. Just under 100 container ships were thrown into an already soft mar- ket, and the challenge of absorbing such a capacity increase is overwhelm- ing. The only way to get to a capacity balance is to increase demand and reduce supply, and in the case of the Hanjin fleet, that means a rapid step up in scrapping. Hanjin itself in 2014 and 2015 had scrapped more than 15 of its large (4,000-TEU) ships, but now returning the ships to the owners has forced the owners to confront the reali - ties of the market. The weakness of the market might best be exemplified by the scrapping of a 4,500-TEU ship of just seven years vintage as it came free from Hanjin. A $60 million investment in 2009 is fetching about $6 million in scrap, just seven years later. The next step in capacity reduction will come in the form of global consolida - tion. Maersk's move to buy Hamburg Sud, CMA CGM's acquisition of NOL , Hapag-Lloyd's merger with United Arab Shipping Co., and the merger of the three Japanese liner giants — NYK Line, MOL, and "K" Line — all point to a rationaliza - tion of capacity. This trend may well continue, and we will be ultimately left with a small cadre of mega-carriers. Liner companies though cannot sustain the current level of losses — a $3 billion industrywide loss in 2016 — so, ultimately, freight rates will have to increase in spite of the oversupply. Out of ashes, phoenixes rise, so there will be many sitting on the side - lines waiting to take advantage of this very distressed situation, and this will manifest itself most likely in the strong companies acquiring distressed tonnage at bargain prices. We can only hope that the players are smart enough not to rush to the shipyards and order newer and bigger ships ... at least not yet. AMERICAN ASSOCIATION OF PORT AUTHORITIES KURT NAGLE President and CEO www.aapa-ports.org INVESTING UP TO $1 trillion in US infrastructure is central to the Trump administration's goal of building a better economic future for America. Strategic investments in freight-related transportation assets are also among the top priorities for America's ports. In mid-November, we sent President-elect Trump's transition team the US port industry's policy recommendations, which include land- and water-side transportation infrastructure investments, along with recommendations for port security and environmental enhancement programs. The AAPA's policy document includes ways to relieve traffic bottle - necks and expand freight-handling capacity, modernize and fully maintain the nation's federal navigation chan- nels, provide tax fairness and equity, secure America's ports and water-side borders, and help protect the environ- ment and build resilience. With regard to improving the freight-handling capacity of US road- ways, railways and waterways, with particular emphasis on connections with US seaports, the AAPA recommends: •  Providing additional FAST Act  investments and a sustainable freight  trust fund to plan and build multi - modal projects.  •  Establishing a properly funded  and staffed Office of Multimodal  Freight Transportation within the  US Department of Transportation's  Office of the Secretary.  •  Supporting funding for a robust  StrongPorts program under the Depart - ment of Transportation's Maritime  Administration to help ports plan for  their 21st century infrastructure needs.  •  Increasing investments for autho - rized marine highway projects to  ensure transportation alternatives  alongside congested landside trans- portation corridors. •  Increasing funding for transporta- tion infrastructure grants to $1.25  billion per year. America's seaport activity accounts for over a quarter of the national econ- omy and supports more than 23 million US jobs. Local ports and their private- sector partners plan to invest nearly $155 billion into infrastructure over the next five years. Leveraging federal invest- ments in seaport and freight-related programs will yield huge dividends in the form of economic growth, main- taining and creating jobs, enhancing America's international competitiveness and sustaining a healthy environment. ARGOSY TRANSPORTATION GROUP RIDER GRISWOLD President and Founder www.argosytg.com AS I LOOK back at 2016 and the local developments in Houston because of the drop in oil prices, and the confi- dence in general about the economy, it is very hard to predict what will be the most critical aspects for barge operating and barge fleeting for 2017. The biggest concern is the impact of continued lower oil prices on the oil field service sector as it is the consumer of transportation and logistics services. Having a new administration may help bring back offshore drilling and create a need for services from the marine sec - tor, as well as a possible infrastructure investment from the public sector. A rebound in offshore drilling is very uncertain due to the actual demand for oil during this period, and the investment requirements of the oil companies. A major infrastructure bill from the federal government will not be fast nor have a major impact in 2017. But if it is passed, it will impact the country for many years to come, depending on the scope of the bill; again, great uncertainty. Regulatory issues are impacting our industry everyday with some posi - tives and negatives, depending on what side of the agenda your company is on. In the case of fleeting areas in Houston, we see an increase of regulatory over- sight by both the US Coast Guard and US Army Corp of Engineers. There is a growing need for barge fleeting, but developing the commercial aspects of this business can be very slow while working through the regulations. To improve this, greater awareness by the regulators of commerce would be a good place to start. The decline of global trade growth is an indicator that there is an increased focus on domestic economies worldwide, ex. Brexit. Knowing that this will con - tinue to impact the transportation and logistics industry, not only worldwide but locally, my outlook for 2017 is one of caution and careful consideration of opportunities in the next 18 months. Cc CARGOSMART STEVE SIU CEO www.cargosmart.com WE ARE NOW in the age of the digital economy. Computing power costs have America's seaport activity  accounts for over a quarter  of the national economy and  supports more than    23 million US jobs. 

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