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Families of the Pakistan cargo crash call for international assistance to find black boxes
Families of the five crew aboard a Boeing 737 cargo aircraft that crashed in the Arabian Sea near Pakistan last week are urging a global search to locate the flight recorders and determine the cause. The debris from the K2 Airways cargo plane was recovered shortly after the crash on July 7, but the depth of the water is approximately 3,000 meters (9,800 feet). Aviation experts who are familiar with deep-water crashes like Air France 447, in 2009, say that finding the "black boxes", would require an expensive underwater search. They may also need foreign assistance. The locator beacons of the plane, which is 27 years old, were only designed to send pings for 30 days. The recovery of the recorders may reveal if a navigation issue reported just before the crash is linked to a component that was replaced by relatives before the flight. Pakistan has not provided a public update for the last week. An industrial company that specializes in underwater search told them they had never heard from Pakistan about requests for help?from foreign companies and navies. Yashib Rizwan is the oldest son of Captain Rizwan. He said, "We need to continue our search and use all resources available, both locally and internationally." For us, a transparent investigation is essential. Abdur Rafay Siddiqui is the son of engineer Muhammad Arif Siddiqui. He has also requested international assistance, if necessary. After losing hope that the bodies will be recovered, both families held funeral prayers. The Pakistani government hasn't responded to questions about whether or not it would seek outside assistance to find the plane. K2, the company that lost its sole plane in the crash has not responded to any requests for comment. NAVIGATIONAL SYSTEM ISSUE Pakistan's airports authorities said that the pilots reported an issue with their navigational system at 9:18 pm Pakistan time, while flying from Sharjah to Karachi in the United Arab Emirates. The authority reported that local air traffic control attempted to guide the plane, but after three minutes, radar systems showed it descending quickly and communication had been lost. Flightradar24 showed that the plane plummeted about 5,000 feet within a minute. It then climbed about 6,500 feet in just 30 seconds, before entering a catastrophic dive at 36,550 feet. Ghulam Jatoi, the father-in law of the co-pilot, Faisal, revealed that the plane stayed in Sharjah for about 10 days before taking off while the pilots awaited the arrival of a replacement component from the U.S. Yashib Rizwan, son of the captain, said that one of the two inertial references units (IRUs) which feeds information about the aircraft's speed, position and orientation to cockpit displays was replaced in Sharjah. John Goglia said that if you are having a problem with your IRU you can't depend on the instruments. He added that pilots flying at night over oceans without visual references may have difficulty determining the orientation of the aircraft. It is unclear whether the IRU replacement was related to the crash. In the Adam Air crash of 2007, the inertial reference systems malfunctioned. The pilots were fixated on resolving erroneous data, and failed to notice the steep right bank. They lost control, the plane plunged into sea, killing the 102 passengers. The U.S. Navy assisted in the search for the black boxes of the Adam Air aircraft about three weeks following the crash. However, recovering the recorders after a month-long, multimillion-dollar operation using a remotely operated vehicle took months. Todd Curtis, a U.S. aviation specialist, said in the podcast "Flight Safety Detectives," that Pakistan would not mount a similar operation unless it had a compelling cause. The K2 aircraft was an old cargo jet and not a passenger model currently being produced. (Reporting from Akhtar Shahid and Ariba Shehid in Karachi, Additional reporting by Allison Lampert and Dan Catchpole in Seattle and Shilpa jamkhandikar in Montreal; Writing and editing by Jamie Freed.)
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Farnborough Airshow shifts focus to weapons and wars from jets
As security threats spiral, defence is expected to be at the forefront of Britain's Farnborough Airshow. Aerospace and arms makers are struggling to keep up with demand for weapons and cement a fragile recovery in civil jet and engine production. The Ukraine war is in its fifth year, and the Gulf ceasefire has been shattered. These risks are likely to push the annual competition between Boeing and Airbus over commercial jet orders in the July 20-24 trade show down the pecking-order. Air Chief Marshall Harv Smyth of the Royal Air Force told the International Air Chiefs Conference before the show that the global security environment was more volatile and complex than it had been in decades. We are also witnessing security threats evolving at an alarming rate. The biggest increase in European defence expenditure since the Cold War is witnessed by weapons makers at their biennial trade show, but there are still unanswered questions regarding where and how the money will be spent. Industry leaders say that drones and AI-powered software targeting systems could disrupt the defence industry, much like SpaceX did with the launch business. The wars in Ukraine and Iran have exposed the need for mass-produced and faster-developed systems. Tom Enders is the president of German Council on Foreign Relations, and also co-chair of German defence startup Helsing. "They spend their money." The procurement agencies and the armed forces are increasingly aware that this is the best way to create a dynamic, fast-moving sector," said Enders. He was the former CEO of Airbus who now chairs the tank manufacturer KNDS. While new budgeted funding will be spent on today's warplanes such as the Lockheed Martin F-35 or the Eurofighter, both of which are performing displays next year, startups like Helsing in the U.S. and Anduril in the U.K. are pushing AI-driven system like uncrewed pilot cohorts despite initial setbacks. Capital Alpha's managing partner, Byron Callan said that "values are tilting towards defence entrants" but most militaries still spend a large amount of resources on manned platform. The organizers said that defence companies will make up half of the 1,600 exhibitors, a record number, compared to 40% in the past. AI, deep tech and finance companies have also seen a significant increase. COMMERCIAL JET SALES, SUPPLY CHAINS Airbus and Boeing will announce commercially new orders, and reveal the customers behind previous deals. The usual flurry announcements will likely attract less attention, as investors are more focused on aircraft deliveries where manufacturers make the most profits. Although air shows are still capable of delivering surprises, industry sources say that the total number of aircraft sold may not exceed 300, which is well below pre-show predictions as high as 800. This could include already announced deals. "Winning orders" is not the issue. The Lundquist Group's managing director Jerrold Lundquist said that production capacity constraints have changed the way it is measured. Since COVID-19 Aerospace has been struggling with supply issues, particularly for parts such as castings and forgings. These are critical components made to exacting standards using molten metal or solid metal. Airbus's goal to increase single-aisle jet production by 25%, to 75 per month by 2027 has been repeatedly postponed. Boeing has announced that it will study?production levels above current targets in order to close the gap with its rival, and maintain a stable market share. Kevin Michaels of AeroDynamic?Advisory, a manufacturing expert and managing director, said that the supply chain has improved compared to a year ago. However it is still not at a point where Airbus will be able to achieve its 75-plane goal. He added: "And as Boeing increases rates, it will surely cause issues there as well." The aviation industry has been plagued by delays in engine deliveries, which frustrate aircraft manufacturers and airlines. GE Aerospace said that conditions are improving, but there is still more work to be done. Larry Culp, CEO of GE Aerospace, said: "I think that the supply chain is really turning the corner." "There's more work to be done." (Reporting and editing by Joe Brock, Jamie Freed, and Jamie Freed; Additional reporting and editing by Dan Catchpole; Additional reporting and editing by Allison Lampert; Shivansh Tiwary, David Shepardson, and Allison Lampert; Reporting and Editing by Tim Hepher and Cassell Byran Low; Editing and rewriting by Joe Brock, Jamie Freed, and Jamie Freed).
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China's oil exports plummeted during the Iran War. How much will the recover?
China imported 11.5 million barrels per day on average in the past five years. Since April, the average has been just 8 million barrels per day. China's rapid slashing of imports - shipments dropped to 40% below pre-Iran War levels in June - has helped keep a lid on global prices, and has freed up cargoes that could be used by other countries. Market observers want to know if the decline in demand will last. Michal Meidan is the head of China Energy Research for the Oxford Institute for Energy Studies. "There is a huge level of uncertainty, because we do not fully understand what happened." This uncertainty is due to the fact that China is not transparent: its oil companies have opaque data and the size of their stockpiles is a secret. Analysts predict that China's oil demand could drop by up to 2 million barrels per day (bpd) after the war, a dramatic decline for a nation that has driven global oil consumption for decades. Consider the following factors: WHY CHINESE FUEL DESIRE? The war revealed that the Chinese transport system can run on less fuel, than was thought possible. This has major implications for crude oil imports as roughly half of them are refined into transportation fuels. It's not clear whether the war will significantly accelerate electric car sales. Especially since petrol prices are now back at pre-war levels, after having risen by over a quarter. In June, electric and hybrid vehicles accounted for a record-breaking 62% of all new car sales. A weak Chinese economy and the slow electrification rate of an 87% petrol-powered fleet have led to hundreds of thousands of cars being sold less this year. The war is likely to accelerate the decline of diesel after the government announced a plan to electrify trucks in June, with the aim to have some popular short-haul routes electrified by 2030. Rystad, a consultancy, expects Chinese consumption of gasoline and diesel to fall 6.6% and 6.9% respectively, as opposed to their previous forecasts which were 3.5% and 3 % before the war. Ye Lin, a Rystad analyst, says that the crisis has been a catalyst. It helped consumers gain a greater confidence in electric vehicles and trucks. WHERE IS THE INDUSTRIAL DEMAND GOING? Meidan, from the Oxford Institute for Energy Studies, warns that if the Iran War slows China’s growth at home or on its export markets further, this will pose a risk to the country’s oil demand. China's construction industry has been hit by the property crisis, which has impacted diesel demand over several years. Property prices continue to fall. A structurally weaker economic system could also affect demand for plastics and petrochemicals. This would hurt refiners as well as reduce oil consumption. Meidan stated that we don't think enough about the bigger economic picture. "That's a big question, and it will have an impact on Chinese oil demand as well as industrial activity." What role does stockpiling play? Crude imports increased due to Beijing's campaign of reserve building last year. This was done in order for China to be able absorb the shock of a closed Strait of Hormuz. Analysts say that the stockpiling of China's reserves has ceased since the end of the war. However, it is difficult to determine when and how much China will resume building its reserves due to the uncertainty surrounding Beijing's goals and the size. Beijing does not disclose its reserve targets or how much it stores. Last year, it was reported that China had been building new storage tanks. Premier Li Qiang demanded even more capacity during a visit in?May to a reserve. According to June Goh senior analyst of Sparta Commodities, "despite the demand destruction, China will still import crude oil in incremental quantities to fill its strategic reserves." Goh believes that a stockpiling drive could bring them back up to the 9.5 to 11 million bpd range. Brent crude traded between $58-$83 per barrel during China's massive stockpiling last year, as opposed to the current price of around $85. Analysts believe it may resume if prices drop below $70. Will the Fuel Export Valve revive oil demand? Analysts say that, whatever the new "normal", it will require certainty regarding the Gulf's supply and the lifting of Beijing's restrictions on fuel exports during wartime. Chinese refiners are less likely to increase production if they don't have exports to absorb excess gasoline, jet fuel and diesel. Beijing may impose these restrictions again in August, now that the Gulf war has resumed. Exports can also determine the final destination of China's crude oil imports in the long term. Refineries could need to import more oil if overseas sales absorb excess fuels and petrochemicals. China closely manages fuel shipments through a fuel export system. (Reporting and editing by Lewis Jackson in Beijing, Sam Li)
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Wall Street Journal, July 17,
These are the most popular stories from the Wall Street Journal. The?has not checked these stories or?cannot?guarantee their accuracy. Databricks, a provider of data analytics, has raised a round of strategic funding valued at $188 billion. The U.S. Food and Drug Administration announced that Taco Bell owned by Yum Brands would stop using shredded iceberg sourced from a supplier that has been linked with a parasitic outbreak causing a severe form of diarrhea and vomiting. Honda Motors will stop?the production?of its Prologue SUV, which is sold?in America?this?year. Honda Motors will not cancel sales immediately, but expects to continue them until early 2027. This is because it has a large inventory. ArcBest Corporation, a logistics firm, will reduce its workforce by 2 percent as part of a plan to simplify the brand structure. MoLo Solutions and Panther Premium Logistics will operate under the ArcBest name starting August 1. Uber Technologies will?buy German Food-Delivery Company Delivery Hero for $14.8 billion. This deal will boost its international presence. Verizon Communications, a U.S. wireless carrier, is restructuring its business by selling franchises and reducing its workforce. (Compiled by Bengaluru Newsroom)
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Vietnam's Cai Mep terminal begins gas delivery to Phu My Power Complex?
The company said in a?statement?on?Friday that the Cai Mep terminal in Vietnam, owned by Atlantic Gulf & Pacific LNG (AG&P LNG), had begun supplying?regasified liquefied?natural gas to the largest gas-fired?generation?complex of the country. The Singapore-based AG&P LNG unit, a U.S. investment firm Nebula Energy said that regassified LNG was now flowing through a pipeline it owns to the 900 megawatt Phu My 2.1E and 2.1E power plant, which is?operated? by a Vietnamese state utility, Vietnam Electricity Corporation. AG&P LNG said that the milestone established Cai 'Mep LNG Vietnam as the first private terminal to supply regasified LNG to 'Phu My Power Complex. Gas sales agreement between EVN and a subsidiary of Cai Mep, Power Generation Corporation 3 (PGC3), is responsible for the deliveries. The first gas sent-out marks completion of the commissioning of a new Cai Mep-Phu My pipeline and gas distribution stations, connecting the terminal with... the 4 gigawatt Phu My Hub. Cai Mep is one of Vietnam’s two LNG terminals. It is located in Ba Ria-Vung Tau Province, which is situated to the south. The terminal has a 3 million metric ton capacity per year. The terminal began operations in the third-quarter of last year and is connected to the Phu My Industrial Zone by pipeline. AG&P LNG raised its stake in the terminal from 50% to 100% in April. The Thi Vai terminal, operated by PetroVietnam Gas in Ba Ria Vung Tau Province, is Vietnam's second operational LNG import facility. The terminal?supplies fuel for the Nhon Trach 3 and 4 Power Plants, the first power plants in the country to run on LNG exclusively. Commercial operations began in December.
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BHP's Australian iron ore hub elects workers to stop work
The Electrical Trades Union reported on Friday that the majority of BHP high-voltage power network workers in Western Australia's Pilbara Region have supported strike action. This is a 'escalation' of labour unrest less than a week after hundreds of BHP iron ore miner employees walked out. The union reported that 97.5% voted for work stops ranging from 30 to 24 hours. ETU stated that "High voltage workers seek transparent classifications, clear criteria for promotion, equal pay for employees doing the same job, and enforceable wages and conditions guaranteed through a collective contract." The union stated that the vote came after?months? of limited industrial actions, including bans on overtime, and more than a year?of unsuccessful negotiations?with BHP. According to its website, the ETU represents more than 70,000 'electricians, electrical apprentices, and electrical workers' throughout Australia. BHP said in an email that it will continue to focus on achieving fair and reasonable agreements. Further bargaining meetings are scheduled for Port Operations workers on Tuesday, with the Fair Work Commission acting as an independent facilitator and high voltage employees next Thursday. The miner stated that the Fair Work Commission was the most constructive way to achieve the best result. After the parties failed in their attempts to agree on the terms of a four-year contract, hundreds of BHP Port Hedland iron ore workers went on strike for eight hours on Thursday. Port Hedland, a major artery through which BHP routes $80 million in iron ore per day, is the site of the biggest strike at BHP in?at least three decades. Unions are looking to gain a foothold in Australia's Iron Ore Regions. Reporting by Sneha Lahiri and Shivangi lahiri from Bengaluru; Additional reporting by Nikita Marie Jino, Editing by Tasim Zaid and Niveditarjee
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Swiss stocks: Factors to be on the lookout for July 17
Here are some of the main factors that could affect Swiss stocks on Friday: H1 net income CHF 105.2 millions. GEORG FISCHER The expected proceeds of CHF 220 MILLION from the divestment and sale of the?industrial gas-turbine business will be used to reduce debt. Company Statements Novartis ?Fabhalta Receives FDA Approval. ANALYSTS VIEWS FLUGHAFEN ZUERICH AG-Jefferies raises the target price from CHF 246 to?CHF252? ECONOMY No major Swiss economic data scheduled. (Reporting by Zurich newsroom and Gdansk newsroom) |1|For Top News in ?a multimedia Web format on Eikon visit: https://bit.ly/2NDFd6g FOR ?RELATED PRICES, NEWS AND ?OTHER ?TOPICS, DOUBLE-CLICK ON: Daily Swiss stock market report in ?German All SMI constituent ?stocks DJ STOXX index Top 10 STOXX sectors Top ?10 EUROSTOXX sectors Swiss ?mid-cap index Swiss all-share ?index Swiss market digest Sector overview All Swiss news Swiss research news All equity news SPEED GUIDES: |1|
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Sources say that RPT, a Saudi Arabian-backed developer, is looking for investors to invest in World Cup stadiums.
Three sources have confirmed that Saudi Arabia's ROSHN group is looking for investors to help finance its Aramco stadium, which will host the FIFA World Cup in 2034. The state-backed developer wants to free up capital so it can deliver projects as part of the kingdom's economic transformation strategy. Saudi Arabia is relying more on outside capital as it tries to reduce its dependence on oil and gas revenues. Two sources who declined to be identified because the matter was not public said that JPMorgan had hired ROSHN to manage the equity raising process. According to a third source, PIF and ROSHN are testing the private investor's?appetite? for a stadium. Aramco, JPMorgan and ROSHN declined to comment. PIF and ROSHN did not respond to requests for comments. STADIUM TRANSACTION WOULD MIRROR STRUCTURE OF PIPELINE DEALS The stadium is expected to be finished by the end this year, and will host its first match in January. Saudi Aramco is the state-owned oil company that operates the stadium on a 25-year concession. ROSHN, as the owner and developer, owns the project. Sources said that ROSHN's transaction will likely follow a structure of lease-and-leaseback. Investors have been attracted to similar infrastructure fundraising deals, such as those used by Aramco in order to raise money for its oil and gas pipelines. According to the model, ROSHN will?establish an entity that controls the leasehold it would co-own?with the investors who would provide the funds upfront. ROSHN would be able to use its capital elsewhere, as the transaction would bring in new funding from investors. Investors would in turn receive a stream of long-term income in the form of Aramco's lease payments. SAUDI ARABIA STRUGGLING WITH FLAGSHIP WORKS PIF, as part of its Vision 2030 economic revamp plan, has heavily invested in sports including Formula E, boxing and tennis. The 2034 World Cup will be a major event in the Kingdom's economic transformation plan. Riyadh has begun building or renovating 15 stadiums in five cities, including the Aramco Stadium, which seats 47,000 people, located in Al Khobar. It is also working on 132 training facilities. Saudi Arabia's Prince Abdulaziz Bin Turki AlFaisal, Saudi Arabia's Minister of Sports, said that the 2034 competition will be the first to host the expanded 48-team tournament in a single country. But overspending and lower-than-anticipated global oil prices that have throttled state revenues have left Saudi Arabia struggling to deliver some of its flagship projects. Trojena was initially set to host 2029 Asian Winter Games, but delays have been experienced. Riyadh hopes private investors can help cover the shortfall. A deal for the Aramco Stadium wouldn't be the first deal involving Saudi owned sports assets. Kingdom Holding Company and the PIF signed an agreement to purchase a 70% stake of Saudi Pro League soccer club Al Hilal in April. Last year, an American investor bought the smaller club Al Kholood as part of a larger privatisation campaign. In May, it was reported that the PIF had been in discussions with investors about a possible minority stake in Newcastle United. This would be part of the fundraising plans to build the stadium.
Shipping companies pull out of Hong Kong to avoid US-China risks
Some shipping companies move their operations discreetly out of Hong Kong, and remove vessels from its registry. Some shipping companies are making contingency planning to do this.
Six shipping executives have said that these low-profile actions are motivated by a fear that their vessels could be seized by Chinese authorities, or face U.S. sanction in the event of a clash between Beijing and Washington. The people said that the growing U.S. scrutiny over the importance of China’s commercial fleet to a potential military conflict, such as one over Taiwan, and Beijing's emphasis of Hong Kong's role in serving Chinese interests is causing concern in the shipping industry. Last month, the U.S. Trade Representative proposed imposing steep U.S. fees on Chinese shipping firms and other companies that operate Chinese-built ships to counter China's "targeted dominant" in shipbuilding and maritime logistic. Washington warned American companies in September about the growing risks associated with operating in Hong Kong. The U.S. has already imposed sanctions on officials who are involved in a crackdown.
Hong Kong has been the hub of shipowners for over a century, as well as brokers, financiers underwriters, and lawyers who support them. Official data shows that its maritime and port industries accounted for 4,2% of the GDP in 2022.
VesselsValue - a subsidiary company of Veson Nautical, a maritime data group - reports that the city's flag was flown on eight out of ten ships in the world.
Interviews with two dozen people familiar with Hong Kong including shipping executives and lawyers revealed a growing concern about the possibility that commercial maritime operations in Hong Kong could be caught up by forces outside their control if a U.S. - China military conflict occurs.
Many pointed out China's increased focus on national security goals, trade frictions, and Hong Kong's leader's broad powers to take control of shipping if necessary, as he is accountable to Beijing.
One executive who, like many others, was allowed to remain anonymous to discuss this sensitive subject said: "We do not want to be in the position where China is knocking on our door, requesting our ships, while the U.S. targets us from the other side."
Previously, the concerns of shipowners as well as their efforts to limit exposure to Hong Kong were not reported. In recent years the perception of risk has increased, in line with the tightening security environment in the Chinese-ruled area and the tensions between two of the largest economies in the world.
Turning Tide
To comply with safety and environment rules, commercial ships must be registered or flagged with a specific country or jurisdiction.
VesselsValue, an independent research firm, found that despite the influx of Chinese ships on Hong Kong's register, the number oceangoing vessels registered in the city dropped by more than 8% in January, from 2,580 in January 2004. Government data show a similar drop.
In 2023 and 2024 74 ships, mostly dry-bulk carriers, were re-flagged for Singapore and Marshall Islands. These vessels transport commodities like coal, iron ore, and grain. VesselsValue reports that 15 tankers and 7 container ships left Hong Kong's registry to fly these flags.
Hong Kong's ship registry has seen a dramatic decline in the last two years. Official data shows that it grew by 400% over the past 20 years.
Hong Kong's Government responded to questions by saying that it is normal for shipping companies, given the changing geopolitical, trade and economic circumstances, to review their operations. It is also normal for the numbers of ships registered to fluctuate over the short-term.
A spokesperson stated that Hong Kong will "continue to excel" as an international shipping center, highlighting a variety of incentives, such as profits tax breaks and environmental subsidies, for shipowners.
The spokesperson stated that neither the laws governing registry nor the emergency provisions empower Hong Kong's leader in commandeering ships to serve as part of a Chinese merchant navy.
When asked to comment on the concerns of industry players about how emergency powers from colonial times might be used during a conflict between the U.S. and China, the spokesperson declined. The provisions give the leader of the city "any regulation whatsoever", which includes taking control over vessels and property.
China's commerce and defence ministries did not respond to questions regarding the role of the merchant fleet in Beijing’s warfighting plan, the possible involvement of Hong Kong flagged vessels, or the concerns of commercial shipowners.
The U.S. Treasury declined to comment on potential sanctions, concerns of shipping executives, or the role played by Hong Kong-registered ships in a Chinese commercial fleet.
Lawyers and executives agree that ships can be reflagged in a variety of ways, including through the sale, chartering or redeployment on different routes.
Basil Karatzas of Karatzas Marine Advisors & Co in the U.S. said that Singapore was becoming the preferred domicile for businesses with less exposure to Chinese shipping or cargo trade. It offered many efficiencies including its legal system but also a lower risk than Hong Kong.
Singapore's Maritime and Port Authority stated that decisions regarding domiciles and flags were based on business considerations. The Maritime and Port Authority of Singapore said it had not noticed any "significant changes" in the number Hong Kong shipping companies moving operations or reflagging vessels to Singapore.
MERCHANT FLEEET
Executives and lawyers agree that Hong Kong's registry for shipping is highly regarded by the industry because of its high safety and regulatory standards. This allows its ships to easily pass through foreign ports. Many of China's international state-owned vessels now fly Hong Kong's banner.
According to PLA military studies and four security analysts, in a conflict these tankers and bulk carriers would be the backbone of the merchant fleet that supplies China's oil and food needs.
The U.S., on the other hand, has a very small shipbuilding industry. It also has far fewer vessels under its flag. Three analysts say that while China's growing state-owned fleet would be a target of the U.S. during a military conflict, Beijing would need other vessels in order to supply its needs, given its reliance on international shipping lanes and vast needs.
Donald Trump has been keeping a close eye on strategic maritime operations. Trump said in his January inauguration address that he would "take back" control of the Panama Canal from China. Trump did not provide specifics but his remarks focused on two Panama port operated by a Hong Kong conglomerate CK Hutchison Holdings subsidiary. The group did not respond to any questions regarding Trump's remarks, but agreed to sell the majority of the subsidiary's shares to a consortium led by BlackRock this week, giving U.S. interest control over the port. Trump said to Congress that his administration would create a shipbuilding office in the White House, and provide new tax incentives.
In a study conducted by the U.S. Congress in November 2023, it was stated that "cargo vessels typically transport 90% of military equipment required in overseas conflicts". The report noted that Chinese shipyards ordered 1,794 ocean-going large ships in 2022 compared to five in the U.S.
Merchant vessels played a crucial role in Britain's 1982 long-range operation to retake Argentina's Falkland Islands. Declassified CIA files show that UK-flagged ships operated out of Hong Kong, many of which were owned or controlled by Chinese firms, supplied communist Hanoi in the Vietnam War.
In 2013, President Xi Jinping outlined the need for a Chinese merchant fleet that would help to build China's maritime strength in a Politburo session.
In the past decade, Chinese military and government documents and studies have emphasized the dual-use value of China’s merchant ships.
According to state media, regulations enacted in 2014 required Chinese builders to build five types of commercial ships, including tankers and container ships, to be able to serve military requirements.
Since then, COSCO has seen a significant increase in its line.
Documents from COSCO show that China places political commissars, officers who make sure Communist Party goals are served, on nominally civil ships.
The U.S. banned COSCO subsidiaries in January for what they said were links with the Chinese military.
COSCO has not responded to any questions regarding its deployment of commissars, U.S. restrictions, or what role COSCO's ships -- including those with Hong Kong flags -- might play in wartime.
'REALLY DE-RISKED'
Hong Kong is still an important shipowners' base, despite geopolitical issues. Some shipowners are quietly hedging.
Taylor Maritime (London-listed) a company that was founded in Hong Kong, in 2014, has a much smaller presence in Hong Kong now after several strategic moves in the last few years.
It has been flagging its ships in Singapore and the Marshall Islands since 2021. The company has offices in London, Guernsey and Singapore.
A person with knowledge of the matter said that the firm "really reduced the risk of Hong Kong". This was due to investors' fears of a Chinese invasion in Taiwan and the Communist Party taking control of Hong Kong.
Taylor Maritime's spokesperson stated that the company initially moved its Asia-based teams from Hong Kong to Singapore to be closer to their clients.
Taylor Maritime, after acquiring Grindrod, a shipping company with an Asia office in Singapore and expanding its operations there, relocated certain functions from Hong Kong to Singapore, where it became the primary Asia hub.
Two people with knowledge of the situation said that Pacific Basin Shipping, a Hong Kong listed company, has always flagged its 110 bulk carrier fleet in Hong Kong. However, it is now preparing contingency plans for them to be registered elsewhere while it assesses possible risks.
Pacific Basin's spokesperson stated that the company constantly evaluated geopolitical risk but its fleet still flew the Hong Kong flag "which, at least for the moment, outweighs the challenges".
The spokesperson stated that "Being located in Hong Kong places us near China's 40% share of the global dry bulk export/import activity as well as close to Asia's strong industrial and economic growth regions."
Angad Banga said that shipping firms adjust contingency plans based upon risk assessments, but he has not heard of concerns regarding the commandeering vessels.
Banga said that although some organizations may be re-evaluating their operational strategies, they do not see a widespread exodus from Hong Kong or a loss of confidence. The city, he added, remained attractive to maritime commerce.
Some industry figures have described a general unease in Hong Kong, which has affected their planning.
Three lawyers have said that, until recently, contracts for the increasing number of ships constructed in China that are financed by Chinese banks stipulated that the ship must fly the Hong Kong Flag.
Lawyers said that in the past two years some companies have added a disclaimer to their contracts, stating that they are willing to consider other flags as an alternative. Could not independently verify these changes. Beijing officials have stressed that Hong Kong is important in achieving national security goals. They also referred to China's modernisation of its military and refusal to abandon the use of force against Taiwan.
Three executives and lawyers said that the sweeping security laws, which were first implemented in Hong Kong in July 2021 and then strengthened in March 2020, have increased dangers.
Lawyers said that any attempt by Hong Kong’s leader to commandeer ships in an emergency could prove difficult, since locally registered vessels often travel routes far away from Hong Kong. They said that such powers, which have been in place for a long time, now needed to be seen through the lens of national security.
One lawyer stated that some shipowners would not object to a request from the government to hand over their vessels. This could be due to patriotism, or because they might profit by a crisis.
Another veteran lawyer said that it is "better to avoid being in a situation where you could be asked".
It was not an issue a few short years ago. The national security map has been redrawn. (Reporting and editing by David Crawshaw; Additional reporting by Andrea Shalal, Idrees, and Idrees in Washington and Beijing, Shanghai, and Hong Kong;
(source: Reuters)