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Argentina's Railway Privatization Dreams Face a Long Road Ahead
Argentina, a global food supplier, is planning to boost its grain and mineral exports through privatization, and a modernization program of its railway network. Industry leaders claim that this will reduce freight costs in regions located far from ports by half. The first tender will be for the Belgrano Cargas, which runs the three biggest freight train lines in the country. The initiative, which will be launched in early 2019, could increase production of global commodities like soybeans and corn. It also includes copper and lithium. The project could also help transport sand from Vaca Muerta in Argentina's Southwest. The privatization of the network was part of Javier Milei’s plan to move struggling state-owned companies to private ownership and to attract investment in order to replenish depleted reserves after years of economic crises. LESS FREIGHT BY TRAIN THAN IN 1970 The railway system will face a huge challenge after decades of neglect. The volume of freight transported by train today is less than in 1970, despite the fact that agricultural production has almost doubled during the same time period, said Alejandro Nunez. Three lines, spanning nearly 8,000 km (5,000 miles), transport 7.5 million tonnes of cargo annually. 60% of that is agricultural products and derivatives. On some occasions, the trains are so slow on the dilapidated track that they can easily be hijacked. Derailments occur frequently. Further 11,000 km (6,800 mile) of line will be offered for tender. Currently, these lines are completely out of service. The majority of cargo is transported by road in Argentina. Rail freight accounts for only 5%, which is a tiny fraction compared to the 20% of cargo transported in Brazil or the 40% in the U.S. According to the Foreign Minister Pablo Quirno, improving the railways is vital for the government to achieve its goal of increasing annual exports to $100 billion within seven years. Argentina's total exports for this year are $71.5 billion. Privatization could help reduce the cost of transporting goods to and from the main ports in and around Rosario. According to Gustavo Idigoras of the grain export chamber CIARA CEC, transporting cargo from Salta in northern Argentina to Rosario costs more per ton than shipping it from Rosario directly to Vietnam. It will be expensive to upgrade the rails. Nunez estimated that an investment of $800 million was needed to upgrade infrastructure. Grupo Mexico transportes (GMXT), the company that operates Mexico's biggest rail network as well as several freight lines within the U.S. is a likely bidder, according to a source who has direct knowledge of the situation but declined to give their name. Source: GMXT will invest $3 billion if they win the tender due to the size of the upgrade required. According to local media, an agricultural consortium consisting of Bunge Global Inc., Cargill Inc. and Asociacion de Cooperativas Argentinas, as well as Aceitera General Deheza SA, has expressed interest in bidding. The companies' representatives declined to comment. EXPANDING FRONTIER Alfredo Sese is the technical secretary for the transportation commission of the Rosario Stock Exchange. He believes that lower freight costs can help to expand the agricultural frontier of the northern part of the country. Rosario is more than 300 km away from where at least half of Argentina’s agricultural production occurs. Sese estimates that a ton of goods transported by truck will cost between 7 and 9 cents per km, while rail transport costs less than five cents. A modernized railroad could be more beneficial to farms that are further away. The mining industry in Argentina could also be benefited. Argentina is the No. The country is the world's No. Roberto Cacciola is the president of Argentine Chamber of Mining Companies. He said that "the mining industry requires logistical solutions to allow it supply projects and move its production." (Reporting and additional reporting by Maximilian Heath, writing by Leila Mill, editing by Rosalba Gregorio and David Gregorio; Reporting by Lucila Sgal, Additional reporting by Maximilian Heath, Writing by Leila Mller
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IndiGo's meltdown brings India's airline industry into focus
Air India, SpiceJet and other airlines have come under the spotlight for introducing extra flights in response to a sudden increase in demand after IndiGo, a market leader cancelled flights due to sever crew shortages. This left thousands of passengers stranded. Here's a look at Indian Airlines by Numbers: INDIGO IndiGo, India's largest airline with a market-share of 65% at the end September and a fleet of 417 aircraft. There are more than 2,200 flights per day connecting 90 domestic and 41 foreign destinations. AIR INDIA The Air India Group has a combined 302 aircraft fleet, including 115 for its budget airline Air India Express. Air India is owned by India's Tata Group, and Singapore Airlines. It operates non-stop flights between 39 destinations on five continents. AKASA AIR Akasa, a relatively new airline in the Indian market, has a 5% share of the market, making it India’s third largest carrier. The airline has 30 aircraft. It also connects Indian cities with locations in the Middle East, including Jeddah and Riyadh. SPICEJET SpiceJet, a low-cost airline with a fleet of 19 operational aircraft at the end of September, had accumulated a 2.5% market share. The majority of its flights are domestic, but it also flies to international destinations like Bangkok, Dubai, and Phuket. In recent years, some airlines in India have filed for bankruptcy. This shows the challenges that this sector faces. KINGFISHER AIRLINES Kingfisher Airlines, founded by Vijay Mallya a business tycoon, once operated over 330 flights per day with a fleet 66 aircraft that connected 69 destinations both in India and abroad. After its license was suspended, the debt-ridden carrier ceased to operate in 2012. JET AIRWAYS Jet Airways, a former major Indian airline that operated a fleet containing 124 aircraft, connected over 65 destinations both in India and around the world, according to their website, was a major Indian carrier. The company suspended its operations in 2019 because of issues with securing crucial funds. Last year, the Supreme Court of India ordered that it be liquidated. GO FIRST was once a major airline in India that offered budget flights. It operated a fleet consisting of 59 aircraft at the time it declared bankruptcy in May 2023. The airline connected 27 domestic cities and seven international ones, including Dubai and Phuket. Go First has been ordered to be liquidated in January of this year.
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Major Gulf markets decline ahead of Fed meeting
The major stock markets in the Gulf experienced a quiet Monday with little trading, despite expectations of a U.S. Federal Reserve rate cut in this week. After three months of steady growth, U.S. consumer expenditures rose modestly in September. This suggests that the economy lost momentum at the end third quarter due to a lacklustre job market and rising costs of living. The Fed's dovish comments have further fueled expectations for monetary ease. CME's FedWatch shows that markets have priced in an approximate 88% chance for a rate cut of 25 basis points at the Fed meeting this week. The Fed's position has implications for Gulf economies where most currencies are pegged with the U.S. Dollar, making it a stable anchor for regional currency. Saudi Arabia's benchmark index of stocks edged up 0.1%, thanks to a 0.3% increase in Saudi National Bank. The bank is the largest lender by assets. Saudi Aramco, the oil giant, was up 0.4%. The possibility of lower interest rates for Americans, coupled with geopolitical uncertainties that could limit supply from Russia and Venezuela, supported oil prices. Even after the recent recovery, crude prices are still near multi-month lows. This puts pressure on the fiscal accounts of oil-dependent Gulf countries through lower revenues. Dubai's benchmark index of stocks was flat. The index in Abu Dhabi fell 0.1%. Qatar Navigation retreated 1.3%, while the benchmark Qatari fell 0.2%.
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Pegasus, a Turkish airline, signs a 154-million euro deal with Smartwings and Czech Airlines.
Pegasus Airlines, a Turkish airline, announced on Monday that it had agreed to buy Czech Airlines and its subsidiary Smartwings for a total of 154 million Euros ($180 million). The deal is part of an expansion plan. In a KAP statement, Pegasus announced that it had reached an agreement with Prague City Air for the purchase of its stakes in CSA and Smartwings, as well as its subsidiaries. The debts of the two companies were included in the 154 million euro figure. Pegasus stated that the strategic investment would help to expand Pegasus's global reach and strengthen its presence in Europe. Pegasus' shares rose 3% on Monday in Istanbul. Pegasus stated that the completion of the deal depends on obtaining necessary approvals in Czech Republic and in other countries where Smartwings Group is active. The transaction should be completed in 2026. Smartwings is the largest leisure airline in the Czech Republic. It has air operator certificates in Czech Republic and Slovakia as well as Poland, Hungary and Czech Republic. The company offers 80 destinations across 20 countries. Smartwings' and Czech Airlines fleets have 47 aircraft. Smartwings is expected to generate around 1 billion euro in revenue by 2024. Pegasus operates 127 aircraft that fly to 158 destinations across 55 countries.
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Draft shows that the EU will intervene to solve power grid bottlenecks
According to documents seen by the, the European Union is planning to increase efforts to develop cross border energy infrastructure. The aim is to reduce costly bottlenecks and speed up construction of new grids. The EU has invested heavily in renewable energy that is low-cost, but the grid upgrades and expansions have not kept pace. Wind and solar power output are being curtailed in order to prevent overloading of networks, waste electricity, and increase costs for consumers. According to the draft proposal due to be published on Wednesday, to address this issue, the European Commission is developing a centralised EU Plan for cross-border electrical infrastructure, and working with grid operators and businesses to get projects underway. Lack of grid investment is a major factor in Europe's high electricity prices. These are up to three times higher than those in China or the U.S. This is a common complaint among industries who claim that these bills reduce their competitiveness. The draft document stated that "grid development can provide real added value to Europeans and save them money." The document said that investing five billion euro in grids could save eight billion euro on the cost of the entire power system. The draft states that outdated networks are driving up energy bills. If the EU does not act, grid constraints could force the EU to reduce renewable power production by as much as 310 terawatt-hours (TWh) in 2040. Official data shows that EU households consumed 691 terawatt hours (TWh) of electricity in 2023. The second draft of the EU legal proposal revealed that the Commission would propose changing EU laws to allow governments to exempt grid project from environmental impact assessments. This was based on long delays which can cause projects years of delay. Environmental permits would not be required for small-scale storage and renewable energy projects. A spokesperson for the Commission declined to comment. All changes to EU law would need approval from EU legislators and countries. The proposal also reduces the deadlines by which authorities must approve grid permits. This includes a limit of six months for new charging stations for electric vehicles. The move is designed to reduce the long delays experienced in some EU member states.
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German warship manufacturer TKMS warns of a possible fall in profit by 2026
TKMS, a German submarine and frigate manufacturer, gave a muted forecast for the fiscal year 2026. It highlighted its dependence on large orders and payment schedules which can sometimes span several years. The company, spun off in October from its parent Thyssenkrupp, is expecting an adjusted operating profit between 100 and 150 million euros (117 to 175 million dollars) for the fiscal year that ends in September 2026. This compares to 131 million in 2025. In a poll conducted by the company, analysts predicted an operating profit adjusted of 143 millions euros in 2026. TKMS is benefiting from a boom in demand for defense suppliers. This surge has been driven by a shift in U.S. policy, which puts greater pressure on Europe, to strengthen its own defences, against Russia that continues to wage war on Ukraine. The order backlog of TKMS has increased to 18.2 billion Euros at the end September - more that tripling in the last five years. Oliver Burkhard, CEO of TKMS, said that TKMS's business model is long-term and its order backlog robust. We continue to see great future potential." Reporting by Christoph Steitz, Editing by Sumana Nady and Ludwig Burger.
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India's Indigo continues to struggle as travel disruptions cause flight delays
IndiGo shares fell 4.8% Monday. They are on track for their worst session in over a month, and have now lost seven sessions. A staffing crisis caused mass cancellations of flights and travel disruptions. IndiGo, India’s largest airline based on market share, is suffering from its worst operational crisis. A pilot shortage compounded with inadequate planning of new rules for crew working hours led to thousands of cancellations in the last week. This left passengers stranded at airports, and forced the Indian government to step in to stop a sharp rise in air fares. The civil aviation regulator gave the company 24 hours on Sunday to explain its position and avoid regulatory action. SpiceJet shares rose 13.9%. IndiGo's shares fell 9% last week, their biggest weekly decline since June 2022 when an increase in COVID-19 cases impacted air travel demand.
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What are the differences between the militaries of Cambodia and Thailand?
Thailand's military has announced that it launched airstrikes along its disputed border, with Cambodia. Both countries had accused each other of violating a ceasefire mediated by U.S. president Donald Trump. Thailand suspended its de-escalation measure last month after a Thai army soldier was injured in the latest of a series of incidents that involved landmines, which Bangkok claims were laid by Cambodia. Cambodia denies the accusations. Budgets and Ground Personnel In 2024, Cambodia had a defense budget of $1.3billion and 124.300 active military personnel. The Armed Forces were formed in 1993 by merging the former Communist military of Cambodia with two other resistance arms. The largest of these is the Cambodian Army, which has around 75,000 soldiers and more than 200 battle tank, along with 480 pieces artillery. Thailand is classified by the U.S. as a major non NATO ally. It has a well-funded, large military with a budget of $5.73billion in 2024. There are also over 360,000 active members. The Thai army is composed of 245,000 soldiers, including 115,000 conscripts. It also has 400 battle tanks, more than 1,200 armored personnel carriers, and 2,600 artillery guns. The army's fleet includes passenger planes, Black Hawk helicopters (made in the USA) and unmanned aerial vehicle. Air Forces The Cambodian air force is composed of 1,500 personnel and a fleet that includes 10 transport aircrafts and 10 helicopters. The country does not have any fighter aircraft, but it has 16 multi-role rotorcraft including six Soviet Mi-17 helicopters and 10 Chinese Z-9 helicopters. Thailand's air force is one of the most well-equipped and best trained in Southeast Asia. It has an estimated 46,000 people, 112 combat aircraft including 28 F-16s, 11 Swedish Gripen fighters and dozens helicopters. NAVIES The Cambodian Navy has a total of 2,800 personnel including 1,500 naval soldiers, 13 patrol and coastal battle vessels, and one amphibious landcraft. Thailand's Navy is larger than most, with 70,000 members, including marines, naval aviation, coastal defense, and conscripts. The fleet consists of one aircraft carrier and seven frigates. There are also 68 patrol vessels and coastal combat ships. Thai naval forces also include amphibious landing ships that can hold hundreds of soldiers each, as well as 14 smaller landing craft. Thailand's Naval Aviation Division has its own fleet, including UAVs and helicopters. It also has a Marine Corps with 23,000 personnel and dozens of armed combat vehicles. (Compiled by Devjyot Ghoshal, edited by Michael Perry).
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)