Thursday, June 8,
2000
P&O Nedlloyd
acquires Farrell
P&O Nedlloyd has announced
the acquisition of Farrell Lines Incorporated subject to final
agreement and regulatory clearances from the United States Maritime
Administration and other agencies. The two companies have reached
agreement on integrating their respective activities in the trade
between the United States and the Mediterranean, which will be
branded Farrell Mediterranean Express.
P&O Nedlloyd already has a major presence
in the U.S.-Mediterranean trade. With the integration of the
Farrell Lines' service and the combined volumes, says P&O
Nedlloyd. true benefits of scale will be achieved. Furthermore,
the service will be upgraded weekly to enable it to link to P&O
Nedlloyd's global network. This new weekly service will call
direct at a number of East Mediterranean ports and as such will
be a unique product in this fast growing market area.
"We are looking forward to working
with Farrell to make the integration a great commercial success.
We are certain that, both in the USA and Europe, P&O Nedlloyd
and Farrell's employees will rise to the challenge and combine
the strengths of the two companies," said Michael Seymour,
President of P&O Nedlloyd North America. In addition, Richard
Gronda President of Farrell Lines commented, "With the strength
of the P&O Nedlloyd Group behind us, Farrell will be in a
much better position to continue to serve its traditional customer
base."
Given the complimentary nature of the account
base of Farrell and P&O Nedlloyd there is full confidence
that both companies' businesses will be maintained following
the implementation phase.
Farrell Lines Inc. operates five U.S. flag
container ships of an average size of 2000 TEU in a service between
the USA East Coast and the West and Eastern Mediterranean. A
key cargo segment is U.S. military and Preference cargo, which
require U.S. flag ships.
Newbuildings ordered for Zim
Six new 4,800 teu panamax-sized
vessels have been ordered for Zim Israel Navigation from Hyundai
.
These six 24 knots ships will replace seven
21 knots ships deployed today in Zim's main global service -
Zim Container Service (ZCS). These
seven 3,029 TEU ships will in turn be transferred to Zim's second
global service - Asia Med Service - operating between the East
Mediterranean, through the Suez canal to the Indian ocean and
the Far East, Pacific ocean and the west coast of North
America. This global service is currently composed of two
separate services (Asia-Med and ZPS) operating smaller capacity
vessels. Hence, these global services will also benefit
from the upgrade.
"The need for this significant change,
involving a $300 million dollars commitment, derives from two
main objectives, "says Zim, "to
give an appropriate answer to the growing needs of the company's
customers in the international trade [and] to
take advantage of the present new buildings' prices as compared
to the current charter rates."
U.K. fine tunes tonnage tax rules
The Chief Secretary to the British Treasury, Andrew Smith MP,
has introduced amendments to the tonnage tax provisions in the
Finance Bill. Tonnage tax is an optional new
tax regime for shipping companies - which has been widely welcomed
by the industry. It is an important part of the package of measures
being introduced to encourage the resurgence of the U.K .shipping
industry. There has been public consultation at each stage of
the development of the regime, in particular with the shipping
industry and other interested parties. Most of the amendments
now introduced today are the result of comments made in response
to that consultation process.
Corporate Partnerships
1. Joint ventures in the shipping industry
may be operated through the vehicle of a corporate partnership.
A number of the Government amendments
will clarify how qualifying corporate members of shipping partnerships
may bring their share of shipping profits within the tonnage
tax regime.
Finance Leasing
2. These amendments relax restrictions
on the availability of capital allowances to lessors who provide
ships to tonnage tax companies on finance lease terms.
The amendments deal with "defeased
leasing" arrangements, allowing certain types of securities
provided to the lessor or to a third party guarantor to be disregarded
when ascertaining whether a finance lessor is entitled to claim
capital allowances
3. There are limits on the capital allowances
available on ships finance- leased into tonnage tax. When a ship
enters or leaves tonnage tax, there has to be a transition between
the normal capital allowances regime and the limited version
available within tonnage tax. The method originally set out for
that transition would have affected the capital allowances available
on other assets held by the leasing company, not just the leased
ship in question. The amendments now tabled set out a replacement
method.
Sale and Leaseback
4. Finance lessors can get no capital allowances
on a ship that they buy from and lease back to a tonnage tax
company (such arrangements are known as "sale and leaseback"
arrangements). The new amendments mean that the sale and leaseback
rules will not apply in the case of a newly built ship.
Start-ups
5. This amendment builds in flexibility
for companies that are new to shipping, allowing them three years
to come within the limit set on the proportion of tonnage that
they time-charter. The change matches the flexibility available
to existing shipping companies under the tonnage tax regime.
Training
6. These amendments allow the Secretary
of State to include in the regulations that deal with the operation
of the tonnage tax training obligation rules to deal with two
situations not catered for in the current wording of the Finance
Bill.
Dredgers
7. Under European law, tonnage tax is a
state aid and as such clearance has to be obtained from the European
Commission that it is not contrary to the interests of the common
market before it can be implemented. Whilst there is agreement
on most aspects of the regime, discussions with the Commission
on the merits of including dredgers within tonnage tax are likely
to be protracted. To improve the prospect of timely clearance
of the regime by the Commission, the Government has introduced
amendments to remove dredgers from the scope of the tonnage tax.
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