Bulk Up

Your western bulk, breakbulk ports continue expansion plans

by Richard Knee

Bulk and breakbulk volumes at most U.S. and Canadian Pacific ports fell during the first half of the year, and many of them are nevertheless moving ahead with facility expansions or upgrades.

At Everett, Wash., recovery efforts began well before the current recession; because of its niche serving the aerospace and logging sectors, activity there nosedived after the terrorist attacks of Sept. 11, 2001. Lately, cargo volumes are off by 20 to 25 percent, due largely to construction industry woes, according to a recent port authority newsletter.

Redwood City, Calif., Portland and Vancouver, British Columbia, also reported volume drops while San Diego, San Francisco and
Sacramento had mixed results, and “fruit business held pretty strong” at Port Hueneme, Calif.

Other West Coast ports handling bulk and breakbulk products did not have results past 2008 readily available, and their officials could not be reached for comment.

San Diego saw declines in construction and housing-related commodities such as cement, sand and lumber, while traffic in steel coils was increasing, Ron Popham, assistant vice president of the port’s maritime division, said through a spokesman.

“Overall, the port is experiencing a 23 percent drop in cargo volume that is following existing economic conditions,” Popham said. “Because of product/commodity diversification, the Port of San Diego has not been hit as hard as the larger ports.

The port is working on securing a major account that may result in additional throughput … within the 2009-10 fiscal year.

“With potential stabilization of the economy and impact of the economic stimulus funds finance, housing/construction and auto the port will begin to see projects that were placed on ‘hold’ for lack of financing come back online,” he said.

Port Hueneme, Calif., has seen “fairly strong” volumes of export citrus and import bananas but there are some question marks about the future, port marketing director Will Berg said.

Produce accounts for about 35 percent of the port’s revenues, and auto shipments, which represent 48 percent, have plunged by 30 to 40 percent, he said.

Anthony Taormina, the port’s executive director, plans “to continue diversifying and expanding (the port’s) largely importing business by boosting exports and purchasing property that can be leased,” Berg said. Taormina voiced doubts that the port would see any recovery in the first half of this fiscal year, and a contract between terminal operator NYKCool and Chiquita Fresh North America was “up in the air,” Berg said. “If the companies don’t work it out, the port’s revenue could fall to as low as $8.2 million, which would require deep operational cuts in the second half of 2010,” he said, though Taormina was optimistic on the prospects for a new agreement.

Port officials at Redwood City, midway between San Francisco and San Jose along the bay’s western shore, reported last spring that tonnage the second half of fiscal 2008-09 had declined and was expected to finish the year at 810,000 metric tons vs. 1.5 million a
year earlier.

Volumes of bulk commodities such as cement, limestone and gypsum were “at zero for several months” and were not expected to return until late this year or early 2010, while scrap metal tonnage was holding steady at about 350,000 metric tons, officials said.
The port is preparing an environmental impact report on proposed structural improvements and facility upgrades at Wharves 1 and 2.
At San Francisco, “business is mostly down” but port officials hope “to see an uptick in the cargo markets by late 2009 or early 2010 as federal stimulus bills start coming into full effect,” spokesman Jim Maloney said. “Much of the port’s cargo is dedicated to the building trades, which should benefit from this funding.”

Aggregate shipments into Piers 92 and 94 were off about 15 percent from a year earlier while breakbulk volume into Pier 80 was down about 35 percent, he said. Liquid bulk tallow export shipments from Darling International, at Pier 92, were up almost 20 percent, he said.

Bulk and breakbulk business at Stockton, Calif., consists chiefly of export rice and import steel, though a recently opened cold-storage facility promises to make the area a regional distribution hub for fresh produce, marketing director Bill Lewicki said.

Operated by Inland Cold Storage, the facility will enable produce grown in the northern San Joaquin Valley to be distributed to markets in the San Francisco Bay area and the Pacific Northwest, drawing some distribution activity away from southern California, where the company has five other sites, Lewicki said.

In addition, the Stockton facility will receive beef and pork from the Midwest, and poultry from the Southeast for preparation to export to Japan, South Korea and China; and imports of grapes and stone fruit from South America and citrus products from Australia, he said. The site will serve ships carrying breakbulk and containerized cargoes, he said.

Officials at Sacramento could not be reached for comment but the daily Sacramento Bee reported in mid-April that a boom in rice exports was offsetting a sharp drop in cement shipments, putting the port on pace to lose about $1.2 million in fiscal 2008-09, its eighth straight year of posting red ink.

At Portland, “there really haven’t been any products increasing in volume lately, especially in bulks (potash, soda ash, grain) and breakbulk (steel rail and steel slab),” port spokesman Josh Thomas said. Year to date, “our numbers are down across the board by double digits. That being said, down volumes are following on several port records in recent years, so percentage-wise, the dramatic decreases appear a little exaggerated in some categories,” he said.

“While we’re seeing some signs of life and we are cautiously optimistic that we’ll start building back some business, we’re also
realistic that recovery will take time and will likely happen gradually.”

The port is continuing forward with $500 million in capital projects including road and rail construction in the terminal-intensive Rivergate Industrial District, terminal upgrades, and completion in 2010 of channel deepening to minus-43 feet along the 103.5-mile channel connecting the port with the Pacific Ocean.

At Grays Harbor, Wash., farmers’ cooperative AGP plans a 13.5-acre expansion of its rail unloading station and ship loader at Terminal 2. Omaha-based AGP procures, processes, markets and ships grains and grain products. The expansion would include on-site storage silos for whole grains; additional unloading capacity to service unit trains delivering product from the Midwest; and warehousing for flat storage of soy meal, distillers dried grain and solubles, corn gluten meal, beet pulp pellets, hay cubes and soil enhancers.

Activity at Vancouver, Wash., is “for the most part doing pretty well,” port spokesman Nelson Holmberg said. Volumes of import pulp, and export scrap metal and pulp are up this year “while most others are holding steady and some (are) down slightly,” he said.
Through May, traffic in import steel, aluminum and lumber, and export grains and lumber were off from year-earlier levels while volumes of import sodium hydroxide, and export bentonite clay and copper concentrate were flat, he said.

New-business prospects appear to be “mostly in the project cargo areas and heavy lift, though we’re always still keeping our eyes open for opportunities in bulk and breakbulk cargoes,” he said.

Officials at Port Longview, Wash., are looking forward to “the prospect of a grain terminal” that they said would be the first export grain elevator built in the country in more than 25 years, and “would provide significant local and regional economic benefits; employment, revenue to the port and contribution to the local tax base.”

The Port of Tacoma’s grain elevator, operated by Cargill subsidiary Tacoma Export Marketing Co., was “almost over capacity” with corn and soybeans in 2008, said Susan Becklund, director of operational services.
A number of companies run their own terminals there, she said. They include GP Gypsum (bulk), Graymont (bulk concrete), Manke (forest products), and U.S. Oil and Refinery (oil and asphalt imports). In addition, PNW Terminals exports tallow through the Manke facility, she said.

At Vancouver, British Columbia, bulk traffic between January and April was off 15 percent year-over-year while breakbulk volume was down 35 percent, port spokesman Michael Smithbower said. Bulk coal was down 17 percent, bulk petroleum products were up 23 percent, and bulk chemicals were down 28 percent, he said. The port also saw volume decreases in potash, 75 percent; sulphur, 7 percent; and “other bulk commodities” such as aggregate, gravel, sand and cement, and forest products, 38 percent, he said.

Bulk grain, specialty crop and feed volumes rose 40 percent, “primarily due to high carryover from a good fall harvest, low supply chain congestion, and strong demand for wheat, canola and other specialty crops,” he said. •

Your eastern U.S. bulk, breakbulk ports less impacted
than container operations

by Peter Hull

As the global economic slump lingers on, cargo ports nationwide are reporting steep downturns in the volume of containerized business. There appears to be no safe haven, with some of the biggest terminal complexes to some of the smallest reporting double-digit declines.

Ships are sitting idle around the world, routes are being combined or cut, and job losses at port authorities are mounting.

Silver lining
But amid the economic doom and gloom, there could be a silver lining: bulk and breakbulk cargo.

These sectors haven’t suffered the recession’s effects as starkly as the containerized cousin. While business isn’t exactly booming, volume at ports around the Gulf of Mexico and up the East Coast is rebounding.

At the Port of New Orleans, where bulk and breakbulk is the port’s bread and butter, the signs are encouraging, and welcome.
“There are some small signs of improvement,” said Chris Bonura, the port’s media relations manager.

Steel imports, a mainstay cargo for New Orleans, were hit hard this year, Bonura said. Volume is closely pegged to the value of the dollar. When the dollar is low traders put off replacing the inventory in their U.S. warehouses for as long as possible.

With the value of the dollar hardening, steel imports are starting to come back, he said. For the period January to March 2009, total steel and iron imports jumped 18.5 percent compared with the same period in the prior year.

The port handled nearly 431,000 short tons during the three-month period, up from 363,500 during the prior period.

Other important commodities for the port are rubber, non-ferrous metals, such as aluminum, plywood, and forest products.

During that same first quarter period, all breakbulk cargo through New Orleans jumped nearly 27 percent compared to the prior year, Bonura said. Export grain, a primary bulk cargo for the port, increased more than 10 percent.

By comparison, containerized tonnage fell more than 18 percent to 594,000 short tons. Overall, it means general cargo through New
Orleans was up 5 percent during the three month period.

What may at first glance appear counter-intuitive, the Port of New Orleans often benefits from a down economy as traders stock-
pile materials.

New Orleans is listed on the London Metal Exchange. When commodity prices are low, people who trade on the exchange prefer to warehouse those commodities. Goods are moved to the U.S. through New Orleans, where they are warehoused until prices improve.
“Non-ferrous metals tend to be counter-cyclical,” Bonura said. “We see a lot of them when the economy is down.”

Containerized cargo is an important and growing part of the port’s business, Bonura said, but breakbulk takes the lion’s share. For volume to go up 26 percent in a quarter is significant, he said.

“I don’t think anyone’s predicting we’re out of the woods yet, but it’s a good sign of improvement,” he said.

Less elastic curveAaron E. Ellis, Communications director for the American Association of Port Authorities in Washington D.C., said the overall trend isthat the big container ports took the hardest hit from the economic slide, most likely because many of those containers were full of consumer goods.

Breakbulk and bulk commodities tend to have a “less elastic demand curve,” he said. When times are tough, consumers will think twice before buying goods such as a new pair of shoes or a flat-screen television.

“If you follow basic economic principles, it’s more difficult to do without gasoline,” Ellis said.

But more recently, the federal government’s stimulus money is starting to trickle through, he said.

The movement of construction products slowed to a crawl when the economy crashed. The bailout cash is creating renewed demand for building materials as the list of government-backed road, rail and other public construction projects continues to expand.

Project cargoes move like the “wind”
The Obama administration, too, is creating a wave of alternative energy projects, which in turn is playing a significant role in the recovery and strength of breakbulk. One of the bright spots is wind energy, Ellis said.

Turbines, power generation equipment and oil exploration components are providing many ports with a welcome boost.
At the Port of Charleston, where officials have worked to proactively increase bulk and breakbulk business, any success the port has seen is thanks to energy-related import and export cargo, said Byron Miller, director of public relations for the South Carolina State Ports Authority.

One of those successes came in March when Charleston officials announced a new service by the National Shipping Company of Saudi Arabia, or NSCSA. The line will bring a combination of breakbulk, roll-on/roll-off and containerized cargo to the port on a 21-day frequency.

The new service will focus initially on breakbulk, specifically exporting turbines and other energy-generating equipment, to the Middle East. 

Breakbulk vessel calls in Charleston increased more than 26 percent during the first quarter of the year compared with 2008. Container vessel calls, meanwhile, dropped 3.6 percent during the same period.

“It seems as though any port we talk to that handles wind energy components is doing OK,” the AAPA’s Ellis said. •

In This Issue

Up Front

News, Trends & Analysis
New Items

The Growth Paradox

Supply Chain
Industries to watch

Trade compliance in the workplace

Logistics costs dropped in 2008

Overseas trade experts have some tips for you

Five things you should know about U.S. trade policy

Supply Chain product review
Inventory container management

Features
Gateway at a glance U.S. Northeast

Bulk Up

Ports & infrastructure
Port of Seattle nets new container business

Clean trucks at your ports: How to pay for them?

Port Product Review
Project cargo equipment

Commentary
Are we thinking inside or outside the box?

On the horizon: Wave Energy - A future power source for your port

Casualties