Cargo Business Newswire Archives
Summary for December 31, 2012 - January 4, 2013:

Wednesday, January 2, 2013

Top Story

USMX and ILA contract talks extended an additional week to February 6

As reported Friday, progress was made over the holidays in contract talks between the International Longshoremen's Association and the United States Maritime Alliance, which resulted in an agreement over container royalties, a main sticking point, and extended contract talks another 30 days under federal mediation. Late Friday, the two sides issued a statement that further extended the deadline an additional week to February 6.

The breakthrough on container royalties came on Friday, December 28, when the negotiators agreed "in principle" on the extra payments given to dock workers based on the tonnage handled through their respective ports.

"The container royalty payment issue has been agreed upon in principle by the parties, subject to achieving an overall collective bargaining agreement," said George Cohen, director of the Federal Mediation and Conciliation Service in a statement.

"The royalty will stay intact. We have worked out a formula for it," said Benny Holland, an executive vice president for the ILA. He did not elaborate and the USMX declined to comment. No further details were disclosed.

The two sides also disagree over the guaranteed eight-hour workday and the seven-man "lashing gang," which the maritime alliance wants to discontinue. Lashing crews secure the cargo containers to the vessel using metal lashing rods to keep them secure while the ship is at sea.

A new long-term agreement has an 80 percent chance of happening by January 28, according to Capital Alpha Partners analyst Loren Smith.

Container royalty agreements have been a central bone of contention between the ILA and USMX since their contract expired September 30 and they agreed to extend their negotiations to the end of this year.

Container royalties paid to the ILA were initially introduced at the dawn of containerization in the early 1960s to protect any loss of labor jobs due the advent of containerization and automation in cargo handling.

As a result of the technology, the number of longshoremen employed in the Port of New York and New Jersey, has dropped to 3,500 from 35,000 in the 1960s, according to The New York Times. The union regards the payments as a core part of wages and as an important way to share productivity gains with members.
According to the USMX, those payments have since grown to over $211 million in 2011, and the shipping employers said they wanted to place a cap placed on them in the next contract.

"What I can report is that the agreement on this important subject represents a major positive step toward achieving an overall collective bargaining agreement," said Cohen.

The president and chief executive of a group representing U.S. retailers, who are collectively dependent on container ports for handling freight that has been sourced from all over the world, shared the cautious optimism.

"While a contract extension does not provide the level of certainty that retailers and other industries were looking for, it is a much better result than an East and Gulf Coast port strike that would have shut down 14 container ports from Maine to Texas," said Matthew Shay of the National Retail Federation in a statement.

No schedule has yet been announced for the next round of bargaining.

For more of the New York Times story:

For more of the Reuters story:

Northwest Grain terminal strike averted

A dock worker lockout and strike has been avoided at Northwest grain terminals since the ILWU, after rejecting the "final contract offer" from three out of four gran terminal owners, decided last Wednesday to keep working despite the "substandard" terms imposed by management. Both sides in the stalled talks said there was opportunity for further contract negotiations.

Negotiations stalled over numerous work-rule changes sought by the companies to improve efficiency and lower costs that the union deems unacceptable.

According to Reuters, a representative for the U.S. Federal Mediation and Conciliation Service was in contact last Wednesday with the parties.

Following brief talks on Wednesday, December 26, the Pacific Northwest Grain Handlers Association announced a formal impasse and that they would implement the terms of their latest proposal, effective at 6:00 a.m. local time on Thursday, December 27. The association stressed that it was not implementing the expected lockout.

The union had three choices – to strike, to accept management's terms, or to have their members continue working under the imposed work rules "but seek further bargaining." The ILWU has chosen the third option for now.

The owners stated they would reserve the right to impose a lockout in the event of intermittent strike activity, work slowdowns or sabotage by the longshoremen.

Three of the four grain terminal operators in the Pacific Northwest involved in contract talks with dockworkers had set a deadline of noon Christmas Eve for the International Longshore and Warehouse Union to accept the owners' final contract offer. The longshoremen have been working without a contract since September 30 of this year.

A port lockout or strike would have impeded or stopped the export of billions of dollars worth of U.S. agricultural products. More than a quarter of all U.S. grain exports move through nine Northwest ports.

In a statement before Christmas, Leal Sundet, an ILWU officer who co-chaired the negotiating committee, alleged the grain terminal owners intended to "risk the U.S. export market to try to break the union."

"Given the parties' respective positions, we do not believe additional meetings would be fruitful," said Glen McClendon, attorney for the operators, in a December 17 letter to Sundet, according to The Columbian.

McClendon's letter lists three of the four grain terminal operators, represented by Pacific Northwest Grain Handlers Association, which had rejected the union's latest contract offer. Columbia Grain, Louis Dreyfus Commodities and United Grain Corp. all said the union's offer "did not meet their needs because it would continue to leave them at a competitive disadvantage" to terminal operators in Longview and Kalama, which negotiated separate, more employer-friendly contracts with the ILWU.

TEMCO, which runs grain-export terminals in Portland and Tacoma, was not mentioned in the letter, indicating that it may have broken with the other three grain terminal owners regarding the terms of the current final offer.

For more of the story:

Long Beach to vote on $1.2B Middle Harbor expansion

The budget for the $1.2 billion expansion at the Port of Long Beach is coming up for vote of the Board of Harbor Commissioners on January 7. The Middle Harbor project will renovate and connect old shipping terminals.

"This is the beginning of our transformation into what will be the port of the future," said Port of Long Beach Executive Director J. Christopher Lytle.

If approved, funding will go toward environmental and engineering costs, demolition, relocation of utilities and enhancements to create greater water access and more storage areas.

Renovations include an expanded on-dock rail yard that will ultimately be 75,000 linear feet, fostering fewer local truck trips and reduced air pollution. The project will also include a high tech computer-controlled transport and stacking system.

China's Orient Overseas Container Line, which signed a 40-year, $4.6 billion deal for most of the 342-acre space, will occupy the new Middle Harbor terminal when it's completed in 2019.

According to port officials, the deal with OOCL is the biggest arrangement of its kind in the history of container terminals in the U.S.

For more of the Press-Telegram story:

Shell Arctic drilling rig beaches on Alaskan island

A Shell Oil Arctic drilling rig, the Kulluk, broke free from a tow ship on Monday night in rough seas and was beached on the south side of Sitkalidak Island, Alaska.

Coast Guard helicopters evacuated the ship's 18 crewmembers on Saturday after the ship first separated from its towline in high winds. By Monday, Coast Guard ships arrived, trying throughout Monday to reattach the line in seas up to 35 feet. They succeeded in reconnecting the line several times, only to have the ship slip the line each time, finally beaching itself.

The status of the rig, carrying 150,000 gallons of diesel fuel and lubricants, was unknown as of Tuesday night, according to the Coast Guard, which is trying to "stabilize" the ship, to prevent the fuel from spilling onto the shoreline.

This could be bad news for Shell, which has struggled in its efforts to drill for oil off Alaska's North Slope, facing equipment malfunctions, unexpected ice floes, operational failures and regulatory delays. The problems caused Shell to stop drilling for oil in September, returning its drilling rigs to Seattle for maintenance after they completed two shallow pilot holes at the Alaska drilling site.

Approximately four hundred shipyard workers on Seattle's Harbor Island have prepared the Kulluk for drilling holes at the bottom of the North Slope this summer, installing new engines, welding bulkheads and more.

On Tuesday afternoon, federal coordinator Capt. Paul Mehler III said that an investigative flight showed the Kulluk was upright and stable, with no significant motion.

"The results are showing us that the Kulluk is sound," Mehler said. "No sign of breach of hull, no sign of release of any product."

For more of the Seattle Times story:


Thursday, January 3, 2013

Top Story

Asia-Europe trade to increase through February, Maersk says

Freight demand on the Asia-Europe trade route will increase until the Lunar New Year in February as China's manufacturers increase their export supply, predicts a Maersk Line executive.

"In December, we saw nice uptick in volume running up to the year-end, and we expect that to continue into Chinese New Year," said Tim Smith, head of North Asia operations for Maersk in an interview with Bloomberg in Hong Kong on Tuesday. "We had too much cargo in the last few weeks that we had to roll containers back to sailings."

Maersk put some idling ships into service at the end of the year due to increased consumer demand, Smith said, noting that Maersk idled up to 21 percent of its fleet in 2012. Hanjin Shipping and Mediterranean Shipping Company also idled some of its vessels in the third quarter due to low European demand and overcapacity.

November Chinese retail sales were better than expected, and industrial sector profits increased for a third consecutive month. Government infrastructure projects helped to bolster the economy.

Spot rates on cargo hauled to Europe from Asia rose 28 percent in December, according to data from the Shanghai Shipping Exchange. In addition, China's December purchasing manager's index was 51.5, the highest figure in 19 months.

"Chinese domestic market spending seems to be quite strong," Smith said. "It's certainly looking more optimistic than it has been."

Smith predicted global capacity in the container ship industry might grow 9 percent this year as new ships are delivered, including Maersk's addition of the world's biggest vessel. He said that compares with a growth forecast in total demand of approximately 5 percent.

For more of the Bloomberg Businessweek story:

Shipping industry besieged by rising fuel costs

Container ships will burn through more fuel than even on increasing trade in 2013, and the rising costs will hit as the industry continues to struggle with a glut of vessels and a sluggish world economy.

The International Monetary Fund predicts global trade will grow 4.5 per cent this year, compared to 3.2 per cent last year, although the growth may not be enough to offset overcapacity.

Demand for bunker fuel will increase 2.2 per cent to 3.37 million barrels a day, says research company JBC Energy. Prices will increase by the same amount to the highest ever price of $690 a metric ton, said industry consultant McQuilling Services.

Last year, bunker prices in Singapore, the larges refueling port in the world, averaged $664.10 a ton, the most in ten years, according to Bloomberg.

A $100-a-ton change in bunker prices increases or diminishes profit by about $100 million for AP Moeller-Maersk, the owner of the largest fleet of container vessels, according to the company's third-quarter earnings report.

Mitsui OSK Lines said that high fuel prices reduced its income by $35 million in the three months to Sept 30, stating that it lost $57 million for the period.

Some vessels may sail faster with gains in consumer demand, increasing fuel use, said Erik Nikolai Stavseth, an analyst at Arctic Securities in Oslo. A very large crude carrier hauling two million barrels of oil can earn about $12,000 more per day if it sails at 10.5 knots instead of the routine 14.5 knots, according to DNB Markets, a unit of Norway's largest bank.

For more of the Today online story:

Shipping may halt this weekend on shallow stretch of Mississippi River

Shipping could halt on the Mississippi River as early as this weekend, according to the American Waterways Operators and the Waterways Council. The river's level is set to reach historic lows after rising slightly this week on the stretch between St. Louis and Cairo, Illinois, according to the National Weather Service.

Last week, the council said the river along the Cairo-St. Louis stretch would be too low for navigation by January 7 but on Wednesday it said shipping could stop between January 5 and 15.

The industry groups said a closure could cost $54 million in wages and benefits, and halt the movement of 7.2 million tons of commodities valued at $2.8 billion.

The Army Corps of Engineers remains optimistic that it can maintain the channel at the nine-foot depth that most commercial vessels need to navigate. They are hoping to increase the depth by about two feet by mid-January by removing rock formations.

The Mississippi is this shallow due to the worst drought since 1956, which has already slowed the shipment of billions of dollars worth of commodities between the U.S. Heartland and Gulf shipping terminals.

"The Corps rock removal contractors are making excellent progress in removing the rock obstructions from the primary area of concern," said the Major General John Peabody, Division Commander of the Mississippi Valley.

For more of the Yahoo story:

California ports to reroute shipping lanes around whale migration routes

Beginning this June, ships across the U.S. West Coast will be re-routed around whale feeding areas and migration routes to avoid injuring them.

Endangered blue whales, fin whales and humpbacks are killed or severely injured by incidents with barges and boats that traverse the shipping lanes around the Ports of Long Beach and Los Angeles, especially during the May-to-September migration season.

The National Oceanic and Atmospheric Administration and the Coast Guard have devised a plan to reduce the events, requiring that cargo vessels, tugboats and automobile carriers take new routes to the Southern California ports. A one-mile buffer zone between the ships and the migration route will also be maintained in the San Francisco Bay and the Channel Islands.

Approximately 200 blue whales or 10 percent of the Pacific population travel between Catalina Island and the mainland annually on their way to the Santa Barbara Channel, where they feed before moving to summer feeding grounds up north. In 2007, five whales were struck and killed in the Santa Barbara Channel.

The International Maritime Organization adopted the same changes back in November.

The new shipping routes will reduce the space between the north and southbound lanes from two miles to one and the northbound lane will move one mile closer to the mainland.

Fore more of the Long Beach Post story:

3 rescued from crab boat in Coos Bay

Three fishermen were rescued from a 39-foot crab boat, the Robert Henry, which ran aground off the Oregon Coast on Wednesday morning off Cape Aragon.

The Coast Guard responded to the scene, launching an MH-65 Dolphin helicopter crew from Air Station North Bend and a 47-foot motor lifeboat crew from Station Coos Bay. The fire department also deployed a unit.

The boats couldn't get to the crew at first due to the rocky area, but by 3:30 a.m., the helicopter lifted the sailors to safety and medical attention.

The Robert Henry is reported to have approximately 4,000 pounds of catch and 400 gallons of fuel on board, the Coast Guard said.

For more of the story:


Friday, January 4, 2013

Top Story

Yang Ming Marine to lease up to 10 ultra-large container ships

In an effort to cut costs in an uncertain market, Yang Ming Marine Transport Company of Taiwan will lease as many as 10 new ultra-large container ships from U.S. company Seaspan Corp.

The state-owned shipping concern will take delivery of some of the new vessels in 2015, chartering five of the ships for 10 years with an option to lease another five, according to spokesman Winsor Huang. He said the Seaspan agreement would be signed this month.

Huang said the ships, which will each hold 14,000 TEUs, would likely be built by a South Korean shipbuilding company. Analysts say the cost of building the ships will be between $100 and $120 million.

Hyundai Heavy Industries has been in talks with Seaspan, but there has been no deal so far, according to Reuters.

Macquarie predicts new ship deliveries will rise 8-10 percent in 2013 compared to 2012, as growth in container shipping will remain low at 4-5 percent this year.

"This is something they need," said Bonnie Chan, a Macquarie shipping analyst. "Yang Ming needs to contribute to the alliance in order to make the alliance stay competitive."

Yang Ming is a part of the four-member CKYH alliance, along with COSCO Container Lines and Hanjin Shipping, which already operate ultra large container ships. The fourth member, Kawasaki Kisen Kaisha (K Line), has announced no plans to sail ships with capacities larger than 10,000 TEUs.

For more of the Reuters story:

Kentucky seeks $7.1 million from Foss Maritime for bridge collapse

The Kentucky Transportation Cabinet is seeking $7.1 million for damages caused when the cargo ship Delta Mariner struck the Eggner's Ferry Bridge one year ago, allegedly causing it to collapse.

Foss Maritime, which owns the Delta Mariner, has told a federal judge it was not responsible for the collapse.

Companies and residents of Western Kentucky are pursuing more than $7.8 million in damages as a result of the accident, including the state claim. BellSouth Telecommunications filed a $59,000 damages claim and a nearby restaurant filed a $33,000 claim.

The claims were made public Thursday as part of a filing by Foss Maritime Thursday.

Foss Maritime Spokeswoman Suzanne Lagoni said they filed a claim in February 2012 under the Shipowner's Limitation of Liability Act, and that everyone with claims stemming from the accident was given until Dec. 12 to file those claims, according to the Cadiz Record. On Thursday, Foss Maritime made public all of the claims against it as a result of the incident.

For more of the Courier Press story:

$11 billion deal to build port and rail in Cambodia inked by two Chinese firms

Two Chinese companies, China Railway Group and Steel Mining Industry, inked an $11 billion deal on December 31 to build a port, a railway and a steel factory in Cambodia.

The deal includes a 249-mile rail route from a steel plant in Preah Vihear province to a port in Koh Kong in southwest Cambodia.

Cambodian official San Sok Lika, who works with Chinese-owned Cambodia Iron and Steel Mining Industry, said that construction is scheduled to begin by July.

For more of the Bismarck Tribune story:

Savannah River dredging conflict still in federal mediation

Officials at Port of Savannah were relieved that the dockworker strike at Gulf and East coast ports was temporarily averted, but the port is still awaiting a final go-ahead to dredge its channel to depths that will allow it to compete to receive the very large container carriers that will call once the Panama Canal expansion is completed in 2014.

The Army Corps of Engineers in April 2012 approved the deepening of the Savannah River from 42 feet to 47. The Corps stated that the project was "economically viable, environmentally sustainable and in the best interests of the United States," and the Assistant Secretary of the Army Jo-Ellen Darcy okayed the project six months later.

South Carolina, which shares both jurisdiction of the river and a port rivalry with Georgia, said its state permit for the project was improperly used, an assertion that was upheld in South Carolina Supreme Court in November. The court also ordered the two sides into federal arbitration on the issue of deepening the channel.

Assistant Secretary Darcy has appealed to Vice President Joe Biden, House Speaker John Boehner and ranking members of House and Senate committees to invoke authority under section 404(r) of the Clean Water Act to "specifically authorize" the project.

The federal mediation will run its course over the next few weeks.

For more of the Savannah Now story:

Raccoon hops a cargo ship for free trip to Hawaii

A 15-pound raccoon was found on Monday in Honolulu aboard a Matson cargo ship that had just sailed from Long Beach, California.

Raccoons are invasive species to Hawaii, due to their diet and proclivity for rabies. Hawaii is the only rabies-free state in the U.S.

Matson personnel and quarantine inspectors from the Hawaii Department of Agriculture enticed the female raccoon into a trap.

For more of the Maui Now story:

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