Cargo Business Newswire ArchivesSummary for January 4 through January 8, 2016:
Monday, January 4, 2016
Port of LA welcomes biggest ship to call a N. American port
The largest container ship ever to call at a North American port arrived at the Port of Los Angeles at dawn on Saturday, December 26, according to a port statement.
French shipping giant CMA CGM launched the massive vessel on December 10. The CMA CGM Benjamin Franklin is 1,300 feet long, 177 feet wide and has the capacity of nearly 18,000 TEUs.
The giant container ship, the world’s 10th largest, went on to dock at the Port of Oakland on New Year’s Eve. It is scheduled to provide regular service between China and the U.S. West Coast.
The visit is a taste of things to come, and a first instance for the West Coast ports to test their readiness to rapidly load and unload the huge ships in a timely and cost effective manner.
Beijing clears the way for China Merchant’s acquisition of Sinotrans & CSC
China’s cabinet approved China Merchants Group’s acquisition of logistics group Sinotrans & CSC Holdings Co, combining two of the country’s biggest state-owned transport and logistics firms.
The deal, reported by financial magazine Caixin in November, puts China Merchants assets worth an estimated $96 billion and Sinotrans & CSC assets worth about $16.7 billion under the same roof.
China Merchants’ business includes ports, shipping and financial services, while Sinotrans & CSC is involved in logistics and vessel chartering.
The acquisition will result in "economies of scale and synergies in areas including integrated logistics, resource and bulk cargo transport, development of industrial parks, port and air transport operations and equipment manufacturing," according to an email statement sent to Reuters by Sinotrans.
Earlier in December, thes cabinet approved the merger of the two biggest state-backed shipping conglomerates, COSCO and China Shipping Group Co.
Effective January 27, 2016 Hapag-Lloyd will revise the Alameda Corridor Fee for all import and export intermodal cargoes via the ports of Los Angeles and Long Beach, as follows:
USD 24 per 20’ Container
USD 48 per 40’ Container
USD 48 per 40’ High Cube Container
USD 54 per 45’ Container
U.S. oil export marks first such shipment in 40 years
The first U.S. shipment of crude oil to an overseas buyer left a Texas port mere weeks after a 40-year ban on most such exports was lifted.
The Theo T tanker has departed NuStar Energy’s facility in Corpus Christi, Texas, according to Mary Rose Brown, a spokeswoman for NuStar. The ship is carrying a cargo of oil and condensate from ConocoPhillips’s wells in South Texas that was sold to Swiss trading house Vitol Group.
A campaign led by oil explorers—including Continental Resources, Chevron and Exxon Mobil— to lift the 1970s-era export prohibition ended in a Dec. 18 congressional decision to end the ban.
On Wednesday (12/30) the U.S. Coast Guard closed a 76-mile stretch of the Mississippi River spanning Chester, Illinois, to the north and Billings Island, Missouri, to the south, according to USCG Public Affairs Officer Christopher Pince.
The section of the river between mile markers 110 and 34 was closed to all vessel traffic, Pince said, after heavy rain raised water levels to moderate and major flood stages, making navigation hazardous.
The river carries grain that accounts for 60 percent of U.S. exports to two major ports in Louisiana.
"In Washington, things go from impossible to inevitable overnight," mused Secretary of Transportation Anthony Foxx to a POLITICO reporter on December 18. Just twelve short months ago, the prospects of Congress moving a long-term surface transportation bill seemed slim at best. Come December, passage of the Fixing America’s Surface Transportation (FAST) Act was imminent. Was the writing on the wall or did the FAST Act catch us all by surprise?
Perhaps the first sign that Washington intended to get serious about passing a long-term surface transportation bill was the flurry of proposals that cropped up earlier this year suggesting ways to pay for a long-term bill. Several lawmakers and the Obama Administration introduced legislation directing revenue from a revamped corporate tax code into the Highway Trust Fund. While the proposals varied in structure and tax rate, repatriation as a concept had support from the two parties and on both sides of the Capitol. Meanwhile, other legislation was introduced to raise the gas tax and institute a barrel tax during the early part of 2015.
As suggestions on how to pay for a long-term bill percolated through the halls of the Capitol, the policy committees began to move legislation as well. The Senate Environment and Public Works (EPW) Committee, with jurisdiction over the highway portion of the surface bill, marked up their long-term bill on June 24. The Senate Commerce, Science, and Transportation Committee, with responsibility for the multimodal and safety provision of a surface bill, marked up their legislation shortly after. The EPW and Commerce titles were combined with a transit title and shepherded to the Senate floor.
The Senate then opted to avoid the political heavy-lifting associated with restructuring the corporate tax code, and instead supplemented existing gas tax revenues with a transfer from the General Fund of the Treasury, offset in the budget through non-surface-transportation-related spending cuts. On July 30, the Senate voted 65-34 to pass their Developing a Reliable and Innovative Transportation (DRIVE) Act, then gaveled out for August recess.
Attention turned to the House, where the Transportation & Infrastructure (T&I) Committee indicated hesitation to move forward without a Ways & Means title that could pay for the bill. Then-Speaker of the House John Boehner, referring to the Senate’s cobbled together funding package, called the DRIVE Act a "piece of --it," and for a moment, it seemed like the legislation would stall indefinitely.
Unexpectedly, in late fall, Boehner announced his retirement and Ways & Means Chairman Paul Ryan (R-WI) ascended to the speaker’s gavel. With a leadership vacuum atop the committee responsible for funding a long-term surface transportation bill, T&I Chairman Bill Shuster (R-PA) moved to introduce this six-year Surface Transportation Reform and Reauthorization (STRR) Act, coupling it instead with the Senate budgetary offsets. STRR was marked up and approved by T&I unanimously, and then passed the House 363-64 on November 5.
The compromise between the Senate DRIVE Act and the House STRR Act was released on December 1. The FAST Act Conference Report contained $281 billion in contract authority and paid for five years of spending with gas tax revenue and a $70 billion transfer from the General Fund of the Treasury to the Highway Trust Fund. Highlights of the bill include two new freight investment programs, a multimodal national freight policy, and a new National Surface Transportation and Innovative Finance Bureau.
While the surface bill was a crowning achievement of 2015, Congress can lay claim to other transportation achievements. The Surface Transportation Board was subject to an overhaul in December, when lawmakers passed a bill making the government agency independent from the U.S. Department of Transportation and instituting key changes to the arbitration process, among other reforms.
The FY16 Omnibus, which also passed in December, includes $500 million for the popular TIGER investment grant program. The bill also found a middle ground between trucking and safety interests. In the final negotiation hours, lawmakers struck language allowing for twin trailers, but acquiesced to industry concerns over the ongoing Federal Motor Carrier Safety Administration 34-hour restart study by adding new standards the study must meet in order to reinstate the July 2013 rule.
2016 is now coming into view, and it’s sure to be a packed one, with possible action on a Federal Aviation Administration bill and another Water Sources Reauthorization Act. And for surface transportation, with the FAST Act now the law of the land, the regulation process begins anew.
Blakey & Agnew, LLC is a public affairs and communications consulting firm based in Washington, DC.
S. Korea to create $1.2 billion ship investment fund
The South Korean government has announced it will create a $1.2 billion ship investment fund to help its struggling shipping industry.
The fund will help shipping companies buy and sell vessels with less financial risk, with Korea Trade Insurance Corp. and Korea Maritime Guarantee Insurance Co. offering insurance for the process, according to statements released by the nation’s Financial Services Commission and its Ministry of Oceans and Fisheries.
Local financial companies and state-run policy lenders, including the Korea Development Bank, will participate in the $1.2 billion fund.
Hyundai Merchant Marine and Hanjin Shipping have faced weak demand throughout the year, while Asia's fourth largest economy suffered an 11-month drop in its outbound shipments.
Also, the Korean government will require local shipbuilding companies to go through harsh restructuring and downsizing through mergers and acquisitions to overcome current difficulties.
Hyundai Heavy Industries Co., South Korea's largest shipyard, and its rival Daewoo Shipbuilding & Marine Engineering Co. have reported massive losses so far due to a sharp fall in new orders and increased costs stemming from a protracted procedure in building offshore facilities.
Heartland Intermodal Gateway rail terminal opens in W. Virginia
The West Virginia Port Authority has a new railroad facility in Appalachia to potentially diversify an economy that has relied on coal for decades.
The Heartland Intermodal Gateway terminal in Prichard recently opened on 76 acres donated by Norfolk Southern. Owned by the West Virginia Port Authority, it is designed to move containers more efficiently by rail through a double-stack method while offering a cheaper alternative to trucks.
Officials hope the terminal can mirror growth generated by other facilities in places like Front Royal, Virginia, and Greer, South Carolina.
"Now they're moving large amounts of containers," said port authority Executive Director Neal Vance. "They're starting to see warehousing and distribution centers pop up along the edge of their properties. I really think we could potentially see that here."
While all those containers pass through, the economic benefits locally could come from a higher tax base and potential jobs if fringe businesses open — not to mention less wear-and-tear from trucks, Vance said.
There are dozens of intermodal facilities across North America. This is the first in West Virginia. The nearest such facility is 140 miles to the west in Georgetown, Kentucky.
Shipping freight rates for transporting containers from ports in Asia to Northern Europe jumped 115 percent to $1,232 per-TEU in the week ended on Friday (1-1-2016), data from the Shanghai Containerized Freight Index showed.
Average rates for 2015 were $620.30 per TEU compared with $1,171.50 in the previous year.
In the week to Friday, container freight rates soared 146.5 percent from Asia to ports in the Mediterranean, jumped 98.2 percent to ports on the U.S. West Coast and were up 76.5 percent to ports on the U.S. East Coast.
Maersk Line, the global market leader with more than 600 container vessels, reported in November a 61 percent drop in net profit in the third quarter.
The Danish shipping company controls around one fifth of all transported containers from Asia to Europe.
China fined eight shipping firms a total of $62.8 million for alleged price fixing, according to The Wall Street Journal.
The fines focused on firms that transport cars and other vehicles to and from China, according to the National Development and Reform Commission. The agency said the eight companies colluded to keep freight rates at high levels, and the fines are equivalent to 4 to 9 percent of the companies’ international shipping sales related to China.
South Korean shipping company Eukor Car Carriers Inc. was ordered to pay $43.4 million, the largest single fine. "We are glad to see the investigation come to an end, so we can move forward," said Craig Jasienski, chief executive and president of Eukor.
Wallenius Wilhelmsen Logistics, based in Oslo, was fined $6.8 million, the second-largest amount. Japan’s Mitsui O.S.K. Lines was ordered to pay the third-largest fine, $5.8 million. Citing its cooperation, the agency did not fine Japan’s Nippon Yusen K.K.
Eukor, Wallenius, Mitsui and Nippon Yusen said they accepted the NDRC’s conclusions.
China in recent years has stepped up its enforcement of its antimonopoly law, making it a major factor in international deals and trade.
Four Chinese shipping firms realign on COSCO-China Shipping merger
Four listed Chinese shipping subsidiaries will realign their businesses due to the merger between COSCO Group and China Shipping Group.
China COSCO Holdings is selling its stake in a bulk shipping company to parent COSCO Group for $1.04 billion. Meanwhile, COSCO Pacific will buy a port operator from China Shipping Container Lines for $1.1 billion. After all deals are completed, China COSCO will specialize in container shipping and COSCO Pacific in operating ports.
China Shipping Development, owned by China Shipping Group, will focus on transporting petroleum products, liquefied natural gas and other items, while fellow group company China Shipping Container Lines will deal with maritime financial services.
The companies hope to gain an edge by eliminating any overlaps. China Shipping Development is expected to become one of the world's largest transporters of LNG.
The four firms will also technically improve their financial position by transferring unprofitable businesses to their unlisted parent companies, but investors could have a harder time determining what's really going on behind the books.
The merger between COSCO Group and China Shipping Group will create the world's fourth-largest shipping company by capacity.
Contract ocean freight rates on the major East-West trade routes saw another reduction in the last quarter of 2015, according to Drewry’s Benchmarking Club, a closed user group of multinational retailers and manufacturers who monitor their contract freight rates.
The Drewry Benchmarking Club Contract Rate Index, based on Trans Pacific and Asia-Europe contract freight rate data provided confidentially by shippers, declined by 5 percent between August and November last year, another fall on top of the sharp decline we saw during the 3rd quarter of 2015.
The reduction was driven by a combination of lower fuel costs, excess vessel capacity and intensive competition between shipping lines. Bunker costs fell from the fourth quarter of 2014 and this contributed to a reduction in contract rates negotiated over the course of last year. The fall in the Drewry Benchmarking Club Contract Rate Index between February and November 2015 was as much as 14 percent. This trend was also reflected in the spot market.
Some of the drop in contract rates was the result of carriers granting shippers temporary reductions in contract rates to secure cargo. Drewry notes that a small number of shippers are using spot market rates for a proportion of their volumes. We advise some caution with this approach as volume and space guarantees are not normally warranted and may pose a risk, especially during peak periods.
"As expected, contract rates reduced further through the latter part of 2015, as the effect of falling fuel costs and continuing overcapacity weakened market rates," said Philip Damas, director of Drewry Supply Chain Advisors. "Given the volatility of rates in both the spot and the contract market, more shippers are turning to Drewry’s Benchmarking Club to ensure that they are securing the best rates in the market."
Kuehne+Nagle opens logistics facility in Singapore
Transportation and logistics company Kuehne+Nagel opened its Singapore Logistics Hub facility on Monday (1-4-2015).
Located at Pioneer Crescent, the company said it invested almost $100 million in the facility - its largest investment outside of Europe - as part of regional expansion plans to support clients operating within Singapore and the ASEAN countries.
A total of 495,000 square feet of the 538,000-square-foot facility will be dedicated to warehousing space, and 40 percent of the space features advanced chilled storage, redressing and postponement facilities to support pharmaceutical and healthcare companies in Singapore.
Apart from the standard freight and warehousing service offerings, Kuehne+Nagel said the new facility will serve as a "center of excellence" for high-tech, industrial, pharmaceutical and healthcare customers, the first for the firm in the region.
COSCO and China Shipping merger to form new company
China Ocean Shipping Group Co. (COSCO) and China Shipping Group Co. will form a new entity after merging, to be led by the China Shipping’s current chairman Xu Lirong, according to China's state-owned assets regulator.
The former competitors said in December they would merge through a series of asset swaps, creating units focused on distinct business areas such as container shipping and vessel leasing.
Together, COSCO and China Shipping control $74.7 billion worth of assets, Barclay analysts estimated.
The merger comes as the government moves to consolidate state-owned industries
Container traffic at world ports grew at slowest rate since recession
Photo credit: Bloomberg
The Wall Street Journal reports that 2015 container traffic at the world’s busiest ports grew at its slowest rate since the recession, according to an estimate by Alphaliner, shipping industry data provider.
Demand was hampered by a lack of "peak season." Traffic in the top 30 ports sank 0.9 percent in the third quarter of 2015, the first decline over those months since 2009, Alphaliner said.
For the full year, Alphaliner projects container traffic rose 0.8 percent, the smallest increase since 2009. Weak demand has left carriers struggling to find customers to fill their ships, even as new vessels hit the seas at a record pace. Last year, ships with a combined capacity of 1.7 million TEUs entered the global fleet. To combat the lower ocean freight rates resulting from excess capacity, ship owners and operators have idled more than 1.3 million TEUs of capacity.
Ports that saw the steepest declines include Jakarta, where traffic fell 16.6 percent in the first nine months compared with a year earlier, and Hamburg, where traffic dropped 9.2 percent. Ports in New York, Ho Chi Minh City, Vietnam and Port Kelang, Malaysia saw double-digit percentage growth.
CV International, a Norfolk-based freight forwarder and customs broker, has acquired M&S Shipping, a freight forwarder based in Virginia Beach.
Under the acquisition, CV International will add M&S Shipping’s three local employees to its Norfolk office.
M&S Shipping was founded in 1987 as the U.S.-based subsidiary of M&S Shipping Group Ltd. of London, to fill the need for a single source logistics firm that could deliver ocean, air, truck and rail shipping services. Like CVI, M&S Shipping’s business has been built on a results driven emphasis on customer service.
"It was a good synergy for us with some of our collateral service lines to grow the business that they had," said Mike Coleman, president of CV International.
Baltic Exchange hits record low on China economy worries
The main sea freight index of the Baltic Exchange, which tracks rates for ships carrying industrial commodities, extended its record low on Wednesday (Jan. 6) as concerns over the Chinese economy continued to affect vessel demand.
The overall index, which gauges the cost of shipping dry bulk cargoes including iron ore, cement, grain, coal and fertilizer, was down a point, or 0.21 percent, at 467 points, the lowest in records that date back to January 1985.
On Tuesday (Jan. 5) the index had touched a low of 468 points.
World stocks fell for a fifth day on Wednesday as China fueled fears about its economy by allowing the yuan to weaken further and a nuclear test by North Korea added to a growing list of geopolitical worries.
U.S. manufacturing contracted in December for the second straight month, giving heavy industry a bleak end to 2015, a survey of executives found.
The Institute for Supply Management said its manufacturing index slipped to 48.2 percent last month from 48.6 percent in November. That’s the lowest reading since the last month of the Great Recession.
Readings under 50 percent indicate more companies are shrinking instead of expanding. The ISM index has posted sub-50 percent readings for two straight months for the first time during an economic recovery that began in July 2009.
Manufacturers have been hurt by a strong dollar, declining exports and shriveling demand by energy producers for drilling equipment in the wake of the plunge in oil prices.
Low waters on the Rhine and Danube rivers impede shipping in Germany
Cargo vessels still cannot sail fully loaded on the Rhine and Danube rivers in Germany due to shallow waters, traders said.
Low levels since the summer have created logistical problems for buyers and distributors of commodities including diesel, heating oil and grains since vessels could only sail half-loaded at best. An unplanned shut down of Switzerland's only oil refinery aggravated the problem.
The Rhine is too shallow to allow vessels to sail with full loads in its entire length south of Cologne and Duisburg, traders said.
The Danube is also too low for ships to sail with full loads along the German section of the river, they said.
Low water means vessel operators impose surcharges on freight rates, increasing costs for cargo owners. More vessels are needed to transport cargo, also increasing costs.
"Rain and snow is forecast in the Rhine catchment areas this week which could raise water levels," a trader said. "People are hoping the wetter winter weather will solve the problem of low water at last."