Monday, January 6, 2014
Panama Canal and contractors tussle over $1.3B cost overrun
The construction consortium executing the Panama Canal expansion has threatened to stop work on the waterway if canal officials don't pay a cost overrun to the tune of $1.63 billion, which amounts to approximately half the original $3.1 billion contract.
Grupo Unidos por el Canal says the massive additional costs are due to the operator's flawed geological studies of the canal's terrain. The consortium, led by Spanish builder Sacyr Vallehermoso, includes Impregilo of Italy, Jan De Nul of Belgium, and Constructora Urbana SA of Panama.
Panamanian President Ricardo Martinelli is meeting with Spain's public works minister this week to iron out a compromise, after the companies informed canal officials via a December 30 letter that they would walk out if the $1.6 billion isn't paid.
"The notice of intent to suspend work is not valid and the arguments raised by the contractor in the note lack legal basis and are not clear," said the Panama Canal Authority (ACP) in a statement issued Sunday. "If the contractor does not fulfill its commitment, the contract includes mechanisms to ensure that the project is completed."
In the letter, consortium leader Sacyr accused the Panama Canal Authority of breaches of contract, asserting that canal officials are obligated to cover the added costs and giving them 21 days to settle the claim. In Sunday's statement, the ACP said they have issues with the companies' work on the $5.25 billion expansion, including their decision to reduce staff in an "apparent intention to slow down performance."
The group, which won the expansion contract in 2009, was poised to build a third set of locks to accommodate the passage of modern ultra large container vessels. Panama Canal managers say the expansion, set to be completed by June 2015, is 72 percent finished.
For more of the Bloomberg story: bloomberg.com
For more of the Reuters story: uk.reuters.com
Maersk sells 15 mega tankers to Euronav for close to $1B
Maersk Tankers Singapore, a unit of A.P. Moller-Maersk, has contracted to sell 15 very large crude carriers to Belgium's crude oil shipping concern, Euronav, at a price of $980 million, according to a Euronav statement.
Euronav said the addition of the 15 ships, which have been in operation for an average of 4 years, would bring its fleet up to almost 50 ships. The company says the acquisition is a first step towards a broader consolidation of the global tanker fleet, and added that the ships will be operated within the Tankers International VLCC Pool, founded in part by Euronav.
"Euronav led the way in 1999 with the establishment of the first VLCC pool, Tankers International LLC," said Paddy Rogers, CEO of Euronav, "and it is our belief that effective access to capital markets will require tanker-owning companies to become larger so as to provide sufficient scale and liquidity to meet the requirements of large institutional investors."
The price of the tankers is payable upon delivery, which is estimated to occur between January and June, except for one chartered ship that will be delivered at the end of 2014, according to the statement.
U.S. manufacturing ends year on up note
Manufacturing in the U.S. ended on a positive note, with December registering the seventh straight month of expansion with a PMI reading of 57, according to the Institute of Supply Management.
The reading was 0.3 percent lower than November's PMI, but slightly bested the prediction of analysts.
"Manufacturing PMI measures averaged 56.3 in the second half of 2013, a nice improvement from the 51.5 average seen in the first half of the year," said Chad Moutray, chief economist for the National Association of Manufacturers.
The employment index increased from November's 56.5 percent to 56.9 percent in December, the highest level since June 2011.
For more of the Industry Week story: industryweek.com
U.S. Coast Guard cutter heads to Antarctica to free two ice-bound ships
The U.S. Coast Guard is sending a specialized ice-breaking cutter to help free two ships stranded in the ice in Antarctica.
In early December, the Polar Star embarked on Operation Deep Freeze, which involves breaking a channel through sea ice to resupply and refuel stations in the NSF-managed U.S. Antarctic Program. The 399-foot USCG cutter can continuously break 6 feet of ice while traveling at 3 knots and ram through ice two-stories high by backing up and butting its way to the other side.
"Our highest priority is safety of life at sea, which is why we are assisting in breaking a navigational path for both of these vessels," said Vice Adm. Paul Zukunft, head of the Coast Guard Pacific Area. "We are always ready and duty-bound to render assistance in one of the most remote and harsh environments on the face of the globe."
Fifty-two scientists and tourists who had been trapped for a week aboard the Akademik Shokalskiy, the Russian ship, were airlifted by helicopter Thursday from the second stranded vessel, the China's Xue Long (Snow Dragon), said Zukunft.
The trapped passengers were transported to the Aurora Australis, an Australian icebreaker that will take them to Tasmania by mid-January.
The crews of the Russian and Chinese vessels have stayed aboard their respective ships.
The Polar Star is responding to a request from the Australian Maritime Safety Authority, coordinator for the continuing rescue operations.
For more of the Seattle Times story: seattletimes.com
Dock worker injured by falling container
A forklift operator at Port Lyttelton in New Zealand was hurt after a shipping container fell on him at the Lyttelton Port Company's yard on Saturday morning.
The driver, who sustained head injuries, was transported to Christchurch Hospital to likely undergo reconstructive surgery of the shattered bones in his skull.
An anonymous Lyttelton Port worker said driver training is a major problem at the depot yard.
For more of The Press story: stuff.co.nz
Tuesday, January 7, 2014
Big business coalition supports Obama in trade deal fight
U.S. big business groups are lobbying Congress to back President Obama in his efforts to clinch two key global agreements that would effect trade for more than half of the world's economies — the Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership.
The pending two trade deals, which would do much to support the President's push to double U.S. exports by the end of the 2014, are being negotiated with 11 Pacific Rim nations and 28 European Union countries, respectively.
The Trade Benefits America Coalition, which includes powerful pro-trade groups Business Roundtable, the U.S. Chamber of Commerce, the American Farm Bureau Federation and the National Association of Manufacturers, is supporting Obama. The coalition, which boasts a membership that includes industry giants such as Boeing, MetLife, Pfizer and Wal-Mart, has been lobbying hard in recent months to drum up allies at the local, state and federal levels.
The deals have to get past nearly 200 congressional Democrats and Republicans who don't want to give the Administration "fast track" authority by yielding the ability to make amendments to the agreements.
A contentious trade debate is in the offing this month, as Senate Finance Committee leaders Max Baucus, a Montana Democrat, Orrin Hatch, a Utah Republican, and House Ways and Means Committee Chairman Dave Camp, a Michigan Republican, are poised to introduce a bill to give Obama fast-track authority.
Proponents of trade-promotion authority, or TPA, argue that such legislation will help the U.S. make more advantageous deals, since other countries will have the assurance that the terms of the agreements won't be changed later as political winds shift.
Opponents say a new bill must demonstrate that the proposed trade deals will protect American jobs and manufacturers that could be adversely affected by outsourcing, Internet trade, currency manipulation and government competition.
For more of the Bloomberg story: businessweek.com
Maersk to sell $3B stake in Denmark's top retailer
A.P Moller-Maersk announced Tuesday it will sell the majority of its stake in Denmark's largest retailer, Dansk Supermarked, for approximately $3 billion.
The shipping giant will sell a 48.7 percent stake in the retail store to its longtime partners, the Salling companies, with the option to sell its remaining 19 percent share within the next five years.
As a part of the agreement, Maersk said it will also sell its 18.7 percent stake in F. Salling Holding.
Maersk said would make approximately $2.5 billion from the completed transaction.
Dansk Supermarked is the largest operator of retail stores in Denmark under a number of brands, including Netto and Salling.
For more of the New York Times story: dealbook.nytimes.com
UP launches new intermodal service between Laredo and Memphis
Union Pacific railroad announced its new intermodal third-morning service between Laredo, Texas and Memphis, Tennessee, which supports the transport of autos and other goods between the U.S. and Mexico six days per week.
"With a truck-competitive transit time, this service allows our automotive manufacturing customers to convert truck shipments to rail with minimal impact to their on-hand inventory of auto parts and the customized racks required to ship them," said Linda Brandl, vice president of Automotive at Union Pacific, in the statement.
The Laredo-Memphis rail service connects manufacturers located in Mexico with retail stores and distribution centers in the Southeastern United States.
Singapore port sets container volume record in 2013
Container volume at the port of Singapore increased by 2.9 percent in 2013.
The globe's second busiest container port handled a record 32.6 million TEUs, according to an advance estimate from Transport Minister Lui Tuck Yew, despite surging energy costs and shipping industry overcapacity.
Total cargo throughput rose 3.6 percent to 557.5 million metric tons, according to the Maritime and Port Authority of Singapore, and although sales of bunker fuel fell to 42.5 million tons from 42.7 million in 2012, Singapore remained the world's top bunkering port in 2013.
Vessel arrivals climbed 3.2 percent to 2.33 billion gross tons, with container ships and tankers accounting for about 30 percent each of total arrivals, the MPA said.
For more of the Bloomberg story: businessweek.com
Indian Coast Guard rescues cargo ship
The Indian Coast Guard rescued a cargo ship on Monday with six people on board.
The MSV Betheal Jeeva, carrying metal, sand and furniture, had lost communication while on its way from Beypore port to Minicoy in Lakshadweep, and the Coast Guard deployed aircraft to locate the beleaguered vessel.
After an inspection, it was found that the ship's engine stopped functioning because of a broken engine plate.
For more of the Business Standard story: business-standard.com
Wednesday, January 8, 2014
Maersk resurrects Sealand moniker for new Americas shipping line
Maersk Line is launching a regional container-shipping firm, SeaLand, which will service ports within the Americas markets starting January 2015, according to a company statement.
Maersk derived the name of the new line from Sea-Land Service, a shipping company founded in 1960 by entrepreneur Malcom McLean that was acquired by A.P. Moller-Maersk in 1999 and incorporated into its operations.
The new shipping company will be organized similar to Maersk's other regional carriers, the statement said, such as its MCC Transport line that services Asia, and Seago Line, which calls at ports in Europe.
Maersk Line veteran Craig Mygatt will serve as CEO of SeaLand, and Maersk will transition its intra-Americas business to the new company in phases throughout 2014.
"We heard from our customers that they value Maersk Line services but they required greater service stability and commitment. That's one of the key reasons why we're responding with an improved, restructured solution for the Intra-Americas," said Mygatt. "We look forward to developing strong, enduring customer relationships as the new SeaLand organization."
Maersk reports that the new 240-member SeaLand team will begin their roles in January 2014, and the new line will be headquartered in the U.S., although the location has not yet been determined.
"This reorganization is an investment in our global container business," said Vincent Clerc, chief trade and marketing officer of Maersk Line. "It enhances and strengthens service in this important and growing trade region."
SeaLand will share certain Maersk Line operational services, such as finance, landside operations, and human resources.
Hanjin poised to decide whether to keep service at Port of Portland
Hanjin Shipping is expected to decide this week whether or not to keep its weekly service at the Port of Portland, after notifying the port that it planned to pull out due to chronic labor conflicts at the port that led to poor performance in 2013.
Oregon's governor recently made a port job decision meant to ease conflict with the dockworker union and help keep Hanjin Shipping at the Port of Portland by spurring container movement at the port.
Port operator ICTSI issued a statement saying the numbers of containers moved per hour has not improved over the past few weeks, but Bill Wyatt, the port's executive director, said that he had seen improvements.
Improved productivity would reduce ICTSI's labor costs, giving shipping lines leverage to negotiate lower rates with the terminal operator. Specific data will be available on Wednesday.
"We're not setting any Olympic records," Wyatt said. "But I have seen the numbers and there has been improvement. There does seem to be a difference in attitude with labor on the waterfront, and we're encouraged."
Gov. John Kitzhaber brokered a deal on Dec. 12 that shifted two disputed reefer maintenance jobs from the electrician's union to workers in the International Longshore and Warehouse Union. His hope was that the action would spur expedited dockworker activity at the port, although ILWU offered no guarantee.
Hanjin faces its own financial challenges after two straight years of losses. If the container carrier makes good on its threat to leave the port, Northwest shippers would incur extra costs to truck containers to and from the ports of Tacoma and Seattle.
For more of the Oregon Live story: oregonlive.com
Port of Seattle CEO Yoshitani to retire in June
Port of Seattle CEO Tay Yoshitani announced at Tuesday's port commission meeting that he would retire at the end June 2014 when his current contract expires.
Yoshitani has served as the port's leader for seven years, a position that oversees the operation of the region's seaport and Seattle-Tacoma International Airport.
Port Commissioner Tom Albro said the commission would soon hire a search firm and begin the international recruitment process for his replacement.
Yoshitani currently makes $367,000 per year at the port, and has a second paid position sitting on the board of freight logistics company, Expeditors International.
For more of the King 5 News story: king5.com
Panama Canal and building group to address overruns with joint financing
The Panama Canal and a building consortium performing the canal expansion work are trying to make a deal to keep the project going after the consortium threatened to stop work over $1.6 billion in cost overruns.
While the two sides are arguing over who should pay for $1.6 billion in budget overruns, both have agreed to put up at least $100 million each to keep the project going.
However, building consortium Grupo Unidos por el Canal, led by Spanish construction company Sacyr, said in a statement it asked the canal administrator for a $400 million advance.
Earlier, the Panama Canal Authority proposed a $283 million joint financing package, but the building companies were not receptive to the idea because it would require them to put up cash while the authority would just advance the funds it would have paid anyway.
Under that plan, the PCA and the consortium would each put up $100 million, and the canal would give the group more time to repay $83 million that was advanced to them.
"The Panama Canal can't have this work stopped," the canal authority's head, Jorge Quijano, told reporters in Panama City earlier on Tuesday. "And we have to do everything necessary to continue with the project."
For more of the Global Post story: globalpost.com/dispatch
CN train carrying crude jumps rail, catches fire
A Canadian National railway freight train carrying crude oil and propane derailed Tuesday in New Brunswick, triggering a fire that was still burning more than 12 hours after the incident.
A helicopter is being brought in today to locate what is on fire in the 122-car train wreck, which happened when the cars jumped the tracks about 7 p.m. Tuesday near the town of Plaster Rock, according to Jim Feeny, a CN spokesman. He said 14 cars and a locomotive are in the fire zone.
Yesterday's accident and a Dec. 30 crude-carrying train derailment in North Dakota is bringing more international attention on the dangers of moving oil via rail.
For more of the Bloomberg story: bloomberg.com
Thursday, January 9, 2014
Mexican exec acquires 49 percent stake in SSA Marine
In a complex transaction, Mexican businessman Fernando Chico Pardo acquired a 49 percent stake in port operations giant SSA Marine that was formerly held by a Goldman Sachs private equity fund.
GS Infrastructure Partners sold its shares in SSA Marine's parent company, FSR Capital Corp, to the founding Smith/Hemingway family. After the acquisition, Fernando Chico Pardo bought a 49 percent share in the firm.
The Seattle-based global port operator runs more than 200 marine terminal and rail facilities across the Americas, Asia and South Africa. The company is also involved in several coal export terminals.
Carrix, the FSR Capital subsidiary that serves as SSA's direct parent company, released a statement that the deal closed on Tuesday, but didn't offer further details.
Carrix senior vice president Bob Watters told the Seattle Times that Chico Pardo was "a great match" because he runs a family-based company with a similar long-term vision. He added that the transaction comes at a time when SSA Marine is preparing to refinance existing debt.
The money will be used to improve the port operator's existing facilities and to increase its portfolio. Accommodating ultra large Post-Panamax vessels will require upgrading its current port infrastructure and adding new equipment, Watters said.
Chico Pardo leads Grupo ASUR, which operates nine airports in Mexico. He serves on the board of the United Nations Global Compact, an alliance of businesses committed to adopting human rights, transparency and environmental initiatives.
For more of the Seattle Times story: seattletimes.com
Maersk CEO: Overcapacity to continue through 2016
Despite recent indications of global economic recovery, AP Moller-Maersk CEO Nils Andersen expects the shipping industry to continue its chronic struggle with ship overcapacity for at least three more years.
"That's just the situation we'll have to learn to live with," said Andersen, who was in Singapore for the christening of the Mary Maersk, the third in Maersk Line's class of new Triple E Class ships to call at the city's port. "We, at the moment, are rather successful in making a profit but of course it is a difficult environment to operate in if you are a smaller player," he added, referring to the recent successes of Maersk Line.
Maersk Line posted third quarter net profits that increased 11 percent to $554 million on cost cutting measures that helped mitigate low freight rates. This upturn by its shipping arm helped to lift AP Moller-Maersk's full-year forecast, as its third quarter net profit surged 28 percent to $1.2 billion.
The industry is still beleaguered with vessel overcapacity, which lowers freight rates. A surge of new ship deliveries is ensuring that the problem will endure for some time.
The Maersk CEO said his company is careful not to put more capacity into the Asia-Europe trade route than it needs. "So when we put in new Triple-E vessels, we take out other, older vessels with higher fuel consumption, higher costs. The exercise is not to add more capacity but to reduce cost and become more environmentally friendly."
For more of the Asia One story: business.asiaone.com
APL reorganizes business structure
APL, a unit of Neptune Orient Lines, is shifting its business in February from a geographic to a functional model, breaking it down into five key areas — trade, commercial, operations, procurement, and planning and strategy, according to an NOL statement.
Low growth and intense competition in container shipping means that APL needs to respond more quickly to market conditions and their customers, according to APL President Kenneth Glenn. After an in depth study of its business model, the company decided on a new strategy that uses cost efficiency and organizational agility to make the company more competitive, the statement said.
"APL has significantly improved its cost position through operational efficiencies," said Glenn, "as well as the continuing introduction of large fuel-efficient ships and the return of expensive chartered tonnage. We want to now take our speed of decision-making, market responsiveness and cost management to the next level by adopting a function-led management approach."
NOL said its new strategy would usher in a new APL management team, led by Glenn, comprised of Chief Commercial Officer Peter Jongepier, Chief Trade Officer Calvin Leong, COO Nathaniel Seeds, and Chief Procurement Officer Jason Wong.
Suez Canal Authority solicits bids to develop industrial and logistics hub
This week Egypt asked 14 consortia to submit bids and visions of how they would develop the Suez Canal area, in a move to attract more ships and revenue to boost the country's finances.
The canal, the quickest shipping route between Europe and Asia, makes approximately $5 billion annually in revenue that has grown in importance since the 2011 uprising has since kept tourists and foreign investors at bay.
"We must move dynamically — investors must find service here at an international level because if they do not find it here they will go some place else," said Mohab Memish, head of the Suez Canal Authority, at a press conference in Ismailiya.
Egypt plans to turn 29,000 square miles around the canal into an international industrial and logistics hub, to help revive economic development after years of fiscal uncertainty and political turmoil.
Memish said a winning bid and plan will be chosen within the next three months, and then developers will have six months to come up with a master plan.
For more of the Reuters story: theafricareport.com
Port leaders wager over Saints-Seahawks face-off
As the Seattle Seahawks are poised to face the New Orleans Saints in the NFC Divisional Playoff game this weekend, port leaders are betting on their home teams.
Fiercely loyal to their respective teams, Port of Seattle CEO Tay Yoshitani and Port of New Orleans CEO Gary LaGrange have locked in a wager that involves regional seafood.
If the Seahawks win, LaGrange has pledged to send Yoshitani a combo of boiled crawfish, wild alligator and New Orleans-style barbecue shrimp, courtesy of two-time Super Bowl champion Jarvis Green's New Orleans Shrimp House.
If the Saints win, Yoshitani has agreed to hand over a "Washington seafood sampler" consisting of crab, salmon and halibut.
In an email to the New Orleans port's director of external affairs Matthew Gresham, Yoshitani referenced the seismic event caused by cheering Seahawks fans when Seahawks beat the Saints on Dec. 2.
"Get your seismographs ready," Yoshitani wrote, "we know there's going to be another earthquake at CenturyLink Field on Saturday. Go Hawks!"
"There's been a lot of braggadocio out there, a lot of hullabaloo, and we weren't going to take that sitting down," said LaGrange.
In a phone interview, LaGrange said Yoshitani is a personal friend. LaGrange served as chair of the American Association of Port Authorities in 2006, and Yoshitani is AAPA's current chairman.
For more of the NOLA.com story: nola.com