Cargo Business Newswire Archives
Summary for January 7, 2013 - January 11, 2013:

Monday, January 7, 2013

Top Story

Report: "Niche" shipping markets like gas and car haulers will recover in 2013

Revenue for ships that haul liquefied gas, automobiles and oil products will go up this year, according to a report from an Oslo investment bank.

Gas, cars and oil carriers are "niche" markets of the shipping industry, said the Artic Securities ASA report, which are helped by conditions, including barriers to entry. The investment bank picked Golar LNG, which has a fleet that transports liquefied natural gas, and vehicle carrier Wilh. Wilhelmsen as its two most promising stocks this year.

"Shipping equities have generally been under pressure through 2012 as most segments are suffering from overcapacity, but we see 2013 as the year when deliveries abate in most markets," the report said. Billionaire John Fredriksen is the largest shareholder of Golar LNG, Golden Ocean and Frontline 2012.

The bank predicted overcapacity would remain an issue for container carriers, crude oil vessels and dry bulk haulers through 2013.

The largest crude tankers will average $23,000 a day in charter rates this year, down from $25,200 in 2012, according to Arctic.

For more of the Bloomberg report:

Jacksonville port awaits Congressional approval for key infrastructure project

Progress at the port of Jacksonville has been in a holding pattern, according to many insiders. The new TraPac cargo terminal, finished in 2009, was expected to bring a surge of volume to JaxPort that has not yet materialized.

Hanjin Shipping is planning to build a terminal next door to TraPac.

One problem revolves around Mile Point, a section of the river on which strong crosscurrents make it difficult for full container vessels to make it to TraPac. The port has been waiting for Congress to give the okay to the Army Corps of Engineers for the $36 million Mile Point project for years.

"When I first got here, I was told it would be addressed by 2011," said Dennis Kelly, director of the TraPac terminal. "Well, 2011 has come and gone."

"It's time for some action from these people," said Elaine Brown, port advocate and former Jacksonville City Council member. "We've been sitting here on first base for way too long. Let's get one thing done so we've got at least one phase of the perfect port done. Let's get going."

The TraPac terminal has the capacity to handle 800,000 to 1 million TEUs annually, but currently handles approximately 180,000 TEUs, about 20 percent of JaxPort's volume.

Prior to opening, JaxPort had forecast TraPac would generate 300,000 to 400,000 TEUs in the first years, based on a 2008 report by Fitch Ratings on the business outlook of the port. But the recession hit just before TraPac opened.

Navigation problems at Mile Point have restricted the size and cargo loads of vessels that can use Jacksonville. The crosscurrents at the junction of the St. Johns River and the Intercoastal Waterway can be strong enough to turn around a cargo ship. The unpredictable currents are stronger in the deepest parts of the shipping channel, prohibiting the passage of big ships to TraPac for three quarters of an average day.

JaxPort says the Mile Point fix would up TraPac's volume to 340,000 TEUs yearly and would generate 1000 jobs for the region. Port officials say the state is ready to provide the $36 million it will cost to alter the coastline of the river so that the currents won't be so strong at Mile Point.

The sticking point is that Congress hasn't passed a water resource development act, usually used to approve funding for such projects, since 2007. Chris Kauffmann, chief operating officer for JaxPort, said the Senate could vote in early 2013 for the act.

The Army Corps of Engineers will tentatively decides this month on the optimal depth of the 40-foot ship channel.

For more of the story:

Long Beach starts reconstruction of Gerald Desmond Bridge

The Port of Long Beach broke ground on the $1 billion Gerald Desmond Bridge replacement on Tuesday.

The project will replace the old bridge with a new structure that will feature 500-foot towers, more traffic lanes, a higher clearance for the new generation of cargo ships, bicycle paths and pedestrian walkways, according to port officials.

The a cable-supported span, connecting Terminal Island to Downtown Long Beach, is a key link for truckers who carry about 14 percent of the nation's imported goods from the ports of Los Angeles and Long Beach to the rest of the country.

The development is expected to foster $2 billion of regional economic activity and create about 3,000 jobs a year over three years, port officials say.

For more of the Long Beach Press-Telegram:

Coast Guard investigates Alaskan drilling ship for violations

The Coast Guard is launching a criminal investigation into possible federal violations concerning the activities of a Noble Oil 572-foot oil drilling and exploration ship hired by Royal Dutch Shell to look for oil in the Arctic.

The Royal Dutch Shell-owned drilling rig, the Kulluk, ran aground last Monday after it repeatedly slipped the line of the boat towing it in rough waters.

The Noble ship working for Shell, the Discoverer, may have been operating with serious safety and pollution control problems, raising the level of environmental concern about drilling in the Arctic. In a routine inspection, the Coast Guard found more than a dozen "discrepancies" with safety and pollution management on board Noble's Discoverer in late November.

When the Coast Guard Investigative Service was called in, the crewmembers had been provided with attorneys and refused to answer questions. The ship was grounded until safety violations were repaired. The ship is currently being fixed in Seward.

The Kulluk has also had recent violations, including three enforcement warnings for being a source of pollution in 2012 and a Coast Guard inspection last May that found 19 deficiencies in electrical and maintenance systems.

Officials say there is no sign that the Kulluk, carrying 143,000 gallons of diesel, is leaking fuel.

On Thursday, a coalition of 46 Democratic members of Congress called on Secretary of the Interior Ken Salazar to join with the Coast Guard in investigating whether the fleet contracted by Shell should operate in the Arctic Ocean.

"Noble continues to cooperate fully with Coast Guard to address any deficiencies they may have identified in their inspections of the ship," said Noble spokesperson John Breed. "Noble will continue to cooperate with the Coast Guard so that the ship can safely travel to the shipyard in Washington State to conduct any further repairs."

For more of the CBS News story:

Life of Pi movie poster "container ship" actually grounded fishing boat

As many of our readers would notice instantly, the sinking container ship on the Life of Pi film poster is actually the beached shipwreck of a fishing boat off the coast of Scotland.

The Life of Pi poster seems to be a heavily edited image of The Sovereign, which has been stranded on the Aberdeenshire coast near Fraserburgh since 2005.

Some locals, who have long wanted to banish the eyesore, see that it might spark a bit of tourism for the village.

For more of the Mail Online story:


Tuesday, January 8, 2013

Top Story

BNSF to boost crude oil cargo by 40 percent in 2013

Burlington Northern Santa Fe railroad will hike crude oil shipments by 40 percent in 2013, helping to offset a drop in coal cargo, said CEO Matt Rose.

Rose said BNSF, owned by Berkshire Hathaway, would spend "a couple hundred million dollars" on capital improvements to carry more petroleum to refineries from the Bakken shale formation in the Northwest U.S.

He said that crude oil shipments would grow to 700,000 barrels daily by the end of 2013.

Bakken's crude oil is putting the U.S. on track to be the world's largest oil producer by 2020, and is helping BNSF mitigate a slump in commodity cargoes.

"We're the 1,000-pound gorilla in the oil markets," said Rose. "Crude by rail is going to be really strong for us. It's been a real benefit to us to replace some of that lost coal business."

BNSF, which Warren Buffett took over three years ago in a $26.5 billion deal, experienced a drop in coal shipments of 6.2 percent in 2012, compared with an average decline among North America's seven largest railroads of 9.8 percent.

For more of the Bloomberg story:

Iron ore imports to China could be a boon to shipping, says Morgan Stanley

Increasing steel prices and diminishing stockpiles of iron ore in China, the world's largest steel maker, could trigger a surge in iron ore imports and hike shipping demand, according to Morgan Stanley.

Iron ore is at the lowest inventory level in more than two years and Chinese steel mills are buying iron ore as prices rise and industrial activity improves, reported Morgan Stanley analyst Fotis Giannakoulis in a report yesterday.

"The sharp rise of iron-ore prices driven by aggressive buying from mills amid higher steel prices is building up the case that demand may be improving on the back of China's new urbanization initiatives," Giannakoulis' report said. "A new wave of purchasing looks possible."

Ore at China's Tianjin port traded at $153.90 a metric ton, up 33 percent for the highest rate in 15 months, and ore inventories at the port dropped 24 percent since the end of August to 72.97 million tons.

The average daily revenue generated by Capesize ships increased 4.6 percent to $5,488 on Monday, according to the Baltic Exchange. Panamax and Supramax vessel earnings were minimally changed at levels of $5,301 and $7,729, respectively, the exchange reported. Handysizes dropped 0.5 percent to $6,584.

For more of the Bloomberg story:

Long Beach commissioners postpone Middle Harbor project vote

The Port of Long Beach Harbor Commissioners decided to postpone the Monday vote on the 1.2 billion Middle Harbor project, which will combine and reconstruct old shipping terminals.

The vote seems like a formality, since the project has already begun and the port has inked a multibillion-dollar deal with Orient Overseas Shipping Line to occupy the terminal once it's finished.

The item was withdrawn from the schedule in order for newer board members and the public to review the project, according to Harbor Commission President Susan E. Anderson Wise.

"There will be a study session about the overall project, its phases and various contracts will be reviewed in order for the board to have a broader understanding of the entire project before voting on the project budget," Wise said. "This is just one example of the meshing of governance and management to adopt and employ best practices that will continue to set this port apart."

The study session has been tentatively scheduled for Jan. 22.

The 342-acre project, set to be finished in 2019, includes six Pier E construction projects involving Middle Harbor.

For more of the Long Beach Press-Telegram story:

Barges increase loads as Corps dredges and clears the Mississippi

Barge operators have recently started to increase their cargo loads on the Mississippi, as emergency work to dredge and remove rocks from the shallowest stretch of river has been successful in keeping the shipping channel open during the worse drought since the 1930s.

"We're back, moving up here," said Martin Hettel, manager of bulk sales for AEP River Operations of St. Louis, to Bloomberg on Monday in Thebes, Illinois.

The expedited work on the river between Illinois and Missouri, along with a warming trend and predicted rainfall, will maintain the needed 10-foot depth for navigation near Thebes this month, said Major General John Peabody, commander of the U.S. Army Corps of Engineers' Mississippi Valley division.

Shipping lines on the Mississippi in January routinely haul up to $2.8 billion in cargo, reports the American Waterway Operators industry association.

Illinois Senator Richard Durbin and Representative Richard Enyart were briefed at the Thebes courthouse by Army Corps of Engineers and Coast Guard officials, and taken on a tour of the river.

Dredging and rock removal will continue throughout the month, and by the end of the week the channel will be two feet deeper to a total depth of 10 feet, said Peabody. Contractors are working to widen certain bends of the river. This means barge owners can once again use towboats, which need 10 feet to operate.

In two weeks the dredging and clearing will move to a stretch of river near Grand Tower, Illinois, Peabody said.

For more of the Bloomberg story:

Another ship strikes Bay Bridge

An empty oil tanker, the Overseas Reymar, hit the San Francisco-Oakland Bay Bridge Monday morning. No oil leaked into the water, officials said.

The Coast Guard is investigating human error as a possible cause of the accident.

The tanker hit the easternmost tower of the western span of the bridge at 11:37 a.m. and a fireboat was sent to the scene, said Mindy Tallmadge on behalf of the San Francisco Fire Department.

The fenders around the tower were damaged, according to Caltrans, but the bridge itself was unharmed. No one was hurt.

The tanker was empty, according to spokesman Charlie Goodyear of the San Francisco Bar Pilots Association, who said the base of the bridge tower was damaged.

Goodyear also noted a pilot was aboard when the ship struck, and damage was reported to the starboard side of the ship.

The double-hulled Overseas Reymar is 751 feet long and 105 feet wide and has a maximum speed of 14 knots. The ship is owned by Osg Shipmanagement Greece and headquartered in Majuro, a large coral atoll in the Marshall Islands.

This is the second time in five years that a vessel has hit the western span. In November 2007, when the single-hulled container ship Cosco Busan hit a Bay Bridge tower, it spilled 53,000 gallons of fuel oil. But in this case, the Overseas Reymar's hull survived with only "scrapes and dents," said Goodyear.

For more of the SF Chronicle story:


Wednesday, January 9, 2013

Top Story

Report: Higher container carrier GRIs unsustainable due to weak demand

Despite attempts by container carriers to increase profits by upping freight rates and pulling capacity from east-west trade routes, the increased container freight rates will likely drop due to sustained weak demand, according to an industry report.

The newest quarterly Container Forecast from Drewry Maritime Research notes that since the huge success of the March 2012 GRI increase, there have been seven other attempts to lift rates, adding up to a grand total of approximately $2,800 to $3,000 per FEU on the Asia-to-North Europe route. However, rates have actually dropped from $2,700 in early March to $2,400 in January 2013, the report said.

The report asserts a fundamental weakness in the market exacerbated by low volumes after a non-existent peak season in 2012. There was also reluctance by carriers to pull enough capacity. Average headhaul load factors have remained in the 75-to-85-percent range for most of the second half of 2012.

The report says the strategy of missing sailings has proven unsuccessful in improving freight rates for any long-term period. With another 40 ships of at least 10,000 TEUs to be delivered this year, the supply/demand balance will be tipped in the wrong direction, and operational alliances across all global trade lanes will increase, the report predicts.

“The emphasis on this tactic (missed sailings) will only lead to severe volatility in the spot market,” said Neil Dekker, Drewry’s head of container research, “with carriers reacting to weaknesses on a temporary basis, with the GRIs essentially being used to prohibit further rate erosion, rather than advancing them by any sustainable margin.”

Drewry also forecasts a global demand to increase by 4.6% this year. However, the research notes capacity growth at the trade route level will strongly challenge carriers and the ability of the growing north-south trades (such as Asia-to-Latin America) to offset the losses is being questioned.

Because of successes of the second and third quarters of 2012, container lines are forecasted to make around $1.5 billion collective profit. Drewry said carriers could make a profit near $5 billion in 2013 if they quickly react to the new reality of weaker demand growth in an era of growing capacity.

“Carriers’ obvious reluctance to pull capacity in the core trades since October suggests that many still have an eye on trade share,” said Dekker. “Carriers seem to want to have it both ways. The core trade lanes are undergoing a major upgrading process with over 40 x 10,000 TEU vessels delivered in 2012, but at the same time they are refusing to lay up or idle significant tonnage.”

Report: Global car logistics market expanding

The global automotive logistics market is looking up, according to a recent industry report, due to the strength of emerging international markets.

“Global Automotive Logistics 2013,” a report by research firm Transport Intelligence, states that the auto logistics sector has recovered “dramatically” from the 2009 economic downturn and is now worth an estimated $91 billion yearly.

The industry has been revitalized, the report said, by an increase in demand for vehicles in developing consumer markets, especially in China and in new and developing North American markets.

“The automotive world looks like it is evolving into one dominated by a few large global vehicle manufacturers with operations in markets such as China, Brazil, Russia, India and elsewhere integrated into supply chains heavily rooted in North America, Western Europe and Japan,” said Thomas Cullen, the senior analyst who wrote the report. “Providing the logistics systems to support this structure will be the main challenge and opportunity for automotive logistics service providers from now on.”

China’s automotive logistics sector will grow by 10 percent per annum until 2014, according to Cullen’s report. Logisitics providers will have new opportunities there created by the massive growth of vehicle sales, which has triggered a rapid increase in production in China by global manufacturers, who demand Western logistics standards, the report said.

Cullen asserts that the ability of logistics companies to support car manufacturers in these emerging markets will be key in the future. For example, manufacturing is also expanding in Mexico—Asian manufacturers Honda, Nissan and Toyota have all increased production in Mexico to support sales in the U.S.

International Trade Commission advised to limit U.S. patent-based import bans

In some cases, patent owners should not be allowed to block sales or imports of products based on the use of standards that help products from different manufacturers work together, according to the Justice Department and U.S. Patent and Trade Office, which jointly issued the paper.

The altered stance puts added pressure on the U.S. International Trade Commission, which is considering the issue as part of a request by Samsung Electronics to stop imports of Apple products made in Asia. A final decision is expected Feb. 6.

The ITC’s action in this matter “will be important to the continued vitality of the voluntary consensus standards-setting process and thus to competitive conditions and consumers in the United States,” the two agencies wrote.

The joint policy paper asserts that, while patent owners have the right to exclude others from using their inventions, the public benefit of allowing that is limited when it comes to so-called standard-essential patents.

Other complaints the ITC will soon consider filed by owners of standard-essential patents include Google’s Motorola Mobility unit against Microsoft, an InterDigital Inc. case against Huawei Technologies Co. and one filed by Ericsson AB against Samsung.

For more of the Bloomberg story:

Tesoro to convert Hawaiian refinery into import terminal

Independent refiner Tesoro Corp. will halt the production of fuel at its refinery in Kapolei, Hawaii, and convert the facility to an import, storage and distribution terminal, according to company officials.

Tesoro tried to sell the 94,00 barrel-a-day refinery due to low profits. The conversion to an import facility, expected to happen in April, will let Tesoro to lower fuel processing costs there and still allows the company to distribute fuel in Hawaii.

Tesoro said the conversion would likely result in a one-time charge of up to $1.10 a share in its fourth quarter. The conversion is expected to add up to $350 million to the company's bottom line by the end of 2013.

For more of the Business Week story:

Medicinal find in ancient Roman shipwreck

Ancient gray disks containing zinc and beeswax found aboard a shipwreck more than 2,000 years old might have been used as medicine for the eyes, according to researchers.

Scientists say the find will help to illuminate how medicine has developed over the ages.

"In archaeology, the discovery of ancient medicines is very rare, as is knowledge of their chemical composition," the researchers wrote. "The data revealed extraordinary information on the composition of the tablets and on their possible therapeutic use."

Researchers analyzed six flat gray tablets about 1.6 inches in diameter and 0.4 inches thick were found in a round tin box aboard the Relitto del Pozzino shipwreck.

The sunken ship was discovered about 60 feet underwater in 1974 on the seabed of the Baratti Gulf off the coast of Tuscany. The hull, only 50 to 60 feet long and about 10 feet wide, dated back to about 140 B.C.

For more of the Huffington Post story:


Thursday, January 10, 2013

Top Story

ILA walks out of regional New York/New Jersey contract negotiations

Photo credit: John O'Boyle/The Star-Ledger

Labor negotiations broke down Wednesday between the International Longshoremen's Association and the New York Shipping Association regarding work rules and staffing at the Port of New York and New Jersey.

The regional talks have followed a master contract extension to Feb. 6 less than two weeks ago between the dockworkers' union and the United States Maritime Alliance, averting a strike at East Coast and Gulf Coast ports.

"Management came to this meeting ready to bargain," Joseph Curto, chief negotiator for the NYSA, said in a statement. "We were — and are — prepared to discuss ideas suggested by the ILA. But by walking out of today's session, the ILA leadership demonstrated its unwillingness to engage in a serious conversation about the changes necessary to ensure the viability of the Port of New York and New Jersey."

The ILA and the USMX are scheduled to meet next week. They worked out an agreement before New Year's Eve over container royalty fees, the most contended issue.

It is unknown how the regional dust up will impact the larger strike talks.

According to the National Retail Foundation, a group of 120 stakeholders from different aspects of the supply chain sent a letter today to the ILA and USMX, urging them to reach a "new, long-term contract" to keep from disrupting trade.

For more of the New Jersey Star Ledger story:

Port of Portland commissioners say yes to container incentive program

The Port of Portland commissioners voted to pay shipping lines $10 per TEU to give them incentive to keep calling at Terminal 6 amidst an ongoing dockworker labor conflict that has slowed operations there and driven up costs.

The commissioners voted 7-2 yesterday to pay the container carriers up to a collective $1 million, in addition to subsidizing the company that runs the Port of Portland container yard.

The carriers asked for the subsidy to help mitigate rate increases by ICTSI Oregon, the firm that took over Terminal 6 operations in 2011 and is negotiating a new terminal-use agreement. ICTSI Oregon must implement higher rates because of higher costs, reduced productivity and lower revenue, Port spokesman Josh Thomas said.

The labor conflict at Port of Portland arose last summer between the ILWU and ICTSI Oregon, the terminal operator, when the union claimed two reefer maintenance jobs that had been done by the electrician's union for decades. The National Labor Relations Board eventually ruled that the contested jobs belonged to the International Brotherhood of Electrical Workers, not the ILWU.

Slowdowns in container movement began in May, when the dispute over the reefer jobs started. Over the past seven months, crane productivity has dropped from 28 moves-per-hour to 23, according to a presentation shown at the commissioner meeting.

The ILWU said the conflict concerned much bigger issues than two jobs, asserting that ICTSI was resisting the West Coast longshore collective bargaining agreement. Litigation continues over this dispute and a port subsidy of as much as $2.7 million to ICTSI.

In a statement the International Longshore and Warehouse Union said the port was squandering public resources and scapegoating union members, who continue to work productively, and stating ICTSI Oregon has mismanaged operations since taking over the terminal and has replaced a positive work environment with a "hostile" one.

Thomas said the container incentive program will "hopefully buy some time" until long-term solutions are found.

For more of the Oregon Live story:

For more of the Seattle Post-Intelligencer story:

Report: China and U.S. drive global auto growth over next 4 years

China and the U.S. will remain the respective number one and number two vehicle producers in the world over the next four years with China driving growth, according to a newly released industry report.

The "Global Light Vehicle and Powertrain Forecast," offered jointly WardsAuto and AutomotiveCompass, asserts automakers should consolidate the number of platforms supporting their vehicles and increase the percentage of cars and trucks that rely on smaller engines.

The monthly report predicts growth in all global regions through 2018, with total vehicle output increasing 23 percent over the next six years. It asserts China will dominate the Asia-Pacific region especially through 2016, when production in China alone will rise to a massive 26 million units, an increase of 7.5 million units from last year.

Production in the U.S. is forecasted to increase by 1.3 million by 2016, while production in the third-highest producing country, Japan, is predicted to drop by 875,000 units over the next four years, with capacity shifting to other regions, according to the forecast.

By 2018, the report says, India will step ahead of South Korea and Germany to rank fourth in vehicle producing nations. The companies also say that Volkswagen will have the top-produced platform in the world by 2015, predicting its MQB architecture will end the three-year dominance of Toyota's MC platform that began in 2012 (when it overthrew Hyundai's HD architecture) and is expected to continue through 2014.

The forecast also confirms the emerging trend of production consolidation among global platforms. In 2012, 31 platforms accounted for half of global production. In 2016, that number will decrease to 27, according to the report.

Los Angeles and Long Beach ports seek to lower trucker trouble tickets

An initiative has been launched to lower the number of transaction problems as trucks pick up or deliver containers at the marine terminals at the Ports of Los Angeles and Long Beach to speed container movement at the ports, according to an announcement by PierPass.

About 5 percent of all terminal transactions in the U.S. result in trouble tickets, which add about an hour to the "turn time" or the amount of time a truck spends at a terminal, according to a 2011 report by the National Cooperative Freight Research Program.

Most trouble tickets can be prevented through better communications before a truck arrives at the terminal gates, the NCFRP report said.

PierPass has surveyed terminal operators at Long Beach and Los Angeles to determine the most common causes of trouble tickets. They found Trouble tickets are usually tied to inaccurate or incomplete information about an import container delivery or an export-booking problem. When given a trouble ticket, a driver has to go to a "trouble window" for resolution, which results in delays and higher costs.

"Trucking companies can avoid most trouble tickets and reduce turn times by checking with the terminals' web-based systems before coming to the terminal gates," said Bruce Wargo, president of PierPass, a nonprofit company created by marine terminal operators to address multi-terminal issues at the ports. "These systems let dispatchers confirm the availability of import containers or the validity of export booking numbers before prematurely sending a truck to the terminal."

PierPass is distributing a fact sheet to trucking companies with tips on trouble-ticket prevention. The organization also released a video yesterday in which stakeholders representing terminal operators, trucking companies and the ports discuss approaches to reducing trouble tickets.

At the APL Terminal in the Port of Los Angeles, 34 percent of trouble tickets in July and August 2012 were issued when truckers arrived to pick up containers that were on hold. The second-largest group (20 percent) was due to the container number not matching the number on the Bill of Lading, which can also be checked online before delivering a container.

Vietnamese cargo ship runs aground

The MV Agnes, a Vietnamese cargo ship, ran aground on Cemara Beach in West Lombok, Indonesia on Monday due to rough seas.

The Agnes, with a gross register tonnage 3,901 tons and a length of 105 meters, beached just after leaving Lembar Seaport, West Lombok.

"The ship had just unloaded cement it was carrying at Lembar Port a week before. It was en route to Singapore when it ran aground," Lembar Port sea traffic division unit head Jasra said on Thursday.

Port and local search and rescue agencies are working with the West Nusa Tenggara water police to help the ship.

For more of the Jakarta Post story:

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