Throughout 2010, insiders within the bulk shipping industry warned that 2011 would be a bad year. And it now looks like their gloomy forecasts are coming true.
Recently, the Baltic Dry Index – the index of the cost of chartering dry bulk ships – fell to a level of 1432, the lowest since February 4, 2009.
Today, the Baltic Dry Index is down nearly half from its October 27, 2010 peak of 2,784.
The bears point to that drop as a sign of global economic weakness and a harbinger of commodity prices plunging soon.
This is particularly true for capesize vessels, the hardest hit shipping segment. The largest oceanic ships used to transport iron ore and steel, their rates have fallen to well under $10,000, down from their October peak of $46,284.
Over the last two decades, shipyards delivered an average of one such vessel every three weeks, slowly increasing the fleet. But in 2010 and 2011, shipyards have launched them at an unprecedented rate.
According to London-based shipbroker Simpson, Spence & Young, 241 capesizes are due for delivery this year. That’s a nearly 25% increase on the current 1,000-strong fleet, and follows 210 deliveries in 2010.
The dropping spot rate isn’t good news for capesize owners. Including the cost of financing, most of the ships incur operating costs of at least $15,000 a day.
Their market is nearing a point where owners would prefer to leave their ships idle than accept rates below their operating costs.
Idaho D.O.T. green lights massive oil machinery hauling
Idaho Transportation Director Brian Ness has agreed to issue travel permits that would allow oil giant ConocoPhillips to begin hauling as early as next week large oil refinery machinery along a winding and scenic stretch of U.S. Highway 12.
Ness said Tuesday he is convinced ConocoPhillips and its contracted shipper can safely haul the four separate loads from the port in Lewiston along a 172 mile stretch in northcentral Idaho en route to the company's refinery in Billings, Montana.
His decision follows months of challenges that played out in state courts and administrative hearings over the agency's initial decision to permit the oversized loads.
Ness said two permits would be issued by the agency Tuesday that would enable the company to begin hauling two of the four shipments starting Monday, weather conditions allowing.
A U.K.-based animal advocacy group is taking Air Canada to task for allegedly shipping lab monkeys in the cargo holds of planes.
Sarah Kite, a spokesman for BUAV-- an advocacy group campaigning to end animal experiments -- said Sunday that a whistle-blower at Pearson International Airport complained the airline flew 48 monkeys from China to Toronto over the weekend.
Kite alleged the monkeys travelled as cargo from the Chinese capital of Beijing to Toronto on Saturday and were kept in crates for 15 hours after their arrival before being flown to Montreal.
Kite said the monkeys are believed to be headed to a research laboratory in Laval, Que.
Air Canada spokesman John Reber said the airline will not comment on the nature of its cargo shipments.
Many airlines, such as British Airways, United Airlines and Qantas Airways, have stopped shipping monkeys, said Kite.
Georgia Ports Authority’s Executive Director Curtis J. Foltz announced today the Port of Savannah experienced nearly 20-percent growth in twenty-foot equivalent units (TEUs) for calendar year 2010.
The more than 2.8 million TEUs were a record for the port.
Strong export volume outpaced imports with a record 1,488,670 TEU exports, which comprised 52.8 percent of Savannah’s total throughput. Moving approximately 1,000 loads of frozen poultry each week, the Port of Savannah handles more containerized poultry than any other port in the nation and the most refrigerated containerized exports on the U.S. East Coast.
Salvage work underway on capsized tanker in Rhine River
Cranes have begun working on salvaging a capsized tanker loaded with sulfuric acid that has been floating in the Rhine River for days.
German authorities say two of three cranes needed to right and recover the ship began work on Saturday. The work is expected to take several days or weeks.
Limited, southbound shipping has been allowed to resume through the bend where the capsized ship is still listing on its side. No acid has leaked.
The accident happened on a picturesque stretch of the Rhine near the famed Loreley cliff, where the river runs 370 feet (113 meters) wide and 82 feet (25 meters) deep, making it one of the most dangerous bends in the river.
A U.K.-based animal advocacy group is taking Air Canada to task for allegedly shipping lab monkeys in the cargo holds of planes.
Sarah Kite, a spokesman for BUAV-- an advocacy group campaigning to end animal experiments -- said Sunday that a whistle-blower at Pearson International Airport complained the airline flew 48 monkeys from China to Toronto over the weekend.
Kite alleged the monkeys travelled as cargo from the Chinese capital of Beijing to Toronto on Saturday and were kept in crates for 15 hours after their arrival before being flown to Montreal.
Kite said the monkeys are believed to be headed to a research laboratory in Laval, Que.
Air Canada spokesman John Reber said the airline will not comment on the nature of its cargo shipments.
Many airlines, such as British Airways, United Airlines and Qantas Airways, have stopped shipping monkeys, said Kite.
In a bold move almost certain to be unpopular on their side of the river, South Carolina's Lowcountry Economic Alliance joined the Georgia Ports Authority and the Savannah Economic Development Authority Monday in signing a joint resolution in support of deepening both the Savannah and Charleston harbors and developing the Jasper Ocean Terminal.
The Lowcountry Economic Alliance is the regional economic development arm of Beaufort and Jasper counties in South Carolina.
Ports Authority board chairman Alec Poitevint praised the alliance for their leadership in signing the resolution.
According to the resolution, deepwater ports in Savannah and Charleston are key U.S. gateways to international trade, and both must be deepened to accommodate the new generation of container ships, which will begin to dominate ocean commerce when the expansion of the Panama Canal is completed in 2014.
Through the resolution, the three organizations also support the creation of a bi-state compact by the legislatures of Georgia and South Carolina. Upon approval of the compact by both states, the organizations will support the filing for permits for the Jasper Ocean Terminal by the Jasper Ocean Terminal Joint Project Office and will each take action to support the beginning of the permitting process.
U.S. West Coast ports’ growth spurs transportation businesses
U.S. West Coast ports are poised for two consecutive years of increased traffic for the first time since 2005-2006, a product of stronger global demand that will benefit America’s railroads and truckers.
Los Angeles, the busiest port, forecasts shipments to rise as much as 6 percent following a 16 percent jump in 2010 that reflected a rebound from the global recession, said spokeswoman Rachel Campbell. The Port of Long Beach, California second behind Los Angeles expects volume to grow further after last year’s 24 percent gain, executive director Richard Steinke said in an interview.
Container volumes surged last year as the economy recovered from the worst recession since the Great Depression and companies including Target Corp. and Wal-Mart Stores Inc. rebuilt depleted inventories. Traffic moving through all six major West Coast ports rose 18 percent last year, according to data compiled by Bloomberg News.
Transportation stocks are reflecting the gains in trade. Since a 2009 low on March 9, the Dow Jones U.S. Transportation Exchange-Traded Fund surged 139 percent through 2010, outpacing an 86 percent gain in the Standard & Poor’s 500 Index.
Union Pacific, the largest U.S. railroad by sales in 2009, reported fourth-quarter profit that rose 41 percent to $775 million. Net income increased to $1.56 a share from $1.08 a year earlier, the Omaha, Nebraska-based company said in a Jan. 20 statement.
California and EPA to release new clean air standards for autos this year
California and federal regulators will buddy-up when they release new clean car standards this fall, three state and national agencies said Monday.
The federal Environmental Protection Agency and Department of Transportation will coordinate with the California Air Resources Board when they simultaneously release proposed rules for vehicle fuel economy and carbon emissions on Sept. 1.
A suggestion floated this fall from the Obama Administration that new cars be required to reach 62 miles per gallon by 2025 met with backlash from the auto industry.
The EPA and the DOT had originally aimed for Sept. 30 to release their proposals, which will affect cars and light trucks in the 2017 to 2025 model years.
The federal agencies say that the current standards for the 2012 to 2016 model years, adopted in April, will eventually save 1.8 billion barrels of oil and avert 960 million metric tons of greenhouse gas emissions.
Cathay Pacific Airways Ltd said on Tuesday that it had appealed against the European Commission's decision to fine the Hong Kong carrier 57.12 million euro ($78 million) for cargo price-fixing.
Cathay and 10 other international airlines, including Air France-KLM and British Airways Plc BAY.L, were fined a total of 799 million euros last November by EU antitrust regulators for fixing cargo prices.
South Korea wants to prosecute captured Somali pirates
South Korea said Tuesday it plans to prosecute five Somali pirates captured by South Korean commandos during a raid on a hijacked cargo ship in the Arabian sea.
The navy commandos rescued all 21 crew members during the daring raid Friday. Five pirates were detained and eight killed in the rescue.
The government's stance is to prosecute pirates rather than swapping them" for other fishermen being held by pirates in a separate hijacking case, Defense Ministry Kim Min-seok said in a briefing Tuesday. He did not elaborate on what charges the detainees would face.
In October, Somali pirates hijacked a South Korean-operated fishing boat with 43 sailors -- two South Korean, two Chinese and 39 Kenyans. They still haven't been released.
U.S. President Barack Obama called for a boost in infrastructure spending Tuesday to create jobs and lift the economy. But the plan will face a significant hurdle: Money for highway projects is scarce, and neither party has shown an appetite for raising the federal gasoline tax.
Mr. Obama will use his State of the Union speech to call for a six-year plan to repair roads, bridges and transit systems, and the creation of a national infrastructure bank to leverage private dollars, White House aides said. He will also call for more spending to build intercity passenger rail lines, and a "national wireless initiative" to give most homes Internet access.
The debate over how to pay for the plan is expected to begin in earnest Wednesday morning in the Senate, where a hearing called by Sen. Barbara Boxer (D., Calif.) will focus on a multi-year highway bill that could provide the framework for Obama's plan.
A broad proposal by Obama in September called for an immediate $50 billion in infrastructure spending this year on top of existing programs. He suggested eliminating tax breaks for oil companies to pay for the plan.
That idea drew immediate criticism from at least one key House Republican, Rep. John Mica of Florida, new chairman of the House Transportation and Infrastructure Committee. Mica has said that raising taxes would hurt the economy and wouldn't be an option.
Mr. Mica has suggested raising more money through the use of tolling and other types of so-called public-private partnerships. Other lawmakers and transportation lobbyists have floated ideas such as taxing a barrel of oil and taxing the percentage of gas drawn at the pump, which would bring more revenue as gas prices increased.
Dubai's port operator DP World says business rose 14 percent across its global network last year, reflecting a resurgence in trade as the world economy picks up steam.
The world's third-largest seaport operator said Tuesday its ports handled the equivalent of 49.6 million standard 20-foot cargo containers, up from 43.4 million in 2009.
The 2010 gains included the addition of new ports in Vietnam and Peru. Not counting those, DP World says business was up 10 percent.
CEO Mohammed Sharaf says the growth puts the firm on track to report financial results in line with expectations and ahead of last year's figures. He says DP World remains confident about the industry's long-term outlook.
Report: Somali pirate attacks adding $2.4 bil to transport costs
Somali pirate attacks are increasing, spurred by a 36-fold jump in ransoms in five years, raising costs for shippers and the threat to vessels carrying 20 percent of world trade.
The raids are adding at least $2.4 billion to transport costs because vessels are being diverted onto longer routes to avoid attacks off east Africa, Louisville, Colorado-based One Earth Future Foundation estimates.
Average ransom payments rose to $5.4 million last year, compared with $150,000 in 2005, the non-profit group says. Attacks off Somalia were the highest on record last year, with 49 vessels and 1,016 crew members hijacked, according to the International Maritime Bureau.
Cathay Pacific Airways Ltd said on Tuesday that it had appealed against the European Commission's decision to fine the Hong Kong carrier 57.12 million euro ($78 million) for cargo price-fixing.
Cathay and 10 other international airlines, including Air France-KLM and British Airways Plc BAY.L, were fined a total of 799 million euros last November by EU antitrust regulators for fixing cargo prices.
The Coast Guard and the Washington state Ecology Department say they're monitoring a 560-foot cargo [ship] that ran aground at a Tacoma log dock.
Ecology spokeswoman Cathy Cochrane says the vessel Ranunculus was loading a cargo of logs bound for Shanghai, China, when it grounded at low tide Tuesday afternoon. The vessel is carrying at least 108,000 gallons of fuel. As of Tuesday evening, there is no indication that any fuel is leaking.
Two Crowley Maritime tug boats have been called to the scene.
The ship is owned by the Japanese shipping company, Santoku Senpaku.
The two largest publically traded warehouse and distribution companies – Denver-based ProLogis and San Francisco-based AMB Property Corp. - have both confirmed they are in the midst of merger talks.
The two companies both announced they are looking at joining their operations based upon the unaffected trading prices of both companies' stock.
Financial terms of the proposed deal have not been disclosed but the Wall Street Journal reported AMB and ProLogis have a combined stock market value of nearly $14 billion.
Virginia Intl. Terminals chief projects 4 to 5 percent growth in 2011
The chief of Virginia International Terminals, the cargo-handling operations arm of the state-run Virginia Port Authority, said it will be a long climb back to pre-recession levels but he does foresee modest growth in 2011.
Joe Dorto, president and CEO of VIT delivered his state of the port speech on Wednesday in Norfolk, and highlighted the port’s 8.6 percent containerized growth at 1.9 million TEUs, APM Terminals’ new 20-year lease in Portsmouth, Norfolk Southern’s Heartland Corridor express intermodal service between Hampton Roads to Chicago, and new capacity at the Portsmouth Marine Terminal after moving most of the container business to the neighboring APM Terminal.
According to a story in the Daily Press, Dorto said the state of Virginia must develop incentives to attract more business to the region in order to be competitive with the likes of the Port of Savannah that posted almost 20 percent growth in 2010.
On the heels of President Obama’s State of the Union speech that touched on doubling exports and improving infrastructure, U.S. exporters have warned of mounting silt at the mouth of the Mississippi River threatening commerce, according to an A.P. report.
The U.S. Army Corps of Engineers is faced with a budget shortfall that is down to $63 million for this year’s dredging to keep the river open. The Corps is usually allocated between $80 million and $100 million for this effort.
The Big River Coalition, a group of farmers, exporters and transportation business was formed last fall in the wake of the dredging budget cut, and is calling on more funding.
"The corps has been gambling to get through this period without dredging and save their money for the spring runoff, and that gamble did not pay off," said Ken Wells, director of the Big River Coalition.
The Mississippi River is a major U.S. tradelane to global markets for products like grain, soybeans, pig iron, coal and many other products for 29 states and Canada.
Approximately 60 percent of U.S. grain is exported out of the Mississippi River.
The American Trucking Associations reported its advanced seasonally adjusted For-Hire Truck Tonnage Index increased 2.2 percent in December after it had fallen 0.6 percent in November. The latest improvement put the SA index at 111.6 (2000=100) in December, which was the highest level since September 2008, the ATA stated. In November, the index equaled 109.2.
The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 107.2 in December, down 1 percent from the previous month, the ATA report said.
Compared with December 2009, seasonally adjusted tonnage climbed 4.2 percent, higher than November’s 3.3 percent year-over-year increase, the report said. For all of 2010, tonnage was up 5.7 percent compared with 2009, when the index took an 8.7 percent plunge.
“Fleets continue to tell me that freight volumes are very choppy – up one week, but down the next. That is a trend that is likely to continue this year as the economy is not growing across the board yet,” said Bob Costello, the ATA’s chief economist.
“I continue to expect truck freight tonnage to grow modestly during the first half of 2011 and accelerate in the later half of the year into 2012,” Costello said.
Log ship is righted at Port of Tacoma
The 560-foot log ship being loaded and bound for Shanghai that was listing approximately 8 degrees on Tuesday at the log dock in the Port of Tacoma’s Hylebos Waterway, has been righted, according to the Washington State Department of Ecology.
The list was reportedly caused by a problem with “cargo loading and ballast distribution,” the Department of Ecology said in a statement.
The vessel had initially been reported to have run aground during low tide, but after diving operations inspected the hull, among other research, it has been officially concluded that it did not touch bottom.
It has also been reported by the Department of Ecology that none of the vessel’s estimated 108,000 gallons of fuel was spilled.
Friday, January 28, 2011
Top Story
CMA CGM issues $500 mil in bonds, elects new board
France’s CMA CGM shipping group announced it has issued $500 million in redeemable bonds, courtesy of the Yildirim Group, and elected a new board of directors.
The financially embattled shipping line said in a statement: “This investment enables the group to sustainably strengthen its balance sheet and secure its investment plan, while providing additional funds to support expansion.”
Following the bond issuance, CMA CGM Group shareholders met and approved its new governance, electing as its directors: Jacques R. Saadé, Rodolphe Saadé, Tanya Saadé-Zeenny, Farid T. Salem, Tristan Vieljeux, Denis Ranque and Christian Garin, Robert Yüksel Yildirim, Evren Öztürk and Ercüment Erdem.
The board unanimously appointed Jacques R. Saadé as the group’s chairman and chief executive officer, and three executive officers: Rodolphe Saadé, Farid T. Salem, and Philippe Soulié.
“With strengthened financial resources and an experienced executive team, CMA CGM Group has begun 2011 on a solid foundation, with the objective of consolidating its worldwide positions,” the ocean carrier said.
More West Coast ports report bright spots from 2010
On the heels of record-breaking 2010 cargo statistics being reported out of Southern California and Seattle earlier this month, the ports of Portland, Tacoma, and Vancouver, B.C., also showed some bright spots in their respective shipping businesses from the previous year.
Canada’s top box port hit an all time record at 2.5 million TEUs, up 17 percent. The port attributed increased demand for consumer imports and containerized exports to Asia that included forest products and special crops.
The Port of Tacoma’s container business dipped 6 percent last year, but total intermodal lifts were up 19 percent. The port said it is forecasting 4 percent growth in its container business for 2011.
The Port of Portland stated 2010 was its third best year ever in total cargo tonnage at 13.1 million tons, up 28 percent over the previous year.
The port said its outlook for both imports and exports is improving with the completion last November of the Columbia River channel’s improvement project down to 43 feet to accommodate heavier, deeper-draft cargo ships.
Study: Houston ship channel depth saved local economy hundreds of millions
A ship channel that was only a foot shallower would have cost Houston’s local economy $373 million in both 2008 and 2009, according to a study by the Texas Transportation Institute, the Houston Chronicle reported.
Shallower depth means lighter loads, especially with the region’s big tanker business, the study found.
The study did not include the impact of channel depth on the Port of Houston’s containerized traffic.
The port requires its shipping channel to range from 36 to 45 feet deep, but silting from the Buffalo Bayou means dredging must be performed every two to three years, impacting over 80 percent of waterway’s depth, the report said.
The port said it will cost approximately $80 million that is typically taken from the Harbor Maintenance Fund to properly dredge the harbor next year in preparation for the widened Panama Canal in 2014.
The port’s chairman, Jim Edmonds, was cited in the Chronicle’s story that Houston and Savannah will benefit most from the Canal’s expansion.
For the full story in the Houston Chronicle: www.chron.com
Hub Group’s income up 26 percent for Q4
Freight transportation company, the Hub Group, Inc., reported income of $13 million for the fourth quarter of 2010, an increase of 26 percent compared to the fourth quarter of 2009.
Hub Group's revenue increased 18 percent to $480 million compared to $408 million for the same period in 2009.
Fourth quarter intermodal revenue increased 19 percent to $340 million that the company attributed to a 14 percent increase in volume, 4 percent increase in fuel, another 4 percent increase in pricing, and partially offset by a 3 percent decrease for mix.
The company said its truck brokerage revenue was $79 million for quarter, equal to its revenue in the fourth quarter of 2009. The freight firm’s Unyson Logistics revenue increased 38 percent to $61 million.
"The fourth quarter was a solid finish to an outstanding year," said David P. Yeager, chairman and CEO of Hub Group, in a statement.
Hub Group reported its income for the year was $43 million, with $115 million in cash and no debt.
Major U.S. -Mexico border point awaits funding decision
Those involved with the U.S. General Services Administration’s Calexico Port of Entry Project in Southern California are anxiously awaiting Congressional approval of $84 million for a first phase project, with at least another $190 million needed for its second phase, the Imperial Valley Press has reported.
The $84 million for the project’s first phase is already in President Obama’s budget but required Congress to approve.
The initial phase, with scheduled completion by 2013, is designed to increase southbound lanes from two to five, and northbound lanes from 10 to 16, the Press reported.
The Calexico Port of Entry is one of the three busiest ports of entry in the U.S., averaging 16,000 privately owned vehicles per day and 20,000 pedestrians, according to Calexico Port Director Billy Whitford.
