Cargo Business Newswire ArchivesSummary for January 25 through January 29, 2016:
Monday, January 25, 2016
Northwest Seaport Alliance volume tops 3.5 million in 2015
Container volumes through the ports of Seattle and Tacoma were up 4 percent year-over-year, handling more than 3.5 million TEUs in 2015.
The ports of Seattle and Tacoma formed the Northwest Seaport Alliance in August to strengthen the competitiveness of the Puget Sound gateway — the third largest in North America — and create more economic opportunities.
Container volumes increased despite the slowing Chinese economy and volume declines early in the year during West Coast labor negotiations.
"The Northwest Seaport Alliance allows us to compete more effectively on behalf of our customers and attract more cargo to the Puget Sound region, which translates to more family-wage jobs in our communities," said CEO John Wolfe.
International containers grew 8 percent. Full containers fueled the nearly 5-percent gain in imports to 1.4 million TEUs. Export containers improved 12 percent to 1.3 million TEUs, powered by the high volume of empty containers being sent back to Asia.
Domestic volumes fell 8 percent to 768,635 TEUs. Alaska’s economy has slowed due to record low oil prices, resulting in less oil and gas-related project cargo heading north.
Auto imports reached a new record in 2015, up 4 percent to 183,305 vehicles. Meanwhile breakbulk cargo — items too large or bulky to fit in a container — fell nearly 8 percent.
Panama Canal administrator: Expansion will open in June 2016
In an exclusive interview with the American Journal of Transportation, the administrator of the Panama Canal Authority – refuting a statement earlier this week by his second in command – says the expanded canal should be ready for inauguration in June, following delays costing the authority more than a half billion dollars in revenue.
As previously reported in CBN, early this year Panamanian President Juan Carlos Varela had said the canal expansion would open in May 2016.
Panama Canal Authority Administrator Jorge L. Quijano told AJOT on Jan. 21 that the opening to traffic of the expanded canal would not be as late as "early the second part of this year," as stated Jan. 18 by Francisco Miguez, the authority’s executive vice president of finance and administration of the Panama Canal Authority, at the SMC3 Jump Start 2016 conference in Atlanta and reported by AJOT.
"I apologize if that’s what he [Miguez] said," Quijano told AJOT prior to speaking at an American Association of Port Authorities conference in Tampa. "Early May or late May, we should be functional, and maybe June for the inauguration. I firmly believe it’s achievable for us to have inauguration sometime in June."
Long Beach port head promises faster, cleaner and safer cargo movement
Port of Long Beach CEO Jon Slangerup promised in his second annual State of the Port address last week to carry forward his concept of the Port of the Future — a model of faster, cleaner and safer goods movement that benefits and protects the local economy, the community and the environment.
"It is the vision of those who came before us that got us here. We now need the courage to think in new ways and make bold decisions that fly in the face of convention," Slangerup said. "Together, we have the opportunity to transform the Port of Long Beach from a world-class port into the world’s best port."
Slangerup acknowledged the challenges and congestion that slowed cargo movement one year ago when dozens of cargo ships waited for days for a chance to come into the harbor complex.
He noted how the port complex, working with industry partners, labor and the community, rebounded quickly and set new cargo records with the port moving 7.2 million TEUs in 2015.
Slangerup underscored the importance of the Supply Chain Optimization (SCO) collaboration between the Port of Long Beach and the neighboring Port of Los Angeles, as well as industry partners and community stakeholders. SCO will enhance efficiency, preventing the kind of congestion that was evident 12 months ago, offering more business-attracting advantages and delivering a cleaner, more sustainable future, he said.
Slangerup updated the audience on the port’s $4 billion modernization plan that includes opening Phase 1 of the automated Middle Harbor terminal in the spring to accommodate the world’s biggest and cleanest ships. It also includes replacement of the Gerald Desmond Bridge with a taller, safer bridge, and an expansion of on-dock rail to move more cargo safely and cleanly.
Slangerup noted the Port of Long Beach’s value proposition of being the fastest, most efficient way to move cargo from Asia to the American consumer.
Hyundai Merchant Marine in talks to sell bulk shipping business
Last week South Korean shipping company Hyundai Merchant Marine said it was in talks with a special purpose operation owned by local private equity firm Hahn & Company to possibly sell its bulk shipping business.
Earlier, the Korea Economic Daily reported that HMM was considering selling its bulk shipping business to Hahn & Company for about 600 billion won (about $497 million) citing unnamed investment banking sources.
HMM said in a regulatory filing that although it was in talks with the private equity firm, nothing had been decided as yet.
Chang Yung-fa, the billionaire founder of Evergreen Group who transformed a second-hand bulk carrier into Asia’s largest container line, died on Jan. 20. He was 88.
Chang, the son of a mariner, started building his business almost fifty years ago by buying a used bulk vessel and became one of Taiwan’s richest people. He was chairman of Evergreen Group, which owns Asia’s largest container fleet Evergreen Marine; EVA Airways Corp., the island’s largest airline by market value; Evergreen Sky Catering, an airline-catering company; and Evergreen International Hotels.
Chang has a fortune of at least $1 billion, according to the Bloomberg Billionaires Index. "The oceans and ships occupy very important places in my life," Chang wrote in his autobiography, published in 1997. The tycoon called himself "a natural-born son of the ocean."
Chang started working as a clerk for a Japanese shipping company as a teenager while attending night school and went on to spend 15 years as a sailor, rising to the rank of captain, according to his memoirs.
Evergreen Marine, the company that began his business empire, was established in 1968 with a used bulk vessel. It then expanded into an operator of more than 190 ships, according to Alphaliner.
CEO: Canadian Pacific may drop efforts to buy Norfolk Southern
Canadian Pacific Railway surged the most in six years as speculation grew that the company might abandon its efforts to acquire Norfolk Southern.
Canada’s second-largest railroad climbed 11 percent on Friday to $116.97 at the close in Toronto, its biggest single-day gain since July 2009. The Jan. 22 advance whittled down Canadian Pacific’s decline this year to 6.2 percent.
Faced with growing political and shipper opposition to the deal, Canadian Pacific may need to adopt a different strategy, CEO Hunter Harrison said last week without being specific. His comments may open the door to Canadian Pacific ending its pursuit of the No. 2 railroad in the eastern U.S., according to analysts from at least eight firms.
"The company (for perhaps the first time) gave the indication that it could pull back from pursuing the proposed deal in the near term," said Allison Landry, an analyst at Credit Suisse Group, in a note to clients.
The DSV Group has finalized its acquisition of U.S.-based UTi Worldwide Inc. for approximately $1.35 billion.
UTi is a global supply chain services and logistics company with 21,000 employees in 58 countries. The combined company will be one of the world's strongest transport and logistics networks
"We are proud to welcome customers and employees of UTi to DSV," said CEO Jens Bjørn Andersen. "We will now commence the integration process while taking care to maintain a high service level towards all customers. As we move forward, the commercial activities of DSV and UTi will continue under the DSV brand."
Headquartered in California, UTi is a global, asset-light supply chain services and logistics company with estimated annual revenue of $3.5 billion. UTi offers complete supply chain services and solutions, including air, ocean, distribution, customs brokerage and contract logistics.
DSV is a Danish transport and logistics company offering transport services worldwide by road, air, sea and train.
China’s maritime economy up 7 percent in 2015
China's maritime economy is expected to have generated almost $988 billion in 2015, a 7 percent year-over-year increase, according to the State Oceanic Administration (SOA).
The maritime economy has become an important aspect of the national economy, with its total production value growing by an average 8.1 percent annually from 2011 to 2015, said SOA director Wang Hong at a national meeting on marine work.
The total production value last year is expected to account for 9.6 percent of the total gross domestic product, according to the SOA. The industry employs more than 35 million people and maritime science and technology contributed to 60 percent of the maritime economy, SOA data shows.
Wang said the government plans to coordinate the construction of high-tech and innovation industrial bases and demonstration zones, and foster emerging industries including marine biomedicine, marine facilities and sea water desalination in 2016.
The SOA will also push to achieve breakthroughs in core technologies concerning maritime industries and advance industrial upgrades in the next five years, he said.
Looking to further the rule of law, the country will promote legislation in the fields of resource exploration in deep seafloor areas, protection of ocean oil and gas pipelines, and the management on Antarctic activities, according to Wang.
The port of Tacoma and Seattle made it official last August and have worked hard to make the Northwest Seaport Alliance (NWSA) a working operation. Now comes the hard part.
It’s probably too early to call this self-described "marriage" a success, but officials are saying all the right words. For two ports that often spent the better part of a century in relentless competition, they are now "working relentlessly to establish a strategic plan for unifying management of the marine cargo facilities in our North and South harbors and attracting more cargo through our gateway," says John Wolfe, CEO of the alliance. This is the first partnership of its kind in North America, so add historic to the mix.
"We’re functioning as one," says Bari Bookout, the alliance’s director of commercial strategy and the non-container business. "We’re talking about the gateway, not about individual ports. It helps to not be competing with each other. We’re bigger and better as one, rather than two."
The idea is to market the North (Seattle) and South (Tacoma) harbors as a gateway and as a value proposition, she says.
Tong Zhu, formerly the chief commercial officer at the Port of Tacoma, now manages the container operations and business development of the NWSA. "Years and years ago, when I sat at the negotiating table, some male customers wouldn’t even look at my eyes," Zhu said. "But I see changes."
Yes, the alliance has the "mega-ship" bug. But a major strategic finding from a May 2015 report was that the two ports have "inadequate capability" to handle ultra-large container vessels. "Too many small terminals do not fit the strategic requirements for handling big ships," the strategic plan found.
So a first order of business for the alliance is to make the region big-ship ready, and that means focusing on the massive and highly expensive Terminal 5 upgrade in the North Harbor.
After receiving input from potential partners interested in a T-5 upgrade, NWSA determined that additional environmental review is required under the State Environmental Policy Act. T-5 could only handle ships with a capacity of 6,000 TEUs when container operations were suspended there in July 2014 to allow for the tactical investments necessary to handle two 18,000-TEU ships simultaneously. Containerships of 15,000 TEUs and above have yet to call at Seattle or Tacoma on a regular basis.
"Upgrading Terminal 5 to handle larger vessels is critical to creating new maritime and industrial jobs for the region," said Stephanie Bowman, co-president of the Port of Seattle.
The planned terminal improvements will accommodate heavier cranes and provide deeper drafts to handle the larger ships cascading into the trans-Pacific trade. Design and permitting for the project began last year.
"We are investing in our terminals and road and rail infrastructure to handle more cargo and the super post-Panamax ships moving into the trans-Pacific trade," Wolfe said.
It’s been estimated the alliance and the two ports will have to spend from $800 million to $1 billion in the near future to prepare and equip the two ports to handle the new generation of super-sized container vessels.
Strategic investments, in addition to the plan for T-5, include redevelopment of T-4, rehabilitation of the T-46 dock, the purchase of two Super Post Panama container cranes, and redevelopment of the APM terminal "for diverse business."
According to NWSA’s initial budget for 2016, it has earmarked $174.5 million to pay for planned projects over the next five years, with the bulk of that total—$130.9 million—funneled into revamping the container terminals.
That seems like a good start, but funding for mega-ship accommodation looks to be a major issue for a port region that handled 3.53 million TEUs last year. That was a modest 4 percent increase from 2014, but the major part of the increase was in international empty boxes – up nearly 35 percent. By 2025, the alliance is projecting volumes of 6 million TEUs.
The Northwest Seaport Alliance is off to a decent start, but "now the real work begins," said Bowman.
Container volume at Port of Savannah up 11.7 percent in 2015
The Georgia Ports Authority posted container volumes in 2015, Executive Director Curtis Foltz reported to the GPA board this week.
Over the last year, the Port of Savannah moved an all-time high 3.73 million TEUs, an increase of 391,356 TEUs, or 11.7 percent compared to CY2014.
"The expansion was fueled in part by heightened demand in the U.S. Southeast, Savannah's logistical advantages drawing new customers to Georgia, and cargo diverted from the West Coast," said Foltz.
Total tonnage across all terminals reached a record 31.48 million tons in 2015, an increase of 1.09 million tons, or 3.6 percent, according to a port authority statement. Container tonnage accounted for most of that growth, adding 991,031 tons (up 4 percent), for a total of 25.81 million tons. Bulk cargo added 60,705 tons (up 2.2 percent) to reach 2.86 million, while breakbulk cargo grew 1.7 percent, or 47,358 tons, to reach 2.79 million tons.
At the meeting, the GPA board approved the purchase of four new ship-to-shore cranes for the Port of Savannah, bringing the total number to 30.
"With today's decision, the Georgia Ports Authority will make a $47 million investment in order to maintain the highest level of service for port customers," said GPA Executive Director Curtis Foltz. "Even before the new cranes arrive, Savannah has more cranes on its nearly two-mile long dock than any other single terminal in North America."
Currently featuring 22 ship-to-shore cranes, Savannah's Garden City Terminal will add four cranes from Konecranes this year as previously purchased machines are put into service. The cranes will arrive in late spring of 2018. The additions are part of the board's Focus 2026 Capital Plan, which calls for 34 ship-to-shore cranes at Garden City Terminal.
Alphaliner: Container ship capacity to increase by slowest rate in 25 years
Alphaliner has forecast that worldwide container ship capacity will increase by 4.6 percent in 2016, the slowest growth rate in more than 25 years, giving some relief to an industry battered by oversupply.
Freight rates have dropped sharply, driving many shipping companies into losses, as global trade has failed to keep pace with the number of new vessels entering the market.
"Falling below the previously smallest year-on-year increase of 5.5 percent, recorded in 2009, it will register well below the average annual growth rate of 10.3 percent, recorded since 1990," Alphaliner said of capacity growth.
Changes in capacity have been tracked since 1990.
The balance between demand and supply will improve as new vessel deliveries from shipyards slow down and a growing number of container ships are scheduled for demolition.
Before the financial crisis in 2008, container transport demand was increasing at about three times the rate of global economic growth. Since 2010, that ratio has been just 1.1, according to shipping organization Bimco.
With the International Monetary Fund expecting world economic growth of 3.4 percent in 2016, that would suggest container demand of between 3.5 percent and 4.0 percent.
"The new normal level of demand is somewhat lower than originally expected - just as global GDP growth keeps disappointing us," said Bimco shipping analyst Peter Sand.
Maersk Line, the world's largest container shipping company, said global demand likely increased 1-3 percent in 2015, compared with its previous expectation of 2-4 percent.
Canadian Pacific Railway, which posted record profits and revenue last year, says it plans to eliminate 1,000 positions and cut spending by $279 million in 2016 as it adjusts to lower shipment volumes and falling commodity prices.
The company said most of the cuts to union and management positions will result from attrition and kick in by mid-year.
Since 2012, the railway has cut 6,000 to 7,000 positions.
CP made the announcement on a conference call after releasing its fourth-quarter and year-end results.
The railway says it had $6.71 billion in revenue and $1.35 billion in net income in 2015, though that still fell below analyst expectations.
CP has cut 6,000 to 7,000 positions since 2012. The company has cut 12 percent of its workforce in the past year and currently employs 12,800 people in its Canadian and U.S. operations.
The railway had $4.69 billion in revenue and $US94 million in net income in 2015, which is below analyst expectations.
The families of 10 crew members killed when the cargo ship El Faro sank have settled claims against the ship’s owners for $500,000 each, court records show.
Tote Maritime Puerto Rico filed notice of the settlement that company attorneys described as "full and final." The notice said the settlement covered "pre-death pain and suffering" and unspecified economic losses the deaths caused.
But the agreements, which include the family of ship captain Michael Davidson, cover less than half the families who brought suit after the Oct. 1 sinking, which killed 33 people.
Attorneys for some of the others said they aren’t done fighting.
"These settlements will have no impact on how we move forward to trial on behalf of the families we represent," said Kurt Arnold, a Texas attorney whose firm represents survivors of four mariners. "We will discover the truth of why [the] defendants allowed this tragedy to occur and ensure that defendants are held fully responsible."
BNSF to slash spending $1.5 billion on freight slump
BNSF Railway intends to reduce capital expenditures for the first time in six years as railroads seek to lower costs amid a freight slump.
The rail company said that it will spend $4.3 billion, down 26 percent from a record $5.8 billion in 2015, on locomotives, rail cars, track and maintenance. BNSF had increased investment since 2010, which marked a six-year low of $2.7 billion.
The railroad joins Union Pacific., CSX Corp. and Kansas City Southern in lowering spending amid a drop in carloads, led by weakened coal demand. Total traffic for large U.S. railroads fell 2.5 percent last year and the declines have continued into the first two weeks of 2016, according to the Association of American Railroads.
BNSF, the largest North American railroad by carloads, came under fire from customers and regulators in 2014 after surging crude-oil cargo, a record grain harvest and harsh winter conditions caused service to decline. In reaction, the railroad pumped up spending by almost 50 percent to $11.3 billion in 2014 through 2015 from the previous two years.
The investment has paid off. BNSF’s train speeds have recovered and the railroad has added new express routes. BNSF’s total traffic fell 0.1 percent last year, compared with a 5.9 percent decline for Union Pacific and 4.9 percent for Kansas City Southern’s U.S. operations, according to AAR data.
Port of Charleston lowers container volume expectations
The South Carolina State Ports Authority is scaling back expectations for the coming months following last year’s near-record numbers for containerized cargo.
"If you look at the December numbers for most ports, they are very modest — some negative and some slightly positive," said Jim Newsome, the SPA’s president and CEO. "We expect flat to very modest growth over the next six months."
The Port of Charleston handled 551,174 TEUs during the first half of fiscal 2016, which started July 1. That is a 4.8 percent year-over-year increase, much lower than the 14.4 percent growth the SPA experienced in fiscal 2015.
Economic weakness in China and tepid demand elsewhere are combining with a strong dollar and inflated inventories to depress U.S. imports and exports.
"Short term, it seems global trade is taking a pause right now," Newsome said. "We believe that to be a short-term blip right now."
The slowdown is also affecting Charleston’s main competition in Georgia, where the larger Port of Savannah set a record for cargo last year but saw its December numbers decline.
"I think everyone’s cautious about this coming year," Curtis Foltz, executive director of the Georgia Ports Authority, told The Wall Street Journal. "Everyone feels decent about the U.S economy but what they’re worried about is China affecting other markets."
Newsome said he hopes new projects, such as expansion of cold storage warehouses in the Charleston region and a Dollar Tree distribution center upstate, will drive more traffic to the port.
"Whatever happens in world trade, we’ve got a lot of things to accomplish," he said. "We have to stay on track with our marketing plan and that really relies on us capturing all the cargo that should move across our port and capturing our share of discretionary cargo."
Newsome hopes there will be another boost in the second half of this year when the expanded Panama Canal opens.
Port of Houston container volume tops 2 million TEUs in 2015
The Port of Houston Authority announced it topped the 2 million-TEU mark handled in 2015 in December, setting a new record that beats the previous record of 1.96 million TEUs set for all of the previous year.
"Having the two millionth TEU crossing our docks illustrates the steadfast guidance of the port authority’s leadership through the port commission and diligence of our staff to deliver exemplary service to our customers and validates that the port is ready for the increased cargo…and bigger things to come," said PHA Executive Director Roger Guenther.
Projections indicate continued strong growth in containers moving across port authority docks in coming years.
The PHA reports it has continued to invest in its facilities and the newest technology to help spur growth and serve its customers. About $700 million is being invested over the next decade to modernize the Barbours Cut Container Terminal to increase efficiency, facilitate larger vessels and double the container handling capacity. Among other improvements, four new Super Post-Panamax ship-to-shore wharf cranes that were delivered this year are now in operation.
At the newer Bayport terminal, a state-of-the-art truck entry gate has improved truck processing, and a user-friendly mobile app for truck drivers has increased efficiency. Recently, the Port Authority processed a record 4,300 trucks in one day at Bayport, which opened in 2007 and is being built out according to its master plan. The terminal continues to show excellent service levels and low truck turn times.
Danish billionaire creates ship broker firm with Arctic Securities
Norwegian-born billionaire John Fredriksen has partnered with investment bank Arctic Securities to form a ship brokering company aimed at taking on bigger competitors and betting on the recovery of the global shipping market.
Many segments of the shipping industry, including dry bulk commodities, are struggling with tougher conditions due to world economic worries and a surfeit of vessels.
Fredriksen, through his family's investment company Geveran Trading and Oslo-headquartered Arctic Securities, said they had established a 50-50 joint venture brokering company named Arctic Shipping Norway, which they expect to start operations in the first half of this year.
"I am truly convinced that both the shipping and the offshore markets will recover. Establishing a new business during tough times is not new to us. Arctic Securities was established in 2007, a short time before the financial crisis," Arctic Securities chief executive Mads Syversen said.