Monday, February 3, 2014
Drewry: Big ships too costly for carriers to idle
Although the container lines are idling more ships, many fewer have been taken out of service compared to last year, according to Drewry Maritime Research's latest issue of Container Insight. Drewry says the industry trend is to cancel sailings when needed rather than canceling whole services, especially those that involve ships with capacities of 8,000 TEUs or more.
According to Drewry's latest data, 175 vessels with a joint capacity of 516,800 TEUs were idled in mid-January, compared to only 152 vessels offering a capacity of 239,000 TEUs idled in September 2013.
The report said the sheer number of new vessels is partly responsible for the growth, with 74 vessels between 3,000 and 8,000 TEUS having joined the fleet during 2013, compared to 58 in 2012. Another contributing factor is that five Trans-Pacific services were withdrawn between September and November, compared to none a year earlier.
Drewry said the lay ups cannot be attributed to improvement in demand, but is probably more related to the fact that freight rates that remain low.
The formation of the P3 alliance could also be a factor in the growing number of idled ships, the report sais, since rivals are being forced to hesitate before embarking on any fleet reduction program that could hurt market share before the second/third quarter of 2014. The G6 also intends to expand into the Trans-Pacific and Trans-Atlantic trades then, further endangering market share for the unaligned.
In conclusion, Drewry forecast that even though the idle fleet capacity will surge in February due to the Chinese New Year, more service withdrawals are less likely because of the threat of the P3 alliance and the expansion of the G6 alliance. They predict more vessels between 3,000-8,000 TEUs will also be laid up due to the large number of ships over 13,000 TEUS due to be delivered this year.
YRC Worldwide reduces debt by $300M
Trucking giant YRC Worldwide, which recently negotiated a new contract with its 26,000 union drivers, announced Friday that it completed a series of transactions that will reduce its reported $1.4 billion debt by approximately $300 million.
YRC said it had issued $250 million of common and preferred stock, the proceeds of which will be used to retire the company's convertible notes. In addition, about $50 million worth of the company's other convertible notes were exchanged or converted to common stock.
The company also successfully amended and extended its pension fund obligations to December 2019, the statement said, and has satisfied the final conditions of its modified contract with the International Brotherhood of Teamsters.
"Today is a great day in the history of YRCW," said Jamie Pierson, chief financial
Pierson said the transaction would improve the company's credit profile, allowing them to move forward with the final step in refinancing the major portion of the company's debt. He said the company looks to refinance their senior debt in February, reducing their interest and extending the maturities for five years.
"The anticipated capital structure will put the company on solid financial footing and enable us to concentrate on achieving best-in-class performance leading to improved operating results for all of our stakeholders," Pierson concluded.
PMSA head: "Political drama" at Long Beach port threatens ability to compete
Pacific Merchants Shipping Association President John McLaurin spoke directly of the "political drama" at the Port of Long Beach and how it damages the competitiveness of nation's busiest port complex in his first State of Trade and Transportation address on Thursday.
Laying out the worries of shipping lines and terminal operators, McLaurin said the ongoing "political drama" between Long Beach city and harbor officials and inside the Harbor Department threatened the port, which has "long has been the goose that laid the golden egg for the city of Long Beach."
"My members — the tenants and customers of the Port of Long Beach who are responsible for over 70 percent of the revenue generated at the port — are tired of the drama and theatrics," McLaurin said.
He pointed to effects of the port power struggle, ranging from infighting among harbor commissioners to Mayor Bob Foster's 2010 veto of a $220-million port headquarters he said was too expensive. Drama over the past few months includes the city's review of port travel, Foster's removal of former harbor board President Thomas Fields in November, and two days later the resignation of former Harbor Commissioner Nick Sramek, who said he was fed up with commission politics. Fields and Sramek attended the trade talk.
The PMSA head highlighted the loss of people from the Harbor Commission and staff, including Fields, Sramek, and former executive director Chris Lytle, who jumped ship to lead the Port of Oakland in the summer.
"These departures have been a function of politics rather than normal organizational turnover," McLaurin said.
"It's been suppressed, and I think what John did was bring it out in the open, and it's critical now because we're in an election year," Fields said, referring to political tension at the port. "We are going to have a new mayor and possibly seven new council members. I just hope that these people are far more aware of the significance of this port and how it impacts not just the city, but the region and this whole country. … We need to get our act together."
"It felt like a shot across the bow about how we're doing things," Long Beach mayoral candidate Doug Otto said.
For more of the Press-Telegram story: presstelegram.com
CMA CGM launches new Oceania to U.S. service
The CMA CGM Group announced an upgrade of its Oceania – U.S. services with the launch of its PAD 2 service, starting in March 2014, meant to complement its existing fortnightly PAD 1 service.
The CMA CGM Group said it will provide weekly services to and from Australia and New Zealand, Central and South America, the Caribbean, North America and Canada, offering the fastest direct transit times from Australia and New Zealand to all U.S. ports.
CMA CGM's new PAD 2 service rotation will be as follows:
Panama releases 32 North Korean sailors, 3 charged with arms smuggling
Panama officials have released 32 of the 35 North Koreans detained after an undeclared cargo of Cuban arms was found on their ship in July, according to prosecutors.
The Chong Chon Gang ship's captain, first officer and political secretary will go on trial for arms trafficking, prosecutor Nathaniel Murgas said, and could face up to 12 years in prison if convicted of arms smuggling charges.
The released mariners were turned over to immigration authorities last week.
The North Korean freighter was stopped July 10 on suspicion of carrying drugs as it tried to enter the Panama Canal. Instead, a search uncovered 25 containers of Cuban military hardware, including two Soviet-era MiG-21 aircraft, air defense systems, missiles and command and control vehicles.
For more of the Channel News Asia story: channelnewsasia.com
Tuesday, February 4, 2014
Analyst: Mexico to overtake Japan as #2 auto exporter to U.S. in 2014
Japan has been in the top two auto exporters to the U.S. since the 1970s, but Mexico is expected to surpass it in 2014.
Cars manufactured in Mexico and sold in the U.S. will reach 1.69 million this year, topping the 1.51 million Japan-built vehicles, according to Guido Vildozo, an IHS Automotive analyst based in Lexington, Massachusetts.
Mexican auto exports to the U.S. have more than quadrupled from 1993 to 2013 and output almost tripled, lifted by lower tariffs under the North American Free Trade Agreement. Three additional plant openings by Nissan Motor Co., Honda Motor Co. and Mazda Motor Corp. will provide the final push to Mexican dominance, Bloomberg reports.
Mexico's numbers are expected to reach 1.9 million in 2015, topping Canada as the biggest exporter of cars to the U.S., consultant IHS Automotive estimated.
"It's certainly a low-cost place to produce and there's a lot of comfort with the caliber of the workforce in Mexico," Ron Harbour, a manufacturing analyst and partner at consultant Oliver Wyman, said in a telephone interview to Bloomberg. "In the late 80s and early 90s, what was coming in from Japan was overwhelming compared with what we thought about from Mexico back then. Obviously, things have changed."
For more of the Bloomberg story: businessweek.com
Norfolk Southern opens bulk transfer facility near Hampton Roads
Norfolk Southern has opened a new rail truck transfer facility for bulk commodities in Chesapeake, Va. near the port at Hampton Roads, according to a statement.
The company refers to the facility as a 'thoroughbred bulk transfer" terminal, which allows customers to transfer a large array of commodities between rail cars and trucks.
NS says the terminal can handle dry and liquid bulk food-grade commodities such as flour, sugar, grains, and plastic pellets, as well as aggregates, sand, and cement with expansion capability to handle lumber, dimensional products and accommodate container stuffing.
Less than three miles from downtown Norfolk, Va., with access to Interstates I-264 and I-464 at 1305 Atlantic Blvd., the Chesapeake TBT is located near the rail-serving yards on Norfolk Southern's main line.
The new NS facility features 104 car spots, a certified truck scale, and is fully paved, fenced, and lighted, the railroad said.
CEO of Port of Houston Authority steps down abruptly
Leonard Waterworth unexpectedly announced Friday, during a port commission meeting, that he would step down immediately from his role as CEO of the Port of Houston Authority, saying he wants to "find a better balance" between work and his personal life.
The commission named Roger Guenther, deputy executive director of operations, as Waterworth's permanent replacement.
Waterworth, former head of the Galveston district of the Army Corps of Engineers, was named executive director in April 2012 after serving a short term as interim CEO. Previously, he was president and CEO of Dannenbaum Engineering.
In his letter of resignation, Waterworth cites several accomplishments as CEO, including increased profitability and preparation for larger container ships from the expansion of the Panama Canal.
"I could not be more proud of the accomplishments achieved due to the hard work of the staff and I am thankful that I have had the opportunity to lead this great institution," Waterworth wrote. "For the last two years, my entire focus has been on the Port Authority, the Port of Houston, and the community we serve, but it is now time to find a better balance between family, friends and future opportunities."
For more of the Houston Business Journal story: bizjournals.com
Crowley ship from Port Everglades first to call at new Cuban mega-port
When Cuba opened its $1 billion mega-port at Mariel on Monday, the first ship at the dock was a Crowley Liner Services vessel coming from Port Everglades.
Crowley arrived with about 50 shipping containers primarily full of frozen chicken, under a waiver to the 50-year-old U.S. embargo against the communist country. It ships weekly to the island, hinting at opportunities for business once U.S.-Cuba trade ties are fully restored.
Some analysts say the presence of the U.S. line at Mariel's opening signals that Cuba is not only open for business, but open for business with the United States.
"The long-term viability of Mariel depends on a change in U.S. policy," said Ted Henken, a professor at Baruch College in New York and president of the Association for the Study of the Cuban Economy. "Clearly, [Crowley's presence] is a sign they're willing to do business with the United States, even if we're not willing to do business with Cuba now."
The largest infrastructure project in Cuba in decades, the modern Mariel port was financed mainly by a Brazilian loan and built by Brazil-based construction giant Odebrecht. Mariel intends to replace Havana as the nation's busiest cargo port, and once dredging is complete, it will be able to host the world's largest ships that soon will cross an expanded Panama Canal.
For more of the Florida Sun Sentinel story: sun-sentinel.com
Seattle Seahawk's 12th Man flag to fly at Port of Oakland
As result of a lost longshoremen's bet, dockworkers at the Port of Oakland will soon be flying the Seattle Seahawk's 12th Man flag in honor of the Super Bowl champions.
The boss of the local dockworkers' union says the flag will be raised on a 125-foot cargo crane at the port "as soon as" he receives one from his counterpart in Seattle.
For more of the NBC Bay Area story: nbcbayarea.com
Wednesday, February 5, 2014
U.S. manufacturing slows in January
U.S. manufacturing activity slowed in January after the biggest drop in new orders in 33 years, indicating a loss of momentum in the recovering economy.
The Institute for Supply Management's index of national factory activity fell to 51.3 in January, from 56.5 in December. Any reading above 50 indicates growth.
Bad weather seemed to negatively impact U.S. auto sales in January, with Ford, General Motors and Japan's Toyota USA reporting lower sales for the month.
U.S. stocks fell on the manufacturing data, with the Dow Jones industrial average down 1.5 percent and the S&P 500 down 1.7 percent.
Many executives surveyed by ISM blamed a harsh winter, indicating they expected better news in the months ahead.
"A number of comments from the panel cite adverse weather conditions as a factor negatively impacting their businesses in January, while others reflect optimism and increasing volumes in the early stages of 2014," said Bradley Holcomb, head of the ISM manufacturing index.
A separate manufacturing survey by Markit found that bad weather hampered U.S. manufacturers in January.
For more of the Market Watch story: marketwatch.com
United Arab Shipping orders 6 more ships from HHI
United Arab Shipping Company announced it has used its option to buy six more 14,000-TEU vessels from South Korean ship builder Hyundai Heavy Industries, bringing its total order to $2 billion and a record 16 new-buildings for UASC.
UASC said the new order sprang from a shipbuilding contract signed by both companies in August 2013, claiming that the vessels will be the biggest, most technologically advanced and most eco-friendly container ships ever built.
"This vessel order positions UASC to deliver on its long-term growth objectives and the unique design features of the vessels ensure that UASC will set new industry benchmarks for fuel economy and environmental performance," said UASC chairman Salem Ali Al Zaabi.
The complete order including the options is comprised of five 14,000-TEU and five 18,000-TEU new vessels. Deliveries are expected in late 2014 and the first half of 2015.
The company said it wants to improve its competitiveness in the between Asia-Europe trades, where the newly built 18,000-TEU vessels will be deployed.
CMA CGM launches Middle East – Somalia service
CMA CGM launched a new service, the Noura Express, which links the Middle East to Somalia, according to a company statement.
The service, which began on January 29th, connects at Khor Fakkan with CMA CGM long haul services worldwide to reach Mogadishu, Somalia.
"We strongly believe in the recovery of the Somalian economy and are proud to launch the Noura Express, offering worldwide connections to and from Mogadishu," said Mathieu Friedberg, senior vice president of African Lines CMA CGM. "This is the first milestone of our growth plan in this region and there will be more developments in the months ahead."
The Noura Express began with M/V CMA CGM Kailas, and the 1,854-TEU ship is being deployed with 21-day frequency.
The full rotation of the Noura Express is as follows: Jebel Ali (day 1) – Khor Fakkan (day 2) – Salalah (day 3) – Mogadishu (day 6) – Jebel Ali.
Excessive ice on Great Lakes may slow advent of 2014 shipping season
The large amount of ice on the Great Lakes this season exceeds the average, and could mean a slow start to the 2014 shipping season in March.
Approximately 70.7 percent of the lakes were covered in ice this week, compared to 60.1 percent last week and a maximum ice of 38.4 percent in the same period of 2013 and 12.9 percent in 2012.
A large percentage of the Great Lakes fleet spends the winter in shipyards for repair and renovation.
"Because we have so much ice, ... we're going to have to have some ice-breaking work just to move some ships around before we get the winds and weather to move the ice and get it away from the system, " said Mark Gill, director of vessel traffic services with the U.S. Coast Guard Sector Sault Ste. Marie, Mich. "Everybody wants to go, and everybody is laid up in different places."
The Coast Guard is meeting with American and Canadian shipping officials to talk about plans for spring, Gill said. The Great Lakes shipping season usually recommences in the spring with the opening of the Soo Locks at Sault Ste. Marie, which is scheduled for March 25.
"It's going to be a slow, deliberate, move," he said about the start of the season. "We still have eight weeks of cold weather. ... If we continue on the track we are, we're going to continue to make ice and we're going to have more ice than we have icebreakers to deal with it."
The Coast Guard has nine icebreaker ships on the lakes. Canada has two.
Cargo ship breaks in two off coast of France
A Spanish cargo ship, the Luno, broke in half after hitting a dike off the Southwest coast of France on Wednesday in high winds, according to French maritime authorities.
The ship was carrying fertilizer.
Two helicopters were deployed to rescue a dozen crewmembers. One of the mariners was injured, said an official in the town of Anglet, near the French border with Spain.
The incident reportedly followed an engine problem after the ship left port. It was not immediately clear what volume of cargo was involved.
For more of the Reuters story: uk.reuters.com
Thursday, February 6, 2014
Conflict over Panama Canal cost overruns could delay expansion
The $5.25 billion Panama Canal expansion project is at risk of being delayed after talks on $1.6 billion in cost overruns between a building consortium and the canal's authority broke down Wednesday.
The Panama Canal Authority said that the construction group building the new, wider locks suspended work on the project today. The consortium is made up of Spain's Sacyr, Impregilo of Italy, Belgian firm Jan De Nul and Constructora Urbana, a Panamanian firm. A spokeswoman for Sacyr said work had been slowed, not stopped.
"Any delay is rather bad for the market," said Nigel Prentis, head of ship broker Hartland Shipping Services, to Bloomberg in a phone interview. "Many ships have been ordered based on the new Panama Canal so it'll be quite a disappointment to have a delay."
Sacyr and Impregilo said in December they wanted compensation for $1.6 billion in cost overruns, about half the value of their original contract. They gave the canal authority one month to reach an accord.
Negotiations were ongoing until Wednesday, when no agreement was reached. The dispute puts as many as 10,000 jobs at "imminent risk," the companies said.
"They put a threat on the table and today they executed it," Jorge Quijano, head of the canal authority, told reporters in Panama City today, vowing to finish the project on time. "We demand they restart the expansion work."
Sacyr and Salini continue to seek a solution to finish the project in 2015, they said in a regulatory filing Thursday in Madrid. They said their work, which is about 70 percent complete, needs the extra financing to be finished. Quijano also said talks would continue, saying he has received offers from other companies to take over the project.
"There have been unforeseen costs" that arbitration should resolve, said Manuel Manrique, Sacyr's CEO, on a radio program in Spain. "But after four years the claims haven't been resolved and there's a liquidity problem and that's what we're discussing."
Prentis said it is unlikely the building consortium's contract will be rescinded.
"Can you imagine? Just taking them off and putting a new construction company that knows nothing about the construction to date?," Prentis said. "I can't imagine that's possible."
For more of the Bloomberg story: bloomberg.com
Toyota forecasts record annual earnings of $18.7B
Toyota Motors, the world's largest automaker, raised its forecast for the year ending March 31 to a record $18.7 billion, after reporting its profits quintupled last quarter.
Toyota's net income rose to $5.1 billion in the three months ending Dec. 31.
The carmaker is poised for a year of record earnings after years of struggle. President Akio Toyoda, grandson of Toyota's founder, has led the company back from vehicle recalls and natural disasters, positioning Toyota to invest in new technologies and expand production after saving a cash stockpile of more than $35 billion.
"Akio Toyoda should be proud of how he has come out of it," said Ashvin Chotai, managing director of Intelligence Automotive Asia in London. "His credibility has been enhanced now. This will provide him with much greater confidence to take even more decisive actions in the future."
Last month the car manufacturer set a target to sell a record 10 million vehicles this year, after leading GM and Volkswagen in worldwide auto deliveries for a second straight year.
For more of the Bloomberg story: bloomberg.com
U.S. trade deficit widens in December on low exports
The trade deficit in the U.S. grew more than expected in December as exports ended a record year on a weak note.
The trade gap expanded 12 percent to $38.7 billion, according to data from the Commerce Department, compared to the $36 billion gap estimated by economists surveyed by Bloomberg. Exports showed declined after surging in November to the highest ever, while imports went up on increased consumer demand.
December "was a bounce back" after a very large drop in the gap in November, said David Sloan, senior economist at 4Cast Inc. in New York, who predicted the widened deficit. "There's still a slight tendency for the deficit to be narrowing. The reduced U.S. dependence on imported energy is quite an important factor."
For all of 2013, the trade gap narrowed 11.8 percent to $471.5 billion, the smallest since 2009.
For more of the Bloomberg story: bloomberg.com
MARAD awards $7M to maritime academies
The U.S. Department of Transportation's Maritime Administration announced that America's six state maritime academies – California Maritime Academy, Great Lakes Maritime Academy, Maine Maritime Academy, Massachusetts Maritime Academy, SUNY Maritime College, and Texas Maritime Academy – and the United States Merchant Marine Academy in Kings Point, NY, will each receive $1 million from a government program that recycles obsolete vessels.
"The most important element in our U.S. Merchant Marine fleet is our people," said U.S. Transportation Secretary Anthony Foxx in the press release. "This funding will help ensure that dedicated men and women of our maritime academies continue to have the resources that make them the best educated and most highly trained mariners anywhere."
The money for this round of funding came from the sale of obsolete vessels from the Maritime Administration's National Defense Reserve Fleet, which were purchased for recycling. Per the National Maritime Heritage Act, 25 percent of the profit from sales is given to maritime academies for facilities and training ship maintenance, repair, and modernization, and for the purchase of simulators and fuel.
Twelve die when cargo ship sinks off coast of Yemen
A cargo ship sank off the coast of Yemen, killing all 12 crew, officials announced Saturday.
The ship, which was carrying car tires and parts, ran aground Thursday night but Yemeni security was not notified until 10 hours later, the statement said.
High winds and waves prevented the rescue of the Indian sailors.
For more of the Chicago Tribune story: chicagotribune.com