Seaports on the U.S. eastern seaboard need to dig deeper.
The Port of Savannah, Georgia greeted the largest containership to ever call there – the 8,500-TEU CMA CGM Figaro. The vessel arrived half-loaded to keep its hull off Savannah’s river bottom, according to a story today in the Associated Press.
East Coast ports are engaged in their own “big dig” competition, or “deep dig,” as the expansion of the Panama Canal in 2014 looms ever closer with the promise of much larger containerships making the transit eastward.
These post-Panamax ships require shipping channel depths downwards towards 50 feet for the larger vessels when fully loaded.
The Virginia Port Authority’s Norfolk complex is the lone port with that depth.
Meanwhile, there is a mad dash for permitting and taxpayer money to dig down for the rest of the field of port players.
The Port Authority of New York/New Jersey, still the top port on the East Coast, has a $2.3 billion project underway to deepen its harbor to 50 feet, however it needs another $1.3 billion to raise the Bayonne Bridge’s span so bigger ships can safely slide under it.
Savannah, the second busiest box port on the East Coast, says it needs $588 million to dredge 6 feet from the Savannah River along 35 miles between the ocean and the city's port, according to the A.P. report.
Neighboring port rival South Carolina, the fourth busiest port authority on the coast, is after $400,000 in federal funds to conduct a feasibility study by the Army Corps to see if its port can go down from 45 to 50 feet.
Ports in Florida are also requesting federal funds for dredging feasibility studies.
The question that remains is how much funding will available for full-scale dredging, and will some ports lose out?
Major shipping firms lured into increased China-India trade
Freight firms like FedEx, DHL, Maersk, COSCO, Evergreen Marine and OOCL have increased their respective cargo businesses between China and India.
On the heels of the two giant nations’ accord to increase commerce to $100 billion, trade has already leapt 20 times in the past decade to $61.8 billion, according to Bloomberg.
FedEx now operates an air cargo service five times a week between Guangzhou and Mumbai, with the aforementioned container-shipping lines adding capacity and experiencing increased business. The cargoes include electrical and mechanical equipment, gems, raw materials, textiles, pharmaceuticals and agricultural goods, the news report said.
Taiwan’s top ocean carrier Evergreen Marine, and Dubai’s Simatech Shipping LLC recently launched a joint six-vessel service between the Port of Xingang and Nhava Sheva near Mumbai.
A flight between Guangzhou and Mumbai is approximately 6.5 hours compared to the two weeks it can take for a containership, which includes stopovers at ports in the Malacca Strait.
Thus far, bilateral trade has favored Chinese companies, as China Ocean Shipping Company (COSCO), the top Chinese shipping line, is carrying more than double the cargo load on the China-India tradelane over the backhaul, according to Bloomberg.
In 2010, China had 40.9 billion worth of exports to India and $20.8 billion of imports from India, according to the Beijing-based Customs General Administration.
The Philadelphia Regional Port Authority reported its overall tonnage was up 17 percent in 2010; handling 3,644,919 metric tons of cargo last year compared to 3,107,067 tons handled in 2009.
“Last year, we didn’t point to a challenging national economy as an excuse for a reduction in port business,” said PRPA Executive Director James T. McDermott, Jr. in a port press release.
“We went out and aggressively sought new business, even if many believed it unlikely we could land it,” McDermott said.
The port referred to new, or increased cargo business in 2010, including Hyundai and Kia citing Philadelphia as their preferred U.S. East Coast port of entry, Sea Star Line’s Puerto Rican service, and the return of a previous customer of the port, Scandinavian company M-real, with paper cargoes.
The port credited Mediterranean Shipping Line’s European service for helping to bolster its container business in 2010, handling 254,059 TEUs, up 18 percent from 2009.
The port said its auto business moved 69,000 units of Hyundai and Kia vehicles at its Packer Avenue Marine Terminal.
Computed as tonnage, 77,350 tons of automobiles moved through the port in 2010, compared to the 496 tons worth of autos handled the previous year.
The port’s forest products tonnage was up 53 percent at 389,109 tons compared to the 254,522 tons handled in 2009.
Fruit tonnage handled was at 328,904 metric tons in 2010 compared to 321,702 tons handled the previous year, up 2 percent, the port said.
Liquid bulk cargoes were up 16 percent, with 676,493 metric tons of liquid bulk cargoes being handled in 2010 compared 583,835 tons handled in 2009.
Steel cargoes were up 53 percent at 170,215 metric tons handled. Cocoa beans were at 97,492 tons handled, and project cargoes were at 39,156 tons handled, without much change from 2009 figures, the port said.
Egyptian ports start to get back to normal
Egyptian ports are starting to get back to normal in wake of the two-week-long uprising there that has claimed 300 lives, according to reports out of the region.
Shipping sources told Reuters that cargo operations at the ports of Alexandria, Damietta and Port Said, which handle bulk and container shipments including grains, are not yet to normal, although they are open for business.
Danish shipping giant Maersk said on Sunday vessel operations at its Port Said container terminal were "near normal," although the company said the situation in Egypt continues to impact its overall business .
Sources cited in the Reuters report said trucks were able to enter ports and pick up freight on Sunday after more than a week not having enough customs officials and of course the high level of protesters making deliveries difficult.
The logistics firm GAC was quoted in the Reuters story with: "Some delays and congestion of stacking areas may be experienced, although import container consignees have started picking up shipments and custom clearance is working half-day at Alexandria port."
Trade sources told Reuters that some grains exporters still had worries over letters of credit payments due to limited banking hours.
Over $10 mil in counterfeit Apple products seized by Port L.A. police
The Port of Los Angeles Police seized over $10 million in counterfeit iPods, iPhones and related products in a Downtown Los Angeles warehouse.
The counterfeit goods were shipped from Asia, according to the port’s police chief Ron Boyd in a Los Angeles Times news story.
The case reportedly began with a stolen-cargo investigation that led Los Angeles Port Police to several downtown Los Angeles and Vernon locations in December and January, the Times story said.
Port Police found counterfeit products with an estimated street value of more than $1.4 million; stolen electronics, toys and blankets worth about $2.5 million; and bank account receipts that indicate the operation generated more than $7 million in profits.
The counterfeit goods arrived as parts so that they could be reassembled and labeled before being sold, according to Boyd.
Two Los Angeles residents have been arrested: Bahram Zahab, 45, and his brother Edward Zahab, 40. Edward Zahab has been charged with three felony counts of the sale of counterfeit goods, and Bahram Zahab has been charged with one felony count of the same crime, according to the Times.
The Fort Worth-based BSNF Railway will spend $3.5 billion this year on upgrades to railroad tracks and equipment, spurred on by a recovering economy and growing freight business.
The railroad, which was acquired last year by Warren Buffett’s Berkshire Hathaway empire, experienced a 17 percent revenue increase in 2010’s first nine months at $12.2 billion, with a 38 percent jump in profit at almost $2.1 billion. The company has yet to report its fourth quarter 2010 figures.
BNSF spokesman John Ambler told the Dallas Fort Worth Star-Telegram that the railroad’s planned 2011 investments are consistent with those from previous years, with approximately $2 billion devoted to replacing the oldest and worn sections of its over 32,000 miles of track.
The western railroad said it plans to spend $450 million on 227 new locomotives, $350 million on new railcars and equipment, $300 million for train control technology, and $300 million on terminal, lines and intermodal expansion.
Hapag Lloyd owner’s Q1 buoyed by shipping line’s improvement
One of the owners of the Hapag-Lloyd container shipping line announced it narrowed first quarter losses thanks in part to the shipping line’s return to profitability.
The German company TUI AG, Europe’s biggest travel firm, reported a net loss for the quarter of $63 million, compared to losses of over $142 million for the same period a year earlier.
In December, TUI and Hapag-Lloyd’s majority German owner, Albert Ballin GmbH, announced plans were being made to initiate a public offering this year of Hapag-Lloyd.
Following the latest upbeat financial news for the first quarter, TUI says it could retain some ownership with the planned sale of the shipping group.
TUI’s earnings from its 49.8 percent stake in Hapag- Lloyd totaled $25 million, compared to a $20 million loss for the same period a year ago.
A 20 percent increase in freight rates, and 6.6 percent increase in containers carried were primary factors cited for Hapag’s improved business performance.
Canadian Wheat Board acquiring two ships for $65 million
Thanks to the removal by the Canadian government of a 25 percent vessel import tariff, prairie farmers in Canada are set to become owners of two bulk ships that will ship wheat on the Great Lakes at a price tag of $65 million.
The Canadian Wheat Board (CWB) announced it has reached an agreement with Algoma Central Corporation and Upper Lakes Group Inc. to acquire the ships, which are scheduled to enter service in 2013.
Farmers will reportedly share in the profits and control of the vessels through the CWB. The $65 million purchase price breaks down to $1 per ton of wheat that is to be paid over the next four crop years, according to CBC News.
The bulkers are to be operated and managed by Seaway Marine Transport in partnership of Algoma Central and Upper Lakes.
The CWB shipped 3.8 million tons of grain on the lakes in 2009.
The Port of Grays Harbor, Wash. announced its 2010 shipping business hit records for dry bulk and auto exports.
The port said it had 106 vessel calls, up considerably from its 19 ship calls five years ago.
Thanks in large part to dry bulk agricultural products that include soybean meal and distillers dry grain shipped out of the Ag Processing Inc (AGP) terminal, the port registered 1.5 million metric tons of cargo handled.
Auto exports out of the Pasha Automotive Services operation at the port hit 21,000 units processed.
Ship sinks off South Korea, four dead, seven missing
Four Russian seafarers died and another seven went missing in a shipwreck off South Korea, Russia’s analytical agency Maritime News reported on Wednesday.
The ship Alexandra flying Cambodia’s flag sank 16 kilometers off the Port of Uslan.
The crew concluded 12 Russian citizens. One seafarer was rescued. Bodies of four people were taken out of water and another seven went missing.
According to South Korea’s coast guard, the Alexandra ship supposedly sank after it collided with another ship. A helicopter and several patrol boats are engaged in the search and rescue operation.
According to some information, the ship with the deadweight of 1,500 tons registered in the Port of Phnom Penh was en route from Japan to China.
The U.S. Federal Maritime Commission has launched its inquiry into the impacts of slower containership speeds on freight rates and shippers' supply chains.
Largely in response to the global recession, container-shipping lines reduced their vessel fleet speed within the past two years to reportedly save fuel and lower greenhouse-gas emissions.
A United Nations Conference on Trade and Development report says that a 10 percent reduction in speed will reduce emissions by 19 percent per ton- mile.
The biggest shipping line in the world, Denmark's Maersk, has said that reducing a ship's average operating speed by 20 percent could lower its daily fuel consumption by as much as 40 percent.
The FMC's notice of inquiry into slow steaming this week references trade data that shows more than half of the 45 weekly container-shipping services operating between the U.S. West Coast and Asia are currently engaged in slow steaming. More than three-fourths of Asia-U.S. East Coast shipping services are slow steaming, the FMC's notice said.
"Slow steaming is a complex issue with advantages and disadvantages for both carriers and shippers depending on trade conditions and commodity transported," the notice said.
The FMC said shippers of lower-value commodities might find longer transit time, but lower freight rates, to work in their favor.
However, "shippers of high-value commodities may not find slow steaming advantageous because a potentially lower freight rate may not outweigh the added delay in accessing payments for goods rendered," the FMC said.
"Likewise, shippers of chilled meat and fresh produce may find slow steaming disadvantageous because the resulting longer transit times could lead to increased spoilage and less shelf-time in grocery stores."
The FMC's notice goes on to say: "the tradeoffs for U.S. importers and exporters assume that carriers pass at least a portion of the cost savings from slow steaming on to their customers. In the U.S. trades, where the vast majority of liner cargo travels under annual service contracts, it is unclear whether ocean carriers' customers have received those savings — either through adjustments to bunker fuel surcharges or the underlying rates."
The FMC also said slow steaming's environmental benefits should measure both carrier and shipper metrics and benefits.
"Better information and more transparency on emissions savings from slow steaming would allow carriers and their customers to make shipping choices that reduce their carbon emissions — and receive full credit for those measures," the FMC notice said.
The agency said it is seeking comments from shippers, carriers, ports, terminal operators, environmental groups and governments through April 5.
For contact information, access to the full report and questions the FMC is seeking:
Karen V. Gregory, Secretary
Federal Maritime Commission, 800 North Capitol Street, NW., Room 1046, Washington, DC 20573–0001 USA
Or e-mail non-confidential comments to: email@example.com (e-mail comments as attachments preferably in Microsoft Word or PDF).
Further information can be obtained from:
Austin L. Schmitt, Director
Bureau of Trade Analysis, Federal Maritime Commission, 800 North Capitol Street, NW., Washington, DC 20573–0001 USA
Telephone: (202) 523–5796
Freight index up 1.5 percent in December
The Freight Transportation Services Index rose 1.5 percent in December over November after having declined the previous month, according to the U.S. Department of Transportation's Bureau of Transportation Statistics (BTS).
The Freight TSI had risen 6.9 percent over the previous 19 months, beginning in June 2009, after declining 15.3 percent in the previous 10 months, the BTS report said.
The freight index has increased in 14 of the last 19 months, and increased 0.4 percent in 2010, the BTS report said.
Dollar rises on encouraging U.S. news
The U.S. dollar strengthened, including a two-week high against the yen, before reports that U.S. unemployment claims fell along with an improving state of consumer confidence.
The dollar gained ground on all 16 major global currencies that it competes against, according to a Bloomberg report.
Federal Reserve Bank of Atlanta President Dennis Lockhart said an increase in Treasury yields indicates growing confidence the U.S. recovery will gain strength.
As of yesterday, the dollar gained to 82.53 yen and $1.3698 euro.
The number of Americans filing first-time unemployment claims dipped to 410,000 last week from 415,000 the previous week, according to a Bloomberg News survey.
The Thomson Reuters/University of Michigan's preliminary index of consumer sentiment rose to 75 in February from 74.2 in January.
A baggage handler was trapped in the cargo hold of a U.S. Airways flight readying for departure out of Washington D.C.
The handler had crawled into a compartment to load some baggage when he was accidentally locked inside and the plane began its taxi.
Passengers heard loud thumping noises from under the floor and alerted flight attendants, and the aircraft was subsequently stopped.
Container of condoms shows up empty
A container that was supposed to contain 85,000 boxes of condoms arrived empty at Sagami Rubber Industries' distribution facility in Japan.
The cargo of ultrathin prophylactics, valued at over $900,000, originated at a manufacturing facility in Northern Malaysia where the company says the container was locked. The vessel departed Port Klang, and when the empty container showed up at its final destination, its locks had been replaced.
Various reports out of the region have pointed to the missing cargo being a possible inside job.
Friday, February 11, 2011
Deutsche Bank sees dry bulk rate improvement
Freight rates for coal, iron ore and other dry-bulk commodities could rebound now that the Lunar New Year holiday in China has ended, according a report by Deutsche Bank AG.
China is the biggest consumer of iron ore for making steel, and its financial markets shut down over the holiday.
There was also historical flooding in Queensland, Australia, where approximately half of the world’s coal is shipped from.
“We believe a window has appeared that will push freight rates higher over the next six months,” according to London-based Deutsche Bank analyst Michael Lewis in a report.
The Baltic Dry Index gained 13 percent this week to 1,178 points, the most since August of last year.
The BDI hit its lowest point since January of 2009 on February 4. The BDI is down 34 percent for the year, thus far.
Kraft still planning on Starbuck’s distribution business
In an investor conference call yesterday over fourth quarter results, Tim McLevish, chief executive officer of Kraft Foods Inc. discussed, in the following question and answer transcript from the call, Kraft’s guidance moving forward with regard to its legally entangled distribution business of Starbucks coffee products.
QUESTION: On Starbucks, is that part of your guidance here? Because you're just, you're not shipping it anymore. And when will we, obviously you can't figure out when the proceeds are coming, but how are you going to treat that? Will it be discontinued at some point?
MCLEVISH: Well, to start out, we still are shipping. We still have the business. Starbucks has notified us of their intent to take it back March 1. But as of right now, we are still fully shipping. You know we lost the first round of a preliminary injunction but we have appealed that and that will still be played out. We've asked for accelerated treatment, so we will know before March 1 as to whether we will be granted that. We have not reflected any change to our guidance with any assumption that the Starbucks business is going to go away.
QUESTION: So pardon me, so this guidance assumes a full year of Starbucks sales?
MCLEVISH: Yes it does.
QUESTION: Isn't that a little aggressive, Tim?
MCLEVISH: I mean, quite frankly, at this point, nothing has really happened. We still have a contract with Starbucks. They have notified us of their intent and we would argue that we still have a contract in place. So at this point, I think it would be prudent to assume that we're going to continue. Should that change, certainly you will know about it.
QUESTION: Well, I wish you luck on that. Thank you.
Short line and regional freight rail operator, RailAmerica, reported its total freight carloads for January were 68,963, up 1.2 percent from 68,164 in January 2010.
Metallic ores and metals carloads in January 2011 were 5,065, a decrease of 0.2 percent, compared to 5,075 carloads in January 2010, the company said.
Rail shipments increased in seven out of twelve commodity groups compared to January 2010, RailAmerica said in a statement.
Most of the increase from shipments of chemicals, non-metallic minerals and products, and pulp, paper and allied products, the company said.
The rail operator said its largest declines were in agricultural products and waste and scrap materials.
U.S. cotton exports on the rise
U.S. export sales rose 26 percent for the week ended Feb. 3 over the previous week, according to the Department of Agriculture.
Global cotton output is forecast to hit 115.25 million bales in the year ending July 31, down 0.2 percent from a January’s 116.55 million-bale forecast, the USSA said.
Cotton prices have more than doubled in the past 12 months.
Construction work digs up two old ships in San Francisco Bay
Analysis of a finding that resulted from construction work that was happening near Candlestick Park in San Francisco has revealed that two 90-foot working vessels from the late 1800s are buried there.
Engineers were drilling for soil samples when chunks of wood were found. The thought at the time is they were from an old pier.
The scows, that once were the floating freight trucks of the Bay Area, are buried in 14 feet of sand and dirt.
The hull sections became visible at the mouth of a huge trench that is supposed to be where a sewage overflow pipe will go, according to a story in the San Francisco Chronicle.
There were approximately 400 of these schooners built after the Gold Rush, with only one currently on display at the San Francisco Maritime National Historic Park.
Hand digging is currently taking place to get as many samples as possible from the vessels, but they won’t be salvaged due to the millions of dollars it would cost to do so, according to the Chronicle story.