Cargo Business Newswire ArchivesSummary for February 8 through February 12, 2016:
Monday, February 8, 2016
Foltz to step down as director of Georgia Ports Authority
Photo credit: Russ Bryant/Georgia Ports Authority
The Georgia Ports Authority's Board of Directors announced that Executive Director Curtis Foltz will step down at the end of the fiscal year, June 30.
"Curtis Foltz has led the GPA to achieve great things over the past six years as executive director, and the six years prior as chief operating officer," said Jim Walters, chairman of the board. "In addition to record cargo growth, GPA, under Curtis' leadership, modernized its terminals and developed operational practices that increased efficiency, improved safety and focused on environmental stewardship. The board is grateful for the many contributions he made to the Authority during his distinguished career as executive director and as chief operating officer."
Foltz will provide consulting services to the GPA for one year after his departure.
The board also unanimously accepted the nominating committee's recommendation to appoint the current chief operating officer, Griff Lynch, to succeed Foltz.
"Griff's extensive operational and port management skills make him the perfect candidate to replace Curtis and continue the success the authority has achieved," said nominating committee chair Jimmy Allgood.
Foltz thanked Governor Deal, the Georgia General Assembly, his board of directors, the ILA leadership and most importantly GPA's 1,100 employees for their support during his 12-year career.
"There is simply no better team anywhere in the maritime community than here at the GPA," Foltz said "Griff is the right choice to lead this great organization to new heights."
Virginia Port Authority says debt reduction on track, CEO earns $200K bonus
The Virginia Port Authority says cargo volume will determine whether it can pay off $5.5 million in debt in the first half of the fiscal year, leaving it with the $2.8 million in operating income it originally budgeted.
Chairman John Milliken said that even if container volume remains flat, the port could hit its mark with CEO John Reinhart’s plan to manage expenses and grow business at the same time.
Port volume fell in November and December due to a slowdown in China’s economy and a weak holiday shopping season, he said. Milliken also reported that discounts offered to customers based on exceeding volume levels were triggered earlier than usual because of last year’s heavy traffic, leading to a drop in the port’s income.
The port is still negotiating a lease with Virginia International Gateway in Portsmouth to double the size of the facility. Milliken said he’s "very optimistic" talks will conclude with a positive result before the end of June. The authority is also seeking $350 million in state money to beef up capacity at Norfolk International Terminals.
Commissioners unanimously approved awarding Reinhart a $211,500 bonus on top of his base salary of $450,000, based on performance metrics that weren’t disclosed. Milliken said a committee determined the port and Reinhart had a "very strong year" and the CEO met 94 percent of the goals set last year.
South Korean container giant Hanjin Shipping reported a net profit of $6 million in 2015 compared to losing $396 million in 2014.
The improved earnings came in spite of a decline in sales, with the company reporting just $6.86 billion in 2015, a 15.3 decrease compared to 2014 results. The company said the fall in revenue was mainly due to low freight rates.
Hanjin’s container business had an operating profit of $119 million on sales of $6.3 billion in 2015 compared to an operating profit of $137 million on sales of $7.4 billion in 2014, according to the statement.
The carrier attributed its results to stringent cost cutting measures and low fuel costs.
FMC: Supply chain innovation teams to tackle L.A.-Long Beach congestion
FMC Chairman Mario Cordero said Commissioner Rebecca Dye will work with U.S. international supply chain stakeholders to form Supply Chain Innovation Teams that will develop commercial solutions to supply chain challenges and port congestion concerns.
The project will involve stakeholders who do business at or with the San Pedro Bay ports of Long Beach and Los Angeles, the statement said. Commissioner Dye was also directed to identify potential commercial solutions to certain unresolved problems that may interfere in the future with the reliable operation of the U.S. supply chain.
Chairman Cordero emphasized that Dye’s supply chain engagement project is separate and distinct from the competition analysis being conducted by the FMC’s Bureau of Trade Analysis of PierPASS’s off-peak gates program.
"Commissioner Dye has been designated to undertake a broader effort to address congestion-related bottlenecks and other supply chain efficiency issues," Cordero said. "In effect, her work will be the next significant step in the commission’s efforts to encourage collaborative, innovative supply chain integration efforts that we initiated through our regional port forums."
Commissioner Dye stressed that many industry representatives agree on the fundamental importance of establishing regional, high-level supply chain teams to cope with increasingly complex international transportation problems that no individual industry segment can effectively address alone.
She said that the FMC is not proposing regulatory solutions, but instead is seeking to assemble working teams of industry leaders to develop commercial innovations that would support adaptive and resilient supply chain systems.
Super-sized container ship stranded near port of Hamburg
The CSCL Indian Ocean, a 1,312-foot container ship owned by China Shipping Group, remains stranded in the River Elbe after running aground while approaching the German port of Hamburg late on Wednesday.
Maritime emergency crews have made several attempts to free the vessel, which became marooned at about 10 p.m. on Feb. 3, according to the Central Command for Maritime Emergencies Germany.
One of the newest generation ultra large container carriers, the Indian Ocean has a capacity of 19,000 TEUs.
It’s unknown what caused the ship to ground, a spokeswoman for the port authority said by phone. The crews have begun to pump fuel from the vessel to prevent spillage, she said.
China Cosco Shipping Corp. may trigger further consolidation
China Cosco Shipping Corp., the new shipping giant spawned by the merger of Cosco Group and China Shipping Group, will trigger further consolidation in the industry when it starts operations later this month, according to The Wall Street Journal.
The merger will allow the two Chinese carriers to stop competing against each other domestically and overseas. China’s economic slowdown has hurt the prices of commodities such as oil, iron ore and coal, hurting the shipping companies’ profitability.
WSJ reports that the merged entity, which will supplant Maersk Line of Denmark as the world’s largest shipping company by ship value, starts operations Feb. 18.
Industry executives said that while shipping mergers are rare, when companies of such size come together, further consolidation likely will follow. One example came in December, when French shipping company CMA CGM made a deal to buy Singapore’s Neptune Orient Lines for about $2.4 billion.
"The [China Cosco Shipping] merger will put an end to the two companies competing for the same clients in container trade, but it doesn’t come without challenges," said Lars Jensen, chief executive of SeaIntelligence Consulting to WSJ. "An obvious one is that cargo owners, especially in China, will now have fewer choices to ship their goods and may abandon CCSC if a foreign competitor gives them better pricing."
Another issue is that Cosco Group and China Shipping Group currently belong to separate global shipping alliances, and the merger will likely kick off anti-trust concerns.
"They will either have to pull out from at least one of the alliances or pull out from both and form a separate alliance hoping to attract other operators to join them," Jensen said. "But with capacity commitments and other sharing of assets already in place, it won’t be an easy task."
Global Logistics Properties Q3 profit up 64 percent
Warehouse operator Global Logistics Properties reported a 64 percent increase in their third quarter net profit, bolstered by higher earnings in China, development gains in Japan and GLP’s entry into the U.S. market.
"Despite the uncertain economic environment, demand for modern logistics facilities continues to be driven by long-term, structural trends in domestic consumption," said Ming Z. Mei, CEO of GLP. "We signed 2.4 million square meters (26 million square feet) of new and renewal leases in 3Q FY16, up 22 percent year-on-year. We remain focused on executing our strategy of being the best operator, creating value through developments and expanding our fund management platform."
China earnings were up 50 percent driven by higher asset values, rent growth and continued lease up of developments, while Japan was up 34 percent on the back of higher development completions.
Overall profit after tax and minority interests was $184 million for the quarter ended Dec. 31, compared with $112 million a year ago.
The company posted an 11 percent rise in revenue to $199 million, its highest since June 2009.
Singapore-based GLP is a leading provider of modern logistics facilities in China, Japan, Brazil and the U.S.
Army Corps denies request to stop dumping toxic dredge material in Lake Erie
The U.S. Army Corps of Engineers has rejected the Port of Cleveland’s effort to protect Lake Erie water quality refusing the port’s plans for dredge disposal and electing to continue dumping waste in the lake, the port announced on Wednesday, Feb. 3.
The Corps is responsible for dredging the Cuyahoga River to keep the river channel deep enough to accommodate commercial shipping. In past years, the sludge that it brings up in the process has been placed in confined disposal facilities to keep it from entering the lake. The Port of Cleveland contends this is necessary, in part because it says "recent testing still shows trace levels of the toxin PCB and other harmful substances present in some sediment, which accumulates in the food chain, including Lake Erie fish."
The Corps would prefer the cheaper option of dumping the dredged waste into the lake itself. To prevent that, the port petitioned to have the Corps’ Cleveland Harbor Project amended to prevent the open-lake dumping. Its efforts were supported by numerous politicians, including six Ohio members of the U.S. House of Representatives and both of Ohio’s senators.
But the Corps still rejected the request, the port said.
"We are disappointed but not surprised that the Army Corps has rejected this request because at every step they have ignored the legitimate concerns of Ohio’s policy makers and citizens in what seems like an obsessive quest to dump unsuitable sediments in the lake," said Will Friedman, the port’s president and CEO, in a statement.
XPO Logistics sues YRC for conspiring to steal secrets
XPO Logistics is suing competitor YRC Worldwide over the hiring of several former employees, alleging that the trucking company conspired to steal customer and pricing secrets by poaching its executives.
The lawsuit, filed Feb. 3, pits two of the largest trucking companies in the U.S. against each other over the trade secrets that are at the heart of the highly competitive freight shipping market.
The complaint grew out of the XPO takeover last October of Con-way Inc. and its Con-way freight unit, the second-largest in the country offering less-than-truckload services. YRC Freight is No. 3 in that market.
In its complaint, XPO asks the court to order YRC to return any trade secrets and company information it holds and to stop employing for a year former XPO employees, including two top executives who had come to XPO through the company’s acquisition of Con-way.
XPO alleges in the complaint that two of the employees, longtime senior executives at Con-way Freight, had "informally" accepted job offers with the competitor weeks before their departures but delayed their resignations. XPO said it believes that was so the executives could get more "confidential information and trade secrets, including but not limited to its most valuable competitive strategies" as XPO prepared to restructure the Con-way operation.
A YRC Worldwide spokesman said in an email that the company declined to comment on the complaint.
The lawsuit comes after XPO moved directly into the trucking market last year with its $3 billion purchase of Con-way.
Port of NY/NJ sets container volume record in 2015
Annual cargo volumes at the Port of New York and New Jersey beat their previous record by more than 10 percent, according to a port authority statement.
The port handled 6,371,720 TEUs in 2015, an increase of 10.4 percent over the previous record set in 2014.
The port said the numbers allow it to maintain its position as the busiest on the East Coast with nearly 30 percent of the nation’s total market share.
The statement said ExpressRail, the port authority’s ship-to-rail system serving New York and New Jersey marine terminals, also set a new record, handling 522,244 containers for an increase of 12.2 percent over the previous annual record set in 2014.
The port’s rail projects – along with road and security infrastructure work at the port – are funded by port wide Cargo Facility Charges.
On the labor front, the statement says that 181 new longshoremen, 44 checkers and 62 mechanics were hired in 2015 to work at port facilities, supplementing the 568 dockworkers hired in 2014 for a total of 855 new dockworkers over the last two years.
Army Corps completes review of Port Everglades dredging project
The U.S. Army Corps of Engineers announced Monday that it has completed its final review for a long-discussed plan to deepen and widen the channel at Port Everglades.
The agency said a report was sent to Congress Jan. 29, and the project will compete with other ventures for funding in future budgets.
The deepening, in the works for nearly two decades, will allow the Broward County port to host massive cargo ships, increase business volume and create more jobs.
Broward Commissioner Chip LaMarca, who has been working closely with the Army Corps, said the final review deals primarily with how the work will be funded.
The completed review is a "major milestone," Port Everglades chief executive Steve Cernak said in a statement. "As vessels continue getting larger, deeper and wider channels are needed for safe passage and to reduce ship traffic congestion," he said.
U.S. Rep. Debbie Wasserman Schultz of Weston and U.S. Rep. Lois Frankel of West Palm Beach have said the renovations are essential for the port and the South Florida economy.
Container volume at Prince Rupert port up 26 percent
Overall 2015 statistics of cargo traffic from the Port of Prince Rupert has given the company good news to start 2016.
Container volumes at the Fairview Container Terminal increased 26 per cent over 2014, with 776,412 TEUs being moved.
An additional 500,000 TEUs in capacity is scheduled to be added by the end of 2017 with the completion of the Port’s Phase 2 North expansion project currently underway at the terminal.
Not only did container cargo rise, but Prince Rupert Grain also experienced a very strong year in 2015, with 6.4 million tons of wheat and canola shipped among other agri-food, the second-best year on record for the category.
Westview Wood Pellet Terminal also saw success with a 44 per cent increase in volume.
Ridley Terminals saw another year of declining volumes, with shipments of metallurgical coal down 60 per cent from 2014 - a six-year low for bulk energy shipments.
Last year, 19.6 million tons of containers, grain, coal, forest products and other commodities were moved through the port by 3,000 employees directly employed in port-related jobs.
Drewry looks at how low bunker prices might impact carrier planning
Bunker prices are now at a low level not seen since the early 2000s. When bunker prices increased five-fold, to levels in excess of $600 per ton, container lines responded with a number of cost saving measures as they focused on bunkers as the biggest single cost item in their business.
However, with the complete reversal of that trend, and bunker prices now in the range $100-150 per ton again, Drewry Maritime Advisors has examined how this change in the carrier’s cost structure may influence the way they plan and operate their networks.
Slow steaming – and later super slow steaming – became popular when bunker prices rose dramatically in 2007/8; then when the global financial crisis reduced demand, slow steaming also had the advantage of soaking up the surplus vessels. When demand returned to more sustainable levels, lines continued with slow steaming because of the significant cost advantages, even when the full cost of the ‘extra’ vessel(s) had to be met.
However, with bunker prices recently approaching $100 per ton, where does this leave the advantages of slow steaming?
Drewry modelled ship system costs (vessel, bunker, port and canal costs) for an illustrative Asia to North Europe loop, using 11, 10 or 9 ships to provide a weekly service, and with bunker prices at $100, $300 and $600 per ton.
It is no surprise that at a bunker price of $600 per ton, a reduction in the number of vessels per loop would increase the effective slot cost. At a price of $300, there is very little change in slot cost if loop speed is increased, and the number of vessels reduced. However, at a bunker price of $100 per ton, there are clear cost savings from increasing service speed, and reducing the number of vessels per loop.
Drewry says, even so, container lines will probably not rush to speed up loops on the East-West trades. Lines and alliances have carefully planned their networks, including terminal berth windows, based on their present slow steaming speeds. To increase service speed would require major replanning and disruption.
On the other hand, with bunkers being relatively cheap, we may see other steps being taken by lines. Extra calls may be added to loops, as the incremental cost of faster steaming will be lower. Schedule reliability should improve (as is already happening) – lines should be more willing to pay the cost of speeding up to achieve an on time arrival.
The analysts say that for a vessel size range from 8,000 to 18,000 TEUs, the impact of bunker price on economies of scale is fairly limited – for example when increasing vessel size from 8,000 to 14,000 TEUs, a saving in slot cost of 21 percent at a bunker price of $600/ton only reduces to a 16 percent or $100 saving.
Drewry also looked Panamax vessels of around 4,000 TEUs, looking at slot costs on the Asia to U.S. West Coast trade for vessel sizes from 4,000 to 14,000 TEUs. The slot cost saving in moving from 4,000 to 8,000 TEU vessels, which is 17 percent at a bunker price of $600/ton diminishes to zero at a bunker price of $100/ton. This conclusion was reached using a current market charter rate for a Panamax 4,000-TEU vessel of $12,500 per day, which although still relatively low, is higher than the rock bottom rates that were earned in 2013/2014.
Drewry concludes that a continuation of the current low bunker prices is not going to change the drive of the big carriers to utilize larger vessel sizes in pursuit of economies of scale, but it does represent a stay of execution for the smaller Panamax ships.
While there are other reasons why lines may continue slow steaming for the time being, a trend of increasing service speeds will reduce global requirements for tonnage. Drewry says lines should carefully consider this change when planning any orders for new vessels.
Cargo ship towed to Orkney after losing power
A Dutch cargo vessel that broke down off the west coast of Orkney in Scotland on Saturday has been towed to the Moray Firth.
The 90m-long Schokland is carrying a cargo of wind turbine parts and lost power on Sunday near the island of Hoy.
The ship was towed through the Pentland Firth and down the east coast overnight by the Einar tug, owned by Orkney Islands Council.
A spokesman for the authority said the cargo ship had suffered engine failure.
Governor: GPA could grow to unseat NY/NJ as top East Coast container port
Gov. Nathan Deal had glowing words for the Georgia Ports Authority and its outgoing director Curtis Foltz at the 2016 Georgia Foreign Trade Conference this week.
"For 12 years, he’s done a great job in raising the value of the port, increasing its worth to the state and literally putting the Port of Savannah on the world map," Deal said, noting that 2015 was "another record-breaking year for the GPA."
He said container volumes grew 17 percent to a record 3.7 million TEUs.
"Overall, the ports authority has enjoyed 28 consecutive months of year-over-year growth and will continue to grow as we move through this year," Deal told attendees of the two-day conference.
"Ours is the No. 2 container port on the East Coast, after the Port of New York/New Jersey, and if it continues to grow in the fashion it has recently, I believe it may eventually be No. 1," he said.
Deal said Georgia’s Statewide Strategic Transportation Plan includes the widening of Interstate 16 between Interstate 516 and Interstate 95 — a heavy truck corridor into and out of the ports — as well as the establishment of truck-only lanes on Interstate 75 from Macon to Atlanta.
Port growth is expected to be boosted by the opening of the expanded Panama Canal in June, making the ports’ deepening project even more critical, he said.
"We as a state made the commitment to do our part in funding this major project, and over the last three years, we’ve put in some $266 million, which is the state’s portion," Deal said.
"I’m saying we need $90 million from appropriations in this next federal budget cycle in order to keep this project on track and on schedule," he said. "I recognize that there are many ways to come up with that $90 million, and I really don’t expect it to be in the president’s upcoming budget announcement."
After Piraeus Port, China's COSCO eyes Greek trains to build Europe hub
China's COSCO is likely to make an offer for Greece's rail network now that it is the sole bidder for the country's largest port, two people familiar with the matter told Reuters, as the state owned shipping giant forges ahead with a plan to build a European transhipment hub.
Buying TRAINOSE and Piraeus Port would give COSCO connections to the Suez Canal and rail links to the Balkans, including central and Eastern Europe.
Strengthened by December's merger with China Shipping Group, COSCO's focus on Greece is about building market share, industry sources said.
COSCO was unchallenged in its $400 million offer for a 67 percent stake in Piraeus Port last month and is set to be named the preferred investor.
But it could face competition for the rail network, including from U.S. railroad holding company Watco, one of the individuals said. TRAINOSE has an estimated value of dozens of millions of euros.
"COSCO and Watco are interested in TRAINOSE," said the source, who declined to be identified. "There is also a Greek group which is interested and is looking for a partner."
A COSCO spokeswoman declined to comment on prospective bids for other Greek assets.
Watco could not be reached for comment and the source did not identify the Greek group.
Canadian Pacific abandons prospective proxy fight for Norfolk Southern
Canadian Pacific Railway backed away from a proxy battle to unseat Norfolk Southern Corp. directors, opting instead to enlist the rail operator’s shareholders to influence the board to engage friendly merger talks.
Canadian Pacific said it would submit a nonbinding resolution to the company’s coming shareholders’ meeting calling for the board to start negotiations. The Alberta-based railway has been surprised by the force of opposition to the deal, according to a person familiar with its plans.
"We believe this shareholder resolution is the clearest, fairest approach to a process that will result in an outcome beneficial to all stakeholders," Canadian Pacific said in a statement on Tuesday.
Norfolk Southern said it wouldn’t support further discussions barring a new offer with "compelling value" and that addresses regulatory issues.
DP World reports 3 percent container volume growth for 2015
Dubai-based port operator DP World announced three percent year-over-year container volume growth for 2015 despite a difficult second half for global trade operators.
DP World reported gross container volumes totaling 61.7 million TEUs in 2015, compared to 59.9 million TEUs in 2014. The company, which operates around 70 marine terminals on six continents, reported an eight percent increase in container volume in 2014.
"The second half of 2015 was difficult for global trade operators, as various economic headwinds including currency weakness and lower commodity prices adversely impacted trade growth," DP World Group chairman and chief executive officer Sultan Ahmed bin Sulayem said in a statement.
"Against this challenging backdrop, all our three regions continued to deliver full year volume growth on a like-for-like basis which demonstrates the strength of our portfolio," bin Sulayem explained.
Growth in 2015 was largely driven by European and the UAE terminals. The portfolio benefited from the ramp-up in London Gateway.
"Despite the uncertain near-term macro environment, and given the high utilization at our portfolio, we remain confident about the medium to long-term outlook of our industry and continue to invest to meet the future capacity requirements of our customers. As we look ahead into 2016, we look forward to the new capacity at Rotterdam (Netherlands), Mumbai (India), Prince Rupert (Canada) and Yarimca (Turkey) to deliver a full year contribution to our throughput," the chairman said.
DP World expects to open its third berth at London Gateway in mid-2016, adding 600,000 TEUs of new capacity. The additional 2 million TEUs at terminal three (T3) Jebel Ali will also be operational in the second half of 2016.
Customs seizes hoverboards worth $1.6 million at Port of Charleston
U.S. Customs and Border Protection agents say they've recently seized hoverboards valued at $1,666,000 at the Port of Charleston.
The agency says they seized two shipments containing 2,380 counterfeit hoverboards that violated trademark protections and are potentially hazardous.
The hoverboards were manufactured in China, agents say, and do not meet U.S. consumer safety standards. Customs officials say the boards often contain counterfeit lithium ion batteries that can be a fire hazard.