Congressional transportation votes could head to the floor this week
A busy week ahead in Washington D.C. as President Obama releases his budget and two transportation bills in the U.S. House and Senate, respectively, could be destined towards final floor votes, with neither necessarily emerging as a sure thing, according to reports out of Capitol Hill.
The Senate’s proposed two-year, $109 billion road and transit project bill, is considered to be the safer bet of the two after last week’s upper chamber floor vote passed handily with 85 votes.
However, Sen. Barbara Boxer (D-Calif.), chair of the Senate Environment and Public Works Committee, cautioned her peers to not "mess up this bill" with "extraneous" amendments.
The House’s $260 billion reportedly faces a stiffer test, with factions in both parties declaiming what they contend is too much investment in transportation and not enough on areas like public transit, sidewalks and green space.
House Democrats have also been vocal against wrapping increased domestic spending on oil drilling into the transport bill.
Survey: Tight credit for shipping companies poses threat
A lack of financing for global shipping companies is biggest threat to their survival, according to 42 percent of the respondents to a transportation survey released last week.
"The past three years has seen a notable decline in the availability of bank lending to the shipping sector, and this has had a considerable impact on many shipping businesses," said Harry Theochari, global head of transport for the international law firm Norton Rose, the conductor of the survey.
According to a Reuters report on the survey: "Many banks are keen to shed dollar-denominated assets such as ship and trade finance loans to meet tougher capital rules imposed on euro-zone lenders."
Traditional ship finance resources, like Lloyds Banking Group, are either scaling back or, as in the reported case of Lloyds, could be selling off the ship loan portfolio.
Thirty-one percent of the survey respondents said they are planning to explore alternative means of financing over the next two years to be through private equity sources, with 18 percent looking at export credit agencies.
"Shipping companies are now looking beyond traditional forms of finance and are readying their businesses to weather further economic uncertainty over the next 12 months," said Theochari.
Amid a global climate of vessel over-capacity in most shipping markets, 55 percent of those surveyed said they would focus on maintaining cash reserves and securing funding, and 56 percent are planning for joint ventures in the next year.
California’s three-mile ballast water ruling approved by EPA
Last week the Environmental Protection Agency approved the ruling to ban ships from dumping their ballast within three miles of the coast of California.
The regulation, which goes into effect in March,
will reportedly be enforced along the 1,624-mile-long coastline of California and is projected to prevent 22.5 million gallons of ship sewage being dumped within the three-mile zone per year.
"What we are really doing is creating a coastal zone that recognizes the importance of our beaches, surfing, swimming and the reason people come to our iconic coastline," said Jared Blumenfeld, regional administrator for the EPA.
Enforcement of the new ballast water ruling that impacts vessels over 300 tons will be in the hands of the U.S. Coast Guard, with the EPA able to impose fines.
The state of California reportedly needed the EPA’s approval of the three-mile rule via that federal regulatory body’s enforcement of the Clean Water Act.
For the full San Francisco Chronicle story:
www.sfgate.com
Are container manufacturers a good investment bet?
An analysis by Wall Street Daily suggests container manufacturers have emerged as a good stock buy despite depressed freight rates and global container-vessel oversupply.
The Daily report refers to statistics compiled by Paris-based shipping industry consultancy Alphaliner that show the "box to slot" ratio of container supply measured against containership space is 2:1, which is reportedly at an all-time low. In 2000, the box to slot ratio was 3:1, according to Alphaliner.
Container leasing rates reportedly risen 40 percent over the past two years, and the cost of purchasing a container has risen 130 percent, according to the major container-manufacturing company TAL International Group.
"We’re seeing perfect conditions," said Brian Sondey, chief executive of TAL in a Bloomberg interview.
Accordingly, the CEO of TAL told Bloomberg, "We’re seeing perfect conditions."
The Wall Street Daily article says that "whenever prices of any product move that much – and that quickly – there must be some dislocations in the markets that offer an opportunity for profit."
"As long as the global economy doesn’t tank, shipping containers should deliver healthy growth on the back of this worldwide shortage," the article said.
Denmark’s A.P. Moller-Maersk, a major global tanker operator, has reportedly suspended any new oil tanker deals with Iran due to the European Union embargo oil imports from that country what were enforced on January 23 of this year.
"As of 24 Jan 2012, all new fixtures involving Iran and all carriages of products with Iranian origin have been suspended," said Henrik Ramskov, chief operating officer with Maersk Tankers.
"Existing spot fixtures, single voyages, concluded prior to 23 Jan 2012 and other obligations entered into before 23 Jan 2012 will also continue to be performed within the framework of the exemption set out in the decision of the EU Council," Ramskov said.
The cost of shipping a forty-foot container from China to the U.S. West Coast has reportedly risen 29 percent since mid-December, although still 5.6 percent lower than a year ago amid current vessel over-capacity.
The cost of shipping a forty-footer from China to the West Coast was most recently $1,824, compared to $1,418 on December 16, according to data compiled by global shipbroker, Clarkson.
Concurrently, shipping volumes from northern Europe and the Mediterranean to the U.S. are up 12 percent, according to a Bloomberg report.
“The data show U.S. households and businesses are still looking to take in imports,” said Paul Dales, senior economist at London-based Capital Economics Ltd.
“The U.S. economy is not doing brilliantly, but at least it’s growing and probably will continue to grow this year,” Dales said.
Average daily rates for containership charters in the 4,400-TEU range are predicted to rise from 2011’s $8,700 to $18,000 over the next 6 to 12 months, according to Morgan Stanley.
China-West Coast container rates are still 36 percent below a high of $2,833 in July 2010, according to Bloomberg.
The International Monetary Fund cut its forecast for Global trade for goods and services by 2 percent last month to 3.8 percent, however, the U.S. economy is projected to be up 2.2 percent compared to 1.7 percent in 2011, according to data compiled by Bloomberg.
A group of short-haul truck drivers serving the Port of Seattle are reportedly in the third week of a walkout that began January 31 over their claim of poor working conditions.
A spokesperson for the port told the Seattle Times that the cargo flow there continues as trucking companies have hired replacement drivers in the interim.
The Times also reported that on Monday morning, 300 protesters gathered on the Duwamish Waterway, a section of Seattle’s industrial working waterfront. Subsequently, “dozens of truckers” gathered outside the office of Pacer Cartage.
"We are powerful right now. A lot of drivers are promising to join us," said Zacharias Abebe, a member of the new Seattle Port Truckers Association to the Times.
The truckers participating in the walkout are reportedly protesting for better workplace conditions, benefits and wages amid what they claim are high vehicle insurance, maintenance, and safety liability costs.
The Times reported the truckers at the Port of Seattle earn an average of $40 to $44 per load
for hauling containers between marine terminals and nearby intermodal railyards, or to warehouses further afield.
The truckers say they earn, on average, $30,000 per year after all costs are paid for.
There are currently two legislative bills on the docket in Washington State aimed at the trucking industry.
One bill would require private companies to be financially responsible for weight violations and damaged chassis. The other bill that has already passed the state’s House classifies drayage drivers as company employees, and would reportedly open the door for short-haul drivers, who are now considered independent contractors, to join labor unions.
Port of Seattle Commission President Gael Tarleton told the Times that a full solution to the port trucker issue could take years, citing Federal courts blocking attempts in California to overhaul that business.
President Barack Obama’s 2013 budget proposal released this week would almost double spending on U.S. infrastructure over the next six years at $476 billion for highway, bridge and mass transit projects.
The budget calls for $50 billion in transportation investment for 2012, including include $26 billion for the National Highway Program and $4 billion for the National Infrastructure Investments program.
The President’s budget would also allocate $350 billion towards a jobs plan.
Obama says the infrastructure spending would in part be offset through cuts to other domestic programs, savings from the U.S. draw down in overseas wars, including in Iraq and Afghanistan, and gasoline tax revenue.
The 2013 budget also includes $848 million for the Harbor Maintenance Trust Fund, an almost 12 percent increase over 2011’s request, drawing a mixed review by the association representing U.S. seaports.
“The president’s proposed civil works program increase for navigation is the highest budget request ever, and is a very positive step toward AAPA’s long-stated goal of full utilization of the Harbor Maintenance Tax for its intended purpose,” said Kurt Nagle, president and CEO of the American Association of Port Authorities in a statement.
However, the AAPA’s statement said the recommended HMTF allocation for U.S. seaports is “not close to the $1.4 billion collected annually from importers and domestic shippers for deep-draft navigation maintenance dredging.”
Nagle said, “importers and domestic shippers already pay approximately double the annual amount that is drawn from the HMTF for maintenance dredging, leaving a surplus that exceeds $6.3 billion today.”
He said the surplus “has been used for other programs,” and that “there are serious dredging needs that have gone unheeded.”
Greece’s shipping stocks on upswing after austerity budget approval
Shipping stocks in Greece have been on an upswing in 2012, especially on the heels of the Greek parliament’s recent announcement that it passed a controversial austerity package in order to receive a $170 billion bailout by the Euro zone and International Monetary Fund in order to avoid default.
Greece’s Excel Maritime Carriers’ stock was up 2.79 percent and Paragon Shipping posted a 7.20 percent uptick, according to investment market research firm Five Star Equities.
Shipping accounts for 6 percent of Greece’s gross domestic product and generates 75 percent of the country’s 400,000 jobs, according to the Hellenic Chamber of Shipping.
However, Greece's unemployment is above 20 percent.
“Greece is highly dependent on shipping from an employment perspective. It's hard to be confident,” said Dimitri Papadimitriou, president of the Levy Economics Institute at Bard College in Annandale-on-Hudson, New York, to CNNMoney.
China could be helping Greece’s flagging shipping industry after agreeing last October to set up a $10 billion dollar fund with reportedly favorable terms to aid Greek ship-owners purchase Chinese-made ships.
Pirates kill two in increasingly dangerous West Africa waters
Pirates killed the captain and chief engineer aboard a cargo ship on Monday morning off Nigeria’s coast as ocean-going vessels face what has been reported to be an increasing danger in the waters of West Africa’s Gulf of New Guinea.
The pirate attack against the Fourseas, owned by a Taiwanese company, was the deadliest to date in a region where piracy has reportedly escalated in the past year from lower-level armed robberies to hijackings and cargo thefts, according to a Washington Post report.
The piracy watchdog group, International Maritime Bureau, said most of the ship’s crew was secured in a safe room while a gunfight ensued during Monday’s incident, as the captain and chief engineer died from their wounds. The pirates reportedly sprayed the ship with gunfire.
Southern Cal container complex posts pre-recession volume
Export growth and a gradual consumer rebound were among reported factors that led to the U.S. -leading container ports of Los Angeles and Long Beach combining for 1.16 million TEUs handled in January; their strongest month of box traffic since the 1.17 million TEUs they posted in January 2008.
The Port of Los Angeles put up a record-breaking January, and its biggest month since 2007, handling 698,715 TEUs, an almost 6 percent increase from the same period a year earlier.
The port’s exports also rose close to 6 percent at 168,427 TEUs, and imports were up over 5 percent at 356,395 TEUs.
Los Angeles' January traffic broke a record set during the height of a global economic boom, in 2007, when the port moved 691,602 containers.
The Port of Long Beach’s January box-handling numbers were down just under 4 percent for the same month last year at 456,424 TEUs, with imports down 5.49 percent and exports dropping 8.2 percent.
Former NOL chief to assume helm at Rickmers
Ron Widdows, the former chief executive of Singapore’s Neptune Orient Lines, owner of the APL container-shipping line, has been announced as the incoming CEO of Hamburg-based shipping group Rickmers Holding and Rickmers-Linie.
Widdows assumes the top spot at Rickmers on April 1 from outgoing CEO Jan B. Steffens, who the company said would continue to serve on the Rickmers advisory board.
Widdows was with APL and NOL for 31 years, where he ended up as group president and CEO.
Port of Portland reorganizes executive management
The Port of Portland, Oregon announced it has restructured is executive management structure, which includes former marine and industrial development director, Sam Ruda, moving into the newly-created post of chief commercial officer.
The port also announced Vince Granato, who had held the position of chief financial officer, will now assume the new role of chief operations officer.
Ruda, a nine-year port employee, and former Nike logistics director, will now be responsible for the oversight of all of the port’s commercial and business development in the marine, aviation, and commercial real estate divisions, according to a statement released by the port.
Granato, a 24-year veteran of the Port of Portland, will oversee all of the port’s operations in marine, aviation and business parks.
The port’s executive director, Bill Wyatt, said his purpose with the reorganization was, “to eliminate duplicate organizational structures, take advantage of the obvious synergies from locating like functional responsibilities within single work groups, place a very concentrated emphasis on our customers and business development (which accounts for 96 percent of our revenue) and, over time, reduce the cost of operating the Port while improving our business.”
Industry group weighs on this week’s China-U.S. commercial agreements
The U.S.-China Business Council issued its response to the commercial agreements reached this week between the PRC Vice President Xi Jinping and Vice President Joe Biden.
“Today’s announcement should allow access for American companies to sell auto insurance, reduce taxes and tariffs to encourage more sales of goods and services by American companies to China’s consumers and confirm U.S. companies will not be forced to transfer technology as a prerequisite for in investing or developing markets in China,” the USCBC said in a statement.
Xi, who is reportedly a potential future leader of China, is on week-long U.S. tour, that has included meetings with President Barack Obama, Vice President Biden, congressional leaders, and continues with visits to Iowa and California.
“We are also encouraged that China will participate in an international working group with the goal to establish best practices for export financing by 2014, the USCBC said.
“This could level the playing field for American companies competing against Chinese firms in third markets,” business group said.
“The announcement today proves that [a bilateral investment and trade] approach can result in meaningful progress for American companies.”
Port of Seattle says trucker walkout has ended
The Port of Seattle announced the over two-week short-haul trucker walkout has ended, while talks between all parties concerned ensue.
Truckers serving terminals at the Port of Seattle began their walkout on January 31 over their reported protests for better workplace conditions, benefits and wages amid what they claim are high vehicle insurance, maintenance, and safety liability costs.
The Seattle Times reported the truckers at the port earn an average of $40 to $44 per load for hauling containers between marine terminals and nearby intermodal railyards, or to warehouses further afield.
The truckers say they earn, on average, $30,000 per year after all costs are paid for.
There are currently two legislative bills on the docket in Washington State aimed at the trucking industry.
One bill would require private companies to be financially responsible for weight violations and damaged chassis. The other bill that has already passed the state’s House classifies drayage drivers as company employees, and would reportedly open the door for short-haul drivers, who are now considered independent contractors, to join labor unions.
On Monday, 300 protesters reportedly gathered on the Duwamish Waterway, a section of Seattle’s industrial working waterfront. Subsequently, “dozens of truckers” gathered outside the office of Pacer Cartage, according to reports.
The Port of Seattle issued a statement late in the day Wednesday that said container cargo movement was back to “normal operations, and that “newly established working groups with these stakeholders as well as state and local law enforcement will address safety issues around intermodal equipment used to haul cargo, along with other concerns raised in the driver community.”
Friday, February 17, 2012
Top Story
Maersk cuts Asia-Europe capacity 9 percent
In a move to restore profits, shipping giant Maersk Line announced plans to cut 9 percent of its shipping capacity on the Asian to Europe route. It will take out the ships on its largest trade route by implementing a vessel-sharing contract with CMA-CGM SA.
To further offset overcapacity, Maersk said it will also consider changing time-charter agreements, laying up vessels and sailing at a lower speed.
Maersk and all other carriers on the Asia – Europe route have lost money since Q3 of 2011. Maersk shares rose up to 2.7 percent after the announcement.
Chinese Vice President Xi Jinping, expected to become the next president of China, visited the Port of Los Angeles Thursday as a part of a five-day U.S. tour.
Governor Jerry Brown greeted Xi at the airport, taking him to the POLA to tour a China Shipping terminal. The port exported $120 billion in goods to China last year.
China Shipping, the eighth largest shipping company in the world, is doubling its size at the LA port through a $253 million expansion. Xi was given an explanation of the electric power system, which China Shipping officials say will make it one of the greenest terminals in the world.
A European Parliament environment committee approved more stringent restrictions on ship-fuel as part of a maritime clean air package that could cost the industry up to $14 billion a year.
The committee voted to set a 0.1 percent sulfur limit beginning in 2020 for all passenger ships that travel between European Union ports. Currently the sulfur limit is 1.5.
The committee also ruled that sulfur content in fuel will be restricted to 0.5 percent by 2015 and 0.1 by 2020 in all EU waters, except for the Baltic Sea, North Sea and English Channel. They will incorporate into law an International Maritime Accord that will also lower fuel in the Baltic and North seas and the English Channel from the current 1.5 percent to 0.1 percent by 2015.
The EU is getting tougher on sulfur-dioxide emissions blamed for illnesses including asthma, bronchitis and heart disease and environmental damage such as the disintegration of buildings.
The European Commission said the new regulations would bring health benefits between 15 and 34 billion euros a year.
Container traffic increased 7 percent this fiscal year at Port Miami, according to port officials.
More than 900,000 TEUs moved through the port during the fiscal year ending September 30.
Officials expect a significant cargo increase when the Panama Canal extension opens in 2014, since the Miami port is increasing its depth to accommodate the flow of the super-sized vessels.
After violating oil pollution laws, Horizon Lines will pay a $1 million fine and donate $500,000 to environmental projects in the Bay Area.
In October, the Horizon Enterprise was inspected at the Port of Oakland, and it was found that a valve had been opened to prevent the detection of oil discharges.
Horizon Lines pled guilty to two felony charges, admitting that engineers had disabled equipment that would prevent oily waste from being dumped into the ocean, and had falsified records to cover their tracks.
The U.S. District Judge accepted the guilty plea on Thursday and sentenced the company, which is also required to adopt a plan to comply with environmental laws in the future.
