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Today's Cargo News Archives
Summary for February 19 - February 23, 2007:

Wal-Mart lifted by overseas expansion

Wal-Mart reported increased earnings in its fourth quarter as expansion of its international operations in South America and Japan helped drive income and sales growth.

Net income at the world’s largest retailer rose to $3.94bn, or 95 cents per share in the fourth quarter, from $3.59bn, or 86 cents, a year ago.

The results included a $98m, or 2 cents a share, benefit from tax. Analysts had been expecting a 90 cent a share profit excluding this special item, according to Reuters.

Net income for the year was up just 0.4 per cent to $11.3bn, or $2.71 a share. In November 2006 Wal-Mart recorded its first drop in sales since 1996 as a program to push its 3000 US stores up-market backfired.

Wal-Mart has also carried out a sweeping reorganization of its senior US marketing and merchandising executives, as it seeks to revive sluggish sales at home.

Sales were back on course in the fourth quarter, rising 10.9% to $98.1bn. Net sales for the year were $345bn, an 11.7% increase.

AB Volvo makes offer for Nissan Diesel

Swedish truck maker AB Volvo, looking to gain a solid foothold in the Asian market, Feb 19 offered to pay more than $1bn for the 81% of Japan's Nissan Diesel Motor Co. that it doesn't already own.

Nissan Diesel, a Japanese maker of trucks and buses, said in a separate statement that its board supports the all-cash offer of 7.5bn Swedish kronor ($1.1bn). The offer breaks down to 540 yen ($4.52) per share, for each share Volvo doesn't yet own, representing a 32% premium to the average share price of Nissan Diesel over the past three months. The offer values all of Nissan Diesel at 165.60bn yen ($1.38bn).

Volvo bought a 13% stake in Nissan Diesel in March 2006 from Tokyo-based auto maker Nissan Motor Co., and then raised its holding to 19% in September.

Volvo said its offer is open through March 23 and isn't conditional on a lowest level of acceptance, and that it is dependent upon necessary approvals of antitrust authorities. If it wins that regulatory approval, the deal would be completed by March 29, Volvo said.

A deal would open bigger opportunities for the Swedish manufacturer in Asia, where demand for trucks has been growing rapidly thanks to brisk economic growth. Volvo owns Mack Trucks in the US and Renault Trucks in Europe, but has lacked a local brand in Asia.

Honda uses Ohio plants as base for expansion

Project teams that have come together from the North American car plants of Honda Motor Co. in Ohio, Alabama and other places are finalizing plans to build a factory in Indiana.

The new facility is slated to come onstream in 2008 at a cost of $550mn and turn out 200,000 vehicles per year.

It will primarily manufacture Civics, which have become a huge hit due to their low fuel consumption. The thinking is to incorporate state-of-the-art technology in the plant along with production expertise cultivated in existing North American factories.

To alleviate any shortages resulting from demand outstripping supply, Honda will increase production of Civics in Canada this spring. It is also boosting production capacity in Mexico to 50,000 vehicles a year from 30,000 as well as launching production of its heralded CR-V sport utility vehicle.

Nidec Tosok to ship auto parts from Vietnam to Mexico

Nidec Tosok Corp. will ship auto parts directly from its Vietnamese unit to a customer in Mexico as early as 2007 to reduce costs and shorten delivery time by at least three weeks.

The auto parts maker now ships control valves from Vietnam to Japan, then sends some of the shipments to a Mexican factory of Jatco Ltd., a Nissan Motor Co. affiliated auto parts maker.

Control valves are used in automatic-transmission and continuously variable-transmission (CVT) systems.

Jatco plans to boost its output of CVTs in Mexico to 800,000 units a year as early as 2008, up threefold from 2006.

HK firm in mainland LNG supply agreement

Energy World Corp, a developer of gas and electricity projects, has signed an initial accord with an undisclosed mainland company for long-term sales of liquefied natural gas.

Negotiations would start in March 2007 with the aim of concluding an agreement for the sale of as much as five million tons a year of LNG to the company over 15-20 years, Energy World said.

Energy World, controlled by Hong Kong-based Energy World International, owns gas reserves in Indonesia and said on February 9 it planned to build two 500,000 tons-a-year LNG plants in South Sulawesi, expanding capacity later. The week of Feb 11 the company said it agreed to sell shares worth $100mn (HK$615.2 million) to help fund construction of the LNG project.

"We have known for some time that demand for LNG in China and the Southeast Asian region far exceeds current supply," Energy World chief executive Stewart Elliott said. "The memorandum of understanding with the Chinese company shows this demand is very real."

The state-owned company has requested its identity not be disclosed until a final agreement is reached.

Bill to change Cuba trade

A bipartisan group of four House members Feb 20 introduced a bill that would force the Bush administration to rescind regulations that have made the sale of food to Cuba more difficult.

The 2000 Trade Sanctions Reform and Export Enhancement Act exempted US agricultural products from the general embargo on trade with Cuba, which the US put in place in the early sixties after the 1959 Cuban revolution.

The Bush administration has put in place regulations that have made financial transactions between US exporters and Cuba more complicated and also made it more difficult for agriculture business leaders to travel to Cuba.

The bill, introduced by Reps. Jo Ann Emerson, R-MO, Stephanie Herseth, D-SD, Jerry Moran, R-KS, and Mike Ross, R-AR, would direct the secretary of state to issue general licenses to producer groups to travel to Cuba on agriculture sales trips and allow temporary visas to be issued to Cuban technicians to travel to the United States to inspect US agricultural plants.

The bill would also reverse a Bush administration requirement that Cuban buyers pay cash to US sellers before shipments leave the US by clarifying that the financial term "payment of cash in advance" means cash payment from Cuban buyers is payable upon delivery. Finally the bill would allow Cuban financial institutions to make direct transfers of funds to US institutions. Cuban officials have complained that the use of third-party intermediaries has driven up the cost of buying products from the US and US executives say the system slows up payment.

"With the stepping aside of Cuban dictator Fidel Castro, this is an opportune time to encourage the US to change its trade policies toward Cuba," Moran said.

Rotterdam port container backlog due to economic growth, bad weather

The Port of Rotterdam, Europe's largest, said Feb 20 that the company operating its main terminal has imposed restrictions on the return of empty shipping containers in order to head off a backlog problem before it becomes unmanageable.

The unusual move was taken by European Container Terminals BV, owned by Hutchison Whampoa Ltd, because of a concurrence of problems including recent bad weather, short staffing and economic growth that is outpacing the speed at which the terminals can expand, port spokesman Sjaak Poppe said.

Under the restrictions, which give priority to loaded incoming containers, empty containers will be denied access to the ECT terminal after 11 p.m. Feb 20. ECT said the measures will likely be in place from two to four weeks.

Poppe noted the immediate problems in Rotterdam had been compounded by smaller ports putting restrictions on the return of empty containers, notably Hamburg, Germany, and Southampton, England.

Kerry Logistics looks to expand chemical logistics in China

Kerry Logistics, an arm of Kerry Properties, is continuing its expansion into the chemical logistics business as it is looks for a site near Shanghai to set up a warehouse, according to senior management.

The international integrated logistics provider recently signed a joint venture agreement with German-based Alfred Talke aimed at offering a full range of chemical logistics services, focusing on the mainland market.

“We believe there is huge demand particularly in China, both inbound and outbound and also domestic,” said managing director Vincent Wong.

Kerry is talking with a potential customer who is selling chemical materials to China from a European factory, Wong said. China's chemical imports and exports totaled $133.56bn (HK$1.04 trillion) in 2005, up 22% from 2004.

“Local large manufactories in China have their own chemical logistic teams, but they don't have the expertise and this is where we are able to bring Alfred Talke's expertise to the table,” Wong said.

The company has yet to decide the specific location for the project. “It will most likely be in the Yangtze River, around Shanghai, close to the industrial zone,” said Wong, adding the company has no plans to join with a mainland firm to operate such a business.

Rickmers Jakarta transports long loads to Saudi Arabia

Project forwarder deugro Projekt GmbH and Rickmers-Linie, the Hamburg-based shipping line that specializes in transporting breakbulk, heavylift and project cargoes, has recently completed the transport of a major project shipment on behalf of Linde Engineering for two air separation facilities being constructed in Saudi Arabia.

In addition to a number of smaller breakbulk shipments, there were four large pieces of cargo - two reactors and two air coolers – loaded on board Rickmers Jakarta in Bremen on 6 January 2007. Measuring 61.26m x 6.52m x 6.45m, the air coolers were loaded on deck above hold nos 2 & 3.

Precarriage was effected by barge and trucks to Bremen, where Rickmers Jakarta took over. Being destined for two different projects, part of the cargo was consigned to Yanbu and the remainder to Al Jubail. On-carriage to the respective construction sites was organized by deugro.

The air separation facilities are being built by Linde Engineering for the National Gas Company of Saudi Arabia and are due to start production at the beginning of 2008.

Alstom, Swiss Railways in freight maintenance joint venture

Alstom unit Alstom Transport said it agreed to form a joint venture for freight traffic maintenance with CFF Cargo, a subsidiary of the Swiss federal railways operator CFF.

The group said it expects the partnership deal to generate sales of 37mn euro in 2007.

The joint venture is to be based at CFF Cargos site at Bienne, Switzerland and will handle maintenance for shunting engines and tank wagons operated by CFF and CFF Cargo, as well as private freight companies.

Alstom Transport will hold a 51% stake in the new entity and CFF Cargo 49%.

Mainland must use more scrap metal

Demand for scrap metal to supply China's fast-growing steel industry will increase amid rising metal prices and as the country seeks to preserve mining and energy resources and reduce pollution, industry observers said.

"There is a shortage of base metals or virgin ores, which will drive aggressive demand for scrap," said Stephen Greer, chief executive of Smorgon Hartwell Recycling, the regional scrap recycling unit of Australia's Smorgon Steel Group.

Greer said China, the world's largest steel producer, was the world's largest scrap consumer and was fast becoming the largest domestic market for generating and recycling scrap.

China is expected to produce more than 400mn tons of crude steel per year between 2006 and 2010, requiring more than 700mn tons of iron ore and more than 75mn tons of scrap per year, according to the National Development and Reform Commission, the country's top economic planner.

The country's scrap steel demand will rise 5.4% to 80mn tons this year, from 75.9mn tons last year, China Association of Metal Scrap Utilisation secretary-general Yan Qiping predicted.

Transport logistics firms offer says to save energy

Transport logistics companies are formulating new business strategies to help consignors meet the requirements of a revised energy conservation law taking full effect in fiscal 2007.

The law is designed to cut carbon dioxide emissions, and one stipulation requires firms that ship more than 30mn ton-kilos a year to create energy conservation plans and periodically report on their domestic energy consumption. Nearly 2,000 companies are likely to be affected.

Sagawa Express Co will begin a service as soon as spring 2007 that offers detailed calculations on the amount of energy used to ship goods and suggests ways to modify distribution networks to reduce consumption.

Japan Freight Liner will propose more efficient methods of trucking goods from shipper to train station, as well as new ways to load products.

Yamato Logistics Co, a member of the Yamato Holdings Co. group, has begun showing clients ways to rationalize their delivery routes.

Alaska Airlines celebrates $3.5mn Nome terminal expansion

Alaska Airlines will celebrate the $3.5mn expansion and renovation of its Nome, Alaska airport terminal Feb 22 during a community open house. The project, begun in June 2006 and nearing completion, includes upgrades to the passenger lobby, cargo facility and ground-service equipment area.

The expansion increases the terminal's lobby area by nearly 1,500 sq ft, or about 50%. The larger lobby nearly doubles the number of seats available to customers and features artwork from one of Alaska's most renowned painters, Fred Machetanz.

The airline also expanded its Nome cargo warehouse by about 30% and added cold-storage cargo facilities. The carrier's ground-service equipment area is about 15% larger, and the terminal building is now connected to city water and sewer lines. The airline will complete the project's final stage, including parking-lot paving and cosmetic details, in late spring 2007.

Johanns hopes for expanded beef exports to Japan

US Agriculture Secretary Mike Johanns Feb 20 expressed the nation's intention to continue to expand beef exports to Japan despite the recent discovery of violation of bilateral beef trade rules by a US meatpacker.

Johanns said he hopes the rule violation case will not affect bilateral negotiations on the possible easing of Tokyo's beef import criteria.

The week of Feb 11 the Japanese government suspended imports of beef from a Nebraska meat-processing plant of Tyson Foods Inc, the US meatpacker in question, because two beef containers shipped to Japan from the plant did not have appropriate certificate stickers. In addition, Tokyo could not ascertain whether the meat had been taken from cows aged 20 months or younger.

Under a bilateral agreement, Japan imports US beef from 20-month or younger cows on condition that brain, spinal cord and other parts with high risks of mad cow disease infection are removed.

Johanns said that Washington takes the Japanese import criteria "very, very seriously," adding, "We will do everything that we can" to prevent the recurrence of a similar violation of the beef trade rules.

Overhaul port, county told

Broward County must overhaul Port Everglades to take advantage of economic opportunities over the next 20 years, consultants told county commissioners at a workshop Feb 20.

The consultants' first draft of a plan for the port envisions expensive renovations, notably building berths large enough to serve new super-size cruise ships and freighters.

DMJM Harris consultants won't study how much the changes would cost until spring 2007. But Port Director Phillip Allen wants to avoid spending taxpayers' money. Instead, developers and companies using the port might join the county in seeking loans.

The plan proposes to: deepen and widen the harbor; add berths and widen and lengthen existing ones; build a loading dock and warehouse for freight trains; move security barriers to remove the convention center from the restricted area; and build a road through port property to bypass checkpoints.

It focuses on projects that could begin in the next five years. Federal money for dredging will not be available before 2010.

Japan, Russia to boost trade

The Japanese and Russian governments are expected to agree as early as next week to work together to improve their investment environments with the goal of boosting bilateral trade and investment.

An action program for increasing trade and investment will likely be signed in Japan by Economy, Trade and Industry Minister Akira Amari and Russian Economic Development and Trade Minister German Gref.

In the program, both countries are expected to confirm their cooperation toward Russia's accession to the World Trade Organization and commitment to resolving their trade disputes according to international rules.

The two men will also likely agree to bolster cooperation in technology transfers among small and midsize businesses, as well as exchanges of copyright and patent inspectors to strengthen policing of piracy and other infringement.

Critics object to Bush plan for Mexican truckers

The news that Mexican trucks will be allowed to haul freight deeper into the U.S. drew an angry reaction Feb 23 from labor leaders, safety advocates and members of the US Congress.

They said Mexico has substandard trucks and low-paid drivers that will threaten US national security, cost thousands of jobs and endanger motorists on the northern side of the border.

The Bush administration's plan to let 100 Mexican trucking companies carry cargo beyond the immediate border area was announced Feb 22 in Mexico.

"This program will make trade with Mexico easier and keep our roads safe at the same time," Transportation Secretary Mary Peters said Feb 23.

She announced details of the plan in El Paso, Texas, at the Bridge of the Americas, which connects to Ciudad Juarez, Mexico.

"They are playing a game of Russian roulette on America's highways," said Teamsters President Jim Hoffa.

The Bush pilot project will let Mexican truck companies travel from Mexico throughout the US and back. No hazardous material shipments will be permitted.

US to inspect Mexican trucks

Truck safety inspectors working for the US Federal Motor Carrier Safety Administration will be able to travel to Mexico to conduct extensive safety audits on companies interested in hauling cargo into and out of the United States as part of a new program announced Feb 22 by US Secretary of Transportation Mary E. Peters.

Secretary Peters, who visited a local trucking company in Monterrey, Mexico, to announce the program with Mexican Secretary of Communications and Transportation Luis Tellez, said this step is needed before the United States can allow trucks from Mexico to operate beyond the currently existing border commercial zones that include cities like San Diego and El Paso.

This program will make trade with Mexico easier and keep our roads safe at the same time, Secretary Peters said.

South Carolina partners with Savi

The South Carolina State Ports Authority (SCSPA) and Savi Networks Feb 22 announced an agreement to extend the SaviTrak(TM) information service to three container terminals at the Port of Charleston to enhance the security and efficiency of in-transit cargo shipments.

The installation of SaviTrak's standards-based Radio Frequency Identification (RFID) infrastructure at the fourth busiest container port on the East and Gulf coasts will automate visibility of RFID-sealed containers and their contents, providing the port and its customers with real-time location and status information, automated alerts, and analytics.

SaviTrak will link South Carolina's Wando Welch, North Charleston and Columbus Street terminals, which account for 2mn container shipments a year, with a global network of trade lanes at partner terminals in Asia, North and South America, and Europe.

"With some of the most productive container terminals in the nation, we view SaviTrak as a best-of-breed technology solution that enhances supply chain visibility and security for shippers using the Port of Charleston," said Bernard S. Groseclose, Jr., SCSPA President and CEO.

FERC approves Mississippi LNG terminal projects

The US Federal Energy Regulatory Commission approved two LNG terminal projects in Mississippi that could add supplies totaling 3.1 billion cubic feet per day (bcfd) of natural gas.

The terminals, which would adjoin each other, are the Bayou Casotte project, next to Chevron USA's Pascagoula refinery, and the LNG Clean Energy project proposed by Gulf LNG Energy LLC.

The first will deliver as much as 1.6 bcfd of regasified LNG to an interstate grid through five pipeline interconnections, while the second will send vaporized LNG through a pipeline and gas processing plant owned by BP America Inc.

"These are significant import projects, with a combined capacity nearly equal to the projected capacity of an Alaskan gas pipeline. More importantly, we find that these projects meet our high safety standards," FERC Chairman Joseph T. Kelliher said in the commission's announcement.