China’s second largest container-shipping group has reportedly formed an acquisitions team that is charged with looking for new opportunities in areas like terminal operations and shipbuilding.
“We will see if it’s the best time for deals given the current situation for the shipping industry,” said China Shipping Group Chairman Li Shaode to a group of reporters during government meetings in Beijing.
Li said container-shipping poses greater potential this year than the group’s tanker and bulk business, with industry-wide containerized rate hikes planned to take effect on April 1, to help counteract losses in that sector in 2011.
Li also said his group would be keeping on eye on the shipbuilding market for future opportunities as China Shipping’s Yangzhou shipyard orders are full through the end of 2013.
The China Shipping chairman said he has called upon the Chinese government to allow shipping lines to pay taxes based on tonnage instead of the current corporate income tax rate.
Containership charterer Seaspan Corp. reported fourth quarter net earnings of $23.5 million, down from the $141.6 million earned for the same period a year ago.
Seaspan said it posted higher revenue of $155.96 million for the quarter, over the $117.95 million it posted last year.
Seaspan's Board of Directors has reportedly authorized the repurchase of up to $50 million of its Class A common shares.
Third party logistics firm Damco announced Martin Sieg had taken over as its global head of ocean freight.
The Cophenhagen-based 3PL said Sieg will have responsibility for more than 600,000 TEUs of ocean freight managed per year by the company.
Sieg had previously served as managing director of the German logistics company SDV Geis and had also held management positions with container-shipping line, Hapag-Lloyd.
Report: LPG carrier trade to increase in 2012
The outlook is rosier in 2012 for the owners of liquid petroleum carriers even though the global economic environment remains uncertain amid a mild winter in the northern hemisphere, according to Drewry’s latest LPG forecast report.
While LPG demand from Western economies has stagnated, Asian demand from Middle East suppliers has helped balance the trade, the Drewery report said.
More than half of global LPG consumption is in the residential and commercial sector and utilized primarily for heating and cooking.
The report forecasts China to the likely driver of the LPG trade in the coming years despite growing competition from domestic suppliers and the possibility of India either reducing, or removing, fuel subsidies.
India is becoming the largest importer importer of butane-rich LPG, the report said.
Drewry also forecasts the medium term outlook Asia’s spot rate market to gain gradually, while taking a longer-term view for Europe’s spot market growth.
Report: $400,000 p/year “low-show” jobs on NY-NJ waterfront
A small group of “cushy” longshore waterfront jobs at the ports of New York and New Jersey have gone to Mafioso relatives and friends, among others, according to a New York Post report.
Some of these jobs have reportedly paid out over $400,000 a year for workers like the nephew of the late crime boss Vincent “The Chin” Gigante.
The Post reports Ralph Gigante, a union shop steward, has admitted to working as little as 30 hours per week while somehow managing to earn $36 per; amounting to $409,659 earned in salary, bonuses and overtime for the year.
The Post said it obtained waterfront commission records through the Freedom of Information Act and found the port authority has approached its container terminal operators to do something about the high labor costs for positions that don’t necessarily log in the amount of hours needed to make the big paychecks.
“At a time the container terminal industry says it is struggling and asking for substantial Port Authority subsidy in our harbor, the industry must help itself by eliminating ‘low- show jobs,’ ” said the newly appointed executive director of the port authority, Patrick Foye.
The Post reports the International Longshoremen’s Association is being sued by the federal government for its alleged ties to the mob, however none of the high wager earners cited in its story have been charged with a crime.
Gigante works for the Port Newark Container Terminal, which the Post said received $150 million for capital improvements by the port authority.
Under oath, Gigante reportedly testified to the Waterfront Commission that he is paid whenever any of the men he reps for the union is working at the terminal that operates 24 hours a day.
Gigante reportedly inherited his position from his cousin, and includes unlimited vacation and several hours of guaranteed double-time each day. He reportedly has not assigned duties as his only responsibility is as union shop steward.
Other top wage earners cited in the Post story include Paul Buglioli, head timekeeper at Port Newark Container Terminal, whose dockworker father was reportedly close to the Genovese crime family, earned $474,105 in 2011, and Joseph Colonna, son-in-law of “The Chin” Gigante, who brought in $401,105 last year as mechanics foreman at APM Terminals in New Jersey.
The ILA and shipping industry employers are reportedly slated to head to the bargaining table to try and hammer out a new contract agreement as soon as April.
U.S. Mayors urge passage of transportation legislation
Close to 200 mayors of cities in the United States sent a letter to Congress urging the passage of pending surface transportation reauthorization.
"Next year, cities and their metro areas will generate 90.4 percent of our Gross Domestic Product and 85.6 percent of the nation's jobs. Our local areas are the engines of the U.S. economy, and investment in our future is an investment in the nation's future prosperity," the group of mayors said in the letter.
The mayors also warned of the transportation projects that would be halted and the subsequent job losses that would result from inaction. "There is a significant demand for major transportation now, at a time when construction is less costly and the resulting jobs are so urgently needed in our local and regional economies. The current extension expires March 31, and the Highway Trust Fund runs out of funds next year. If Congress does not address these challenges, the potential consequences for the nation could be devastating."
The mayors’ letter goes on to oppose a pending House bill that proposes to shift gas tax revenues away from public transportation.
"As mayors, we urge adoption of final bipartisan legislation that provides adequate funding, at least at current levels with an adjustment for inflation, to help us invest in needed transportation infrastructure and preserves the fundamental elements of current law. As such, this explains why we so strongly oppose the pending House proposal to redirect existing federal gas tax commitments away from public transportation, undermining years of bipartisan support in Congress for balanced investment in our nation's highway and transit systems," the mayors said.
The Conference of Mayors also released a report prepared by IHS Global Insight, entitled: U.S. Metro Economies: Exports in the Next Decade.
The report focuses on the development of a nationwide agenda that focuses on the expansion of exports, infrastructure and port modernization.
“Ninety-five percent of the world's consumers are outside of the United States. To help businesses get their products from cities across the United States to markets around the world, we need to invest in our roads, bridges, ports, and rail systems," said Villaraigosa.
Over the next decade, the report projects exports will account for nearly 40 percent of real U.S. Gross Domestic Product growth, compared to the previous decade, when exports accounted for 26.5 percent of real GDP growth.
MSC megaship calls East Coast ports
The 9,200-TEU MSC Roma reportedly made calls at East Coast ports before departing Virginia Port Authority last Thursday for the Suez Canal full of exports and requiring 48.5 feet of water – a first for that port.
The big ship call was part of Mediterranean Shipping Company’s Golden Gate Service that connects ports in Asia ports with the East Coast via the Suez route.
The vessel also stopped at the ports of New York-New Jersey, Baltimore, Charleston, S.C., and Savannah, Georgia, as well as Freeport in the Bahamas.
Virginia’s Hampton Roads facility was also the first inbound call.
Virginia is currently the only East Coast port with 50-foot channels and 50-foot berths, while Baltimore sports a 50-foot channel with a 50-foot berth on the way. New York-New Jersey is slated to open up a 50-foot-deep channel by the end of this year.
Apple’s new iPad clogs shipping space, raises airfreight rates
Apple’s new iPad HD is reportedly clogging up airfreight capacity and subsequently raising rates between China and the U.S. by as much as 20 percent.
The new iPad is scheduled to debut in San Francisco next week will feature a new high resolution Retina Display.
Apple reportedly has $100 billion in cash and can afford to buy up as much freight space as it needs to ensure the new iPad gets to market, and shipping firms like DHL, are projecting huge volumes of the product being booked.
Sunpeaks Ventures enters specialty drug distribution market
Sunpeaks Ventures announced the acquisition of its wholly owned subsidiary Healthcare Distribution Specialists that operates in what the group says is a $45 billion sector for specialty pharmaceuticals.
"The hard-to-find and specialty drug sector is rapidly growing and HDS is positioned to become a potential leader in the secondary wholesale market," said Mackie Barch, president and CEO of Sunpeaks Ventures in a statement.
"The opportunity that lies ahead of us is enormous," Barch said.
In addition to the distribution business, Sunpeaks also owns and markets Clotamin, in what the group claims is “the world's first specialized over-the-counter multivitamin product designed exclusively for use by patients on Warfarin or other blood thinners.”
Wednesday, March 7, 2012
Top Story
CMA CGM lost $30 mil in 2011
France’s CMA CGM, the world’s third largest container shipping group, added itself to the list of its money losing peers, reporting a net loss of $30 million for 2011, although revenue rose 4 percent over 2010 along with a volume increase of 11 percent to a record 10.016 million TEUs carried.
The shipping line said in a statement that its revenue was 14.87 billion for the year while claiming market conditions to be challenging with overcapacity and bunker oil prices shooting up 34 percent during year.
“CMA CGM nevertheless enjoyed a satisfactory operating performance, thanks to its extremely efficient fleet, global network and sustained cost discipline,” the company said.
The group’s earnings before interest, taxes, depreciation, and amortization was $711 million, down from 2010 when the container shipping industry as a whole reported record profits.
Looking ahead at his company’s performance for the rest remainder of 2012, Rodolphe Saadé, CMA CGM Group’s executive officer said: “We set up strategic operating partnerships with MSC and with Maersk to address market challenges and maintained our commitment to controlling costs. We expect the market to improve in 2012, particularly in the second half.”
The shipping line said it also plans to “continue implementing operating partnerships” with Mediterranean Shipping Company in the Asia-North Europe and South America tradelanes, and with Maersk on Asia-Mediterranean, Adriatic and Black Sea routes.
CMA CGM said that the introduction, along with several other container-shipping lines of “significant rate increases” as the first of March, coupled with a cost-reduction plan, should help the company achieve $400 million in savings for 2012, including $80 million saved from a decline in charter rates.
A retail report that surveyed close to 200 supply chain executives representing companies with over $1 billion in revenue, revealed the growth of multi-channel retailing will receive increased focus in areas that include the online, mobile and tablet platforms.
The Third Annual State of the Retail Supply Chain report, prepared by the Retail Industry Leaders Association, Auburn University and Accenture, found electronic ecommerce sales have grown by more than 15 percent to $35.3 billion compared to overall sales growth of 4.1 percent over the previous year.
The report forecasts e-commerce sales to grow 10 percent annually, driving multichannel retailing growth and adding more fulfillment complexity.
As a result, RILA said in a statement on the report's release that over 85 percent of the survey respondents indicated direct consumer fulfillment has become a top priority.
“Traditionally retailers have used separate operational models to move goods and fulfill orders,” said Casey Chroust, RILA’s executive vice president of retail operations.
“Now those models need to be merged so that companies can continue to deliver the products consumers want across any channel without losing efficiency or adding cost. This requires advanced integration and innovation and working closely with suppliers and service providers while utilizing technology,” Chroust said.
RILA said its report also highlighted the various multichannel challenges facing retailers, including: variation in shipment size, order filling processes and delivery methods as well as the inconsistent SKU assortment of multichannel retailers, as less than 18 percent of the retailers surveyed offer the same SKUs across channels.
“As sales volume grows in nontraditional channels, achievement of technology integration, operational flexibility, and process visibility will separate the leaders from the pack,” said Brian Gibson, professor of supply chain management at Auburn University.
The report’s findings include the emergence of distributed order management software “as a common-sense response to retailers’ multi-channel needs. DOM allows retailers the ability to capture, manage and optimize orders regardless of origin-computer, retailer store, kiosk, or mobile phone.”
Maersk, BNSF launch Flagship import service
Maersk Line announced a new trans-Pacific Flagship import service in partnership with the BNSF railroad that the container-shipping line says goes direct from Asia to five markets based in Chicago, Dallas-Fort Worth, Houston, Memphis, and Northwest Ohio.
Maersk said in a statement that the new service continues its “absolute reliability” model that was introduced last year with its Daily Maersk service in the Asia-Europe trade, based on “total transportation time and cargo arriving at a promised delivery date, every single time, effectively streamlines supply chains and improves time to market.”
Maersk Line said its new service offers five products: Chicago Flagship, Dallas Flagship, Houston Flagship, Memphis Flagship, and Northwest Ohio Flagship, with all of them featuring non-stop rail service through the BNSF that the shipping partners are promising will arrive “at an agreed time” at each of the five destinations.
Investments in network expansion, intermodal facilities and port capacity “will enable the two companies to offer customers fixed transits and unmatched 95 percent on-time delivery,” according to Maersk.
Maersk Line said it would be feeding the new Flagship service via its TP5, TP6 and TP8 container-shipping services, citing the first two as “100 percent reliable” based on a Drewry Maritime Research report for the first quarter of this year.
Brown Shoe to close Midwest distribution center on heels of Q4 losses
Brown Shoe Company announced it plans to close its distribution center in Sikeston, Missouri this year after posting a net loss of $8.22 million for its fourth quarter, compared to a profit of $3.4 million for the same period a year earlier.
"The decision to close this facility was difficult and is in no way a reflection of the skills and abilities of the Sikeston team," said Mike Kauffman, senior vice president of global supply chain management for Brown Shoe Company in a statement.
"However, the industry landscape continues to change, and we must adapt and evolve to remain competitive," Kauffman said.
Brown Shoe reported higher net sales of $628.9 million for the fourth quarter compared $604.5 million a year ago.
Man and puppy survive collision with freight train (incl. video link)
A man and his puppy survived a collision between the pickup truck they were in and a freight train west of Fresno, Calif. on Tuesday morning, according to the Fresno Bee.
The train's engineer reportedly told the California Highway Patrol he saw the truck and sounded the train's air horn before colliding with the 2004 Ford F-150, shoving it approximately 500 feet.
The driver of the pickup was taken to a nearby hospital and was treated for minor injuries while firefighters and the CHP spent 45 minutes dismantling the wreckage to save the bull mastiff puppy trapped inside.
The dog suffered a broken leg, back injury, had one of its toes removed from the back left foot, and remained in critical condition as of Tuesday night, the Bee reported.
“The dog had literally been hit by the train," said Dr. Carrie Anne Strickland, the dog's surgeon.
The Grand Alliance shipping consortium of Hapag Lloyd, OOCL and NYK Lines have reportedly announced they would shift their Pacific Northwest port of call from the Port of Seattle to next-door competitor Port of Tacoma.
The move from Seattle's Terminal 18, operated by SSA Marine, would be to Tacoma's Washington United Terminal, owned by Hyundai Merchant Marine, and could boost the latter's container volume by 25 to 30 percent, or approximately 400,000 TEUs, according to the Tacoma News Tribune.
"This is probably the biggest announcement that will be made in the rest of my working life at the port," said Scott Mason, president of Tacoma's Longshore Local 23 to the Tribune.
The Port of Tacoma recently completed a berth extension project at WUT that would allow two containerships to be worked simultaneously.
The WUT operation was reportedly one of four Puget Sound-area marine terminal operators bidding for the Grand Alliance's business.
The Port of Seattle issued a statement on the shipping lines' impending move that will reportedly occur later this year.
"It is important that the [Grand Alliance] business remains in Washington. Unfortunately, though many of the jobs will be preserved, others may not. Some who work in the Seattle harbor could see their livelihood impacted severely or in some cases, disappear," the Seattle port said.
The Port of Seattle statement goes on to say that "trading customers" encourages "a downward competitive cycle" for infrastructure investments in the state of Washington.
"As stewards of public infrastructure, ports are compelled to ensure that the investments made in our harbor are used. The short-term local gains for an individual port announced today could very well work to the to the detriment of the state's economy in the long run."
The addition of the containerized volume the Grand Alliance would bring would reportedly get Tacoma close to its peak box volume of 2006, before the global recession had a widely reported, significant impact on that port's shipping business, including losing it's former top customer Maersk to Seattle.
Grand Alliance shift from Seattle to Tacoma brings aprox. 400,000 TEUs
By Peter Hurme
The Grand Alliance shipping consortium of Germany’s Hapag Lloyd, Japan’s NYK Lines, and Hong Kong-based OOCL will shift their Pacific Northwest port of call from the Port of Seattle to next-door competitor Port of Tacoma as soon as July, bringing with them an estimated 400,000 TEUs worth of container-shipping business, according to announcements and reports.
The Alliance’s move from Seattle’s Terminal 18, operated by SSA Marine, will be to Tacoma’s Washington United Terminal, owned by Hyundai Merchant Marine, and could reportedly boost the latter’s container volume by 25 to 30 percent.
“This is probably the biggest announcement that will be made in the rest of my working life at the port,” said Scott Mason, president of Tacoma’s Longshore Local 23 to the Tacoma News Tribune.
The Port of Tacoma released a statement that said WUT “was selected by the NATC Group, which represents the Grand Alliance.”
The WUT cargo-handling facility was reportedly one of four terminal operations in the Puget Sound region that had bid for the Grand Alliance.
Tacoma completed a berth expansion project at WUT that created the ability to work two containerships simultaneously.
The cost of doing business could reportedly be at play in the Alliance’s shift of its box business, as global container-shipping lines, after enjoying a robust, profitable rebound in 2010 after 2009’s record, money-losing year, were largely back in the red for 2011 and facing a 2012 campaign with too much vessel capacity and struggling freight rates.
According to a Seattle Times report, Port of Seattle Commissioner John Creighton said previously estimated annual revenue from ocean shipments at his port equated to $130,000 per acre over 500 acres, but has been slashed to $70,000 per acre, or $35 million, due to rate competition with Tacoma.
The Times reported the Port of Seattle’s estimate was based on a comparison with Northern California’s only true container-handling complex, the Port of Oakland, which reportedly produces $200,000 per acre.
“The shipping industry has undergone dramatic change in the past three years in response to tremendous economic and competitive pressures. Shipping lines have formed alliances to share ship space, terminal capacity and reduce fuel costs,” the Port of Tacoma said in a statement on the Grand Alliance’s move to WUT.
The addition of the containerized volume the Alliance brings, could reportedly get Tacoma close to its peak box volume period of the middle of the last decade, before the global recession had a widely reported, significant impact on that port’s shipping business, that included losing it’s former top customer Maersk to a vessel-sharing agreement with France’s CMA CGM at the Port of Seattle in 2009.
Seattle has also lost business to its Puget Sound rival to the south before, including its former top customer, SeaLand (which Maersk acquired in 1999) in the early 1980s, Japan’s “K” Line in the late 1980s, South Korea’s Hyundai Merchant Marine in 1997, and in 2007, NYK Line signed a lease for a new container terminal project that was subsequently quashed by the global recession that followed soon thereafter.
“It is important that the [Grand Alliance] business remains in Washington. Unfortunately, though many of the jobs will be preserved, others may not. Some who work in the Seattle harbor could see their livelihood impacted severely or in some cases, disappear,” the Seattle port said in a statement.
The Port of Seattle went on to say that “trading customers” encourages “a downward competitive cycle” for infrastructure investments in the state of Washington.
“As stewards of public infrastructure, ports are compelled to ensure that the investments made in our harbor are used. The short-term local gains for an individual port announced today could very well work to the to the detriment of the state’s economy in the long run,” the port said.
The Port of Seattle handled a record 2.1 million TEUs in 2010, while the recession and losing business like Maersk had a widely reported negative impact on Tacoma’s containerized fortunes, as that port recorded 1.5 million TEUs passing through in 2010 – an almost half-a-million-TEU drop from 2007.
However, with three major shipping lines about to bring a significant amount of business to the Blair Waterway, Port of Tacoma CEO John Wolfe said he’s “confident” his port “will continue to realize new business opportunities.”
Hong Kong 4Q cargo stats reflect slow growth
In the 4th quarter of 2011, Hong Kong’s overall port cargo increased 1 percent to 70.7 million tons, compared to last year’s figures. Imports decreased by 2 percent to 39 million tons, while exports rose by 5 percent to 31.6 million tons, according to statistics released by the Census and Statistics Department of the Hong Kong regional government.
In the 4th quarter of 2011, the port of Hong Kong reportedly handled 6.2 million TEUs, a 2 percent increase from the previous year. Laden containers rose by 2 percent to 5.2 million TEUs, and empty containers decreased by 2 percent to 0.9 million TEUs. Among laden containers, container imports increased by 1 percent to 2.6 million TEUs, while container exports rose by 4 percent to 2.7 million TEUs.
In 2011, the port of Hong Kong handled 24.4 million TEUs, representing a 3 percent increase over 2010, according to government census figures. Loaded containers went up 3 percent to 20.7 million TEUs, while empty containers recorded no change at 3.7 million TEUs. Among loaded containers, imports surged by 4 percent to 10.3 million TEUs, while outward containers also rose by 3 percent to 10.4 million TEUs.
TPP Apparel Coalition pushes for more flexibility
In Australia this week, the TPP Apparel Coalition held negotiations with the Australian and Vietnamese textile and apparel industries and other industry stakeholders at the Trans-Pacific Partnership negotiations. The coalition advocated for simpler, flexible rules of origin and customs provisions, plus immediate market access to facilitate apparel trade and investment in the TPP region, according to a TPPAC statement released Friday.
The TPP Apparel Coalition asserted that restrictive rules such as the “yarn forward” style rule of origin--which require all materials that go into a garment to originate and be assembled in a TPP country to receive tariff-free treatment--are impractical in today’s global supply chains.
“Millions of well-paying U.S. jobs would be bolstered by flexible apparel rules and the successful conclusion of the TPP,” said Stephanie Lester vice president of international trade for the Retail Industry Leaders Association.
“It is time for U.S. trade policy to recognize that 98 percent of apparel sold in the United States is imported and not allow antiquated rules to hold up negotiations any longer,” concluded Steve Lamar, executive vice president for the American Apparel and Footwear Association.
Norden forecasts rough road for 2012 dry bulk market
Danish shipping company Norden, a dry-bulk and tanker operator, said in a statement on Wednesday that the dry cargo market will be “very challenging” in 2012 due to fleet expansion.
This was asserted even though Norden’s 4th quarter earnings were higher than expected, rising to $38.5 million in October-December 2011 from $22.5 million in the fourth quarter a year earlier.
Chief Executive Carsten Mortensen said in a statement that Norden expects rates in dry cargo to bottom out this year.
The statement said Norden’s full-year 2012 EBIT is expected to be $10 million to $50 million, down from $104 million in 2011.
A U.S. entrepreneur intends to turn every city into an instant seaport with his idea for robot cranes floating in the sky beneath giant balloons. Jeremy Wiley, founder of Tethered Air, could change the shipping industry by offloading containers from ships without the need of harbors or ports.
He envisions a system that could span the Panama Canal, helping to move containers during shipping gridlock, or to facilitate military maneuvers or humanitarian relief efforts.
The robot crane is comprised of a cargo-lifting body, suspended from four payload cables that connect to four vertical anchor cables. The anchor cables are tethered together with an enormous balloon at the top — a pyramid-shaped design that “allows the robot crane to move anywhere within that space by shortening and extending its own suspension cables or sliding up and down the anchor cables.”
