Monday, March 9, 2009
Seas of red: Survival of the fittest liners says Maersk CEO
It is likely all container lines will lose money this year, and some might go under, but not Maersk Line, according to the Danish container shipping company’s chief executive, Eivind Kolding, in a Reuters interview on Monday.
"More likely than not we will see all liner companies in red territory in 2009…Most likely, some liner companies will have to cease business if freight rates do not come up. I have no idea who that will be, because we are all different, but it will not be Maersk," Kolding said.
"We would not like to see our market share go down…When we had huge growth in the market, of 10 percent or more, it was not necessary that we kept our market share each and every year if we had other priorities. But in this environment we will keep our market position," he said.
The Asia-Europe trade is the most competitive with major new vessel tonnage, however Kolding said it is a strong market for Maersk and that
”it's definitely where we want to keep our position whatever it takes."
"Our plans assume all our competitors will be there tomorrow, but if something happens we need to be ready to move in, take a bigger share of the business if the opportunity is there," he said.
Maersk has said it would remove as many as 25 midsize containerships in 2009, in addition to the eight ships it laid up in December.
Kolding told Reuters he expects global tonnage to grow by 15 percent each year between 2009 and 2011 due to ship orders that are not able to be canceled.
"That number will probably go up. Until that surplus has been dealt with, I don't think anyone will be thinking about ordering new ships," Kolding said.
Aside from over-tonnage, low freight rates are another major issue the container shipping lines are dealing with in a contracted global trading economy. The Europe trade’s freight rates alone have reportedly plummeted as much as 80 percent since last May.
"We are incrementally trying to increase rates when we believe we can get them through. If it works, we'll of course keep them and consider when we can take the next step. If it doesn't work we'll have to give it up,” Kolding said.
Report: “K” Line pulling out of Portland
The Japanese ocean carrier “K” Line will pull a seven-month-old shipping service out of the Port of Portland April 23 , according to a report in the Portland Business Journal.
“K” Line is dropping a pendulum shipping service that will reportedly impact other ports in Japan, Taiwan, and Europe, the report said.
“Obviously it has to do with costs…All the shipping lines are suffering through the current circumstances and we have to try and take measure to reduce whatever costs we can. We can reduce costs by changing our schedule, which unfortunately means eliminating Portland,” said Peter Bennett,” “K” Line’s vice president for Pacific Coast operations, in the PBJ article.
The shipping line said it would continue a space-sharing agreement with Hanjin in Portland, in addition to keeping its auto shipping business there.
Singapore firm to develop $115 million logistics park in Vietnam
Singapore’s Mapletree Investments Pte Ltd. announced it would develop a $115 million logistics park in Vietnam at the northern Bac Ninh Province’s Viet Nam-Singapore Industrial Park.
The provincial government there granted an investment license to Mapletree to build an almost 136-acre logistics park.
The new logistics park’s logistics space capacity is expected to be at over 3 million square feet by the fourth quarter of 2011, and include built-to-suit, multi-tenant warehouse facilities, and an inland container depot.
The new park will be the Mapletree’s third logistics facility in Vietnam, with two already in the southern Binh Duong Province.
Alexander & Baldwin acquires San Diego distribution center
Honolulu’s Alexander & Baldwin, via its real estate subsidiary A&B Properties Inc., recently acquired the 252,318 square-foot Activity Distribution Center in San Diego for just over $26.2 million from AMB Property LP.
Hyundai Heavy Industries orders dropped 54 percent in January
Orders for ships, marine engines and offshore units dropped 54 percent for the major shipbuilding company Hyundai Heavy Industries, according to the Taiwan News.
Contracts dropped to $863 million, down from $1.86 billion from the previous January, and the shipbuilder has not had any new ship orders since September of last year due in large part to the credit crunch, the report said.
Conversely, Hyundai Heavy’s sales climbed 23 percent to $1.1 billion in January because more vessels were built at higher prices, the company said.
Tuesday, March 10, 2009
One million enrolled in TWIC
One million port and longshore workers, truckers and others at ports around the U.S. have enrolled in the Department of Homeland Security's Transportation Worker Identification Credential (TWIC) program, the DHS reported on Monday.
The program's stated goal has been to ensure that any individual who has unescorted access to secure areas of port facilities and vessels has received a thorough background check and is not a known security threat.
"American ports from coast to coast are more secure today because of the significant progress this program has made," said Gale Rossides, acting administrator, Transportation Security Administration (TSA). "Enrolling 1 million workers in less than 18 months is a testament to the collaborative efforts of TSA and the United States Coast Guard on this important maritime security effort."
As of March 9, thirty-six of the 42 Captain of the Port Zones across the country require workers to have a TWIC. All ports must be in compliance with credential requirements by April 14, 2009. Port security personnel are trained to ensure workers have valid cards and Coast Guard officials are conducting random compliance inspections at these ports.
More than 150 fixed enrollment centers will ultimately vet more than 1.2 million maritime transportation system workers by the April deadline. In addition to fixed sites, more than 450 mobile enrollment sites have been deployed, registering workers at locations convenient to their places of employment.
Workers are able to pre-enroll for TWIC online at www.tsa.gov/twic or the Coast Guard's Homeport site, http://homeport.uscg.mil. Pre-enrolling speeds up the process by allowing workers to provide biographic information and schedule a time to complete the application process in person. This eliminates waiting at enrollment centers and reduces the time it takes to enroll.
December 2008 U.S. surface trade with NAFTA
partners fell 13.1 percent
Trade using surface transportation between the United States and its North American Free Trade Agreement (NAFTA) partners, Canada and Mexico , was 13.1 percent lower in December 2008 than in December 2007, dropping to $52.9 billion, according to the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation.
December was the second straight month with a year-to-year decline of greater than 13 percent. The value of U.S. surface transportation trade with Canada and Mexico fell 12.8 percent in December from November. Month-to-month changes can be affected by seasonal variations and other factors, the BTS said.
Surface transportation consists largely of freight movements by truck, rail and pipeline. About 88 percent of U.S. trade by value with Canada and Mexico moves on land.
The value of U.S. surface transportation trade with Canada and Mexico in December was up 16.5 percent compared to December 2003, and up 42.3 percent compared to December 1998, a period of 10 years. Imports in December were up 41.9 percent compared to December 1998, while exports were up 42.9 percent.
U.S.–Canada surface transportation trade totaled $32.9 billion in December, down 17.0 percent compared to December 2007. The value of imports carried by truck was 15.4 percent lower in December 2008 compared to December 2007, while the value of exports carried by truck was 13.7 percent lower. Michigan led all states in surface trade with Canada in December with $4.0 billion
U.S.–Mexico surface transportation trade totaled $20.0 billion in December, down 6.0 percent compared to December 2007. The value of imports carried by truck was 11.8 percent lower in December 2008 than December 2007 while the value of exports carried by truck was 9.7 percent higher. Texas led all states in surface trade with Mexico in December with $6.4 billion.
ProLogis leases 300,000 square feet to Costco near Tokyo
The Denver-based real-estate-investment trust, ProLogis, announced Monday it has entered its first lease agreement with Costco Wholesale Corp., leasing approximately 300,000 square feet to the company’s Japanese division.
Costco Wholesale is to occupy space at the distribution facility in Ichikawa City, just oustide of Tokyo. Costco will utilize the facility to be its new distribution hub in Japan, ProLogis said.
Federal Transit Administration $8.4 billion
in funding state-by-state
Wednesday, March 11, 2009
Union Pacific's freight declined 15 percent in first quarter
The Union Pacific Railroad announced this week its freight volume was down 15 percent in the first quarter from the same period last year.
The decline in rail freight began almost a year ago, according to UPR Chairman Jim Young in an interview with the Fort Worth Star-Telegram.
"We're a barometer of the economy," Young said. He said his railroad began to see traffic drop in the second quarter of 2008, after a record first quarter. He said the company began to experience idling locomotives and rail cars. The UP said it currently has 1,800 locomotives and 48,000 cars in storage during the economic downturn.
"I wish I could tell you I see it rebounding. I think it's flattening out," Young told the Star-Telegram.
If you get any kick [in spring demand], you're going to see production pick up pretty quick," he said. "The next few weeks are going to be key."
The UP is still slated to invest $2.8 billion on capital expenses this year, primarily for new and refurbished track and facilities, the company said.
Weyerhaeuser to close 9 facilities; cut 480 jobs
Forest products giant Weyerhaeuser announced on Tuesday it would close four wood products mills for an undetermined period and shut down five service centers permanently due to the flagging housing market. The Federal Way, Wash.-based company said it would be cutting 480 jobs.
The company said it would shut down its iLevel veneer and engineered wood mills indefinitely in Evergreen, Alabama and Dodson and Simsboro, Louisiana, and close a TimberStrand mill in Chavies, Kentucky.
Service centers in Albuquerque, Cincinnati, Columbus, Las Vegas and Reno, Nevada are to be closed permanently, Weyerhaeuser said.
"Demand for wood products continues to decline due to a slowdown in the housing market, and virtually all of our operating facilities are experiencing reduced operations," the company's executive vice president of forest products, Tom Gideon, said.
Freight transportation index slipped 2.3 percent
December to January
The Freight Transportation Services Index (TSI) fell 2.3 percent in January from its December level, falling for the third consecutive month to its lowest level in more than five years, the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) reported today.
January’s drop was the fifth monthly decrease in six months and has declined 7.7 percent in the last six months, the largest six-month decline since an 8.4 percent decline in 1995, the BTS reported. The 5.9 percent decline in the three-month November through January period was the largest three-month decline since April 2000, the BTS said.
The 2.3 percent decline in January was the second January decline in five years and the largest January decline since 1996. The index dropped 0.3 percent in 2007, the BTS said.
At 102.7 in January, the freight TSI is at its lowest level since May 2003 when it was 102.5 and is down 9.2 percent from its historic peak of 113.1 reached in November 2005, the BTS said.
The freight TSI measures the month-to-month changes in the output of services provided by the for-hire freight transportation industries. The index consists of data from for-hire trucking, rail, inland waterways, pipelines and airfreight.
The 7.8 percent decline from January to January left the freight index at its lowest January level since 2002, the BTS said.
The 2.3 percent decline in January resulted in a 3.5 percent drop in the freight index in the five years from January 2004, the second five-year decline in the 19-year history of TSI data. The first ever five-year decline was a 2.7 percent decrease from December 2003 to December 2008. The index is still up 2.9 percent in 10 years, the BTS said.
The TSI is a seasonally adjusted index that measures changes from the monthly average of the base year of 2000 and includes historic data from 1990 to the present.
Port of Long Beach to boost clean fuel Incentives through July 1
The Port of Long Beach harbor commission authorized preliminary approval on Monday to boost the incentive reimbursement to ocean carriers for switching to cleaner burning fuels through July 1 of this year.
Last July, the port began compensating ocean carriers for the difference between the lower-cost bunker fuel, and the more expensive, cleaner-burning, low-sulfur fuels, if the vessel operators voluntarily switched over within 20 to 40 nautical miles (nm) of the Long Beach Harbor.
The port said it now proposes to increase the reimbursement for each vessel trip by 50 percent, to help cover the vessel operators' cost of transitioning to the clean fuels before they enter the 20- or 40-nm range.
"We have talked to the vessel operators and we made this adjustment to bring more of our ocean carrier partners into the low-sulfur fuels program," said Richard D. Steinke, executive director of the Port of Long Beach. "This is a very cost-effective way to reduce emissions from ships coming into and leaving the port," he said.
The increased incentive will apply for only the final three months of the voluntary program, the port said. By July 1, 2009, California Air Resources Board regulations will require vessel operators to switch to low-sulfur fuels near the California coast.
The port said approximately 20 ocean carriers, representing about 17 percent of vessels, currently participate in the low-sulfur fuel incentive program.
Kalmar Asia wins four awards
Cargotec’s Kalmar business unit announced it won four business awards in recognition of “organizational excellence of its Kalmar Asia Pacific Region.”
Kalmar Asia Pacific Region was crowned the Grand Winner 2008 at the Asia Pacific Business Excellence Standard (APBEST) awards in February. This was the first time that Kalmar Asia Pacific Region had participated in these awards, the company said.
Kalmar Asia Pacific Region was also named “Best Logistics Company in the Asia Pacific” and also too two individual awards, the company said. Ken Loh, president of Kalmar Asia Pacific Region, was named APBEST “Strategist Of The Year,” and Eugene Che, senior TQM manager, was named “APBEST KPI Achievement Driver Of The Year.”
Thursday, March 12, 2009
TSA revises bunker charge calculation for 2009-2010 contracts
Container shipping lines servicing the Asia-U.S. tradelanes in the trans-Pacific announced a revision to how they calculate bunker fuel charges.
As of the 2009-2010 service contracts that commence May 1, 2009 or thereafter, member carriers in the Transpacific Stabilization Agreement (TSA) will begin the transition to a new bunker charge calculation formula developed by TSA as a group.
The new formula will distinguish between U.S. West Coast and East Coast sailings; reduce volatility through quarterly adjustment; and address the changes to vessel size, speed and fuel consumption, the TSA said.
"Vessel and operating characteristics have changed in the seven years since TSA last modified its bunker formula," said TSA chairman Ronald D. Widdows.
"In the current environment of price volatility, members saw an opportunity to improve the accuracy of their fuel cost calculations, while also accommodating shippers' calls for greater transparency in how the charge is developed, he said.
The TSA said it began working on the new formula in the late summer of 2008, as bunker fuel prices hit a peak level of $767 per metric ton - a 260 percent increase since the beginning of 2007. Prices have since fallen dramatically, but are reportedly expected to see continued volatility over time.
The new simplified formula is to be based on average weekly fuel prices published by independent tracking service Bunkerworld, for a smaller number of load ports - Hong Kong and Los Angeles for a West Coast sailing; and Hong Kong and New York for an East Coast sailing. It assumes average vessel size, fuel consumption and steaming time for each routing, taking into account effective capacity for each type of vessel. TSA said the formula moderates volatility to customers in the charge itself, with a return to quarterly rather than monthly adjustment.
"TSA has taken a clear step forward with this new bunker formula," Widdows said. "It's simpler, more transparent, and more accurately captures fuel-related costs for local, intermodal and all-water East Coast service. It enables carriers to fully and fairly recover costs, and provides shippers with greater pricing predictability in planning their shipments."
The TSA said would post the new formula shortly in the ancillary charges section of its web site www.tsacarriers.org . The calculation page will track Bunkerworld average West Coast and East Coast weekly fuel prices over a 13-week period. It will provide a link to a fact sheet explaining the calculation formula in detail, with a table for easy translation of the 13-week average price into the upcoming quarterly bunker charge. And it will link to a page on the Bunkerworld web site confirming average weekly West Coast and East Coast prices, developed specially for TSA.
For an initial transition period through June 30, 2009, TSA will separately retain the weekly fuel price listings and calculation table for the existing formula on its web site, for the benefit of current 2008-09 service contracts.
TSA members include: APL Ltd., Hyundai Merchant Marine Co., Ltd., China Shipping Container Lines, Kawasaki Kisen Kaisha, Ltd. (K Line), CMA-CGM, Mediterranean Shipping Co., COSCO Container Lines, Ltd., Nippon Yusen Kaisha (N.Y.K. Line), Evergreen Line, Orient Overseas Container Line, Inc., Hanjin Shipping Co., Ltd., Yangming Marine Transport Corp., Hapag-Lloyd AG, Zim Integrated Shipping Services.
CenterPoint’s Virginia cargo terminals bid due today
Chicago-based industrial real estate developer CenterPoint Properties said on Wednesday it would submit its formal, multi-billion-dollar bid to purchase the operating rights of the Virginia Port Authority's cargo terminals today, March 12.
What would amount to a major development and operating agreement would stretch over decades with a large payment up front and revenue sharing with the state of Virginia, according to CenterPoint. The revenue sharing would be applied towards the port authority’s staff of approximately 140.
The deal would reportedly include all of the Virginia Port Authority's cargo handling in Newport News, Norfolk and Portsmouth. The deal would also include the planned 600-acre expansion of Craney Island as a marine terminal, and an inland port in Front Royal.
CenterPoint had previously announced plans last year to build a $350 million warehouse and distribution center in Suffolk, Virginia, which is to end up with13 buildings at 5.8 million square feet.
Virginia Secretary of Transportation Pierce M. Homer will reportedly take up to10 days to evaluate the proposal, and beyond that, the state would open a 90-120-day period for other prospective bidders to submit offers.
Panalpina 2008 net profit dropped 46 percent
The Swiss logistics group Panalpina reported a 46 percent drop to in full-year net profit this week at $96.36 million and said it would cut approximately 10 percent of its workforce amid the global economic crisis.
"As a result of the clearly declining freight volumes caused by the current financial and economic crisis, Panalpina will intensify the cost-cutting program it introduced in 2008," the company said in a statement.
"In 2009, this will include the reduction of between 1,400 and 1,600 jobs worldwide, approximately 10 percent of the overall workforce," Panalpina said.
Its pullout of Nigeria impacted the group’s earnings last year after a bribery investigation by the United States.
Top 100 infrastructure projects for Latin America pegged
at $64.6 billion
CB/LA Infrastructure LLC, an infrastructure project identification and development group released the list of the top 100 infrastructure projects in Latin America and Mexico this week.
The total estimated value of the projects was projected at $64.6 billion, the equivalent to almost 2 percent of Latin America’s GDP. The report projected total job creation at 2.8 million.
The report outlines eight infrastructure sectors, including top 5 projects in: ports and logistics, oil ad gas; water and wastewater; electricity generation; urban mass transit; digital infrastructure; new energy; and highways.
The projects on the list cover 12 Latin American countries, including: the Panama Canal Expansion at $52 billion; the Eastern Aqueduct in the Dominican Republic at $1 billion; the Metropolitan Electric Train in Costa Rica at $520 million; Sao Paulo’s ‘Metropolis’ project at $1.2 billion; and the Multimodal Corridor Mazatlan-Matamoros in Mexico at $1.4 billion.
Freighter carrying invasive species turned back from Baltimore
A Turkish freighter was recently turned back from the Port of the Baltimore after an inspection by the U.S. Customs and Border Protection found cogon grass weed seed, an invasive species from Asia, the Baltimore Sun reported.
The seed reportedly spreads quickly, causing potential widespread environmental damage, the report said.
Friday, March 13, 2009
Port for sale: $8.9 billion over 60 years
The Virginia Port Authority’s cargo-handling business could end up being an estimated $8.9 billion deal over a 60-year lease, according to prospective buyer, CenterPoint Properties, the Chicago-based industrial real estate group.
CenterPoint submitted its formal bid to the state yesterday to acquire the port authority’s Virginia International Terminals that in today’s dollars is worth $3.5 billion, the real estate company said.
The VPA owns and operates its marine terminals in Norfolk, Portsmouth, Newport News, and an inland port in Port Royal. The planned 600-acre terminal development expansion on Craney Island would also be part of the deal.
The VPA was the sixth-highest ranked container port in 2007, according to the American Association of Port Authorities.
Other terms of the proposed deal include:
- Profit sharing with the Commonwealth of Virginia
- CenterPoint would release the annual subsidy provided the port from the Commonwealth Transportation Fund
- The dollars CenterPoint pays the state of Virginia, and the foregone subsidy, could be used for off-port rail and road infrastructure to ease area congestion or for other pressing needs
- CenterPoint would increase payments to the municipalities hosting port facilities
The next step in the process is Virginia’s Secretary of Transportation will review CenterPoint's proposal, and if it passes muster, will be forwarded to the VPA, CenterPoint said.
If the VPA confirms that the proposal meets all legal and policy requirements, and deserves further evaluation, a formal notice will be posted, and others will be invited to submit competing bids.
"We respect Virginia's process, which is designed to be cautious and transparent," said Paul Fisher, president, CenterPoint.
"At the appropriate time, we look forward to presenting our proposal in more detail and explaining its merits."
Too many boxes: Yantian port clogged with empty containers
Southern China’s Port of Yantian in Shenzhen has 400,000 empty containers stressing the storage capacity of a port that is designed to max-out at 250,000 containers at any given time, according to the South China Morning Post.
A similar situation is reported at the Hong Kong, the report said, where that port will be trying to re-locate hundreds of thousands of empty containers over the next few months.
Shenzhen’s containerized throughput fell 17.5 percent in February, and Hong Kong’s dropped 24.1 percent in December, and 23.2 percent in January, according to the Post.
Hong Kong-based consultancy Transport Trackers revised its forecast to 11 percent drop for the Asia-Europe container trade and a 9 percent fall for the trans-Pacific box trade, according to the report. Transport Trackers also lowered global container trade forecast this year a 0.8 percent decline.
North Carolina’s new port prospect to get some Obama funds
A proposed 600-acre, $2 billion container port in Southport, North Carolina, was awarded $100,000 as part of the federal funding initiative singed by President Obama.
The funds would towards the study of the feasibility of a cargo-handling complex in Southport that would ostensibly open for business in its first phase by 2017.
Danish port aims to be fossil free by 2015
The Port of Frederikshavn, in northern Denmark, says it aims to be fossil free by 2015.
The port city of 25,000 said if it is successful, that it would be the first city in the world to be completely powered renewable energy.
Frederishavn is already renowned for its wind-power initiative as nearby turbines are expected to provide 30 percent of the city’s electricity. Presently, the city is at 24 percent green energy.
The city and port facilities would be powered by a mix of non-fossil energies such as biofuel, wind, solar and other hybrid energies.
Frederskshavn said it is currently working with the Danish government on ways to help fund and move the project forward. Denmark has been a world leader in green initiatives.
Cal Maritime offers maritime security awareness course online
The California Maritime Academy in Vallejo, Calif. announced it s is offering an online certificated course in “Maritime Security Awareness” for workers in the maritime environment.
Cal Maritime said its “new and improved” online course satisfies the requirements of the ISPS Code and MTSA regulations, and provides training in:
- Basic Security Regulations and Policies
- The roles of the Vessel, Facility and Company Safety Officer
- Maritime Security Levels
- Observation and Reporting Procedures
- Basic Vehicle and Personnel Screening Procedures
- Physical Security
- Access and Identification Procedures
- Surveillance Equipment Types, Applications and Operations
For more information: www.maritime-education.com