Cargo Business Newswire ArchivesSummary for March 9 through March 13, 2015:
Monday, March 9, 2015
Port delays prompt retailers to consider U.S.-based manufacturing
Recently resolved labor problems at West Coast ports, along with other issues, have spurred retailers to consider goods made in the U.S. According to a new study by consulting firm BDO, even though the cost of manufacturing remains lower in overseas regions like Asia, 43 percent of retail chief financial officers said that North America features the most attractive sourcing opportunities for 2015.
Last year, only 30 percent of the respondent CFOs chose North America. The number of CFOs who said Asia is the best region for sourcing opportunities decreased from 39 percent to 37 percent; the number who chose Europe dropped from 7 percent to 2 percent.
"If you just look at pure dollars of the labor cost [in the U.S.], it's not cheaper," said Ted Vaughan, partner in BDO's consumer business practice. "But when you start adding up the costs of manufacturing overseas and you add in the additional shipping costs or the potential for delays and getting products, those costs will begin to equal out."
Retailers — including Macy's, the Gap and Steve Madden — cited delays at the West Coast ports where operations have been disrupted by a labor dispute — as a substantial headwind for 2015. The International Longshore and Warehouse Union and the Pacific Maritime Association reached a tentative deal in February.
Macy's management said about 12 percent of its first-quarter buys would be delayed one to five weeks. At the Gap, executives predict delayed merchandise will dent its full-year earnings by 13 cents a share.
Cost increases include the cost of rerouting goods. According to a recent report by Macquarie Research, it costs roughly twice as much — $4,000 — to ship an FEU from China to the East Coast compared to the West Coast.
West Coast dockworkers sue employers for unpaid healthcare claims
West Coast dockworkers are suing employers for what they say are tens of millions of dollars in unreimbursed health claims.
The Pacific Maritime Association, along with Zenith American Solutions and Cigna Inc., the current and former third-party administrators of the employee health plan for International Longshore and Warehouse Union workers, were named in a class-action lawsuit filed in federal district court in Los Angeles.
The suit also names PMA trustees who manage the plan, alleging that they are not acting in the best interest of employees.
The PMA declined to comment, and Zenith and Cigna did not return calls or emails seeking comment Wednesday. The union declined to comment, referring media calls to the office that manages the PMA health plan, which did not immediately respond.
Export rail containers temporarily banned at Norfolk International Terminals
Backups at Virginia ports have started to impact some rail operations, and in late February the Virginia Port Authority decided to temporarily ban export rail containers headed for Norfolk International Terminals.
"We apologize for this short-term disruption as the result of weather and volume demands and appreciate your attention on this issue," the authority said in a statement.
The decision, enacted Feb. 26, remains in effect while the port's "rail operations team continues to address significant rail volume" at NIT, one of its two main container facilities.
Port officials made the decision before last week's two-day shutdown due to snow. At that point, the port's rail-operations team was already dealing with the backlog of cargo left from a day-and-a-half shutdown because of the Feb. 16 snowstorm.
Joe Harris, a Port Authority spokesman, said that the port handled a huge amount of cargo last week.
Norfolk Southern, which controls all rail business at NIT, "is working closely with the port on a daily basis to reduce the backlog and minimize disruptions to our customers," said Ed Elkins, group vice president of international intermodal marketing and sales, in an email.
"Over the past few days, productivity at NIT has rebounded and continues to improve. We anticipate that the gates at our origin terminals will reopen as soon as possible."
Oil train derails and catches fire in Northern Illinois
A BNSF freight train hauling crude oil derailed in northern Illinois on Thursday (March 6), bursting into flames, prompting officials to suggest that everyone with one mile evacuate, according to authorities.
Firefighters attempted to fight the fire but had to pull back for safety reason and leave the fire to burn itself out, fire officials said. In addition to Galena firefighters, emergency and hazardous material responders from Iowa and Wisconsin were at the scene.
The BNSF Railway train derailed about 1:05 p.m. in a rural area where the Galena River meets the Mississippi, according to company spokesman Andy Williams.
The train had 103 cars loaded with crude oil, along with two buffer cars loaded with sand. A cause for the derailment is unknown. No injuries were reported.
Port captain of Lazaro Cardenas murdered, 2 arrested
Mexican police have arrested two suspects for the murder of the captain of the Port of Lazaro Cardenas, according to the top prosecutor in the southwestern state of Michoacan, who said the motive was vehicle theft.
Jose Luis Corro Chavez, the Mexican navy's second-in-command in Michoacan, was shot and killed Wednesday night in the port city of Lazaro Cardenas while riding in a pick-up truck with his wife and children.
Port of Oakland to build $500M trade and logistics center
The Port of Oakland is launching a massive $500 million trade and development project aimed at reducing truck traffic, making shipping more efficient and creating jobs.
Building begins this year on the publicly and privately financed Oakland Global Trade & Logistics Center, managed by the city of Oakland. The logistics center will be constructed on the site of a 330-acre U.S. Army base that has been closed since 1993.
Crews have already demolished 320,000 square feet of warehouses. Efforts are ongoing to cleanup toxic waste left by the military and to stabilize the soil in case of earthquakes.
Once the logistics center is operational, the port can use more trains to carry goods and conduct more freight packing and unpacking on site. That, in turn, will reduce the number of trucks heading out from the port along Interstates 80 and 880.
APM Terminals to break ground on $1B Costa Rica terminal
Construction is about to start on Costa Rica’s $1 billion Moín container terminal, after years of delays. The project promises to create hundreds of jobs and revitalize the long-depressed region, allowing supersized post-Panamax vessels to call on the port.
The new terminal is set to quadruple the port of Moín’s current capacity, allowing for an estimated 2.5 million TEUs annually by 2030, according to the project’s master plan.
The first phase of the project involves building an artificial island west of the existing port of Moín, to be complete in three years. The new container terminal will be 3-kilometers long and span out to cover roughly 100 hectares — the equivalent of nearly 50 football fields.
President Luis Guillermo Solís and representatives from the Netherlands-based APM Terminals, which owns the port concession, met Sunday in the town of Moín for a groundbreaking ceremony.
Foreign Minister Alexander Mora told The Tico Times the port would be the largest of its kind in Central America.
Orient Overseas net profits increase on global trade recovery
Orient Overseas (International) Limited, holding company of Orient Overseas Container Line, announced 2014 net profits that increased more than five-fold year over year to $270.5 million, as operating costs fell and gains from its property business rose.
OOIL slashed operating costs 10 percent in 2014 as oil prices fell and fuel efficiency increased. Wall Street Plaza, an office building it owns in New York, contributed $119.4 million to its operating income, almost double the level of a year ago. A $9.7 million net fair value gain on the property was also posted in the past year.
Revenue at OOIL grew 4.7 percent to $6.5 billion as global trade recovered.
"Seaborne trade growth for the liner industry was better than expected during 2014," said the OOIL statement. "East-West trades recorded healthy volume growth while the intra-Asia trade posted positive growth. In aggregate terms, global demand grew 5.3 per cent, an improvement from 4.0 per cent in 2013. The industry as a whole performed better than that of 2013, though freight rates across trades were mixed."
For more of the South China Morning Post story: www.scmp.com
$134M Port of Savannah dredging project awarded
The U.S. Army Corps of Engineers has awarded a $134.5 million contract to Great Lakes Dredge and Dock Company for harbor expansion at the Port of Savannah in Georgia, according to a company statement.
The first phase of the contract involves dredging the river channel to 47 feet to facilitate the entry of supersized container ships into the Georgia port after the Panama Canal widening project is complete in 2016, the statement said.
Under the deal, dredging of the outer harbors will be done by the Great Lakes Dredge and Dock Company, which will start along the Savannah River off Tybee Island and extend 18 miles up to the Atlantic Ocean. Great Lakes plans to use cutter suction and hopper dredges for the channel deepening, which will start later this year and be completed by Summer 2018.
The shallow depths of many East Coast seaports, including Savannah, keep large container vessels from carrying full loads during low tides.
DP World terminal at Port Metro Vancouver reopens after fire
Operations at Port Metro Vancouver have resumed fully after a chemical fire tore through a shipping container Wednesday.
DP World’s Centerm container terminal, where the fire started, opened to full operations Friday night, according to Port Metro Vancouver spokesman John Parker-Jervis. He also said the terminal added a Sunday shift to help clear the backlog.
The container from China carried a compound used for disinfectant and bleach, and burned for more than 24 hours after bursting into flames Wednesday afternoon. More than 12 people showed up at local emergency rooms with eye and lung irritation, according to Vancouver Coastal Health spokeswoman Viola Kaminski.
Parker-Jervis says Vancouver Fire and Rescue Services and Transport Canada will investigate the cause of the fire.
The Chill Factor: Top cold chain trends include capacity, last mile and security
By William DiBenedetto, CBN Features Editor
Even the best pharmaceutical, biologic, food and other temperature-controlled products can fail without effective and knowledgeable cold supply chain partners to handle the logistics side of the equation.
This is not news of course, but the cold chain is more than a complex, constantly evolving process. This is because, more than most other supply chain relationships, the best cold chains are really collaborative partnerships. It is crucial to get it right in a highly regulated environment.
UPS has noted — based on a study by the UK-based Medicines and Healthcare Products Regulatory Agency (MHRA) — that more than 40 percent of critical and major product deficiencies are related to ineffective temperature control. The stakes are high because as UPS also recently noted, by 2016 world sales of cold-chain drugs and biologics such as vaccines and blood plasma products will approach $240 billion.
Protecting these products throughout the transportation logistics cycle is critical. Establishing a temperature-sensitive protocol has four steps, according to UPS:
• Planning to maintain product integrity throughout the transportation journey and meeting the guidance and requirements of regulatory agencies.
• A discussion of product requirements about the transportation mode, temperature sensitivity and permitted excursions.
• A design solution, including packaging options that optimize value throughout the transportation process while defining service levels, primary
and backup routings, documentation requirements and standard operating procedures.
• Contingency plans that jointly identify potential problems, with alternative transport plans, including a return and replacement plan for
Bottom line: cold chain integrity should never be compromised. That’s why the term Good Distribution Practice (GDP) is more than a catchphrase. GDP guidelines include monitoring and reporting requirements in the cold chain. GDP and Good Automated Manufacturing Practice (GAMP) guidelines also require mandatory reports in a standard format to demonstrate compliance.
"There is now a good deal of awareness of the need for proper cold chain management in the storage and transportation of temperature-sensitive products in the pharmaceutical and food industry," says Rene Tjong Tjin Tai, CEO of Dyzle, in a recent report for ColdChainIQ. Dyzle is a real-time cold chain monitoring platform that helps provide proof of product integrity of temperature-sensitive products being handled in the food, pharmaceutical and retail logistics cold chain.
He identified the trends that are moving the cold chain to the next level, with capacity, "last mile," and security becoming increasingly important.
Tai outlined five cold chain trends to watch this year:
• Creation of additional capacity and capability of handling for cold chain products - "there is a shortage of both at warehouses as well as 3PLs."
• Proper last mile delivery and storage - "this is still an issue in many emerging economies that don’t have proper end to end cold chain
infrastructure, and this also needs to include return of products."
• In air/at sea temperature monitoring - "temperatures can already be monitored in the air but cannot currently be transmitted in real time as the
wireless radio connection has to be switched off in air."
• GDP-like inspections by the regulators in the last-mile - for example, at pharmacies.
• Maximizing the benefits of investments in serialization, security, GS1 and temperature monitoring by integrating solutions.
He said the last point, serialization, "is an important one in the battle against counterfeit drugs, and ensuring supply chain security."
Expect new legislation in a number of countries, Tai said, forcing multinational companies to look at effective ways of coding individual products around the world. "The ability to track and record each item’s movement across borders will mean new challenges and requirements for pharmaceutical companies in implementing serialization standards."
Tai said the cold chain industry is entering a new phase "where issues like capacity, last mile delivery, and product security become as important as the capabilities that we are currently seeing to monitor the cold chain."
Next: The numbers and the challenges
NRF: March cargo volume to surge 17 percent at major ports
Import cargo volume for March at U.S. major retail container ports is expected to surge 16.9 percent year over year as West Coast ports begin to clear out their massive cargo backlog, according to the monthly Global Port Tracker report released today by the National Retail Federation and Hackett Associates.
"The (West Coast labor) contract talks are over, but the tentative agreement still has to be ratified and it’s going to take months to get back to normal on the West Coast," said Jonathan Gold, NRF vice president for supply chain. "Retailers’ immediate priority is to make sure spring merchandise reaches store shelves in time. Going forward, we want labor, management and Washington to work together to see that we never again have a situation like what we went through these past several months."
NRF said that cargo congestion took its toll on port business. West Coast ports handled 55 percent of cargo this January, down from 64 percent during the same month in 2014, while East Coast ports handled 45 percent, up from 36 percent.
"Importers and exporters are reviewing their supply chain plans for the future, and not necessarily in favor of the West Coast," Hackett Associates Founder Ben Hackett said. "Looking on the practical side, a number of factors favor a return to the West Coast."
Hackett said sending ships from Asia to the East Coast is more expensive than the West Coast, takes longer, and results in higher expenses to move the cargo to Midwest distribution centers by rail. In addition, importers have significant investments in West Coast distribution centers that would not easily be abandoned.
West Coast ports handled 55 percent of cargo this January, down from 64 percent during the same month in 2014, while East Coast ports handled 45 percent, up from 36 percent.
Ports covered by Global Port Tracker handled 1.24 million TEUs in January, the latest month for which real numbers are available. That was down 9.5 percent from January 2014.
February is forecast to be up 2.3 percent year over year at 1.27 million TEUs, March is estimated to be up 16.9 percent at 1.52 million TEUs—as spring merchandise arrives and ships that have been waiting at anchor are finally unloaded. April is forecast up 5.2 percent at 1.51 million TEUs, May up 6.1 percent at 1.57 million TEUs, June up 6 percent at 1.57 million TEUs and July up 6.7 percent at 1.6 million TEUs.
Global Port Tracker covers the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle and Tacoma, New York/New Jersey, Hampton Roads, Charleston, Savannah, Port Everglades, Miami and Houston.
Long Beach staging area for empties/chassis to stay open 6 more months
Port of Long Beach customers and truck drivers will be able use a temporary staging area to store empty containers for six more months.
In an effort to clear cargo congestion, the Long Beach Board of Harbor Commissioners approved a six-month permit extension for Pasha Stevedoring & Terminals. This will allow the company to manage the use of Pier S at the port as a temporary empty container depot and expand it to include storage of exports and chassis.
The 30-acre depot, first approved by the commission Nov. 13, was set to expire March 31. But faced with a huge inventory that will take about three months to clear — the Marine Exchange of Southern California reported 24 container ships at sea waiting to be unloaded Monday — officials felt the extension of the depot was necessary.
There’s an "ongoing effort to help our supply chain partners clear the backlog and return our port to normal operations as soon as possible," said Noel Hacegaba, managing director of commercial operations at the Port of Long Beach. "Without question, this is our top priority."
Terminal at Port of Houston closed due to chemical leak
A section of the Houston Ship Channel was closed Monday after two 600-foot ships crashed in the fog, resulting in a flammable liquid leak.
Methyl tertiary-butyl ether, a gasoline additive aboard the chemical tanker Carla Maersk, leaked from tanks ruptured during the collision with a 623-foot Liberian bulk carrier, Conti Peridot, according to Coast Guard Petty Officer Manda Emery.
Three cargo tanks on the vessel were ruptured, releasing an unknown quantity of the gas additive, said Coast Guard Capt. Brian Penoyer.
"This is not a cargo chemical that is easy to clean up," he said.
The Barbours Cut Terminal was closed, and nearby residents were asked to remain indoors.
Crews were examining the vessel's tanks to determine how much of the product may have been spilled into the 50-mile channel that connects the Gulf of Mexico to the Port of Houston.
An Amtrak train on its way to New York derailed Monday in eastern North Carolina after colliding with a tractor-trailer truck that was apparently trying to turn onto a highway.
Although injuries were reported, none was life threatening.
Amtrak said the train, which originated in Charlotte, had 212 passengers and eight crewmembers on board. Several passengers were taken to medical facilities for treatment, and emergency responders were on the scene.
The collision took place in Halifax, N.C., about 80 miles northeast of Raleigh.
Port of L.A. "Peel Off" program expedites container movement
In late February, the Port of Los Angeles launched its new "Peel Off" program, which streamlines container moves at the port to clear the current backlog and improve cargo flow going forward.
"We have found an efficient way to get containers to their destination that is beginning to pay off," said Port of Los Angeles Executive Director Gene Seroka. "We’re acting on our pledge to our customers to harmonize the supply chain and make it work better. Permanently."
The program involves “peeling off” containers of high-volume customers to a near-dock yard where they are sorted for destination to inland distribution centers.
The port says it partnered with stevedoring company The Pasha Group, harbor trucking firm Total Transportation Services Inc., several terminal operators, and a group of major retailers to create the new operational model.
"The trucks are doing exactly what everyone needs them to do – make more turns every day," said TTSI President and CEO Vic La Rosa. "This single step eliminates multiple inefficient moves so cargo flows faster and more reliably."
The yard is open six days a week from 7 a.m. to 3 a.m. Currently, 17 acres are available for staging up to 500 containers. As demand grows, the facility can operate 24/7 and accommodate up to 650 containers.
The "Peel Off" yard is located at Navy Way and Reeves Avenue on port property, according to the statement. While the program is geared for high-volume shippers, all customers benefit, Seroka said. "Increasing terminal productivity has a positive ripple effect for everyone moving cargo through our Port."
Port of Prince Rupert to boost cargo capacity
Maher Terminals said it would boost container-handling capacity by more than half at the Port of Prince Rupert in British Columbia.
The Fairview Container terminal will be expanded to more than 1.3 million TEUs per year, up from its current capacity of some 850,000 TEUs. Construction will begin in April and is expected to be complete by mid-2017.
The $157.9 million expansion project will include a second deep-water berth, four additional cranes and land reclamation work to expand the existing container yard. Rail loading capacity at the port will also be increased.
Canadian National Railway Company said it would continue to invest in capacity improvements on the route from Prince Rupert to major U.S. markets such as Chicago and Memphis.
Roughly 60 percent to 70 percent of container imports at the port are destined for cross-border markets, while container exports are dominated by Canadian shipments of wood and grain products.
Evergreen Line announced the enhancement of its services to/from the Southeast Asian markets. The carrier said it would launch its new Taiwan-Shekou-Malacca Strait Service (TSS) later in March and will also introduce a dedicated Taiwan - Hong Kong Service (THK).
Evergreen will deploy three ships of 1,600 TEUs on the TSS service, connecting Taiwan, Southern China, Singapore and Malaysia. The start of this weekly service will be marked by the inaugural sailing from Kaohsiung on March 19th. The port rotation will be Hong Kong - Shekou - Port Klang - Penang - Port Klang - Singapore - Tanjung Pelepas - Kaohsiung.
The new service string will connect into the global networks of Evergreen Line and its alliance partners via hubs at Kaohsiung, Hong Kong, Singapore and Tanjung Pelepas.
In addition, March marks the start of the THK Service. Employing a 1,200-TEU vessel, the weekly service will have a port rotation of Taichung, Taipei, Kaohsiung, Hong Kong and Taichung with its maiden voyage from Hong Kong on March 25th.
Yusen Logistics expands services to Brazil
Yusen Logistics Do Brasil Ltda. announced it has established a project cargo team in Sao Paulo, Brazil.
The team will provide global project consultation, planning and implementation, across all modes of transportation, according to the company statement. Its service portfolio is ready to support break-bulk, over-dimension heavy machinery, equipment and ocean services such as Ro-Ro, heavy lift, flat rack and Open Top Out of Gauge (OOG), and chartering.
"The focus on the Brazil market comes at exactly the right time to match the increase in demand for these services," says Marcos Pultrini, Project Team Leader, Brazil. "While we have provided project to support in the past, the formation of this team as part of our global project network is real advantage to our customers in this market."
Yusen Logistics said it would manage existing manufacturing customers in Brazil as well as new clients in the region. Although covering all industries, the growth of segments such as industrial goods, energy and general machinery have helped spur this development.
"In many cases, it more cost effective to import heavy equipment and machinery from the U.S., Europe and China, then it is to build these same parts in Brazil," says Pultrini. "We expect to see much growth in this area."
Fri Sea cargo ship refloated west of Scotland
The Fri Sea cargo ship, which ran aground on the west coast of Scotland, has been refloated.
Stornoway Coastguard said the ship went aground on Saturday morning while docking at Corpach.
There were no reports of injuries or signs of pollution. The crew remained on board the vessel.
A second attempt to refloat the vessel, at about 20:00 on Sunday, was successful.