Cargo Business Newswire ArchivesSummary for March 16 through March 20, 2015:
Monday, March 16, 2015
Report: Port labor conflict to have little economic impact on California
Photo credit: Bob Chamberlin/Los Angeles Times
The short-term economic fallout of the recent labor standoff at West Coast ports will be small, says a new economic forecast, but ports face a long-term struggle to remain competitive.
Many businesses in California, especially agriculture companies, suffered from missed orders and produce left rotting on docks. But many other shipments were just delayed rather than lost entirely, according to the quarterly UCLA Anderson Forecast.
The report predicts that backlogs during the recently resolved labor dispute would cause slightly slower economic growth in California for the first three months.
"We're talking about tenths of a percent — very small stuff," said Jerry Nickelsburg, a senior economist with the Anderson Forecast who specializes in the California economy. "California is a $2.2-trillion economy, so it's hard to get any big numbers based on a relatively short labor dispute."
Looking ahead, the UCLA report raises the possibility of businesses rerouting goods from U.S. West Coast ports to East and Gulf coast ports once the newly widened Panama Canal is completed in 2016.
But experts say that businesses that use West Coast ports will continue to focus on the bottom line rather than fear of a port shutdown. And other factors are giving an edge to West Coast ports. For example, the new high-capacity mega container ships will not be able to fit through the newly revamped Panama Canal. That means U.S. West Coast ports such as Los Angeles and Long Beach would remain the natural option for a growing share of trans-Pacific trade.
Oakland terminal shuts down for one day over labor dispute
SSA terminal managers shut down the international container terminal at the Port of Oakland on Wednesday, March 11, a port official confirmed.
The official reason behind the closure was a "staffing dispute" between workers and port operators, according to Port of Oakland communications director Mike Zampa.
Officials said the other four terminals were operating at full capacity.
A disagreement between labor and management over staffing levels stopped the port's international container terminal yard and gate operations. Tension reportedly started around 10:30 a.m. Wednesday. Managers at SSA's Oakland International Container Terminal shut down yard and gate operations. The ILWU said 45 dockworkers were sent home early.
SSA Terminal managers reportedly wanted two people working on each crane, which they say is common practice at other port terminals. In a statement on SSA's behalf, the PMA said, "ILWU LOCAL 10 is refusing to allow yard cranes to operate unless that number is increased to three. This is a demand that Local 10 made and dropped during negotiations that led to the tentative agreement."
The PMA says another conflict arose over SSA's request that union workers lock and unlock the chassis and containers.
Both of issues were raised during contract talks but later dropped by the union, according to the PMA.
"It's a ploy by the PMA. These members come to go to work," said Local 10 President Melvin Mackay to CNN. "But the companies are telling the members to operate the machine with no safety man on the ground. The members want safety. That's the bottom line."
The closure impacted the staging and gate areas at the facility, where truck drivers drop off and pick up cargo.
Last month, under pressure from U.S. Labor Secretary Tom Perez, negotiators from the International Longshore and Warehouse Union and the Pacific Maritime Association in San Francisco reached a tentative deal on a new five-year contract, after nine months of contentions talks.
Zampa says there is worry that more of these labor problems could ruin the port's reputation, causing shippers to take their business somewhere more reliable.
"Both sides need to get it settled. We need to get back to full operations quickly," Zampa said.
Despite the settlement, the union offered no firm timetable for its members to ratify the contract. Union delegates will meet March 30 to April 3 to review the proposal. Union leaders are expected to present the contract to a caucus of 90 union members for review on March 30th. They will go over the final language before distributing copies to the entire membership for a ratification vote.
Truck drivers are complaining about mismanagement at the Port of Virginia in Portsmouth, claiming they’re forced to wait for hours to drop off and pick up containers.
The Port of Virginia has been a success story lately, turning around its losses and reporting increasing revenues and volume. In fact, this week the port announced millions in savings by reducing the cost of its debt. But truckers say wait times is an issue that isn’t being addressed.
"This is a mess. It is killing us. I mean, we are trying to survive, and it’s taking us down," said truck driver Blake Nixon.
Nixon and many other truckers claim it takes hours to get into the Virginia International Gateway terminal, one the port’s two main container terminals. The other is Norfolk International Terminal.
Truck drivers wait for hours, with no portable toilets available for them to relieve themselves. When WAVY went to the port to investigate the claims, reporters found bottles of urine discarded on the ground alongside bags of human feces.
"It’s every day. Four … five hours every time you come in here … it’s terrible. This is supposed to be the most efficient port. There’s no efficiency here," Nixon said.
Port of Virginia spokesman Joe Harris said the port is handling a high volume of containers. Right now, he said VIG terminal is operating above capacity, and blamed that and the delays on recent bad weather. He said the weather closed the port for four days: five vessel calls and 7,000 containers in February were pushed to this month.
"We are fully aware of the situation that has beset motor carriers trying to serve [Virginia International Gateway] this week. We understand that it is unacceptable to them and it is unacceptable to the Port of Virginia team as well," Harris said last week. "We are operating with a high sense of urgency to correct the situation. To that end, today we announced an extension of the hours of operation at VIG."
WAVY got news of improvements in an email from Harris: "I played your message for our chief operating officer, and right away, he said he was ordering a bank of toilets for the gate queue at VIG."
Report: Emerging markets should double investment in port and rail
Multinational commodities trading firm Trafigura Beheer BV said emerging markets need to double their investments in port, rail and other infrastructure to $2 trillion a year by the end of the decade, or risk slower economic growth and higher prices.
"The world currently faces a massive deficit of infrastructure investment, especially in the emerging economies of Africa, Latin America and large parts of Asia," Claude Dauphin, the commodity trader’s executive chairman, said in a report by Llewellyn Consulting.
Commodity trading firms—usually middlemen who earned razor-thin margins buying and selling raw materials—are investing more in infrastructure as a way of boosting their income. The warning from Trafigura, which has built oil terminals and storage facilities in Africa, repeats a World Bank call to emerging nations to ramp up spending.
Two ports in Western Australia closed last week as a burgeoning tropical cyclone approached the coast.
The port of Dampier, used by Rio Tinto Group, closed at 10 a.m. local time on Thursday, March 12, said the Pilbara Ports Authority in an e-mailed statement. The port of Ashburton shut at 8 a.m., it said. There’s no significant impact on operations at Port Hedland, according to the authority.
Category 2 Tropical Cyclone Olwyn is expected to morph into a category 3 storm as it approaches the Western Australian coast, the Bureau of Meteorology predicted.
Australia’s cyclone season runs from Nov. 1 to April 30.
Shippers scramble after Hanjin leaves Port of Portland
Last week Hanjin Shipping officially left the Port of Portland, and businesses around Oregon and southwest Washington are scrambling to find ways to get their goods to markets overseas.
The shipping line pulled its services from the port because Portland’s container terminal was taking too long to load and unload its ships due to a nearly three-year long, local labor dispute between union dockworkers and their employer, terminal operator ICTSI Oregon. Hanjin accounted for about 80 percent of all the business at Oregon’s only international container port.
At this point, Portland area businesses must move containers via rail or truck to other ports. Exports, for the most part, will now need to make their way to Tacoma or Seattle for shipment overseas. And getting goods to Puget Sound container terminals can be four times as expensive for shippers as it was to access the terminal at the Port of Portland.
The general manager of Mitchell Brothers Truck Line, David Braman, said Hanjin’s departure has left many businesses that ship containers in a state of "chaos."
Northwest Container, the railway option, has been so swamped recently it’s had to close early most days and even turn containers away.
Braman said everything that can’t get on the train has to move by truck. And there’s a shortage there, too.
"There’s not enough equipment to service the area any more," he said. "Something’s going to get left behind. And we’re all in that same predicament. There’s nobody here that’s up to this speed yet."
Florida governor makes pitch for California port business
Florida Gov. Rick Scott is taking a trade delegation to California in April, trying to lure California shippers to Florida ports by trying to exploit shippers’ discontent over the recent West Coast labor conflict and leverage his state’s recent port investments.
Scott sent a letter to shipping professionals last week, promoting Florida’s $850 million investment in port infrastructure over the last four years, as well as its "low-tax, business friendly climate."
"Our investment in port infrastructure means Florida’s ports are ready and have the capacity to immediately handle increased cargo that could come to Florida as a result of port congestion on the other side of the country," Scott wrote, adding that Florida ports handle more than 3.1 million cargo units annually, with the capacity for more.
"We’ve made job creation a priority while Governor Brown idly watches businesses flee California, which has the second highest unemployment rate of any state, only behind Mississippi," Scott wrote.
Evan Westrup, spokesman for the California governor’s office, countered by asserting that California has the seventh largest economy in the world, leads the nation in manufacturing, technology and life sciences, and is at the top of Fortune 500 rankings.
He also touted the state’s balanced budget, good credit rating and its creation of more than a quarter of the nation’s jobs in January.
"We can certainly understand why our friend from Florida is interested in visiting the Golden State," Westrup said.
Federal court orders ILWU to pay $60K in NLRB lawyer fees
A federal judge ordered the national International Longshore and Warehouse Union and their Portland local to pay almost $60,000 to the National Labor Relations Board for violating a court order to resume normal operations at the container terminal at the Port of Portland.
U.S. District Judge Michael Simon ruled in December that the ILWU Local 8 continued to slow work even after a court order to stop the slowdown. Last week he approved the $59,628.18 in NLRB attorney fees—fees that the ILWU is responsible for paying.
The case action is part of the long-running struggle between the union and the terminal operator ICTSI Oregon that has cost the port much of its container business.
ICTSI Oregon says ruling sends a message to the union that there is a cost to its actions. The union maintained it wasn’t at fault.
DP World, expanding its reach in northern Europe, has announced it will take full control of the planned container terminal at Liège Port in Belgium.
The port operator said that it would take over the shares owned by Euroports in the Trilogiport terminal.
"DP World supports our strategy to connect Antwerp and Rotterdam to Germany, the Netherlands and France via Liège," said Louis Bertrand, the director general of the Liège Port Authority.
The container terminal will cover almost 250 acres along the Albert Canal, a shallow waterway located in northeastern Belgium. DP World’s involvement in the project is the next phase of its expansion in Belgium, the Netherlands and Luxembourg, Arabian Supply Chain reported.
DP World has been operating a terminal in the province of Antwerp in Belgium since 2011 and said the operation of two terminals, one at each end of the canal, will create synergies.
The new terminal is expected to be completed in 2016.
Dockworker dies in Port of Anchorage loading accident
A worker died at the Port of Anchorage Friday morning in an accident that occurred while loading equipment onto railroad cars, according to port officials.
Port spokeswoman Lindsey Whitt said the incident occurred at about 9 a.m., as equipment from the 1st Stryker Brigade, 25th Infantry Division in Fairbanks was being returned to the Army base after a training exercise.
The equipment had been transferred from a Totem Ocean Trailer Express ship to property at the port and was being loaded onto railcars when the deceased was hit.
"There were essentially two pieces of equipment that struck the longshoreman, and he was killed instantly," Whitt said.
Whitt identified the man, whose name was not released until his family was notified, as an Anchorage Independent Longshore Union longshoreman with the Sea Star Line, contracted by Totem to help with the offloading process.
Shipping lines collectively lost around $150 million in the fourth quarter of 2014 due to U.S. West Coast congestion, according to Drewry Maritime Research. In the most recent issue of Container Insight, researchers note that carriers experienced various levels of disruption from the port labor dispute, and attempted to quantify the losses by examining available data.
According to the report, APL is the only carrier that provided a set figure representing the extra costs it accrued due to U.S. West Coast congestion in Q4, although it is vague about the details. NOL/APL said that the port delays added $15 million to the company’s liner division core EBIT loss in the last three months of 2014.
To quantify the extra costs, Drewry mined data from the Marine Exchange of Southern California. They found the average vessel turnaround time at LA/LB during 4Q14 was 126 hours, or 5.25 days, meaning the average ship turnaround time had doubled since August.
Around 55 percent of all containerships calling at LA/LB in Q4 of 2014 were turned around in 5 days or fewer, while 13 percent of ships stayed for 10 days or more. The 10,000-TEU CSCL East China Sea had the longest stay, waiting a whopping 32 days to depart after its arrival on 21 December. Inevitably, ships that were anchored ended up with the longest turnaround times. Out of the 51 ships that were resident for 10 days or more, 45 had been anchored outside port.
APL was actually one of the least affected by vessel anchorage and long delays, the researchers note, while OOCL, CSCL, NYK and Hanjin took more than their fair share of the pain.
In terms of turnaround times, APL also came out on top, with OOCL coming in last. Drewry reckons it would have taken just under four days to turn around a 6,086-TEU APL ship in the fourth quarter, but if that same ship belonged to OOCL it would have taken just over 8 days. The researchers said nine of the ten carriers (Horizon Lines was the exception) with the fastest implied Q4 turnaround time had some form of interest in a terminal within the LA/LB complex.
Drewry says more carriers should come up with actual numbers to quantify their extra outlay due to West Coast delays, since greater transparency would increase their chances of recovering the extra costs from their customers. "They are clearly hurting, but the failed blanket $1,000 surcharge at the end of last year was self-defeating as it looked like an ill-thought out revenue generating scheme."
Even though USWC port labor contract has seemingly been resolved, Drewry asserts that carriers will continue to accrue costs through the first quarter of 2015 at least. The number of ships anchored outside LA/LB was worse in the first two months of 2015 so the cost to the industry will be larger than the fourth quarter bill. The analysts conclude that carriers should be more open with the associated costs, especially as many customers will think the issue has now been resolved.
Port of Oakland cargo volume down 36 percent in February
February cargo volume at the Port of Oakland declined 36.67 percent year over year, according to a port statement, but the head of the port said it is making significant progress in recovering from the backlog caused by the West Coast labor contract dispute.
"Cargo is moving and the backlog is shrinking," said Maritime Director John Driscoll. "With capacity again available in our marine terminals, volumes should begin building soon."
The statement said containerized import volume dropped 39 percent in February compared to the same period last year, and exports dropped 34 percent.
Port officials assert that similar results are expected at other major West Coast ports when results are announced. That’s the after-effect of the nine-month dockworker contract dispute that constricted cargo movement from Seattle to San Diego. Labor and management reached tentative agreement Feb. 20 on a new pact, which awaits union ratification.
Analysts forecast an uptick in containerized West Coast trade volume as the cargo backlog disappears. The port said only three vessels were anchored offshore awaiting terminal berths this week, a significant drop from the 20 vessels awaiting berths in mid-February.
Maersk Line hires new CFO
Shipping giant Maersk Line has hired Pierre Danet, current vice president and regional CFO of Hewlett Packard printing and personal systems in Europe, the Middle East and Africa, as chief financial officer and part of the carrier’s management board. He is scheduled to start April 7.
Danet, 44, has served as a vice president with Hewlett Packard in Geneva since 2011. Prior to that, he worked as an executive at Proctor and Gamble from 1998 to 2008, most recently serving as P&G finance director of fabric care in Geneva.
The company said its current chief strategy, finance and transformation officer, Jakob Stausholm, would continue in the role of chief strategy and transformation officer, adding leadership to the ongoing transformation and business development of Maersk Line.
CaroTrans to start weekly Shanghai to Seattle service
NVOCC and ocean freight consolidator CaroTrans announced a new Shanghai import service to Seattle and Portland. The direct, weekly Shanghai to Seattle service, which will bypass Southern California port congestion, starts April 12.
CaroTrans also offers direct LCL services from Qingdao and Busan to Seattle.
China, Japan and South Korea are the Port of Seattle’s top three import trade partners, according to the 2013 Foreign Waterborne Trade Report from the U.S. Maritime Administration. The company says local CaroTrans teams are located at origin and destination to provide support to customers in each area.
"As a global transportation provider, we must respond quickly to the needs of the marketplace," said Greg Howard, CEO of CaroTrans. "May 2012 we opened our dedicated CaroTrans Seattle office to deliver local support to customers in this important trade area. In today’s marketplace, we work to provide gateway alternatives that support the smooth flow of freight."
Another CN train derails in Canada
Canadian National Railway says a tar-like hydrocarbon spilled last week when 13 cars of an eastbound freight train derailed in southern Manitoba.
The accident happened about 7 p.m. Wednesday, March 11, near the small community of Gregg.
CN said in a release that the cars were carrying refinery cracking stock, a non-regulated commodity, and that one of them spilled some of its load. A company spokesman said the hydrocarbon product isn't dangerous.
CN was also involved in a fiery crash March 7 when a train carrying Alberta crude derailed just outside Gogama in northern Ontario. The track and a bridge were destroyed, and a trace of oil product was found in the mouth of the local river system.
Canada Transport Minister Lisa Raitt says she's made her concerns known to CN Rail, according to a CBC News story.
"It does make you think and it makes you wonder ... operationally, that they have to make sure what they’re doing is exactly correct," she said. "That’s a lot of cars and that’s too many derailments, in my opinion, in a short period of time."
February cargo volume down by double digits at Ports of L.A./Long Beach
February cargo volumes at the Ports of Los Angeles and Long Beach took a substantial fall compared to last year due to cargo backups faced by all West Coast ports.
Volume at the Los Angeles port fell 10.2 percent to 502,663 TEUs year over year, according to a port statement. Imports dropped 10.7 percent to 253,225 TEUs, with exports down 10.3 percent to 131,806 TEUs.
Long Beach experienced even more pain, with February cargo volumes dropping 20.1 percent to 412,114 TEUs moving through the port compared to the same time period of 2014. Imports came in at 204,462 TEUs, a 24.7 percent drop, while exports fell 22.9 percent to 110,711 TEUs.
Backups along the supply chain, particularly during the final months of the contentious West Coast labor negotiations between port employers and dockworkers, were the cause of the precipitous drop in volume at both Southern California ports. A dearth of chassis, labor slowdowns and the logistics of unloading and loading supersized container ships were key factors that contributed to the unprecedented cargo congestion at West Coast ports.
Congestion lingers, according to the Marine Exchange of Southern California. On Tuesday, March 17, the exchange reported that 26 container ships awaited berths at the two ports.
Europe to require 94 million square feet of logistics space by 2020
Global real estate services firm Savills has reported that 94 million square feet of logistics property will be required across Europe by 2020, with demand driven by a substantive increase in online shopping, retail consolidation and major food retailers servicing consumers in different ways.
The firm forecasts that the rising value of Europe’s online retail market, set to increase from $121 billion to $253 billion over the next three years according to a Forrester study, means that the need for logistics space will continue to soar.
"While the assumption might be that occupiers would concentrate on large units in centers of countries and continents, we are experiencing a surge in demand from parcel delivery companies looking for demand from parcel delivery companies looking for smaller units on the edge of conurbations as they struggle to get to grips with urban logistics," said Richard Sullivan, national head of industrial and logistics at Savills. "Additionally, with reports suggesting up to 40 percent of goods ordered online are returned, a whole new asset class is emerging in the form of the returns center."
Savills also says that logistics investments in Europe rose 29 percent to $32.5 billion in 2014, which was well above the long term average of $24 billion and nearly as high as the record $43 billion of 2007. This was largely dominated by the economies of Western Europe, with the UK and Germany accounting for 54 percent of all logistics investment across the continent in 2014.
Massport acquires land for $70M Port of Boston project
The Massachusetts Port Authority (Massport) has purchased land from the Massachusetts Bay Transportation Authority to complete a planned park and trucking route in South Boston that will divert cargo from residential areas and increase container capacity at its Boston port.
The state port authority paid $7 million to acquire a parcel on East First Street in South Boston, west of the Port of Boston and south of the channel that separates the neighborhood’s northern and southern halves, according to land records.
The purchase, according to the Boston Business Journal, is part of a project to re-route cargo trucks raway from the neighborhood and expand the port’s capacity for cargo containers. Currently, a crumbling wall and cracked sidewalk run along East First St., used by more than 900 trucks daily.
The total cost for the Thomas J. Butler Freight Corridor and Memorial Park is $70 million, according to Massport. The authority expects the work to be completed in 2016.
YRC Freight sets up hotline for delayed W.C. port shipments
YRC Freight has launched a hotline specifically for businesses with freight delayed at West Coast ports. The 24-hour hotline, 800-325-8747, was created to give callers shipping solutions to help them avoid additional delays and have their goods on store shelves in time for the spring retail season.
"In order to get the supply chain moving again and help avoid additional revenue loss, we are ready with time and cost effective shipping options," said Howard Moshier, senior VP of operations for YRC Freight.
Even though a tentative agreement on a new 5-year labor contract has been reached between the PMA and the ILWU, experts say shipment delays will continue.
"PMA officials continue to reiterate that it will take 8-12 weeks to clear the backlog of shipments sitting off the West Coast," said Keith Prather, managing director of Armada Corporate Intelligence. "Many shippers will need to expedite loads once they hit the port to make it in time for the spring retail season."
Both new and established customers calling the hotline can take advantage of air, dedicated equipment, and expedited ground services to advance freight from port to points across North America, according to YRC.
Court considers case involving Seattle port’s deal with Foss Maritime
A King County Superior Court judge in Washington State said she would decide in the next week whether to hear a case brought by a coalition of environmental groups against the Port of Seattle and Foss Maritime. The lawsuit involves a deal made between the port and Foss that includes using Terminal 5 as a mooring station for Shell Oil’s Arctic drilling fleet.
King County Superior Court Judge Mariane Spearman presided over the first hearing Friday. She said she would read some of the case law cited before ruling this week.
On Feb. 9, Port of Seattle CEO Theodore Fick signed the agreement with Foss, which will pay $13.17 million over two years to use 50 acres of the 156-acre Terminal 5.
The lawsuit, filed March 2, argues that basing Shell’s oil drilling fleet at Terminal 5 will fundamentally change its use as a cargo terminal, which would require a new environmental review.