Impasse over Ex-Im Bank funding puts tens of thousands of jobs at risk
By William Armbruster
The U.S. may lose billions of dollars in U.S. exports and tens of thousands of American jobs if the House of Representatives fail to end a deadlock over the U.S. Export-Import Bank.
The bank's lending authority expires on May 31.
"While we're wringing our hands, our competitors are licking their chops," says Fred Hochberg, Ex-Im Bank's chairman and president.
Small businesses that depend on exports for most or all of their sales are particularly vulnerable and may have to shut down unless Congress resolves the stalemate.
U.S. companies are already losing business because they cannot guarantee that they will be able to provide financing to foreign buyers. Exporters in other countries are taking away business because they can offer financing guarantees supported by export-credit agencies provided by their governments.
More than 300 companies and business association expressed their concern over the impasse in a letter to congressional leaders on March 28.
"The Ex-Im Bank is the only tool American manufacturers have to counter the huge sums of export financing - many hundreds of billions of dollars - that other governments provide their exporters. If American manufacturers lose access to the Ex-Im Bank, our ability to compete globally will be severely curtailed," the letter stated.
China's Export-Import Bank and other agencies provided trade-finance that supported $280 billion in exports in 2010, according to Lauren Airey, director of trade facilitation policy for the National Association of Manufacturers.
"They're making it hard for customers to turn down very attractive financing options," she said.
Canada, with a population of just 33 million, provided $78 billion in trade finance support, compared to $32 billion by Ex-Im Bank. That was enough to support more than $40 billion in export sales from more than 3,600 U.S. companies in fiscal 2011, supporting approximately 290,000 export-related American jobs, according to the letter from the business groups.
Airey said members of Congress were impressed with the number and scope of associations and companies that signed the letter.
Some House conservatives want to shut down the Ex-Im Bank because they see it as a vehicle for corporate welfare and a drain on the taxpayer -- charges rebutted by the U.S. Chamber of Commerce in a section on its web site entitled Myths and Facts: The Export-Import Bank.
"Far from being a handout to corporations, Ex-Im turns a profit for the American taxpayer. Since 2005, Ex-Im has generated more than $3.4 billion to the Treasury above all costs and loss reserves, including $700 million in FY 2011 alone," the chamber stated.
The bank generates that profit because of the fees it charges for its services.
Ex-Im Bank supports U.S. exporters by providing guarantees to commercial banks that would otherwise not be willing or able to extend credit. Small businesses are particularly dependent on working capital loans that enable them to pay for labor, equipment and other costs before they receive payment from foreign buyers. Export credit insurance is another important Ex-Im Bank service for small exporters, which account for 85 percent of the bank's transactions.
The business community and the bank hope that Congress will agree to a four-year extension of Ex-Im's authority when it returns to session on April 16 after the two-week Easter recess.
Extension of the bank's authority used to be routine. In 2006 it was reauthorized for four years on a voice vote in the House and by unanimous consent in the Senate.
That authority expired on Sept. 30. Ex-Im has been able to keep operating because of three temporary extensions.
"This is not good for business. Companies don't operate six or twelve months at a time. They've got to plan ahead. If we get another short extension or are reauthorized for just another year, it will significantly affect our ability to serve the needs of U.S. exporters," said Maura Policelli, the bank's senior vice president for communications.
Besides extending the bank's authority, Ex-Im supporters also want Congress to increase the cap on the bank's exposure to the $140 billion sought by the Obama administration. The current cap is $100 billion.
ILA and USMX report "productive exchange of ideas"
The International Longshoremen's Association met with the United States Maritime Alliance for two days of new contract negotiations in Tampa, Florida and both sides said in a joint statement that there is "confidence they will reach an agreement before the current pact expires on September 30."
The ILA said it represents 15,000 members at ports along the East and Gulf coasts, and USMX said its membership includes 24 container-shipping companies calling those ports.
"We had a productive exchange of ideas that will give us a good start toward negotiating contract sooner, rather than later, in 2012," said Harold Daggett, president of the ILA and his counterpart James Capo, CEO of the USMX.
"Both sides recognize the importance of the East and Gulf Coast ports to the nation's economy and remain committed to reaching an agreement without any disruption to port operations," Daggett and Capo said.
The two sides claimed there have no been no work disruptions from a halt in contract negotiations since 1977 with nine new master contracts having been successfully negotiated.
The current master contract took effect in 2004 and was extended for two years in 2010.
China Shipping lost $428 mil in 2011
Shanghai-based China Shipping Container Lines Co. announced it posted a net loss of $428 million compared to a net gain of $667 million for the previous year.
China's second largest container-shipping group cited overcapacity and rising fuel costs as contributing factors to its 19 percent drop in revenue for the year at $4.5 billion.
CAT Logistics to add new parts distribution center in Mexico
Caterpillar Logistics Inc. announced it would add a new 500,000 square-foot parts distribution center in San Luis Potosi, Mexico.
The heavy equipment manufacturer Caterpillar's logistics unit said in a statement that the new Mexico facility would be the sixth such new parts center that is part of its modernization plan and "the first of many aimed at enhancing parts distribution operations in Central and South America."
CAT Logistics said there are also other capacity expansion projects underway at existing facilities in Atlanta, Georgia; Grimbergen, Belgium; Melbourne, Australia; and Shanghai, China.
ILA worker killed by forklift at Savannah port
A member of the International Longshoremen's Association was struck and killed last Wednesday morning by a forklift at the Port of Savannah's Ocean Terminal.
The Local 1475 longshore worker was a retired postal employee and worked at the terminal with her son, who witnessed the accident, the Savannah Morning News reported.
The accident reportedly occurred during a cargo-handling operation with a bulk vessel that had arrived the night before from Wilmington, North Carolina.
Hong Kong's largest container-shipping line, Orient Overseas Container Line, formerly inked a 40-year, $4.6 billion lease this week for a cargo-handling terminal operation in the Port of Long Beach's Middle Harbor.
The official signing ceremony was held in Hong Kong with OOCL's chief executive, Philip Chow, and Port of Long Beach Executive Director Chris Lytle providing their signatures for the deal that the shipping line said would triple its handling capacity.
When developed to its final phase, the over 300-acre site will be able to handle 3 million TEUs.
"This land-lease agreement has been many years in the making and without the support of the citizens of Long Beach, the government, ILWU, Harbor Commission, and all those who believe in the many benefits that this project will bring to the city and region, this day could have been possible," said OOCL's Chow.
"This is a really a big deal," said Ms. Susan Wise, president of the Long Beach Board of Harbor Commissioners. "It is a 40 year lease that will generate billions of dollars of revenue for the port over its lifetime," she said.
Drewry: Container lines don't "see the severity of their situation"
While $800 per-TEU rate increases have been realized in the Asia-Europe container-shipping trade, a leading freight industry trend-forecasting firm says ocean carriers will need to tackle over-capacity issues or face a bumpy ride in 2012.
"Until the inherent structural capacity is truly tackled, we will continue to have periodic and violent bouts of overcapacity that will keep rates and operating margins yo-yoing up and down," said Neil Dekker, head of container research for Drewry Shipping Consultants in a statement.
"It seems evident that carriers do not truly see the severity of their situation since the number of ships in actual full term lay-up is fairly small. As of early March, the idle or inactive fleet had grown to around 5.4 percent of total global capacity, but only 47 vessels above 5,000 TEUs were included in this figure and a number of these are being re-deployed on new services," Dekker said.
Drewry's latest Container Forecaster report contends that although carriers have successfully implemented general rate increases in the benchmark Asia-Europe and trans-Pacific tradelanes, the research firm has also downgraded its 2012 global demand forecast to 4.6 percent, largely based upon the financial crisis in debt-ridden Europe.
According to Drewry's report, "spot rates above or at least close to the respective trade route break even margins. But until very recently, even the largest 15,500-TEU vessels operating on the Asia-North Europe trade were not making money."
Despite freight rates, including fuel, that could rise by as much as 13.7 percent, the Container Forecaster says "we should not be lulled into a false sense of security by the considerably higher spot rates revealed in the weekly indices and think that all is now fixed."
Container-shipping lines will likely need to take a hard line on maintaining GRIs "since they resolutely refuse to put significant tonnage into lay-up," the report said.
Another 59 ships of at least 10,000-TEU capacity will be added to the global fleet, in addition to five new trans-Pacific services scheduled for launch before June, Drewry said.
"Given that Asia-U.S. demand is still uncertain, this desire to re-introduce so much new capacity, rather than lay-up tonnage, could be a derailer if there is a weak Peak Season. The cascading of larger vessels into the North-South trades is also becoming more noticeable and could also be a threat to their stability," according to the Container Forecaster.
Rail Logistics links up with Interstate Distributor
Overland Park, Kansas-based intermodal service provider Rail Logistics announced its "Cold Train" service has formed a new partnership with Tacoma-based Interstate Distributor Co. to offer short-haul drayage service to and from the Quincy (Wash.) Intermodal Terminal.
The Cold Train is a refrigerated intermodal rail service that runs between Eastern Washington and Chicago for fresh produce and frozen products, among other cargoes.
FedEx to acquire Polish courier
FedEx Corp. announced it has signed an agreement to acquire Polish courier Opek Sp.z o.o., a domestic ground network with an estimated $70 million in annual revenue.
"In recent years, we have made significant investments throughout Europe, greatly expanding our network coverage and improving service to customers," said Frederick W. Smith, chairman, president and chief executive officer of Memphis-based FedEx Corp. in a statement.
The latest FedEx acquisition comes on the heels of recent news of rival United Parcel Service coming to terms to acquire the Dutch firm TNT Express, for $6.85 billion, a move that will reportedly elevate the Atlanta-based delivery company to market-leading status in Europe.
FedEx said it expects that the Opek transaction to close by the summer.
CMA CGM subsidiary upgrades West Med-Morocco service
Frances's CMA CGM announced that its Moroccan subsidiary, COMANAV, would upgrade its West Med - Morocco service.
The Loop 1 - Spain, will be effective on April 11, the shipping line said in a statement, with the following port rotation: Barcelona, Valencia TCV, Valencia Noatum, Casablanca, Barcelona.
Starting on April 18, the ocean carrier said the fixed rotation would be: Valencia TCV, Valencia Noatum, Barcelona, Casablanca, Valencia TCV.
The Loop 2 - Italy, will commence on April 14, calling: Naples, La Spezia, Genoa, Casablanca, Salerno, Naples.
The shipping line said Loop 3 - France, will launch on April 11 utilizing two CMA CGM Ro-Ro vessels serving: Marseilles, Casablanca, Marseilles twice a week.
Coast Guard to scuttle tsunami "ghost ship" (incl. photo)
The U.S. Coast Guard announced it plans to sink a commercial shrimping vessel south of Sitka, Alaska that slowly drifted across the Pacific after the huge tsunami and earthquake that rocked Japan a year ago.
The U.S.C.G. said it would fire cannons on the so-called "ghost ship" in order to remove the potential hazard of shipping lane interference.
Five million tons of post-tsunami debris was swept into the Pacific, the Associated Press reported.
For the full A.P. story: http://seattletimes.nwsource.com/html/nationworld/2017915232_apustsunamighostship.html
Friday, April 6, 2012
Report: BDP International for sale
Industry insiders told Reuters that BDP International, one of the world's biggest logistics companies, is looking to sell itself, but the company said it was talking to private equity firms only to raise money.
BDP, an air and ocean freight forwarding and customs brokerage, is looking for opportunities to raise capital and will continue to be owned and operated by the founding family and current management team, a company spokesman told Reuters.
When asked by Reuters, one inside source maintained that BDP is for sale, even in the face of the company's denial.
Founded in 1966 by Richard Bolte, another source reportedly said BDP could go for $500 million.
NY/NJ Red Hook terminal to keep moving with Customs inspectors
Brooklyn's Red Hook Container Terminal will continue to move cargo, thanks to an eleventh hour agreement between the Port Authority of New York and New Jersey and federal customs officials, which stipulates that a customs presence will be maintained at the small port for the next five years.
U.S. Customs officials had planned to remove its inspectors from Red Hook due to low volume - the terminal moves 110,000 TEUs annually, compared to an average of three million moved by the area's other ports. Customs officials wanted goods received by Red Hook shipped by truck to inspectors at ports on Staten Island and in New Jersey. Shipping companies feared the expense would require them to move to another port entirely.
In a meeting of customs officials and local government, House Representative Jerrold L. Nadler, whose district includes Red Hook, expressed concerned that the removal of the inspectors could lose the port 700 jobs and endanger "the future of the only major port east of the Hudson River." Other elected officials worried about allowing uninspected cargo to travel by truck over the city's bridges.
On Thursday, customs officials announced they would keep inspectors at Red Hook through early 2017.
Southern California's $500 bil regional transportation plan
The Southern California Association of Governments passed a $500 billion regional transportation plan on Wednesday, aimed to improve cargo movement, reduce air pollution and improve life for commuters.
The strategy is to build new high-speed rail and rapid transit bus lines, improve highways, increase commuter programs such as carpooling, and encourage telecommuting.
Pam O'Connor, president of the regional transportation association, told the Los Angeles Times that the plan will prepare for population growth in one of the largest transportation grids in the U.S., and will help Southern California remain competitive in the world marketplace.
Pacific Coast Container fined $460K for overweight vehicles
Pacific Coast Container, an Oakland-based company, will pay $460,000 to settle charges of transporting grossly overweight cargo loads at the Port of Long Beach, according to the City Prosecutor's office. The company pled guilty to 47 misdemeanors for defying vehicle weight regulations.
Reportedly, most of the cited PCC 18-wheelers carrying FEUs to the Port of Long Beach were at least 10,000 pounds over the 80,000-pound limit.
The city will receive $76,000 for roadwork and $13,000 for legal costs, and the remainder will go to the L.A. Superior Court.
U.S. Customs and Border Protection officers inspecting containers with "used fitness equipment" instead discovered a 2010 Ferrari 458 Italia worth $280,000 and 15 other stolen luxury cars bound for Hong Kong and Vietnam, officials announced Tuesday.
The U.S. is working with Vietnamese officials to retrieve four other stolen high-end cars that have already been shipped to Vietnam, according to a spokesman for Homeland Security.
The thefts were discovered after a car rental company noticed the GPS of a rented Ferrari indicated the vehicle was at the harbor and not moving. After customs agents tracked the Ferrari to a container marked "used fitness equipment," they found the other stolen cars by checking other containers labeled the same way.
Customs officials estimate the collective cost of the recovered cars is $1.5 million.