Cargo Business Newswire ArchivesSummary for April 11 through April 15, 2016:
Monday, April 11, 2016
Capitol Watch: Mind the (Highway Trust Fund) Gap
By Anna Denecke, Associate, Blakey & Agnew
The streamers and champagne have been put away and we're settling into the five-year tenure of the Fixing America's Surface Transportation (FAST) Act. The bill, which was signed into law on Dec. 4, 2015, includes modest increases in federal transportation spending. It also boasts several new programs, including a $4.5 billion, freight-specific discretionary grant program to support large-scale projects that stand to benefit regional or the national economy.
While passage of the FAST Act – the first long-term surface transportation bill in nearly a decade – is reason to celebrate, reality is setting in: if additional revenue is not identified and collected, the next surface transportation bill will be all the more difficult to enact. The law's policy and programs are paid for with proceeds from the Highway Trust Fund, a firewalled account supported by a federal excise tax on gasoline and diesel fuel. The 18.4 cent-per-gallon gasoline tax and the 24.4 cent-per-gallon diesel fuel tax haven't been raised since 1993. Meanwhile, inflation and better vehicle fuel economy have taken their toll, contributing to chronic insolvency of the Highway Trust Fund.
Rather than raise the gas tax, in recent years Congress repeatedly authorized transfers from the General Fund of the Treasury to the beleaguered transportation fund. In December, drafters of the FAST Act again declined to raise the gas tax, instead relying on a series of budgetary offsets to transfer enough from the General Fund to augment anticipated gas tax receipts and pay for the five-year bill. Baring the identification and collection of new revenues, by the next reauthorization round the Highway Trust Fund will be facing over $100 billion of a projected shortfall. To put that in perspective, the heavy political lifting this time resulted in a $70 billion General Fund transfer, or $30 billion short of what will be needed in 2020.
Adding to the transportation fiscal headache is the FAST Act's $7.5 billion rescission. Rescissions have become common in transportation bills because they lower the overall cost of the legislation and improve a bill's Congressional Budget Office score. While it might be tempting to brush this rescission off as far into the future and avoidable, the adjustment has an impact on state planning.
A rescission written into SAFETEA-LU law caused real dollar losses to state transportation departments. Most entities predicted that Congress would be able to reverse the 2009 rescission before it took effect, but ultimately, the Federal Highway Administration was unable to dole out an additional $8.7 billion in anticipated funds. Many states had already programmed these dollars for specific purposes and the rescission caused project delays and even cancellations.
The July 1, 2020 FAST Act rescission could cause damage to state transportation departments and the national economy. It could also hurt progress made by the five-year surface bill. The rescission has the effect of resetting baseline spending levels, meaning that programs that benefited from augmented spending in the FAST Act, as well as new programs such as the freight discretionary grant program, would face cuts or even elimination in future years.
In 2020, or even earlier should Congress choose to act, there's always the option for repeal of the rescission. That, combined with the ever-growing gap between Highway Trust Fund receipts compared to outlays, means future Congresses will face a wealth of transportation-related budgetary headaches. The hard-fought FAST Act could seem like a walk in the park by comparison. Alternatively, Congress could get to work now on identifying sound financial solutions to steady the shaky foundation on which surface transportation rests.
Blakey & Agnew, LLC is a public affairs and communications consulting firm based in Washington, DC.
Greece sells Piraeus Port to China COSCO Shipping
Greece inked the sale of Piraeus Port Authority to China COSCO Shipping Corporation on Friday, as striking dockworkers protested against the country's second major privatization since late last year.
The sale of Greece's biggest port had been stopped by the leftist government of Alexis Tsipras when it won elections in January 2015, only to be resumed in August under Greece's $98 billion bailout deal with its euro zone partners.
Dockworkers walked out on Friday and marched in central Athens to protest against the deal, which they fear will put their jobs at risk. Container terminals were shut as a result of the strike.
Under the 419 million deal, signed on Friday by China COSCO with Greece's privatization agency, COSCO will buy 51 percent of Piraeus for $319 million and the remaining 16 percent for $100 million after five years once it completes investments of approximately $400 million over the ten years.
China COSCO Chairman Xu Lirong, present at the signing, likened Piraeus Port to the "Argo," the ship used by Jason and the Argonauts.
"Let the ship sail and bring the Golden Fleece," Xu said, adding that COSCO would invest in upgrading infrastructure at the port and that new jobs would be created.
The total value of the COSCO contract is $1.7 billion, including additional investment, as well as revenues of $467 million, dividends and interest Greece is expecting to collect under the 36-year concession deal between Piraeus Port and the government.
The Port of Long Beach has commissioned a study to evaluate the business case for short-haul rail that is due to be completed in the coming months.
When the port launched its Supply Chain Optimization (SCO) Initiative last year, short-haul rail quickly emerged as a strategy with big potential. The analysis will examine market demand, the anticipated costs, and the next steps if the findings support shuttling cargo by rail between the port, markets and warehousing districts within 100 miles of the harbor.
A short-haul rail service could take more cargo off the highway and add more consistency to delivering it inland. Regional benefits include reducing traffic on the region's impacted highway system, with one double-stacked train eliminating up to 750 truck trips.
"Short-haul rail is a key component of a broader port rail expansion strategy to enable our regional supply chain partners to achieve significant gains in velocity, throughput and environmental improve-ments," said Port CEO Jon Slangerup. "We're taking a comprehensive look at the feasibility of this concept."
Up to 70 percent of containerized imports that move through the San Pedro Bay ports leave the harbor complex by truck. Of that total, about 40 percent are headed east for distribution centers and warehouses in San Bernardino and Riverside counties known as the Inland Empire.
The short-haul rail concept is not new, but today, the dynamics have shifted. The cost of drayage to the Inland Empire is substantially higher and freeway commutes are slower than ever. At the same time, the Class I railroads are experiencing a decline in business due to a slump in commodities such as oil and coal.
For the ports and marine container terminal operators, a major driver is the advent of megaships delivering more cargo in a single call and during the same four or five days per ship as previously with smaller vessels.
The study will address cost, velocity and reliability.
Port Authority reform bill sent to Governor Christie for signature
New Jersey lawmakers sent a Port Authority reform bill to Governor Christie that he is all but certain to veto, according to Politico New Jersey.
The bill (S708), approved by a 67-0 vote last week by the N.J. legislature, is a competing proposal to one that has already passed the New York Legislature and been signed into law by Gov. Andrew Cuomo. Without an approval in Trenton, though, that proposal cannot take effect.
"Trying to get identical legislation agreed upon and passed in both houses of two separate legislatures is no easy feat, especially legislation that remains true to our intent and tackles our main goals," Democratic Assemblywoman Valerie Vainieri Huttle, a primary sponsor, said in a statement. "But after a lengthy, multi-year process, I'm confident that we've come to an agreement that does just that."
The Democrats who back measure say it would do a far better job of addressing systemic issues with the notoriously secretive bi-state authority. While much of the legislation mirrors what has been enacted in New York, it also includes several provisions meant to give lawmakers additional oversight. That has been the main sticking point.
The bill would require officials with the bi-state agency to appear before the state legislatures in New York and New Jersey up to twice a year. It also calls for the appointment of the chair and vice chair of the agency to rotate every two years between the New Jersey and New York commissioners.
The reforms were triggered by controversy surrounding the closure for four days in September 2013 of two access lanes on the Fort Lee side of the George Washington to create a politically-motivated traffic jam.
For the measure to be adopted, it would have to be signed by both Christie and New York Gov. Andrew Cuomo.
SC State Port Authority head to provide SOLAS container weighing at port
Photo credit: The Post and Courier
Jim Newsome, CEO of the S.C. State Ports Authority said his agency is willing to weigh cargo containers for shippers to help them meet the Safety of Life at Sea (SOLAS) regulations that begin July 1. Under the new rules, shippers of cargo must verify the weight of each container filled with goods destined for export to another country.
Newsome is the first ports director to say he will consider such a service. Many U.S. ports, particularly on the West Coast, have resisted helping shippers and have said they will reject any container that doesn't already have a verified weight certificate when it passes through the gate.
Newsome said that would hurt truckers who would have to hold onto such containers until shippers verified their weights.
U.S. ports, including the Port of Charleston, already must weigh cargo containers to meet existing Occupational Safety and Health Administration rules. In Charleston, those weights are then passed along to the shipping lines carrying the containers overseas.
Newsome figures if the SPA is already weighing containers for its own purposes, it could easily provide that information to shippers needing to fulfill SOLAS requirements.
"If an individual shipper determines that our weights are the best that they have access to and that enables them to meet this requirement, would we give that to them? Yes," Newsome said, adding that the SPA might charge a "modest fee" for the service.
The SPA would still provide the information to shipping lines at no charge.
The SOLAS rules will affect nearly 200 countries worldwide.
Fewer than a dozen countries have had their SOLAS guidelines published to the World Shipping Council's website. The council represents about 90 percent of global container capacity and helped create the new rules. No U.S. guidelines have been published. While the Coast Guard is in charge of enforcing the rules in the U.S., it will not tell shippers how to comply with the rules.
The Port of Charleston obtains container weights when trucks enter the terminal gates. Scales weigh the trucks and their loads, and port officials then deduct the weight of the truck and its chassis to calculate the net figure. The SPA recently conducted an informal study that showed its method was within 1.2 percent of the containers' actual weights. While the U.S. hasn't specified an acceptable margin of error, other countries have said margins of between 2.5 percent and 5 percent are acceptable.
"So we were well within any acceptable tolerance," Newsome said.
The SPA is hoping shippers will agree to certify those weights measured at the Port of Charleston as each container's true weight for SOLAS purposes. But Newsome said he doesn't want the SPA to get into the business of certifying weights.
"SOLAS says a shipper has to certify the weight to a shipping line, that rule is clear," Newsome said. "But we load ships very accurately with our scale weights. Why shouldn't a shipper be able to say, 'We know we have a good system, and we're going to use the port's weights as we always have.'"
Time is running out for shippers that haven't figured out how they comply with SOLAS and for those countries who aren't sure how they will enforce the new rules, which begin in 82 days.
Newsome said he fears that in the haste of making a decision, the reliable method of weighing containers that's already in place at the Port of Charleston might be scuttled. And that could lead to plenty of confusion at ports worldwide this summer.
Total volume at the Port of Oakland for the month of March declined 14.5 percent, the result of a drop in imports. The port attributed the decrease to an unfavorable comparison with extraordinary March 2015 volumes, when the floodgates opened at West Coast ports following a protracted waterfront contract dispute. The statement also said that March volume was limited by a seasonal post-Lunar New Year slowdown in imports from Asia.
On the up side, Port of Oakland officials said containerized exports at the Oakland harbor are up 19.9 percent year over year.
"It's too soon to declare this a trend, but we're encouraged by recent signs," said Maritime Director John Driscoll.
March exports were up 9.9 percent, the third straight monthly increase.
The Port of Oakland is one of the nation's leading gateways to Asia and exports comprise more than half the port's total 2016 cargo volume, while other West Coast ports depend on imports, according to the port statement.
The gains are attributed to a recent decline in the strength of the dollar, as U.S. goods are more affordable overseas when the dollar's value declines.
The port said total container volume - imports, exports and empty containers - is up 18.9 percent this year.
Canadian Pacific Trust plan draws U.S. antitrust concern
The U.S. Justice Department said Canadian Pacific Railway's plan to set up a voting trust to allow its CEO to run Norfolk Southern Corp. in advance of its proposed takeover of the U.S. carrier should be rejected.
The trust structure is meant to allow Norfolk Southern investors to be paid for their shares while the U.S. railroad keeps operating on its own pending a regulatory review of Canadian Pacific's unsolicited bid. The Justice Department, in a written statement Friday, said the trust would fail to keep the railroads separate during the review and would risk harm to current and future competition.
"Canadian Pacific's voting trust proposal would compromise Norfolk Southern's independence and effectively combine the two railroads prior to completion of the STB's review," Bill Baer, the head of the department's antitrust division said, referring to the U.S. Surface Transportation Board. "That makes no sense."
Canadian Pacific, Canada's second-largest railroad, is seeking the STB's approval of the trust structure. The U.S. Army on Thursday voiced opposition to the deal and the trust, saying it could harm national defense for two companies with "potentially competing interests" to be managed as one.
Warehouse workers stage one-day strike at Port of L.A. warehouse
Warehouse Workers at California Cartage staged a one-day strike Wednesday (4/6) protesting company retaliation for an earlier strike.
More than 200 workers were told Monday they would be fired by the temporary staffing agency AMR/SSI. Cal Cartage uses that agency to staff its warehouse at the Port of Los Angeles.
Steven Hatch, a warehouse worker and member of the Warehouse Worker Resource Center, says warehouse workers have many issues they want improved.
"Low wages, working through a staffing agency for an extended number of years without ever being hired by the company," said Hatch. "The staffing agency winds up taking probably forty percent of your wages right off the top. Working conditions are unsafe and a certain amount of retaliation (is) going on towards the workers by management."
Hatch says Cal Cartage is trying to intimidate workers at its warehouse from using their legal labor rights. That includes trying to instill fear into undocumented workers to keep them from uniting to improve their working conditions.
The 200 Cal Cartage workers fired by the temp agency are demanding they be re-hired as direct employees. Federal labor charges have been filed. The Teamsters are supporting the warehouse workers.
Port of Los Angeles responds to story on $5M retrofit of China Shipping vessels
Cargo Business News ran a story by the Los Angeles Times March 28 under the headline "Port of Los Angeles paid $5M to upgrade China Shipping vessels with little benefit."
The port's media director, Phillip Sanfield, said the thrust of the headline was misleading and provides the port's point of view about the Port of Los Angeles, China Shipping, and the port's environmental efforts relative to the Los Angeles Times story.
When asked by the Los Angeles Times if the port's $5 million investment (more than a decade ago) in retrofitting those ships was worthwhile, Sanfield said this is the written response Port Executive Director Gene Seroka provided:
"While this action and legal settlement preceded me by a decade, the port's worthwhile investment in retrofitting vessels at China Shipping was instrumental in establishing what is now California law and international maritime standard," said Seroka. "With these ships, AMP was invented at China Shipping and the Port of Los Angeles. While the 17 retrofitted ships may be in other trade routes or retired, they paved the way for plug-in technology to grow at the Port of Los Angeles and the world."
The port also noted the 17 China Shipping vessels that were retrofitted with shoreside power technology (AMP) called at the Port of Los Angeles more than 275 times.
"Since the L.A. Times story was published," Sanfield said, "our enviro team ran some calculations. We estimate that those ships reduced 14 tons of DPM (diesel particulate matter), 123 tons of NOx, and 115 tons of SOx. The cost-effectiveness of associated emission reductions were $12,318 per ton over the project life. This project cost-effectiveness compares quite favorably to generally accepted thresholds. We consider that a valuable reduction in emissions."
Sanfield notes that the Port of Los Angeles, between 2005 and 2014, has had remarkable success reducing emissions. The port has reduced diesel particulate matter by 85 percent, SOx by 97 percent and NOx by 52 percent. It has invested approximately $350 million in research, technology and process management advances during this time period and the results have been extremely effective.
"The port believes this provides important overall context to the shortcomings that we have acknowledged with respect to the 3 mitigation measures out of compliance at Trapac and the 11 at China Shipping," Sanfield said.
Wednesday, April 13, 2016
Featured Story: Mega-ship Party Starts on the West Coast
By William DiBenedetto, CBN Feature Editor
The thing about port productivity is that it's not only about what individual ports are doing, it's also about carrier decisions, logistics supply chains and shipper/manufacturer distribution channels.
Added to this often uneasy and complicated mix is the mega-ship factor, as a new generation of huge vessels come on-line in large numbers. At this stage it looks like West Coast ports could be the early "winners." But is winning the mega-ship game really worth it? The jury is still out.
French shipping giant CMA CGM, the world's No. 3 container line after Maersk and MSC, recently said it will deploy six 18,000-TEU ships in the Transpacific market to accelerate its growth.
That decision goes against the grain of conventional wisdom, which holds that mega-ships should be confined mainly to the Asia-Europe trades, where there is enough deep water for them to operate efficiently.
But CMA CGM's decision "is in line with both the growth strategy set by the group in the United States and around the world and the optimization of its fleet," according to a company statement. "The flagship fleet of the group will henceforth be deployed on the most active and dynamic market to date — the Transpacific — and will support its development as well as that of its customers," the statement continued.
CMA CGM's Benjamin Franklin was the largest ship ever to call in the U.S. last December and was inaugurated on February 19 in Long Beach. It will remain in the Transpacific trade. Starting at the end of May, the line's other five super-sized vessels will join the fleet on the Pearl River Express line.
Drewry Maritime Research says these ships will become by far the largest ever to sail on the Transpacific, and has expressed reservations about West Coast ports' ability to "efficiently handle ships of this size on a regular basis." In a recent report, Drewry concluded that West Coast ports "are not yet in a position to handle 18,000-TEU containerships regularly and have much work to do in terms of improving productivity if they are to see them call on anything other than an ad-hoc basis."
Drewry has also questioned CMA CGM's contention that the six mega-ships will help accelerate growth in the Transpacific. "That statement has a whiff of spin about it as the size of ships deployed has no influence on cargo demand. More realistically, CMA CGM has realized that it has a surplus of big ships on the faltering Asia-Europe route and decided that the relatively stronger Asia-USWC route can take up some of that slack," Drewry said.
"As more megaships enter service, the industry is rapidly approaching a critical stage," said Tim Power, Drewry managing director. "To ensure the economics of vessel upsizing continue to benefit the entire supply chain, lines and ports need to work in a more coordinated manner," he said.
Working in a coordinated manner has not exactly been a hallmark of port and carrier relationships, and with cargo demand soft on the Transpacific, Drewry analysts say if more lines adopt CMA CGM's strategy without rationalizing the number of services it would hurt both rates and yield.
The shipper perspective from Hackett Associates founder Ben Hackett, who compiles Port Tracker statistics with the National Retail Federation, is sharply critical. He said the decision to add new mega-ships to routes between Asia and the West Coast runs the risk of chaos. "Does this make sense? Absolutely not," Hackett said. "It flies in the face of financial and economic wisdom and totally ignores the state of the freight market."
U.S. terminals are investing heavily to be "big ship ready" with moves such as raising the heights of container cranes so they can lift boxes stacked 10-high on deck, and making ship berths longer and deeper.
The Port of Long Beach has pegged more than $4 billion to expand its terminal and rail capacity, along with new bridge and road infrastructure. The soon-to-be-opened $1.3 billion Middle Harbor container terminal project, which the port says will be the world's first all-electric, fully automated terminal, will be able to accommodate 18,000-TEU vessels immediately and eventually will be able to handle ships of up to 24,000 TEUs. When the second phase of the project opens in 2019, it will have an annual capacity of around 3.4 million TEUs.
The vessel upsizing trend in the Asia-USWC will almost certainly continue, as carriers such as Maersk Line and CSCL have ordered 14,000-TEU vessels specifically for the trade.
Drewry has noted it's important for the West Coast ports to "step up" because they are losing some of their dominant market share to East Coast rivals, which will soon get a boost from the expanded Panama Canal. The canal is now scheduled to open in late June and will handle triple the maximum size of containerships that can call there.
The bottom line facing ports all over the world is that from now until 2019 carriers will need to find homes for 72 x 18,000+ TEU vessels. "There is much to be done," says Drewry. West Coast ports will have to gear up in terms of water depth, dock length, and cranes, "but there is also a need to improve the efficiency of how cargo is brought to and from the port complex via truckers (who are in short supply) and intermodal railroad."
Terminal automation will help to improve productivity, as would longer working hours to turn ports into 24/7 operations, but this would require more flexibility from union longshore workers — and how likely is that?
Meanwhile, introducing too many mega-ships to the West Coast ports before they are fully ready would most likely worsen productivity, rather than improve it, and could add days to move boxes at terminals, thus undermining West Coast competitiveness versus the East Coast, says Lawrence Gross, president of Gross Transportation Consulting of New Jersey, writing in IHS Media.
"Although bigger ships may optimize line-haul costs, they impose significant additional costs to the terminals and other land-side operators," he said.
"When volumes don't grow, and cargo comes in ever-larger but more widely spaced chunks, coupled with the requirement to turn those big ships rapidly, the terminal needs more of everything: more land, more cranes, more shuttle units and other equipment to handle the same volume delivered in smaller, more frequent doses," he said.
Ocean carriers "hold the upper hand because of their ability to shift volume away from any terminal that doesn't meet their requirements," Gross writes. "The massive investment needed to support the mega-ships in effect became the cover charge just to stay in the game."
Carriers are mainly concerned with how long the ship is tied up at berth, Gross adds. "What happens to the containers before and after they clear the ship's rail is a problem for the land-side players to deal with." he said.
Gross also poses a question that voices the fears of some industry insiders. "Will we look back a decade from now and see the (mega-ship) as an evolutionary dead end, a dinosaur that was too large to survive in a changing world?"
Ferries approach Florida ports regarding Cuba cargo, passengers
Ferry operators who want to transport cargo and passengers to Cuba have started negotiations with officials at several Florida ports.
Service has not yet begun because the Cuban government has not approved a U.S. ferry to use one of its ports, but ferries are expected to be a popular way to travel and ship cargo from Florida to the Caribbean island.
Jorge Fernandez, CEO of Havana Ferry Partners of Fort Lauderdale, tells The Tampa Tribune that the company recently met with Cuban government officials and is optimistic it will receive permission to set sail as early as June.
Fernandez is interested in sailing from Miami, Fort Lauderdale and Key West, but he has also been exploring ports in the Tampa Bay area. Port Manatee would be preferred over ports in Tampa and St. Petersburg, he said, while in Cuba a landing in Havana would be preferred over the port in Santiago.
A ferry from Port Manatee would take roughly eight hours to reach Havana. That's 90 minutes closer than St. Petersburg and three hours closer than Tampa.
Ferry service would be cheaper than baggage fees for a flight for passengers bringing bulk goods to family in Cuba, said Phil Richards, president of Havana Ferry Partners. Tickets would cost roughly $290, and the first 40 to 60 pounds of baggage would be free, he said.
The Tampa Bay area currently has no regularly scheduled cargo lines serving Cuba. Neither does the Port of Miami, though Port Everglades in Fort Lauderdale and the Port of Jacksonville do have regular cargo service to Cuba.
Port Tampa Bay is talking with ferries looking to connect the area to Cuba, said spokesman Andy Fobes.
"We have the terminals and the appropriate on-site regulatory agencies and facilities already in place to handle passengers,'" Fobes said, "and one day, once the embargo is lifted, cargo."
Port St. Petersburg, owned by the city, would likely host ferries carrying mainly passengers with limited cargo space, said executive director Walt Miller.
The infrastructure at Cuba's ports will be tested when U.S. cruise ships begin sailing there from Miami next month.
"The port facilities, cargo handling, security, customs, immigration — all of it will be under duress due to the cruises," said John Kavulich, president of the U.S.-Cuba Trade and Economic Council. "I don't see Cuba moving forward on ferries until they are comfortable with the cruise ship operations."
New train service linking China and Europe to open this year
A new cargo train service linking north China's Inner Mongolia Autonomous Region with Europe is to open soon, according to local authorities.
The new route will link Erenhot, an Inner Mongolian city bordering on Mongolia, with Europe via the Russian capital Moscow.
The cargo train will slash the Erenhot-Europe transportation time to just 12 days instead of about a month via shipping.
It will mainly carry goods such as auto parts, iron and steel products and daily necessities from Chinese cities of Hohhot, Baotou, Erdos and Ulanqab, and then return to China with Russia's wood and fertilizer, Germany's machine parts and northern Europe's packing materials, according to sources with the Erenhot government.
At least 20 trains have been scheduled on the route before the end of this year.
JAXPORT's new ICTF used for military training exercise
JAXPORT's newly completed Intermodal Container Transfer Facility (ICTF) at Dames Point is being used in support of a high-level military training exercise this month in advance of its official opening to commercial container movements later this year.
Prior to the start of the ICTF's commercial operations, JAXPORT is partnering with numerous U.S. Army units, including the JAXPORT-based 832nd Transportation Battalion, for exercises aimed at expediting the movement of ocean-going military cargo, rehearsing the capabilities of personnel as well as the new terminal.
During the exercise, uniformed Army personnel are moving nearly 800 pieces of cargo — including vehicles, containers and equipment — from this state-of-the-art facility onto a nearby military ship. The ICTF allows cargo to move directly between ships and trains, speeding up the shipment process, extending the port's intermodal reach well beyond Jacksonville and increasing the region's global trade competitiveness.
Construction of the $30 million ICTF was funded through state and federal grants. The facility is served by CSX rail lines.
JAXPORT is one of 17 U.S. strategic seaports on-call to move military cargo for national defense, foreign humanitarian assistance and disaster relief.
Canadian Pacific ends efforts to acquire Norfolk Southern
Canadian Pacific Railway abandoned its bid to buy Norfolk Southern Corp. after five months of public efforts and several rejected bids, dealing a setback to investor Bill Ackman, who championed the transaction.
The deal, valued at $27 billion, would have been the largest railroad merger since regulators changed their criteria for approving combinations in 2001. Norfolk, the second-largest railroad in the eastern U.S., had called that offer "grossly inadequate" and said regulators probably would scuttle the deal.
The abandoned bid means Canadian Pacific Chief Executive Officer Hunter Harrison must search for other ways to bolster profit under the oversight of Ackman, whose Pershing Square Capital Management is the railroad's second-largest shareholder. The carrier's effort to merge with Norfolk Southern drew opposition from customers such as United Parcel Service Inc. and FedEx Corp., as well as from the U.S. Department of Justice.
Ports America extends lease and plans $141M upgrade at Tacoma's Husky Terminal
Photo credit: Tacoma News Tribune
Ports America says it is investing in a significant expansion and 20-year lease extension of the Husky Terminal in Tacoma, Wash., a part of its strategy to increase its West Coast presence through additional investments, services and expansion of its terminal capacity.
International Transportation Service, Inc. (ITS), a joint venture between Ports America and "K" Line, negotiated an extension of its Husky lease with the Northwest Seaport Alliance (NWSA) through 2046.
Ports America is an equity holder and service provider to Husky Terminal. Included in the lease extension is a planned $141 million expansion project, expected to be completed by July 2018, which will "greatly enhance" the terminal's capacity.
The upgrade will provide the Husky Terminal with approximately 104 acres of leased and preferential berthing area in this major gate port in the Pacific Northwest. In addition, NWSA has agreed to order four of the largest, most modern gantry cranes and complete yard and gate improvements. Upon completion, the newly-designed Husky Terminal will be capable of simultaneously accommodating two 18,000-TEU mega-container vessels.
Ports America is a 30-percent owner of ITS, with the remaining interest owned by "K" Line. ITS has been operating container terminals for 40 years in the ports of Long Beach (Calif.) and Tacoma, providing services to major shipping lines including "K" Line. Ports America has a long-established relationship with "K" Line and is pleased to provide world-class terminal operations and process excellence to its distinguished partner.
Ports America, based in New Jersey, currently operates in more than 42 ports and 80 locations.
Hearing to focus on maritime transportation safety, including SOLAS
The Coast Guard and the House Maritime Transportation Subcommittee, chaired by U.S. Rep. Duncan Hunter (R-CA), will hold a hearing in D.C. today on the status and implementation of maritime transportation programs, including SOLAS container weighing rules, according to a committee statement.
Significant Coast Guard rules affecting the maritime industry will be discussed, including towing vessel safety, cruise vessel safety and security, and ballast water and incidental discharges. In addition, Congress has recently passed two Coast Guard authorizations that provide new maritime regulatory requirements.
Further, in 2014, the International Maritime Organization approved changes to the International Convention for the Safety of Life at Sea (SOLAS) relevant to container weights. The Coast Guard implements SOLAS on behalf of the U.S.
On March 14, 2016, a group of 49 shipping industry representatives sent a letter to the Coast Guard to relay concerns that carriers may interpret the new regulation to require a shipper to certify both the cargo and the carrier's container. The shippers state that implementing the SOLAS regulation in this way is "contrary to the practical realities of our United States export maritime commerce and fundamentally flawed conceptually."
The Subcommittee will hear from the Coast Guard, the Transportation Research Board of the National Academies of Sciences, Engineering, and Medicine, the American Waterways Operators, the International Cruise Victims Association, Inc., the Agriculture Transportation Coalition and the National Association of Waterfront Employers.
The Subcommittee hearing, "Maritime Transportation Safety and Stewardship Programs," is scheduled to begin at 10:00 a.m. on Thursday, April 14, 2016, in 2253 Rayburn House Office Building in Washington, D.C.
RDML Paul Thomas, Deputy Commandant for Prevention Policy, U.S. Coast Guard
R. Keith Michel, Committee Chair, Transportation Research Board, National Academy of Science, Engineering, and Medicine
Thomas Allegretti, President and Chief Executive Officer, American Waterways Operators
John W. Butler, President and Chief Executive Officer, World Shipping Council
John Crowley, Executive Director, National Association of Waterfront Employers
Donna Lemm, AgTC SOLAS Committee Chair, VP, Mallory Alexander International Logistics
Kendall Carver, Chairman, International Cruise Victims Association, Inc.
Port of Charleston attracts new warehouse facilities
Two new warehouse facilities are taking advantage of growing container volume at the Port of Charleston.
Lineage Logistics said it has opened the region's largest cold-storage warehouse, a 180,000-square-foot building at Palmetto Commerce Park in North Charleston. The warehouse has access to the port via U.S. Interstate 26 and a Norfolk Southern rail line.
"Charleston has it all — first-rate infrastructure, great access, a top-ranked port and a skilled workforce," Lineage CEO Greg Lehmkuhl said in a statement. "The feedback we've received to date is that our newest facility is opening in the right location at the right time."
Lineage joins a 136,000-square-foot cold storage warehouse operated by New Orleans Cold Storage in North Charleston and a 121,000-square-foot facility operated by Atlanta-based Agro Merchants Group near Summerville.
Poultry, meat and other grocery products account for more than 6 percent of the State Ports Authority's total exports and are one of the fastest-growing cargo segments. To handle the growing numbers, the SPA plans to spend nearly $18.5 million over the next three years on improvements to its refrigerated cargo facilities, including a new refrigerated cargo yard and more electric outlets for refrigerated boxes at the Wando Welch Terminal in Mount Pleasant, the port's largest container terminal.
The SPA "has worked diligently to expand our capacity for temperature-sensitive products, including investments in on-terminal capabilities and expansion of our refrigerated cargo infrastructure," said Jim Newsome, the maritime agency's president and CEO.
Tianjin port expects big volume increase by 2020 on free trade zone
China's Tianjin port is expected to see a marked increase in throughput by 2020 thanks to rising cargo volume after the north China city was allowed to pilot free trade zone.
"We will strive to improve the throughput to 650 million tons by 2020...to support Tianjin city to develop into a key international shipping center in the China's north," Zhang Liyi, spokesperson of Tianjin Port Co., said on Sunday.
As the world's fourth largest port, Tianjin handled 540 million tons of cargo last year, almost flat with the volume seen in 2014.
The Tianjin Free Trade Experimental Zone was inaugurated in April 2015 to further open up and stimulate trade amid a sluggish global economic recovery.
The cargo and container throughput will see steady improvement this year, Zhang said.
The port will also strengthen cooperation with companies in railway transport and shipping to facilitate goods trade with foreign countries, Zhang added.