Cargo Business Newswire ArchivesSummary for April 13 through April 17, 2015:
Monday, April 13, 2015
NRF: Imports at major U.S. retail ports to rise 8 percent in April
Import cargo volume at U.S. major retail container ports is expected to rise 8 percent in April year-over-year as West Coast ports continue to recover from severe cargo backups exacerbated by labor contract negotiations, according to the latest Global Port Tracker report from the National Retail Federation and Hackett Associates.
"Progress is being made but there’s still a lot of cargo waiting to be loaded onto trucks and trains and moved across the country even after it’s unloaded from the ships," NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. "The situation is getting better but we’re still far from normal."
Ports covered by Global Port Tracker handled 1.2 million TEUs in February, the latest month for which after-the-fact numbers are available, and historically the slowest month of the year. That was down 10.3 percent from January and down 3.6 percent from February 2014.
March has been estimated at 1.48 million TEUs, up 13.5 percent from 2014.
Looking ahead, April is forecast to be up 8 percent year-over-year at 1.55 million TEUs, May up 5.6 percent at 1.57 million TEUs, June up 4.3 percent at 1.54 million TEUs, July up 5.6 percent at 1.58 million TEUs, and August up 5.7 percent at 1.61 million TEUs.
"The disruption on the West Coast appears to be over and great measures are being taken to clear the backlog of ships sitting offshore," said Hackett Associates Founder Ben Hackett. "Of course, all those ships being discharged are causing landside issues as workers try to get containers out of the terminal gates and onto trucks and rail."
Global Port Tracker covers the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle, Tacoma, New York/New Jersey, Hampton Roads, Charleston, Savannah, Port Everglades, Miami and Houston.
FedEx buys TNT Express
U.S. package delivery giant FedEx will buy its Dutch rival TNT Express for $4.8 billion, aiming to expand European operations, according to a joint statement.
FedEx has offered shareholders $8.47 per share, a 33 percent premium on TNT's closing share price on April 2. The acquisition comes two years after United Parcel Service pulled out of a $5.5 billion bid for the Dutch company.
UPS pulled out of the deal following opposition from EU competition authorities, saying it saw "no realistic prospect" of approval from the European Commission.
Since then TNT has undertaken a restructuring program, cutting costs, selling operations and investing heavily in its road network to hold on to customers in what has been a weak European market for business package deliveries.
FedEx and TNT Express expect the deal to be completed in the first half of next year and say they are confident any European competition concerns can be overcome this time.
"This offer comes at a time of important transformations within TNT Express and we were fully geared to executing our stand-alone strategy," said Tex Gunning, chief executive of TNT Express.
Coast Guard: Ice on Lake Superior stalling ship traffic
Ice on eastern Lake Superior has stalled vessel traffic this week, with 18 vessels waiting Wednesday in Whitefish Bay to move through ice that’s eight-feet-thick in some areas.
"This is just crazy how much ice we have out there; we’ve had 35 square miles of ice descend upon and affix itself (to existing ice)," said Mark Gill, director of vessel traffic services for the U.S. Coast Guard, who likened Whitefish Bay to a bathtub drain that took in all of Lake Superior’s ice during several days of westerly winds dating back to last weekend. "The wind blew all the ice down from the open lake. It’s all packed in there and rolled up on itself."
The ships are staged in the ice waiting for Canadian and U.S. coast guard icebreakers to re-establish track lines through the bay. Six of the vessels are downbound — headed for the nearby Soo Locks — while 12 are upbound.
The U.S. Coast Guard cutter Alder, from Duluth, and the Mackinaw — the largest U.S. icebreaker serving the Great Lakes — have been chipping away with assistance from several other smaller icebreakers. Canada’s big icebreaker Pierre Radisson was set to join the fray later Wednesday.
"The ice is very mobile; there’s a lot of water in it," Gill said. "Hit with the icebreakers, it moves and doesn’t take the break. It’s been very slow to say the least."
Cargo volume at Port Panama City improved in March, officials reported at a Port Authority meeting this week.
"We had another good, strong month," said Port Director Wayne Stubbs. "We're almost on pace to do 2 million tons" in 2015, which would be a record for the facility.
Overall, March brought 91,000 tons of general cargo and 60,000 tons of bulk cargo through the facility.
Total tonnage for the first six months of the fiscal year was up 15 percent year-over-year, increasing from 842,000 tons to 980,000 tons. The number of vessels calling on the port has also increased from the same period last year, from 115 to 130.
The port authority is working on a project to finish site work at the Intermodal Distribution Center on U.S. 231 following a $200,000 bond settlement with a previous contractor for unfinished work.
The board moved to approve a $251,000 base contract with low bidder Sikes Construction to finish the job, which requires fill dirt to prepare the 54-acre parcel for development. The site recently received an industrial site certification through Gulf Power’s Florida First Sites program, which will likely attract new industry to the area.
About 6:10 p.m. Thursday, the fire department was alerted to a vehicle submerged in the water at Berth 73 at the Port of Los Angeles, according to fire department spokesman Brian Humphrey.
A 13-year-old boy died and another boy, 8, is in serious condition after they were trapped Thursday in a car that was submerged in the harbor, authorities said. Two adults were also in the car — firefighters and LAFD divers rescued the four individuals, according to authorities. Reportedly, the 13-year-old boy later died.
The vehicle was estimated to be about 30 feet underwater, Humphrey said.
Congestion diminishing at Ports of Los Angeles and Long Beach
The Marine Exchange of Southern California reported that there were six container ships waiting to be unloaded on Thursday at the ports of Los Angeles and Long Beach — the lowest level since early January.
It’s considered a vast improvement from the 28 container ships anchored off the coast on March 24 at the height of the congestion.
"The dwindling number of ships is an encouraging sign that our terminals, labor force and supply chain partners are working diligently to bring the carrier services back on schedule," said Port of Los Angeles Executive Director Gene Seroka. "This is being accomplished as we serve a growing number of larger-class vessels and alliance business — which represents a new level of complexity that we are collectively working to manage while improving operational efficiencies."
Port congestion has been caused by higher volume ships, a dearth of chassis, a shortage of rail cars and the new carrier alliances that have resulted in an organizational quandary in cargo handling. Plus, nine months of antagonistic labor talks caused productivity slowdowns at the docks.
Jon Slangerup, chief executive at the Port of Long Beach, said Thursday that the twin ports have been able to drop the number of container ships from 28 to six, a statistic he attributes to having adequate labor, more rail car availability and better trucking movement.
The West Coast port slow-down caused you to fail to deliver the goods under your supply or transportation contract. Are you liable to the customer?
By Robert Dow, Partner, Arnall Golden Gregory LLP
Although the unpleasantness at the West Coast ports has been partially resolved, there continues to be an unmanageable backlog with continued delays, and the losses have become enormous. By some estimates, retailers will suffer more than $7 billion in losses due to delays and lost sales. Do the retailers have to absorb all those losses, or is someone else in the supply chain going to be responsible for those losses?
If you are a supplier or transportation company with obligations to deliver those goods, you should make sure that the responsibility does not fall on you.
Significant contractual provisions
Well-drafted contracts should have provisions that address such problems. Below is a discussion of some of the most pertinent provisions.
Delivery Terms. As an initial matter, you must know the terms of your delivery obligations under your contract. Does your responsibility end as soon as the goods leave your loading dock? Or are you fully responsible for delivery at the end customer’s plant or store? Or does it fall at some point in between? And where is that point in relation to the port that is so backed up that the goods will not be moved until several weeks too late? INCOTERMs or other standard industry terms may dictate the initial delivery obligation, subject to the additional terms discussed below.
Force Majeure Clause. Many contracts have a "force majeure" clause that absolves the party from liability in case of events beyond the party’s control. If your contract lacks such a clause, this could greatly increase your exposure. If you do have a force majeure clause, the devil may be in the details. Is it broad enough to cover events such as: labor disputes which fall short of a formal strike; or the failure of another intermediary to deliver the goods; or a shortage of other supply chain capacity due indirectly to the port’s labor disputes?
Indemnification Clause. Contracts frequently include an indemnification clause whereby one party takes responsibility for losses of the other party in the event that specified events go wrong. If your business routinely uses contracts containing an indemnity clause, you should ask yourself an important question: Does that provision require you to indemnify your contract partner in the event that a loss is caused by his own negligent acts? Generally, the law resists putting the burden of negligent acts upon an innocent company and instead encourages people to proceed carefully, rather than recklessly, knowing that someone else will bear the risk. Thus, a company expecting indemnification for its own negligent acts must usually include express language to that effect in its contracts. Although many states follow this general rule, judicial interpretation varies. When it comes to indemnification, it’s not only what you say, but how you say it, that counts.
Demurrage and Detention. Port delays may lead to goods being stuck in ships, trucks, train cars, and intermediate warehouse facilities where they don’t belong for such long times. There could be significant delays in unloading the cargo due to the back-ups in the supply chain. Transportation contracts may have demurrage and detention provisions governing costs related to such events. Now would be a good time to be an expert in any such provisions included in your contracts.
Standard of Care. Some contracts include a provision governing the standard of care in handling goods. The provision likely will reference "industry standards." Companies subject to such a provision need to make sure they are following industry best practices in dealing with the current crisis. What kinds of options or alternative solutions are being used in your industry sector? If everyone else is finding a way to get the goods there, and you’re falling down, this scenario may affect your liability.
Spoilage. The contract should address who is responsible for the spoilage incurred when perishable goods arrive late.
For more of the Arnall Golden Gregory story: www.agg.com
Samsung Heavy scores record ship building order from OOCL
Samsung Heavy Industries set a record for the world's largest container ship order this week with the signing of a deal to build six 21,100-teu container ships from OOCL.
The order of six super-sized container ships was finalized on April 1 and is valued at approximately $950-million.
The South Korean shipyard is setting itself apart as an ultra-large container ship builder with ten of the 12 vessels of more than 20,000-teu ordered thus far globally being built by the yard.
Samsung Heavy Industries confirmed in a statement that the six-vessel order contains options for six more, so the total value of the contract is likely to grow significantly in the coming years.
These new container ships will be at the very edge of the current plateau of length at 400 meters, with a 58.8-meter beam and the ability to carry 21,000 TEUs.
The cost of transporting each container aboard an 18,000-TEU vessel is around 50 percent lower than other container ships.
The Port of Virginia posted an all-time container volume record in March.
"In March we handled 229,000 TEUs, which averages to 7,400 TEUS each day and that is a significant amount of volume on a day-in, day-out basis," said John F. Reinhart, CEO and executive director of the Virginia Port Authority. "We were 16 percent ahead (31,500 TEUs) of the same month last year."
The record volume forced the port’s operations team to take a series of immediate measures to address the volume and restore operational tempo, according to the port statement. The interim remedies included steps to reduce density in the stacks, a temporary embargo on empty containers arriving by rail, the addition of more cargo handling equipment and extended operating hours at the gates, did help to alleviate the congestion, Reinhart said.
"That amount of volume, some of which was carried over from February, presented a challenge to our team at every phase of the operation and it was most acute at Virginia International Gateway, where our operational consistency was overtaken by sheer TEU volume: our delivery of service at the VIG gate for the first three weeks of March was unacceptable."
In March the port’s total for truck moves was up 17 percent; rail containers, up 17 percent; Virginia Inland Port volume, up 3 percent; barge containers, down 6 percent; and vehicle units, up 148 percent. Thus far into the calendar year, the port’s TEU volume is up 10 percent compared with the same period last year.
Tug boat dragged by cargo ship crashes into oil tanker
A runaway cargo ship on the Mississippi River Monday dragged the tugboat connected to it down the river until both crashed into an oil tanker docked at a terminal in St. James Parish.
The crew of the tugboat Texas — tethered to the out-of-control coal-laden M/V Privocean — tried to push on the Privocean’s bow to avoid the crash, according to a federal lawsuit brought by the tug’s owner.
The Texas ended up being smashed between the Privocean and the tanker M/T Bravo. Two other tugs holding the Bravo in place were also damaged.
Crescent Towing and Salvage of New Orleans claims in its lawsuit that four tugboats were damaged when the Privocean broke free and hit the Ergon terminal and the Bravo.
China's trade dropped in March by a surprisingly wide margin, sparking speculation that Beijing will launch new stimulus measures to bolster its economy.
Exports fell 15 percent compared year-over-year to $144.6 billion following a 20.5 percent drop the previous month, customs data showed Monday. Imports declined 12.7 percent to $141.5 billion.
The decline fueled concerns that economic growth in the first three months of this year, due to be reported this week, fell further after declining to 7.3 percent in the final quarter of 2014.
The weakness "represents not only monthly volatility but also further weakness in foreign trade, adding uncertainties to economic recovery," Citigroup economist Minggao Shen said in a report.
N.Y./N.J. port truckers cause "traffic nightmare" for commuters
In an effort to end the week-long traffic nightmare for morning rush hour commuters using the Turnpike Extension, the Port Authority of New York/New Jersey has started "vigorously enforcing" restrictions on when trucks can begin lining up to get into the Global Marine Terminal port facility.
In the past two months, there has been a 15 percent increase in cargo imports in the area, according to the Port Authority. Rick Larrabee, director of the Port Authority's Port Commerce Department, attributed that increase to the recent labor dispute at U.S. West Coast ports.
The bi-state agency set up barricades Saturday to prevent trucks from queuing up outside the facility before 5:30 a.m., according to Larrabee. If truckers attempt to line up in the vicinity, causing traffic congestion on the Turnpike Extension, the Port Authority police will issue them tickets, he said.
The Association of Bi-State Motor Carriers, which represents 70 percent of the intermodal traffic in the ports of New York and New Jersey, said trucks have been lining up early to get into the port facility partly because of an increase in container volume.
Port of Lewiston shippers impacted by Portland’s shipping line loss
The Port of Portland has now lost shipping line Hapag-Lloyd as well as Hanjin Shipping, decimating the port’s container business. Farmers more than 400 miles up the Columbia River that typically use the Port of Lewiston, Idaho, are scrambling to book trucks for their cargo containers.
Many of the farmers’ shipments were already late because labor struggles at West Coast ports have caused a backlog of work.
The Hapag-Lloyd announcement came about a month after Hanjin Shipping Co. made the same decision. Together, the shipping lines had accounted for virtually all of the Port of Portland's cargo-container business in recent years.
While Hapag-Lloyd carried only about 20 percent of the Port of Portland's containers, it accounted for 90 percent of the Port of Lewiston in Idaho.
Before the announcement, Hapag-Lloyd had stopped giving containers to anyone who wanted to send them back through the Port of Lewiston to be put on a barge, which would sail down the Columbia Snake River channel, get transferred to a ship in Portland and then shipped to customers in Europe, the Middle East or South America.
Now farmers can only load their dry peas, lentils and garbanzo beans into containers that would be sent by truck to ports in Seattle or Tacoma.
The inland Port of Lewiston is 365 miles farther from the Pacific Ocean than Portland, beyond the reach of major shipping lines. Port customers depended on barges to transport 40 percent of the country's wheat exports and thousands of containers a year of "pulses" - legume crops including chick peas, lima beans, lentils, peanuts, dry peas and soybeans.
In the longrun, losing the container terminal isn't a catastrophe for the Oregon economy or the region's businesses. But it could be devastating for some farmers and manufacturers up the Columbia River.
"The Port of Lewiston is only as competitive as the Port of Portland is competitive," said Lewiston manager David Doeringsfeld. "It'll end container shipment on the Snake."
OODIA petitions appeals court to intervene in cross-border trucking suit
The Owner-Operator Independent Drivers Association filed a petition with the U.S. Court of Appeals for the Ninth Circuit to intervene in a cross-border trucking lawsuit against the U.S. Department of Transportation and the Federal Motor Carrier Safety Administration.
The lawsuit, filed in March 2015 by the Teamsters and safety advocate groups, challenges the government’s decision to grant permanent operating authority to Mexico-domiciled trucking companies conducting long-haul trucking services throughout the U.S., according to an OODIA statement.
The association’s petition states that as the representative of small-business truck drivers, OOIDA can bring a unique practical and legal perspective compared to the other petitioners regarding the ability of Mexico-domiciled trucking companies to operate safely on U.S. highways. Additionally, the motion points out that the economic interests of small-business truck drivers differs from the interests represented by the other petitioners.
OOIDA contends that the U.S. DOT’s three-year pilot program did not generate enough data to reach an informed conclusion about whether the border should be opened. It questioned the validity of the information collected during the pilot program. OOIDA contends that the border should not be opened until Mexico establishes equivalent regulatory trucking standards as those of the U.S. and proves that its trucking industry can fully comply with U.S. safety regulations.
The Owner-Operator Independent Drivers Association is a national trade association representing the interests of small-business trucking professionals and professional truck drivers, with more than 150,000 members nationwide.
Two sailors stabbed to death on cargo ship
Two Chinese mariners were stabbed to death and another was injured during violence among crewmembers on a cargo ship that contacted Filipino authorities for medical help, police said Sunday.
According to Zamboanga Police Director Angelito Casimiro, Philippine authorities boarded M/V Qing May after it docked and took an injured Chinese crewman to a hospital in Zamboanga City early Sunday with the permission of the ship's captain.
The bodies of two other Chinese crewmen, which had stab wounds, remained on board the ship.
The Liberian-flagged ship with a crew of 25 Chinese sailors was en route to China from Australia with a cargo of iron ore when it radioed for help while passing near the southern Philippines.
Filipino investigators were looking for an interpreter to talk to the Chinese and establish what happened.
FMC study examines solutions to port fee penalties
The Federal Maritime Commission is researching how to help stem congestion at the nation’s ports, possibly by acting on shipping violations and making changes to the way fees are charged by terminal operators and ocean carriers.
The 64-page commission report outlines the concerns made by importers and exporters that the fees being charged against them are unfair because of port congestion, an issue they say is beyond their control.
For the past several months, major U.S. ports have been dogged by bottlenecks due to supersized ships carrying more volume, uneven chassis distribution, a shortage of railcars and months of labor slowdowns due to contentious contract talks between dockworkers and their employers. While the ports are quickly addressing the backlog and are seeing some relief, other congestion-related issues remain.
The commission’s report, based on information gathered from the agency’s four congestion forums that took place in fall 2014 and follow-ups with stakeholders, centered around the issue of fees charged against importers and exporters who say the penalties are unfair.
Normally, marine terminal operators and shipping lines will charge space and equipment fees to encourage faster cargo movement and to prevent importers and exporters from holding onto equipment or using yards as warehouses, according to the report.
But congestion has made it difficult for them to move cargo in a timely manner. Often, truckers are turned away from terminals because the cargo they’re picking up is buried in terminal yards, forcing them to leave containers beyond the "free time," according to the report. With equipment, such as empty containers, customers are being told by terminals that they can’t accept them because yards are full. However, customers continue to be charged daily for keeping that equipment.
"One shipper has told commission staff that it has paid over $100,000 in demurrage charges (for failing to unload promptly) in the past year, as compared with paying approximately $10,000 for the previous year," said the report. "This disparity highlights shippers’ perceptions that demurrage charges are not serving to speed the movement of cargo, the purpose for which those charges had originally been intended. Shippers feel they are in a ‘Catch-22’ when they are not permitted to pick up their container because of [marine terminal operators] congestion, and yet are charged demurrage."
The report outlines ways that the industry can address the problem, including carriers who could lower or waive fees, marine terminals that could improve gate operations with technology, and port authorities that could add mandates or incentives to improve terminal productivity.
Small exporters to take big hit from strong dollar
Small U.S. exporters will increasingly take a big hit from the strong dollar.
The dollar’s surge of about 25 percent since mid-2014 is making U.S.-made goods more expensive to foreign buyers and imports cheaper, and is stoking competition. For small firms the squeeze is inescapable, and it’s only just beginning.
The rapid rise of the dollar "is a hard knock for any company, and it’s harder for small exporters," many of which sell specialty products often less than $1,000 a shipment, said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington. "The short-term outlook is painful."
Companies with less than 500 workers accounted for about a third of the $1.6 trillion in goods sold overseas, according to 2013 data released by the Census Bureau. Six out of 10 shipped their products to just one foreign market, and 92 percent operated from a single location.
"It is harder for us to now get those customers," said Greg Smith, vice president at Freund-Vector Corp., a maker of equipment used in processing medicines and powders. "We sell 50 to 60 systems a year, so even losing two or three sales could be devastating." The Marion, Iowa-based company relies on exports for 70 percent of its $40 million in annual revenue.
Genco Shipping and Trading Limited and its subsidiary Baltic Trading Limited announced that they have entered into a definitive merger agreement in which Genco will acquire Baltic Trading in a stock-for-stock transaction.
The combined company expects to extend its leadership position in drybulk shipping and own a combined fleet of 70 drybulk vessels with an average age of 8.8 years and an aggregate carrying capacity of approximately 5,159,000 dwt. Included are 13 Capesize, eight Panamax, 21 Supramax, four Ultramax, six Handymax and 18 Handysize vessels, after the expected delivery of two Ultramax newbuildings previously contracted by Baltic Trading.
"This transaction is a natural evolution for Genco and Baltic Trading, and we are confident that it will deliver superior value to the shareholders of both companies," said Peter C. Georgiopoulos, chairman of the Genco, in the statement. "The combined company will be poised to capitalize on opportunities in the current market environment, and we believe the combined platform is well positioned for continued growth as a consolidator in our industry. We look forward to completing this transaction, which has been approved by both companies' independent special committees, and building on our position as a leader in international drybulk shipping to create value for our shareholders."
Upon completion of the transaction, Genco shareholders are expected to own approximately 84.5 percent of the combined company and Baltic Trading shareholders are expected to own approximately 15.5 percent of the combined company. Genco expects to have its stock listed on the NYSE.
China South Rail buys UK maritime engineering term
A subsidiary of train maker China South Rail has bought a UK manufacturer of ocean engineering products, Specialist Machine Developments.
Zhuzhou CSR Times Electric has paid $190 million for the firm. SMD will remain independent in its business operations, and day-to-day functions will still be controlled by its original management team.
CSR president Liu Hualong said it would help SMD expand its operations and explore further global opportunities.
The Tyneside firm makes remotely operated underwater vehicles and advanced submarine engineering machines, including for underwater mining. It exports to 30 countries. A Chinese subsidiary of SMD will be set up to develop its presence in the maritime market in that country.
The purchase fits into China's broader strategy to acquire foreign technology and market access.
A cargo ship ran aground on the Delaware River Tuesday morning.
The 32,000-ton Nord Explorer cargo ship ran aground around 4 a.m. Tuesday near the Riverton Yacht Club, at the mouth of the Rancocas Creek near Riverside, N.J.
No injuries or fuel spills were reported, according to a U.S. Coast Guard spokeswoman.
The ship had already unloaded its shipment of salt and was empty when it ran ground during low tide.
Import cargo volume at U.S. major retail container ports is expected to rise 8 percent in April year-over-year as West Coast ports continue to recover from severe cargo backups exacerbated by labor contract negotiations, according to the latest Global Port Tracker report from the National Retail Federation and Hackett Associates.
The Marine Exchange of Southern California reported that there were six container ships waiting to be unloaded on Thursday at the ports of Los Angeles and Long Beach — the lowest level since early January.
China's trade dropped in March by a surprisingly wide margin, sparking speculation that Beijing will launch new stimulus measures to bolster its economy.
The Federal Maritime Commission is researching how to help stem congestion at the nation’s ports, possibly by acting on shipping violations and making changes to the way fees are charged by terminal operators and ocean carriers.