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Summary for April 30 - May 4, 2007:

Containership inbound for Tacoma rescued

The Washington state–funded rescue tug Gladiator, for the fourth time since the start of the winter season, Apr 26 was sent to rescue a vessel just outside the Strait of Juan de Fuca.

This time it was the 758-ft containership Scotland, which lost power eight miles northwest of Cape Flattery as it was about to enter the Strait en route to the Port of Tacoma.

The US Coast Guard directed the Scotland to move offshore and await arrival of a tug escort. Using its backup generator, the ship changed course to wait a safe distance off the Washington coast.

The rescue tug Gladiator left its homeport of Neah Bay and escorted the containership to Port Angeles, while another tug, the Jeffrey Foss, took over escort of the Scotland for the final leg of its journey into Puget Sound.

Funding for the rescue tug is nearly exhausted this year, and the current deployment of the Gladiator will end on or about May 3, according to the Washington state Dept. of Ecology.

Matson increases fuel surcharge

Matson Navigation Co. Apr 23 announced an increase in its fuel surcharge effective May 6.

Matson, a subsidiary of Honolulu-based Alexander & Baldwin (Nasdaq: ALEX), said the new fuel surcharge will be 20.75%, an increase of 1.25 percentage points from 19.5%, its current rate.

“Current trends are on the rise again and returning to record-high levels,” Matson spokesman Jeff Hull said. “This is due to an increase in bunker fuel and other energy-related costs.

Horizon announced last week that it will raise its fuel surcharge 1.25 percentage points to 20.75%, also effective May 6, while Pasha Hawaii said it will raise its surcharge 2 percentage points to 19.5%, effective May 9.

Matson’s prime competitor, Charlotte-based Horizon Lines (NYSE: HRZ), made a similar announcement on Apr 18.

This is the first time the surcharge will be greater than one-fifth of the basic shipping charge.

Arizona wants oversight of railroads

The Arizona Senate by a vote of 26-0 Apr 26 approved a bill that would require new state regulatory oversight of railroads using eminent domain to acquire property.

Both major railroads operating in Arizona — Omaha, NB–based Union Pacific and Forth Worth, TX–based Burlington Northern Santa Fe — oppose the bill.

Supporters include agricultural groups and land owners of property in two areas being considered by UP for planned or possible projects.

One possible project is near Picacho Peak in Pinal County, where the railroad wants to build a new switching yard off a stretch of its Sunset Route mainline.

The second is a possible new spur line that might cross farmland near Yuma to reach Mexico to serve a proposed new seaport.

When initially proposed in the Senate, the bill would have required that railroads obtain approval from the state Corporation Commission to use existing eminent-domain authority to compel land sales.

Trade, worries grow in So Cal

TRADE through Southern California ports will hit record highs again in 2007, but experts warned of several developing problems and rising objections to the public health cost of moving international goods.

Traffic at the ports of Los Angeles and Long Beach will rise more than 9% to 17.8mn containers in 2007, the Los Angeles Economic Development Corp. said in its International Trade Trends and Impacts report for Southern California.

But the study warned that the railroad system serving the region is nearly at capacity already, while fees on cargo containers, proposed to help defray the costs of pollution reduction, might drive some business to other ports.

Anger continues to rise among neighbors and environmentalists over traffic congestion and unchecked diesel emissions from ships, trucks and other port equipment, the report said.

Concerns also are rising over upcoming negotiations between the International Longshore and Warehouse Union and the shipping companies that employ them on a contract that expires in 2008.

Another worry, it said, is the cost and implementation of the Transportation Workers' Identification Credential, a federally mandated ID card that will affect port workers, shipping companies and truck drivers.

Matson leads A&B profits

ALEXANDER & BALDWIN Inc. (NASDAQ:ALEX) Apr 30 reported that its revenue for 1Q 2007, led by real estate and its Matson subsidiaries, rose 6.7% to $385.0mn compared with $360.6mn for 1Q 2006.

“We started the year on a solid note, led by double-digit operating profit gains in our real estate leasing and integrated logistics segments, and sustained strong volume in our hina service,” said W. Allen Doane, A&B chairman and CEO.

In 1Q 2007, Doane said, Matson’s Ocean Transportation operating profit of $18.8mn improved over 1Q 2006 by 3%, due chiefly to the profitable ocean transport service from China.

While the Hawaii service experienced modest cyclical declines in container volume and a more significant drop in auto volume, he said these were offset by favorable yields and a better cargo mix.

Matson Integrated Logistics realized a 19% increase in operating profit from the prior year, continuing apace with its exceptional growth trajectory of the past five years.

“Despite a 5% drop in revenues,” Doane said, “MIL improved its operating margin by 110 basis points, which is attributable to higher yields in its truck and rail segments, as well as by its emerging expedited service line.”

US trucks to operate in Mexico

US Secretary of Transportation Mary E. Peters Apr 30 announced that US trucks will begin operating in Mexico for the first time ever, starting at the same time Mexican trucks begin operating north of the commercial border zone in the US.

“We are working to give American truckers an unprecedented opportunity to compete in a substantial new market,” Peters said. “This announcement puts the program on track to lower costs for US consumers, make our economy more competitive, and give US truckers new business opportunities.”

In February, the Department of Transportation announced a year-long demonstration program to expand cross-border trucking operations with Mexico.

Peters noted that the improvements to the demonstration program are a result of recent conversations with the Mexican government and the US Congress.

The Department is seeking comment on the program over the next 30 days. The elements of the trucking program are discussed in a Federal Register notice also issued Apr 30.

As part of the program, US inspectors will conduct in-person safety audits to ensure participating Mexican companies comply with US safety regulations.

Indians, SSA Marine to build Tacoma terminal

The Puyallup Tribe Apr 30 announced a long-term agreement with SSA Marine Inc. to develop and operate a privately funded, $300mn container terminal on the East Blair Waterway, Tacoma, WA.

The terminal will have two berths for ships, with both the Puyallup Tribe and SSA Marine contributing property.

Construction of the facility will be completed in approximately 4-5 years, with no public funding required.

“This partnership will benefit the entire region,” said Herman Dillon, chairman of the Puyallup Tribe. “Several thousand high-paying jobs will be created, and the container shipping volume of the port will be significantly expanded.”

“This agreement has been 25 years in the making,” said Tribal Councilman Bill Sterud. “We had a vision back then of the potential of what the port property could be.”

Jon Hemingway, president and CEO of SSA Marine, agreed. “We are very excited about our new agreement with the Puyallup Tribe,” he said. “SSA Marine has had extensive operations in Tacoma for more than 50 years, and we look forward to this exciting opportunity to invest in the economic future of this area.”

APL signs for five new vessels

APL, the container transportation arm of Neptune Orient Lines, Apr 25 announced it has signed a charter agreement for five new post-Panamax container vessels.

The ships will each have a nominal capacity of 7,000 TEUs and will be deployed in the trans-Pacific trade beginning in 2009.

APL CEO Ron Widdows said, “Growth in the Transpacific has consistently exceeded industry expectations. The relationship between ship supply and demand in the trade is forecast to narrow between 2007 and 2009. These vessels will enter service at a point that additional capacity will be required.”

The vessels are being built at Hyundai Heavy Industries in South Korea and will be chartered for five years from German owners Bernhard Schulte.

In the near term, APL will introduce seven containerships into its fleet in 2007, raising its capacity by around 10%. APL’s fleet currently comprises 110 vessels.

APL is a global container transportation company offering more than 60 weekly services and nearly 300 calls at more than 90 ports in Asia, Europe, the Middle East, and the Americas.

VPA to raise truck standards

The British Columbia Vancouver Port Authority (VPA) Apr 30 announced that it will introduce more rigorous container truck safety and environmental standards by July 2007.

The VPA also registered its support for ongoing container truck inspections and called on its transportation industry partners to implement tougher inspection standards.

“Recent safety inspection results confirm the container trucking industry in the Lower Mainland needs to take a serious look at how it manages safety standards,” said Chris Badger, Vancouver Port Authority vice president, customer development and operations.

During a three-day safety inspection conducted by Delta Police and the BC Ministry of Transportation along Deltaport Way the last week of April, 114 out of 250 container trucks singled out for inspection failed to meet the safety standards, according to the port.

“These results are unacceptable to the port authority, to the communities in which we operate, and to the trucking industry as a whole,” said Badger.

The Port of Vancouver is the only major North American port that operates a container truck licensing system, said the port.

Truckers’ protest slows LA-LB ports traffic

Traffic in the San Pedro Bay port complex was said to be unusually slow May 2 as thousands of truck drivers boycotted marine terminals in coordination with national immigration reform protests.

"We're here supporting an amnesty for immigrants and changes in immigration law and making a statement about truck driver working conditions," said Hernando Gomez, a port trucker for the past six years. "Our working conditions now are very bad."

Some 14,000 truck drivers transport goods in and out of the San Pedro Bay ports daily, many of the drivers immigrants from Mexico and Central America.

At the Port of Los Angeles, port spokeswoman Miaesha Campbell said container truck traffic was thinnest at the APL and Yang Ming terminals, but appeared to be picking up as the day progressed.

In the Port of Long Beach, port spokesman Art Wong said shippers reported light traffic as well, with some terminals saying they were less than half as busy as they normally are.

Authorities in both ports said boycotts were peaceful and that on-dock staff members were reporting to work.

Inland hubs coming on: The Allen Group

The inland port is going to be the next big thing, according to Jon Cross, director of marketing for The Allen Group, a San Diego–based commercial real estate developer.

“We go where the rail hubs are,” Cross told MD&CBN at CoreNet in Denver, the largest industrial real estate conference in the US.

One of the benefits to leasing packages in these projects is the ability to greatly reduce drayage costs per mile, a crucial, and potential costly, distribution mode, Cross said.

The Allen Group is involved in the Dallas Logistics Hub, which includes 6,000 acres of industrial land with multi-mode connections.

Cross said the Dallas Logistics Hub and another Texas-sized competitor, Alliance Group, Ross Perot Jr’s regional logistics hub project, are the first two such mega-complexes in North America.

The Allen Group’s Kansas City Logistics Park is the next big industrial hub project underway, Cross said.

IAPH continues in Houston

The 25th International Association of Ports and Harbors (IAPH) World Ports Conference continues today and Friday in Houston.

Port security and global trade issues are major topics at the conference, which began Apr 27.

Commerce Secretary Carlos Gutierrez and Homeland Security Deputy Secretary Michael Jackson were the featured speakers on Tuesday.

“Ports are the vehicle for economic growth,” said Gutierrez, and added, “This is not the time for protectionism. It is time to continue to engage and lead.”

US Homeland Security Deputy Secretary Michael Jackson emphasized that “Ocean shipping is a crucial part of the infrastructure, which we must protect.”

Jackson added, however, “We are not single-mindedly focused on security at all costs. Security and mobility are compatible.”

The conference is a “biennial reunion of the world port family to discuss issues of immediate and long-term interest and concern and to acquaint themselves with the state-of-the-art port and maritime technology showcased at conference exhibitions,” according to the IAPH.

CMA CGM launches new service

CMA CGM May 2 announced the start-up of a new dedicated service between Asia and North Africa, via its hub in Malta.

“This new service between Asia and North Africa is one of a kind on the market. It confirms our willingness to offer our North African customers a high performance service,” said Philippe Borel, deputy vice-president, Short Lines–North Africa Services.

The new North Africa Express will operate with seven 3,000-TEU ships calling on Shanghai, Ningbo, Hong Kong, Chiwan, Jakarta, Malta, Port Kelang, Jakarta, and Chiwan.

Via Malta, the North Africa Express will provide connections with CMA CGM feeders to Morocco, Tunisia, Algeria, and Libya.

The firm said it will offer competitive transit times, such as Chiwan to Algiers in 21 days or Shanghai to Tripoli in 24 days.

Its first ship on the new route, the CMA CGM JASMIN, will leave Shanghai on June 15.

Led by founder Jacques R. Saadé, CMA CGM is currently the world’s third-largest container shipping group, operating a fleet of 332 vessels serving 400 ports around the world.

UP, Norfolk Southern offer fast tracks

Union Pacific Railroad and Norfolk Southern Railway plan to significantly improve eastbound domestic transcontinental service from Los Angeles to the US Southeast beginning May 21.

They said the improvement in this high-volume lane will result from shifting traffic from the Memphis gateway to a new one in Shreveport, LA.

Nearly 150 miles shorter than the current route, the new route links UP’s Sunset Route – between Los Angeles and Texas – with Norfolk Southern’s and Kansas City Southern’s joint line which runs between Shreveport and Meridian, MS.

UP said standard service to Atlanta will improve by a day to fifth-morning availability.

Improvements on the new route will include standard service to Atlanta improved by a day to fifth-morning availability and Blue Streak premium service to Atlanta available on the fourth afternoon, covering 600 miles per day.

Cut-off times in Los Angeles have been moved to later in the day to allow more shipments to depart on the evening train.

All eastbound domestic shipments will originate at Union Pacific’s Los Angeles LATC Intermodal Terminal.

Westbound domestic service is expected to be shifted to the faster Shreveport gateway during the third quarter of 2007, UP said.


Nippon Yusen Kabushiki Kaisha (NYK) Apr 26 announced plans to equip 38 ships of its container vessel fleet with Alternative Maritime Power (AMP) technology over the next few years at a cost of $22mn.

“NYK will continue to make the environment its top priority,” said Kenji Mizushima, corporate officer, NYK Line. “Striving to develop and utilizing environmentally conscious engineering and equipment reinforces our company’s environmental policy of ‘The Earth Is Our Home.’”

In line with that theme, 20 new ships currently on order will be delivered with AMP capability, while 17 ships presently in service will be retrofitted with AMP technology during their regularly scheduled inspections, NYK said.

The Panamax and post-Panamax vessels range in size from 4,800-8,600 TEUs.

AMP technology allows a vessel to shut down the onboard diesel power generators while at berth and connect directly to more environmentally friendly shore-side electrical power.

Utilizing shore power while at dockside significantly reduces the vessel’s emission of gases, which contain pollutants such as carbon dioxide (CO2), nitrogen oxide (NOx), sulfur oxide (SOx), and particulate matter (PM), said the company.