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Summary for May 2 - May 6, 2011:
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Monday, May 2, 2011

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Up Front: One terrorist changed global security forever

Special Editorial by Peter Hurme, Senior Editor, Cargo Business News

For the past decade, the name of one person has been synonymous with death, destruction, terror, and tragedy. However, the names of the now deceased Osama bin Laden, and his still-active terror group, Al Qaeda, were also directly connected to an overhaul in how U.S and global security was to be conducted, especially in the transportation sector.

President Barack Obama made a nationally televised announcement on May Day, 2011, that the leader of terror group Al Qaeda, those behind the attacks on the United States on September 11, 2001, was killed after a 40-minute firefight in a compound near Islamabad, Pakistan.

The biggest change sparked by the 9/11 attacks was the creation of a new Department of Homeland Security and folding a number of major U.S. government departments under that umbrella – a Herculean task that was more or less accomplished (depending upon who you ask) in record time.

You can now put any word in front of the word "security" and it takes on a serious resonance that meant little to most people before 9/11: Airport, seaport, transportation, supply chain…security.

As a result, the way we fly has changed irrevocably. Nothing has impacted the average person more nor received more press when it comes to security news.

Air cargo and ocean shipping containers aren't just boxes to stow freight in, but have targets on them, too.

Those engaged in moving global freight, especially in and out of the world's top economy, faced – and still face – a growing list of labyrinthine, costly regulations.

There has also been the onslaught of evolving security solutions, strategies and tactics these past ten years that have spurred decidedly mixed opinions on their effectiveness.

While the news of the world's most notorious criminal meeting his deserved end is heartening on so many levels – not least of which, to those who suffered deep loss that fateful September day – victory cannot yet be declared.

Terrorism is a moving target, and while we may have slowed that target down for a moment, we'd be fooling ourselves to think it won't be on the move again.

Sunday, May 1, 2011 is not a bookend to 9/11/01.

The global supply chain is still vulnerable, thanks to the dark legacy of Al Qaeda and those affiliated with such underhanded endeavors.

The end result is that there is no end result.

But this day is still worthy of elation, and remembrance.

U.S. security threat level remains un-changed

Department of Homeland Security Secretary Janet Napolitano said the U.S. government currently has no plans to raise its terror alert level in the wake of Osama bin Laden's shooting death in Pakistan yesterday by an American military force.

Napolitano said elevated terror alerts would be instigated in the event of credible intelligence.

The lack of a further heightened national terror alert has not stopped airports and public transit systems from increasing their respective security levels, such as at Boston's Logan Airport and the New York subway system.

The U.S. government under President Barack Obama did away with the Bush administration's color-coded terror alert system, instead broadcasting specific alerts to the public.

Horizon Lines' reduced criminal fine eases bankruptcy concerns

Charlotte-based Horizon Lines announced a federal criminal fine it received for fixing shipping rates was lowered from $45 million to $15 million over five years without interest, potentially keeping the largest U.S. domestic container-shipping line out of bankruptcy.

"The fine reduction...will facilitate our efforts to secure new long-term financing. We remain in constructive discussions as we continue to move forward with our refinancing efforts," said Chief Financial Officer Michael Avara in a statement, as reported by Reuters.

Horizon Lines pled guilty to one felony count of fixing shipping rates on shipments to Puerto Rico.

For the full Reuters story:

China's manufacturing index dipped in April

China's manufacturing slowed up in April after a slight rebound in March, with a drop in new orders, especially for exports, according to data compiled by the China Federation of Logistics and Purchasing.

The CFLP's Purchase Manager's Index slipped to 52.9 from March's 53.4, which had rebounded from three months of softening.

Levels above the 50.0 mark equate to manufacturing expansion in the PMI.

The CFLP's PMI has been above the 50 mark for 26 straight months.

Fifteen of the 20 industries surveyed in the PMI showed expansion in April, compared with 16 in March, according to the CFLP.

Textiles, pharmaceuticals, transportation equipment, chemical products and oil refining industries were under 50 in April.

The new orders index fell to 53.8 in April from 55.2 in March with new export orders index dropping to 51.3 from 52.5 in March.

The CFLP also said 42 percent of the PMI survey's participants complained of cost pressures and 18.2 percent complained of liquidity pressure, the highest such readings in almost two years.

Bin Laden buried at sea

Al Qaeda's terrorist leader Osama bin Laden's dead body was discharged into the Arabian Sea from the deck of a U.S.S. Carl Vinson aircraft carrier in order to comply with Islamic law, which dictates a body must be buried within 24 hours without a viable land alternative.

According to CNN, a defense official said there was no country willing or able to accept the body for burial, and U.S. forces "took pains to observe Muslim law."

The religious rites reportedly began at 1:10 a.m. and finished at 2:10 a.m. ET.

"The body was washed and placed in a white sheet. A military official read prepared remarks, which were then translated into Arabic by a native speaker. The body of Osama bin Laden was placed on a flat board, which was then tipped up, and allowed to slide into the sea," an official said.

For the CNN story source:


Thursday, May5, 2011

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Yangtze River drought ensnarls shipping

A severe drought in eastern and northern China has dramatically lowered water levels in portions of the 3,900-mile-long Yangtze River – a key shipping route that reaches into the country's vast inland markets.

According to an Associated Press report, Chinese authorities are frantically trying to free clogged vessel traffic and prevent accidents where water levels have dropped to record lows.

In a river that is best known for seasonal flooding in the summer, the drought has reportedly impacted crops, drinking water and hydroelectricity.

Upriver, the major city of Wuhan registered a draft of 2.87 meters (9.4 feet). The dry season average for Hankou in Wuhan is 4 meters deep.

At the river's mouth is Shanghai where $2.7 billion has already been invested in dredging navigational channels in an area where silt buildup is a constant challenge.

The giant Poyang Lake that absorbs flood waters from the many typhoons in that part of the world is, according to the A.P. report "a flat plain of dust."

For the full Washington Examiner/A.P. story:

Matson brings parent company's Q1 earnings down

Shipping firm Matson Navigation Co., a subsidiary of Honolulu-based Alexander & Baldwin, was a drag on its parent company's first quarter net profit, posting a $7.4 million operating loss.

As a consequence, Alexander & Baldwin's net profit for the quarter was $5.2 million, a steep 70 percent drop from the company's $17.3 million for the same period in 2010.

Real estate dealings largely helped offset A&B's losses, according to the Honolulu Star-Advertiser.

Matson attributed the quarterly decline to its expanded trans-Pacific service to China, higher fuel prices and lower freight rates.

Performance for [the China service] in the quarter fell short of our expectations," said Matthew Cox, president, Matson, a conference call.

Matson's container business to Hawaii grew 8 percent largely on the back of an international carrier cargo agreement. Auto shipments in the Hawaii market declined 18 percent, in part due to rental car fleet replacement the company said.

For the full Honolulu Star-Advertiser story:

For the full Star-Advertiser story:

Former Jaxport vice chairman faces bribery charges in U.S. District Court

A "star witness" took the stand in U.S. District Court in Florida this week in a bribery case against the former vice chairman of the Jacksonville Port Authority.

Lance Young, a witness for the prosecution testified that former Jaxport vice chairman Tony Nelson bribed him and a lobbyist for $8,500 per month in order to secure dredging work for Young's company, Subaqueous Services – now owned by Orion Marine Group.

Young and lobbyist Frank Bernardino are on trial for 36 counts of bribery, conspiracy, mail fraud and money laundering, according to the Florida Times Union. Young faces up to five years in prison and $250,000 in fines.

Young told jurors this week that he and Nelson met in a skybox at a Jacksonville Jaguars football game in 2005, and that the former Jaxport official demanded a bribe that would subsequently be concealed as consulting fees through Bernardino's lobbying firm in exchange for dredging work for the port.

Several months later, the FBI reportedly recorded Young handing Nelson a lump sum check of the monthly payments for $50,000 at a dinner at Ruth's Chris Steak House.

For the full Florida Times-Union story:

North Carolina ports box volume up 16 percent

The North Carolina State Ports Authority announced its container-handling business for its fiscal year-to-date at the Port of Wilmington is up 16 percent.

"The growth in container volume is a direct result of NC Ports being able to respond to the growing needs of NC businesses. New services provide better opportunities for the shippers and consignees," said Glenn Carlson, the port authority's chief commercial officer in a statement.

The port also reported growth for its breakbulk operations in Wilmington and Morehead City, up combined 27 percent over the same period in 2010.

This port attributed "strong global recovery" for commodities that include wood pulp, metal products and rubber imports.

The port said it expects moderate growth to continue throughout the rest of its fiscal year.

Bulker with crew of 24 Chinese hijacked in Arabian Sea

According to news reports, seven pirates in the middle of the Arabian Sea hijacked a Panama-registered bulk vessel with 24 Chinese on board today.

No further information has been officially released as of this report's press time.


Friday, May 6, 2011

Top Story

Port heavy equipment manufacturers up for Q1

Two major heavy equipment suppliers to cargo ports around the world posted strong numbers for their respective first quarter earnings with orders rising and a pick-up in container-shipping markets.

Finland's Cargotec reported operating profit for its first quarter at $74 million, besting its previous margin almost four times over and beating estimates that ranged between $33 million and $51 million, according to Reuters.

Cargotec's total sales for the quarter were up 37 percent to $1.2 billion.

The company said the rebound in global container shipping would be a factor in its projection of 20 percent growth in sales for 2011.

Another Finnish heavy equipment firm, Konecranes, reported a 59 percent increase in new orders at $737 million in addition to a 59 percent increase in operating profit to $27 million.

Konecranes said profit forecast was lower than estimates due to I.T. investments and lower margins on some of its sales.

For the full Reuters story:

FMCSA adds four more studies to Hours-of-Service docket

The U.S. Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) announced it has placed four additional research studies into the official rulemaking docket for the Hours-of-Service (HOS) Notice of Proposed Rulemaking (NPRM).

The four studies are: The Impact of Driving, Non-Driving Work, and Rest Breaks on Driving Performance in Commercial Motor Vehicle Operations; Hours of Service and Driver Fatigue-Driver Characteristics Research; Analysis of the Relationship Between Operator Cumulative Driving Hours and Involvement in Preventable Collisions; and Potential Causes Of Driver Fatigue: A Study On Transit Bus Operators In Florida.

The FMCSA said it is reopening the HOS NPRM comment period to allow for public review and discussion of these studies.

As a result, the agency said it would extend the final rule publication date.

The research studies are available here:

Crude oil hits two-week high on news of more U.S. jobs

Crude oil reached a two-week high after the U.S. Department of Labor released data on Wednesday that 244,000 more jobs added for the month of April, beating a Bloomberg forecast of 185,000 more jobs.

The price of crude for delivery in June grew from between 2.3 to 2.6 percent, and as high as $113.40 a barrel for Brent crude, after oil had plunged 10 percent, the most in over a year.

"The jobs report was definitely supportive for oil and takes away some of the fears of demand destruction," said Phil Flynn, vice president of research at PFGBest, in a Bloomberg story. "We broke through a little bit of the resistance from yesterday and went back above $100."

For the full Bloomberg report:

Hawaii raises import freight tax 50 percent

Hawaii's legislature voted to increase a tax tied to the net weight of imported freight by 50 percent in order to fund 15 agriculture inspector positions in the state's reported battle against invasive species.

House Bill 865 was signed into law this week with the goal of improving inspections at airports and harbors, according to West Hawaii Today.

The bill's original intent was to pay for invasive species program but the state's $1.2 billion budget shortfall impacted its scope.

The import tax from 50 cents to 75 cents for every 1,000 pounds of freight and is supposed to fund the agriculture program from between $4.5 million and $5.25 million.

For the full West Hawaii Today story:

Brazilian mining group takes delivery of 7 bulkers

The Brazilian mining group Vale took delivery of the first of seven 400,000-ton bulk vessels from South Korea's Daewoo Shipbuilding & Marine Engineering Co.

Vale has also ordered another 12 large ships from shipyards in China and 16 chartered vessels that are scheduled for delivery between this year and 2013, bringing Vale's total shipping fleet to 60, according to Macau Hub.

Vale posted a record profit of almost $7 billion in this year's first quarter, almost four times its profit posted in the same period last year.

For the full Macau Hub story:

Shipping containers as prison?

Shipping containers are being used in a variety of ways outside of their originally intended purpose of riding on the backs of cargo ships, such as for alternative housing.

Now, prisoners in South Australia could be housed in the corrugated steel boxes as a more affordable way to lock them up, according to the Sydney Morning Herald.

The region's Correctional Services Minister Tom Koutsantonis unveiled a six-cell unit of containers today.

"Using this method, the government can deploy new prison cells to cope with any increase in demand in up to half the time with a cost saving of up to 40 per cent compared to traditional cellblock construction," he said.

"Construction time is only six months, as opposed to more traditional cell construction which could take more than 12 months."

For the full Sydney Morning Herald story:


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