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Summary for May 7 - May 11, 2007:

UP opts out of Punta Colonet: report

Union Pacific Railroad (NYSE: UNP) does not plan to proceed with Hutchison Port Holdings in plans to develop a rail line to the US from the proposed Punta Colonet megaport in the Mexican state of Baja California, 150 miles south of San Diego.

“If the project goes ahead, and the government of Mexico issues (a competitive bidding process), Union Pacific and Hutchison will not bid on it together,” Robert W. Turner, UP senior vice president for corporate relations, told the San Diego Union newspaper.

UP and HPH, which operates the Port of Ensenada, had been considered the leading contenders to win a Mexican government auction to build and operate the port and rail line.

The paper said it remains unclear what effect UP's action will have on the port-rail project, saying the company might be willing to re-enter the process or that Hutchison could partner with a different rail company.

Mexican officials have described the Colonet project as an alternative to the increasingly “saturated” ports of Long Beach and Los Angeles, saying it would process 6-8mn TEUs a year.

However, a 200-plus-mile rail line that would traverse Baja California and connect to the US system is considered essential to carrying the mostly Chinese goods across the US.

Horizon Lines to purchase Hawaii Stevedores

Horizon Lines Inc. (NYSE:HRZ) May 4 announced it had signed a Letter of Intent to purchase Honolulu-based Hawaii Stevedores Inc. (HSI), pending the completion of a due diligence process.

The terms of the transaction were not disclosed.

Hawaii Stevedores will operate as a Horizon Lines subsidiary, said the company, and it is intended that “all HSI stevedoring contracts and any existing HSI labor contracts will be maintained,” said Horizon.

Both Horizon and Hawaii Stevedores cited strategic synergies, employee stability, operational efficiencies, and cost savings as the driving factors in Horizon Lines’ acquisition of HSI.

“We have enjoyed a great relationship with HIS,” said Mar Labrador, vice president and general manager, Hawaii and Micronesia Division for Horizon Lines. “We look forward to retaining the existing staff so we can continue to offer the quality of performance our trade has come to expect.”

“HSI has a long history of outstanding service, and coupled with the resources and strengths of Horizon Lines, we can create the best choice for stevedoring in Hawaii,” said HSI’s President and CEO Randy Grune.

Fire investigated at Port of Vancouver, USA

Vancouver, WA, Fire Department investigators May 3 released a preliminary report indicating that a fire that occurred May 2 in a wooden A-frame building being used to store calcium nitrate agricultural fertilizer was likely started unintentionally due to mechanical failure, according to the Port of Vancouver.

The roof of the building was heavily damaged, said port officials, who estimated that 15% of the 9,800 metric tonnes of calcium nitrate inside the building was damaged.

“At this time, we do not know if the conveyors will be overhauled or replaced, nor do we know the business loss or an estimation of the product salvage,” said the port’s Facilities Manager, Todd Krout. Officially, the exact cause of the fire is still undetermined.

The port’s facilities department also issued a preliminary report that estimated the damage may be listed at $1mn-$1.5mn. The building is insured by the tenant, NuStar, said the port.

Calcium nitrate is imported from Norway to the Port of Vancouver and is distributed across the Pacific Northwest and into Canada, said the port.

NYK signs carrier deal with CVRD

Nippon Yusen KK (TSE: 9101) has signed a 20-year agreement with Brazilian resource giant Companhia Vale do Rio Doce SA to build one of the world's largest iron ore carriers and transport roughly 1.3mn tons of the material from Brazil to China each year starting in 2011.

The deal, worth roughly 40bn yen, is the first such long-term pact between a Japanese shipping company and a resource producer. Nippon Yusen's longest agreement with a resource firm to date has been roughly five years.

Nippon Yusen will build a massive ore carrier, capable of carrying 300,000 tons, for use on the shuttle route between three loading ports in Brazil and four ports in China, including Shanghai and Zhanjiang in Guangdong Province.

The carrier, which will make 4-5 round trips each year, will be built by a Chinese joint venture of the Kawasaki Heavy Industries Ltd. (TSE:7012) group for around 10bn yen.

The iron ore will mostly be supplied to smaller Chinese steel companies. By offering long-term agreements, CVRD aims to bolster its relationship with small and midsize steelmakers in China, said to number more than 800.

Yang Ming launches new USWC service

Yang Ming Marine Transport Corp. May 3 announced a new PSW5 service, in which the company will deploy five 1,800-TEU vessels connecting North China and the US West Coast.

Yang Ming calls it “the fastest 13-day Xingang (China) to Oakland (CA) and 11-day Pusan (Korea) to Oakland service in the market.”

In addition, Yang Ming will upgrade its PNW service with five 4,000-TEU vessels to enhance its Taiwan/S.PRC to PNW sector, offering a Yantian (China)/Kaohsiung (Taiwan) to Portland (US) direct connection, and “the most competitive 11-day Kaohsiung to Tacoma (US), eight-day Pusan to Tacoma service in the market,” according to the company.

The new service also extends its coverage to Hong Kong/Pusan and Vancouver, Canada.

The new PSW5 service route includes Lianyungang – Qingdao – Xingang – Pusan – Oakland – Los Angeles – Lianyungang.

The upgraded PNW service route includes Hong Kong – Yantian – Kaohsiung – Pusan – Tacoma – Vancouver – Portland – Pusan – Hong Kong.

OffPeak removes 5mn trucks from LA traffic

PierPASS Inc. May 7 announced that its OffPeak program has diverted more than 5mn truck trips from peak daytime traffic in the Los Angeles area since the program’s start in July 2005.

PierPASS said the program “has eliminated costly bottlenecks at the ports of Los Angeles and Long Beach, reduced gridlock on area freeways, and curtailed air pollution from idling traffic.”

In an average week, OffPeak removes 60,000 truck trips from the freeways during busy commuting hours, according to PierPASS.

OffPeak uses a congestion pricing model that provides an incentive for cargo owners to move shipments at night and on weekends.

“The OffPeak program has achieved real results in reducing traffic congestion and air pollution near the ports,” said Los Angeles Mayor Antonio Villaraigosa. “It is hard to conceive of going back to the days before OffPeak.”

Long Beach Mayor Bob Foster added that participation in the OffPeak program “continues to grow and make a noticeable difference in reducing truck traffic around America’s ports of Los Angeles and Long Beach.”

In 2006, more than 2.9mn truck trips used OffPeak operation hours, according to Pier PASS.

BNSF greens So Cal

BNSF Railway Company May 8 announced “significant enhancements” to its proposed Southern California International Gateway (SCIG) based on input from residents, community leaders, as well as elected and port officials.

Matthew K. Rose, BNSF chairman, president and chief executive officer, said company officials have spoken one-on-one with more than 200 households near the facility and received feedback from hundreds of key stakeholders.

“We listened to their concerns and are adding several important features to make SCIG the greenest rail facility in the United States,” Rose said. “We believe these enhancements are consistent with local elected officials' vision for green growth and job creation."

Among the enhancements, BNSF said that 100% of the truck fleet servicing SCIG will be 2007 or newer upon facility opening - exceeding compliance with the San Pedro Bay Ports Clean Air Action Plan (CAAP).

It also said that trucks serving SCIG will be limited to traveling on specified non-residential truck routes and be equipped with global positioning satellite (GPS) devices to monitor and enforce compliance.

Randy Gordon, president of the Long Beach Chamber of Commerce, endorsed the railroad’s action saying that “with this announcement, BNSF has really stepped up to promote green growth."

US-Mexico trucking due in July

A pilot program to allow Mexican trucks into all areas of the United States should be in place by July, a top US trade official said May 8.

"To my mind Mexico has lived up to its responsibility" in addressing safety concerns raised by the US Congress, said Franklin L. Lavin, undersecretary for international trade for the US.

"We fully intend to go ahead with liberalization in July. So we're on track."

Lavin spoke to US business leaders at a luncheon sponsored by the American Chamber of Commerce in Mexico City.

US President George W. Bush has announced a one-year pilot program for Mexican trucks to enter the US. But an April launch was delayed for additional public comment under pressure from the US Congress.

A lawsuit was filed in a federal court in April to block the project by the Teamsters Union, The Sierra Club, Public Citizen and the Environmental Law Foundation, citing safety and environmental concerns.

Access to the US by Mexican trucks has been delayed for years by safety and environmental concerns and resistance from US truckers.

YRC names two new presidents

YRC Regional Transportation, a subsidiary of YRC Worldwide Inc. (NASDAQ:YRCW), May 3 announced that John M. O’Sullivan has been named president of USF Holland and Gary Pruden has been named president and CEO of USF Glen Moore.

O’Sullivan previously served as CFO at YRC Regional Transportation, while Pruden previously served as CFO for New Penn and USF Glen Moore.

Jim Staley, president and CEO of YRC Regional Transportation, said that O’Sullivan “has been an influential leader in the USF organization. We are confident that his intimate knowledge of the brand will help him lead USF Holland in continuing to build on the well-recognized reputation in the marketplace.”

Of Pruden, Staley said, “He has an intimate knowledge of the YRC Regional brands, and we are confident he will lead USF Glen Moore in continuing to deliver high quality service, flexible solutions, and complete customer and driver satisfaction across dedicated, regional, and national markets.”

YRC Regional Transportation is comprised of USF Holland, USF Reddaway, USF Glen Moore, and New Penn.

MTCH goes to Highstar

AIG Global Investment Group (AIGGIG) and Christopher Redlich Jr. May 9 announced that Highstar Harbor Holdings III Inc., a subsidiary of AIG Highstar Capital (Highstar), entered into a definitive agreement with Redlich to purchase 100% of MTC Holdings (MTCH). Terms were not disclosed.

Headquartered in San Francisco, CA, MTCH is one of the largest independent terminal operators in the US, with extensive operations on the US West Coast and growing operations on the East Coast and US Gulf Coast. MTCH provides operations at 32 terminals at key strategic ports, including Oakland, Los Angeles, Long Beach, Seattle, Tacoma, Baltimore, and Savannah.

AIG said MTCH CEO Doug Tilden and the existing MTCH management team will continue to manage the business following its acquisition by Highstar.

“This business was founded by my grandfather in 1932,” said Christopher Redlich, chairman of the board of MTCH. “We have brought the business a long way since that time. But, competition on a world scale requires more and more capital. We are glad that we could attract a well-capitalized investor like Highstar that wants to support this important domestic business.”

Thumbs up for Port of San Diego

The Port of San Diego May 8 announced a report to the Board of Port Commissioners on the progress of the port’s draft Maritime Business Plan. The report is being developed by consultant TEC Inc. and is intended to guide the port’s maritime cargo strategy through the year 2030.

The report shows that “maritime cargo through the port has a huge economic impact and that there is considerable potential for additional and diverse maritime cargo to the San Diego region,” the port said.

The port said that economic impact highlights, based on fiscal year 2006 statistics, show that:

  • Maritime cargo activity at the port’s terminals generated $1.6bn annually and $100mn in state and local taxes and supported 19,298 regional jobs
  • 1,817 regional jobs are directly related to cargo activity at the port’s terminals and pay an average salary of more than $54,000
  • A total of 4,850 jobs are directly or indirectly related to or are induced by the maritime cargo industry in the San Diego region.

NYK receives new bulk carrier

Nippon Yusen Kabushiki Kaisha (NYK) May 8 announced that the company took delivery Apr 27 of a new 175,000 DWT bulk carrier.

The Ocean Crescent was built by Shanghai Waigaoqiao Shipbuilding Co. Ltd. and is the first vessel built for NYK at a shipyard located in China.

This ship will be co-owned by NYK and Mitsui & Co. Ltd., and for the time being, will be assigned on a voyage-by-voyage basis for the transport of specific cargo for clients around the world.

NYK announced it has ordered three more of the same type of bulk carrier from Shanghai Waigaoqiao Shipbuilding and has also ordered two 300,000 DWT bulk carriers and two VLCCs from Nantong Cosco KHI Engineering Co. Ltd. (NYK said one of the VLCCs was delivered Mar 12.)

NYK, based in Tokyo, is a leading transportation company operating approximately 700 major ocean vessels, as well as fleets of planes, trains, and trucks. The company’s shipping fleet includes around 130 containerships, 210 bulk carriers, 40 wood-chip carriers, 100 car carriers, 25 reefer carriers, 55 tankers, 20 LNG carriers, and three cruiseships.

MSC inks agreement with Port of Charleston

Mediterranean Shipping Company (MSC), the world’s second-largest container carrier, May 10 announced it has signed a new five-year agreement with the South Carolina State Ports Authority (SCSPA).

The agreement will mean more than 230 ship calls per year, and it solidifies the line’s place as one of Charleston’s largest customers, said the port.

“This is a significant event for the Port of Charleston and our customers,” said Bernard S. Groseclose Jr., president & CEO of the SCSPA. “A commitment of this nature is a clear signal of MSC’s confidence in our port community and the cargo base that we serve.”

Groseclose added that Charleston has significantly expanded capacity at existing terminals over the past two years and is uniquely positioned among South Atlantic ports to handle post-Panamax ships.

Chris Parvin, vice president of marine operations for MSC, stated, “For the past year or so, we have been successfully operating 6,700-TEU post-Panamax ships in Charleston on a regular schedule. These operations have been performing extremely well.”

The new contract provides for centralizing all MSC services at the Wando Welch Terminal.

Maritime TV channel launched

The world's first global maritime television channel Marine BizTV has been launched in Dubai. The free-to-air television channel is the initiative of Sharjah-based Aries Marines, the Middle East's largest ship design and consultancy firm.

MD and CEO of Aries Marines and Marine BizTV Sohan Roy said the vision of the new television station based in Kochi, Kerala, is to become the single point of contact for all maritime activities and information worldwide.

Roy said the channel also aims to propagate and help create a safe maritime world, become an educative and informative media for the whole maritime industry, [and] provide a supportive platform to create awareness about the opportunities and developments in the industry.

He also said the channel hopes to redefine the market place for maritime buyers where brand owners are provided with new and exciting ways to market their products and services.

The features of the television channel include global coverage, parallel coverage on web TV, clubbed with marine communities around the world, immediate reception and delivery of news, catalyzing maritime business worldwide, focusing on maritime market hubs, penetration into underdeveloped markets, expressing and exchanging ideas and use as a source of information.

Con-way Freight driver on DOT CDL committee

Con-way Freight, a subsidiary of Con-way Inc. (NYSE: CNW), May 7 announced that David May, a professional driver for Con-way Freight-Central, has been selected to participate on the Federal Motor Carrier Safety Administration’s (FMCSA) Commercial Driver’s License (CDL) advisory committee.

The April advisory committee meeting was focused on preparing FMCSA recommendations to the US Dept. of Transportation regarding CDL requirements.

May was the lead speaker for the April advisory committee meeting in Arlington, VA. May spoke out on the need for strengthening and improving driver training and for incorporating more actual driving scenarios into the CDL road test for truck drivers.

May was selected for the committee in part because of his 27 years as a professional truck driver and the skills he demonstrated as a member of the America’s Road Team, Con-way said.

“David May is the consummate professional driver and an exemplary representative of Con-way Freight,” said David S. McClimon, president, Con-way Freight.

May joined Con-way Freight in 1997 and has been a professional truck driver since leaving the US Army in 1980. May has driven more than 1.4mn accident-free miles.

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