Monday, May 12, 2014
Major shipper groups to West Coast port labor negotiators: Get it done
On Friday, more than 60 shipper, business and transport logistics groups sent a letter to the leadership of the Pacific Maritime Association and the International Longshore and Warehouse Union, pleading with them to do everything in their power to complete West Coast dockworker contract negotiations without disrupting the flow of trade.
The letter, addressed jointly to ILWU President Robert McEllrath and PMA President and CEO James McKenna, was written in anticipation of upcoming negotiations meant to hammer out a new labor contract for workers at West Coast ports. The letter's signers say they hope a new contract will be in place before the current contract expires July 1.
Industry associations that signed off on the letter, included the National Association of Manufacturers, U.S. Chamber of Commerce, National Retail Federation, American Trucking Associations, U.S. Dairy Export Council and the North American Shippers Association, to name a few.
"We all know the impact of the West Coast lockout 10 years ago on the U.S. economy, including the businesses which rely on the ports to move their goods and on the employees who depend on fully operational ports." reads the letter from the manufacturers. "While the circumstances were different at that time, these same companies just experienced the tumultuous negotiations impacting the East Coast/Gulf coast ports where constant threats of disruption created high levels of uncertainty at a tremendous cost. The West Coast ports and their customers cannot afford to go through a similar situation again."
According to the ILWU website, new issues involving ILWU jurisdiction, health care and the emergence of super-alliances among shipping lines aren't currently dealt with in the contract, and may be difficult for employers to address. For example, the Affordable Care Act imposes a tax on high-end plans that typically cover corporate executives. The ILWU says their medical plan rivals those of executives, since members pay no premiums, and their co-pay for medicine is $1.
"Who is going to pay the additional $150 million in taxes?" said Jim McKenna, president of the Pacific Maritime Association, which represents employers. "The ILWU doesn't want to pay for it," he said, and employers don't either because growing benefit costs drive up the cargo and man-hour assessments that employers must pay.
"We urge both parties to begin negotiations with the goal of finalizing a long term labor agreement without any disruptions to the supply chain," the letter concludes. "Our organizations believe that both parties can reach an agreement that will ensure the continued success and competitiveness of these ports for the foreseeable future.
NRF predicts 3.5 percent rise in May retail imports barring labor unrest
Import volume at the major U.S. retail container ports is forecast to increase 3.5 percent in May as contract talks for West Coast dockworkers begin, according to the latest Global Port Tracker report from the National Retail Federation and Hackett Associates.
"We're expecting a lot of cargo to move through the ports this summer and we want to make sure there aren't any supply chain disruptions that would impact the cargo flow," said Jonathan Gold said, NRF vice president for supply chain and customs policy. "We hope there won't be any issues, but the sooner labor and management can agree on a new contract, the better it will be for everyone who relies on the West Coast ports."
The Pacific Maritime Association and the International Longshore and Warehouse Union are slotted to start negotiations next week on a new contract to replace the one that expires June 30.
NRF has entreated both labor and management to avoid any scenario that could affect peak season shipments from Asia of back-to-school or holiday season consumer goods. The last major labor shutdown at West Coast ports in the fall 2002 closed ports for 10 days, creating a weeks-long cargo backlog.
U.S. ports followed by Global Port Tracker handled 1.3 million TEUs in March, up 14.5 percent from March 2013. April is forecast to be up 6.1 percent year-over-year at 1.38 million TEUs, May up 3.5 percent at 1.44 million TEUs, June up 5.6 percent at 1.43 million TEUs, July up 3 percent at 1.49 million TEUs, August up 0.8 percent at 1.5 million TEUs, and September up 0.1 percent at 1.44 million TEUs.
NRF said it expects 4.1 percent sales growth in 2014.
"Most economic fundamentals are pointing in the direction of continued, sustained recovery in consumer demand and import volumes," Hackett Associates Founder Ben Hackett said. "This is turning out to be the longest period of growth for some time now."
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.
Rickmers-Linie appoints new CEO
Rickmers-Linie promoted Ulrich Ulrichs from chief operating officer to chief executive officer of the shipping line on May 1. Ulrichs succeeds Ru?diger Gerhardt, now the chief administrative officer of the company.
Ulrichs, who has more than 15 years in the shipping business, joined Rickmers-Linie in 2005 as general manager of line management, and was promoted to director in 2008. He was appointed deputy managing director of the firm in 2011 and rose to the position of chief operating officer and managing director in July 2012.
Gerhardt, who has been with Rickmers-Linie since 1978, has directed finance, personnel and administration for the company since 1992. As chief administrative officer he will oversee the line's structure and organization.
Drewry: Dry bulk freight rates drop in Q1
Bulk freight rates on most trade routes declined in the first quarter of 2014 as the capacity crunch of the previous quarter petered out, according to the latest issue of Dry Bulk Forecaster from Drewry Maritime Research.
Rates had surged in the fourth quarter of 2013 in spite of modest demand, the publication reports, due to a tonnage supply crisis triggered by the bankruptcy-related issues of some dry bulk ship owners, who have struggled due to prolonged low earnings over the past few years.
Drewry said the bulker operating fleet, which contracted in the fourth quarter of 2013, regained capacity as vessels that were unavailable due to bankruptcy-related issues returned to service in the first quarter of 2014.
Companies such as TMT, STX and Excel, had gotten trapped in an earnings standstill and were forced to file for Chapter 11 bankruptcy protection. Legalities resulting from bankruptcy issues forced charterers to avoid hiring these ships, researchers said, and the ensuing unavailability of many dry bulk ships created a short term capacity crunch in the market, causing rates to rise.
Drewry forecasts that even though demand for dry bulkers has risen to new highs in the first quarter, freight rates could further drop once ships from these financially strapped owners become available for chartering, and capacity rises once again. Despite the short-term pressure, the maritime researchers predict the dry bulk market will improve by last quarter of 2014 as global demand improves further and increase in overall supply slows down.
Cocaine worth $9M seized from container at Port of Savannah
U.S. Customs and Border Protection confiscated an estimated $9 million worth of cocaine hidden inside a shipping container at the Port of Savannah.
CBP officials said Thursday a routine container inspections at the port uncovered 133 packages filled with a white powder that tested positive for cocaine.
Customs officials say they are still investigating. No arrests were announced.
For more of the Republic story: therepublic.com
Tuesday, May 13, 2014
Congress reaches deal on transportation bill
The U.S. Senate and House have made a deal on a transportation bill that will help several U.S. ports dredge their channels to depths that can accommodate the mega-container ships expected after the opening of the widened Panama Canal in 2015.
The Water Resources Reform and Development Act, H.R. 3080, is seen as a rare example of bipartisan achievement in a Congress that seems to be in a perpetual state of stalemate on most issues.
The law will include provisions to allow ports to pay the costs of deepening harbors up front, and then seek reimbursement from the government after lawmakers sanction the project. This will allow some ports to get the dredging started and completed at a faster pace.
The full legislation probably won't be released until next week, according to House Transportation Committee Chair Bill Shuster and Senate Transportation Committee Chair Barbara Boxer.
For more of the Bloomberg story: bloomberg.com
Freight rates on Asia-Europe trades up 7.4 percent last week
In the third week of rising freight rates, rates on the Asia-to-Northern-Europe trades increased 7.4 percent to $1,401 per-TEU in the week ended on Friday, according to data from the Shanghai Containerized Freight Index.
Average freight rates for 2014 are $1,305 per-TEU compared with $1,090 in 2013.
Hapag Lloyd said Friday it try to hike rates on routes from Asia to Northern Europe by $750 per-TEU starting June 9 — a 53 percent increase.
For more of the Reuters story: in.reuters.com
USPS loses $1.9B in Q2
The U.S. Postal Service reported a $1.9 billion in the second quarter of 2014, even though it increased its revenue by $379 million and shipping-and-package business has grown 8 percent year-over-year.
Many are already calling for Congress to pass reforms to help fix the agency's chronic fiscal problems. The Postal Service lost $5 billion in 2013 although it also posted its first revenue gain since 2008. The agency hasn't made a profit since 2006.
The agency desperately needs legislation that would allow "a smarter delivery schedule, greater control over our personnel and benefit costs and more flexibility in pricing and products," said Joseph Corbett, USPS' chief financial officer.
Postal unions such as the National Association of Letter Carriers worry about cuts in service that have been proposed in the past, including terminating Saturday delivery.
For more of the Washington Post story: washingtonpost.com
Matson raises fuel surcharge
Matson Navigation Co. announced it is raising its fuel surcharge by 3 percentage points for Hawaii service, from 39.5 to 42.5 percent, effective June 8.
"Since announcing our last increase, Matson's fuel costs have continued to rise," said Dave Hoppes, senior vice president of ocean services, in the statement. "A major contributor to our increase in fuel consumption has been a number of additional vessel sailings necessary to meet the service requirements of our customers. Equally important, the extra voyages added to the higher costs we are already experiencing because of the Emission Control Area regulations, which became effective in August 2012."
Matson said it is also raising its fuel surcharge June 8 for its Guam, Marianas and Micronesia service by 1.5 percentage points, to 43 percent from 41.5 percent.
The company says fuel costs have continued to rise since the last surcharge hike that in March 2014.
Container ship hauling oil stuck on rocks in Galapagos
A container ship carrying 60,000 liters of oil is stuck on rocks in the Galapagos Islands off the coast of South America.
Officials are making exigency plans in case it starts to leak, but inspectors say that section of the ship is not on the rocks.
Cargo is being removed from the ship to make it lighter in hopes that that will help high tide shift it off its perch.
For more of the BBC story: bbc.co.uk
Wednesday, May 14, 2014
PMA and ILWU begin West Coast labor contract talks
Highly anticipated negotiations started Monday in San Francisco to hammer out a new contract for dockworkers at West Coast ports. The current six-year contract expires June 30.
Officials from Pacific Maritime Association, representing 29 ports, will discuss an array of contract provisions with leadership of the International Longshore and Warehouse Union, which represents approximately 20,000 full- and part-time workers. Key contract issues include job security and safety, wages, and benefits, according to an ILWU spokeswoman.
Both sides of the table have agreed to meet daily in San Francisco, where the headquarters of both offices are based, until an agreement is reached.
"Dockworkers are looking forward to negotiating a fair agreement that protects the good jobs and benefits that support thousands of families and dozens of communities around West Coast ports," said Bob McEllrath, ILWU's international president in a statement Monday.
"West Coast ports have lost significant market share in recent years and face renewed competition from Canada, Mexico, the Panama Canal and other domestic ports for cargo that has powered job and economic growth in local port communities and beyond," said PMA President Jim McKenna. "With these stakes in mind, PMA and its members are focused on delivering a contract that ensures the West Coast's standing as the gateway of choice for goods sent to and from Asia."
Neither side released specifics about their proposals, but in March McKenna referenced the annual 40 percent excise tax costs associated with the Affordable Care Act, which taxes high-end medical coverage such as the health care benefits dockworkers enjoy. The ACA would trigger an excise tax associated with longshore benefits estimated to be as high as $150 million starting in 2018.
Retailers, manufacturers and other shippers have written letters to the contract negotiators, imploring them to avoid a costly work stoppage at all costs.
McKenna said a deal probably won't be reached by June 30, but was optimistic that both sides would agree on new contract terms by July without business disruption.
For more of the Long Beach Press-Telegram story: presstelegram.com
Private equity's $32B shipping splurge endangers sector recovery
Just as the shipping sector is beginning to free itself from the clutches of severe vessel glut, the overcapacity problem is being perpetuated by a private equity-funded spending spree that has funneled $32 billion into shipping over the past two years.
Private equity and hedge fund financing have backed shipping companies that have ordered thousands of new vessels over the past two years, echoing the ship-ordering splurge in the mid-2000s that led to overcapacity just as the global financial crisis hit.
"Shipping is not a get-rich-quick business. By virtue of the capital that the private equity funds are pumping into shipping, they are in effect destroying the very prospects that they are chasing," said Jan Engelhardtsen, chief financial officer at Olso-listed tanker and terminals company Stolt Nielsen.
"Because the investment horizon for private equity is short-term and shipping is fundamentally long-term in nature, private equity's entry into shipping in most cases is never going to end well," Engelhardtsen told Reuters.
Estimates vary, but maritime fund management company Tufton Oceanic says private equity has invested about $32 billion in shipping in the last two years.
The current global ship order book is worth $297.6 billion, although $110 billion remains unfunded, according to figures from Britain's Clarkson Research Services and Tufton Oceanic.
The investment will help create a surge in ship deliveries with ships totaling 299 million deadweight tons due to enter the global fleet from May 2014 compared with a current global fleet of 1.7 billion dead weight tons, according to Clarkson data.
Global seaborne trade, including commodity shipments, is expected to grow 4 percent in 2014, Clarkson predicts. If trade growth remains at similar levels in the next two years, it will potentially create a new supply glut of tonnage from 2016.
Albert Stein of debt and restructuring firm AlixPartners, which advises private equity companies, said ship owners share the blame for the worsening glut.
"You can't blame private equity alone. (Look at) who sold them the idea that the market's going to expand," said Stein.
For more of the Reuters story: reuters.com
Cosco, China Shipping and Sinotrans ally on Japan routes
Three of China's state-owned shipping lines — COSCO's Shanghai Pan Asia Shipping, China Shipping's Shanghai Puhai Shipping and Sinotrans Container Lines — will collaborate on Japan routes starting May 6, according to China Business News.
The group plans to add capacity and share routes to Japan from the ports of Shanghai, Qingdao and Dalian.
The alliance of the previous rivals will help eliminate competition and cut costs.
For more of the China Times story: wantchinatimes.com
Hapag-Lloyd Q1 loss widens
German container line Hapag-Lloyd said Tuesday its first-quarter net loss increased due to stiff competition and one-off costs from its takeover of the Chilean shipping company Compania Sud Americana de Vapores, according to a company statement.
In the first quarter the company said its net loss grew to $163.9 million from $128 million in Q1 of 2013.
Earnings before interest, taxes, depreciation and amortization fell to $3.9 million from $32 million in the prior year, the statement said.
Hapag-Lloyd stated its goal to improve its overall freight rate in 2014 compared with 2013, but it "will depend largely on the development of freight rates in the second half of the year and, above all, on the peak season," according to Chief Executive Michael Behrendt.
CEO arrested due to S. Korea ferry tragedy
The CEO of the company that operated the passenger ferry Sewol that sank off South Korea in April 16, killing more than 260 people, was arrested Thursday, according to a senior prosecutor in the investigation.
Kim Han-sik, the head of Cheonghaejin Marine Company, is being charged with "causing death by negligence, as well as causing the capsizing of the ship in the line of duty," said prosecutor Yang Joong-jin. Kim is also charged with violating the ship safety act, Yang added, because of assertions that too much cargo on board was a factor in the April sinking.
Investigators have said the cargo and the failure to tie it down properly was partially responsible for the sinking of the Sewol, which was carrying 467 passengers and crew -- including more than 300 high school students on a field trip.
For more of the CNN story: wsbt.com
Thursday, May 15, 2014
Terminal operator ICTSI income up 29 percent in first quarter
Philippines-based terminal operator International Container Terminal Services Inc. announced a 29 percent increase in its net income in the first quarter of 2014.
ICTSI said net income surged to $52.4 million in the first quarter of 2014 compared to $40.7 million posted in Q1 of 2013, according to its disclosure to the stock exchange.
ICTSI attributed the higher net income primarily to a one-time gain on sale of Cebu International Container Terminal Inc.
Excluding the one-time gain, the port operator's net income would have risen 6 percent at $45.1 million.
For more of the ABS CBN News story: abs-cbnnews.com
PSA International wins bid to run terminal at Mumbai port
PSA International, formerly the Port of Singapore Authority, won a bid to build and manage the fourth container terminal at the Jawaharlal Nehru Port in India's business capital, Mumbai.
Bharat Mumbai Container Terminals will help handle India's increasing demand for container handling capacity, according to a PSA International statement.
BMCT will have berths with a depth of 54 feet, the deepest in JN Port. When finished, it will have a quay length of 2,000 meters with a capacity of 4.8 million TEUs.
The concession agreement for BMCT is for a period of 30 years.
For more of the Channel News Asia story: channelnewsasia.com
Neptune Orient Lines posts $98 million Q1 loss
On Wednesday container carrier Neptune Orient Lines reported a first-quarter loss compared to a profit in the first quarter of 2013, when it posted a one-time gain.
Net loss in the January-to-March quarter was $98 million, compared to a net profit of $76 million a year earlier. Neptune Orient had reported a $200 million gain from the sale of its headquarters in Singapore last year.
Revenue fell 4 percent to $2.28 billion as the company struggled with operating conditions, including severe weather in Europe and North America, said NOL Group Chief Executive Ng Yat Chung in a statement.
Oversupply of shipping capacity will continue to exert pressure on liner freight rates, Mr. Ng said, saying the company will concentrate on reducing costs and improving efficiency.
For more of the Wall Street Journal story: online.wsj.com
Cosco favored to purchase stake in Greek port
China Ocean Shipping Group Co. is an early favorite in an auction to buy a majority stake in the operator of the port of Piraeus in Greece, which runs Athens' main port and is listed on the Athens stock exchange, according to inside sources.
Greece named six bidders last month that want buy its 67 percent stake in the Piraeus Port Authority, which has a current market capitalization of $636 million. Other big bidders for the port stake include APM Terminals, Ports America Group Holdings, and Philippines-based port operator International Container Terminal.
Cosco subsidiary Cosco Pacific already operates the container terminal at Piraeus under a long-term lease inked in 2009. Under Cosco management, the terminal has more than doubled its handling capacity since 2011. In weighing the competing bids, the Greek government "wants to further develop the relationship" with Cosco, according to one of the sources.
"The Greeks want Piraeus to become a gateway for Chinese trade in Europe, and Cosco is the preferred partner," said another person familiar with the matter.
For more of the Wall Street Journal story: online.wsj.com
Canadian Pacific fined by DOT following train derailment
The New York Department of Transportation is fining Canadian Pacific Railroad $5,000 for not immediately reporting a crude oil train derailment in Albany early Monday morning, according to a DOT statement.
Four tank cars carrying crude oil derailed at 4:30 a.m. Monday morning at the Kenwood Rail Yard in the city of Albany, and the derailed cars remained upright and no oil was spilled.
The derailment was not reported to state DOT by Canadian Pacific until 9:16 a.m., almost five hours after the incident occurred. Under New York State law, rail accidents involving freight trains carrying hazardous materials must be reported to state DOT within one hour of the accident.
For more of The Record story: troyrecord.com