Cargo Business Newswire Archives
Summary for May 23 - May 27, 2011:
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Monday, May 23, 2011

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Report: Trucking’s share of U.S. freight to hit 70 percent by 2022

Trucking's share of the U.S. freight market will rise to 70 percent by 2022, even though its share of freight revenues will only increase by a fraction of a percent, according to a report commissioned by the American Trucking Associations.

In the ATA’s U.S. Freight Transportation Forecast 2022, produced in collaboration with IHS Global Insight and Martin Labbe Associations, overall freight tonnage is projected to grow by 24 percent over the next decade, with revenue from freight rising 66 percent.

"The trucking industry continues to dominate the freight transportation industry in terms of both tonnage and revenue, comprising 67 percent of tonnage and 81 percent of revenue in 2010," ATA Chief Economist Bob Costello said in this year's forecast.

Freight rail's overall share of tonnage will fall to 14.6 percent in 2022 from 15.3 percent in 2010, the report said.

Intermodal tonnage is projected to rise 6.6 percent each year between 2011 and 2016, and 5.5 percent annually through 2022, according to the report.

Revenues for intermodal transportation will almost triple from $11.1 billion in 2010 to $30.7 billion in 2022, the report said.

Domestic waterborne transportation’s growth is more modest by 2022 in the ATA’s report, rising at just 2 percent a year through 2016, and 0.2 percent annually through 2022. Revenues for short-sea freight will grow to $16.2 billion in 2022 from $11.1 billion in 2010, the report said.

U.S. imposes prelim duties on flooring imports from China

The U.S. Commerce Department has imposed preliminary dumping duties that rise as high as almost 83 percent on wood flooring imports from China.

A group of 74 Chinese exporters would pay a close to 11 percent duty if the decision is finalized by U.S. Commerce in August based upon whether the U.S. International Trade Commission rules that the imports could harm U.S. wood flooring manufacturers, according to a statement by the Commerce Department.

Zhejiang Yuhua Timber Co. and Zhejiang Layo Wood Industry Co. would not pay tariffs while all other Chinese wood flooring exporters would pay 82.65 percent, the statement said.

Shipping groups applaud IMO taking on container-weight issue

At last week’s meeting of the International Maritime Organization’s Maritime Safety Committee, the decision was made to address a proposal made by the Netherlands, Denmark and Australia to address the issue of incorrectly declared containerized cargo shipments and to study measures that could improve the safety of container stowage and ship operations.

The World Shipping Council and International Chamber of Shipping greeted the IMO safety committee’s news over the issue with support.

“WSC and ICS, along with many IMO Member States and representative bodies for seafarers, dockworkers and masters, support this initiative that demonstrates the compelling need to address the problem,” the two groups said in a statement.

“Verification of actual container weight before vessel loading and the availability of the actual container weights for proper and safe stowage planning will mark a long overdue and important improvement in industry safety,” they said.

In December 2010, the WSC and ICS said they jointly urged the IMO to establish an international legal requirement that all loaded containers be weighed at the marine port facility before stowage aboard a vessel for export.

“However, the problem will not be solved until there is a legal requirement to verify container weights before containers are loaded onto ships,” the shipping groups said.

China, Japan, S. Korea to work towards free trade deal

Three Asian giants that together make up one fifth of global trade, agreed to speed up talks over a potential free trade deal.

China's Premier Wen Jiabao, Japan's Prime Minister Naoto Kan, and South Korea's President Lee Myung-bak held a trilateral summit in Tokyo over the weekend that included talks over assisting Japan in its post-disaster reconstruction and Premier Wen’s promise to ease some restrictions on Japanese food imports.

For the full BBC story:

South Korea holds first-ever Somali pirate trial

South Korea’s first-ever trial of suspected Somali pirates has commenced in Busan.

Five pirate suspects were apprehended from South Korean freighter in January through a military operation off the Omani coast.

The suspects were subsequently charged with hijacking and attempted murder of the ship’s captain, Seok Hae-kyun.

A ruling is expected by Friday of this week. The accused face up to life imprisonment.

For the full Korean Times story:

Puget Sound’s worst shipwreck possibly found (includes link to video footage of wreck)

Divers have possibly located the shipwrecked SS Dix, a former “Mosquito Fleet” ferry from the turn of the last century that serviced communities all around Puget Sound, shuttling both passengers and freight.

The vessel sank in 1906 after colliding with a cargo ship and sank just a few minutes later, taking 45 people down with it.

Local diver Laura Johnson had studied tide charts and historical records to pinpoint where the accident happened back in 1993, and no one believed her at the time.

Since then, the National Oceanic and Atmospheric Administration took pictures of the ocean floor and a vessel fitting the Dix’s description was recently found in 500 feet of water off of Seattle’s Alki Point.

A submersible was sent down to the site of the wreck and some video footage of their findings is here:


Wednesday, May 25, 2011

Top Story

Economist: West Coast ports could be competitive in environmental era

Environmental factors in the shipping industry are going to matter, and it’s possible that could be a competitive advantage for North America’s West Coast ports, according to a shipping economist.

“As consumers and businesses start to use environmental scorecards in their supply chain, they will increasingly look to compliance or performance measures that are not just in terms of cost and liability that traditionally transportation carriers have striven to optimize…they’re also going to need to be able to demonstrate environmental compliance in order to retain business,” said Paul Bingham, economics practice leader for Wilbur Smith Associates, speaking at Cargo Business News’ 4th Northwest Intermodal Conference in Portland, Ore. on May 17.

Bingham talked about trade being directly impacted by environmental issues on the operations of ports and all of the carrier modes, including the fuel types used, use of alternative shore-side power, and the effects of emissions controls on the equipment deployed in the industry such as yard equipment at port terminals, or on the truckers that are serving the ports.

“Environmentally driven factors like slow steaming, adopted first to save money, are actually being sustained, especially out of pressure from places like Europe with emissions and carbon compliance,” Bingham said.

As a result, there might be commercial benefits to getting ahead of the environmental curve, according to Bingham.

“It’s going to be a differentiator as a competitive factor, where the West Coast ports have a lead, and that actually may give them an advantage,” he said.

“That’s not something I would discount in terms of ability to capture, in the long run, some environmentally-friendly shipping compared to those ports, especially on the Gulf Coast or East Coast, that are behind in trying to be compliant or to be as green a port as possible with their operations,” he said.

However, Bingham also cautioned on how far environmental factors might go.

“There’s a limit to that. If environmental controls and factors get priced to such a degree that it makes sense to shorten supply chains up to be bringing that production back somewhere in North America, for example, in Mexico – and if we get to that point in terms of clusters of near-shoring production and trade – that can have a dampening effect in the long term on trade capacity and volume.”

Container leasing demand surged 120 percent since end of 2009

The demand for shipping containers has risen out of tight conditions created when the bottom fell out of global trade in 2009.

Since the end of that year when the availability of shipping equipment plummeted, container-leasing demand has risen over 120 percent, according to the Bloomberg U.S. Container Leasing Index.

“We’re seeing perfect conditions,” said Brian Donsey, president and CEO of the New York-based container-leasing firm CAI International in a Bloomberg interview.

“Relatively strong growth in trade creates a good level of need for containers, supply is very tight and shipping lines aren’t purchasing as many containers as in the past,” he said.

Demand for containers is expected to continue to increase by much as 11 percent, according to Bloomberg, with lessors able to raise their rates as container manufacturing is not yet able to keep up with demand. The cost of a new container is approximately $3,000.

There are approximately 18.61 million containers currently in use globally, according to the World Shipping Council’s Container Supply Review. Leasing a container usually means a five-year to six-year contract that accounts for about 14 percent of the purchase price, according to the Bloomberg report.

For the full Bloomberg story:

DP World plans to list on London Stock Exchange

The Gulf emirate of Dubai-based DP World, has announced plans to list its shares on the London Stock Exchange by next week.

The third-largest marine terminal operator in the world said it is trying to attract “a wider range of shareholders” for investment in the subsidiary of the financially troubled parent company Dubai World.

DP’s port division is reportedly on more solid financial footing than the parent company and already trades on the Nasdaq Dubai.

"This is the next natural step in the evolution of DP World, as the company has developed into a global leader," Chairman Sultan Ahmed bin Sulayem told reporters.

To date, Dubai World has only released a fifth of DP World’s shares to the open market.

For the full ABC News story:

AAPA to put on port security event in Big Easy

The American Association of Port Authorities announced it is organizing a port security seminar and exposition that will be hosted by the Port of New Orleans, July 20-22 at the Hilton New Orleans Riverside.

"Safe and secure seaport facilities are absolutely fundamental to protecting our citizens and national borders, and for moving the goods we all depend on every day," said Kurt Nagle, the AAPA's president and CEO.

Event topics are to include: legal issues and jurisdictions related to seaport crime; challenges of implementing the Transportation Worker Identification Credential (TWIC); and emerging trends in port security technology.

The program will also feature a federal roundtable discussion on port security featuring the Department of Homeland Security Port Security Program Section Chief Julian D. Gilman; lessons learned from the Gulf oil spill crisis last year; and security implications surrounding this year's nuclear disaster in Japan, the AAPA said in a statement.

CSX freight trains collide near Charlotte; two crewmembers killed

Two CSX freight trains collided early Tuesday near Charlotte, North Carolina, killing two crewmembers and injuring two.

According to CSX spokesman Bob Sullivan, one train with 12 freight cars was transiting from Atlanta to Charlotte and the other was traveling from New Orleans, when one struck the other from behind, derailing both.

Five homes were reportedly evacuated when a fire was started from the accident, although there were no hazardous materials – a freight car carrying cooking oil caused the fire.

One CSX crewmember died at a nearby hospital while the other died on scene, where one of the residents of the evacuated houses told a local television station he heard the conductor cry out from being trapped.

"I believe he was trapped from the way he sounded, and, evidently, he couldn't move; he was just crying out," James Bailey told WBTV-TV.

For the full CBS News story on the incident:


Thrusday, May 26, 2011

What’s going to happen to your chassis?

If you ship containers through U.S. ports, you can thank Malcolm Mclean for setting the precedent of wheeled terminal operations that have been taken somewhat for granted for the past 55 years.

At the very beginning of containerization in the 1950s, Mr. McLean, the founder of the pioneering container-shipping line Sealand, launched the concept that the shipping line would not just provide supply ocean services but that on the land side they would provide the chassis to move that container inland from the seaport.

Things have changed.

“I don’t think anyone could have predicted that 55 years later the decision to un-bundle the free provision of chassis in America would create the huge tidal wave of controversy that has happened,” said Barry Horowitz, principal of CMS Consulting Services, as he introduced a roundtable discussion on the future of chassis provision at Cargo Business News’ 4th Northwest Intermodal Conference in Portland, Ore. in mid-May.

The U.S. port system has been the lone wolf in the world in terms of employing the chassis model for containers over the preferred grounded method for boxes in Asia and Europe.

Global container-shipping leader, Maersk, announced in 2009 it would be phasing out chassis provision, and in its place has spun off one of what is expected to be several third-party services for chassis.

“We still have 70,000 chassis, but instead of two customers – Maersk and Horizon Lines - we have over 3,500 customers: trucking companies. We lease to them on a daily basis,” said Tom Reagan, West Coast director for Direct Chassis Link, a chassis provider business that has been spun off from Maersk.

“The big problem in the past with having chassis in the terminal – the old model - is it’s a very inefficient way for the terminals to operate. At the end of the day the cargo owner pays for all of the inefficiencies in our industry,” Reagan said.

Multi-user container terminals have the challenge of “trying to match up a green chassis to a green container, blue chassis to a blue container, black to black and so on…you can only use that one chassis supplied by that one steamship line for his containers,” Reagan said.

A West Coast container terminal operator concurred with Reagan.

“From an efficiency standpoint, in Oakland, we have six chassis sorts where there is no pooling arrangement at all,” said Frank Capo, senior vice president and chief commercial officer of Hanjin-owned Total Terminals International.

“Our general manager cringes now when we say we’re thinking about bringing in a new customer and he’s thinking about where he is going to put their chassis. We’re actually in a situation now where we have a slot-charter arrangement that’s been put together between one of our current customers and another outside steamship line, and we’ve been forced to tell the new steamship line that you can’t store chassis on terminal – that we just don’t have the space,” Capo said.

There is the same type of situation for TTI’s operation in Seattle, the smallest footprint of the company’s three facilities on the West Coast where Capo said “We really don’t have the space [for a new customer’s chassis.]”

Capo said the flip side is his company’s terminal facility at the Port of Long Beach “where we have excess capacity in a 380-acre facility that is under-utilized at this point and you have to trade off between having the chassis and being able to wheel your operation which saves you cost from an operational standpoint versus if you have the volume and you maximize your capacity by going with grounded cargo, where you make it up on volume.”

Capo added that unlike his company’s operations in Oakland and Seattle, customers of TTI’s Long Beach terminal are participating in the Los Angeles Basin [chassis] Pool, translating to only two different chassis sorts.

Capo also said the difference between wheeled and grounded operations have tradeoffs.

“When you have 5 or 6 chassis sorts, and you’re doing an operation especially at night time, you tell the [hustler] driver to go get a Hanjin chassis and he comes back with a K Line chassis. Do you hold up the hook and send him back or do you mount it on that K Line chassis that then results in a cost to us later on because we mis-mounted it?”

“If you go with a pure grounded operation, you don’t have that issue with the mis-matches. It’s cleaner in that sense, but there’s no two ways about it, with a grounded operation, it’s more expensive. RTGs (rubber tired gantry cranes) or transtainers are expensive to operate and there’s a lot more associated with a grounded operation, but if you’re making it up on volume, it makes a lot more sense,” Capo said.

In the meantime, ocean carriers have it made it known they are starting to follow Maersk’s example by fleeing the traditional chassis provision business, and DCLI’s Reagan offered up how his firm’s chassis services work.

“The truckers can pick out the chassis they want to use. The terminal provider can pick out the chassis provider they want to have on their terminal to take care of the needs they have. When the chassis leaves the terminal, it then changes over from being used by the terminal and is now being rented by the user of it…the steamship line is still paying it for ultimately but they’re paying for it in the trucking cost rather than being hidden somewhere in the bill of lading.”

Reagan said he believes this new way of dealing with chassis will make truck drivers more productive, such as with changing hours of service issues.

“If we don’t have the driver getting out on the terminal two, three, four different times to be able to do a hookup to another chassis because he has to match it up to the right container…now he has more time in the truck where he’s actually driving,” he said.

As for who is responsible for chassis maintenance and repair, Reagan said DCLI is responsible for these costs that are included in trucker’s rental fee of the equipment.

“With DCLI, if you move a chassis from Chicago to Los Angeles, once you leave that chassis at Pier 400, you cease paying for it,” he said.

Nonetheless, there were several different questions asked from conference attendees regarding what the chassis evolution means, without the availability of concrete answers as the industry consensus in the room seemed to remain that a major transition is occurring and is far from being settled.

“We’re in the middle of a very complicated process and I guarantee you we’re going to have a multiplicity of options,” said Barry Horowitz.

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