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Summary for May 30 - June 03, 2011:
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Tuesday, May 31, 2011

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Who will pay for cold ironing?

By Richard Knee for CBN in San Francisco

American President Lines on Friday became the first ocean carrier to hook a vessel up to shoreside electricity at the Port of Oakland, and company executives told a gathering of customers, port and government officials, dockworkers, seafarers and reporters that it isn’t costing shippers a cent.

But who will pay long-term as efforts to cut and clean up berthed ships’ emissions spread remains to be seen and, according to some observers, that issue is a major reason that it’s taken about three decades for shoreside hookups, also called cold-ironing, to move from concept to reality.

At the heart of the cost-sharing dilemma is fragmentation of ownership, said Eric Olson, senior vice president of Business for Social Responsibility, a San Francisco-based non-profit organization whose component arms include a Clean Cargo Working Group in which shippers and carriers are equal leadership partners.

“(Marine) terminals are separately owned from the ports, carriers and terminal operators are separately owned, and some carriers charter in ships, so there’s an ownership split there, too,” Olson said.

He added that Oakland and other West Coast ports are ahead of the curve in the effort to curb pollution from berthed vessels, and northern Europe “loves to do these things, too.” Across the Pacific, Hong Kong and Singapore are likely to take the lead while “China is a little slower to come along,” he said. Still, “pressure has increased exponentially” for air and water cleanup along China’s Pearl River Delta, where industrial activity is rapidly growing, he said.

In heralding the startup of cold ironing, APL executives cited cost and technological challenges in explaining why the practice is slow to catch on.

“You can’t just buy an extension cord and plug it in,” said Eugene D. Seroka, president of APL Americas. It took four years and $11 million to get the system installed at the Oakland facility run by Eagle Marine Services, APL’s terminal-operating subsidiary, Seroka said. Of that, $4.8 million came from a California Air Resources Board grant and APL paid the rest.

Asked how much of APL’s expense would be passed along to shippers, Rickey Childs, operations director at the terminal, said “none.”

Nate Miley, a member of the Bay Area Air Quality Management District Board of Directors, said an additional $25 million grant from the state air resources agency, matched by port authority and federal funds, would enable installation of 11 more plug-in systems around the port.

Also remaining to be seen is how much of the $500-an-hour cost for the electricity itself APL and other carriers will try to pass along.

David Olsen, manager of engineering for APL Americas, said the need to set international standards for hardware design, voltage, frequency, capacity and “quality” of power is another reason for the seemingly slow spread of cold-ironing. Vessels need to plug in wherever they dock, he said.

When the cold-ironing idea first surfaced, in the early 1980s, the shipping industry fought it. One of the objections was that with its engine shut off, a vessel could not get back to full power fast enough to evacuate a berth in an emergency, and at most ports there are not enough tugs to bring into service in a multiple-ship evacuation.

But with or without shoreside power available, a ship’s main engine is always stopped in port, said George Werdann, master of the APL Singapore, the vessel that inaugurated cold ironing at Oakland on Friday. The difference is that cold-ironing enables the shut down of diesel-fueled generators on ship and, even then, unhooking the vessel-to-shore cables takes about the same amount of time, 30 minutes, as bringing the main engine back to full power, Werdann said. Furthermore, 3,000-horsepower horizontal propellers obviate the need for tug assistance, he said.

Seroka said cold ironing would cut emissions of nitrous oxide by 50,000 pounds and of particulate matter by 1,500 pounds a year at Eagle Marine Services’ Oakland terminal.


Credit Managers' Index: May was a step backward

The bottom might have dropped out of the economic recovery in May, according to the National Association of Credit Managers' Index (CMI).

Beginning in April of this year, the NACM said its CMI data "hinted at the problems with declining numbers in areas like sales, credit extension and dollars beyond terms."

"The momentum of the economic rebound has been reversed for the time being and for reasons that should not come as a shock to many," said Chris Kuehl, PhD, managing director of Armada Corporate Intelligence and the NACM's economic advisor.

The biggest drop in May's CMI was in sales at 59.4, the lowest performance level since September 2010, especially in the manufacturing and service sectors, according to the NACM report.

"There is widespread concern that the consumer was retreating from spending again as retail numbers in general have been tepid," the NACM report said.

"The CMI data reflects the decline in demand at the manufacturing and wholesale level, and it is very likely that consumer retail numbers will dip correspondingly in June," said Kuehl.

"The CMI data generally presages activity in the consumer sector as it reflects the activity in the commercial sector."??

Dollar collections dropped to a level last seen in August 2010 as per the May CMI, as several U.S. companies are now contending with inflation.

"As companies start to exit the recession, they often face some severe competitive pressure, as there is nearly always a market leader ready to put pressure on a given industry" the NACM report said.

"As the market leader starts to become aggressive and goes after market share, other competitors in that sector have to keep pace—even if they are not ready. They start to spend more despite limited resources as they fear losing their market position. Add in an inflation surge and there will be some real consequence," the report said.

Despite the less-than-stellar news for May's CMI, "there is still a sense that conditions will improve as the threat of inflation fades, but if the threat continues to advance there is likely to be another wave of negative responses" the NACM said.

"The most dramatic changes in the overall index represent an early warning of some bad times ahead if conditions do not improve on the inflation and growth fronts," said Kuehl.


Zim parent under fire from U.S. for suspected Iran ties

The U.S. State Department announced it has imposed sanctions on an Israeli shipping firm, alleging the sale of a tanker valued at $8.65 million to the blacklisted Islamic Republic of Iran Shipping Lines (IRISL).

The State Department is specifically targeting Ofer Brothers Group, owned by Israel’s wealthiest billionaire Sammy Ofer, over engaging in activity that the U.S. government deems as aiding Iran in its nuclear-development program.

Ofer Group is the parent company to container-shipping line Zim, as well as Tanker Pacific, one of the two firms under the U.S. government’s scrutiny, along with Morocco-based Associated Shipbroking for allegedly brokering the deal with IRISL.

There have also been at least 13 calls by Ofer-owned ships at Iranian ports in the past 10 years, according to the global shipping database Equasis.

Iran has since denied the tanker deal. Ofer Brothers have thus far insisted they’ve done nothing wrong, and Israel’s government, which itself has led calls for Iran’s nuclear disarmament, has reportedly set up its own investigatory committee too find out if laws were indeed broken.


China Southern to buy Boeing 777 freighters for $1.58 bil

China Southern Airlines Co Ltd announced it would buy six Boeing B777 freighters at a total pricetag of $1.58 billion. The six freighters are scheduled for delivery between 2013 and 2015, the airline said.


Study: Arctic shipping routes will open up, but inland piplelines could melt, too

Three Arctic shipping corridors could be completely open to shipping traffic over the top of the world by mid-century, but close to 400,000 square meters of related Canadian land might disappear from global warming, according to a geographical study conducted by a team from the University of California, Los Angeles.

The upper reaches of Canada, nearest to the melting shipping routes, have been dependent upon a network of roads built over ice to carry a variety of supplies that range from mining equipment to diesel and groceries, according to a story on the UCLA study in Canada’s national newspaper, the Globe and Mail.

“This is a transportation system that is going to be profoundly affected by a warming climate in an adverse direction,” said Scott Stephenson, a physical geographer and PhD student at UCLA who was the lead on the study.

Using a climate model developed by the National Center of Climate Research in Boulder, Colo., the study reportedly says the Arctic’s temperature could increase by as much as 11 degrees in winter by century’s end.

The report also projects that by 2045-2059 range, all three major Arctic shipping corridors will be open to commercial vessels fitted with some ice-reinforcement, where they would transit from July to September.

The three routes, specifically, are: the Northern Sea Route that travels over the top of Russia; the North Pole route that is literally over the top of the world; and the Arctic Bridge, a route between Manitoba and Russia via Greenland’s eastern coast.

For the full Globe and Mail story:


Thursday, June 2, 2011

Top Story

CMA CGM responds to scrutiny from U.S. congressional leaders

France's shipping giant CMA CGM Group issued a statement this week where it said it wanted to clarify issues surrounding the scrutiny it has been under by some U.S. congressional leaders over why the ocean carrier's MV Victoria was seized by Israeli naval forces in March and found to be carrying 50 tons of Iranian-sourced weapons.

The weapons cache seized from the ship in the Mediterranean Sea included 3,000 mortar shells and close to 70,000 rounds of ammunition.

Other shipping groups are under U.S. scrutiny for suspected shipping ties to Iran's nuclear development, including Israel's own Ofer Brothers, the owners of container-shipping line Zim and the liquid bulk-shipping group Tanker Pacific.

CMA CGM responded to the scrutiny this week that was specifically coming from Republican congressmen Mike Conaway and Peter King, who recently sent a sent a letter to U.S. Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner over what they allege has been CMA CGM's failure to adhere to international counterterrorism procedures.

"Like other leading international maritime shipping companies, on very rare occasions, CMA CGM has to deal with fraudulent shipping documents, containing misleading information about the true nature of the shipped cargo," was the carrier's response in a statement.

"In March 2011, for example, the shipper of three containers carried on the MV Victoria falsely described their contents in the shipping documents These documents, prepared by the shipper, clearly indicated that the containers were loaded with lentils, when in fact they contained weapons," the company said.

CMA CGM claims the MV Victoria incident is on par with "postal mail, i.e. the declarative principle."

The shipping line's statement goes on to say:

"A maritime shipper loads containers that are delivered sealed to dockside, without any other knowledge of their contents than what is declared by the customer on the shipping documents. As a result, the carrier cannot be held liable for the contents. The shipping documents are presented to customs officials and local authorities, who then grant the export licenses. They are the only persons authorized to inspect container contents, as needed."

The shipping line said that in the MV Victoria incident's case "after impounding the incriminated containers, Israeli authorities allowed the ship to continue on its voyage. No fines were levied, no security deposit was required and no legal action was taken against the ship or its owner, which was in no way held to be liable."

Subsequently, CMA CGM said it has created an in-house "Iran Compliance Desk" that works with its shipping agents over areas that include: verifying the identity of parties in the shipping contract and the legality of the cargo being shipped; obtaining a letter of indemnity from the shipper confirming the legality of the cargo to be shipped; inspecting any cargo loaded in Iran; and ensuring container traceability so contraband cargo can be impounded and returned to the shipper.

CMA CGM said it is developing "awareness building initiatives" and "written directives" to be circulated to its network of agents.

The company said it would also increase its personnel training to be in compliance with U.S. Office of Foreign Assets Control (OFAC) regulatory issues.

Bi-partisan effort in U.S. Senate to advance surface transport reauthorization

A bi-partisan team of U.S. senators recently announced progress in the drafting of a new piece of legislation that would reauthorize, and consolidate, several federal surface transportation programs.

Senators Barbara Boxer (D-Calif.), James Inhofe (R-Okla.), Max Baucus (D-Mont.) and David Vitter (R-La.) jointly announced Senate Environment and Public Works Committee members are working on "Moving Ahead for Progress in the 21st Century (MAP-21)."

"It is no secret that the four of us represent very different political views, but we have found common ground in the belief that building highways, bridges, and transportation systems is an important responsibility of the federal government, in cooperation with state and local governments and the private sector," the group of senators said in a statement.

The MAP-21 legislation is aimed at freezing current levels of spending for transportation infrastructure programs.

Moreover, MAP-21 would also reportedly eliminate earmarks and consolidate several programs into a more focused national transport program.

The new transportation legislation would also create America Fast Forward – a program aimed at stretching federal dollars for locally approved and funded transportation projects, and adding funding to Transportation Infrastructure Finance and Investment Act (TIFIA) projects.

"Our goal is to attain the optimum achievable authorization length depending on the resources available," the senators said.

"It is critical that this be done in a way that does not increase the deficit and can achieve bipartisan support."

The industry trade group, Coalition for America's Gateways and Trade Corridors, released a statement on MAP-21, applauding it for being a more "focused freight program that recognizes the importance of a dedicated multi-modal freight initiative."

"Although the progress alluded to may bring forth a full authorization bill sooner rather than later, the joint statement by the Environment and Public Works Committee recalls in some ways the Commerce Committee's bill of a couple of years ago establishing principles that they have adhered to in subsequent 'pieces' of authorization-targeted legislation," the CAGTC said.

"That approach has had a useful effect in allowing the committee members to develop specific legislative proposals, such as the FREIGHT Act ... that are consistent with the committee's direction for authorization."

Port of Oakland to get $18 mil for ship channel maintenance

The Port of Oakland has been awarded $18 million in Federal monies from the Harbor Maintenance Trust Fund to keep its shipping channel at a 50-foot depth.

The port spent a decade and $433 million to dredge its harbor down from 42 feet to 50 feet, completing that project in 2009.

The maintenance dredging work is expected to commence by summer's end, the port said.

Georgia’s governor could get $70 mil from 2012 federal budget

Georgia Governor Nathan Deal told reporters this week from the nation’s capitol that he might be able to secure at least $70 million of the $105 million the Georgia Ports Authority had originally sought from the Federal Government’s 2012 budget for phase one dredging of the Savannah River.

The Port of Savannah’s shipping channel is currently at a depth of 42 feet and the port authority wants to dredge it another 6 feet down at a cost of $588 million in order to be prepared for post-Panamax shipping once the Panama Canal is widened in late 2014.

Con-way donates $100K to Joplin disaster relief efforts

Trucking firm Con-way Inc. announced it is donating $100,000 to support disaster relief efforts in Joplin, Missouri, which was recently devastated by one of the most powerful tornados in U.S. history.

Joplin is the headquarters of Con-way Truckload, one of the company's three principal business units.

Con-way said it is also making another $100,000 contribution to a separate fund set up for Joplin employees of Con-way Truckload who suffered losses from the tornado.

The company said it has established The Con-way Truckload Employee Tornado Relief Fund, providing a mechanism for Con-way employees nationally to assist fellow employees.


Friday, June 3, 2011

Top Story

It’s official: Two largest industrial real estate firms merge

The two largest publically traded warehouse and distribution companies – Denver-based ProLogis and San Francisco-based AMB Property Corp. – announced their pending merger is official and debuts on the New York Stock Exchange under the symbol PLD.

The industrial real estate firms reportedly have a combined stock market value of nearly $14 billion, and jointly form the biggest warehouse REIT in the world with $46 billion in assets and $80 million in annual general and administrative savings, according to a joint statement.

Hamid Moghadam, AMB's former CEO, and Walter Rakowich, ProLogis' former CEO, will serve as co-CEOs of the combined company through December 31, 2012, at which time Rakowich will retire and Moghadam will become sole CEO.

“This merger brings together two great organizations to form an even stronger global industrial real estate company,” said Moghadam.

In a video interview with the two CEOs on their corporate websites, Moghadam pointed to both companies’ strongholds in North American warehouse and distribution and to Prologis’ major presence in European industrial property markets being an advantage for the newly formed entity.

As a result of the merger, former ProLogis common equity holders now hold approximately 60 percent of the combined company's common stock, and former AMB common equity holders hold approximately 40 percent, the companies said in a statement.

The new company's corporate headquarters will be in San Francisco, with its operations headquarters based in Denver. The combined company is structured as an UPREIT.

Port of L.A. approves $977 mil fiscal budget

The Los Angeles Harbor Commission approved a $976.6 million 2011-2012 fiscal year budget, a 7.4 percent or $67 million increase from the current fiscal year that the busiest container port in the Americas said is a result of higher revenue from operations and grants.

“Local, national and global economies have regained stability and forward momentum,” said Harbor Commission President Cindy Miscikowski in a statement.

“This year’s port-approved budget strikes the right balance between ensuring competitiveness and financial strength, but with a disciplined use of resources to achieve these objectives,” Miscikowski said.

The Port of L.A. said it is riding a growing tide of shipping business with a 16 percent increase in containerized cargo to date in 2010, helping the port maintain its AA Bond rating.

The port said it anticipates the same approximate level of operating revenues at $405.4 million for its new fiscal year, and projects a $23.2 million or 2.3 percent decrease in total estimated expenditures.

The port’s capital investments the fiscal year will include $10.7 million in terminal improvements at the TraPac Container Terminal and $5.6 million at the APL facility at Berths 301-306.

Another $45 million is allocated for L.A. waterfront project construction, and $44 million for surface transportation infrastructure, the port said.

A $7.2 million investment is planned for what the port termed clean air Action plan initiatives, including $2.7 million for the clean truck program, $2.5 million for the vessel speed reduction program, $1.5 million for the technology advancement program, and $.5 million for the TraPac AMP demonstration project.

The port said it is also investing $24 million to enhance port security.

GSC Logistics acquires PNW-based trucking firm

Oakland, Calif.-based GSC Logistics, Inc. announced it has acquired Seattle-based Best Way Trucking.

GSC Logistics said in a statement that “the combined companies will provide services throughout Northern California and the Pacific Northwest,” and offer services that include container drayage, cross-dock deconsolidation, transloading, super-chassis heavy hauling, over the road refrigerated and dry freight transportation, hazardous materials and intermodal drayage services.

Israeli shipping magnate dies amid scandal

Amid a scandal that has pitted the U.S. government against his shipping firm, the billionaire magnate Sammy Ofer died today at age 89 in Tel Aviv, according to news reports.

Ofer Group is the parent company to vast holdings including container-shipping line Zim, and Tanker Pacific, the latter of which has come under U.S. State Department scrutiny, alleging the sale of a tanker valued at $8.65 million to the blacklisted Islamic Republic of Iran Shipping Lines (IRISL).

Iran has since denied the tanker deal. Ofer Brothers have thus far insisted they’ve done nothing wrong, and Israel’s government, which itself has led calls for Iran’s nuclear disarmament, has reportedly set up its own investigatory committee too find out if laws were indeed broken.

Sammy Ofer founded, and ran the family empire with his brother, Yuli, that covers an array of holdings in banking, chemicals, energy, real estate and shipping.

The family released a statement today that did not the scandal they are embroiled in, but said: "Through his children and grandchildren, and in the spirit of the founder, the group's business will continue without change, while protecting our tradition of hard work and commitment, which constitute the great inheritance Sammy left behind him."

Girl falls asleep in freight train in Canada; wakes up in the U.S.

A 16-year-old girl who had gone missing from her home in Manitoba, Canada, was found after she had take shelter and fallen asleep in a Canadian National freight rail car and subsequently woke up the next morning in Duluth, Minnesota, according to news reports.

While preliminary news is that the girl did not plan to cross the border between Canada and the U.S., the U.S. Department of Homeland Security transported her to the Office of Refugee Resettlement in New York City where her parents reportedly picked her up.

The motive for her disappearance has not been established.


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