Cargo Business Newswire ArchivesSummary for May 30 through June 3, 2016:
Tuesday, May 31, 2016
Capitol Watch: Congress' Long Transportation To-Do-List
By Anna Denecke, Associate, Blakey & Agnew
It might not feel like summer in Washington but Congress is nonetheless barreling towards August recess. A number of transportation-related items lay unfinished on the Congressional to-do-list and the House and Senate are working overtime to see that progress is made on these bills before they leave town in mid-July.
First up is the FY17 Transportation, Housing, and Urban Development (THUD) bill. Appropriations bills, of which there are twelve total, fund the various branches of the government for the duration of the federal fiscal year. While many of the programs in the recently-passed Fixing America's Surface Transportation (FAST) Act are funded through the Highway Trust Fund, and therefore not subject to appropriations, THUD does allocate important dollars to various United States Department of Transportation (USDOT) modal administrations and also serves to authorize the TIGER grant program.
In recent history, Congress has been unable to pass THUD as a stand-alone piece of legislation, instead resorting to combining all twelve appropriations bills into a single omnibus, which is usually passed by September 30, the end of the fiscal year. This year, both the House and the Senate are bullish on returning to regular order and passing appropriations bills individually. To demonstrate commitment to regular order, the Senate introduced their FY17 THUD proposal on April 21. The legislation provides $16.9 billion in discretionary appropriations for USDOT, including $550 million for the ninth round of TIGER. At time of print, Senate Majority Leader McConnell (R-KY) was moving aggressively to schedule a final vote on the legislation. The House introduced their FY17 THUD proposal on May 18. The legislation authorizes $19.2 billion in discretionary appropriations for USDOT and includes $450 million for TIGER. The House bill was reported favorably by the subcommittee with jurisdiction over USDOT funding on May 18 and now awaits action from the full Appropriations Committee.
While it's possible that both chambers could pass THUD before exiting Washington for August recess, a number of controversial provisions have slowed forward progress on the bill. Some, including funding to combat the spread of the Zika virus, are not related to transportation, but language aimed at changing the trucker Hours of Service regulations has many concerned. The White House issued a veto threat over the Senate THUD, citing displeasure with the Hours of Service provision in particular.
Also on the Congressional transportation to-do-list is the long-delayed Federal Aviation Administration reauthorization. In February, Transportation & Infrastructure Committee Chairman Bill Shuster (R-PA) introduced H.R. 4441, the Aviation Innovation Reform and Reauthorization (AIRR) Act. In addition to reauthorizing the Federal Aviation Administration until FY22, the AIRR Act proposes privatizing air traffic control by transiting oversight of the system to a private, non-profit entity. Shuster's bill was reported favorably by the Transportation and Infrastructure Committee by a vote of 34 to 25 on February 11, but has not been taken up on the House floor.
On the Senate side of the Capitol, Sen. Thune (R-SD) introduced his own version of a long-term FAA reauthorization bill on March 9, which reauthorizes the FAA and related programs through FY17 and does not attempt to make reforms to air traffic control. The Senate overwhelmingly passed the Federal Aviation Administration Reauthorization bill on April 19, by a vote of 95 to 3. The House can either take up the Senate version or try to move forward with Chairman Shuster's AIRR Act and conference the two proposals together.
Lawmakers are also bullish on passing a Water Resources Development Act (WRDA) before they adjourn for August recess. Traditionally, Washington passes WRDA biennially. The legislation serves to authorize water projects for study, planning and development by the U.S. Army Corps of Engineers. WRDA also acts as a vehicle for Corps'-related policy changes.
On April 26, Environment and Public Works Committee Chairman Inhofe (R-OK) and Ranking Member Boxer (D-CA) introduced the Water Resources Development Act of 2016. The bill authorizes 25 Army Corps projects and provides additional resources to maintain drinking water and wastewater infrastructure. The House, meanwhile, is holding hearings on the topic. Chairman Shuster indicated this month he plans to have WRDA on the House floor by June.
Blakey & Agnew, LLC is a public affairs and communications consulting firm based in Washington, DC.
Can Intermodal Carry the Freight for Transportation?
By William DiBenedetto, CBN Feature Editor
The buzzwords for intermodal logistics are technology, innovation, collaboration and cost-control, but the trick is to make it all work in an economy handicapped by increasing costs, the continuing driver shortage and sluggish rail numbers so far this year.
Rail traffic started out relatively strong this year but then "fell off a cliff" in March and April, according to Hale Stewart, a lawyer and transportation analyst for Seeking Alpha. "While I continue to be mildly optimistic about the economy for the remainder of this year, there are some legitimate pessimistic arguments," he says, based mainly on his study of rail traffic data.
Stewart breaks out rail data by dividing it between intermodal units (which tend to be manufactured goods) and carloads, which tend to be commodities like coal, mineral ores, and oil. Briefly put, carloads have been "awful," he notes, while intermodal has been "negative, but not so awful." He also ties the rail data to trucking and shipping performance, concluding that they are "confirming the negative signal from rail" because manufacturing on a global scale has been negative and "the commodity collapse - at least in terms of commodities supplied - is continuing."
Class I railroads have been trying to offset the commodity collapse—especially the loss of coal volumes and revenue—by diversifying traffic mixes and focusing on other business segments, namely intermodal. BNSF Railway is a good example of this dynamic. Its intermodal volume increased 6 percent in the first quarter year-over-year, while the industry average was only 1 percent. Neither the 1 percent increase in intermodal nor upticks in automotive and construction-related traffic were enough to help Class Is make up for the continued, steeper-than-expected decline in energy-related volumes.
"There's a slowly strengthening economy out there and we're doing a lot of business development to go after it, which again is being overshadowed by just the huge [negative] volume numbers for coal and shale, and the other headwinds we have," said Eric Butler, Union Pacific's executive vice president of marketing and sales, during UP's April 21 earnings teleconference.
The numbers are troubling for the rail industry and transportation in general. Are they sustainable, and can they even increase in light of the Panama Canal expansion, which is scheduled to open next month? The answer is maybe, but if the intermodal story will continue to have legs during the course of the year, it will need some smart thinking.
The quest for efficiency-improved infrastructure and technological innovation continues. "Re-engineering the intermodal yard, the container yard, and the ocean terminals by increasing density on current properties is the next generation 'throughput goal' for intermodal yards," says Curtis Spencer, president, IMS Worldwide, Inc. New wide-load gantry cranes, also known as rail-mounted gantry (RMG) cranes, are emerging as an alternative to current mechanical choices for intermodal, terminal, and ocean terminal operations, he says.
BNSF recently introduced RailPASS, a truck driver app designed to expedite in- and out-gate processes for truck drivers who drop off, pick up or need to locate a trailer or container at a BNSF intermodal facility. The app is part of the railroad's efforts to boost intermodal service performance to help generate more domestic volume. Drivers can access RailPASS on their smartphone or tablet to input shipment data, receive equipment status information and update an assigned parking location. BNSF say the app eliminates the manual inputting of information at terminal gates and reduces the need for a trucker to stop at a driver assistance building.
CSX Corporation plans to build a $272-million intermodal rail terminal in North Carolina; the idea is to make the Carolina Connector (CCX) a major transportation hub for the region. The projected completion date is the end of 2019. CSX has pledged $150 million to cover costs, and is expecting to receive $100 million from North Carolina's Strategic Transportation Investment (STI) program. The remaining money is expected to come from other development programs. Then there's "autonomous logistics," which according to DHL's "Logistics Trend Radar," is on the rise both on the ground in the form of self-driving vehicles, and in the air—as in unmanned aerial vehicles (UAVs) .
"The next step for self-driving vehicles in logistics will be to overcome regulatory and security challenges to deploy autonomous vehicles on public roads," says the DHL report. And UAVs "still require a bit more time before mainstream adoption."
A long list of emerging trends cited by DHL in its trend radar report include:
- Convenience logistics – meaning 24/7 availability and convenience. "With increasing consumer trust in purchasing groceries and pharmaceuticals online, there is high demand for new cold-chain packaging and delivery solutions that maintain the integrity and traceability of temperature-sensitive products."
- De-stressing the supply chain – "Supply chain complexity and varying customer needs require the right mix of transportation modes and services. De-stressing is achieved by adjusting logistics to operate sustainably at lower cost with higher quality. For example, a tactical transportation 'slow-down' can balance the supply chain, cut storage costs, and achieve regulatory compliance by reducing the carbon footprint."
- Fair and Responsible logistics – "The intersection between the need to remain competitive and the need to increase sustainability has given way to a new strategy called fair and responsible logistics. Logistics providers can meet these demands by providing new services that generate revenue while also improving the welfare of society and the environment."
- Logistics marketplaces – The growing need for transparent, flexible and easily adjustable logistics services "fosters the creation of disruptive digital brokerage platforms that match a variety of logistics demands with supply. Such centralized marketplaces can provide visibility on the information, rates, and services of different logistics providers, and enable solutions to be digitally tailored to meet the needs of each customer."
- Multi-purpose networks – Sector-specific or even customer-specific logistics chains will become a thing of the past through the rise of multi-purpose networks, "enabled by innovations in transportation, packaging, real-time supply chain monitoring, as well as collaboration between different sectors."
- Smart energy logistics – The increasing shift towards renewable energy sources such as solar, wind, etc., is propelling the adoption of electric mobility solutions in logistics.
Some of these trends are closer to reality than others but all are on the horizon, making it an exciting time for transportation logistics and cargo business. Maybe we'll see them (and you) on the other side…
Oakland terminal making appointments mandatory for import pick-ups
Oakland International Container Terminal (OICT) said Friday it's making appointments mandatory for most container import pick-ups starting June 6. That means port truckers usually won't be able to drive off with loaded boxes without a reservation. The terminal said its goal is to shorten lines at terminal gates while speeding up cargo delivery to customers.
"We applaud this move," said Port of Oakland Maritime Director John Driscoll. "This is the largest marine terminal in Oakland and they're taking all possible steps to improve trade flow."
The terminal said it will require appointments for drivers picking up containers from import delivery lanes. Mandatory import reservations will be an extension of the terminal's existing appointment system, OICT said.
OICT said appointments will eliminate long lines of drivers waiting for imports on a first-come, first-serve basis. The terminal handles 67 percent of the containerized cargo shipped through Oakland. It releases about 1,000 import loads daily.
The terminal said it won't require appointments for other transactions, such as empty container return. Appointments won't be required for three unique types of import pick-ups: peel-offs, which enable drivers to take the first container from a stack of imports all intended for the same customer; dray-offs, which are imports transported to a nearby facility and available for pick-up around the clock; and pre-mounted loads, which are import containers affixed to chassis and ready for immediate hauling over the road.
Singapore Exchange in talks to buy London's Baltic Exchange
The Singapore Exchange (SGX) is in exclusive talks to buy London's Baltic Exchange, which has been at the heart of the global shipping industry for centuries, the two companies said last week.
Founded in 1744, the Baltic Exchange is no longer a forum for chartering vessels but owns benchmark indexes for global shipping rates and provides a trading platform for the multi-billion-dollar freight derivatives market.
The takeover talks come as the global shipping industry grapples with the worst market conditions for decades after a slump in commodity markets coincided with an increase in the number of vessels, sending freight costs to record lows
Sources told Reuters early last week the Baltic and SGX had entered into advanced talks, with one putting the value of a potential deal at about $100 million. The Baltic and SGX said in a statement later they had entered a period of exclusivity which would expire on June 30.
A purchase by SGX, which has a market value of $5.9 billion, would boost new Chief Executive Loh Boon Chye's plans to diversify its revenue streams at a time when it has been hit by sluggish equity listings and securities volumes.
"Additionally, Singapore's ambition to be a global maritime hub further reinforces SGX's view of trying to do this transaction," Loh told Reuters.
SGX sees huge long-term potential for freight derivatives and clearing and has launched new products to increase the appeal of its Asian pricing benchmarks for commodities such as iron ore, liquefied natural gas and coking coal.
Baltic Chairman Guy Campbell said in a statement: "The board considers this proposal is an exciting development for the Baltic and all the stakeholders in the markets it serves."
"SGX has indicated that in the event its bid is successful, it would maintain the current model for the Baltic business and our presence and building in London, as the platform for the Baltic's future growth."
The Baltic is owned by about 380 shareholders, many from the shipping industry. It produces daily benchmark rates and indexes used around the world to trade and settle freight contracts.
The Baltic said it would hold joint meetings with the SGX, shareholders and wider members in the coming weeks to explain the terms of the proposal before presenting an agreement which could form the basis of a recommendation to shareholders.
An MSC circular on Advice to Administrations, port State control authorities, companies, port terminals and masters regarding the SOLAS requirements for verified gross mass of packed containers has been agreed by the Maritime Safety Committee (MSC) of the International Maritime Organization, following discussion on the pending entry into force of the requirements in SOLAS regulations on the verification of the gross mass of packed containers on July 1.
Concerns were noted regarding the application of the requirements to a container that was loaded before July 1 and then transshipped. The committee also noted comments that, in the first few months after July 1, some leeway should be provided in order for any problems resulting from software updates, required for the electronic collection and transmittal of verified gross mass data, to be rectified without causing delays to containers being loaded.
In this context, the MSC agreed that while there should be no delay in the implementation of the SOLAS requirements, it would be beneficial if administrations and port state control authorities could take a "practical and pragmatic approach" when enforcing them, for a period of three months immediately following 1 July 2016. This would help ensure that containers that are loaded before 1 July 2016, but transshipped on or after 1 July 2016, reach their final port of discharge without a verified gross mass and it would provide flexibility, for three months immediately after 1 July 2016, to all the stakeholders in containerized transport to refine, if necessary, procedures (e.g. updated software) for documenting, communicating and sharing electronic verified gross mass data.
Bulk carrier detained when crew unable to use navigational equipment
A cargo ship made its way down the Queensland coast and through the Great Barrier Reef without its crew knowing how to use the bulk carrier's electronic navigation equipment.
The Australian Maritime Safety Authority detained the Panama-flagged bulk carrier, the African Alke, in Brisbane on Thursday.
An AMSA spokesman said a port state control inspection found the 177-metre ship's bridge watch-keeping officers were unable to show they could operate the vessel's Electronic Chart Display and Information System.
That system helps ships navigate Australia's defined coastal routes, including through the Great Barrier Reef.
"The vessel was detained because the safety management system had not identified a lack of on board familiarization training in the use of ECDIS," the AMSA spokesman said.
"The ship's operators have flown an ECDIS trainer in from Singapore to train the crew."
By Anna Denecke, Associate, Blakey & Agnew
By William DiBenedetto, CBN Feature Editor