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Summary for June 2 through June 6, 2014:
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Monday, June 2, 2014 Top StoryDrewry: P3 services may tip EU-to-North American East Coast trade capacity in the wrong direction
Drewry notes the balance between supply and demand in this trade lane is difficult to predict, since the P3 alliance hasn't yet confirmed when their three new services will be introduced or how big the ships to be deployed. The launch of the Maersk, MSC, and CMA CGM cooperative may cause trouble, since average vessel utilization will approaching a "comfortable" level through the end of June, and additional capacity growth may tip back the balance in the wrong direction. North America's imports from Northern Europe rose from 192,000 TEUs in February to 247,000 TEUs in March, the publication reports. Due to small vessel schedule changes made between February and March, Drewry said, and the big seasonal increase in westbound cargo, average vessel use jumped from 83 percent in February to 100 percent in March, improving freight rates. Industry analysts say that shippers took advantage of a lull in carriers' pricing activity caused by uncertainty over the new services of the G6 and P3 alliances. Drewry says many anticipate an increase in freight rates afterward these mega-alliances deploy. March's cargo figures brought the total for the first quarter on the trade route up to 634,000 TEUs, a 3 percent year-over-year increase, the article said. Port of Long Beach appoints new harbor commissionerThe Long Beach City Council has appointed Long Beach City College executive Lou Anne Bynum to the Long Beach Board of Harbor Commissioners, according to a port statement. Bynum fills the vacancy left by former Commissioner Thomas Fields, who departed in November 2013. The unexpired term will end June 2015. Bynum is the executive vice president of college advancement and economic development for Long Beach City College, where she has previously served as vice president and administrative dean. "I've long worked with representatives of the Port of Long Beach to develop educational and job opportunities in support of economic and workforce development in the region," said Bynum, "and I look forward to continuing those strong ties between the Port and the educational community." Bynum has been active in the community, including former service as chair of the Long Beach Area Chamber of Commerce, vice chair of the Long Beach Economic Development Commission and president of the Southern California International Business Association. NYK Line expands services at JAXPORTNYK Line is expanding its roll-on/roll-off service to and from Jacksonville to include connections in Asia, according to a port statement. Starting in June, NYK's existing RoRo service to the Middle East will increase to three sailings per month from JAXPORT. "We are pleased to further grow our partnership with NYK RoRo and provide more options to the industry," said Roy Schleicher, JAXPORT executive vice president and chief commercial officer. According to the NYK website, the line's Americas-to-the-Middle-East RoRo service loads at ports in Baltimore, Savannah, Jacksonville, Houston, Los Angeles and Tacoma; delivering to Jeddah, Aqaba, Hodeidah, Massawa*, Mombassa*, Durban, Muscat, Dubai, Abu Dhabi, Doha, Bahrain, Dammam, and Kuwait. (*NYK RoRo service to East Africa has been temporarily suspended.) The port statement notes that NYK's expanded service offers connections to Thailand, Malaysia, Indonesia, Philippines, Vietnam, Hong Kong, Japan, and Australia, as well China and Taiwan via Japan. It said all types of Ro/Ro cargo is accepted for the new service, including mafi trailers for selected destinations. CMA-CGM invests $300M in Nigeria's Lekki portFrench shipping giant CMA-CGM announced it will invest $300 million in the development of the Lekki Container Terminal in Nigeria. Mathieu Friedberg, CMA-CGM vice president in charge of African lines, said that the company's acquisition of 25 percent of Lekki terminal will create jobs and open up the country's shipping sector for more foreign investments. The Lekki terminal will serve as the new hub for West Africa, he said, adding that when operations begin, it will help ease off the pressure off the Apapa port. "Africa is offering new challenges and opportunities which need to be addressed through joint efforts by all stakeholders," Friedberg said. "The Lekki port project is a public-private partnership, which when completed, will be the first modern terminal in Nigeria. We decided to invest here because of the strategic importance of this place to the economy of the country." For more of The Sun story: sunnewsonline.com NY/NJ Port Authority: $400M Jersey City lawsuit without meritJersey City's $400 million lawsuit against the Port Authority of New York and New Jersey is "without merit," a spokesman for the bi-state agency said today. The Port Authority owns 40 properties in Jersey City, and the city says the agency pays "no real estate taxes" on any of them. Jersey City says if the bi-state agency paid traditional taxes on all its properties, the city would see an additional $18 million annually. Port Authority spokesman Steve Coleman said that the Port Authority would not be commenting on the lawsuit, which Jersey City filed last week in federal district court. "The vitality of Jersey City has been important to the Port Authority for many years, and that's why we invested more than $1 billion to create a modern, robust PATH system that serves tens of thousands of city residents daily," Coleman said in an email. "It's also why we acquired and invested millions in the Global Terminal, giving the city a thriving, job-creating port facility." For more of the Jersey Journal story: nj.com
Tuesday, June 3, 2014 Top StoryNLRB judge: ILWU workers guilty of deliberate slowdowns at Portland port
Administrative law Judge Jeffrey D. Wedekind found evidence that union workers intentionally slowed their pace between September 2012 and June 2013. He ordered ILWU Local 8 and Local 40 in Portland "to cease and desist from engaging in such unlawful secondary conduct." Contentious relations between union dockworkers and Philippine-owned terminal operator ICTSI Oregon, which operates Terminal 6 under a 25-year lease, have been ongoing for two years. Chronic labor disputes at the location have slowed work and triggered truck backups, delayed and rerouted ships and lawsuits – almost causing the port to lose its largest customer, Hanjin Shipping. As a result of the conflict and to keep business at the port, the Port of Portland started a $4 million incentive program offering extra payments to container carriers who continued to call. "Poor productivity means that ICTSI must order more gangs to work the vessels that call on Terminal 6, which results in much higher labor costs," ICTSI Oregon Chief Executive Officer Elvis Ganda told The Oregonian earlier this year. The union has blamed the conflict on poor business decisions by ICTSI, asserting that the terminal operator has no motive to make operations less efficient. For more of the Oregonian story: oregonlive.com NRF and 70 organizations urge Homeland Security to nix container scan mandateThe National Retail Federation, the U.S. Chamber of Commerce and the World Shipping Council organized a group of 70 organizations – including distributors, farmers, importers, manufacturers, retailers, logistics providers, and wholesalers – to send a letter to Secretary of Homeland Security Jeh Johnson urging him to repeal the 100 percent container scanning requirement. The letter expressed strong support of Johnson's May 5 letter to Congress renewing, for another two years, an extension of the deadline to implement 100 percent scanning of U.S. bound maritime containers. The group referred to the cargo-scanning mandate as "flawed" and "impractical," and encouraged DHS to instead develop a risk-based strategy to identify and inspect containers that "does not impair the efficiency of the global supply chain." The group said U.S. Customs and Border Protection, working with the support of U.S. importers, exporters, and ocean carriers, have already developed an effective risk-based strategy to screen all containerized cargo shipments bound for the U.S. and inspect those that are found to be high risk. They note the CBP method does not negatively impact the global supply chain. The letter noted that Congress knew when it passed the statute that it was "wholly impractical, which is why it included the provisions allowing the Secretary of the Department to waive the 100 percent scanning requirement every two years." In conclusion, the business groups asked that the DHS recommend that Congress do away with the 100 percent container scanning provision altogether, rather than having to go through the waiver process each year. Drewry: Big ships and higher volumes spark terminal operator collaborationThe post-Panamax mega container ships are triggering huge surges in global container terminal activity, according to the latest issue of Container Insight by Drewry Maritime Research. Coupled with the combined volumes of shipping line alliances, analysts say, this new paradigm requires fewer but larger terminals at each port, which will likely lead to increased cooperation among terminal operators. Drewry points to the Eurogate terminal in Hamburg as an example, which recently handled 11,600 TEUs from a single vessel – China Shipping's Le Havre, which is shared with CMA CGM and UASC. The researchers note that these large capacity ships need bigger, more efficient terminals, even if the annual throughput is no greater. Alliances are also having a huge impact on terminals. At the Port of Antwerp for example, MSC alone accounts for a massive throughput of 4.5 million TEUs per year, around half of the port's container traffic. Soon MSC's P3 Alliance partners Maersk Line and CMA CGM will add to Antwerp's burgeoning traffic, Drewry says, all likely accommodated at one terminal. All of this is causing terminal operators to work more closely together, consolidating terminal layouts and ownership. One example among many, according to Container Insight, is that A.P. Moller-Maersk Group has signed a strategic cooperation MOU with China Shipping regarding container terminals. Another is APM Terminals and MSC-affiliated Terminal Investment Limited, which together jointly own terminals in Santos, Callao and Marseilles-Fos. Drewry concludes that growth in ship size and alliances will have far reaching consequences for ports and terminals. More redevelopment of terminals is expected, as well as alliances and cooperation between international terminal operators. Maher Terminals names Frank Capo as new commercial headMaher Terminals, one of the largest container terminal operators on the East Coast, announced the appointment of Frank Capo as senior vice president of commercial enterprises. Capo, a seasoned marine terminal veteran, assumes oversight of Maher's commercial and customer service strategy, according to the company statement. Capo started at Maher in 1990 as a superintendent. He worked at Atlantic Container Line, then Inchcape Shipping Services where he served as senior vice president and North America operating officer. In 2001 Capo joined Marine Terminals Corporation as senior vice president of sales and marketing. His most recent position was with Total Terminals International in Long Beach California as the senior vice president and chief commercial officer. "Frank Capo returns with a wealth of East Coast and West Coast port experience that will serve Maher Terminals and its customers very well and continue the company's focus to meet and exceed customer expectations," said Cross. Captain missing after oil tanker sinks off JapanAn oil tanker sank off the Japanese coast Thursday after a large explosion. The captain of the ship was still unaccounted for almost 12 hours after the accident, and four of crewmembers were hospitalized for severe burns, according to the coastguard. The ship's boatswain remained unconscious with burns on his entire body, the statement said. The nearly 1,000-ton tanker had unloaded its crude oil cargo last week and was anchored off the coast of Hyogo prefecture, around 450 kilometers west of Tokyo, when the explosion occurred. For more of the Business Standard story: business-standard.com
Wednesday, June 4, 2014 Top StoryEuropean Union approves P3 Alliance
The proposed collaboration, which Maersk revealed in March, involves the three companies pooling approximately 250 ships to operate on three trades — Asia-Europe, trans-Pacific and trans-Atlantic — in order to lower costs. That deal came on the heels of a Far East-Europe alliance called G6 that was set up in late 2011 and includes APL, Hapag-Lloyd, Hyundai Merchant Marine, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Orient Overseas Container Line. The group had sparked scrutiny from the European Commission. The EU regulatory group said Tuesday it did would not take any action against either alliance. "At this stage, the commission does not intend to open proceedings in relation to P3 or G6," said Antoine Colombani, commission spokesman for competition policy. "The commission will follow market developments and will remain vigilant as regards any risks for competition that may arise from the implementation of P3 or G6. The commission will consider intervening if necessary." The United States regulators cleared the P3 for business in March 2014. For more of the Reuters story: reuters.com Special Harbor Commission panel to scrutinize Port of Long Beach budgetThe commissioners of the Port of Long Beach's Harbor Department created a special panel to review the port budget as disturbing signs have emerged over forecasts of a slight decline in cargo handling. Commissioners Rich Dines and Lori Ann Farrell were named to the panel, tasked with finding ways to clip the budget as revenue drops. Also, expenditures are predicted to increase and debt payments for large construction projects in process at the port will rise. In the proposed budget for fiscal 2015 that starts Oct. 1, documents obtained by the Register show that port revenue is forecast to fall 1.9 percent, expenses to rise 6.4 percent and debt service to surge 38.6 percent. The increase in expenses and debt were anticipated as part of the aggressive capital improvement program in the port, said Al Moro, acting executive director of the Port of Long Beach. "The investment in modernization will pay great dividends in the future," Moro said. For more of the OC Register story: ocregister.com B.C. ports threatened by prospective tug boat crew strikeUnion-affiliated tug boat crews are threatening strike action against employer company Seaspan, a move that could shutdown shipping through several Canadian ports in British Columbia. Seaspan tugs help vessels entering and exiting port terminals in Vancouver Harbour, Deltaport, Victoria and other locations on the B.C. coast. A strike could disrupt container imports, and shipments of oil, sulfur, potash, lumber and coal. Union officials say Seaspan is trying to impose harsh concessions on more than 400 of their members following their contract expiration last fall. International Longshore and Warehouse Union Local 400 were set to hold a strike vote Tuesday and tug boat captains and engineers represented by the Canadian Merchant Service Guild said they would hold a strike vote Wednesday. The new seven-year contract would provide one per cent pay increases in each of the first four years, followed by 1.5 per cent each year after that. The terms that are causing the conflict, according to Local 400 president Terry Engler, include Seaspan's goal to slash benefits costs by more than half and gain more flexibility to contract work out or revise shift schedules. Engler said crews might be required under the federal labor code to accept the new contract if they show up for work, so the union won't take that chance. "Seaspan will have picket lines up before June 9 if it continues down this reckless road," Engler said. Seaspan CEO Jonathan Whitford said the company is no longer cost competitive against "aggressive" rivals and the altered employment terms are "necessary changes to improve our competitive position and ensure our future viability." For more of the Surrey Leader story: surreyleader.com President of Mexico: $4.55B will be invested to develop nation's portsMexico President Enrique Peña Nieto said $4.55 billion would be invested to expand and modernize Mexico's ports. Speaking at a Navy Day ceremony Sunday at the port of Tampico, Peña Nieto said that legislation would be updated as part of the effort to improve Mexico's competitiveness in the maritime arena. He said regulations for the Maritime Navigation and Trade Law will be published over the next few days, and that his administration was working with the legislature on a new marine industry promotion law. "This year alone, more than 3.1 billion pesos ($241 million) are being invested in the industry's organization, strengthening the fleet, the creation of high-value trade networks and the commercial use of more marine species," the president said. For more of the Global Post story: globalpost.com Inspectors locked in refrigerated truck, taken for a rideA truck driver in Argentina who was upset with inspectors that found problems with his refrigerated cargo shut them in the back of the truck and took them for a long, chilly ride. Sanitary control inspector Valeria Aguirre said during a routine inspection they discovered the food inside the reefer truck wasn't being stored at an acceptable temperature and told the driver they were going to retain his cargo. She said while she and another inspector were in the back of the truck registering the goods, he locked them in and drove off. The inspectors called for help. The police stopped the vehicle after it traveled about two miles, arresting the driver and rescuing the shivering inspectors. For more of the USA Today story: usatoday.com
Thursday, June 5, 2014 Top StoryInside sources: China set to follow U.S. and EU in approving P3 alliance
The European Commission watchdog group gave their approval for the shipping alliance of Maersk Line, MSC and CMA CGM this week, aligning with U.S. regulators who said they would not raise antitrust issues concerning the deal. The sanction of Chinese regulators is the sole remaining major hurdle before the P3 shipping giants can implement their cooperative agreement globally. The three container lines have agreed to share ships, routes and logistics in a deal that would concentrate their control over some of the world's busiest trade routes. Chinese regulators are expected to give the okay later this month, according to two people familiar with Beijing's thinking. The Chinese waited to see how the U.S. and Europe would respond, said one individual familiar with the matter. Now, that they both have agreed, it is expected the Chinese will too by the end of the month, according to this source. Maersk Chief Executive Nils Andersen told The Wall Street Journal in May the company hadn't received any negative feedback in talks with Chinese regulators, suggesting the review was going smoothly. If China approves the union, the three partners will move up to 40 percent of all cargo transported from Asia to Europe and across the Atlantic and Pacific oceans. The alliance will allow the three companies to slash billions in annual costs by sharing each other's vessels and port facilities. It will also exploit each container carrier's geographic strengths to move cargo faster and more economically. For more of the Wall Street Journal story: online.wsj.com U.S. manufacturing growth slower than expected in MayManufacturing in the U.S. expanded more slowly than predicted in May on lower orders and production, according to the newest reading from the Institute for Supply Management, issued Monday. The ISM's factory index fell to a three-month low of 53.2 from April's 54.9 reading. A score above 50 indicates growth. The median forecast of economists surveyed by Bloomberg forecast 55.5. Some companies may be looking for more evidence of an increase in sales demand before they buy new equipment and expand capacity, the report suggested. "We have a little bit of a normalization in May of manufacturing output and sentiment after a big unwind of the winter weakness in April," said Guy Lebas, managing director of fixed income strategy at Janney Montgomery Scott. Manufacturing "is telling us right now that things are stable, not spectacular." For more of the Bloomberg story: businessweek.com China prepares to roll back tariffs on rare earth materialsChina is preparing to do away with divisive tariffs and quotas on the export of rare earth materials after a World Trade Organization panel branded them discriminatory earlier this year, an inside source told Reuters. China produces more than 90 percent of global rare earth materials, giving it unprecedented power over the supply of 17 elements that have a wide range of uses in high-tech industries such as defense and renewable energy. The move to comply with WTO rules would be a shift in policy for Beijing, but its long-term plan to improve pricing and gain market share in profitable downstream industries is expected to remain intact. After complaining that global market prices were too low to cover the environmental costs of production, Beijing implemented tough output quotas and export tariffs in 2010 on rare earth materials. Exporters have paid a tax of 15-25 percent this year. A WTO panel said in March that the tariffs violated trade rules by giving domestic consumers an unfair advantage over foreign competitors. Beijing is expected to accept the ruling and could cancel export restrictions on rare earth, tungsten and molybdenum by next year, an industry source with ties to the government said. He asked to remain anonymous since he is not authorized to speak with press. "They may be cancelled next year," the source said, adding that export quotas on other products could also be scrapped at a later stage. For more of the Reuters story: reuters.com Russia's Transcontainer rail group Q1 profits up 18 percentOn Monday, Russian rail group Transcontainer reported an 18 percent jump in first quarter profits on lower costs. The company's profits grew twice as much as the country's overall rail container transportation market, which grew by 9 percent in Q1. Transcontainer said it expects the market to grow in mid single-digit percentage rates for the full year and said that higher levels of competition in the container market may put operator tariffs under pressure. Transcontainer's first quarter net profit was $37 million, according to a company statement. For more of the Reuters story: reuters.com Hit show 24 filming at DP World's Southampton container terminalThe T.V. series "24: Live Another Day" is filming at DP World's Southampton container terminal for the next two nights, and fans who want to catch a glimpse of action hero Jack Bauer, played by Kiefer Sutherland, are being warned to stay way. Terminal heads are reminding fans that the general public has no access to the area during the shoot. Local community members were sent letters from 20th Century Fox informing them what to expect, since the shoot will include gun fire and pyrotechnics on board a small container ship on the water. "Unsurprisingly, there has been a lot of interest from members of the public and fans of the show, interested in coming to the terminal to witness the filming," said a spokesperson for DP World Southampton and Associated British Ports. "In accordance with the port harbor authority, an exclusion zone operates around all ships that berth at the port including ships at the container terminal. During the filming, patrols will be in place on Southampton Water to monitor the exclusion zone." For more of the Daily Echo story: dailyecho.co.uk
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The new services offered by the G6 between Northern Europe and North America in early May does not leave much room for other carrier growth, according to a recent issue of Container Insight by Drewry Maritime Research.
On Friday, the National Labor Relations Board found that the International Longshore and Warehouse Union was guilty of orchestrating intentional slowdowns at Port of Portland's container Terminal 6.
European Union antitrust regulators have approved the so-called P3 Alliance, comprised of three container shipping giants — Denmark's Maersk Line, Switzerland's Mediterranean Shipping Company and France's CMA CGM.
Chinese regulators are poised to sanction a giant shipping alliance between the world's three biggest container operators this month, according to inside sources, allowing the P3 Alliance to start operating as early as Fall 2014.