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Summary for June 3 - June 7:
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Monday, June 3, 2013 Top StoryChina's May PMI exceeds expectations
The Purchasing Managers’ Index rose to 50.8 in May from 50.6 in April, according to the National Bureau of Statistics and China Federation of Logistics and Purchasing. The PMI was higher than all estimates in a Bloomberg survey of 30 analysts and a median forecast of 50. A reading of 50 or above indicates expansion. This contradicts a private manufacturing survey that indicated weaker growth in China for the first time in seven months. The preliminary PMI reading released by HSBC Holdings Plc and Markit Economics fell to 49.6 in May from 50.4 in April. “Given the mixed signals, I’d wait for the full set of activity data such as industrial production and electricity production to judge the momentum of the economy,” said Zhang Zhiwei, chief China economist at Nomura Holdings in Hong Kong. “The rise of the official PMI further reduces the chance for monetary policy easing.” For more of the Bloomberg story: bloomberg.com Oregon issues first draft permits to allow coal exports from NWState regulators issued initial draft permits in Oregon Friday to allow coal exports from the Northwest, which is good news for Ambre Energy's plans to build an export terminal on the Columbia River at the Port of Morrow. Ambre wants to be the first in line to export of Montana and Wyoming coal from the Northwest to Asia. The process is ongoing. The three Oregon Department of Environmental Quality permits are open for public comment through July 12, and DEQ officials scheduled public hearings on July 9. No decisions have been made regarding the possible timing of final permits issuance. Ambre also needs permit approvals from Oregon's Department of State Lands and the U.S. Army Corps of Engineers. If issued, all the permits are likely to be challenged by opponents, with lawsuits expected. Morrow Pacific's president, Clark Moseley, said getting final DEQ permits would allow it to begin construction at the port in Boardman, including an unloading shed, a storage barn and enclosed conveyer belts. Ambre wants to begin shipping coal next year, before two much larger export terminals proposed in Washington are operational, including another Ambre project in Longview, Wash. For more of the Oregon Live story: oregonlive.com Port of Olympia marine terminal welcomes PacArctic LogisticsAlaska-based PacArctic Logistics took its place as a key marine terminal customer at the Port of Olympia when a 400-foot barge called at the port last week. PacArctic will use the port’s container terminal as a base to ship goods and equipment north to Alaska on a monthly basis, and occasionally south to locations along the Columbia River. About 30 to 35 dockworkers are expected to work on loading each shipment, according to Jim Amador, the port’s marine terminal director. PacArctic is one of Olympia’s four key marine terminal customers, along with Weyerhaeuser, Pacific Lumber and Shipping, and Rainbow Ceramics. The revitalized port projects record total revenue of $10 million in 2013, with approximately $4.6 million, generated by the marine terminal, said port finance director Jeff Smith. For more of the The Olympian story: theolympian.com NY-NJ Port Authority commissioner resignsJames Rubin has resigned as a commissioner of the Port Authority of New York and New Jersey just a year and a half after he was appointed by the governor. Rubin was the State Department's chief spokesman under President Bill Clinton. Before entering government, he was a journalist and a professor. Rubin was head of the Port Authority's security committee and a member of its operations committee. Gov. Cuomo also appointed him as a counselor to the state's Empire State Development Corporation. Rubin said in an interview he plans to move to London with his wife, Christiane Amanpour, CNN’s top international correspondent, and their son to work on several projects, including a book about America’s use of military force abroad. Rubin will be a scholar in residence at the Rothermere American Institute at Oxford University and will also work as a contributing editor of the New Republic. For more of the New York Times story: nytimes.com Dockworker dies in heavy equipment accidentOne worker died this week in an accident involving heavy equipment in Port Klang in Malaysia. The tragedy occurred as a Myanmar national was operating a forklift in the path of a loaded container handler. The 10-ton machine suddenly toppled forward and its load crushed the forklift roof and the driver. The driver of the container handler escaped injury even though he was thrown around in the cab when it tipped over. For more of the Asia One story: news.asiaone.com
Tuesday, June 4, 2013 Top StoryFour-hour Hampton Roads closure to facilitate labor talks
"We feel it's important to educate them on what the contract really means," said Roger Giesinger, president and chief negotiator of the Hampton Roads Shipping Association, which is sponsoring the event in conjunction with top local leaders of the International Longshoremen's Association. Giesinger said the plan is to continue negotiations with the local ILU leadership about five days after the June 12 session. He said the ILU has requested federal mediation. The key issue in the talks, which have stalled since dockworkers voted down the contract on April 25, constellates the size of labor "gangs," according to port management and labor officials. Virginia International Terminals, the operations arm of the Virginia Port Authority, includes in the gangs three nonworking union members per crane at Norfolk International Terminals whenever vessels are being loaded and unloaded, according to a 2012 consultants' study. This puts Hampton Roads at a competitive disadvantage with the competing ports in Savannah, Charleston and Wilmington, the study said. Port officials are now trying to negotiate an incremental change in the policy as part of the local contract talks. For more of the Virginia-Pilot story: hamptonroads.com Importers suspend U.S. wheat orders after GMO discoveryMajor international importers balked last week over the first-ever discovery of an unapproved genetically modified grain in Oregon, as the U.S. scrambled to limit the consequences. South Korean millers suspended imports of U.S. wheat on Friday, Japan cancelled a tender offer to buy U.S. western white wheat and the European Union stated it would start testing incoming U.S. shipments to block any that contained genetically modified wheat. Asian wheat importers in China and the Philippines said they were upping inspections and monitoring the situation. "Asian consumers are jittery about genetically modified food," said Abah Ofon, an analyst at Standard Chartered Bank in Singapore. "This is adding to concerns that already exist on quality and availability of food wheat globally." Although the United States has sanctioned genetically modified crops such as soybeans and cotton, genetically modified wheat has never been approved in the U.S. or anywhere else in the world. Some analysts fear damage to the $8 billion export business. "Unless there's a quick resolution, this is not going to be good for the export market," said Art Liming, Citigroup grain futures specialist. The wheat was found in late April at an Oregon farm that grew winter wheat in 2012. USDA officials said that when a farmer sprayed the so-called "volunteer" plants with a powerful herbicide meant to kill off standard wheat plants, some of them unexpectedly survived. The strain was developed by biotech giant Monsanto more than ten years ago but never put into commercial production. The U.S. Department of Agriculture said nine investigators were collecting evidence in and around the area in Oregon. They said the GM wheat found posed no threat to human health, and there was no evidence that the grain had entered the commercial supply chain. "We have increased the number of investigators throughout this month to work quickly and carefully to cover as much ground each day to determine what we are dealing with, how it got there, and where it might have gone," said a USDA spokesman. "The developers of GE wheat have repeatedly said that GE wheat will not contaminate conventional or organic wheat because it is predominantly self-pollinating. Despite these empty promises, GE contamination has happened," Greenpeace International scientist Janet Cotter said. For more of the Reuters stories: reuters.com/article/2013/06/01 and reuters.com/article/2013/05/30 U.S. manufacturing index unexpectedly contracts in MayManufacturing in the U.S. unexpectedly contracted in May at the fastest clip in four years, as The Institute for Supply Management's factory index fell to 49, the lowest reading since mid-2009. A reading of 50 or more indicates growth. The April PMI was 50.7. Federal budget cuts and sluggish overseas markets are contributing to the manufacturing slowdown, according to Bloomberg. "Manufacturing is really stymied by slow corporate spending and government spending cutbacks," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, who was the only analyst in the Bloomberg survey to correctly predict the drop in the index. "Manufacturing will grow at a modest pace this year" although it "is unlikely to accelerate in coming months," he added. "This is part of the slower expansion we'll have in the second quarter." The ISM reading contradicts another manufacturing report from financial data firm Markit, whose Manufacturing Purchasing Managers Index rose to 52.3 in May from 52.1 in April. Analysts surveyed by Bloomberg had forecast PMIs from 49 to 54. For more of the Business Week story: businessweek.com Flooding halts shipping on the Mississippi RiverThe Mississippi River was closed to barge traffic from northern Iowa to St. Louis as flooding closed several locks on the river and stranded at least 70 barges, according to the U.S. Coast Guard and the Army Corps of Engineers. The Coast Guard closed the Port of St. Louis from mile markers 179 to 184 because of high water and warned sailors of increased debris, just five months after record low water threatened shipping on the river. The latest lock closures, which may stay in place until next week, stopped the transport of grain barges from Midwest farm areas to Gulf Coast terminals, from which about 60 percent of all U.S. grain is exported. Eight ships towing a total of 70 barges were waiting at locks between Mississippi River mile markers 273 and 325 as of midday Monday, the Coast Guard said. Many grain elevators on the rivers were unable to load barges since the vessels could not fit below loading spouts because of the river's high level. Seven locks, from Lock 17 at New Boston, Illinois, to Lock 25 at Winfield, Missouri, were currently closed and an eighth, Lock 16 at Muscatine, Iowa, is likely to close by Tuesday, the Army Corps said. For more of the Chicago Tribune story: chicagotribune.com Shipping industry faces $500B environmental billAlong with overcapacity and weak freight rates, the shipping industry will be required to pay more than $500 billion to comply with environmental regulations by 2025, according to the International Chamber of Shipping. Mandatory rules to cut sulfur emissions will cost the sector approximately $50 billion annually between 2015 and 2025, said Masamichi Morooka, chairman of ICS, at a shipping conference in Oslo. The ICS represents ship owner associations whose members operate two thirds of the globe's vessels. "Many of the expensive environmental regulations that are about to enter into force were conceived in a different world, at a time when shipping markets were booming and finance for retrofitting had not dried up," Morooka said. "There is a danger of creating real barriers to investment in our industry as we hopefully move closer to recovery." A global 0.5 percent limit on sulfur emissions is scheduled for 2020, as well as a 2015 cap of 0.1 percent in parts of northwest Europe and North America, the chamber said in a statement. Ballast water regulations will also add costs, the statement said. For more of the Bloomberg story: bloomberg.com
Wednesday, June 5, 2013 Top StoryPort of Long Beach considers interim chief appointment
Commission President Susan E. Anderson Wise said board discussions will continue on Wednesday. Prior to the closed session, board members and other stakeholders weighed in on the process. Vice president of the Pacific Merchant Shipping Association Michael Grubbs said the port's tenants and customers need the selection process to be swift, methodical, fair and transparent. Commissioner Doug Drummond was worried about the billions of dollars of construction underway and the performance penalties that might be levied if work is not completed on time. "My focus is on someone at the helm who has engineering experience and has the major project experience," Drummond said. Commissioner Rich Dines said he favored appointing an internal candidate for the acting director role. "I don't believe that an outsider would be able to fill that role as good as someone from the inside," he said. "An internal candidate should be brought forward as our interim, but I think in fairness, we should bring someone that is not interested in the permanent position." "I just want the best person in there today or as soon as we can come to some conclusion, and I don't care if that person is eligible to be executive director in the future," said Commissioner Nick Sramek. Wise suggested that the port reach out to different stakeholders for input on the qualities and characteristics that they would like to see in a new executive director. For more of the Press-Telegram story: presstelegram.com Alliance for American Manufacturing urges Obama to get tough on ChinaThe Alliance for American Manufacturing lobby this week is urging President Obama to get tougher with President Xi Jinping regarding alleged Chinese cyber spying and what it calls predatory economic policies. AAM also wants Obama to directly take on claims that China manipulates its currency, perceived Chinese trade abuses and intellectual property theft with Xi when he meets with him this Friday in California. Although both the U.S. and China are presenting the meet-up as an opportunity for the leaders to swap strategic visions and forge a personal connection, accusations about China's hacking have come to the forefront. Obama is under pressure to address allegations that a Chinese cyber spy operation that involves the military has stolen U.S. weapons designs and commercial secrets. "We are hopeful that this focused two-day visit will yield new and meaningful results," said Scott Paul, AAM president, in a letter to Obama. "Americans are losing patience with China's refusal to play by the rules." Paul also expressed concern that the U.S. defense sector was overly dependent on Chinese suppliers for key components of equipment such as rocket fuel and night vision goggles. Paul said that unless specific punishments are levied and the U.S. approach gets tougher, China's behavior on a number of issues important to Washington is not likely to change. For more of the Industry Week story: industryweek.com Six Norfolk Southern executives promoted to senior managementNorfolk Southern promoted six of their executives to senior management positions, including the appointment of a new president, according to an announcement from company chairman and CEO Wick Moorman. All six appointees are headquartered in Norfolk. On June 1, Jim Squires, currently executive vice president of administration, will become the railroad's president, effective June 1. He will oversee the corporation's administration, finance, law and corporate relations, and planning and information technology divisions. Jim is a forward-thinking railroader and a well-tested leader," Moorman said. "As president, he will ensure that Norfolk Southern stays at the forefront of strategic planning, innovation, and financial performance." Squires joined Norfolk Southern in 1992 and served in several law positions before being named vice president of law in 2003, senior vice president of law in 2004, senior vice president of financial planning in 2006, executive vice president of finance in 2007, and executive vice president of administration in 2012. Also effective June 1, Cindy C. Earhart, currently vice president of human resources, will become executive vice president of administration, and Juan K. Cunningham, currently assistant vice president executive, will become vice president of human resources. MSC and G&P Trucking expand presence in CharlestonThe Port of Charleston announced two expansions that will benefit port stakeholders, one involving a new Mediterranean Shipping Company data recovery center and a new G&P Trucking cargo yard. The Charleston area is already home to MSC's regional headquarters, and the shipping line plans to invest more than $1.7 million and create 30 new jobs as part of a new data recovery center. MSC will also develop its "MSC University" training center at property adjacent to existing offices in Mount Pleasant. G&P Trucking of Gaston, S.C. has purchased a 10-acre site on Highway 101 in Greer, S.C. to help serve cargo connected to the new South Carolina Inland Port, scheduled to open this fall. The acquisition represents an expansion of G&P's trucking presence in Greer, where it currently operates a 14-acre full service terminal. "The opening of the inland port in Greer will mean that shipping containers can be transferred directly to our trucks and delivered to our upstate customers," Clifton Parker, president of G&P, said in a statement. "Expanding our presence in Greer gives us the opportunity to improve drayage services and offer more flexibility for our customers." Coast Guard monitors leaky oil containers on cargo ship from ChinaThe Coast Guard at the Port of Valdez is holding the BBC Arizona, a foreign cargo ship with containers leaking oil shipped from China, until the leaks can be stopped and the chemical composition of the oil can be discovered. The leaking oil, used for insulating and cooling transformers, is part of a shipment bound for Venezuela that includes transformers, according to Coast Guard Lt. Allie Ferko. The ship, the BBC Arizona, stopped in Valdez to deliver steel I-beams. The oil leak came to the attention of American officials because the I-beams were welded to the ship's deck for transit, and sparks from the cutting torch used to free them set a small fire in sawdust soaked with oil, Ferko said. For more of the Anchorage Daily News story: adn.com
Thursday, June 6, 2013 Top StoryDrewry: Ocean rate war could come at a price to shippers
The latest report shows that airfreight rates were steady in comparison to falling ocean rates. Drewry's East-West Air Freight Price Index, a weighted average of airfreight rates across 21 East-West trades, rose by 1.9 points in April to 98.8. The available carrier financial reports for the first quarter of 2013 indicate the same mixed results as in 2012. Some carriers made a little money but the majority lost cash, with the industry at large starting 2013 in the red. The second quarter has been worse, Drewry reports. Rates have been in free-fall since the start of the year, especially in Asia-Europe westbound trade where Shanghai-to-Rotterdam spot rates have lost half their value, according to the World Container Index. "Carriers will be forced to curb their losses somehow. Service quality might be forsaken as some operators might ask what benefit they get from offering reliable port-to-port services," said Simon Heaney, research manager at Drewry. "We expect the first step to be further slowing down on ship speeds," Heaney said, "which in itself should not lessen reliability but will lengthen transit times even more. After that, if they are still losing cash, the incentive to offer reliable services will be sorely tested." City of Long Beach files suit to stop Port of Los Angeles railyard projectLong Beach city officials are seeking injunctions to prevent the city of Los Angeles and BNSF Railway Co. from moving forward on a $500 million rail yard project, asserting the project is detrimental to West Long Beach residents. In a lawsuit filed late Wednesday, Long Beach officials are also asking the courts to "vacate and set aside" Los Angeles' recent approvals of the Southern California International Gateway project, also known as SCIG, and its environmental impact report, which Long Beach says does not comply with the California Environmental Quality Act "As (proponents of the project) concede, the negative effects of the railyard project will be borne almost entirely by the residents of West Long Beach," states the lawsuit, adding that the project's impact on the health of nearby schools and homes "is expected to be devastating." Los Angeles leaders and BNSF in their environmental review "downplayed the issue, ignoring the comments of the City of Long Beach numerous regulatory authorities, environmental organizations and members of the public," according to the lawsuit. For more of the Los Angeles Daily News story: dailynews.com CMA CGM to hike freight rates in June as it doubles its fleetShipping giant CMA CGM plans to sharply raise prices on Asia-Europe container shipping routes this summer as it doubles the size of its fleet amid a deepening glut in global container capacity. The Marseilles-based company will raise fees charged on containers shipped from Asia to Northern Europe to $1,375 per container from $600 on July 1, and from Asia to the Mediterranean to $1,200 from $900 later in June. This strategy follows the lead of some of the world's other major shipping lines, including Maersk Line, the world's biggest container concern. CMA CGM, the world's third largest container carrier by volume, is at the same time adding three new ships capable of carrying up to 16,000 TEUs to the three it already has in service, which are for now the largest vessels of their kind on the oceans. CMA CGM launched the Jules Verne this week, after the Marco Polo, which entered service in late 2012 and was the first of the 396-meter-long ships. Part of the big shippers' strategy is to add these larger and more fuel-efficient vessels to reduce costs and weed out weaker competitors unable to afford the upfront investments. However, this approach is widening the overcapacity on key shipping lanes in the short term, driving down shipping rates. "With demand for Asian exports in Europe still weak it will be difficult to stop the bloodbath in rates," said Jonathan Roach, senior container analyst at Braemar Seascope. "Big customers like forwarding companies are always hunting for lower rates and smaller shipping firms will oblige." By forwarding companies, the analyst means United Parcel Service Inc., FedEx Corp. and Deutsche Post's DHL unit. "There is a market feeling that we cannot have an industry that consistently loses money on some routes," said Michel Sirat, CFO of CMA CGM in an interview. "If the price increases stick we will be able to make a good profit in 2013." For more of the Wall Street Journal story: stream.wsj.com Horizon Lines names new executive vice president and COOHorizon Lines announced the promotion of William A. Hamlin to the position of executive vice president and chief operating officer. In his new role, Hamlin will continue to report to Sam Woodward, president and CEO. His responsibilities include ocean transportation services, inland transportation, terminals, equipment management, maintenance, network management, labor relations, security, safety and environmental. Hamlin joined Horizon in March 2011 as senior vice president of operations. He was previously with Jamian McElroy & Hamlin, LLC, a consulting firm specializing in transportation and infrastructure, domestic and international security and environmental issues. He served as a partner there from 2009 to 2011. Prior to that, Hamlin held various executive positions with Norwegian Cruise Line Holdings Ltd., which he joined in 2004. During his tenure, he was responsible for fleet operations and new builds. From 1999 to 2004, Hamlin worked for APL Ltd., where he rose to president of APL's Americas Region after serving as vice president of operations, with responsibility for all port, equipment and inland transportation for the Americas. Deltaport closes for several hours after container ship crew falls illBusiness at Deltaport was shut down for most of the day last Friday after HAZMAT crews had to be called in after crewmembers on one ship reported feeling ill. Delta Fire Department deputy chief Ken Sim said a call came in around 3 a.m. that there was an acrid smell on one ship and workers were reporting feeling dizzy and nauseous. Sim said there were hazardous material containers on the ship and one in particular was identified as the source of the smell. Delta police were called in around 8 a.m. to provide traffic control as no shipments were allowed in or out of the port while crews dealt with the situation. Deltaport is the largest container terminal in Canada, with a capacity of 1.8 million TEUs. For more of the Optimist story: delta-optimist.com Submit Your Press |
China’s manufacturing industry beat analyst’s estimates with a PMI that indicates slightly increased growth in May, according to Bloomberg News.
Port officials at Hampton Roads are taking an unusual step—shutting down the Hampton Roads container terminals for four hours on June 12—in order to make a case with the union to reduce the labor force, more than a month after longshoremen rejected a local labor contract.
After Monday's two-hour closed session of the Long Beach Harbor Commission, the leadership said further discussion is needed before an interim replacement for outgoing executive director Chris Lytle is chosen. 
The current price war in the ocean container industry may currently benefit shippers, but there are risks attached, according to Drewry.