Cargo Business Newswire Archives
Summary for June 4 - June 8, 2012:
Tuesday, June 5, 2012

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ILA's Daggett fires back

Shots were fired back across the bow of the group representing the East and Gulf Coast shipping industry by the president of the International Longshore Union regarding issues of new technology integration, chassis pools and container weights in a new proposed contract.

In a letter dated June 2, Harold Daggett, president of the ILA took his counterpart to task for what he termed were "personal attacks" in a previous letter posted on the USMX website last week that was signed by the employer group's chief executive, James Capo that had accused the waterfront union of making non-negotiable demands as the September 30 deadline for a new labor contract looms.

"I view your letter as a thinly veiled attempt to try to turn the ILA Wage Scale Delegates against me," wrote Daggett in the latest response to what has amounted to a publically waged war of words since the last round of meetings between the two sides ended in Tampa, Florida, back in March with no apparent progress made towards a contract agreement.

The introduction of new automated technologies related to cargo handling has emerged as the central bone of contention between the ILA and USMX as both sides appear to be at odds over the potential impact to waterfront jobs.

Capo's letter dated May 31 said that what Daggett "fails to recognize is that the current Collective Bargaining Agreement mandates that both sides negotiate over the impact new technology might have on the work force."

Daggett responded that he did "not need [Capo] to tell me what is in the Master Contract. I have been in this industry over 40 years and know firsthand how technology has affected our membership."

Daggett's latest letter goes on to say that a multi-year agreement over wages and benefits for ILA members "needs to be strengthened" as he wrote that the USMX's "true goal seems to be productivity for the shippers and unemployment for the ILA."

"My concern is that USMX wants to effectively eliminate the workforce through automation. If that happens, the wage and benefit package will not matter, since there will be very few ILA members working in your new automated terminals," Daggett said.

Another contentious issue that Capo pointed to last week was over chassis pools, as his group did not seem in favor of implicit language in the next contract stipulating ILA jurisdiction. The provision of chassis for containers has been shifting away from shipping lines to third party ownership.

Capo said having labor chassis jurisdiction "bound by the Master Contract" would be "impossible to achieve because USMX cannot legally force the pool operators to become members of the Alliance.

Daggett responded with: ".the ILA's concern is that carriers will sell their chassis and the ILA will lose that bargaining unit work."

The ILA's chief negotiator also defended his group's demand for all import containers to be weighed at pier before being released after Capo had asserted that it "would create more unneeded work, add unnecessary expense and increase congestion at the ports."

"That may be true," Daggett wrote in response, "but it would also assure that the ILA funds are not shortchanged monies and help save lives on the highways."

"The ILA has lost 14 members in the past year, due to workplace fatalities. Productivity can never trump the safety of my members and the protection of their employee benefit funds," Daggett said.

When the two sides might go back to the bargaining table is unclear, however, Daggett invited Capo and the USMX to a meeting of his Wage Scale Committee that commences June 27 in Delray Beach, Florida that he said could run through June 29.
"I am fully committed to addressing all of these issues and believe that our time would be better spent at the negotiating table," Daggett wrote.

Ex-Im Bank to lend $6.8 bil on heels of re-authorization

On the heels of the recent re-authorization for lending power by the United States Export-Import Bank, the Ex-Im Bank announced it has already authorized $6.8 billion worth of export financing.

The Export-Import Bank Reauthorization Act was passed by Congress and signed into law by President Barack Obama last week, increasing the bank's portfolio cap from $100 to $120 billion that will ultimately be increased to $140 billion. The export bank's authority now extends through 2014.

According to an Ex-Im statement, the export bank's board of directors approved close to two-dozen transactions on May 30 and 31, including $300 million for Ford Motor Company, $1 billion for Pemex, and $32 million for Wind Power Energia, a company that manufactures wind turbine blades.

"Our goal is to continue to help create and sustain U.S. jobs, and these latest transactions demonstrate why it was critically important for Congress to increase Ex-Im's exposure limit," said Ex-Im Chairman and President Fred P. Hochberg.

"Without this increase, the Bank would have been forced to turn exporters away, and U.S. jobs would have been lost," he said.

The Ex-Im Bank approved a record $32.7 billion in total authorizations in 2011.

DuPont names new VP of sourcing and logistics

DuPont announced the hiring of Shelley Stewart, Jr. as the chemical giant's new vice president of sourcing and logistics, in addition to becoming chief procurement officer as of July 9.

Stewart currently holds a similar position at Tyco and was previously in senior vice president of supply chain roles for Invensys and Raytheon. He also spent 18 years with United Technologies in operational and supply chain roles, according to a statement released by DuPont.

Cargo jet overshoots runway in Ghana; at least 10 killed

A Nigerian cargo jet landed in a pool of heavy rainwater and overshot the runway at Ghana's Accra Airport on Saturday, killing at least 10 on the ground, while all four crew on board survived and were in good shape, according to news reports out of the region.

Allied Air Cargo's Boeing 727-200 aircraft was reportedly carrying consumer goods on its way from Nigeria to the Ivory Coast with a planned stop at Accra when it landed in the pool of water, rammed through an airport fence, subsequently hitting a mini-bus and taxicab.


Wednesday, June 6, 2012

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Are box carriers getting in their own way on rate increases?

Freight rate under-cutting and the return of some of the idled vessel capacity to the global fleet in the financially-struggling global container-shipping sector could reportedly be re-surfacing as the heart of the peak shipping season looms.

According to Paris-based shipping consultancy Alphaliner, there are "increasing signs of rate undercutting as rates have risen above break-even for most carriers."

However, if those peak season rates are not successfully increased it "could have significant negative ramifications on the carriers' attempt to return to profits this year," Alphaliner said.

Since May 4, the Shanghai Containerized Freight Index has reportedly slid 7.6 percent after a 58-percent rise for the first four months of 2012.

"Somebody of the 15 lines contributing to the index must have undercut the jointly established higher freight rates," said Kai Miller of London-based shipbroker ICAP Shipping to Bloomberg Businessweek. "More general rate increases were announced for the summertime, but that is now a big question mark," Miller said.

"The implementation of the peak season charges that most lines had planned for early June seem to have moved to mid- June," said Lars Jensen, director of the Asia-Europe trade for Maersk Line in Bloomberg's report.

Jensen said Maersk has pushed the introduction of its peak season surcharge to June 15.

"It all depends on supply and demand, but we are reasonably optimistic as far as the summer is concerned" with vessel utilization percentages "in the mid-90s" for Asia-Europe, he said.

The current average rate in the Asia-Europe tradelane is reportedly about $1,700 per-TEU, well above the approximate $1,000 per-TEU that is supposedly the break-even point for container-shipping lines.

However, another 400,000 TEUs of vessel capacity hit the seas in the first quarter, with 40 percent of formerly idled ships back in service, as that figure is projected to grow to 1.2 million TEUs by year's end, according to the global shipping association BIMCO.

"When rates improve, container lines are quick to add capacity and that creates a ceiling as to how much rates can recover," said Peter Sand, an analyst at BIMCO.

For the full Bloomberg Businessweek story:

CMA CGM posts $248 mil net loss for Q1

France's container-shipping giant CMA CGM said its second quarter should improve from freight rate increases after posting a net loss of $248 million for its first quarter of 2012, while volume grew 13.4 percent year-on-year to 2.6 billion TEUs and consolidated revenue increased 2.6 percent to $3.6 billion.

Despite entering into operational agreements with Mediterranean Shipping Company in the Asia-Northern Europe tradelanes and Maersk on the Asia-Mediterranean market, the third-largest box carrier in the world said the first quarter "was particularly difficult for the maritime container shipping industry."

"In a market shaped by persistent overcapacity, freight rates fell to new lows during the period, while oil prices climbed sharply until mid-March, with Rotterdam bunker prices rising to nearly $720 per ton," the shipping line said in a statement.

Since the end of the first quarter, CMA CGM said, "the market has significantly rebounded with several successful freight rates increases."

The company pointed to an example in the Asia-North Europe trade where the benchmark Shanghai Containerized Freight Index was at $1,666 per-TEU as of June 1 compared to $490 per-TEU in December 2011.

The shipping group said it has also "observed" freight rate gains in the Asia-Mediterranean and trans-Pacific trades.
An over 20 percent decrease in heavy oil prices to $560 per-ton in Rotterdam at the beginning of June is another factor that has "sharply" improved the company's performance since the start of the second quarter generating breakeven level "in terms of operating profit in April.

A cost reduction will result in $400 million in savings by the end of this year that CMA CGM said should allow it to "return to the black in 2012."

Port of Long Beach approves bigger $942 mil budget for 2013

The Port of Long Beach's harbor commission approved a $942 million budget for its fiscal 2013, up 12 percent over the previous year, as part of a $4.4 billion facility modernization project over the next decade.

The 2013 budget calls for $720 million in capital spending, a 14 percent increase over last year, as the port said it in a statement that the additional investment pertains to its large construction projects that are underway on its middle harbor and the Gerald Desmond Bridge replacement,

The port announced it would add 25 new positions that would be tied primarily to the construction projects, but that there would be no salary increases for management, although there would be "contractually mandated increases for staff."

Another $104 million will go towards environmental infrastructure projects and related programs, according to the 2013 budget.

The port said it plans to reduce non-staff related costs by 5 percent.

"We are consciously changing our mindset to one of frugality," said the port's chief executive, Chris Lytle.

"We are trying to be smarter about all different aspects of what we do in our spending and our budget," he said.

Port of Oakland commission approves "impasse actions" in stalled service employee contract talks

The Port of Oakland announced its board of commissioners voted to initiate "impasse actions" that could include bringing in a third-party mediator as it deals with stalled contract negotiations with Service Employees International Union Local 1021.

The agreement between the port and 250 janitorial, maintenance and security workers expired 12 months ago.

The port said in a statement that it had reached a tentative agreement with the SEIU in late March, but that the Local 1021 membership voted the deal down in April.

The Port of Oakland claimed it offered 42 proposals to the SEIU, of 29 have been resolved, and another 25 were withdrawn due to SEIU concerns.

The Northern California port said in a statement that its tentative agreement the SEIU subsequently rejected included: maintaining current wage levels; continuing full employer-paid healthcare with no retirement changes for current employees; current employees would pay 5 percent of the retirement plan, with the port paying 3 percent and a full 23.6 percent member share; new employees would pay 8 percent into the retirement plan; no cost-of-living increases through July 1, 2014; and continued port reimbursement of SDI payments.

As a result, the port said if a resolution between the two parties can't be reached; the impasse actions could include the appointment of a neutral third-party and ultimately a "last, best and final offer."


Friday, June 8, 2012

Top Story

GOP opens door for 6-month extension on transportation bill

Speaker of the House John Boehner dampened hopes for a bipartisan surface transportation bill when he said on Thursday that another possible funding extension of six months would take the decision beyond the November election.

"Frankly, I think if we get to June 30, there would be a six-month extension and move this thing out of the political realm that it appears to be in at this moment," Boehner said to reporters, according to Reuters. He also said he wanted an agreement on a long-term solution.

The embattled highway bill, which would bolster the economy with a flood of construction related jobs, has been a major point of disagreement between the parties during a contentious election year.

Democrats have said the transportation bill delay is another GOP tactic to undermine any U.S. economic recovery that could be attributed to President Obama's policies.

California Senator Barbara Boxer reportedly said the Highway Trust Fund will go bankrupt before six months is up, since the gas taxes will only support the current rate of spending through October.

The House will have another recess next week, leaving only two weeks to iron out a bipartisan plan that will pass both chambers.

For more of the Reuters story:

Horizon Lines hires new CEO

Sam Woodward was hired as the new president and CEO of the largest ocean carrier in the U.S. domestic trades, Charlotte-based Horizon Lines, effective June 7, according to a company announcement. Woodward, who has also been appointed to the Horizon board of directors, succeeds Stephen H. Fraser, who has served as interim head since early 2011.

Woodward was most recently an executive at Traffic Tech, a freight forwarder, where he has worked since 2008. Prior to that, he served as managing director of investment bank Bengur Bryan & Co., and was chairman, president and CEO of Gemini Air Cargo from 2004 to 2008. He also ran his own investment company specializing in freight and logistics, and was a vice president at YRC Worldwide.

"Sam brings extensive transportation and logistics experience, and is known for his leadership abilities as a business strategist focused on operational transformation and excellence," said Jeffrey A. Brodsky, chairman of Horizon's board of directors.

"Best of the best" shipping lines honored for green practices

The Port of Long Beach announced 14 container lines that received the "best of the best" title from the port's environmental program. The lines took advantage of incentives offered by the port's 7-year Green Flag speed reduction program, voluntarily slowing their ships 20 nautical miles from the Long Beach harbor, which has helped to significantly lower diesel emissions in the region by 72 percent since 2005.

The port gives vessels that slow down within the 20-nautical-mile zone a break on dockage fees, and an even greater fee reduction to those that slow down within 40 nautical miles. $2.1 million in dockage fee discounts were awarded last year.

The shipping companies recognized with Green Flags are Mediterranean Shipping Co. (MSC), Kawasaki Kisen Kaisha ("K" Line), Nippon Yusen Kaisha (NYK Line), P O Shipping, Orient Overseas Container Line (OOCL), ZIM Integrated Shipping, Pacific International Lines, Hanjin Shipping Co, Matson Navigation, Hamburg Sud, China Ocean Shipping Co. (COSCO), CSAV, Alaska Tanker and CMA CGM.

FedEx raises rates

FedEx Freight announced it is increasing its shipping rates on July 9, 2012. The 6.9 percent rate increase will apply to FedEx Freight shipments "within the contiguous U.S., between the contiguous U.S. and Canada, and within Canada," according to a statement.

The rate for FedEx Freight shipments between the U.S. and Mexico will increase 6.9 percent for the U.S. part of the shipment only, and will also take effect July 9.

The rate hike will apply to shipments covered by the FXF 1000, FXF 501 and other related series base rates, the company said. The FedEx Freight fuel surcharge will remain the same.

For more of the FedEx press release on Market Watch:

Japan dock ripped away by tsunami comes ashore in Oregon

A huge concrete dock ripped from the Japanese city of Misawa during the March 2011 tsunami came ashore at Oregon's Agate Beach this week. The dock's arrival in Oregon is an indication that tsunami debris will reach the U.S. West Coast sooner than earlier predictions, according to the Oregonian.

The Oregonian reports the dock is "66 feet long by 19 feet wide by 7 feet tall," and one Japanese official told the paper that three more just like it may be on their way to the U.S.

Commercial fishermen have expressed anxiety about the debris damaging their ships, according to Oregon Public Broadcasting.

For more of the NPR story:


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