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Summary for June 21 - June 25, 2010:
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Monday, June 21, 2010

Top Story

Jones Act comes into play in Gulf Oil spill

The Coast Guard Friday "redoubled" efforts to keep the Deepwater Horizon oil spill from impacting Gulf states by calling in more skimming boats and equipment from the Netherlands, Norway, France, and Spain after previously telling one Dutch official "Thanks, but no thanks," to an offer of help.

That revelation comes as Florida lawmakers beg for more skimmers to ward off Gulf spill oil approaching the state's white sand beaches and the Unified Command – led by Coast Guard Adm. Thad Allen – struggles with chain-of-command issues as BP changes its on-scene leadership.

The news of more foreign ships steaming toward the Gulf also comes amidst a heated political debate over the role of the 1920 Jones Act, a protectionist law that prohibits foreign-flagged boats and crews from doing port-to-port duty within 3 miles of the US coast.

On Friday, Sen., Kay Bailey Hutchinson (R) of Texas filed legislation to waive the Jones Act to welcome more high-tech foreign clean-up boats, saying the Jones Act is standing in the way. White House spokesman Robert Gibbs said last week "that we have not had [a] problem" with the Jones Act. At the same time, US marine interests complain that up to 1,500 US-flagged skimmers sit idle, and should be used first.

-Yahoo News/Christian Science Monitor

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Protesters attempt to disrupt ZIM ship call in Oakland

Hundreds of demonstrators, condemning Israel's blockade of the Gaza Strip, picketed at the Port of Oakland on Sunday and may have prevented an Israeli cargo ship from unloading for the day.

Two shifts of longshoremen agreed not to cross the picket line, leaving nobody to unload the vessel.

The demonstrators first gathered before dawn at Berth 58, where a ship from Israel's Zim shipping line was scheduled to dock Sunday, first in the morning then in the afternoon, protesters said. It eventually arrived around 6 p.m., Becker said, but by that time the dockworkers had agreed not to show up to unload the vessel.

An Israeli Consulate representative disputed that account, saying the ship was always scheduled to arrive about 6 p.m.

-San Francisco Chronicle

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Texas ports big beneficiaries of foreign aid cargoes

Texas benefits more economically from shipments of food for foreign aid than any other state because of its huge port capacities, according to a study released last week.

Earnings for transportation and maritime industry activities total $177 million in Texas, supporting 4,070 jobs, states the report on the economic benefits of the Food for Peace international food aid program for fiscal year 2009.

The report was compiled by Virginia-based Promar International for USA Maritime, a coalition of shippers and maritime unions.

The Port Authority of Houston leads the state in food aid shipments in volume with 1.16 million tons yearly, followed by Corpus Christi with 263,000 tons, Galveston with 234,000 tons and Beaumont with 45,000 tons.

-Houston Chronicle

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Great Lakes shipping surged in May

The surge of cargo demand for Great Lakes shipping continued last month, with U.S.-flagged lakers carrying one-third more goods than in April. Mike Simonson reports from Superior.

The 29% increase in cargo in May over April is even higher when compared to a year ago. Things are 39% better than last year.

"Now we've got to temper that with the realization a year ago was very, very bad. So just about anything would have been an increase."

That's Lake Carrier's Association Vice-President Glen Neckvasil. He says the downside is that May's totals are off 11% from the five year average. But he says more ships are sailing. That includes the thousand-footer Stuart J. Cort, which hadn't sailed since 2008.

-Business North

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Hanjin ship runs aground in New Zealand

A cargo ship that ran aground on rocks at Mount Maunganui tonight has been towed out to sea.

The 167m Hanjin Bombay, which sails under a Panamanian flag, pierced its hull on the rocks around 7pm, Maritime New Zealand spokesman Nick Churchhouse said.

"It has since been towed off the rocks and taken out of the harbour," he said. "It is sitting about 2.5km out of the harbour, at sea. An attempt is to be made at 2am around high tide to bring it back into the harbour."

There was no sign of any pollution, but Port of Tauranga staff were monitoring the situation frequently, he said.

There was no report of any injuries at this stage.

"There is no information as to how it came to be on the rocks," Mr Churchhouse said.

MNZ would send investigators to the port in the morning to inquire into the grounding. (New Zealand)

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Tuesday, June 22, 2010

Top Story

Maersk on the Peak: “Unprecedented shortage of equipment”

Responding to what it says is an unexpectedly strong rebound in the demand for container shipping, Maersk Line said it expects the 2010 Peak Season will see an unprecedented shortage of containers, and plans to bring more equipment and capacity back into the marketplace.

"The present market situation is unique. We are experiencing a demand surge in most trades, which is a development that is both unprecedented and unexpected by us and our customers,” said Lars Reno Jakobsen, head of network and product for Maersk, and a member of Maersk Line’s management board.

Jakobsen said the Asia - Europe trade is growing by 23 percent “compared to the market’s single digit expectation just six months ago.”

“Therefore, we already see a very tight equipment situation, and we expect an even more pronounced and serious shortage of containers in the coming months as we enter the peak season,” he said.

The global recession of the past few years reportedly caused a virtual halt to container leasing, sourcing and production, and as a result Maersk said in a statement “the necessary equipment has not been ordered in 2010, ultimately resulting in the global shortage in equipment.”

In response to the equipment shortage, Jakobsen  said the company has initiated production and leasing of containers, along with re-activating laid-up containerships “to assist in repositioning containers as fast as possible from e.g. the east coast of North America and Latin America to Asia.

“We have been working hard the last couple of months to minimize the inconvenience for our customers. And we are adamant that we continue to live up to the customer commitments we make, also through the peak season,” said Jakobsen.

Maersk referred to its most recent Peak Season Surcharge for the Far East – Europe trade that begins in mid-July as a way for it to recover “the higher costs caused by the increased volumes and equipment shortage (e.g. port costs, extraordinary vessels deployed to reposition containers and leasing of same) and ensure that Maersk Line can continue to offer its services in a sustainable manner,” the shipping line said.

Maersk said it expects the equipment shortage to last through the third quarter of this year.

In related news, the member carriers of the Trans-Pacific Stabilization Agreement (TSA) released a statement that said the group of container shipping lines “acknowledged the difficulties many shippers have had going into second quarter 2010, with space and equipment availability in Asia, as a result of the unforeseen surge in cargo volumes.”

The TSA members said in the statement they are each adopting “a range of strategies to address these issues, including reinstatement of key service strings, deployment of  ‘extra loaders’ – vessels added on a per-sailing basis to carry loaded containers to the U.S. and reposition empty equipment back – and have also noted the use by some shippers, of transloading to keep ocean containers close to port for quicker turns.”

The TSA carrier group reported a 24.1 percent year-on-year increase in traffic during the month of May to the U.S. West Coast and a 30.8 percent increase in all-water shipments to the East and Gulf Coasts via the Panama Canal.

TSA members include APL Ltd., ”K” Line, China Shipping Container Line, Maersk Line, CMA-CGM, Mediterranean Shipping Co., COSCO Container Lines, Ltd., N.Y.K. Line, Evergreen Line, Orient Overseas Container Line, Inc., Hanjin Shipping Co., Ltd., Yangming Marine Transport Corp., Hapag-Lloyd AG, Zim Integrated Shipping Services and Hyundai Merchant Marine Co., Ltd.

Report: China purchases six cargo-loads of corn in past two weeks

China, the world’s second-largest corn consumer, bought six cargoes from the U.S. in the past two weeks, or 360,000 metric tons, bringing purchases to 16 cargoes, or almost 1 million tons, two executives familiar with the transactions said.

State-owned Cofco Ltd. bought three shipments to sell to feed mills, while Jilin Grain Group Co. and two private buyers in southern China bought one each, they said. Each cargo weighs about 60,000 tons, they said, declining to be identified as the trade wasn’t public.

China, the third-biggest economy, has booked the most corn imports in 14 years, and is draining domestic stockpiles to cool an 18 percent gain in local prices in the past year. The gap between local and global prices is narrowing, signaling imports may slow, the executives said.


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Lockheed wins back $5 bil Special Forces logistics contract

Lockheed Martin Corp. was reinstated with a multi-billion dollar contract to support U.S. special forces after L-3 Communications was suspended from the program because it allegedly monitored emails between its workers and government employees, according to media reports. The contract for logistics and maintenance support could be worth up to $5 billion through 2018, the Pentagon said late Monday.

Lockheed was first awarded the contract in March 2009, but it was taken back after L-3 protested the decision. But the Air Force earlier this month said L-3 was now under criminal investigation for supposedly monitoring and copying emails, and then forwarding them without the authors knowing, according to reports.


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Crowley realigns liner, logistics divisions

Jacksonville-based Crowley announced it has realigned its liner and logistics sales, pricing, customer service and marketing groups.

The company said in a statement that the realignment would create “a single point of contact” customers. 

Charlie Dominguez was named vice president of national accounts; Robb Clapp, vice president, customer care; Pete Noyer, vice president business development; Jorge Estevez, vice president, pricing and Craig Cox, director of marketing, liner and logistics, the company said.

The newly appointed group will be based at Crowley’s headquarters in Jacksonville and report jointly to Senior Vice President and General Managers, John Hourihan, Latin America services; John Douglass, Puerto Rico/Caribbean services and Steve Collar, logistics, the company said.

Bunker oil recovered from old cruise ship wreck off Alaska

The U.S. Coast Guard says it emptied about 110,000 gallons of bunker oil from the wreck of a one-time cruise ship that sank along the coast of Alaska in 1952.

The delicate operation off Lena Point defused a potential environmental time bomb in the form of oil stored in the deteriorating fuel tanks or trapped in the fragile hull of the Princess Kathleen, officials said.

The salvage team, along with the Coast Guard and state officials, devised a plan in which the oil and water from the Princess Kathleen was heated and re-circulated between the sunken ship's fuel tanks and a barge on the surface. The result was the capture of pure oil and a minimal amount of contaminated water.

It took four months and about $12 million to complete the operation but Coast Guard officials said it would have been more costly to clean up the oil if the Princess Kathleen had sprung a major leak.

-Sitka News

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Wednesday, June 23, 2010

Top Story

CMA CGM, Maersk, MSC reinstate trans-Pac service

On the heels of recent container-shipping line announcements that more capacity would be brought back into a surging cargo marketplace, three of the top major global carriers announced a reinstated direct call trans-Pacific service to Long Beach.

The MSC Luisa is scheduled to depart July 10 from Xiamen, China on the re-introduced Trans Pacific 2 (TP2)/Yang Tse service as part of a vessel sharing agreement between CMA CGM, Maersk Line and Mediterranean Shipping Company (MSC).

The carrier group said the new service rotation would be Kaohsiung, Taiwan; Hong Kong, China; Xiamen, China; Shanghai, China; Qingdao, China; and Long Beach, Calif on the eastbound. The westbound rotation is to be Long Beach, Kaohsiung, Hong Kong, Xiamen, Shanghai, and Qingdao, China.

Maersk Line said it would operate two of the six vessels on its slow steaming plan, with MSC operating three, and CMA CGM deploying one ship The carrier group said the service would feature 6500-TEU containerships.

Mexico posts larger-than-expected trade surplus

Mexico tallied a slightly larger than expected trade surplus in May as crude-oil prices rose from the year-ago month and manufacturing exports remained on their path to recovery, while imports also saw strong growth.

The National Statistics Institute, Inegi, said Wednesday that Mexico's trade surplus last month was $179 million, compared with a surplus of $195 million in April and a surplus of $694 million in May 2009.

Increasing global oil prices and higher volume caused the value of Mexico's petroleum exports to jump 59% from the year-ago month to $3.84 billion. Mexico exported 1.59 million barrels of crude per day in May.

Exports surged 44% in May to $24.8 billion. Manufacturing exports rose 42% to $19.9 billion, with exports of cars, steel, and industrial equipment leading the way.

Among the most notable points of May's trade data was a turnaround in imports of capital goods, or equipment and machinery, which rose 9.9% to $2.34 billion.

Through the first five months of this year, Mexico's exports rose 38% to $116.27 billion, while imports grew 35% to $115.61 billion.


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Kinder Morgan fined $1 mil for "environmental crimes" at Florida port

A company operating at Port Manatee was ordered to pay a $1 million penalty Tuesday and sentenced to two years of probation for "environmental crimes."

Officials with Kinder Morgan Port Manatee Terminal LLC in February pleaded guilty to violating the federal Clean Air Act during a seven-year period, according to a plea agreement reached with the U.S. Attorney’s Office in Tampa. Those violations involved a malfunctioning air-pollution control system which allowed the release of particles into the air from materials the company ships at its four-acre site.

During a sentencing hearing in a Tampa federal courtroom Tuesday, U.S. District Court Judge James Moody Jr. ordered the company to pay a $750,000 fine and make a $250,000 "community service payment" to the National Fish and Wildlife Foundation. Moody also tacked on $1,600 in court costs for the company’s guilty plea.

-Bradenton Herald

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Oil shipping industry to help pay for rescue tug in Wash. State

Oil shippers will pay 57 percent of the cost of an emergency rescue tugboat at Neah Bay when private industry takes over paying for the tug operation on July 1.

Representatives of the tanker and non-tanker sectors of the shipping industry have reached an agreement on cost allocation. They have signed a contract with Foss Maritime to provide a rescue tug for the coming year.

The tug is required by law to be an ocean-going vessel with enough power to pull oil tankers and large cargo vessels out of harm’s way if they lose power. Shifting currents and the narrow entrance to the Strait of Juan de Fuca have been cited as reasons for a year-round tug at Neah Bay — in the northwest corner of Washington state.

The Jeffrey Foss, a 115-foot tug built in 1970, is scheduled to be on station July 1, taking over for the Hunter, a tug operated by Crowley Maritime under a state contract.

In 1999, the Legislature began paying for a tug during the winter months, when the ocean is most treacherous. Beginning July 1, 2008, the Legislature provided $3.6 million a year for a full-time tug.

-Kitsap Sun

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U.S. chases rogue logistics firm

Frustrated federal prosecutors asked a judge not to dismiss fraud charges against a Kuwaiti company that was paid billions to supply food for the U.S. military in Iraq and Kuwait, calling the logistics firm a "fugitive from justice" that is hiding behind its foreign headquarters.

Prosecutors said in a motion filed late Monday that Public Warehousing Co. "contemptuously contends that it is not subject to the laws or courts of the United States" but asserts in press releases that it looks forward to its day in court.
"The temerity of this defendant is breathtaking," the court filing said.

Prosecutors in November charged the company, also known as Agility, with inflating prices and defrauding the U.S. government of at least $68 million while supplying soldiers in Kuwait, Iraq and Jordan. The firm has received more than $8.5 billion in food supply contracts and has been the military's chief food supplier in Kuwait and Iraq since 2003.


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Thursday, June 24, 2010

Top Story

U.S. cabotage group seeks to quell Gulf oil skimmer debate

Some Americans do not understand the Jones Act and think it may be an impediment to the U.S. Gulf oil spill cleanup, but it is not, says the Maritime Cabotage Task Force (MCTF), a group that counts 350 members composed of U.S. shipping companies and related organizations.

The MCTF issued a response this week on the heels of news that specialized foreign-owned "skimmers" might be needed to assist in Gulf oil spill clean-up efforts within the 3-mile barrier from land that is part of the 1920 Jones Act U.S. cabotage law that in effect bans foreign-flagged and crewed vessels from competing domestically port to port in the U.S.

There were reports that Dutch assistance in this manner was rebuffed by the U.S. in tandem with the news that Senator Kay Bailey Hutchinson of Texas had reportedly filed legislation to temporarily waive the Jones Act to allow more foreign vessel assistance within the 3-miles of the U.S. coastline.

The MCTF proposes a specific exception to the Jones Act as opposed to a "blanket waiver" so job opportunities and related economies associated with the cleanup within the 3-mile zone are kept within U.S. domain.

"The primary purpose of a cabotage law is to draw a distinction between international trade [between countries] and domestic trade [within a country]. Ships [and airplanes and trucks] that operate in U.S. domestic trade must obey American laws, including immigration, employment, safety, environmental, tax, labor and other laws," the MCTF said in a statement.

However, the group said: "American law is particularly flexible in allowing the use of foreign oil spill response vessels such as skimmers."

"The National Incident Command (NIC) says there has been ‘no case' where an offer of foreign assistance has been declined because of the Jones Act," the MCTF said.

"In fact, the U.S. State Department has said that ‘[a] number of offers of assistance have been accepted,' including Mexican skimmers, Norwegian skimming systems and other assets from Canada, Germany, and the Netherlands," the group said.

The MCTF said the Jones Act does not apply to skimming operations outside of 3 miles from shore, including near the well, which is "completely open to foreign oil spill response vessels. That is where the vast majority of skimming has occurred so far."
The MCTF contends the Jones Act "can be waived on a case-by-case basis if there is a need but no American vessel is available to meet that need. That waiver process is always quick but it has been streamlined even further by Admiral Thad Allen and the NIC since the spill to deal with any waiver requests."

The MCTF also pointed to the Coast Guard's finding that there is an insufficient number of applicable oil skimming vessels in the U.S. to respond to this spill, allowing for foreign vessels of this variety to be utilized within the 3-mile limit.

However, the MCTF says "no waivers of the Jones Act ... have been required because none of the foreign vessels currently operating as part of the BP Deepwater Horizon response has required such a waiver."

 "If the use of foreign vessels is necessary, the American maritime industry has stated publicly that it will not oppose the use of these well-established waiver procedures," the cabotage group said.

The group also contends "hundreds of American vessels are already involved in the Gulf cleanup but there are many more American vessels standing by waiting to be called."

Trucking freight picks up with driver shortage

If it seems like there are more trucks on the road these days, there are. Tavio Headley, an economist with the American Trucking Associations, says freight traffic has climbed steadily since late last year.

This April was almost 10 percent better than a year earlier, Headley says. The broad gauge the ATA uses to monitor the trucking industry has climbed back to where it was just before the recession.

And at the Truckers Jubilee, a part-barn dance, part-job fair at a truck stop in Oak Grove, Mo., job seekers definitely had the upper hand.

Sundy Muse-Morton with O&S Trucking was at the event, trying to entice would-be employees. "We're having to turn down freight because we don't have enough drivers," Muse-Morton said. "I mean, for all the freight shortage last year, it's coming back now stronger than ever, and we literally can't keep up."

Some 1,700 small trucking companies folded just last year. That sent thousands of drivers out of the business, and that wave of failures has swelled even as the freight markets improved.

Banks are now more likely to foreclose on truck loans gone bad because used semis are back in demand. In the first quarter of this year, 730 companies went under.

-National Public Radio

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General Maritime raises over $195 mil

General Maritime Corp. said Wednesday that it has closed a public offering of stock that raised $195.6 million for the company, after expenses.

The company, which operates tanker ships for transporting oil shipments, said it sold 30.6 million shares of newly issued common stock at $6.75 per share. General Maritime said it plans to use the money to help pay for its previously announced acquisition of seven tankers.

General Maritime shares rose 8 cents, or 1.2 percent, to $6.70 in extended trading, after falling 8 cents, or 1.2 percent, to close the regular trading session at $6.62.


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CP Rail and BC terminal operator to work on freight flow improvement

Canadian Pacific said on Wednesday it would share information with container terminal operator TSI Terminal Systems Inc. to try to improve the flow of freight through Vancouver, British Columbia.

The two companies plan to set up working groups to study operations, technology and marketing so they can look for improvements. They're also looking to improve their systems for tracking and predicting customer demand.

Railroad operator Canadian Pacific is based in Calgary. TSI calls itself Vancouver's largest terminal operator.


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112-year-old freighter identified on Lake Michigan bottom

For almost 112 years, the steamship rested in ghostly silence at the bottom of Lake Michigan, unknown and unseen until a group of divers kicked their way down to the deck and solved a perplexing maritime mystery.

The deckhouses were gone, the smokestack was tipped over and a wheelbarrow used to move cargo lay on the boat's surface. Though the name couldn't be seen on the stern, the length of the vessel and unusual characteristics pointed to only one ship — the L.R. Doty. Until last week, it was the largest wooden ship that had been unaccounted for in Lake Michigan.

The 291-foot-long L.R. Doty was carrying a cargo of corn when it sank during a ferocious storm on Oct. 25, 1898. All 17 people aboard and the ship's two cats, Dewey and Watson, were lost.

When a group of divers and maritime historians discovered the L.R. Doty's grave about 20 miles off Oak Creek in 320 feet of water, they found an intact ship sitting upright. It was in remarkable condition considering it has been underwater for more than a century, courtesy of the frigid waters of the Great Lakes that act as a great preservative of wooden ships.

And the cargo, harvested from Illinois farms and destined for Ontario, Canada, is still in the hold, though it now has a layer of muck on top of it, said Brendon Baillod, a Great Lakes maritime historian who spearheaded the search.

-Milwaukee Journal-Sentinel

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Friday, June 25, 2010

Virginia port approves 20-year, $1 bil lease to APM

The Virginia Port Authority's Board of Commissioners unanimously approved a 20-year lease of APM Terminals Inc.'s 3-year-old cargo facility in Portsmouth Thursday in one of the largest transactions in the history of the Port of Virginia.

The lease, valued at more than $1 billion over the life of the deal, is scheduled to take effect on July 6 and continue through 2030.

It marks the end of nearly three years of competition between the state-owned port operation and the private company and once again unifies all of the port's major cargo terminals under one management team.

APM opened the $500 million terminal on the Elizabeth River in September 2007, but its growth was stifled by a global crash in international trade. The terminal has the capacity to move about 825,000 containers a year with the ability to expand to handle nearly 1.5 million.

-Daily Press

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NY-NJ port authority to acquire military and container terminals

The Port Authority of New York and New Jersey is buying a huge chunk of the former Military Ocean Terminal at Bayonne and all of the Global Terminal container port in Jersey City as part of a plan to ensure the future growth of the region’s ports.

Under terms of the deal disclosed by the Port Authority tonight, Bayonne will receive payments totaling $235 million spread over 24 years, including $135 million for the 130 acres of Ocean Terminal, plus almost 100 underwater acres surrounding the peninsula. The agency will pay the city another $100 million for permanent roadway easements to assure that trucks and other vehicles always have access to the site. Bayonne officials gave preliminary approval to the deal last night.


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NYK says surcharges might help company beat profit forecast

Nippon Yusen K.K., Japan’s largest shipping line by sales, said it may beat the annual profit forecast at its container-carrying unit as rebounding demand allows the introduction of peak-season surcharges.

The company plans to add an extra $200 per 20-foot container on Asia-North America routes beginning as early as this month through September, Mikitoshi Kai, its head of investor relations, said in an interview in Tokyo yesterday. The company hadn’t included the levy in its profit forecast, he said.

The peak-season surcharge comes after Tokyo-based Nippon Yusen negotiated rate increases of as much as $400 per container in annual contracts beginning from last month, Kai said.


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Boeing lands $100 mil contract with Navy

The Boeing Co. on Thursday announced it has won a five-year, $100 million support contract from the U.S. Navy for work on the C-40A.

The aircraft is a modified version of the Boeing 737-700C. The company builds all-passenger, all-cargo and combination versions of the plane for the Navy.

The work will be handled by Boeing Global Transport & Executive Systems, which is headquartered at Boeing’s (NYSE: BA) defense facility in Wichita.

The Navy has nine C-40As in service. Boeing is scheduled to deliver three more of the aircraft by 2011.

-Wichita Business Journal

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Kenya opens for business with piracy court

Kenya opened a special court on Thursday to try suspected pirates arrested by foreign navies patrolling the coast of Somalia and the busy Gulf of Aden.

The east African country has borne the brunt of taking in, trying and jailing suspected pirates, who have made the eastern African shipping lanes linking Europe with Africa and Asia the most dangerous in the world.

Foreign navies patrol the Indian Ocean to help protect commercial shipping from pirates. Tanzania, Seychelles and Mauritius have pledged to assist Kenya in prosecuting and jailing pirates.

The court, based at Shimo La Tewa prison in the Indian Ocean port city of Mombasa, will be funded by the U.N. Office on Drugs and Crime, the European Union, Australia and Canada.

-Reuters Africa

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