Cargo Business Newswire Archives
Summary for June 22 - June 26, 2009:
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Monday, June 22, 2009

Top Story

National freight policy needed says BNSF chief to U.S. Senate committee

The biggest challenge to an efficient freight system in this country is the lack of a national freight policy, according to BNSF’s chairman, president and CEO Matt Rose in testimony before a Senate Commerce Committee hearing on freight transportation in America.

"Now, more than ever, the government’s role in providing a vision and funding for freight mobility is so important," said Rose.  "The challenges around capacity, environmental requirements, and even fuel costs, can be managed – if there is a coherent federal policy framework."
Rose said that in order to increase the freight rail’s market share by 10 percent, an additional $700 million in annual investment would be necessary.

Rose said that while enormous efficiencies were realized with deregulation of the railroad industry in the 1980s, supply chain costs began to increase in 2003 as the economy began to outgrow capacity.

Rose outlined a policy roadmap that included a national vision for freight projects, balanced economic regulation, tax incentives to spur infrastructure investments, increased use of public-private partnerships, and performance based-transportation funds.

Australia’s Toll Group sets up JV to operate Cambodia railway

Australia's Toll Group announced it has signed an agreement with the government of Cambodia to operate the nation's railway system under a 30-year concession agreement.

The Toll Group said in its statement to the Australian Securities Exchange that under the terms of the concession agreement with the Cambodian government, a joint venture would be set up with Toll taking a 55 percent stake and the Royal Group, which would take the remaining 45 percent of the Cambodian railway network.

The Royal Group is a Cambodian conglomerate with operations in a range of businesses in Cambodia including banking, telecommunications and media.

"This agreement complements Toll's existing presence in Cambodia through its oil and gas logistics operation. As the operator of the railways, we now have a strong strategic partnership with the government of Cambodia that will see future benefits for Toll and the Cambodian people," said Toll Group Managing Director Paul Little.

"The Cambodian government has committed in our agreement to seeing more freight transported by rail. They have acknowledged that an efficient intermodal rail and integrated logistics operation will underpin Cambodia's economic development both locally and across the Asian region," said Little.

"The agreement is conditional upon final confirmation of investment by the international community of about US$145 million. These funds will be used to upgrade the rail network and develop a modern intermodal facility on 98 hectares in Phnom Penh. Principal funding has been committed by the Asian Development Bank," he said.

Volkswagen opens $30 mil parts distribution center in Jacksonville

Volkswagen Group of America (VWGoA) has opened a $30 million parts distribution center in Jacksonville, Florida. The new center is expected to receive an average inbound of three trailers or 1,000 inventory lines a day and send out nearly 6,000 outbound inventory lines per day.

With more than $18 million in inventory and nearly 50,000 unique part numbers, the new center is 30% larger than the company's former Jacksonville parts distribution center.

-Automotive Business Review

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Home Depot’s planned Redlands, Calif. distribution facility still on for 2010

The Home Depot still has plans to open a new distribution center on Alabama Street, but it will not be this year.

Several similar facilities "leap frogged" their original opening dates ahead of the Redlands location, said The Home Depot spokesperson Sarah Molinari. The company is committed to opening the Redlands facility by 2010, she said.

The Redlands center is part of The Home Depot's new distribution plan. The company is opening 20 new facilities to streamline its distribution process.

ProLogis and The Home Depot have a build-to-suit lease agreement for a 658,000-square-foot building at ProLogis Park near Interstate 10 and Highway 30. ProLogis has completed construction on the building and received an occupancy permit, said San Bernardino County Planner Chris Warrick.

-Redlands Daily Facts

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APL posts softer decline in May

Singapore's Neptune Orient Lines (NOL) announced container-shipping volume for APL dropped 21 percent in May compared to the same period a year ago.

The container volume drop was the softest for the shipping line since it posted a 35-percent decline for the four-week operating period to February 6 of this year.

From May 2 to May 29, APL moved 159,100 FEUs, down from 201,700 FEUs in the same period in 2008, with average revenue per FEU dropping 23 percent to $2,326 dollars, the company said.

Tuesday, June 23, 2009

Top Story

Shipping line exec to head up SC port authority

The South Carolina State Ports Authority (SCSPA) announced its board of directors today voted unanimously to hire James I. (Jim) Newsome III as president and chief executive officer, effective September 1.

Newsome, 53, is a 30-year shipping industry veteran, and becomes the fifth leader of the SCSPA in its 67-year history. He most recently served as president of German container shipping line Hapag-Lloyd (America), Inc.

“We are very pleased to have such a well-respected and accomplished executive leading our ports,” said David Posek, chairman of the SCSPA.  “He will be welcomed by customers and port workers alike.”

“South Carolina’s ports are tremendous economic assets,” said Newsome.

“I hope to lead in a way that allows us to focus squarely on our core mission – serving our customers and bringing economic benefits to the state. With the region’s deepest channels and the most efficient operations in the country, we are very well positioned.  I am very excited about the opportunity to advance the state’s ports,” he said

Newsome said he would explore new ways to engage customers and other stakeholders.  “Relationships are critical to a port's success, and they will be a top priority.”

Newsome’s hire ended a five-month executive search led by a 13-member search committee of business leaders and port stakeholders from across the state, after former SCSPA chief executive Bernie Groseclose resigned earlier this year

“Jim was the unanimous pick of both the board and the search committee,” said Bill Stern, SCSPA vice chairman and chairman of the search committee.  “The stars have aligned.”

Maersk’s container shipping investment to abate

Executive management in the A.P. Møller-Mærsk Group have indicated that the foundation stone of the company – its container shipping line – is not as profitable as other areas and will not receive as much investment in the future.

Maersk chief executive Nils Smedegaard Andersen told Berlingske Tidende newspaper that the heavy investment in Maersk Line over the last two decades meant that the company’s fleet simply can’t get any larger.

Port of Portland breaks ground on $14 mil rail project

The Port of Portland, Ore. announced the groundbreaking on a $14 million rail project at its Rivergate Industrial District, led by Congressman Earl Blumenauer.

The new Ramsey Rail Yard is projected to increase freight rail capacity and help to decrease rail system congestion, the port said. Presently, only one track connects north and south Rivergate, which the port said has created a bottleneck for the two Class 1 rail carriers serving Portland. Adding a second main lead and three storage tracks will allow one track to remain open for rail travel while adding the capability to store long unit trains, the port said.

The project’s funding included federal appropriation, a state ConnectOregon grant, a loan from the state of Oregon, and financial support from the port and the railroads, the port said.

The rail facility is scheduled for completion in late summer of 2010 and is one of nearly $500 million in capital projects that the Port of Portland says it is currently involved with.

ATA asks Congress for action on oil speculation as cost of diesel rises

The American Trucking Associations (ATA) announced it has called upon Congress to increase the transparency of futures markets and impose what it terms “reasonable aggregate position limits on energy commodities.”

“Since March, the price of diesel has risen 56 cents per gallon despite supplies being at a historical high and diesel demand at a 9-year low,” said the ATA’s president and chief ecxecutive Bill Graves. “It seems that more is at play than just the fundamentals of supply and demand.”

The ATA claims that although the price of crude oil is down from last summer’s record-high levels, there has seen a dramatic and, in the association’s words “inexplicable run-up in price over the past five months.” U.S. oil inventories are near a 19-year high and oil demand is down 6 percent from a year earlier, but the price of crude has more than doubled since February, the ATA claimed.

“Demand for petroleum products in the United States is lower today than it was 10 years ago and supply is higher today than it was in 1982,” said Bob Costello, ATA vice president and chief economist. “In addition, the International Energy Agency recently predicted that global demand for oil will drop by about 2.5 million barrels a day this year compared to last year – the sharpest year-over-year decline in nearly 30 years.”

According to data the ATA cited from the Energy Information Administration (EIA), crude inventories in May were at their highest levels in almost two decades.

The trucking industry spent a record $150.9 billion purchasing diesel fuel last year and with relatively low freight volumes as a result of the global recession, the industry cannot afford a dramatic price spike in diesel fuel like the one in 2008, the ATA said.

Diesel fuel is typically the second-highest expense for a trucking fleet, accounting for up to 25 percent of total operating expenses, the ATA said.

The ATA said it is concerned that speculation could be increasing as a result of investors seeking investments that provide insulation from anticipated inflation.

North Korea bans shipping off eastern coast during military drills

Japanese coast guard officials say North Korea has banned ships from sailing off its east coast for 16 days starting this Thursday.

Coast guard officials say the North Korean government sent them an e-mail warning that it will hold military drills off its eastern port of Wonsan between Thursday and July 10.

The e-mail did not say what consequences ships would face if they violated the ban.

-Voice of America

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Thursday, June 25, 2009

Top Story

Matson crew members and management work to avert strike

Crew members, including captains, on Matson Navigation Co.'s trans-Pacific cargo ships have authorized their union to call a strike if a contract agreement is not reached.

Matson is the state's largest shipping company, carrying about two-thirds of the containerized freight shipped to Hawai'i. About 80 percent of all goods sold in Hawai'i arrives via ship.

The crew members' contract expires at midnight tonight. Talks between the company and union resume this morning in San Francisco.

-Honolulu Advertiser

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Thousands of knockoff Nikes found in L.A. shipping container

A shipping container from China with more than 10,000 pairs of knockoff Nikes inside was seized at the Los Angeles-Long Beach port complex, a U.S. Customs and Border Protection spokesperson said Wednesday.

The 10,900 pairs of counterfeit Nikes were valued at nearly $400,000 but, if real, would have been worth about $1.8 million, according to Cristina Gamez of CBP.

The knockoffs were under a layer of used shoes in the top of the container, a move apparently designed to throw off inspectors, she said.

-NBC News Los Angeles

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Shipping economist says ship financiers need to look beyond
current crisis

Ship financing institutions should see beyond the current gloom in the sector to appreciate its long-term potential, participants at a ship financing seminar were told Thursday.

Nazery Khalid, senior fellow at the Maritime Institute of Malaysia, said despite the economic crisis, consumers and businesses still needed to use goods and materials, and nations needed to continue to trade.

To this end, Nazery said alternative financing options such as Islamic financing, shipping trusts, leasing and private equity funding should be explored further and introduced to ship financing to add more depth to the sector and provide a wider range of financing alternatives.

-Malaysian National News Agency

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New Shanghai tunnel connects port to financial center

The city’s newly-completed tunnel spanning of 2,254 meters will now link the Shanghai Port located on the on the west bank of the Huangpu River to its finance and trade center, Lujiazui.

The tunnel took 10 months to build at a cost of RMB1.8 billion and runs under the Huangpu river bed.

-China Briefing


American Fast Freight to build new Tacoma facility

Transportation and logistics company American Fast Freight plans to start construction soon on its new 90,000-square-foot facility in Fife.

The company – now located in Tacoma’s Tideflats – ships cargo to Alaska, Hawaii, Guam and Puerto Rico.

American Fast Freight currently leases property from the Port of Tacoma and is moving to make way for the port’s planned expansion onto the Blair-Hylebos Peninsula.

-Tacoma News Tribune

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Friday, June 26, 2009

Top Story

Report: Revenue falls 35 percent in Q1 for top 11 container lines

The revenues of the top 11container-shipping lines have fallen 35 percent in the first quarter of 2009 compared to the same period a year earlier, Paris-based AXS-Alphaliner reported.

Liner business declined from $22.4 billion a year ago to $14.4 billion among the group of 11 carriers that claim approximately 45 percent of total container line capacity, according to the report.

The drop was due to the decline in freight volumes and rates, with the average decrease in volumes at 20 percent, and rates dropping 15 percent, the report said.

Of the 11 carriers surveyed, the two Chinese container carriers, CSCL and COSCO, experienced the sharpest revenue falls in the first quarter at 56 percent and 53 percent, respectively.

The Alphaliner report went on to say the two Chinese lines are at a higher level of exposure among all the top carriers to the intra-Asia and domestic China trades, both of which have been greatly impacted by the drop-off in cargo demand.

California tops in U.S. transport stimulus funds at $1.5 Billion

Governor Arnold Schwarzenegger announced that California leads the nation in attaining federal approval and commitment for federal transportation stimulus monies to date at $1.5 billion in Recovery Act funds allocated for 312 projects around the state.

“California obligated half of its transportation stimulus funds two months ahead of federal deadline – and we continue that pace today by leading the nation in federal commitments,” the governor said.

“Californians can be assured that we are exceeding federal deadlines and working around the clock to stimulate the California economy through President Obama’s Recovery Act.”

California is expected to receive nearly $2.6 billion from the Recovery Act for highways and local streets and $1 billion for transit projects, the governor’s office said.

For a list of California’s state and local transportation projects with federal Recovery Act funding commitments to date click here.

China Shipping to net almost $3 bil credit line from China Merchants Bank

China Merchants Bank Co Ltd., the nation's sixth-largest lender by assets, on Thursday signed an all-round cooperation agreement with China Shipping Group Co (China Shipping), the parent of the country's biggest container-shipping firm, China Shipping Container Lines Co Ltd., the Shanghai Securities News reported.

Under the terms of the agreement, CMB will extend a credit line of RMB 20 billion to Shanghai-based China Shipping as part of the bank's effort to support the nation's shipping industry.

-China Knowledge

Matson’s contract talks with union heads into overtime

Matson and the unions representing ship captains and other crew members have agreed to continue contract talks today in San Francisco, averting for at least a day the threat of a shipping strike as contracts expired last night.

Matson's contracts with the International Organization of Masters, Mates & Pilots, the Marine Engineers Beneficial Association and the American Radio Association expired at 9 o'clock last night Hawai'i time. But negotiations were extended into today after both sides made progress in negotiations, said Charles Khim, attorney for the unions.

-Honolulu Advertiser

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China's largest cold chain logistics facility to be completed this year

The largest cold chain logistics complex in China, located in Tianjin, is under construction and expected to be finished this year, according to China’s state media organization Xinhua.

The $146.3 million facility will cover 14.9 hectares and include 220,000 square meters of floor space with a cold storage capacity of 200,000 tons, the report said.

The cold storage complex is composed of five cold storage warehouses and a 15,000-square-meter aquaculture market with projected processing capacity of 10,000 tons each year, frozen foodstuff trade volume of one million tons, and trade value of almost $4.4 billion.

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