Cargo Business Newswire ArchivesSummary for July 6 through July 10, 2015:
Monday, July 6, 2015
Capitol Watch: Freight takes the spotlight in EPW's DRIVE Act
By Anna Denecke, Associate, Blakey & Agnew, LLC
On June 24, the Senate Environment and Public Works (EPW) Committee voted 20-0 to approve S. 1647, the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act. If enacted, the six-year, $278 billion proposal would provide long-term funding certainty for state and local transportation projects. The DRIVE Act generally maintains the funding levels of MAP-21, the most recent surface transportation bill. The exception is two new freight programs, which earned $15.8 of the $16 billion in new funding provided by the bill.
The first, the National Freight Program, distributes formula funding based on current apportionment criteria. The National Freight Program is authorized at $2 billion in FY2016 and increases by an additional $100 million each year. By FY2021, the NFP is authorized at $2.5 billion.
The second freight-focused portion in the DRIVE Act is the Assistance for Major Projects Program. AMPP is a competitive grant program funded in FY2016 at $300 million per year, eventually increasing to $450 million in FY2021. The program is designed to support projects that are typically very large and often multimodal, sometimes stretching across multiple jurisdictional boundaries, including state lines.
AMPP is similar to Projects of National and Regional Significance (PNRS), a SAFETEA-LU era program that was included in MAP-21 but left unfunded by appropriators. AMPP is funded through Highway Trust Fund contract authority, meaning grant dollars will not be subject to the annual appropriations process and the program cannot be left unfunded.
In addition to the two new freight programs, the DRIVE Act also improves existing freight policy. The Primary Freight Network, created by MAP-21, requires the Secretary of Transportation to identify up to 27,000 miles of roadways necessary for the efficient transportation of goods. The limited mileage and other restrictions left the draft Primary Freight Network a patchwork map. Many transportation interests deemed the draft network unrepresentative of how freight truly moves.
The DRIVE Act takes steps to ensure that the Primary Freight Network is a useful tool and serves its original purpose. Renaming it the Primary Highway Freight System, per the highway-only jurisdiction of the EPW Committee, the DRIVE Act increases the mileage cap to 30,000 centerline miles and adds all National Highway System freight intermodal connectors. Intermodal connectors tie modes together; they are key to ensuring goods move seamlessly within regions, across the country, and to our borders. The DRIVE Act also provides states, in consultation with their State Freight Advisory Committees, the opportunity to gradually increase the number of miles within their state that appear on the Primary Highway Freight System.
While MAP-21 only recommended states develop State Freight Advisory Committees and State Freight Plans, the DRIVE Act requires them. This will allow for a cross-section of public and private sector freight stakeholders to assist states in forecasting for short- and long-term freight planning and investment.
The EPW Committee put a stake in the ground on June 24 by unanimously voting to report the DRIVE Act out of committee. However, in order for the Senate to pass a long-term surface transportation bill, the Senate Commerce, Science, and Transportation Committee must draft the multimodal language and the Senate Banking Committee must write the transit section. Finally, the Senate Finance Committee must find the funds to support the comprehensive plan. So far, the EPW is the only committee to act on a long-term bill. The latest extension of MAP-21 expires on July 31.
Blakey & Agnew, LLC is a public affairs and communications consulting firm based in Washington, DC.
Maersk returns to Port of Baltimore
Maryland officials welcomed Maersk Line back to the port of Baltimore on Wednesday after an absence of nearly 20 years.
Port officials said the line is bringing three ships weekly from the Far East, Northern Europe and the Mediterranean Sea.
A delegation led by Lt. Gov. Boyd K. Rutherford gathered at Seagirt Marine Terminal to mark the renewal of a partnership that is expected to increase the port's container ship traffic.
"As the port succeeds, Maryland succeeds, and now Maersk is here and is going to link that success to the success of our state," said Rutherford, who was filling in for Gov. Larry Hogan, who was undergoing chemotherapy treatment for cancer.
The Maryland Port Administration forecasts that Maersk, which quietly resumed calling on the port in early February, would bring an added 31,000 TEUs to the port per year. The world's largest shipping line, Maersk handles about 15 percent of all global container shipments.
Maersk ships once called at Baltimore port terminals more than 120 times a year, but the line's departure in the late 1990s marked an end to the port's hopes to be a major container shipping center.
White said the port wants to recapture more of the line's business. "We view this as the first step in getting Maersk back," he said. "We're hoping to get it all back. We want global services coming through Maryland."
"This is a homecoming to us," said David Zimmerman, Maersk's vice president for North American sales. "We're delighted to be back."
Maersk's return also reflects changes in the shipping trade since the line left Baltimore, White said. Container ships are much larger now, carrying three to four times as many containers, making it more economical traveling up the Chesapeake Bay to unload in a port closer to consumers.
U.S. exporters are trying to find ways to convince foreign customers not to abandon deals supported by the U.S. Export-Import Bank, which was forced to halt new business at midnight Thursday when its charter expired.
There are about 195 pending transactions still in its approval pipeline that will be frozen by the lapse, with requested amounts totaling $9.14 billion, according to Ex-Im data. The amounts include 14 loan guarantees worth $3.33 billion, and 137 trade insurance requests worth $163 million.
Companies affected range from giants including aircraft maker Boeing Co. and General Electric Co. to small exporters of specialty oilfield equipment.
Congress took no action to keep the 81-year-old Ex-Im operating before leaving Washington last week for an 11-day break. Democrats, moderate Republicans and exporters are pinning their hopes of renewing the bank’s charter on attaching a measure to a "must-pass" transportation funding bill in July.
President Barack Obama said the lapse "means lost sales, lost customers, and lost opportunities" for exporters and vowed to fight for Ex-Im’s revival.
Boeing, by far the Ex-Im Bank’s largest beneficiary, faces an aircraft financing void of $8 billion to $9 billion this year if Ex-Im never reopens, and would have to fill about half of that through its own financing arm, Boeing Capital, according to Moody’s Investors Service.
"But we don’t see that as a viable long-term solution," said Boeing spokesman Thayer Scott in Washington D.C., because it would reduce capital available for new airplane development.
While Boeing faces no immediate threat to its credit rating, the outlook without Ex-Im could worsen over time if other negative factors came into play, said Moody’s senior vice president Russell Solomon.
Fitch Ratings managing director Craig Fraser gave a similar assessment for construction equipment maker Caterpillar Inc., another top user of Ex-Im services, adding that without the bank, its competitive position could be reduced over time.
Global Container Terminals NY welcomes Sealand/APL reefer service
Global Container Terminals USA welcomed the maiden call of the new North-South NAE/ACX service to GCT New York on June 28.
Operated by SeaLand and APL, the expanded NAE/ACX service connects the East Coast market to the carriers' broader network on the West Coast of South America, Central America, and the Caribbean, according to a GCT statement. The weekly reefer service will call GCT New York, the only facility with an on-dock customs exam station and agriculture quarantine inspection warehouse at the Port of New York and New Jersey.
"GCT New York boasts the quickest truck turnaround times in the harbor and first class reefer customer service," said Bob Nixon, vice president of operations at GCT New York. "Awarding us this newest service demonstrates APL and SeaLand's confidence in our proven ability to deliver an efficient product."
Five cargo ships tossed by storm in Bohai sea
It was reported that five Chinese cargo ships were caught in a storm off Dalian, in the Bohai sea on the afternoon of June 29.
The ships requested help and a large-scale rescue operation was launched, according to officials.
The five Chinese-flagged ships held a total 26 crewmembers, who were all rescued by helicopters and emergency response ships, officials said.
Tuesday, July 7, 2015
Drewry: Carriers position for Panama expansion
Container lines are hurrying to start new Asia to U.S. East Coast services prior to the opening of the wider Panama Canal, according to a recent issue of Container Insight by Drewry Maritime Research.
The $5.2 billion project to widen the Panama Canal is almost finished. According to the Panama Canal Authority (ACP), it was 89.8 percent complete at the end of May, with another important milestone reached in June — the filling of the Atlantic side locks. Filling the Pacific side locks is now underway, at a rate of 37,000 gallons of water per minute, and should take 90 days.
Starting April 2016 container ships of up to 13,000 TEUs will be able to navigate the Panama Canal, more than doubling the existing maximum size of 5,000 TEUs. Analysts say the expansion of this key shipping lane to bigger ships will give carriers an extra option to address the current supply and demand imbalance by offering more trade options.
In readiness, carriers are starting new Panama-transiting services to build up their customer base. Since the start of the year there have been six new services created for the Asia to U.S. East Coast trade with all but one of them routed via Panama.
Part of the allure of the all-water option is the sizeable freight rate premium that carriers can charge, which grew larger during the slowdown on the U.S. West Coast. However, that pricing differential is decreasing now that West Coast operations are normalizing and because of all of the additional East Coast capacity. According to Drewry’s Container Freight Rate Insight in February the average spot rate per-FEU from Shanghai to New York was nearly $2,800 more expensive than for the same box moving from Shanghai to Los Angeles. By May that gap had shrunk to $1,700.
The USWC remains by far the most widely used gateway for Asian container imports but its share is dwindling quite rapidly. At the start of the century the split was more like 84 percent USWC to 16 percent USEC but the latter coast has nearly doubled its share in 15 years. The transfer of cargo seems to be intensifying too. Since January 2013 the USWC’s share has fallen from 73 percent to 69 percent, while the USEC has gained those four percentage points to reach 29 percent.
Much of the USEC’s recent surge has come from greater use of Asia to U.S. via Suez Canal services that are able to accommodate larger ships. But the researchers say that the trend is reversing to Panama.
There are currently 25 weekly Asia-USEC services with 16 going via Panama and nine via Suez. When measured in effective capacity that takes into account the smaller size of ships on the Panama route, Drewry says services via Panama now account for just over half of all the available Asia-USEC slots.
Drewry concludes that container carriers will continue to build up their Panama services before 2016’s opening of the expansion, but unless carefully managed, they risk losing more of the East Coast freight rate premium.
Charleston harbor dredge passes milestone
The planned $500 million deepening of the Charleston Harbor shipping is expected to receive final approval from U.S. Army Corps of Engineers by early fall.
Three years ago, the White House designated Charleston and four other harbor projects as nationally significant and allowed required studies to be expedited. When studies for the Charleston deepening project began in 2011, they were expected to take as long as a decade and cost $19 million. Under the fast-track system they were completed in four years and cost $11 million.
New studies to be conducted in the coming months could lower the estimated $509 million price tag. The price tag includes estimates of the maximum width of the shipping channels and ship turning basins needed. New ship simulation studies will be conducted in the coming months.
Last year the Corps released studies proposing that the shipping channel in the inner harbor be deepened to 52 feet from its current depth of 45 feet. The entrance channel would be extended and deepened from its current 47 feet to 54 feet.
The design work on the project is expected to take between 18 months and two years. The Charleston District last week received $1.3 million in federal money for that work, which can begin even before congressional approval.
China said Friday it has lifted a three-year ban that had banned Brazilian miner Vale SA's giant vessels and will now allow the 400,000-deadweight-ton ships to dock at its ports.
The National Development and Reform Commission (NDRC) said that four ports in the country — Qingdao, Dalian, Tangshan Caofeidian and Ningbo — would be allowed to receive the carriers once they meet the technical standards.
Vale's Valexmax mega-ships had been banned in Beijing in early 2012 due to safety concerns. The ban had halted Vale’s $4 billion expansion strategy in China. These ships were specifically constructed to bring down the transportation costs of shipping iron ore to the country.
Record fuel oil volumes traded last month in Singapore are congesting the port's oil terminals as buyers try to load them, as land tanks are nearly full and tens of millions of barrels of marine fuel are being held in ships, according to traders and shipbrokers.
Almost 39 million barrels of fuel oil were traded in June in the world's largest market for shipping fuel during an end-of-day pricing process, pushing up rates for Aframax vessels to near seven-year highs as buyers tried to find tankers to load the cargoes.
Complaints of loading delays resulted in at least two companies being temporarily barred from oil pricing agency Platts' daily market-on-close price assessment process, traders said.
Platts - which declined to comment - periodically bans companies from its pricing process for trading behavior, financial concerns or non-fulfillment of contracts.
"There are loads of delays in Singapore and many vessels are loaded with fuel oil, and I believe some of them have not found a home," a Singapore-based shipbroker said.
Various traders, including Glencore's shipping arm ST Shipping and Petrochina's trading arm Chinaoil, have hired at least 28 tankers for short-term charter, possibly to store the excess oil, shipbrokers said.
SeaIntel report: APL leads in May carrier reliability
APL announced it was deemed the most reliable carrier in May 2015, with a global on-time performance of 85.5 percent, citing the latest Global Liner Performance Report by SeaIntel Maritime Analysis.
The report, which ranks the performance of the top 20 carriers, says that there was a global improvement in container lines’ schedule reliability from April to May 2015. It noted that schedule reliability increased considerably in May to a global performance of 78.3 percent compared to 72.8 percent in the previous month, the statement said.
"APL has been working hard to improve the reliability of our product," said Nathaniel Seeds, COO of APL. "Our performance improvement is a gratifying result for APL's dedicated team of onshore and seafaring professionals who work tirelessly each day to earn the trust of our customers."
Based on the figures published in June, APL’s schedule reliability in its key trade lanes has shown an improving trend over the first five months of the year.
For example, APL said its on-time performance in the head-haul Asia-US West Coast and Asia-US East Coast trades rose to 65 percent and 74 percent respectively in May. The results are 41 percent and 15 percent higher than its performance in the respective trades in January when port congestion, particularly in the U.S. West Coast, impacted global schedule reliability, the statement said.
CMA CGM gets okay from EU to buy short sea transport firm
The CMA CGM Group has announced that the European Commission approved the acquisition of OPDR, an intra-European short sea transport expert that officially joined the group on July 1.
In order to finalize the acquisition, which was announced on November 25, 2014, by Jacques R. Saadé, founder, chairman and CEO of the CMA CGM Group, the approval of Moroccan and European Union regulatory authorities was necessary.
On June 29th, the European Commission finalized the process by giving its approval without any conditions.
OPDR, a sea carrier, is part of the Bernhard Schulte Group. It is specialized in short sea maritime services and door-to-door logistics solutions between North Europe, the Canary Islands, the Iberian Peninsula and Morocco.
The OPDR fleet sails 4 trades between: North Europe and the Canaries, South of Spain and the Canaries, North Europe, Spain and Portugal, and North Europe and Morocco.
Union Pacific levies surcharge on older crude railcars
Union Pacific Corp. told customers that move crude in older railcars, it will levy a $1,200 per-car surcharge on oil, becoming at least the second U.S. railroad to raise costs in the midst of widespread safety concerns.
In a revised tariff effective Aug. 1, Reuters reports the No. 1 U.S. railroad posted rates that will charge shippers more if they use so-called DOT-111 railcars, which are not as strong as the cars built to a higher standard the industry adopted in October 2011.
For DOT-111s carrying an average of 700 barrels of crude per car, a $1,200 surcharge would add an additional cost of $1.71 per barrel shipped.
Union Pacific said it changed its tariff in response to stronger U.S. rules for handling flammable liquids that were recently announced after a string of fiery crashes.
On Friday, investigators were looking into what caused a freight train carrying flammable and toxic gas to derail and catch fire in Tennessee, triggering the daylong evacuation of 5,000 people, officials said.
The flames that engulfed a car of the CSX Corp. train in Blount County, near Maryville in eastern Tennessee, late Wednesday were extinguished by late Thursday, CSX said. The tank car was loaded with about 24,000 gallons of acrylonitrile, a hazardous material used in manufacturing plastics and other industrial processes.
Noxious fumes sent more than 80 people to the hospital, including 10 law enforcement officers who were kept overnight, said Blount County Sheriff's spokeswoman Marian O'Briant.
The EPA was testing air, soil and water samples and "so far everything is looking good there," O'Briant said. Residents were advised not to use well water.
Egypt arrested 13 Muslim Brotherhood members Monday, suspected of installing explosives around the Suez Canal to disrupt shipping.
The canal is a prime maritime shipping route between Asia and Europe and an important source of revenue for Egypt. Security sources said the group of 13 includes an employee of the Suez Canal authority. Prosecutors contend they planted bombs on beaches adjoining the canal, and in sanitation and electrical facilities along the 120-mile-long route.
The government of Egyptian President Abdel Fattah al-Sisi has cracked down on the Muslim Brotherhood, a group supportive of former President Mohammad Morsi since Morsi was ousted from power in 2013.
Egypt regards the Muslim Brotherhood in the same category as the Islamic State and other Islamist militant groups intent on disrupting peace, as well as government policies and functions.
Maersk orders nine 14,000-TEU ships from Hundai Heavy
Maersk Line announced it signed a new $1.1 billion building contract this week with Hyundai Heavy Industries. The order is for nine vessels with a capacity of 14,000 TEUs each. The agreement includes an option for up to eight additional ships. The vessels will have a length of 353 meters.
The contract was signed by Sam H. Ka, COO of HHI and Søren Toft, COO of Maersk Line, at a ceremony at Maersk Line’s headquarters in Copenhagen.
This is the third new-building order in Maersk Line’s investment program announced in September 2014. The order follows the seven 3,600 TEU feeder vessels and eleven 19,630 TEU Triple-E vessels announced earlier this year as part of Maersk Line’s $15 billion investment in new-buildings, retrofitting, containers and other equipment. Maersk Line says it hopes to be able to acquire the capacity it needs, replace less efficient tonnage and increase its share of owned vessels.
"I am very pleased about this order for which we have taken a new approach," said Toft. "The vessels will be designed to operate in and perform efficiently across many trades and not just designed for one specific trade. They will help us stay competitive and make our fleet more flexible and efficient."
Designing vessels with a flexible operational profile is a first for Maersk Line. By moving away from hulls designed with a certain speed and draft in mind, Maersk is strengthening its fleet with vessels that can be deployed on East-West or North-South trades where requirements differ, with no impact on fuel consumption, the statement said.
Jaxport launches Mile Point harbor project
On Tuesday (7-7), Florida Governor Rick Scott and other state, local and port leaders officially kicked-off JAXPORT’s Mile Point harbor improvement project, which will remove an existing navigational restriction in the St. Johns River. This project will allow larger ships to traverse the channel more efficiently, the port says, saving shippers and businesses time and money.
The state has funded $43.5 million for design and construction of the Mile Point project. The U.S. Army Corps of Engineers is overseeing the construction, scheduled for completion in late 2016.
"Since taking office, my administration has invested more than $850 million in seaport infrastructure improvements in Florida, which has helped make our state a global trade leader and has created thousands of jobs," Governor Scott said. "In February, I was excited to announce that Volkswagen Group of America chose JAXPORT as the location of its import facility and Southeastern distribution center, and in April, I announced Nestle USA was shifting a majority of their U.S. to Puerto Rico shipments from the Port of New York and New Jersey to JAXPORT. We look forward to welcoming more shippers and businesses to JAXPORT because of this important investment."
JAXPORT is a full-service, international trade seaport situated at the crossroads of the nation’s rail and highway network. The port owns, maintains and markets three cargo terminals offering worldwide cargo service from dozens of ocean carriers for all types of cargo.
Jasper terminal project moving full speed ahead
The once-acrimonious Jasper Ocean Terminal project is moving forward with speed and a spirit of cooperation.
"If everything goes right ... we should dump a permit this fiscal year for the actual construction of the Jasper terminal," David Posek, chairman of the Jasper Ocean Terminal Joint Project board of directors, said during the group’s meeting last month. "It’s been a long time coming."
Now that arguments between South Carolina and Georgia ports officials over dredging at the Port of Savannah have subsided, Posek said the bi-state board’s most recent gathering was "a watershed meeting."
The board is waiting until after the Army Corps of Engineers announces its final decision on deepening Charleston Harbor, expected in September, to submit its permit application for channel deepening and widening and construction of the Jasper terminal. The 1,500-acre site is in Jasper County near the Georgia border, about 15 miles from the Port of Savannah on the Savannah River.
While engineering and geotechnical studies have been ongoing, initial work on the $3.3 billion project will begin in the coming months when tons of material dredged as part of the Port of Savannah deepening project is dumped on the Jasper terminal site.
A study completed this year shows the dredging and the large container ships that will be attracted to Georgia’s port won’t clog the Savannah River, leaving enough room for the Jasper terminal to succeed. Moffatt & Nichol has updated the terminal’s design plan to reflect the need for more efficiency.
The plan calls for cargo boxes to be offloaded horizontally from ships and then stacked horizontal to the waterside wharf wall. Keeping the cargo boxes parallel to the wharf wall will cut back on the amount of equipment needed on the ground to move cargo, which will cost less money and increase the number of moves that can be made during a given time.
The new configuration will let up to five cranes offload each ship carrying 18,000 or more cargo boxes. Ships that large won’t fit under the Ravenel Bridge in Charleston or the Talmadge Bridge in Savannah, leaving Jasper as the only site in the fast-growing South Carolina-Georgia sea trade corridor.
Maritime union files appeal after ship’s crew ordered back to work
An appeal lodged by the Maritime Union of Australia against a Fair Work Commission decision involving an oil tanker in Tasmania will be heard on Friday.
The commission ruled that the industrial action by the crew of the Alexander Spirit in Devonport is illegal. The 36 crewmembers have been refusing to sail to Singapore because they are going to be replaced by a foreign crew on a new international route.
The commission ruled on Tuesday that the five-day protest by the crew was not protected industrial action. The MUA lodged an appeal to the full bench of the commission requesting an urgent hearing.
Six crewmembers missing after ship sinks off Phuket
Six sailors are still missing after a cargo ship capsized off Thailand’s southern resort Phuket Province before dawn today, reports Thai News Agency.
The incident took place at around 3:45 a.m. Tuesday (7-7), when the ill-fated cargo ship capsized about five nautical miles east of Racha Yai Island in the Andaman Sea off Phuket Province.
Police said rescue and Royal Thai Navy personnel were searching for the six missing crewmen.
By Anna Denecke, Associate, Blakey & Agnew, LLC
Container lines are hurrying to start new Asia to U.S. East Coast services prior to the opening of the wider Panama Canal, according to a recent issue of Container Insight by Drewry Maritime Research.
APL announced it was deemed the most reliable carrier in May 2015, with a global on-time performance of 85.5 percent, citing the latest Global Liner Performance Report by SeaIntel Maritime Analysis.
Maersk Line announced it signed a new $1.1 billion building contract this week with Hyundai Heavy Industries. The order is for nine vessels with a capacity of 14,000 TEUs each. The agreement includes an option for up to eight additional ships. The vessels will have a length of 353 meters.