Report: Containerized overcapacity amid freight rate drop
New shipping tonnage is hitting the world’s waves despite a decline in freight rates, according to a Bloomberg report.
The total capacity of idled ships is at approximately 80,000 containers, the lowest such level since just before the recession that started in late 2008, according to Paris-based shipping consultancy Alphaliner.
Presently, about 45 percent of cargoes to Europe from Asia are being shipped at a loss, says the Nordea Bank AB. Containerized capacity in that tradelane would need be cut by up to 10 percent in order to balance out supply and demand, the bank said.
“Rates are really bad,” said Torkel Aaberg of Oslo-based fund manager KLP Asset Management in the Bloomberg report. KLP has about $3.3 million worth of shares in Maersk and said it is under-weighting that stock.
“Every shipping line wants the other ones to cut capacity first” said Rahul Kapoor, a container analyst at RS Platou Markets AS.
Freight rates have declined as much as 60 percent from March 2010, according to Alphaliner. In June, a twenty-foot container from Asia to Northern Europe went for $850, as opposed to over $2,000 15 months earlier.
However, the reported difference between now and 2009’s deep recession is that 2011’s container-shipping volume has been projected to increase from between 6 and 8 percent, showing a market that is in growth mode comparatively.
Although, new container-ships will add 9 percent to global capacity this year, which the shipping lines had reportedly hoped would prepare them for the third quarter’s peak shipping season, according to Finn Bjarke, an analyst with Nordea Bank.
Dismissed ABF lawsuit against Teamsters, YRC affiliates overturned
The 8th U.S. Circuit Court of Appeals overturned a lower court decision to dismiss trucking company ABF’s $750 million lawsuit that alleged Teamsters and subsidiaries of competitor YRC violated a collective bargaining agreement.
The Court of Appeals panel overruled District Judge Susan Webber Wright’s dismissal last year of Forth Worth-based ABF Freight System's lawsuit on Wednesday.
The lawsuit was based on the grounds that the Teamsters negotiated amendments to the National Master Freight Agreement that ABF alleged gave the YRC subsidiaries unfair competitive advantage, reportedly involving wage and benefit reductions.
Port of Seattle awarded for environmental programs by AAPA
The Port of Seattle announced that the American Association of Port Authorities awarded two of the Pacific Northwest port’s environmental programs.
The AAPA’s 2011 Environmental Improvement Awards competition honored the Port of Seattle for “stakeholder awareness, education, and involvement in the Terminal 117 cleanup process,” in addition to the Comprehensive Environmental Management award for their implementation of the Northwest Ports Clean Air Strategy.
The Northwest Clean Air Strategy is a joint effort between the ports of Seattle, Tacoma, and Port Metro Vancouver, B.C to reduce emissions from shipping operations. The Port of Seattle said it was singled out by the AAPA for the Comprehensive Environmental Management award for implementing the short-term (2010) goals of the strategy, which includes its clean truck program that was launched in January.
The port’s clean truck program includes scrapping older, dirtier trucks and offering financial assistance to truckers to obtain newer, cleaner models.
The port said it was also recognized for its clean fuel incentive program for shipping lines. The port said it offers financial incentive to lines that use low-sulfur fuels while at berth. ABC Fuels just celebrated its 800th vessel call, and says it has removed approximately 500 metric tons of sulfur emissions from Seattle's harbor.
The Terminal 117 cleanup is a joint project between the port and the City of Seattle that the port said is a major cleanup project in the middle of a residential area.
Massport requests release from last 9/11 wrongful death suit
The Massachusetts Port Authority has requested it be released from the last pending wrongful death lawsuit stemming from the Sept. 11, 2001 terrorist attacks.
The suit was filed by the mother of a Boston man who died in the attacks, and is based on the hijackers being able to board United Airlines Flight 175 in Boston due to alleged negligence by United Airlines and Massport, the latter of which operates Logan International Airport.
It has been reported that Massport’s filing last week contends the airport had no role in screening passengers and no "causal connection" to the attacks.
Report: Shipping line says pirates fired rocket launcher at tanker off Yemen
The Greek shipping company that operates the tanker that caught fire this week with 141,000 metric tons of fuel oil onboard off the coast of Yemen alleges Somali pirates fired at the vessel with a rocket-launcher.
The tanker Brillante Virtuoso’s operator, Central Mare Inc said through its public relations firm that the fire does not threaten the ship’s oil.
The tanker was reportedly attacked on Wednesday about 20 miles from the Port of Aden, and once the fire broke out from the attack, the pirates gave up on the hijacking effort.
All 26 Filipino crew reportedly abandoned ship and were picked up from a life raft.
A new $200 million privately funded grain terminal is scheduled to open this summer at the Port of Longview, Wash. on the Lower Columbia River, and the operator’s intention to employ non-union labor at the facility led to almost 100 protesters being arrested this week, including two International Longshore and Warehouse Union leaders.
The ILWU has demanded union labor should be utilized for all cargo handling on the port’s property.
According to reports in the The Longview Daily News, EGT Development, a joint venture of Japan’s Itochu, Korea’s STX Pan Ocean, and St. Louis-based Bunge of North America, sued the Port of Longview in federal court over not needing to honor the port's contract with ILWU local 21, saying its annual operations costs would increase by $1 million.
The Port of Longview contends that EGT’s lease agreement mandates it must hire Local 21 union members.
Subsequent negotiations between EGT, ILWU and the port reportedly broke down when the former backed out of those talks three months ago.
On Monday afternoon, close to 100 union protesters tore down a fence and prevented company laborers from working, according to the TDN report.
The protesters were reportedly arrested and cited for misdemeanor criminal trespassing and released Monday night, the TDN said.
Two ILWU leaders were also arrested and released later Monday evening after posting $500 bail: Bradley Mannan Clark, 46, president of Vancouver-based Local 4 and Jeff Lynn Smith, 57, president of Portland-based Local 8.
Protests continued again against EGT on Tuesday outside of the Port of Longview’s commission meeting.
At a port commission meeting on Tuesday, approximately 70 ILWU members and supporters protested outside.
There have been no other reported, related waterfront labor disruptions on the West Coast, although one terminal operator requesting anonymity, told CBN there is concern over the impact of Longview’s labor unrest spreading.
For Longview Daily News’ coverage of the unfolding events: tdn.com
Report: U.S. import shipments down 4.57 percent in June
Import containerized shipment volume into the U.S. for June decreased 4.57 percent from the previous month and 7.38 percent for the same period last year, according to trade intelligence firm, Zepol.
Total containerized shipments decreased 4.79 percent from May and over 6 percent from June of 2010, although, according to Zepol’s statistics, total containerized shipments are up 4.8 percent for the year to date.
One major impact to the containerized downturn was due to a close to 6 percent drop in shipments from Asia, with China accounting for most of that drop, while imports from Japan were up 2.53 percent, the Zepol report said.
Imported shipments from Central and South America were down 4.85 percent and 7.56 percent, respectively, the report said. Containerized imports from Europe dipped only slightly by 0.14 percent.
Imports through container ports on the U.S. West Coast, South Atlantic and Mid-Atlantic were down 6.18 percent, 2.93 percent and 5.34 percent respectively, the report said.
California’s box ports ended a 2-month-long streak of rising imports, posting an 8 percent decrease from June 2010, according to Zepol.
Denmark’s Maersk Line maintained its number one ocean carrier status with U.S. -bound containerized shipments, with a 4.53 percent decrease from May, while Hong Kong’s Orient Overseas Container Line showed a 3.54 percent increase, according to Zepol.
Moody’s downgrades outlook for shipping industry
For the next 12 to 18 months, the global shipping industry’s outlook has been downgraded to “negative” due to overcapacity, according to Moody’s Investors Service.
The biggest culprit is the dry-bulk shipping sector that is experiencing the heftiest oversupply of tonnage driving rates down, according to the Moody’s report.
Eighty percent of dry bulkers on order are scheduled for delivery over the next two years accounting for 46 percent of total working tonnage, the report said.
Oil tanker oversupply should continue through to 2013 as the practice of storing crude oil at sea very large crude carriers is ending and vessels have returned to shipping rotation, adding more tonnage to the global fleet, Moody’s said.
Warehouse group launches sustainable logistics program
The International Warehouse Logistics Association announced what the group claims is the “first metric-driven, facility-output-based sustainable logistics program for warehouse operations in North America.”
Termed the Sustainable Logistics Initiative, the IWLA said in a statement that the program’s participants would “report and engage” in a data-collection effort to measure and establish a warehouse logistics industry benchmarks for environmental, social and cost responsibilities.
"The warehouse-based logistics industry is taking an innovative approach toward planet, people and profits,” said IWLA Chairman Linda C. Hothem, chief executive officer of Pacific American Group and senior advisor to Matson Global Distribution Services Inc. in Oakland, California.
"The data collected through SLI will inform our industry and our customers on the best and most efficient means to improve sustainable warehouse-logistics practices," Hothem said.
The IWLA said the sustainability program would be verified through an outside independent organization: The Sustainable Supply Chain Foundation.
"The data-collection technologically will be cutting edge, employing the most advanced Internet-based, easy-to-use tools," Hothem said. "We assembled an incredible team to lead the challenge of establishing output-based metrics that will provide the first-ever benchmark for the warehouse-based logistics industry."
Three accused Somali pirates could face death penalty in U.S.
Three men from Somali who are accused of hijacking a sailboat in the Indian Ocean, killing the four Americans on board, could face the death penalty if they are convicted.
A 20-charge indictment was issued on Friday by a grand jury in Norfolk, Virginia that could add up to the death penalty, according to a report in the Wall Street Journal.
The three suspected pirates were captured in February after U.S. Navy SEALs reportedly killed several pirates, and captured 14 of them.
The Somali suspects are accused of killing Scott Adam, Jean Adam, Phyllis Macay and Robert Riggle four days after they hijacked their 58-foot sailboat in the Indian Ocean.
The U.S. Navy had reportedly trailed the hijacked the S/V Quest and tried to negotiate for the Americans’ release before they were killed.
Eleven of the captured Somalis have already pled guilty to piracy charges that carry mandatory life sentences.
The Top 20 container-shipping lines own a record 84 percent of the global market, creating a much higher barrier to entry for smaller, start-up ocean carriers, according to the Paris-based shipping industry consultancy, Alphaliner.
"The recent failures of start-up carriers, the Containership Company and Yanghai Shipping Co, have highlighted the high barriers to entry for new companies that may be planning to join the container shipping market," Alphaliner said in its weekly newsletter as reported by Reuters.
"Unless new entrants have a strong financial backing, it will be increasingly difficult for new carriers to compete against larger and more established industry players," the newsletter said.
Led by Maersk, and followed by Mediterranean Shipping Company, the top 20 ocean carriers controlled a record-setting 84 percent of the container-shipping market for the past 12 months, up from approximately 70 percent ten years ago.
Those barriers to entry into the container-shipping market are not about to get any easier, according to the report, with a wave of 10,000-plus-TEU vessels hitting the world’s seas over the next few years, such as Maersk’s ten 18,000-TEU ships due for delivery by 2013.
The concern in the shipping industry is over a rate war that reportedly could ensue with too much ship capacity, mirroring 2009’s precipitous market drop.
Roughly fifty 10,000-TEU ships and bigger, are scheduled for delivery this year, close to half of 2011’s total new 1.35 million-TEU capacity, Alphaliner reported.
Global Port Tracker: U.S. retail imports expected to rise by September
Cargo imports for U.S. retailers are forecast to increase 10 percent by September over the same period last year, according to the monthly Global Port Trackers put out by the Hackett Associates and the National Retail Federation.
"With the economy facing continuing challenges, retailers are managing their inventory levels carefully…but the increases in import volume expected this fall are a clear sign that retailers are confident consumer demand will be there in the fourth quarter," said Jonathan Gold, vice-president for supply chain and Customs policy for the NRF.
The latest monthly Global Port Tracker report, which tracks the top U.S. container ports that deal heavily in U.S. retail import shipments, also said these ports handled 1.28 million TEUs in May, up 6 percent from April and 1 percent from the same period last year.
May also marked the 18th month in a row of year-over-year improvement after the preceding 28 straight months of decline, according to the report.
The forecast for June 2011’s U.S. retail port imports is 1.31 million TEUs, just slightly down from June 2010, Port Tracker said.
"On the bright side, there will be no imminent boom or bust in volumes as we experienced in 2007 and 2010," said Ben Hackett, founder of Hackett Associates.
Several hundred labor protesters block BNSF train at grain terminal at Port of Longview
Up to 600 union protesters on Thursday reportedly blocked a BNSF train from a test delivery of grain to the new $200 million privately funded EGT terminal at the Port of Longview, Wash early Thursday morning amid the operator’s intention to employ non-union labor at the facility that earlier this week led to almost 100 protesters being arrested, including two International Longshore and Warehouse Union leaders.
According to the Longview Daily News, the 107-car train from Minnesota had to be rerouted to nearby Vancouver, Wash as a result of the protesters on the tracks and a BNSF spokesperson told the newspaper it had suspended its service to the EGT terminal for the time being.
As reported earlier this week, EGT Development, a joint venture of Japan’s Itochu, Korea’s STX Pan Ocean, and St. Louis-based Bunge of North America, sued the Port of Longview in federal court back in January over reportedly not wanting to honor the port's contract with ILWU local 21, saying its annual operations costs would increase by $1 million.
The Port of Longview countered that EGT’s lease agreement mandates it must hire Local 21 union members for the terminal’s 50 labor positions.
Subsequent negotiations between EGT, ILWU and the port reportedly broke down when the former backed out of those talks three months ago.
On Monday afternoon, close to 100 union protesters tore down a fence and prevented company laborers from working, according to a Longview Daily News report.
The protesters were reportedly arrested and cited for misdemeanor criminal trespassing and released Monday night, the TDN said.
Two ILWU leaders were also arrested and released later Monday evening after posting $500 bail: Bradley Mannan Clark, 46, president of Vancouver-based Local 4 and Jeff Lynn Smith, 57, president of Portland-based Local 8.
At a port commission meeting on Tuesday, approximately 70 ILWU members and supporters protested outside.
There have been no other reported, related waterfront labor disruptions on the West Coast, although one terminal operator requesting anonymity, told CBN there is concern over the impact of Longview’s labor unrest spreading.
GE CEO Immelt: No great country has trade deficits like U.S. has
The chief executive of General Electric Company and the head of President Obama’s export initiative, said the United States needs to get more aggressive in getting its manufactured goods overseas amid the swift rise of emerging foreign markets at a stop at one of his company’s gas and wind turbine factories in Greenville, South Carolina.
"There's just no example of a great country that has the kind of trade deficits that we have…As a national competitiveness, you've got to have some kind of perspective on exporting, and De facto, if you're going to be an exporter, manufacturing jobs are a big part of that," GE CEO Jeffrey Immelt was quoted as saying in a Bloomberg report.
General Electric has reportedly been able to retain its U.S. employment base due to its exports that have, according to Immelt, tripled from $7 billion-worth in 2001, making it one of the top five U.S. exporters.
GE's plant in South Carolina will reportedly export 22 gas power-plant turbines this year, and is also hiring 125 people to add to its 3,300 employees.
Cargo ship hit by containership and sinks of China’s East Coast; 8 crew missing
A 97-meter-long cargo vessel was struck by a Panama-flagged containership, and subsequently sank on Thursday about 170 km from the city of Lianyungang on China’s eastern coastline with eight of the 11 crewmembers still missing, according to news reports out of the region.
The sunken ship is reportedly owned by a Malaysian company and had been sailing from Qingdao, China to Singapore.
