Cargo Business Newswire Archives
Summary for July 21 through July 25, 2014:

Monday, July 21, 2014

West Coast ports labor and cargo update

Earlier this week, members of International Longshore and Warehouse Union Local 8 in Portland walked off the job for about an hour in a dispute unrelated to the current West Coast ILWU-PMA contract negotiations, according to third-party logistics provider OHL.

The dockworkers reportedly did not return from their lunch break at 1 p.m. due to a jurisdictional dispute with terminal operator ICTSI. ICTSI and the ILWU Local 8 hashed out the issue and the workers were back on the jobs by 2 p.m. that day.

Meanwhile, the ILWU and PMA resumed contract talks for approximately 20,000 workers at West Coast ports on July 11 after a three-day break. Both sides have reportedly been closed-mouth about the talks, with both saying that they are committed to keeping cargo moving as the negotiations continue.

In other West Coast port news, it appears many importers are shipping higher volumes of merchandise to avoid possible labor disruptions on the West Coast during the peak shipping season, in anticipation of Back-to-School and holiday shopping seasons.

in June, cargo volumes at the Port of Los Angeles surged 14 percent year-over-year, according to a port statement.

Imports at the Los Angeles port spiked 16.5 percent, with 382,666 TEUs being handled at the docks in June compared with 328,324 TEUs during the same time last year. Exports at the port rose 8.5 percent at 160,823 TEUs leaving the docks in June versus 148,203 TEUs last year.

Cargo volume at the Port of Long Beach increased 8 percent in June year-over year, according to the port website. The port noted it was the busiest June since 2007, with more than 610,000 TEUs handled last month.

Ship’s crew protests employer’s failure to pay at Port of Long Beach

Crewmembers from the Vega-Reederei, a Liberian-flagged ship operated by German company Arend Bruegge, formed a picket line last week at the Port of Long Beach. The 21 mariners are protesting their employer’s failure to pay them up to four months of back wages, according to a statement from the International Longshore and Warehouse Union.

The predominantly Filipino crew has asked for help from the International Transport Workers’ Federation and from ILWU dockworkers, the ILWU said.

At the ship’s last port of call in Korea, the crew told the ILWU that the company promised to pay but did not. The workers were told if they complained about the failure to pay they would be replaced with a Chinese crew, the statement said. Eleven of the sailors say the company has kept them on board past the original agreement, and demand to be flown home to the Philippines.

According to the ILWU, crewmembers contacted Stefan Mueller-Dombois, inspector for the ITWF in Southern California, to ask for help because their families in the Philippines haven’t received any wages in months and are going hungry.

Arend Bruegge allegedly owes workers more than $150,000 in unpaid wages, the ILWU said, noting the company has a history of failing to pay crewmembers on other vessels it operates.

"It appears that this company has done this before by refusing to pay crewmembers on the ships they operate," said ITF West Coast Coordinator Jeff Engels. “The crew are seeking justice and support from other maritime workers in the area.” 

The ITF has been talking with the ship operator to reach a settlement, the ILWU reports, but as of Wednesday of last week, company officials had refused to negotiate and threatened to leave Long Beach without paying crewmembers.

Engels said that ITF Inspector Stefan Mueller-Dumbois is seeking immediate payment for the crewmembers – and a written agreement that will prevent similar incidents from happening in the future.

"Our job is to help crewmembers from being exploited by powerful, international corporations that own and operate these vessels," Engels said.

The ship is hauling a cargo of wind turbines, according to the statement.

U.S. House passes $10.9B extension of transportation bill through May 15

Last week the House of Representatives passed a $10.9 billion extension of U.S. transportation funding through May 2015 to avoid August curbs on federal spending for crucial road, bridge and transit infrastructure projects.

The bill, passed with a 367-55 bipartisan vote, will be paid for primarily by revenue generated by pension accounting changes and higher customs user fees.

Senate Majority Leader Harry Reid said that the Senate would begin considering a similar, $10.8 billion measure with some alternate funding provisions in the coming days. The Senate companion measure would also fund transportation projects through May 2015, but would rely less on pension changes and more on revenues from measures to boost tax compliance.

The White House said Monday it supported the 10-month extension, to the disapproval of some Democrats who say it would push any decisions on long-term funding to a newly elected Congress next year.

Without new money the Highway Trust Fund will run out of adequate funding by August 1, when the DOT said it will start to cut back federal funding to states for projects by nearly a third.

For more of the Reuters story:

China Merchants in talks to buy stake in Australia ports business

Australian port and logistics group Asciano is reportedly in talks to sell a stake to state-run China Merchants Group in a deal may be worth up to $1 billion.

In a statement to the Australian Securities Exchange on Friday, Asciano said it "has been, and continues to be, in discussions with third parties in relation to a potential sale of a non-controlling interest in its terminals and logistics business division."

Asciano shares rose 4.4 percent to their highest level in eight months.

Chinese firms are increasingly interested in Australian logistics firms, which are seen as dependable long-term investments with predictable returns.

In April, China Merchants Group teamed with Australia's Hastings Funds Management to buy the Port of Newcastle from the New South Wales state government for $1.64 billion.

For more of the Reuters story:

Hyundai sells logistics group to Japan’s Orix

Hyundai Group made a deal to sell its logistics unit to a consortium led by Japan’s commercial finance company Orix, in order to shore up its finances.

Orix teamed with Hyundai Merchant Marine to buy 88.8 percent of Hyundai Logistics Company for $584 million. As part of the restructuring agreement, Hyundai Group will buy the 20 percent state in Hyundai Elevator that was owned by the logistics group.

The sale piques hopes that Hyundai Group, which has raised $2.58 billion selling assets, is recovering after a downturn in its shipping business.

"We have undertaken an aggressive restructuring plan to get funds and reduce debt," Hyundai Group said in the statement. "We believe this will provide an impetus in restoring market confidence in the group."

"The deal will help ease Hyundai Group’s cash problems for now," said Jay Ryu, an analyst at Daewoo Securities Co. in Seoul. "Still, the shipping industry is weak and is only beginning to recover. The industry needs to recover faster or the group won’t be able to fully recover from its current situation."

For more of the Bloomberg story:

FedEx indicted for shipping drugs from illegal pharmacies

Package shipping giant FedEx was indicted Thursday for allegedly shipping prescription drugs from illegal online pharmacies, according to documents filed in federal court.

FedEx. which ships 10 million packages a day, said it would plead not guilty and is innocent of the charges. The company reports it has provided assistance to federal authorities combating rogue Internet pharmacies.

"The advent of Internet pharmacies allowed the cheap and easy distribution of massive amounts of illegal prescription drugs to every corner of the United States, while allowing perpetrators to conceal their identities through the anonymity the Internet provides," said U.S. Attorney Melinda Haag. "This indictment highlights the importance of holding corporations that knowingly enable illegal activity responsible for their role in aiding criminal behavior."

The prosecution was the result of a nine-year investigation into shipments from two pharmacies between 2000 and 2010.

A conviction could mean up to $1.6 billion in fines and penalties, according to prosecutors.

"We continue to stand ready and willing to support and assist law enforcement," said spokesman Patrick Fitzgerald. "We cannot, however, do the job of law enforcement ourselves."

For more of the CNN story:


Tuesday, July 22, 2014

Drewry: Carrier alliances necessary to cut costs and improve service

Despite China's rejection of the P3 Alliance, container line consortiums will continue to grow in importance, according to the latest issue of Container Insight from the analysts at Drewry Maritime Research.

The article notes the formation of 2M, the newest vessel sharing agreement between Maersk Line and MSC, is only the beginning of what it calls the latest round of mega-alliance negotiations.

Drewry reports that Evergreen and the CKYH alliance (Cosco, K Line, Yang Ming and Hanjin Shipping) are still talking to the U.S. Federal Maritime Commission about extending their Asia-Europe operating agreement to include the U.S., and CMA CGM has yet to announce its new partners, which industry experts speculate will likely be China Shipping Container Lines and United Arab Shipping Company.

Container carrier partnerships handle the majority of East-West container trades, the article states, and less cohesive vessel-sharing agreements take care of a big slice of the North-South routes. As ships get bigger, so will the cooperation agreements in order to create economies of scale, it said.

The EU's recent decision to extend its regulation on ocean carrier consortiums for another five years to 2020 is good news for alliances, according to the publication. The rule basically frees consortia members from anti-trust considerations as long as the combined market share is 30 percent or less.

The article notes that market share, generally measured in terms of cargo carried, can get tricky when trying to review the scope of the trade lane and the different ways it can be served.

Drewry says it regularly monitors consortia market shares in a wide variety of trade lanes after taking into account estimated space allocated to wayport and out-of-scope cargo, but before considering slot charters/swaps with other lines, coming up with a useful, but not "strictly accurate" guideline.

For example, using this guideline, Drewry calculates that using data from May 2014, the new Maersk-MSC relationship would be operating with a 35.4 percent market share of effective vessel capacity on the Asia-Europe trades.

Drewry concludes that the new alliances are needed, since the shipping industry as a whole desperately needs to cut costs and improve service frequency, and nothing else short of mergers can accomplish that.

Maersk announces Asia-Europe freight increase of $450 per-TEU

Shipping giant Maersk Line announced its intention to raise freight rates on its Asia-Europe services by $450 per-TEU effective August 1, the company told Reuters via email on Friday.

A container freight derivatives broker said most of the ten biggest container carriers are aiming for higher rates from Aug. 1, although not all have issued statements to that effect.

Shipping lines continue to struggle with overcapacity as a result of a weaker global demand. Less than a handful of container shipping companies, Maersk said, posted profits last year.

Rate increases announced so far include $550 per-TEU by France's CMA CGM, $1,000 per-TEU by Germany's Hapag-Lloyd, and $600 per-TEU by Korea's Hanjin Shipping.

Only 62 percent of announced price hikes for July 1 held.

Shipping freight spot rates between Asia and Northern Europe dropped 5.5 percent to $1,230 per-TEU in the week ended on Friday.

For more of the Reuters story:

Greenbrier and Watco complete railcar repair joint venture

The Greenbrier Companies and Watco Companies have completed a 50/50 railcar repair joint venture, creating the largest independent railcar repair shop network in North America, according to a Greenbrier statement.

The new joint venture, called GBW Railcar Services, owns and operates the combined network of the two companies' 38 railcar repair, refurbishment and maintenance shops, the statement said.

GBW, to be led by rail industry veteran Jim Cowan, features a North American network of 14 tank car repair shops certified by the Association of American Railroads, as required by federal regulations. Greenbrier said the shops are equipped to service, recertify and retrofit the continent's tank car fleet and offers a broad range of repair and maintenance services for other general freight cars.

"We are excited that our first day at GBW is here as we commence operations with the support of Greenbrier and Watco, two rail industry leaders," Cowan said. "GBW responds to interests from our existing Customers for access to the broadest tank car expertise available in the market, along with substantial general railcar repair capability delivered through an efficient and geographically convenient service platform. Safety, quality and Customer service are GBW's core values as we move ahead."

South Carolina ports post 8 percent container growth for FY2014

The South Carolina Ports Authority reported 8 percent container growth for fiscal year 2014 — 2 percent higher than expected.

"The implementation of our strategic plan is paying off, and the large capital investments committed to port infrastructure by the state of South Carolina and Ports Authority are yielding great dividends," said SCPA president and CEO Jim Newsome. "Significant capital investment by major port users has also positively impacted volumes."

The SCPA handled 149,183 TEUs in June, up 19 percent from year-over-year. For the total fiscal year July 2013 through June 2014, the SCPA moved 1,684,907 TEUs.

The SCPA handled 83,399 pier tons in non-containerized cargo in June for a total of 763,230 pier tons during the fiscal year in Charleston, 3.6 percent more than projected.

"I'm extremely proud of our strong fiscal year performance," said Bill Stern, SCPA board chairman. "We have a strong board, talented and visionary CEO and senior staff, and support from a productive maritime community."

Hackers attack shipping/logistics firms with malware embedded in scanners

China-based hackers are using high-level malware installed on handheld scanners to attack shipping and logistics organizations from all over the world.

Cyber-security firm TrapX uncovered the "Zombie Zero" attack. TrapX said the attack originated at a Chinese company that provides hardware and software for handheld scanners used by global shipping and logistics firms to inventory the items they handle.

The Chinese manufacturer installs the malware on Windows XP operating systems embedded in the devices. The threat is also distributed via the company's support website, the security firm said in its report.

The scanners send the data they collect (origin, destination, value, contents, etc.) via the customer's wireless network. Once the customer starts using the device, the malware immediately sends this information back to a command and control server located in China. TrapX said the companies that use the scanners install security certificates for network authentication, but the certificates are compromised because the malware is already present on the device.

Experts discovered that the threat group targets servers storing corporate financial data, customer data and other sensitive information.

"By compromising cryptographic keys and digital certificates, Zombie Zero attackers obtained trusted, authenticated status on their victim's network," Kevin Bocek, vice president of security strategy and threat intelligence at Venafi, told SecurityWeek. "We are seeing this time and time again with APT1, Careto/Mask, and now Zombie Zero.

"The rising tide in circumventing keys and certificates will only increase as more sophisticated evasion and takeover techniques are required as all businesses and governments wake up to the fact they are being targeted and are already breached."

For more of the Security Week story:


Wednesday, July 23, 2014

APM Terminals to sell Virginia container terminal

APM Terminals, the terminal operating arm of A.P. Moller-Maersk, announced it is selling APM Terminals Virginia in Portsmouth to infrastructure investor Alinda Capital Partners and a private British pension fund.

The deal is slotted to close in the third quarter of 2014, and staff at the facility will reportedly not be affected.

Alinda and Universities Superannuation Scheme Limited did not disclose the amount they will pay for the Virginia container terminal in their joint press release.

The terminal was commissioned in 2007 for $540 million and later leased to the Virginia Port Authority.

"Ownership of this terminal does not fit with our global strategy and ambition to operate and develop ports," said APM CFO Christian Moller Laursen. "We have chosen to sell our Portsmouth terminal because we are a non-operating lessor."

Chief executive Kim Feijfer said in 2013 that APM would invest in growing regions such as Russia and Africa to make up for a lack of growth in mature markets.

For more of the Reuters story:

Port Metro Vancouver truck drivers meet with government, ask for March deal to be enforced

On Monday, truck drivers servicing Port Metro Vancouver asked the federal and provincial governments to take quick action against trucking companies that aren't honoring a deal negotiated last spring to end a strike.

More than 1,600 union and non-unionized truckers for Port Metro Vancouver went back to work in late March after hammering out an action plan that pledged to improve job conditions.

Representatives met with two levels of government to request an order-in-council, making rates legal and binding for workers across the sector.

Unifor director Gavin McGarrigle, who represents about 400 drivers, said companies are "thumbing their nose" at the 14-point action plan devised to get cargo moving after drivers walked off the job for weeks.

Workers don't want to walk out again, McGarrigle said, noting members are still in a legal strike position.

Manny Dhillon, who represents about 1,200 members of the United Truckers' Association of B.C., said drivers have become increasingly frustrated over rates owed since early April.

"They're pretty angry," he said, arguing 12 of the action plan's 14 points have not come to fruition. "It's really getting hard to calm people down out there."

Prior to Monday's meeting, a spokeswoman for the Federal Transportation Minister Lisa Raitt said she has been working with her provincial counterpart to ensure "the necessary steps" are taken to pay truckers. No details were given on when or how that might happen.

The truckers say that concerns remain over an oversupply of trucks in the industry, truck licensing problems and worries that the auditing system is not independent from the port.

On the positive side, truckers note some improvement, including the payment of more than $1 million in waiting fees and equipping fleets with GPS systems.

For more of the Vancouver Sun story:

Debt-ridden Horizon Lines in talks to sell Puerto Rican assets to Crowley

Horizon Lines is reportedly in talks to sell off its facilities at the port of San Juan, as well as its ships and routes to and from Puerto Rico, to Jacksonville-based competitor Crowley Maritime.

Industry sources told Caribbean Business that Goldman Sachs is brokering an $80 million deal between Crowley and Horizon.

The talks for the San Juan port facilities and lines are reportedly part of Horizon's plans to sell all three of its Jones Act routes — San Juan, Alaska and Hawaii — to different buyers for each of these markets.

Last year, Horizon posted more than $100 million in losses and the company has $700 million in debt, the company reported to the Securities and Exchange Commission.

Crowley is currently conflicting with the Puerto Rico Ports Authority over tax credits it wants to cover the estimated $100 million the company will need to invest in port facilities to receive two new ships, El Coquí and El Taíno, scheduled for delivery in the second quarter of 2017.

If Horizon does sell to Crowley, then Crowley could use Horizon's docks without having to improve their own.

"If Crowley buys Horizon's ports facilities, Crowley wouldn't have to make the improvements. All they would have to do is move over to Horizon's facilities at the dock," one industry source said. "Crowley was expecting to get tax credits from Ports to make the improvements, but since the government is broke, the authority doesn't want to give Crowley tax credits for this investment."

For more of the Caribbean Business story:

Argentina gets $7.5B loan from China for rail and power projects

Argentina signed deals this month to borrow $7.5 billion from China for rail and power projects.

The China Development Bank granted Argentina a $2.1 billion loan to help finance a railway project that will facilitate grain transport from the country's farms to its ports.

Argentine President Cristina Fernandez and PRC President Xi Jinping also agreed on a loan of $4.7 billion from China Development Bank to build two hydroelectric dams in Patagonia. China Gezhouba Group Corp and Argentina's Electroingenieria SA were awarded contracts last year to construct the two dams, which will have a combined generating capacity of 1,740 megawatts.

"It's a day we can define as foundational in the relations between our two countries," Fernandez said after signing the deals.

In 2013, Argentina's trade deficit with China, its second-largest trading partner, increased more than 20 percent to $5.8 billion. Argentina is the third largest global soybean exporter, and China is its main buyer of the commodity.

For more of the Reuters story:

Fugitive South Korean ferry owner found dead

The body of fugitive billionaire Yoo Byung-eun, who had been sought over April's ferry tragedy that left 300 dead, was found in a plum field in Suncheon, South Korea, according to police.

The badly decomposed body was found on June 12, local police station chief Wu Hyung-ho said, confirming that DNA and fingerprint samples taken from the body matched those of reported Sewol ferry owner Yoo Byung-eun.

Police and prosecutors have been seeking Yoo for weeks to question him regarding possible criminal negligence and embezzlement charges, and had offered a $500,000 reward. Yoo went missing shortly after the ferry sinking.

For more of the BBC story:


Thursday, July 24, 2014

Logistics index strikes positive note for second half of 2014

The Stifel Logistics Confidence Index for July is up 0.9 points over June to 56.1, according to Transport Intelligence. Since February, researchers note, the overall index has gone up one month and dropped the next, reaching its high in May at 57.9.

Both the ocean freight and the airfreight components of the index gained this month.

The overall ocean freight confidence index reached its high in May at 60.1, dropped in June, and recovered in July at 57.8, the researchers said.

They report the July sea freight index climbed 1.6 points over June to 53.8. The Asia-to-Europe trades had the biggest increase from June, up 2.9 points to 55.6.

The Europe-to-Asia route had the weakest rise, up 0.3 points from June to 51.4, which likely indicates ongoing weakness in Asia’s economy, according to the index. This lane noted a decline of 0.8 points from June for the six-month expectations to 61.0.

The six-month expectations for the U.S. lanes to and from Europe are weak, growing less than 1.0 point from June, the report said. This could be due to uncertainty constellating labor contract negotiations for U.S. West Coast ports, since the latest contract expired the first of July.

The Asia-to-Europe lane logged the biggest gain from June, up 1.6 points to 66.6, according to the analysts, who said this might be due improving economic conditions in Europe.

The overall airfreight confidence index, which hit its high in January at 56.5, posted a reading in July of 54.4, according to Transport Intelligence.

Drewry: As cost cutting ramps up, reliability slips

As ocean carriers concentrate more on cutting costs to improve the bottom line, service quality is suffering, according to the latest Logistics Executive Briefing from Drewry Supply Chain Advisors.

Containership reliability dropped for the fifth straight quarter in Q1 of 2013 with the on-time average slipping to just 61 percent, according to Drewry researchers.

The report noted that unusually bad weather in Asia and Europe contributed to the slump, but that it also indicates a decline in the carriers’ network operations.

Delays are causing major productivity issues for ports, which can’t plan when ships will arrive, the analysts said. Bottlenecks arise, with dwell times up and storage capacity down.

Operational inefficiencies add cost to carriers, Drewry says, which have to stay longer at ports to handle customer complaints.

The supply chain experts say it is in the lines’ best interests to maintain service reliability, but the opposite seems to be happening. Drewry says carriers may not have sped up to get back on schedule for cost reasons, and that although shippers can live with longer planned transit times, they will not long tolerate more delays tacked on to the longer transit times.

Drewry says the trend is cemented by the worsening performance of Maersk Line, which have been standouts in terms of reliability and used to have an on-time target of 95 percent. Maersk experienced a steep quarter-over-quarter decline of 10 percent in the first quarter of 2014 to 70 percent—still above the industry average but down from their average mid-80 percent scores seen in the last two years.

The analysts say Maersk performance suffered, in part, due to its service partners’ ships, which had poorer reliability records. They said Maersk’s own operated ships had reliability average of 82 percent, second only to Hamburg Süd ships (91 percent). Drewry notes this may be bad news for Maersk as it continues to pursue vessel sharing with other carriers.

In conclusion, Drewry expects carriers to continue to emphasize cost cutting measures to keep freight rates low, and therefore reliability will continue to suffer.

On Wednesday, the U.S. Department of Transportation proposed a revamp of safety standards with regards to shipping crude oil and ethanol by rail, following several incendiary rail accidents that occurred last year.

The draft rules recommend new tank-car braking systems, train-speed restrictions, more testing for unstable gases and liquids, and a two-year phase-out of older tank cars that officials have said are prone to puncture and fire when derailments occur.

"Today's proposal represents our most significant progress yet in developing and enforcing new rules to ensure that all flammable liquids... are transported safely," said Transportation Secretary Anthony Foxx in a statement.

The proposed rules requested industry feedback on several options that address two of the most contentious issues—whether to lower speed limits for trains, a step some railroads oppose; and upgrading the specifications for rail tank-cars.

The rules, subject to a 60-day pubic comment period, follow an 18-month period in which more than a dozen derailments of trains carrying crude oil occurred. Six of the incidents led to major fires and one caused the death of 47 people in the Canadian town of Lac Megantic, in Quebec province.

For more of the Reuters story:

Cargill announced it would invest $45 million to construct a grain handling and shipping plant in West Memphis.

Cargill, which operates a corn mill on Presidents Island in Memphis, said in a statement that the new facility would "become a key origination point in the south for soybeans, corn, milo and wheat."

The West Memphis facility will have three truck-receiving areas for unloading grain and will be capable of holding up to five barges, loading as many as eight barges in a full day or 50,000 bushels per hour, Cargill said.

"Our farmer-customer base on the southern river system is strategic to Cargill’s global supply chain, and the West Memphis facility will be a very competitive market for deliveries," said Fred Oelschlaeger, regional manager for Cargill’s Southern River Region of grain elevators and farm service centers. "The West Memphis location will be easy to reach with large semi-loads of grain, and will have excellent access for loading barges, during both high and low river levels."

State Senator Keith Ingram of West Memphis said the new facility would be good for Arkansas agriculture. "Over the years, corn and soybean production have increased in Arkansas and the West Memphis elevator will provide an additional market," he said. "The facility will further link Arkansas to the global marketplace."

Cargill said the West Memphis facility would complement the company’s grain storage assets on the Mississippi River and export facilities in the Gulf.

Produce distributors sue MSC over rotted fruit

Two California-based produce distributors have filed a federal civil suit against Mediterranean Shipping Company based on losing more than $65,000 in fresh fruit from South America that rotted during on its way to Philadelphia.

The owners of Green Earth Produce Trading of Vernon, Calif., and Alberts Organic in San Francisco allege that sub-standard practices and negligent behavior by MSC contributed directly to the poor condition of the produce. Both companies are seeking full restitution for what they call unusable fruit.

For more of The Pennsylvania Record story:

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