Monday, July 22, 2013
Efficiency, reliability controlling costs called key for U.S. Pacific ports
By Richard Knee
Heightening competition, local politics and imminent labor contract talks pose huge challenges for U.S. Pacific ports and marine terminal operators trying to stay attractive to shippers, leading executives with a pair of industry advocacy organizations and a veteran freight-watching journalist told an audience from the shipper, carrier, logistics and port sectors over lunch in Oakland on Thursday.
West Coast ports and terminal managers need to operate efficiently, reliably and in a business-friendly manner, and must control operating costs to compete with cargo load centers on the East Coast and in Prince Rupert, Canada, said presidents John McLaurin of the Pacific Merchant Shipping Association and James McKenna of the Pacific Maritime Association, and senior editor Bill Mongelluzzo of The Journal of Commerce at the Ports and Terminals Luncheon sponsored annually by the Pacific Transportation Association.
The PMSA is a lobbying organization, the PMA represents most West Coast dockside employers in labor-related matters, and the PTA conducts forums and social events aimed at fostering shipper-carrier cooperation and raising public awareness of freight-related issues. All three are based in San Francisco.
Many shippers route at least some cargo in the eastern U.S.-Far East trade through the Panama Canal as a hedge in case there is a repeat of the labor strife that wracked West Coast ports in 2002, and McKenna said the East Coast stands to gain further when the canal's expansion is completed; that is expected in 2015.
The two main factors that shippers will weigh, he said, are the total cost of landing goods and which ports can handle cargo reliably and efficiently.
McKenna's prediction that negotiations toward a new contract between the PMA and the International Longshore and Warehouse Union "will be difficult – they always are" came as no surprise to ILWU spokesman Craig Merrilees. The current, six-year pact is due to expire next June 30.
McKenna noted that the PMA gained some agreements on the use of automation in the 2002 and current contracts. Unions define their success by how much work and how many workers they control, he said.
Told during a brief phone conversation of McKenna's comments about the competitive challenges that ports and terminal operators face, Merrilees said their claims of hardship "can't be taken at face value without some careful analysis. The union makes its own independent evaluation as to whether the statements are legitimate or part of the normal trash talk and hyperbole that always occur leading up to negotiations."
McLaurin cited examples of local politics affecting port fortunes and said ports' health depends partly on support from their city halls and surrounding communities.
Christopher Lytle's move from the executive director's post at the Port of Long Beach to the same job at the Port of Oakland is a big loss for the former and a big gain for the latter, according to both McLaurin and Mongelluzzo.
Part of a port's attractiveness stems from a perception that it is "a happy place with happy people," and Lytle's departure from Long Beach made it clear that that port authority was having internal problems, Mongelluzzo said.
McLaurin laid the trouble to "a couple of appointments" to the Long Beach Port Commission and said the commission's future makeup is uncertain, partly because Mayor Bob Foster has announced he will not seek a third term and "seven, eight, nine people" are vying to succeed him. Relations between the port and city hall will be a major issue in that race, McLaurin said.
Neighboring Los Angeles, meanwhile, has a new mayor, Eric Garcetti, and there is "some speculation" on whether he will replace all five port commissioners, McLaurin said.
The Port of Oakland is in a transitional period, with Lytle due to take the administrative helm on Monday and the port authority hoping to build stronger ties with city hall, McLaurin said.
Oakland was the only U.S. port whose operations were disrupted by Occupy Movement marchers in 2011, and Mayor Jean Quan drew fire from the freight community when she said there was nothing the city could do to prevent such episodes from recurring, McLaurin said.
Following some new appointments to the port commission, that body is focusing on the port's "core activities," he said.
Port of Oakland to create mega-terminal
As a result of the the Oakland Board of Port Commissioners unanimously approving the litigation settlement with SSA Terminals, which involves four of the port's seven terminals, the port will create the third largest terminal on the U.S. West Coast.
"This is a fair deal and creates a lease in line with current market realities," said Cestra "Ces" Butner, the board president. "This agreement, along with other transformative projects like the City/Port Oakland Army Base redevelopment, is key to long-term economic growth in and around the Port because it will make us a more competitive gateway."
The four terminals involved in the agreement are located along the Inner and Middle Harbors and include Howard Terminal (Berths 67-68), Global Gateway Central terminal (Berths 60-63), Oakland International Container Terminal (Berths 57-59), and Total Terminals International terminal (Berths 55-56).
New GE figures give manufacturing outlook a boost
General Electric Co revealed a surprise surge in its backlog of orders for locomotives, X-ray machines and scores of other industrial products, boosting the company's shares and fueling hopes for global manufacturing gains.
GE's presence in most parts of the global economy, including energy, finance, manufacturing and transportation, makes it a gauge of worldwide trends, according to Reuters.
"Many customers have moved from the 'doing your homework' stage toward moving pen to paper and placing orders," said Morningstar analyst Daniel Holland. "It is encouraging to see customers willing to sign agreements for a new piece of capital equipment. That indicates a level of certainty in the economic situation."
GE's backlog at the end of the second quarter was up 4 percent to $223 billion compared to the first quarter, which gives the conglomerate a surplus of work across its seven industrial units. The order book rose 20 percent in the United States alone.
"This is as close as GE comes to a positive surprise as possible," said Tim Ghriskey of Solaris Asset Management, which owns GE shares.
Orders for jet engines, subsea oil blowout preventers, and other aviation and energy products are responsible for large portions of the backlog and are responsible for GE's largest growth sectors.
For more of the Reuters story: reuters.com
Port of Chicago draws $500M investment
The Port of Chicago signed a 62-year lease with a Colorado company Sunday that will bring a $500 million private investment that city officials say will revamp Chicago's port and modernize its infrastructure, which has not been updated in 30 years.
"We've been running a port for a long time," said Mayor Rahm Emanuel. "We haven't made an investment since 1981."
He said the lease to the Denver-based Broe Group will bring "critical investment that we could not make on our own" and hundreds of jobs to the Southeast Side port. The Broe Group, selected through a bidding process, will lease most of the port's facilities and invest the $500 million over the next decade.
Emanuel said the lease is a way to make an asset out of what was long an underused, fiscal liability. The Illinois International Port District, which owns the port, operated in the black last year for the first time in ten years. Before 2011, according to the mayor's office, the port's debt was about five times its annual revenue.
For more of the Chicago Tribune story: chicagotribune.com
Crew of 19 rescued from sinking ship
Nineteen people were rescued from a cargo vessel that sank off Sulu province in the Philippines last Saturday.
The M/L Sea Dayang II was on its way to Zamboanga City from Tawi-Tawi when it capsized Saturday noon due to bad weather caused by a low-pressure area over the Sulu Sea, according to a "Balitanghali" report.
The captain said the ship sank due to big waves and strong winds, the report added.
For more of the GMA News story: gmanetwork.com
Tuesday, July 23, 2013
Port of Vancouver, Wash. oil terminal debate heats up
Port of Vancouver, Wash. commissioners had a public meeting yesterday on a controversial proposal to build the largest oil terminal in the Pacific Northwest.
Gramor Development, which wants to revamp 32 acres along Vancouver, Wash.'s waterfront, urged the port commission at the meeting to delay plans for a crude oil-by-rail terminal nearby.
The port anticipates operating revenues of $34 million this year. A lease deal with Tesoro Corp. and Savage Companies would bring $4.5 million annually to the port, or $45 million over the first 10 years of the lease.
The companies' oil-by-rail plan would invest up to $100 million to build a 42-acre operation capable of handling up to 380,000 barrels of crude per day.
The devastating oil train explosion in Quebec could hurt the funding and insurance of his mixed-use renewal project if the Vancouver oil terminal proceeds, according to Barry Cain, president of Gramor Development.
It could be "a good time to back off," Cain told the three port commissioners at last night's meeting. "We'd like to take another look at it, and we'd like to do that with you."
The commission is scheduled to vote on a lease for the oil terminal Tuesday.
Gramor and local investors signed a 2009 development deal with the city to build on 22 city blocks along the Columbia River, including 3,300 residential units, more than 1 million square feet of office space, 250,000 square feet of retail space and a 200-room hotel.
The development on the site of a former Boise Cascade mill is east of the proposed oil terminal on port property, with train tracks running nearby.
In addition to needing a lease deal from port commissioners, the plan by Tesoro and Savage would have to be sanctioned by the state Energy Facility Site Evaluation Council, which would make a recommendation to Gov. Jay Inslee, who has the final say.
JaxPort to host President Obama's economic talk, pitch Mile Point project
Jacksonville's port will be the setting for President Obama's Thursday speech about his vision for the U.S. economic development. Obama, who will speak at a port facility, "will lay out his vision for rebuilding an economy that puts the middle class and those fighting to join it front and center," according to a White House statement.
Jacksonville Port Authority officials hope to make an appeal to Obama about fixing the JaxPort's Mile Point navigation hazards, which limit the port's ability to participate in global trade. The Intracoastal Waterway meets the St. Johns River at Mile point, creating unpredictable crosscurrents that limit the passage of large container ships to eight hours per day.
The state has earmarked $36 million for a construction project that would weaken those currents by reconfiguring the shoreline at Mile Point on the south side of the river. The U.S. Army Corps of Engineers cannot start the construction without getting authorization from Congress.
JaxPort has been working with the U.S. DOT and the corps on an alternative method of funneling the money through the U.S. Maritime Administration to the corps. The federal Office of Management and Budget, in the president's executive branch, has raised some concerns about that arrangement, said Eric Green, senior director of government and external affairs at JaxPort.
"I would imagine that everybody in Jacksonville will want to try to get a meeting with him," JaxPort Board Chairman Joe York said. "Certainly, we want to try to highlight the great things that are happening at JaxPort."
Nick Martinelli, legislative director for U.S. Rep. Corrine Brown, D-Jacksonville, said Brown plans to meet this week with Transportation Secretary Anthony Foxx about Mile Point. Martinelli said Obama's visit could be a chance to discuss it directly with him.
For more of The Florida Times-Union story: jacksonville.com
Dry cargo recovery threatened by new ship orders, lowered demand
A flood of new ship orders and sluggish Chinese growth in demand for commodities might disrupt a recovery in dry bulk shipping, say industry leaders, by keeping freight rates down and threatening a further shake-out among shipping firms.
The rise in capacity while China's economic growth is slowing provokes fear that its demand for iron ore and coal may also start to diminish.
"The ordering wave is indeed worrying," said Henning Oldendorff, chairman of Oldendorff Carriers, one of the world's largest dry cargo operators. "If it coincides with a China slowdown and possible recession in the global steel industry, then freight rates could potentially stay low for many years to come."
Oldendorff estimated some 35 million deadweight tons of new capacity was ordered during the first half of 2013, well above the 22 million dwt ordered during the whole 2012.
For more of the Reuters story: reuters.com
Port of Olympia commissioners approve $20M in bonds for port projects
The Port of Olympia commission approved a plan to issue approximately $20 million in general obligation bonds to help pay for several key port projects.
The bond issue will help fund a marine terminal dredge, a storm water facility, an expansion of storage on the marine terminal, and airport facilities.
The commission also voted on raising some cost adjustments for three of those projects: the dredging, the storm water facility and the marine terminal storage. Both votes were unanimous.
The bond issue will have a total interest cost below 5 percent, and the majority of the bonds will be paid off in 12 years; the total bond issue will be paid off in 2029.
The bonds will likely be issued in August, with dredging beginning in the fall, after a dredging permit is issued by the Army Corps of Engineers, followed by a bond rating from the credit rating agency Moody's.
For more of The Olympian story: theolympian.com
Silver recovered from WWII shipwreck
Deepwater salvage and exploration company Odyssey Marine Exploration said that it has recovered more than 61 tons of silver bullion this month from a British cargo ship torpedoed during World War II.
Odyssey, a U.S. company, said the recovery includes 1,574 silver ingots weighing about 1,100 ounces each. The silver was recovered from a depth of nearly three miles, a record for the deepest and largest precious metal recovery from a shipwreck, according to the company.
For more of the Business Week story: businessweek.com
Wednesday, July 24, 2013
Port of Vancouver, Wash. oil terminal debate heats up
China's manufacturing growth contracted further than expected in July, according to the preliminary survey of purchasing manners just released by HSBC Holdings Plc and Markit Economics, making it less likely that Beijing will meet its annual economic growth target.
The 47.7 reading, if confirmed by the final report scheduled for release August 1, would be the lowest in 11 months. A separate Euro-area manufacturing gauge unexpectedly indicated gains for that part of the world in July.
This week, China's leaders committed to a five-year ban on construction of new state office buildings. Premier Li Keqiang's efforts to limit credit, property prices, and exorbitant spending by state officials risk exacerbating the economic slowdown.
"The key thing now is confidence," Qu Hongbin, HSBC's chief China economist in Hong Kong, said on Bloomberg Television. "The confidence now is pretty weak both in the financial market and the corporate sector."
For more of the Bloomberg story: businessweek.com
Tampa Port Authority makes auto terminal deal with Amports
The Tampa Port Authority announced it has signed a "letter of intent" with Amports, one of the leading auto processing companies in the United States, to develop a new auto terminal at the port.
The new terminal will hasten the unloading of vehicles off ships, process them and then ship them by rail or by highway across Florida and the rest of the country.
The port's deal with Amports calls for them to jointly renovate an abandoned 100,000-square-foot warehouse into an car processing facility, where new vehicles could be customized with extras before being shipped out.
"We believe that Tampa is right in the sweet spot for short sea shipments out of Mexico," Amports CEO Steven Rand said in a prepared statement. "We also believe it will become a gateway port for export finished vehicles.
For more of the Tampa Bay Times article: tampabay.com
Arctic shipping quadruples in past year
The melting Arctic sea ice has opened up shipping to an unprecedented degree over the past year. As of last week, 204 ships had received permits this year to sail the Northern Sea Route, which connects East Asia to Europe via the waters off of Russia's northern coast, according to The Financial Times. Last year, just 46 vessels made the trip. Two years ago, the number was four.
The route remains more dangerous than the routine Asia-Europe passage via the Suez Canal. But as Arctic ice continues to recede, it will become increasingly become an option during the summer months since it's a much shorter route.
The trip from Kobe or Busan to Rotterdam should be 23 days via the northern passage compared with 33 days via the canal, the captain of a Russian icebreaker fleet said to the Financial Times.
For more of the Anchorage Daily News story: adn.com
Port of Everett receives $1.5M state funding for Ro/Ro dock
The Port of Everett received a $1.5 million Washington state grant to help finish the second phase of its roll-on/roll-off cargo facility, a project that will allow the port to accommodate the largest Ro/Ro ships in the world.
Ro/Ro capabilities are crucial for the Port of Everett to meet the shipping demands of the local aerospace industry and U.S. Navy facilities. Gov. Jay Inslee recently employed strategies to keep jobs associated with the assembly of Boeing's imminent 777X wide-body in Washington state. Among the list was investment in Everett's Ro/Ro dock.
In support of the state grant, Gov. Inslee wrote, "The Port of Everett roll on/roll off cargo berth…will boost efficiency and add capacity at the main point of entry for airplane parts manufactured in Asia, and help ensure the 777X and future Boeing airplane programs are built in Washington."
The first phase of the project improved the existing dolphin berth to handle bigger ships. With the additional funding, the port will be able to begin the second phase of the project that bolsters the viability of the dock for loading and unloading container cargo. The port is also rebuilding the terminal rail spur with the help of a state rail bank loan.
"Our ability to support the aerospace logistics chain will be greatly enhanced with state funding for this project," said John Mohr, executive director of the port. "I want to specifically thank Gov. Inslee, Sens. Nick Harper and Steve Hobbs and Reps. Hans Dunshee, Mike Sells and John McCoy for their efforts to secure project funding."
For more of The Herald story: heraldnet.com
Record ivory haul seized in Hong Kong
Customs officials in Hong Kong on Friday announced one of the biggest seizures of smuggled ivory ever made in the city, indicating the proclivity of the trade is a serious threat to elephant populations in Africa, according to conservationists.
The shipment, consisting of 1,148 tusks weighing approximately 4,800 pounds, was worth an estimated $2.25 million, according to a customs department statement.
The tusks were hidden in a container that originated in the country of Togo in West Africa.
For more of the New York Times story: nytimes.com
Thursday, July 25, 2013
UPS second quarter profits fall 4 percent
UPS reported disappointing second quarter results, with profits falling 4 percent as global shippers continue to go with slower, cheaper options, although volume was up overall.
The shipping conglomerate said it expects to make up for the losses in the third and fourth quarters of 2013, as it resolves its labor contract with the Teamsters union.
Chief Executive Scott Davis said the development of more regional supply chains means business demand for international express shipping may not grow as fast as it has in the past even when the economy recovers.
UPS and rival FedEx have been reducing cargo flights out of Asia due to the lower demand for express service. UPS Chief Financial Officer Kurt Kuehn said UPS decreased flights again in the second quarter and reduced the number of some flights between the U.S. and Europe.
UPS expects to bring back many of its grounded international flights when the economy rebounds, Kuehn said. Until then the UPS is preparing for slower growth in express demand overall, he said, such as increasing ocean-transport services in its freight-forwarding division and its logistics offerings for the health-care industry.
Earnings came in at $1.07 billion, or $1.13 a share, down from $1.12 billion, or $1.15 a share, a year earlier. Revenue grew 1.2 percent to $13.51 billion. Analysts surveyed by Thomson Reuters forecast a profit of $1.13 a share on revenue of $13.59 billion.
For more of the Wall Street Journal story: online.wsj.com
Largest shipping banks see signs of industry recovery
Two of the world's largest shipping lenders, Nordea Bank AB and DNB ASA, are seeing signs of an end to the shipping industry's five-year slump as bets grow on a recovery, according to Bloomberg.
"They're now coming down, they're not that high," Clausen said in a Bloomberg telephone interview. "I don't think loan losses in shipping are an issue anymore."
DNB, the world's second biggest shipping bank, saw loan losses at its shipping, offshore and logistics division drop 43 percent to $33 million in the second quarter from the first, the lowest in four quarters, according to its website.
"2013 will be a very tough year and 2014 will also be quite tough in some industries, but with a diversified portfolio we should still be able to have a good return," Kristin Holth, global head of shipping, offshore and logistics at DNB, said by phone on July 23.
For more of the Bloomberg story: bloomberg.com
S.C. ports container volume up 9 percent
Container volume as the South Carolina Ports Authority totaled 1.56 million TEUs in fiscal year 2013, a 9 percent increase year over year, according to a port statement.
"While just under the aggressive target we set for the past fiscal year, the Port of Charleston's growth remains at more than double the average market growth for the nation's ports," said Jim Newsome, SCPA president and CEO.
Non-container facilities in Charleston handled 1.1 million tons of bulk and breakbulk cargo in FY2013, a 30 percent increase compared with FY2012.
For the month of June, the Port of Charleston's two container facilities handled 125,257 TEUs, up 4 percent year over year. SPCA said the increase indicates the start of new or enhanced container services at the port this summer.
NY-NJ Port Authority and NY Container Terminal reduces toll for truckers
The Port Authority of New York and New Jersey and the New York Container Terminal announced a "bridge toll credit program" for truckers that will start next month, along with a multi-year lease agreement through 2029.
"Today's lease extension builds on a long-term commitment by the Port Authority to Howland Hook and Staten Island," said Foye. "Over the past 13 years, the agency has invested more than $375 million to enhance the facility infrastructure, including its on-dock ExpressRail facility, and ensure the continued vitality of New York Container Terminal and retention and creation of jobs in Staten Island."
The toll deal would reduce the current $12 per-axle toll in half, to $6 per-axle, with a Consumer Price Index adjustment for inflation. But the $6 per-axle toll would be capped once NYCT reaches 350,000 vessel moves in any given year. After that number is reached, the toll would increase incrementally.
Under the bridge toll credit program, truck companies would be reimbursed via their E-ZPass accounts, GCT said in statement. All trucks serving the terminal for container pick-up or delivery would be eligible.
For more of the Staten Island Advance story: silive.com
Train derailment closes Port of Tampa
Twelve rail cars derailed early Thursday at the Port of Tampa, closing the main section of the port several hours after Tampa Fire Rescue officials used foam to clean up ethanol that leaked from three of the toppled CSX train cars.
The train was coming into the port at 1 a.m. when it left the tracks, pulling 12 cars off of the rails. Ten of the cars fell onto their sides, according to fire department spokesman Capt. Lonnie Benniefield. No one was hurt in the derailment.
Responders found three of the cars leaking ethanol, a flammable liquid that's often mixed with gasoline to fuel cars and trucks. When it's shipped by rail, ethanol is usually stored in a form that is more flammable than gasoline.
Hazmat-trained firefighters have laid a coating of foam on top of the spill to keep it from catching fire.
The majority of the Port of Tampa reopened later on Thursday morning. Righting the entire train could take until Friday.
For more of the USA Today story: usnews.nbcnews.com