Monday, July 23, 2012
No Newswire today.
Tuesday, July 24, 2012
RailAmerica sold to Genesee & Wyoming for $1.39 Billion
Genesee & Wyoming signed an agreement to purchase RailAmerica for $1.39 billion, uniting the two biggest short line railroads on the continent. The deal, which must be sanctioned by the U.S. Surface Transportation Board, will close at the end of 2012 at the earliest.
Genesee will pay $27.50 a share for the company, and will fund the existing debt with $2.3 billion in debt financing from Bank of America, and $800 million of equity financing from the Carlyle Group.
"It certainly is a bigger transaction than we've seen Genesee engage in, but they were able to get attractive financing and they were able to refinance some of their existing debt," said Allison Landry, a New York-based Credit Suisse analyst, to Bloomberg. "I don't see this as them over-levering to do this transaction."
RailAmerica shares increased 9.9 percent to $27.27 at 1:01 p.m. on Monday, while Genesee gained 0.1 percent to $56.06, after being down 7.6 percent this year.
After the acquisition of RailAmerica, Genesee will have a total of 111 railroads, 108 of them in North America, along with 4,300 employees.
For more of the Bloomberg story: bloomberg.com
Out of the Box
It's a battle for freight as container lines grab traditional breakbulk cargoes, while project and ro-ro cargo continue to dominate the sector.
APM bid for Virginia's terminal operations may be raised at meeting
A Tuesday meeting of the Virginia Port Authority board of directors may help to clarify recent buzz about the APM Terminals bid to take over state port operations, according to Mike Quillen, VPA board chair.
In May 2012, Virginia announced APM Terminal's proposal to take over port operations for 48 years, an agreement APM claimed was worth up to $3.9 billion to the state, which is accepting competing bids through August 13.
Virginia's Transportation Secretary Sean Connaughton recently asked Virginia International Terminals, which currently runs the ports, to provide more information so officials can assess whether to change operators.
A number of container lines that compete with Maersk Line, which like APM is an arm of A.P. Moller Maersk, have complained the deal would give Maersk an unfair advantage at the port. APM says it treats all shipping lines fairly.
Tuesday's board meeting agenda doesn't include the APM proposal, Quillen said, but it is possible the deal could come up. For example, three officials from Norfolk Southern, which handles most rail shipments for Virginia ports, are scheduled to make a presentation to the board, and might want to touch on the terminal operator issue.
A spokesman for Norfolk Southern said recently that Norfolk Southern's CEO and president Wick Moorman thinks it is too soon to discuss APM's proposal before understanding the details.
For more of the Daily Press story: dailypress.com
China's logistics industry shows slower growth
The Chinese logistics industry saw modest growth in the first six months of 2012, during a time when China is experiencing its slowest economic growth since 2009.
The growth rate was down 3.7 percent from the same period last year and dropped 0.9 percent since the first quarter this year, according an announcement from the China Federation of Logistics and Purchasing.
The federation reported that the value of the logistics sector for the first six months of 2012 grew by 10 percent year on year to $13.25 trillion. Logistics expenses represented 18 percent of China's GDP during the same period, significantly higher than the ratio reported by most developed economies.
The federation predicts the value of the logistics sector will rise by 11 percent in 2012, since they anticipate positive factors will increase in the second half because of "macroeconomic regulatory policies."
China's economy expanded 7.6 percent in the second quarter of 2012 compared to 2011, slowing from a growth rate of 8.1 percent in the first quarter, according to National Bureau of Statistics data. The growth rate marked the sixth consecutive quarter of weakness and indicates the slowest rate of growth since the first quarter of 2009.
For more of the China Daily story: chinadaily.com.cn
146 presumed dead in ferry accident
The government of Tanzania stopped rescue operations associated with a ferry accident last Wednesday in which 146 people appear to have died.
According to Tanzania government official Ali Juma Shamhuna, 69 passengers were confirmed dead and 77 were still missing, but rescuers believed after three days there was little hope of recovering more bodies in the Indian Ocean. Rough seas hampered rescue operations
The ferry MV Skagit capsized Wednesday while heading from the East African city Dar es Salaam to the island of Zanzibar. The ferry was carrying 291 passengers, but had only been approved to carry 250, according to Shamhuna. 145 passengers were rescued.
Washington state officials sold the Skagit to a Canadian company in 2011 as part of a two-vessel sale totaling $400,000, and those ferries were scheduled to be transported by cargo ship to Tanzania, according to an article in the Charlotte Observer. The Skagit was built in 1989 and had been inactive since 2009 after the state ended its passenger-only service.
For more of the Sacramento Bee story: sacbee.com
Wednesday, July 25, 2012
APM bid to take over Virginia ports faces opposition
The Virginia Maritime Association announced that most of its members do not approve of the privatization of Virginia ports. The majority of those surveyed is clearly in opposition of a take over by APM Terminals, which recently offered an unsolicited bid to manage port facilities at Virginia's Newport News, Portsmouth and Norfolk ports.
Of the 84 respondents polled, 71 percent opposed a change, according to Art Moye, the group's executive vice president, who said that the sample size was representative of the association's 400 member companies. Moye stated the VMA executive committee had not yet weighed in on the APM bid, but the committee plans to make a public statement soon.
APM pitched their bid by saying they would increase port business, but many shipping companies were worried that APM would unfairly favor sister company Maersk Line over other container lines. A local trucking association and an association of warehousing and distribution companies also oppose the APM deal.
Responding to the skepticism, APM modified its bid on Monday, adding stipulations to prevent favoritism. The new provisions state APM will "honor all existing contracts between VIT and its customers, provide competitive prices and services and allow for independent oversight by the Virginia Port Authority," according to the Daily Press.
The port authority will make its decision in November 2012.
For more of the Daily Press story: dailypress.com
Port of Tacoma container volume jumps 10 percent in June
Port of Tacoma container traffic grew by 10 percent in June, with expectations for another significant surge next month, thanks to new Grand Alliance business that began in July. Imports led the June growth, with an increase of 13,000 TEUs compared to last year.
The Grand Alliance shipping lines, which include OOCL, Hanjin and Hapag-Lloyd, pool their ships on the route between the U.S. West Coast and Asia. Formerly calling at Seattle, the shipping partnership switched in July to the Port of Tacoma United Terminal.
Breakbulk cargo, especially mining and farming equipment, has almost doubled in the first half of 2012 at the port. Auto imports jumped 21.3 percent in the first half of the year and gypsum imports rose by 115.7 percent, according to the News Tribune.
For more of the News Tribune story: thenewstribune.com
Evergreen christens newest container ship
The Evergreen Line fleet celebrated its first L-type containership this week, christening the Ever Lambent at the Samsung Heavy Industries shipyard.
The Ever Lambent will join the line's Far East-to-Europe route in August. The new 8,452-TEU ship can travel at a speed of 24.5 knots, is 334 meters long and 45.8 meters wide, and has 942 reefer plugs and a draft of 14.2 meters.
Evergreen's newest shipbuilding project, started in 2010 with an order of 20 L-type vessels from Samsung Heavy Industries to be delivered by 2014. Another order was placed in 2011 for 10 more L-type vessels from the Taiwan Shipbuilding Corp., to be delivered from 2013 to 2015.
Georgia Ports sees record year for containers and breakbulk
The Georgia Port Authority experienced record container volumes, tonnage and auto shipping in the 2012 fiscal year, according to Executive Director Curtis J. Foltz. The Port of Savannah moved 2,982,467 TEUs, almost 2 percent more than the previous year.
"Strong growth in breakbulk and auto cargoes complemented record volumes in total tonnage and container traffic," Foltz said.
Breakbulk cargo grew by 15.6 percent year on year, for an increase of 342,446 tons to 2.53 million. The ports overall tonnage jumped to 26.5 million for an increase of 561,038 tons.
Georgia ports handled 569,984 roll-on/roll-off units across all terminals in fiscal 2012. "The GPA's double-digit growth in Ro/Ro cargo emphasizes Georgia's role as an important corridor in global trade," said board Chairman Robert S. Jepson Jr.
In autos and machinery, Port of Brunswick led the GPA to more than 19 percent growth.
For more of the Savannah Morning News story: m.savannahnow.com
Iran's first homegrown oil tanker
In a bid to circumvent Western nuclear sanctions, Iran has built its first domestic aframax oil tanker. The tanker, which can carry 700,000 barrels of oil, was ordered by Venezuela, according to Iran's Fars news agency.
"The production of the aframax ship is the first export shipbuilding activity of Iran, and we must continue by attracting more customers," said Mehdi Etesam, managing director of Iran Maritime Industrial Company SADRA, reported Fars.
The U.S. Treasury imposed additional sanctions in March on SADRA, saying the firm was owned by Khatam al-Anbiya, an engineering company the Islamic Revolutionary Guard Corps uses to fund its operations. According to Treasury, the Revolutionary Guard plays a key role in Iran's nuclear programs, supports terrorism and is guilty of human rights violations.
An EU ban on Iranian oil and insurance has hurt the country's ability to sell its oil.
Iran claims it is not developing nuclear weapons.
For more of the Reuters story: www.reuters.com
Thursday, July 26, 2012
Report accuses Canadian ports of poaching U.S. shipments
The U.S. Federal Maritime Commission on Tuesday voted to approve a report that is criticizes Canada's West Coast ports, especially the new container terminal at Prince Rupert, alleging Canada is unfairly and deliberately attracting cargo business away from the U.S.
The report will be sent to Congress, which in 2011 asked the agency to investigate charges made by two Washington state senators that Canadian ports were trying to undermine and lure business away from U.S. ports. These allegations have caused some U.S. senators to consider attaching a $140 per-TEU levy to any cargo that passes through British Columbia's ports on the way to the U.S.
The matter has been a U.S.-Canada trade problem since Washington senators Patty Murray and Maria Cantwell asserted that Canadians were unfairly subsidizing the rerouting of container ships away from U.S. competitors, especially in Prince Rupert. They noted that the U.S. Harbor Maintenance Tax, used for dredging U.S. West Coast ports, is not collected at border crossings when cargo enters the country on trains from Canada after arriving via Canadian ports, and that perhaps it should be.
For more of the Vancouver Sun story: vancouversun.com
Vallejo, Calif shipping hub?
Vallejo, Calif – positioned up in the San Francisco Bay Delta - may soon transform into a commercial shipping hub, as the city is considering the purchase and conversion of the former General Mills site into a center for the transport of good by truck, rail or barge.
An entity called the Vallejo Marine Terminal, LLC, wants approval to open an international center for commodity shipments. The Vallejo City Council on Tuesday voted to extend an existing ground lease for its portion of the former General Mills property.
Vallejo Marine Terminal representatives plans to integrate rail, truck and ship transport for its products, including lumber, grain and steal, city economic development director Ursula Luna-Reynosa advised the council.
The company could increase city income by a $40,000 a year, Luna-Reynosa wrote in a council report. The company's plans to sublet the site to other businesses, including a possible manufacturing facility, may result in extensive energy use and site capital improvements and an estimated $265,000 in tax revenue, Luna-Reynosa wrote.
The waterfront former mill was built in 1918 for Sperry Mill, sold to General Mills in 1929.
Virginia ports experience slow recovery
Although business is rebounding at Virginia ports, the recovery has not yet reached pre-recession levels, according to a report released by the Virginia Port Authority. The study takes on more significance as the VPA considers privatizing the operations of several of its ports.
The port saw the number of containers increase 2 percent to more than 1.1 million TEUs in 2011. So far in 2012, container volume has increased by more than 5 percent, according to port officials. After dropping 17 percent in 2009, business has rebounded, but is still below the more than 1.2 million TEUs that went through the port in 2007.
Gov. Bob McConnell, frustrated that as the third largest port complex on the East Coast, Virginia was not recovering as fast as New York or Savannah, replaced 10 of Virginia's 11 port commissioners in 2011 in a move meant to encourage growth.
The port also is the only one on the East Coast that currently has inbound and outbound deep-water channels to attract post-Panamax ships to Virginia. Port officials think the Port of Virginia is poised to increase cargo with the expansion of Craney Island, which would almost double the Port of Virginia's marine terminal capacity.
"That's where we by far are in the best position of any port on the East Coast," said Rodney Oliver, the port authority's deputy executive director and CFO.
Earlier this month, Virginia extended the deadline for privatization proposals until Aug. 13. The state will accepted or reject proposals by Aug. 31.
For more of the Virginia-Pilot story: hamptonroads.com
House representatives reach across the aisle to save maritime jobs
Two U.S. congressional representatives, Democrat Elijah Cummings of Maryland and Republican Jeff Landry of Louisiana, introduced the Saving Essential American Sailors (SEAS) act on Tuesday, which would mandate that American workers transport American food aid.
The act repeals a section of the highway bill that MARAD has said might cause the U.S.-flagged fleet to lose 16 vessels and $90 million in yearly income. Section 100124 of the bill reduced the amount of U.S. food aid that must be carried on U.S.-flagged ships from 75 percent to 50 percent, endangering up to 2,000 American maritime jobs.
"This is what happens when Washington rushes bills; we don't fully debate them or understand their ramifications. Section 100124 will mean that American taxpayers will be paying foreign workers while American mariners sit on the beach," said Landry. "I hope my colleagues from both sides of the aisle will join us in fighting for our American workers and quickly pass the SEAS Act."
"The SEAS Act will undo a shortsighted provision that dealt a huge blow to job creation at a time when the maritime industry is already hurting," said House Representative Rick Larsen of Washington state, a co-sponsor of the bill. "Congress should be doing everything it can to create jobs. The SEAS Act will reverse this backward step that could cost our mariners thousands of jobs.
Federal conspiracy charges filed against eight people, three corporations for Long Beach import scheme
The San Diego U.S. attorney's office charged eight individuals and three companies on Wednesday with a plot to dodge customs fees on hundreds of millions of dollars of goods imported through the Port of Long Beach. Charges include conspiracy, obstruction of justice and bringing goods into the U.S. with false statements.
Allegedly, on official documents the goods were marked as a trans-shipment to Mexico not to be sold in the U.S., according to U.S. Attorney Laura Duffy. Chinese clothes and Indian cigarettes were among the goods involved in the charge.
Gerardo Chavez, president of the San Diego Brokers Association, was one of those charged.
For more of the Los Angeles Times story: latimesblogs.latimes.com
Friday, July 27, 2012
STB moves on behalf of captive rail shippers
The Surface Transportation Board announced two initiatives this week that the regulatory body said would "explore ways to further protect captive [rail] shippers from unreasonable rail rates."
The STB said in a statement that the centerpiece of its rate rules proposal would remove the limitation on relief for cases under "Simplified-Stand Alone Cost" alternative.
"Our goal is to encourage shippers to use a simplified alternative to a Full- [Stand Alone Cost] analysis that is economically sound, yet provides a less complicated and less expensive way to challenge freight rates by discarding the requirement that shippers design a hypothetical railroad to judge a railroad's real world rates," the Board wrote in its decision.
The STB said captive shippers "have long stated that they do not bring rate disputes to the Board because of high litigation costs associated with the Board's complex Stand Alone Cost test traditionally used to resolve major rate cases."
The second STB would double the relief available to shippers under the "simplified approach" that would institute technical changes to rate procedures and raise the interest rate railroads must pay for reparations to shippers if they are found guilty of charging unreasonable rates.
The STB said it has also launched a proceeding over a proposal submitted by the U.S. shipper organization, the National Industrial Transportation League that is aimed at increasing rail-to-rail competition where "certain shippers located in terminal areas that lack effective transportation alternatives would be granted access to a competing railroad, if there is a working interchange within 30 miles."
REPORT: Prologis could sell U.S. industrial properties worth $800 mil this year
Prologis, the world's largest owner of industrial property, could reportedly sell approximately $800 million worth of U.S. properties by the end of this year.
"We're not selling anything that we weren't going to sell anyway," said Prologis' Co-Chief Executive Officer Hamid Moghadam in an interview with Bloomberg.
Moghadam said a seller's market environment could prompt the more aggressive timetable for adding to the already $450 million worth of property sold in the Americas this year by the San Francisco-based real estate company.
"The stuff that we're selling is clearly not in the best markets, and within the better markets it's certainly not the best assets," Moghadam said.
For the full Bloomberg story: bloomberg.com
NJ governor vetoes transparency and greenhouse bills for NY-NJ ports
Governor Chris Christie vetoed bills that would have increased financial transparency at the Port Authority of New York and New Jersey and required participation in the Regional Greenhouse Gas Initiative.
On the heels of reports that overtime costs at the port authority have reached $90 million along with how revenue from recent higher toll rates will be spent, one bill would have placed stricter financial scrutiny on the agency by requiring hold public hearings for the raising of any fees or tolls.
Governor Christie said he thinks the bill does not apply such regulations to all multi-jurisdictional authorities, such as for water and sewer commissions.
The second bill vetoed by the Governor was aimed at controlling carbon emissions.
"In withdrawing, I recognized that RGGI [Regional Greenouse Gas Initiative] has failed to create economic incentives for fossil fuel-fired electric generators to limit greenhouse gases," Gov Christie said.
"Energy producers, accordingly, were not incentivized to use lower carbon-based fuels, improve emission controls, or increase efficiencies in production. Indeed, RGGI did nothing more than impose a tax on electricity to be borne by New Jersey's overburdened taxpayers and ratepayers," he said.
For the full New Jersey Star-Ledger story: nj.com
Hunter Harrison makes comeback at a cost to CP
The former chief of Canada's largest Class One railroad has assumed the throne of the North American nation's second largest, but it has reportedly come at a cost.
Hunter Harrison, once the chief executive of the Canadian National, is now CEO of the Canadian Pacific Railway at a charge of $38 million, the Globe & Mail reports.
Harrison replaced former CP chief, Fred Green, after a bitter proxy battle instigated by board member Bill Ackman, CEO of Pershing Square Capital Management LP, who said back in January that he would guarantee Harrison's retirement benefits if his former company won a legal complaint over that issue.
The CP's second quarter profit fell 20 percent, including the $38 million charge.
"Included in this charge were amounts totaling $16-million in respect of deferred retirement compensation for Mr. Harrison and $20-million which was payable at June 30, 2012, to Pershing Square Capital Management LP and related entities," the CP said.
"The amount payable to Pershing Square and related entities was to reimburse them, on behalf of Mr. Harrison, for certain amounts they had previously paid to or incurred on behalf of Mr. Harrison pursuant to an indemnity in favor of Mr. Harrison," the railroad said
The CP also agreed to indemnify Harrison for up to $3-million in legal costs in addition to granting him stock options and deferred share units valued at $12-million.
For the full Globe & Mail story: theglobeandmail.com