A report on the U.S. trucking industry says the largest U.S trucking group, financially embattled YRC Worldwide, might benefit from a slowly-turning tide of freight growth on the heels of the firm’s restructure and announcement of an entirely new board of directors.
The Overland Park, Kansas-based company announced on Friday it had completed its financial restructuring plan on the heels of losing $38.7 million for the second quarter.
A completely new board of directors was also introduced.
"I am delighted to lead this strong lineup of business executives as the new Chairman of the YRC Worldwide family of companies," said James Hoffman, the new Board Chairman in a statement.
"I am confident that the new Board members, with their vast experience in a wide variety of areas such as logistics, operations, business management, finance and law, will help us take YRC Worldwide to the next level as a leading provider of transportation and global logistics services," Hoffman said.
The market research firm, Bedford Report, in a trucking industry analysis, said that although YRCW’s much-publicized financial losses continued through to the second quarter, its revenue grew 12 percent to $1.26 billion and regional business revenue was up 14 percent to help offset a 10 percent drop in its truckload unit. YRCW’s second quarter included $17 million in restructuring fees, the Bedford Report pointed out.
Moreover, economic indicators suggest growth in truck freight volumes, according to the report, citing the bellwether Cass Freight Index’s June’s shipments were up 5.3 percent, albeit a softer climb from April and May’s 9.6 percent and 12.3 percent year-over-year gains, respectively. July’s final truck freight volumes are forecast for growth.
The new YRCW Board of Directors are: Raymond Bromark, CPA, retired PricewaterhouseCoopers LLP partner; Douglas Carty, former president and CEO, Laidlaw Education Services; Matthew Doheny, president, North Country Capital LLC; Robert L. Friedman, senior managing director, The Blackstone Group, L.P.; James E. Hoffman, former president, Alliant Energy Resources; Michael J. Kneeland, president, CEO, and director, United Rentals, Inc.; Harry J. Wilson, chairman and CEO, MAEVA Advisors, LLC; and James "Jim" Winestock, Jr., former senior vice president and officer, United Parcel Service, Inc.
Virginia governor cleans house with port authority’s board
The governor of Virginia, Bob McDonnell, announced the replacement on Friday of 10 of 12 Virginia Port Authority board members, including the chairman, with new appointees scheduled to be sworn in on Tuesday.
Despite encouraging developments at the deepest-water container port on the eastern seaboard, including APM Terminals signing a news lease and $150 million to be allotted towards the authority’s Craney Island project, the state’s transportation director spoke out on Friday that things are not what they might seem.
“We’re the only port on the East Coast that has not recovered to pre-recession levels,” said Virginia’s Secretary of Transportation Sean Connaughton as reported by the Virginian-Pilot.
“We’re not doing this personally or politically,” Connaughton said. “It’s just that this is a business unit and when you have a business unit and you’re investing a lot of money and it’s not performing up to par, then you know, just like any other shareholders would expect, we’re going to expect new management.”
The port authority board member appointees are:
Jennifer D. Aumen, vice president of Transurban; Scott R. Bergeron, chief operating officer of Liberian Registry; James M. Boyd, attorney and president of Boyd & Boyd; Juliann J. Clemente, president of Clemente Development Company; The Honorable William H. Fralin Jr. of Roanoke, vice president and general counsel, Medical Facilities of America;
Frank E. Laughon Jr., chairman emeritus, Richmond Cold Storage; John N. Pullen, president and chief growth officer of Luck Stone Corporation; Robert M. Stanton, chairman of Stanton Partners; Jeffrey D. Wassmer, president and CEO of Spectrum Comm;
Ting Xu, president and CEO of Plow & Hearth.
The Georgia Ports Authority recorded a record fiscal year for 2011, including an 11 percent uptick in its container traffic at 2.9 million TEUs handled.
The port reported its breakbulk business was up 37 percent to almost 2.2 million tons and its auto and ro-ro business shot up 40 percent year-over-year.
The port’s imports were up 9 percent, with exports up 12 percent, with the latter taking up 53 percent of total containerized cargo.
Port of Tacoma’s container volumes dropped 11 percent in June
The Port of Tacoma announced its container-shipping volumes dropped 11 percent in June over the same period a year ago, to 720,178 TEUs handled.
The port cited the continued economic trend of the slow-to-recover U.S. real estate and retail sectors impacting its shipping business.
The port’s full export container volumes showed more promise, rising 14 percent year-to-date through June, although full import containers were down 4 percent for the same period.
The port said its auto imports were up 26 percent; breakbulk tonnage grew a whopping 61 percent; total tonnage was up 11 percent; and total container volume is up 2.3 percent for the first half of the year.
Domestic shipping business for the Port of Tacoma, including container traffic to Alaska, a significant piece of the Puget Sound port’s portfolio, dipped 2.7 percent.
In related news, it was announced Karen Matthias has been appointed the port’s new Alaska consultant, replacing longtime consultant Shari Gross, who had served in that capacity since 1986.
Mathias, based in Anchorage where she will continue to operate from in her new capacity, was the Canada’s Consul in Alaska from 2004-2009.
The port said Alaska is its third largest trading partner, accounting for more than $3 billion in trade each year.
Shipping lines that serve between Tacoma and Alaska include Horizon Lines and Totem Ocean Trailer Express (TOTE), Inc., along with transportation companies Carlile, and Lynden. The port said Alaska-related shippers that have facilities in, or near the port area, include North West Company, the Odom Corporation and Trident.
Shipping industry challenge to EPA ballast water permitting rejected by Court of Appeals
The U.S. Court of Appeals for the D.C. Circuit on Friday rejected a challenge by three shipping industry associations to the Environmental Protection Agency’s permitting process over invasive species in U.S. domestic waters, such as in the Great Lakes.
The EPA’s permitting system regulates the discharge of ballast and bilge water on top of any further regulations states might enact over the threat of invasive species like Zebra mussels.
Three industry groups that brought the challenge to the Appeals court over the EPA’s Vessel General Permit program that was enacted in 2008, were the American Waterways Operators, Lake Carriers’ Association and Canadian Shipowners Association.
In a prepared response, the industry groups said the EPA “had violated the Administrative Procedure Act and the Regulatory Flexibility Act when it issued the final VGP without providing the regulated community an opportunity to comment on the 100-plus state conditions that had been added to its draft permit, nor considering the economic impact of those state conditions on small businesses.”
The associations said they subsequently “petitioned the court to vacate the section of the VGP containing the state conditions and remand it to the agency for further consideration consistent with the law.”
In its ruling on Friday, the Appeals Court reportedly suggested to Congress that it should amend the Clean Water Act to provide the maritime industry with a permanent solution to the problem.
Tuesday, July 26, 2011
Top Story
UPS Q2 profit up 26 percent amid sluggish economy
The world’s largest package-delivery company, United Parcel Service Inc posted $1.06 billion in profit for its second quarter, a 26 percent rise over the same period a year ago, and a record for highest-ever earnings per share despite a softening economy.
The positive news on UPS’ second quarter earnings arrives amid what it terms an “uneven economic environment,” where the firm said it has experienced “extremely sluggish” business in Asia outside of China, and expects its U.S. market to slow down in the third quarter.
Conversely, stronger domestic sales in the U.S. domestic market, along with growing demand in China and Europe, contributed to 8.1 percent growth to $13.2 billion in sales for the quarter, the carrier reported.
The Atlanta-based company said it expects demand to increase for the last months of the year.
The third-largest marine terminal operator – DP World - said this week its first half profit will show “record improvement” at $206 million on the back of container volumes that were lifted by 11 percent at a gross of 26.2 million TEUs, thanks in part to the performance of markets in Asia and the United Arab Emirates.
"The strong container volumes seen in the first half of the year will result in a significant improvement in first half profit after tax against the same period last year," said DP World CEO Mohammed Sharaf.
"Going forward, as you know, everyone's talking about uncertainty. But usually the second half is stronger than the first," Sharaf said in a conference call as reported by Reuters.
DP World sold 75 percent of its terminal operations in Australia for $1.5 billion in 2010, and in June, the firm started trading on the London Stock Exchange.
Exxon Mobile to build two Alaska-bound tankers at Philly shipyard
The Irving, Texas-based energy giant, Exxon Mobile, announced it has signed a letter of intent with the Aker Philadelphia Shipyard in partnership with Samsung Heavy Industries to build two U.S. -flagged, 115,000 dwt, double-hull tankers scheduled for delivery in 2014 and destined for service out of Alaska.
Exxon said the new vessels capable of carrying 730,000 barrels would be operated by its SeaRiver Maritime affiliate, and will be deployed for shipping crude oil originated from Alaska’s North Slope out of Prince William Sound and down the U.S. West Coast.
FedEx Express acquires Mexico’s MultiPack
FedEx Express announced it has completed the acquisition of Mexico’s Servicios Nacionales Mupa, S.A. de C.V. (MultiPack).
The acquisition includes MultiPack’s network of pick-up and delivery, warehousing and logistics services, in addition to 48 distribution centers, 13 warehouses and over 500 retail outlets, according to FedEx Express.
"FedEx is expanding its footprint in order to better meet the demands of Mexican businesses, and responding to the growth potential of this dynamic economy. The integration of the companies will create a winning combination of global reach and national expertise, backed by a commitment to service excellence," said Michael L. Ducker, chief operating officer, FedEx Express.
FedEx said its workforce in Mexico is now over 5,000 employees.
Labor protests against private terminal at Washington State port continue with further arrests
Protests by waterfront workers that began on July 11, continued on Monday at the Port of Longview, Wash. over the scheduled opening of a $200 million private-operated grain export terminal with the arrest of seven members of the International Longshore and Warehouse Union.
The ILWU’s Local 21 has been attempting to get the EGT terminal’s management to hire from its pool of workers via its contract with the Port of Longview, according to a story in 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 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.
EGT has since contracted through Federal Way, Wash.-based General Construction to staff its labor force utilizing the Oregon-based International Union of Operating Engineers Local 701, the Daily News reported.
According to the newspaper’s report on the ongoing protests and arrests, local law enforcement is concerned over increased aggression by the union protesters.
"The protesters today are substantially more aggressive in both threats and actions. They have turned their aggression towards the deputies and officers on the scene, repeatedly shouting and calling the officers profane names, and many of them refusing the officers' requests," said Chief Criminal Deputy Charlie Rosenzweig in a news release.
One of the seven protesters arrested yesterday was reportedly taken into custody for felony harassment, with law enforcement alleging that he threatened to kill a person driving into EGT’s facility.
The terminal has reportedly not received grain shipments since the Burlington Northern Santa Fe halted its deliveries last week after union protesters blocked one of its trains.
Forest products giant, Weyerhaeuser, is reportedly finalizing the $53 million sale of its Westwood Shipping Lines unit to J-WesCo, a Japanese holding company of stevedoring operations and subsidiary of Sumitomo Warehouse, with the transaction expected to close next month.
The sale was first announced last month on Westwood's website by its president, Guy Stephenson, and this week, it was announced that the shipping line's staff of over 70 will be moving from the soon-to-be-former parent company's main offices in Federal Way, Wash. to occupy 20,000 square feet at a 92-acre office park in Puyallup, Wash.
Stephenson said Westwood would continue serving markets in Japan, Korea and China from the Pacific Northwest with its fleet of seven vessels that have carried a range of cargoes from various forest products to auto and airplane parts, including freight for Boeing.
J-WesCo's stevedoring companies have been "key service providers to Westwood for more than 25 years," Stephenson said.
"J-WesCo is uniquely positioned to support Westwood's ongoing business as well as its future service enhancements," he said.
Dow Jones launches Global Shipping Index
Dow Jones Indexes announced the launch of the Dow Jones Global Shipping Index, which it says measures the performance of 25 leading dividend-paying companies in the shipping industry.
Dow Jones said in a statement the shipping index "includes all companies involved in the shipping industry globally that primarily transport goods and materials."
The bar for being included in the shipping index is set at companies that have a minimum float-adjusted market capitalization of $150 million and a three-month average daily trading volume of $2 million, according to Dow Jones.
From this pool, the 25 stocks ranked highest by indicated annual dividend yield are selected for the index, Dow Jones said.
"The Dow Jones Global Shipping Index is designed to include companies that are poised to benefit from the global business recovery," said Michael A. Petronella, president, Dow Jones Indexes. "These same component companies are also in position to take advantage of growing emerging-market demand for commodities and other goods," he said.
The global shipping Index will be reviewed annually in June with price and total return indexes calculated in U.S. dollars, Dow Jones said.
Georgia, South Carolina to move forward on $1 million Jasper County port study
Port officials representing Georgia and South Carolina reached an agreement this week to move forward on a $1 million study over a proposed 1,500-acre container-handling facility on the Savannah River in Jasper County, South Carolina.
Over four years ago, the two states formed a joint-oversight agreement for the fledgling marine terminal, and since then, have spent $3.8 million over preliminary development plans, in what has been at times a contentious relationship between the two states that also compete with their own port authorities over global containerized cargoes.
The study is to include $425,000 to review over the next year the best use of clay dredged from the river in raising the elevation of the construction site by 6 feet that could reportedly save the project $300 million according to a Business Week report.
"We're moving forward in a way that spends our resources efficiently," said David Posek of the South Carolina State Ports Authority and chairman of the joint oversight board.
Jim Balloun, the oversight board's vice chairman from Georgia, said: "We would not be spending the money if we didn't believe there would be a Jasper port."
Greece's DryShips Inc, a dry-bulk shipping group, announced it is acquiring the smaller, rival shipping firm, OceanFreight Inc. for $118 million.
OceanFreight owns four capesize vessels and two Panamax ships at an average age of six years and 859,622 tons.
OceanFreight also has five Very Large Ore Carriers under contract at total deadweight tonnage of approximately 1 million tons.
The much larger DryShips have a fleet of 37 vessels.
"The merger with OceanFreight offers us a unique opportunity to renew DryShips fleet, increase our presence in the Capesize/VLOC sector and augment our fixed revenues," said DryShips CEO George Economou in a statement.
Sixteenth diver dies trying to search Andrea Doria shipwreck
For the sixteenth time, a diver trying to search through the wreckage of the famed Andrea Doria shipwreck off of Nantucket, Mass. that sank there in 1956 after colliding with the MS Stockholm killing 46 people has died.
Michael LaPrade, a 27-year-old from Los Angeles had reportedly been drifting over 200 feet down and about 25 feet above the ship's wreckage in swift currents, and apparently let go of a rope that anchored him and two other divers to the surface.
LaPrade's fellow divers said he was suddenly gone and his body was recovered three hours later on the ocean's bottom near the shipwreck.
The cause of death is reportedly still under investigation.
The 700-foot Andrea Doria sits on its right side close to the edge of the continental shelf and is considered to be the Mt. Everest of scuba diving, according to a story in the Boston Globe.
The container-shipping sector has hit a rough patch with softened consumer demand, plunging freight and charter rates, high fuel costs, and bloated vessel capacity that is now starting to be reduced.
A typical 40-foot container shipping from China to the U.S. West Coast has dropped 42 percent to approximately $1,600 per box, according to data from Clarkson Securities Ltd., in a Bloomberg report.
The report goes on to say derivatives indicate that average price level won’t get above $1,962 by next year’s end.
“The U.S. economy isn’t recovering fast enough to help increase demand,” said Um Kyung A, an analyst for Singyoung Securities Co. in Seoul, South Korea.
Import containerized traffic at the bellwether ports of Los Angeles and Long Beach dipped 4.6 percent in June, the first such decline since January 2010, according to Bloomberg’s data.
First-half of 2011 financial returns haven’t been as rosy as they were last year for container-shipping lines, such as the latest news of China Shipping Container Lines recording its largest earnings dip in almost two years, dropping 6.9 percent, with China COSCO Holdings falling 3.7 percent, and Hanjin slipping 4.3 percent for the period.
Containership charters have plunged 9.3 percent after 56 percent growth last year, according to the Howe Robinson Container Index. Charter lengths are also down from an average of 10 months to 7 months, according to Paris-based shipping consultancy Alphaliner.
Fuel prices are up 53 percent over the same period last year, with a 5 percent increase in vessel capacity since the beginning of this year, and ocean carrier-imposed surcharges that are late in taking effect according to the Bloomberg report.
“Container rates have fallen slightly short of our expectations,” said Jiro Asakura, president of Japan’s “K” Line.
Retailer inventories reportedly continue to be lower than usual and could lead to re-stocking of these levels later this year, possibly pushing freight rates upwards again, the report said.
New Jersey’s Governor on hand for Port Newark Container Terminal’s investment announcement
At a ceremony this week at the Port Newark Container Terminal, New Jersey Governor Chris Christie was on hand for the special occasion marking the terminal operator’s own $500 million investment to upgrade the facility and another $150 million coming from the port authority.
"There is no question that this is the most important engine for economic growth in our state," The Governor said as reported by the New Jersey Star-Ledger.
The port’s expansion is to include deepening its shipping draft, adding more harbor cranes, and expanding another 107 acres with the goal to double container-handling volume in the next 20 years.
The PNCT restructured lease with the Port Authority of New York-New Jersey is now 50 years with $522 million in payments in addition to the $500 million in capital investments.
Freight transportation and logistics services provider Pacer International Inc. posted profit of $4.2 million for the second quarter of this year, compared to $1.4 million for the same period a year ago.
Revenue for the Dublin, Ohio-based firm dropped to $386.3 million from $401 million for the second quarter of 2010, with end-of-year revenue forecast to be in the $1.5 billion range.
Pacer’s intermodal revenues improved by $27.2 million or 9.8 percent.
Old Dominion Q2 earnings beat expectations
Less-than-truckload carrier Old Dominion Freight Line posted better than expected earnings for this year’s second quarter with $39.4 million in profit, compared to $21.5 million for the same period a year ago.
Analysts had pegged the Thomasville, North Carolina-based trucking firm’s revenue for the quarter to be $469.7 million, rather than the $480.3 million that was posted.
Residents evacuated from 250 homes in L.A. area after UP train derails
On Wednesday afternoon, 21 cars from a 68-car Union Pacific freight train derailed, causing the evacuation of residents from approximately 250 homes in Antelope Valley in the Greater Los Angeles region.
The evacuations were spurred by fears of possible hazardous materials being in some of the derailed cars, although UP officials said the six derailed hazmat cars were empty.
The evacuated residents have since been allowed to return to their homes while the incident is under investigation.
Forest products giant, Weyerhaeuser, is reportedly finalizing the $53 million sale of its Westwood Shipping Lines unit to J-WesCo, a Japanese holding company of stevedoring operations and subsidiary of Sumitomo Warehouse, with the transaction expected to close next month.