Cargo Business Newswire ArchivesSummary for July 27 through July 31, 2015:
Tuesday, July 28, 2015
Bulk ports riding the waves
By William DiBenedetto, CBN Feature Editor
Port executives who track the fluctuations of the Baltic Dry Freight Index to get a line on supply and demand — and hence carrier movements and rate trends in the bulk sector — are probably scratching their heads this year.
That’s because the Baltic Index, which is a composite of sub-indexes that measure the activities of different sizes of dry bulk carriers (Capesize, Supramax and Panamax) for multiple geographic routes, has been more volatile and confounding than usual.
Given that context, what are the best U.S. bulk and breakbulk ports to watch? Hint: look for the ones that have invested heavily in bulk/breakbulk terminal space.
The Port of Houston leads the nation in breakbulk cargo, mainly because of the terminal areas it has dedicated to loading, off-loading and storing such cargo. The port features 47 different general cargo and heavy lift docks.
This year, the Port of Houston Authority plans to spend $275 million for various capital projects, and while most of it ($184 million) is earmarked for container terminal development, $35 million will fund improvements at general cargo and bulk terminals in the Turning Basin area.
Houston’s Turning Basin Terminal (pictured) is a multipurpose complex of 37 wharves equipped to handle just about any type of breakbulk, containerized, project or heavy-lift cargoes. Wharf 32 is specially designed for handling project and heavy-lift cargoes and features a 1,000-pound-per-square-foot load capacity. Last year PHA ranked first among U.S. ports in total foreign tonnage and second in terms of total foreign cargo value.
Cargo handled at the Port of New Orleans last year totaled 8.37 million tons, the highest since 2000 and an increase of 28 percent over the 2013 total. Breakbulk tons, at 3.76 million, were up 51.7 percent. New shippers such as Chiquita, which returned to the port after a 40-year hiatus, and project cargo generated by the growing chemical industry, likely will bolster cargo figures in the future, according to Gary LaGrange, port president and CEO. Port NOLA has 13,511 feet of berthing space available at six facilities tailored to breakbulk cargo; it also has 1.6 million square feet of transit shed area slotted for temporary breakbulk storage.
The Port of Baltimore ranks first among all U.S. ports for handling autos and light trucks, farm and construction machinery, imported forest products, imported sugar and imported aluminum. Overall, the port is ranked ninth in the U.S. for the total dollar value of cargo and 13th for cargo tonnage. The port’s Dundalk Marine Terminal covers 570 acres and handles breakbulk, forest products, ro/ro, autos, project cargo, farm and construction equipment, along with containers at six general cargo berths and seven container berths. The terminal has 10 sheds totaling 789,820 square feet, with 20 acres of container storage, 20 acres of breakbulk storage, 300 acres of automobile storage and 100 acres of ro/ro storage.
The Port of Mobile is the second-largest steel-handling port in the U.S., with more than 5 million tons handled in fiscal 2014. That total will increase with the addition of a new $36 million steel-coil handling facility. Mobile also handled 29.1 million tons of heavy-lift and oversized cargo, coal, lumber, plywood, wood pulp, laminate, flooring, roll and cut paper, iron, steel, frozen poultry, soybeans and chemicals.
Profits and volume are up at the Port of Virginia, and coffee trade could wake up its sluggish breakbulk performance. Last year the port was designated an "Exchange Port" for internationally traded Arabica coffee beans. In September 2016, the port will join the ports of New York and New Jersey, Miami, New Orleans and Houston as a designated domestic delivery point for Arabica beans.
Finally, the recently approved Northwest Seaport Alliance between Seattle and Tacoma could boost bulk and breakbulk activity at their "unified" terminals. The strategic plan is focused somewhat on the container trade but it also calls for repurposing smaller terminals for other marine cargoes, which could include logs, domestic cargo, breakbulk and autos. Grain terminals, however, remain outside the alliance.
Northwest Seaport Alliance receives federal approval
The Northwest Seaport Alliance, which unites some of the business operations of the ports of Seattle and Tacoma, is one step closer to reality after receiving approval from the Federal Maritime Commission last week. The last hurdle will be the final votes by both the two ports on Aug. 4.
The FMC voted unanimously for the alliance to become effective, allowing the ports of Seattle and Tacoma to unify their marine cargo terminal investments, operations, planning and marketing. The goal is to collectively compete more effectively as larger container ships are built, the widened Panama Canal opens, and rival West Coast ports, such as British Columbia and Southern California, up their games.
"The Pacific Northwest is a key region for inbound and outbound United States cargo, moving cargo not only for the regional trade, but also cargo headed to destinations throughout the entire U.S. Midwest," FMC chairman Mario Cordero said in a statement. "This Alliance will help the region remain competitive into the future."
United Parcel Service is in talks to buy Chicago-based Coyote Logistics for approximately $1.8 billion, according to two sources with inside information, according to Bloomberg News.
The deal to acquire Coyote, a transport-management service provider, could be reached as soon as this month, according to one of the sources who asked to remain anonymous since the information is not yet public. No agreement has been reached and discussions could still fall apart.
A deal between Coyote and UPS would be the third-largest logistics deal this year, amid a wave of industry consolidation prompted by rising consumer demand. In April, FedEx agreed to buy Dutch parcel-delivery company TNT Express for $4.8 billion. Later that month, XPO Logistics agreed to acquire European counterpart Norbert Dentressangle in a deal valued at $3.53 billion including debt.
Private equity firm Warburg Pincus has backed Coyote Logistics with bolt-on acquisitions, including Access America Transport last year. While terms for that deal weren’t disclosed, Coyote said in a statement that the combined company would be one of the biggest third-party logistics providers in North America, with run rate revenue of more than $2 billion, 17 locations and about 1,750 employees.
Representatives for UPS, Warburg Pincus and Coyote declined to comment.
MSC Rail, an arm of shipping giant Mediterranean Shipping Company, has won the bid to buy the cargo division of Portugal's railway firm CP Carga with an offer of $58.14 million, according to the government.
Most of the funds will be used to capitalize the debt-laden CP Carga, and MSC Rail will also lease locomotives and railway cars to CP, said Portugal’s State Secretary for Transport Sergio Monteiro.
Also bidding for CP Carga were Portuguese holding company Cofihold and private equity firms Springwater Capital of Switzerland and Atena Equity Partners.
The government has also decided to cancel the sale of state-owned railway equipment maintenance firm EMEF due to a probe of possible state aid to EMEF launched by European authorities after a complaint by its competitor.
Over the past few years Portugal has implemented a program of state property sell-offs, agreed upon with its European and IMF creditors, under the terms of a 2011-2014 bailout deal. Most privatizations have been completed, far exceeding Lisbon's revenue target.
CBP seizes $3.2M in Hermes belt knock-offs at L.A. port
U.S. Customs and Border Protection officers and import specialists at the Los Angeles and Long Beach ports seized nearly 4,000 counterfeit Hermes belts.
Officers seized 3,960 belts that arrived from China on June 18. The shipment was displayed as "plastic brooms" as a way to evade detection, according to CBP officers.
The belts sported the Hermes trademark on the boxes, back of each belt and on the back of each belt buckle. If the items were genuine, officers estimate the total cost of the belts to be more than $3.2 million.
"Counterfeit products are increasingly of a higher quality, making consumers easily deceived by fakes that look and feel real," said Carlos Martel, CBP port director of the Los Angeles and Long Beach seaport complex. "The flood of counterfeit products not only creates an enormous drain on the U.S. economy, but funds transnational criminal enterprises."
Cargo volume at NY/NJ port on track for record year
Cargo volumes at the Port of New York and New Jersey during the first six months of this year are 13.4 percent higher than the same period in 2014, when the previous record was established, according to a Port Authority statement.
Between January and June of this year, the port handled 3,093,789 TEUs compared to 2,727,554 TEUs handled during the same period in 2014. The record volumes have allowed the port to maintain its position as the busiest port complex on the East Coast.
Cargo handled by ExpressRail, the Port Authority’s ship-to-rail system, also continued to increase. During the first six months of 2015, ExpressRail handled 257,103 boxes, up 15.1 percent year-over-year. The agency said its investment of more than $600 million in ExpressRail – as well as plans to build a new ExpressRail facility in Greenville Yard in Jersey City – has been critical to address the need for on-dock rail to improve port efficiency, competitiveness and emissions reduction.
Port road, rail and security projects are now funded by port-wide Cargo Facility Charges.
The port also reported a 31 percent increase in vehicles handled by the port – from 172,375 units in 2014 to 226,053 units in 2015. The increase is due in part to the Auto Incentive Program launched in 2014 to provide financial incentives to auto manufacturers who bring new or increased vehicle business to the port.
"Port Director Rick Larrabee is retiring on a high note with cargo volumes at record levels thanks to strategic initiatives he led including the 50-foot channel project, investments in our port’s environmentally friendly rail network, upgraded port roads, and our award-winning Clean Air port strategy," said Port Authority Executive Director Pat Foye in the statement. "He leaves the Port of New York and New Jersey with a strong outlook for continued growth in jobs and economic activity as the pre-eminent East Coast port, and our project to raise the Bayonne Bridge underway."
"This week we welcome Molly Campbell as our new port director who I am confident will build on Rick’s accomplishments in the years to come."
G6 announces service changes
Shipping line members of the G6 Alliance have announced a service enhancement in the Asia – Europe trade.
The group’s Loop 7 service will be upgraded to include port calls at Gothenburg and Antwerp, providing improved connections between Asia and Scandinavia as well as faster transit times from Antwerp to Asia.
The new port rotation is as follows: Qingdao – Shanghai (Yangshan) – Hong Kong – Yantian – Singapore – Rotterdam – Hamburg – Gdansk – Gothenburg – Antwerp – Southampton – Singapore – Yantian – Qingdao.
The G6 Alliance offers a variety of services between Asia and Europe, Asia and North America as well as on the trans-Atlantic covering all major port pairs with weekly sailings.
The G6 Alliance members are APL, Hapag-Lloyd, Hyundai Merchant Marine, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Orient Overseas Container Line.
Egypt completes trial run on second Suez Canal
Egypt has finished a successful trial run of its second Suez Canal lane, as a number of cargo ships tried out the new passageway ahead of its official opening next month.
The 44-mile route allows two-way traffic and can accommodate larger vessels.
Construction on the new lane, which runs alongside part of the existing canal, began less than a year ago. Several container ships from around the world successfully navigated it on Saturday as part of the trial run. Helicopters and naval vessels escorted the ships as part of the tight security operation.
The Sinai Peninsula, which borders the canal, is a base for Islamic militants, who have killed hundreds of people since the military overthrow of President Mohammed Morsi in 2013.
Container volumes at South Carolina ports climbed 14 percent during the 2015 fiscal year, according to a statement from the S.C. Ports Authority.
SCPA handled 1.9 million TEUs during the fiscal year that ended June 30, a boost of 231,473 TEUs year-over-year. June volumes provided a strong finish to FY2015 with 169,913 TEUs handled.
"2015 was a memorable year for S.C. Ports Authority," said SCPA president and CEO Jim Newsome. "We reached near-record levels of containerized cargo and saw strong volume and good diversification of the breakbulk sector. From an operations perspective, highlights of this year include handling the highest ever month of pier containers in May and Inland Port rail moves in June, all while delivering high reliability and logistics efficiencies for our customers."
Pier containers, or box volume, also surged 14 percent in FY2015 with 138,221 more boxes handled compared to FY2014. SCPA moved 96,916 boxes in June, pushing total fiscal year volume to 1.1 million containers.
The SCPA noted strong fundamentals played a key role in the above-market growth of container cargo. Amidst the Panama Canal expansion and the Bayonne Bridge raising, big ships have transitioned to East Coast trade routes, and SCPA says it currently receives 11 post-Panamax vessel calls each week. The booming automotive sector in the Southeast also supported both import and export volume gains.
China will investigate auto shipping lines on antitrust concerns
China’s National Development and Reform Commission is investigating allegations of monopolistic practices by shipping lines that move vehicles, according to sources with inside information.
The economic planning agency’s probe involves several companies but focuses on Japan’s Mitsui OSK Lines, Kawasaki Kisen Kaisha and Nippon Yusen KK, because they control the bulk of the Chinese market, according to one person familiar with the matter, who asked to remain anonymous since the investigation isn’t yet public.
China’s action follows similar probes by the EU in 2013 and Japan’s Fair Trade Commission in 2012, along with lawsuits in Canada and the U.S.
Mitsui OSK closed down 0.5 percent at 394 yen in Tokyo trading Monday. Kawasaki Kisen ended down 1.8 percent at 269 yen and Nippon Yusen rose 1.8 percent to 345 yen.
Congress likely to approve 3-month highway bill extension
Republican leaders in the U.S. Congress prepared to pass a three-month highway funding extension on Tuesday, leaving the future of the idled Export-Import Bank in limbo until at least September.
With the House of Representatives and Senate approaching a five-week summer recess, Republican leaders embraced the newest version of a bill to temporarily fund road and mass transit construction projects.
Failure by Congress to act by Friday would lead to a cutoff of federal transport funds, disrupting projects nationwide. The extension until Oct. 29 is expected to pass the House, followed by quick action in the Senate this week.
After the August recess, Congress will have approximately two weeks in September to avoid a government shutdown on Oct. 1.
Then, less than 30 days after that, highway funding is set to expire again. According to Politico, House Transportation Chairman Bill Shuster (R-Pa.), Ways and Means Chairman Paul Ryan (R-Wis.), and Sens. Jim Inhofe (R-Okla.) and Barbara Boxer (D-Calif.) need to find a way to resolve their differences over how to reauthorize — and pay for — highway projects across the nation. So far, they’ve been unable to approach any consensus on the issue.
The Georgia Ports Authority announced it moved a record 3.66 million TEUs in fiscal year 2015, an increase of more than half a million TEUs.
Strong performances across business sectors also led to records in total tonnage and roll-on/roll-off cargo in the year ending June 30.
"Georgia's ports have seen phenomenal growth over the past fiscal year, due to a combination of West Coast cargo diversions, U.S. economic recovery and regional gateway shifts placing more demands on Georgia's terminals," said GPA Executive Director Curtis Foltz. "Our people and our infrastructure rose to meet that demand flawlessly, handling record volumes while maintaining world-class customer service."
The 3.66 million TEUs crossing Savannah's docks in FY2015 constitutes a 17 percent increase year-over-year.
Total tonnage in FY2015, reached a record 31.69 million tons, up 7.8 percent or 2.29 million tons. Of that amount, containerized cargo accounted for 25.89 million tons, also up 7.8 percent or 1.86 million tons compared to FY2014.
The Port of Savannah moved 369,347 boxes by rail in FY2015, up from the previous record of 332,996 set in FY2014. The growing volumes moved by rail resulted in an increase of 10.9 percent or 36,351 containers for the year.
In other cargo sectors, the GPA achieved an 8.1 percent improvement in bulk cargo tonnage for a total of 2.95 million tons, an increase of 221,601 tons. GPA terminals moved 7.6 percent more breakbulk cargo in FY2015 than in the previous year for a total of 2.83 million tons.
Combined, Brunswick and Savannah moved 714,021 units of roll-on/roll-off cargo, an improvement of 13,313 units or 1.9 percent. Of the total, Brunswick handled 680,427 units.
More layoffs possible as weak demand cuts Union Pacific profits
Union Pacific Chief Executive Officer Lance Fritz said more layoffs are possible as the railroad confronts sharply lower freight volumes that are cutting into the company’s sales, profits and share price.
"What I would communicate to our employees is that right now volumes are down and we have to get our costs in line," Fritz told The World-Herald last week after the company reported a 7.7 percent decline in second-quarter profit from last year.
UP said last week it already has temporarily laid off 1,200 employees who work on trains, engines and in yards. That’s an increase from 900 furloughs announced earlier this year for those same occupations. Unions represent approximately 85 percent of the company’s 48,000 workers who perform on-the-ground work, such as operating trains, maintaining track and repairing locomotives.
That leaves about 8,000 workers in management, salaried and office positions. Many of those workers are in the company’s downtown Omaha headquarters. Fritz said he hoped that normal attrition, such as retirements and other routine separations, would suffice when it comes to getting payrolls aligned with lower freight-hauling demand.
Fritz said the company’s normal attrition level is about 7 percent per year, suggesting about 3,360 people leave each year under circumstances other than layoffs.
The new chief executive and longtime Union Pacific executive, who took office this year when predecessor Jack Koraleski moved to executive chairman, said neither he nor the company takes it lightly when the subject is payroll reductions. He said the company is being "fair, sensitive and transparent" in reducing the payroll.
Roadrunner buys Stagecoach to boost U.S.-Mexico services
Roadrunner Transportation Systems announced that it has acquired Stagecoach Cartage and Distribution, a provider of truckload and logistics services based in El Paso, Texas, for a total of $35 million, plus an earn-out capped at $5 million.
Stagecoach provides regional, intermodal, and over-the-road truckload services throughout the southwestern U.S. and Mexico. Stagecoach also provides warehousing and trans-loading solutions to customers through its network of facilities in south, central and west Texas. The acquisition was financed under Roadrunner’s credit facility, according to the statement.
"Stagecoach is an extremely high-quality company with a broad service portfolio and an experienced and motivated management team that represents an excellent platform to expand our cross-border services," said Mark DiBlasi, president and CEO of Roadrunner. "Stagecoach’s strong presence within the El Paso and Laredo markets, coupled with the company’s Mexican Operating Authority, provides us with immediately realizable growth opportunities created by the accelerating demand within the region."
Roadrunner reports that Stagecoach generated revenues of approximately $34 million during the 12 months ended June 30, 2015, with EBITDA in excess of $7 million.
U.S. blacklists Singapore shipping firm on alleged arms smuggling
The U.S. has blacklisted a Singapore-based Senat Shipping over allegations it is supporting illicit arms shipments to North Korea. That means that any assets the firm holds in the U.S. are frozen and U.S. citizens are prohibited from doing business with it.
The Treasury Department said that Senat was providing "extensive support" to a North Korean company already under sanctions. Treasury claims the shipping firm was cooperating with Ocean Maritime Management Company, a North Korean firm already under sanctions.
Senat Shipping has denied the allegations.
Panamanian authorities seized a ship operated by OMMC in 2013 for hiding undeclared military equipment from Cuba under its cargo of sugar.
According to U.S. authorities, Senat arranged the purchase, repair, certification, and crewing of vessels for OMMC.