Cargo Business Newswire ArchivesSummary for August 3 through August 7, 2015:
Monday, August 3, 2015
Trucking Trends: Weathering the Summer
By Mark Montague, DAT Solutions
The largest truckload fleets have been commanding a bigger share of the freight marketplace in recent months, and for an unexpected reason: an improved driver turnover rate. During the first quarter, annualized turnover at truckload fleets with more than $30 million in revenue dropped 12 points to 84 percent, its lowest level in four years, according to the American Trucking Associations.
Another factor is that large fleets are replacing old trucks and adding new ones as driver incentives. Class-8 truck orders rose 42 percent to 380,200 net orders in 2014 and the number of tractors on U.S. highways is expected to rise 6 percent this year to 1.43 million, reports ACT Research.
The combination of better driver retention and fleets with newer, more fuel-efficient trucks is a boon to large truckload carriers. According to second-quarter financial reports, this group has generally done a fine job controlling operating costs and improving equipment utilization. Deadhead miles are down.
Where does this leave small truckload carriers? If you can put trucks and drivers in the right place at the right time, there is money to be made — even in a soft market.
For instance, reefer load availability increased 5.5 percent in June but capacity also added 6.3 percent compared to May. The overall load-to-truck ratio was stable (down 0.8 percent) at 5.9 loads per truck, month-over-month, but compared to the unusually high demand of June 2014, the ratio fell 49 percent. Load-to-truck ratios are important. They represent the number of loads posted for every truck posted on DAT load boards and they’re a real-time indicator of the balance between spot market demand and capacity. Changes in the ratio often signal impending changes in rates.
When you map load-to-truck ratios on a state-by-state level — see the June 2015 map of reefer load-to-truck ratios from dat.com/trendlines, for example — wherever the reefer load-to-truck ratio appears high (darker blue areas) signals an imbalance that favors the carrier.
You can drill down more closely. For example, the Cape Girardeau, Mo., market ships melons that came in season in late July. In a few weeks, markets farther north will come into play, boosting rates during the fall harvest season.
A strong load-to-truck ratio doesn’t necessarily mean that rates are high in the direction you want to go. But if you have a truck in the region, or you have an inbound load, it will tell you that those are some good places to start looking for freight.
Santa is Coming
It’s been a relatively slow first half of the year, marked by bad weather, labor issues at the West Coast ports, and a stronger U.S. dollar, among other things. This slump is a bummer but the data tells us that much of the slowdown is due to seasonal freight cycles. The rest is adjustment from the slowdown in oil and gas production.
Meanwhile, consumer confidence is up, and the non-manufacturing sector shows rising orders that should boost the economy and van freight availability, as retailers build inventory for the fall retail season.
Mark Montague is the senior industry analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates, and routing for more than 30 years. Mark is based in Portland, Ore. For information, visit www.dat.com.
GLP to buy $4.55 billion U.S. logistics properties
GLP, global provider of modern logistics facilities, has made a deal to acquire a $4.55 billion U.S. logistics portfolio from Industrial Income Trust. GLP intends to fold the portfolio into its fund management platform.
GLP expects to own 100 percent of the portfolio upon closing by November 16, 2015, and pare down its stake to 10 percent by April 2016. Demand from major institutional investors to invest with GLP in U.S. logistics real estate is strong, with GLP in negotiations with several new and existing capital partners.
"This is an accretive opportunity for GLP that allows us to strengthen our US market presence and growth prospects with minimal incremental overhead," said Ming Z. Mei, CEO of GLP. "The fund management platform is one of GLP's main sources of capital to fund our growth. The fund syndication offering for our first US income fund was significantly oversubscribed. Building on the positive momentum, we remain confident of injecting this portfolio into our fund management platform by April 2016."
With this acquisition, GLP says it becomes second largest logistics property owner and operator in the U.S. The portfolio, selectively aggregated through over 100 separate transactions over a period of five years, is one of the highest quality in the country. It is comprised of 58 million square feet of in-fill logistics assets spread across 20 major markets, the statement said. The largest markets include Los Angeles, Metro D.C. and Pennsylvania.
This transaction will enlarge GLP's US footprint by 50 percent to 173 million square feet, with GLP becoming the second largest logistics property owner and operator in the U.S. within a year of market entry.
GLP says it is also the largest provider of modern logistics facilities in China, Japan and Brazil. Subsequent to this transaction, GLP's global portfolio will encompass more than 500 million square feet valued at approximately $33 billion.
Farrell Harrison named Long Beach Harbor Commission president
The Long Beach Board of Harbor Commissioners has elected Lori Ann Farrell Harrison as its new board president.
The five-member Harbor Commission, which oversees the Port of Long Beach, also selected Lou Anne Bynum as vice president and Tracy Egoscue as secretary, according to the press release. The commission selects from its own members the president and the other board officers for one-year terms each July.
Farrell Harrison, a 5th District resident, is the director of finance for the City of Huntington Beach and was previously CFO for the City of Long Beach. She was appointed to the Harbor Commission in 2013 by then-Mayor Bob Foster. The commission president chairs board meetings and represents the port to the public.
"I look forward to working with our customers, staff of the Harbor Department, the City of Long Beach and the community to further our goal of strengthening our Port so it continues to be one of the most competitive seaports in the world. Thank you for putting your faith and confidence in me," Farrell Harrison said.
Farrell Harrison and Bynum succeed Doug Drummond and Rich Dines as President and Vice President, respectively.
Under the City Charter, the mayor of Long Beach appoints city residents to the Harbor Commission for a six-year term, the statement said.
NOL posts profit after 6 quarters of loss
Singapore's Neptune Orient Lines swung to a tiny net profit in its second quarter after six straight quarters of losses on severe freight rate erosion.
"The group's container shipping business continued to face a challenging environment characterized by over-capacity and weak market demand," said NOL Group CEO Ng Yat Chung.
The container carrier, controlled by Singapore's state investor Temasek Holdings, reported a net profit of $3 million in the quarter ending June 30 versus a net loss of $54 million a year earlier.
People familiar with the matter told Reuters this month that Temasek had hired a bank to seek buyers for NOL. Temasek has declined comment, while NOL has said it not made any decision on a potential sale of the company.
NOL said that following the sale of its APL Logistics unit for $1.24 billion, it had used the proceeds to reduce its debt.
Matson Navigation, which spilled 233,000 gallons of molasses into Honolulu Harbor in 2013, will pay a $15 million settlement agreement with the state, Hawaii officials announced.
The 1,400-ton spill of the syrupy liquid from a Matson pipeline caused what has been described as the worst environmental disaster in Hawaii’s history, killing coral and more than 26,000 fish, crabs and other marine life.
The $15.4 million settlement is one of the largest payouts for an environmental violation in Hawaii’s history, Hawaii Attorney General Doug Chin said.
The settlement also required Matson to shut down all molasses operations in the islands.
The $706 million deepening of Savannah’s harbor is scheduled to start in September – three months earlier than expected.
The U.S. Army Corps of Engineers and Gov. Nathan Deal’s office said last week that workers will begin to dredge the outer edge of the 38-mile channel on Sept. 7 instead of December, when the project was initially expected to start.
The agency also announced it has granted a nearly $100 million contract to a Florida company to pump oxygen into the Savannah River harbor, which suffers from low oxygen levels. The work is part of an out-of-court settlement with conservationists and considered crucial to offset the project’s environmental impact.
Other work to set the stage for the dredging is well underway. Deal’s office said a key section of a weighty ironclad vessel called the CSS Georgia that defended the city during the Civil War is to be raised from the river’s depths on Saturday. That work will bring up a bulky casemate, which housed the boat’s artillery pieces, that remains deep beneath the water’s surface.
Deal said the developments are a sign that the dredging project is shifting into high gear. The project, which will deepen Savannah’s harbor and waterway from 42 feet to 47 feet, has been in the works for more than a decade and has united Georgia politicians of all stripes.
Shipping line Sealand, part of the shipping giant Maersk, is starting service to Broward County's seaport in late August.
Port Everglades expects to handle more than 20,000 TEUs per-year from Sealand's new North Atlantic Express route. The port will be its first U.S. stop on the way from Panama moving up the U.S. East Coast and its last U.S. stop on the way back to Panama.
The new route should boost cargo carried in and out of the port by Florida East Coast Railway trains and by trucks, too, port officials said. The seaport handled more than 1 million TEUs last year.
The route comes after Sealand opened its headquarters in Miramar last January, pledging to invest at least $350,000 at that 13,000-square-foot site. The company received government incentives that include grants for training employees, Florida officials said.
Maersk formed its Sealand line in 2014 to handle its trade within the Americas. It has other lines for trade within Asia and within Europe.
United Parcel Service confirmed rumors that it is buying Coyote Logistics, a smaller transportation and logistics provider, for $1.8 billion in cash.
UPS said that it expected to generate $100 million to $150 million of annual operational cost cuts from the deal, which is intended to help boost UPS’s presence in the freight brokerage business.
Private equity firm Warburg Pincus owns the nine-year-old logistics company, Coyote, which contracts with more than 35,000 trucking companies and posted $2.1 billion in sales last year.
"The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments," David Abney, UPS’s chief executive, said in a statement. "This high-quality acquisition significantly increases UPS full-truckload scale and we are uniquely positioned to take advantage of exciting new revenue growth and synergy opportunities."
Judge rules Seattle port can host Shell’s Arctic drilling rigs
A King County judge has affirmed Shell's right to park its Arctic drilling ships in Seattle. On July 31st, Judge Douglass North shut down an environmental coalition's challenge to the lease — thereby allowing that one of Shell's Arctic drilling rigs can return to Seattle in the fall.
The environmental coalition — including Earthjustice, the Sierra Club, the Seattle Audubon Society, the Puget Soundkeeper Alliance, and the Washington Environmental Council — argued that the Port of Seattle pulled an illegal shortcut around a full environmental review for the lease at Terminal 5 that provides off-season space for Shell's Arctic fleet.
"The judge’s ruling confirms what we’ve known all along: Terminal 5 is properly permitted to tie up these vessels, sometimes for extended periods," Paul Queary, a spokesperson for Foss Maritime, said. "We look forward to the hearings examiner reaching the same conclusion."
The container ships Northern Democrat and MOL Empire collided in Westport harbor in Port Klang, authorities said.
The incident took place as one of the ships was maneuvering for berthing at the quay. The collision caused several containers to fall overboard and a shore crane was damaged.
The cause of the collision was attributed to high speed and strong wind, which led to the drifting of the MOL Empire over the already berthed Northern Democrat. Both ships were damaged, but not enough to cause any problems with stability and seaworthiness.
Even so, both vessels were detained for inspection and further investigation.
Drewry: Container market will slow on decreased China demand
The dry bulk market dropped due to a slowdown in Chinese demand, according to the latest issue of Container Insight Weekly from Drewry Maritime Research. Drewry researchers say the container market will also likely react to the slowed Chinese economy, but not as strongly.
Greater China represents approximately 30 percent of all container moves in the world, having nearly doubled its share since the start of the century when its expansion was given a boost following entry into the World Trade Organization.
Clearly, with such a large market share, the direction of the Chinese economy has a huge bearing on world port throughput growth. Although the IMF has kept its forecast for China with GDP growth pegged at 6.8 percent for 2015 and 6.3 percent in 2016, the slowing trend has prompted Drewry to downgrade its outlook for Greater China, and subsequently, world container traffic.
Drewry estimates that China container imports only grew by 1.6 percent last year, whereas exports rose by 9.1 percent. The net effect was that total volume growth was unchanged at 5.6 percent.
The latest WTO data suggests that China’s merchandise imports were down by 15.5 percent in the first six months of 2015, whereas merchandise exports managed a 1.0 percent rise.
Against this slowing inbound backdrop, Drewry has cut its 2015 growth forecast for Greater China port throughput from 5.8 percent to 4.9 percent, which represents a shortfall of approximately 1.85 million TEUs, or roughly 1 percent of world traffic in 2014.
In conclusion, Drewry said risks from a slowdown in Chinese consumption to container shipping are far smaller than for the dry bulk sector, but they are not insignificant and will contribute to slowing global container growth.
Minister: Suez Canal revenues to increase by 9 percent
Revenues from the Suez Canal should receive a 9 percent boost during the 2015/2016 fiscal year, thanks to a new shipping lane opening this week, according to minister of planning Ashraf El-Arabi.
El-Arabi added that around a million job opportunities will be created within 15 years through planned projects in the Suez Canal's industrial and logistics hub.
Egypt's revenues from the canal dropped 4 percent in June compared to May, according to official figures.
The waterway, which connects the Mediterranean and Red Sea, is the shortest marine route between Asia and Europe. It is one of Egypt's main sources of foreign currency, along with tourism and remittances from Egyptian expatriates.
Last year, president Abdel-Fattah El-Sisi announced the digging of a new $8 billion waterway to enable two-way traffic in the canal.
The 72-kilometer shipping lane will be officially opened in a ceremony on August 6.
Virginia Port Authority to buy property next to Norfolk terminal
The Virginia Port Authority is in the process of purchasing a strategically located piece of property on Hampton Boulevard, which backs onto Norfolk International Terminals.
The port board last week signed off on a resolution authorizing the purchase of the former Acosta building. Port officials have the okay to spend up to $3.15 million on the nearly 3-acre site, which includes an 84,000-plus-square-foot office/warehouse building, built in 1968.
The property, which as of July 1 was assessed at nearly $5.2 million, was auctioned off in a foreclosure sale last fall to an Ohio company that paid $1.8 million for it, city records show.
The building is zoned for commercial use, not industrial.
John Milliken, who chairs the port authority board, said the pending acquisition is a "short-term tactical thing," a way to move some of the uses now behind the security gate at NIT to a place where users don’t need to go through security first.
As the scale of global trade gets bigger, many small and midsize U.S. ports, such as the Port of Portland, face the prospect of falling off the map entirely, according to The Wall Street Journal.
Barges loaded with Idaho-grown produce used to regularly travel downriver to Portland’s port, the first leg in a journey that would end in supermarkets and restaurants across Asia and Europe.
But now Idaho’s farmers — along with Oregon’s grass seed growers as well as manufacturers and other exporters across the Pacific Northwest — need a new route to the global market.
The last major container shipping line ended its Portland run in March, leaving the city without regular ocean-bound container service for the first time in four decades. Exporters who relied on the port say their transportation costs soared overnight.
Fearing a similar slide into irrelevance, port operators from Newark, N.J., to Long Beach, Calif., are spending billions of dollars to dredge harbors, raise bridges and build larger terminals to accommodate megaships.
Portland’s woes have created hardships for farmers and other exporters who say they are paying much more to send their crops 150 miles north to the Seattle area. Portland officials estimate that an additional 1,700 heavy trucks are carrying cargo north on the main regional freeways each week, causing traffic snarls.
Some ports are taking steps to avoid Portland’s fate.
Over the next 10 years, the South Carolina Ports Authority and the State of South Carolina plan to spend a combined $2 billion at the Port of Charleston to build a container terminal, deepen its channel and expand road and rail access. The Port Authority of New York and New Jersey is raising the Bayonne Bridge connecting the states to allow larger ships to pass underneath. The goal in both cases: attract the business of mega container ships.
Four Chinese sailors fell into the sea Tuesday morning as rough waves caused their 50-meter-long cargo vessel to tilt to one side and sink.
The four mainland Chinese men were navigating in Hong Kong waters on their way to Dongguan, Guangdong province, when they were hit by big waves at about 5.15 a.m.
All four were plucked out of the water by marine police and then ferried to Tuen Mun Hospital, where they were discharged after treatment.
For more of the South China Morning Post story: www.scmp.com
Thursday, August 6, 2015
NOL sale a bargain with modern fleet
Photo credit: Andreas Spörri
Singapore’s Temasek Holdings' sale of Neptune Orient Lines offers potential buyers a modern fleet at a bargain — around $2 billion, according to industry and banking sources.
However, NOL has lost more than $1 billion in four years and may be up for sale at a time when the container shipping industry is in the grip of a severe prolonged downturn. The global sector's debt has nearly doubled to $86 billion over the past decade, said Rahul Kapoor, Singapore director of Drewry Equity Research, with spot Asia-to-Europe and trans-Pacific container freight rates near six-year lows.
Still, industry sources say NOL's new ships and 2.8 percent share of the global container shipping business will appeal to players seeking an edge over rivals. United Arab Shipping Company is expected to join Hapag-Lloyd and Hamburg Süd in running the rule over NOL, sources said.
Temasek, with nearly $200 billion in assets, reportedly hired Citigroup to seek buyers for the majority stake in NOL, bought in 2004 for $2 billion, triggering the sale of the whole firm under Singapore rules.
Buyers would need to offer at least 30 percent more than NOL's current market value of about $1.8 billion - the usual premium paid to acquire a publicly traded company, bankers said. Both Citi and Temasek declined comment.
The port commissions of Seattle and Tacoma voted unanimously Tuesday to form the Northwest Seaport Alliance, unifying the ports’ marine cargo divisions.
Both ports have faced increased pressure from British Columbia and Southern California, losing market share in the container business. The Seaport Alliance is an effort for the ports to keep their operations competitive.
"We have moved from fierce competitors to bold collaborators," Port of Tacoma commission president Don Johnson said in a statement. "We recognize how critical the maritime industry is to our state’s economy, and we are proud and excited to strengthen it even more."
While the ports remain separate organizations and retain ownership of their respective assets, they formed a port development authority to manage the container, breakbulk, auto and some bulk terminals in Seattle and Tacoma.
The alliance doesn’t include the airport; cruise business; marinas, such as Fisherman’s Terminal; grain terminals and industrial real estate.
French shipping giant CMA CGM said this week it would resume operations to Iran following the deal between Tehran and world powers over the Middle Eastern country's nuclear program.
"Following the recent positive developments involving Iran and the P5+1 Group - comprising the U.S., China, France, the UK, Germany and Russia - and with the conclusion of the joint comprehensive plan of action, CMA CGM Group has decided to resume service to Iran starting (at the) beginning August 2015," it said in an email.
Tyson cuts annual profit projections on W.C. port disruptions
Tyson Foods, the biggest U.S. meat processor, cut its full-year profit forecast after posting its slowest sales growth in nine quarters as customers overseas refused to accept shipments delayed by West Coast port disruptions.
During the disruptions, Asian buyers were importing meat from other countries and became overwhelmed with supply after the port issues ended in February, Tyson Chief Executive Donnie Smith said on a call on Monday.
Tyson was forced to cut prices and take a hit to margins in the third quarter to clear "significant" inventory, said Smith, adding that conditions had not improved much so far in the current quarter.
The company's shares, which have been trading at record highs over the past month, fell nearly 11 percent.
B.C. port truckers go to court over enforcement of agreement
When B.C. truckers went on strike in March 2014, it cost the local economy millions of dollars. As a result of the prolonged strike, reforms were made and a new port trucking commissioner was appointed.
But now, truckers are saying the commissioner, Andy Smith, has refused to enforce the new provincially-imposed minimum rates companies must pay.
"Drivers went back to work on the promise that they would be paid higher rates from April 3rd of last year," says Unifor B.C. area director Gavin McGarrigle. "The province eventually put that into law and now we’ve written to the commissioner to ask him to enforce the law and he doesn’t seem interested in it. So we’re left with no choice but to go to court to try to get the money that’s owed to the container truck drivers."
This week Unifor, the union representing container truck drivers, filed an application in court asking that truckers get what they are owed and also that Smith step aside as commissioner.
Along with being port trucking commissioner, Smith is also the president of the B.C. Maritime Employers Association, which represents employers at the port. Unifor says Smith’s role with the employers association is a conflict of interest.