Cargo Business Newswire Archives
Summary for August 4 through August 8, 2014:

Monday, August 4, 2014

Senate passes House transportation bill

The Senate passed the House version of the transportation bill Thursday, extending federal funding to states for transportation infrastructure projects for another 10 months through May 2015.

If Congress had failed to act by August 1, federal monies pledged to states for crucial road and bridge projects would have been immediately cut.

Although the Senate had sent an amended bill to the House Tuesday due to objections about the House version using funding sources that might destabilize pension funds, the House insisted on its own version, rejecting the Senate bill in a 272-150 vote.

The new measure will transfer $10.8 billion into the Highway Trust Fund, largely funded through a budget move known as pension smoothing, which allows companies to contribute less to their pension plans. The tactic raises money for the government, because companies lose out on the tax deduction associated with pension contributions.

The rejected Senate bill would have funded the programs only through Dec. 19.

The bill will now go to President Obama, who said he would sign it into law.

The highway fund has nearly spent its reserves because the gas taxes that have traditionally funded it haven't kept up with spending.

For more of the Wall Street Journal story: online.wsj.com

Ports America and "K" Line to acquire 30 percent stake in ITS

Ports America and Kawasaki Kisen Kaisha are partnering to purchase a 30 percent stake in terminal operator International Transportation Service, according to Ports America, which said the deal will likely go through in late August.

ITS, a subsidiary of "K" Line, has operated port container terminals in Long Beach and Tacoma for more than 40 years.

Ports America, the largest terminal operator and stevedoring company in the
country, provides stevedoring services to "K" Line in Oakland for container ships and in Jacksonville, Newark, Brunswick and Charleston for car carriers.

"We are pleased to extend our relationship with "K" Line through this investment," said Michael Hassing, Ports America president and CEO, in the statement. "Ports America realizes the significance of innovation and the need for continued capital improvement and expansion."

The two firms plan to integrate Ports America's technology and safety programs into ITS gate, yard and vessel operations after regulatory approval, the statement said. Ports America reports its management team also will apply its business development and market growth strategies to ITS' terminal business.

Asia-Northern Europe rates up 21 percent

Freight rates on the Asia-Northern Europe trades surged 21 percent to $1,455 per-TEU in the week ended August, according to the Shanghai Containerized Freight Index.

It was the first time rates on route increased since July 4, when they jumped 28 percent. So far in 2014, container freight rates have increased in 10 weeks of the year and decreased in 21 weeks.

Average rates for 2014 on the routes are $1,278 per-TEU compared with $1,090 in 2013. The comprehensive index rose 13 percent to $1,195 per-TEU.

Last month, Maersk Line said it would raise Asia-Europe freight rates by $450 per- TEU as of Aug. 1.

For more of the Reuters story: reuters.com

U.S. blacklists North Korean shipping companies

On Wednesday the U.S. blacklisted two North Korean shipping companies, saying that they attempted to conceal arms shipments from Cuba to North Korea, after the United Nations also sanctioned the firms.

The Treasury Department imposed sanctions on Chongchongang Shipping Company, owned by the North Korean government, and the Ocean Maritime Management Company, which tried to conceal the weapons and provide false documents to authorities in Panama. It also blacklisted 18 ships in which the firms have an interest.

The vessel Chong Chon Gang was found in July 2013 near the Panama Canal hauling a large amount of weapons, including two MiG-21 jet fighters hidden under 200,000 bags of sugar, which the U.S. said demonstrated a clear effort to get around U.N. and U.S. sanctions against North Korea.

North Korea has been under a number of sanctions since 2006 for testing nuclear and ballistic missiles in defiance of world demands to stop.

"The Chong Chon Gang episode, in which (North Korea) tried to hide an arms shipment under tons of sugar, is a perfect example of North Korea's deceptive activity, and precisely the sort of conduct that we are committed to disrupting," David Cohen, the U.S. Treasury Department's undersecretary for terrorism and financial intelligence, said in a statement.

For more of the Reuters story: reuters.com

Ship discovered under World Trade Center site from 1770s

The ship uncovered at the World Trade Center site in 2010 actually dates back to 1773, scientists have determined.

They found the wood was made from a forest of white oaks in Philadelphia, the same type of trees used to build Independence Hall.

"Therefore, the ship's construction date of 1773 is important in confirming that the hull encountered at the World Trade Center represents a rare and valuable piece of American shipbuilding history," said researchers at Columbia University's Lamont-Doherty Earth Observatory.

The ship was buried as landfill 200 years ago in an attempt to expand Manhattan, and re-emerged from the mud near ground zero four years ago.

A 32-foot piece of the vessel was found in 2010 in the earth 20 feet below street level, as bulldozers excavated a parking garage for the future World Trade Center.

For more of the WABC-TV story: 7online.com

 

Tuesday, August 5, 2014

ILWU and PMA try to hash out who will pay health care taxes

As West Coast port labor talks continue between the International Longshore and Warehouse Union and the Pacific Maritime Association this week, negotiations have been complicated by provisions in the Affordable Care Act that tax premium health care plans such as the ones provided to dockworkers at West Coast ports.

The ILWU and the PMA are discussing how the $150 million tax on health insurance for the 20,000 port workers should be paid—whether workers, shippers or both should foot the bill for the ACA's 40 percent tax on high-end health care plans that will go into effect in 2018.

The health-care tax is a frustrating issue for both the union and employers because it could set a precedent, according to Nelson Lichtenstein, director of the Center for the Study of Work, Labor, and Democracy at the University of California at Santa Barbara.

"The ILWU is really one of the first unions to negotiate this," Lichtenstein said in a telephone interview. "It could set a precedent for other workers in other industries if the ILWU has to eat this."

Employers will have to decide whether to lower health benefits below the threshold to avoid the tax or try to shift the cost to workers, said J.D. Piro, a senior vice president at consulting firm Aon Hewitt who leads the company's health-benefits practice legal group.

"This will come up in just about every contract negotiation out there," Piro said by telephone. "Every employer is going to be calculating when and if they hit the threshold and how they're going to pay for this."

Union spokesman Craig Merrilees and PMA spokesman Wade Gates both called health care a major issue in contract negotiations, but declined to provide their bargaining strategies.

The ACA imposes a 40 percent excise tax on health insurance plans that cost more than $10,200 in annual benefits for individuals and $27,500 for families, indexed for inflation.

Merrilees said the two parties have been making progress toward a new contract since talks began in San Francisco in May. He didn't say whether the agreement would be for six years or less.

Longshore workers have continued working at West Coast ports since their contract expired July 1, first under an extension of the terms and currently without a contract.

For more of the Bloomberg story: businessweek.com

FMCS: Labor talks between ILWU and PNW grain terminals continue

Labor negotiations continue between the International Longshore and Warehouse Union and Pacific Northwest grain terminal employers, according to a statement from the Federal Mediation and Conciliation Service.

The FMCS said that bargaining between the grain group and the ILWU is receiving mediation assistance from FMCS Acting Director Scot Beckenbaugh.

The agency reports that the parties have held lengthy discussions addressing the issues that separate them and that further bargaining is planned for August 10 and 11.

The Federal Mediation and Conciliation Service is an independent U.S. government agency that provides mediation and conflict resolution services to industry, government agencies and communities.

Drewry: Container leasing sector growth increases in 2013

The container leasing sector expanded in 2013 due to continuing weakness in shipping line financials, according to Drewry's recently published Container Leasing report, which forecasts that the trend will continue.

Leased containers expanded 7.3 percent in 2013, Drewry says, outpacing the 2 percent growth recorded by the container fleet owned by transport operators, most of whom are container carriers. This brought the lessors' share of worldwide inventories to an eight-year high of 46 percent, according to the report, which marked a 6 percent gain in 2009.

"The leasing sector's fleet growth has outpaced that of owner operators for each of the four years since the worldwide recession of 2009," said Andrew Foxcroft, who wrote Drewry's Container Leasing report. "This is because the changed financial climate has left the container shipping industry heavily in debt and unable to easily access capital for investment. Carriers have been forced to turn to the leasing sector to renew their container equipment fleets."

Drewry said most of last year's growth in the leased fleet can be attributed to investment in new container equipment, but there were other reasons that contributed to the rise.

"Purchase of used equipment from cash-strapped shipping lines, by way of sale and lease-back, also helped propel the leasing sector," added Foxcroft. "This action, together with operators' more limited investment in new equipment, explains why shipping lines' more recent rate of fleet growth has been so small."

Of the various container equipment categories, lessors appear to be gaining most ground with reefers, Drewry said, estimating that the leased reefer fleet doubled in the four years to 2013 and grew its share of the overall fleet from 30 percent to 40 percent over the period.

On the down side, Drewry's report highlights that rental cash returns from the lease of new equipment fell to a new low in 2013.

"The recent rate erosion has been due to the expansionist antics of top leasing firms," said Foxcroft, "most of which are still chasing market share growth in order to maintain investor interest and draw in further capital funding for investment."

Drewry predicts that growth in the container leasing fleet will continue to outpace that of the owner operator sector. But the gap between the two is expected to narrow as shipping line finances improve and they commit to more direct investment.

Port of NY/NJ sets cargo record in first half

The Port Authority of New York and New Jersey announced that its cargo volumes set a record for the first six months of 2014.

The port authority reported 4 percent growth in container traffic from January through June of 2014. That includes a 5.4 percent hike in imports and a 14.3 percent boost in empty containers during that six-month period.

Since the start of 2014, the port said it handled 1,583,449 TEUs, up from 1,523,273 year-over-year and 35,000 TEUs more than the six-month record set in 2012.

The statement reports that ship-to-rail system ExpressRail showed a 5.1 percent increase in total lifts during the same period. More than 14 percent of total port traffic is currently transported by rail.

"Improving port infrastructure – including the raising of the Bayonne Bridge – and boosting productivity by implementing recommendations made by the Port Performance Task Force are critical to handling the growth in international cargo coming to the port," said Pat Foye, the executive director of the port authority, in the statement. "That's why we are investing more than $1 billion dollars to ensure that our port maintains its competitiveness and drives job growth for the region."

West Texas cargo train derailment injures 2

A freight train and a water-hauling truck in West Texas collided near Barstow, leaving two people hurt and more than a dozen cars and locomotives derailed.

Three locomotives and 10 cars derailed Sunday afternoon but remained upright, according to Union Pacific Railroad spokesman Jeff DeGraff. He said the trucker was taken to an Odessa hospital and his condition is currently unknown, and a conductor who had a minor arm injury didn't require medical attention.

Crews worked Monday to repair and reopen the line.

The eastbound train was hauling containers from California to Shreveport, Louisiana, when the collision occurred at a rural crossing.

For more of The Eagle story: theeagle.com

 

Wednesday, August 6, 2014

IANA: Intermodal sector gains in Q2 indicate recovery

In the second quarter the intermodal sector posted gains across all segments, according to the latest Intermodal Market Trends and Statistics report issued by the Intermodal Association of North America.

The report said that international containers grew by 9.6 percent, trailers by 4.3 percent, and domestic containers by 7.6 percent quarter-over-quarter, signaling that the intermodal industry is recovering from the unusually harsh winter and contracted economy.

Due in large part to a strong second quarter, the IANA observed the first half of 2014 averaged 5.5 percent in total intermodal volume gains, just under the 5.8 percent growth posted in the second half of 2013.

"The second quarter results were indicative of a rebounding economy and higher than predicted import shipments," said Joni Casey, president and CEO of IANA. "It is also probable the harsh winter that resulted in constricted Q1 capacity contributed to the second quarter's strong growth, by comparison."

The seven highest-density trade corridors, accounting for 66.2 percent of total intermodal volume, rose 7.4 percent this quarter, falling below the 8.2 percent industry average, IANA said. The Trans-Canada corridor led the way in corridor growth with a 10.5 percent quarter-over-quarter increase, according to the report

The Midwest and Southwest, which the IANA says are two regions that account for almost 50 percent of total loadings, rose 6.3 percent and 7.8 percent, respectively, in the second quarter.

Intermodal marketing companies posted Q2 growth rates that were less than the overall intermodal volume numbers, the report noted, growing 2.4 percent from last year. IMCs benefited, in part, from the increased imports based on transloading opportunities.

Shipping company Pasha competes with Matson for Hawaii market

Shipping company Pasha plans to introduce a second containership in the Hawaiian market in late 2014, trying to gain a foothold in a market that has been dominated by Matson—transporting goods to and from the U.S. Mainland.

"Absent of the Pasha entry, Matson's market share has bounced around a few points but has remained steady over time," said Matt Cox, Matson's president and CEO. "We do expect a loss of some cargo when Pasha introduces its second vessel … Exactly where that settles out is unclear."

Cox said the second vessel would add between 5 to 10 percent container-carrying capacity to the market.

Pasha currently has one Ro-Ro vessel, the Jean Anne, which travels between Hawaii and the Mainland. The new ship, the 692-foot M/V Marjorie C, is currently being built in Pascagoula, Mississippi, according to Pasha spokeswoman Emily Sinclair.

"The Marjorie C is a versatile combination vessel capable of carrying autos and larger rolling stock, construction equipment and material as well as containers," said Sinclair. "Due to significant new construction projects, we anticipate the Marjorie C will be quite busy as she starts in service before the end of the year."

For more of the Pacific Business News story: bizjournals.com

Panama Canal expansion could spike insurance costs

The Panama Canal expansion could result in more than $1.25 billion in additional insured goods passing through the canal in a single day, according to a new report from insurance company Allianz Global Corporate and Specialty.

The Panama Canal expansion, expected to open in 2015, will let an additional 12-to-14 larger vessels traverse the canal per day, which amounts to about 4,750 extra ships per year, according to AGCS.

The firm's new report, "Panama Canal 100: Shipping Safety and Future Risks," reports that the surge in the volume of cargo will increase the loss potential of any possible casualty, which could lead to disruption to the supply chain. Their premise is based on the fact that larger vessels can pose serious salvage challenges in a congested shipping environment, potentially leading to back-ups.

The wider canal will let 12,600-TEU vessels through the new locks. Right now only container vessels with a maximum capacity of 4,400 TEUs can get through.

The increased size of vessels will play a vital role in increasing canal throughput capacity from 300 million Panama Canal Universal Measurement System tons to 600 million PCUMS tons, AGCS says. One Panama Canal Universal Measurement System ton is approximately 100 cubic feet of cargo space. One TEU is equivalent to approximately 13 PCUMS tons.

This increase in volume will have a big effect on the insured value of goods transported through the canal, especially on the mammoth New-Panamax ships, which are as long as four football fields, according to the report. In the event of an accident, the report says, there could be a dearth of qualified salvage experts available to handle the mega ships.

"Larger ships automatically pose greater risks," says Captain Rahul Khanna, AGCS global head of Marine Risk Consulting. "The sheer amount of cargo carried means a serious casualty has the potential to lead to a sizeable loss and greater disruption. For example, a fully-loaded new-Panamax 12,600-TEU container ship is as long as four football fields with a beam of up to 160 feet and could have an insured cargo value alone of $250 million."

The report says the regional impact of an incident with bigger ships is also of concern. With larger ships on the move in the surrounding region, an incident could also affect traffic at major ports in the U.S., resulting in a potential increase in the disruption of the flow of goods and insurance losses. In addition, a number of U.S. terminals on the East and Gulf Coasts are exposed to hurricanes. AGCS also says port operating procedures will have to be reviewed with regard to wind and weather constraints given the tight operating margins that these ships will be facing.

AGCS believes training is key to offsetting the new risks, both in the canal region itself and in affected ports.
 
"The expansion of the Panama Canal will represent a new shipping environment for many mariners," Khanna said. "Due to the increase in the number of larger vessels passing through this important waterway the level of training provided to pilots will be extremely important. Attempting to maneuver one of these vessels through such a restricted space in itself creates a much bigger hazard."

For more of the report: agcs.allianz.com

2014 International Seafarers Center benefit on Queen Mary, September 30

The 2014 Maritime Industry Salute dinner and "14th Annual Boat Races of San Pedro Bay" fundraising event, a benefit for the International Seafarers Center, will occur September 30 aboard the Queen Mary in Long Beach, California.

This year's events will honor William H. Collier, Jr., of counsel for Keesal Young and Logan, a well-respected member of the global trade and maritime industry. Shane Murphy will be a featured guest at the dinner. Murphy, who was the first mate of M/V Maersk Alabama, became responsible for saving the crew when he took command of the vessel after Somali pirates hijacked the ship in 2009 and took Captain Richard Phillips hostage.

The ISC is the last open center serving the needs of all seamen in the ports of Long Beach and Los Angeles. The organization reaches out to visiting ships' crews throughout the Los Angeles/Long Beach harbor complex, offering transportation, recreation, spiritual outreach, and communication services.

"The ISC, which first opened more than 32 years ago, provides humanitarian services to all international seafarers in the ports of Long Beach and Los Angeles," said Guy Fox, ISC dinner chair and president/CEO of Guy Fox & Associates, Inc. "This fundraiser is the primary source of funds that sustain the ISC. We are calling upon the generosity of the maritime industry and the local business community to support the ISC through this effort."

For tickets and sponsorship info, contact Pat Pettit at iscpolb.la@verizon.net

Container ship crew stranded on the Delaware

A Greek-based cargo ship with 20 crewmembers on board has been anchored in the Delaware River for almost 16 weeks, caught in a predicament with the U.S. Coast Guard demanding operational repairs and an owner who has not paid bills since April.

The Nikol H needs more repairs before sailing, and the owners allegedly owe as much as $1.2 million, which has prompted vendors and others to sue to recover costs for providing fuel, food, and supplies while the ship has been here.

The visas of the crewmembers have expired, so they are not allowed to go ashore for recreation or shopping.

But several of the original sailors, whose contracts expired, were allowed by U.S. Customs to go home. New crewmembers replaced them.

The Seamen's Church Institute has provided the sailors with cellphones to call home, Internet service, and chaplain visits. The crew are getting paid and receive supplies from the ship agent, G.M. Richards Enterprises.

"Morale is OK," said Capt. Ali Affar, reached by telephone. "The crew are getting paid on time. Provisions are on time. We don't have any problems. We receive also fresh water supply.

The ordeal began April 11 when the Nikol H, owned by an operating company in Piraeus, Greece, unloaded 13,521 tons of cocoa beans at Pier 84 in South Philadelphia.

For more of the Military.com story: military.com

 

Thursday, August 7, 2014

Egypt to build new $4B Suez Canal

On Tuesday, Egypt announced plans to dig a new Suez Canal right next to the existing one in a $4 billion dollar project meant to boost trade on the fastest shipping route between Europe and Asia.

The army-run project is a big move by new President Abdel Fattah al-Sisi to rekindle Egypt's struggling economy by upgrading the 145-year-old waterway.

"This giant project will be the creation of a new Suez Canal parallel to the current channel of a total length of 44.74 miles," Mohab Mamish, authority chairman, told a conference in the port city of Ismailia.

The Suez Canal earns Egypt about $5 billion annually, important for a country that has suffered a reduction in tourism and foreign investment since the 2011 uprising.

The new canal is expected to increase annual revenues to $13.5 billion by 2023, according to an official in the Suez Canal Authority.

Mamish said the total estimated cost of drilling the new channel would be about $4 billion and should be completed in five years, although Sisi said he hoped it would be finished within a one-year deadline.

Former army chief Sisi took power last year after deposing elected Islamist President Mohamed Mursi and has since overseen a massive crackdown on Mursi's Muslim Brotherhood.

For more of the Reuters story: uk.reuters.com

U.S. regulators approve Hapag-Lloyd/CSAV merger

U.S. regulators have sanctioned the merger of Germany's Hapag-Lloyd and Chile's Compania Sud Americana de Vapores, which will form the planet's fourth-largest container carrier by capacity, according to a Hapag-Lloyd spokesman.

"The Department of Justice and the Federal Trade Commission have approved the merger," said Rainer Horn, Hapag-Lloyd's director of public relations, to The Wall Street Journal. "We are still awaiting approvals from a number of other regulatory bodies."

Insiders expect European Commission and Chinese regulators to approve the merger over the next two months. The two companies, which signed a contract in April, have said they expect the merger to be completed by November.

Hapag-Lloyd operates about 150 ships, competing with Maersk and MSC on the Asia-Europe, trans-Atlantic, and trans-Pacific trades. CSAV operates about 50 vessels. Industry officials say the merger would give Hapag-Lloyd more exposure in intra-South American and South America-U.S. markets.

CSAV said the combined company would have a capacity of one million TEUs.

For more of the Wall Street Journal story: online.wsj.com

Indonesia's Pelindo II secures $1.25B loan for port expansion

State-owned Indonesia Port Corporation, also known as Pelindo II, announced plans to raise a syndicated loan of $1.25 billion to fund the expansion of North Jakarta Port.

"Hopefully the government will grant the permission by this week," said R.J. Lino, Pelindo II's president director, adding that the company expects to sign the loan agreement next week.

Lino said the deal involves six lenders with Deutsche Bank as the lead arranger of the syndicate.

The Pelindo II expansion will focus on the construction of Kalibaru Port, also known as New Tanjung Priok Port. The first phase of Kalibaru Port construction should begin operations by 2017, adding 4.5 million TEUs of capacity to the existing Tanjung Priok Port.

The company's $1.51 billion investment is expected to increase the port's existing capacity by 300 percent by 2023.

For more of the Jakarta Post story: thejakartapost.com

Army Corps to clear path for barges on the Mississippi

The Army Corps of Engineers is leading a massive effort to remove silt and sand deposits in the bed of the Mississippi River in Minnesota, clearing the way for hundreds of commercial barges hauling millions of dollars of cargo to make their way to downstream markets.

The sediment, left behind by flooding from heavy seasonal showers, has delayed shipments up and down the river, according to Steve Tapp of U.S. Army Corps of Engineers. Tapp said this year's work and the barge backup is the worst in his 25 years of cleanups.

The corps used four dredges to churn up huge deposits near the southern Minnesota towns of Winona and Wabasha, vacuuming them up and spewing them onto boats to be carried to shore.

The delays have extended close to the grain harvesting season, a time when barges transport wheat, soybeans and corn exports from the Midwest down to the Gulf Coast.

"We are looking at a very large grain crop. That has got people on pins and needles," said Jerry Fruin, a retired economics professor from the University of Minnesota.

A harsh winter kept Lake Pepin frozen into the start of the 2014 shipping season, blocking Mississippi traffic, and then heavy rains in April, June and July raised the river too high for some locks, dams and dredging equipment to operate.

As the waters receded, they dropped shoals of sediment throughout the river.

"When the water dropped out, it dropped out fast. It left a lot of problems with us," Tapp said.

For more of the The Republic story: therepublic.com

2 dead, 100 missing after ferry sinks in Bangladesh

On Monday, after a 200-passenger ferry sank in Bangladesh southwest of the capital city of Dhaka, approximately 100 people were missing, according to the chief of the district administration.

About 100 passengers were rescued from the vessel after it capsized in the Padma river, said Mohammad Sinful Has an Basal, deputy commissioner of Munshiganj district.

Two women that were taken to hospital died and the remainder of those on board were unaccounted for, he said.

"Most of the passengers were coming back to the city after celebrating Eid al-Fitr," Saiful told Reuters, referring to the festival that marks the end of the Ramadan fasting month.

Low-lying Bangladesh, with broad inland waterways and weak safety regulations, has a dreadful record of ferry accidents, with casualties sometimes running into the hundreds. Overcrowding is a common factor.

For more of the Reuters story: reuters.com


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