Cargo Business Newswire Archives
Summary for August 6 - August 10, 2012:

Monday, August 6, 2012

Top Story

Maersk Line to rally in 2013, says CEO

According to the head of A. P. Moller-Maersk, Nils Smedegaard Andersen, Maersk Line will recover in 2013 despite its tepid performance this year.

Container shipping has been hit hard due to sluggish world markets, high fuel costs and overcapacity. Companies have struggled to make a profit due to plunging freight rates, which have just started to rally this year.

"Although we are not as well positioned as we hoped to be a year ago, the early signs are positive and I am optimistic that Maersk Line will be in a much stronger position in a year's time," Andersen said in the company magazine. He added the container line is striving to restore rates to sustainable levels by expanding only as much as the market will allow and by reducing costs wherever it can.

This is one part of a four-part strategy that A. P. Moller-Maersk launched in February 2011, when it invested $12.23 billion in its four core businesses — container shipping, oil and gas production, oil services and ports operations.

A.P. Moller-Maersk’s oil services business, which includes drill ships, supply vessels and oilrigs, received the highest allotment at $4.75 billion. $3.98 billion went to the company’s oil and gas business, $1.90 billion went to Maersk Line and APM Terminals received $1.61 billion.

The parent company, which will report results for the first half of 2012 on August 14, has predicted a profit for 2012 that is just a little lower than 2011’s $3.4 billion.

For more of the Reuters story:

Orient Overseas profits plunge 33 percent

Hong Kong’s Orient Overseas saw profits plunge 33 percent in the first half of 2012 due to high fuel costs, the company announced Wednesday.

The container line’s net income dropped to $117 million from $175 million year on year, according to a company statement. Sales increased by 7 percent to $3.1 billion.

Orient Overseas said it paid approximately $689 per ton for fuel in the first half, 16 percent more than during the same time period in 2011.

Shipping lines have raised rates to balance higher fuel costs and vessel overcapacity. Even so, CFO Kenneth Cambie said in the fourth quarter rates may fall again after the peak season.

Asia-Europe route rates have doubled year on year to $1,888 per-TEU on June 30, according to Geoffrey Cheng, a Hong Kong-based analyst at Bank of Communications, up from the $1,660 per-TEU rate at the end of March.

The company handled 2.59 million TEUs in the first half, a 6.1 percent increase from a year earlier, it said in a July statement.

For more of the Bloomberg story:

Hanjin returns to Port of Portland, union dispute continues

Starting Saturday, Hanjin Shipping will go back to calling weekly at the Port of Portland after circumventing the port for the past month.

The company was waiting for the port’s labor dispute to be resolved before resuming service there, but the union conflict is ongoing.

The longshoremen’s union and the electrician’s union are battling in court over which labor union has jurisdiction over two jobs plugging, unplugging and monitoring refrigerated cargo containers, reefers, at the port. Right now, under a temporary arrangement, workers from the longshoremen’s union will be performing the two disputed jobs.

Whether or not Hanjin continues to call weekly depends on whether the cargo is unloaded and loaded at a suitable speed on Saturday. The last Hanjin ship that called at Portland in June experienced significant delays.

Hapag-Lloyd, which also went on hiatus due to dock delays, resumed service to Portland after two weeks, although it is reevaluating the situation each week.

Meanwhile, on Tuesday testimony continued in federal court regarding the International Longshore and Warehouse Union's tactics in the dispute. The National Labor Relations Board accused ILWU of using work slowdowns to pressure terminal operator ICTSI to hand over the reefer work. The trial is currently on hold until August 20.

For more of the Oregon Live story:

$250 million asset-backed container lease indicates new funding trend

SeaCo’s $250 million shipping container-lease is an asset-backed debt, a funding departure from the typical acquisition finance method of bank loans and bonds.

SeaCo’s transaction, sold to the market by Deutsche Bank, Bank of America Merrill Lynch, and Wells Fargo, points to a growing trend in the industry.

China’s HNA group acquired container-lease company GE SeaCo from General Electric in December. HNA paid $1.05 billion a share for GE SeaCo, the fifth-largest intermodal container lessor in the world. The financing was syndicated to a group of 12 banks, which meant they all shared the risk.

This week’s asset-backed market offering, secured by the lease payments on a portfolio of shipping containers, is the first “term ABS deal,” lowering and replacing the syndicated securitization funding.

"This transaction almost has the look of a leveraged finance transaction, but it's a true non-recourse offering repaid by the cashflow of the containers," said a senior ABS banker to Reuters

For more of the Reuters story:

Pirates kill 2 and kidnap 4 off coast of Nigeria

On Saturday two Nigerian naval guards were murdered and four staff were kidnapped off the Jascon, a ship owned by Sea Trucks Group, 33 nautical miles off the coast of Bonny, a Nigerian oil export terminal.

“An oil servicing company was attacked by gunmen. We lost two of our men and four expatriates were abducted, one Malaysian, one Iranian," said Navy spokesman Commodore Kabir Aliyu to Reuters. He said a Thai and an Indonesian were also taken. Two other security guards were wounded and have been hospitalized.

The West African Gulf of Guinea is second only to Somalia in terms of the risk of pirate attacks. Nigerian pirates usually release crew after the ship is looted.

For more of the Reuters story:


Tuesday, August 7, 2012

No Newswire today.


Wednesday, August 8, 2012

Top Story

Global container equipment fleet grew to over 31 million TEUs in 2011

The global container equipment fleet grew a better than expected 8.5 percent to 31.25 million TEUs 2011, bettering 7 percent growth the previous year, according to an industry research report.

Up to 70 percent of net additions to the container equipment fleet likely occurred in the first half of 2011 with newbuilds subsequently slowing down along with a "misreading of demand" apparently at the root of a slowdown in the final six months of the year "highlighting distinct uneven progress," according to Drewry Maritime Research's Container Census 2012 – Survey and Forecast of Global Container Units.

"Few buyers predicted an over-supply (900,000 TEUs at mid-2011, and over 500,000 TEUs end-2011) that was exacerbated by a weak peak season," the report said.

"Even so, utilization of the in-service fleet held at a very high level, topping 95 percent," the report said.

Container-to-slot operating levels have dropped to historic lows, close to a ratio of 1.8:1 in 2010-11 compared to a 2:1 ratio for the period preceding 2009, the report said.

"This has been achieved by shipping companies working their assets harder, which considering the increasing container dwell times resulting from slow steaming, is something of an achievement," said Andrew Foxcroft, author of the Container Census report.

Foxcroft forecasts annual container fleet growth will be approximately 7 percent from 2012-2015 due to shipping company-wide adoption of a tighter container-slot operating ratio, with an increase in replacement purchase compared to 2010-2011.

Leasing companies have continued to dominate fleet TEU growth since, up 10.6 percent in 2011 and 9 percent in 2009, compared to shipping lines and related transportation companies increasing 7 percent and 5.7 percent, respectively. Investment in equipment by shipping lines in particular has dropped due to lower profits and higher debt, the report said.

Newbuild dry freight pricing continued to be volatile, hitting a high of close to $3,000 per-CEU (capital equipment unit) in early 2011 when replacement cost of the global fleet was up by over a third compared to the start of 2010, the report said.

CEU values increased throughout 2011 against little change in the fleet's replacement cost due to an overall 20 percent drop in dry freight pricing compared to "the continued static level of reefer, tank costs," the report said.

The dry freight price subsequently recovered by 20 percent during the first half of 2012 to $2,750 per CEU, before declining again, according to the report.

"The outlook is for pricing to stay high, with the annualized forecast holding at $2,500 for 2012 and 2013," said Foxcroft.

Six shipping lines sign on as inaugural participants in Port of L.A.'s environmental ship index

Six container-shipping lines will become the inaugural participants in the Port of Los Angeles Environmental Ship Index, an international clean air program that rewards ocean carriers for making ship calls with newer, cleaner vessels at the port.

The Port of Los Angeles said in a statement that the ESI program, developed through the International Association of Ports & Harbors' World Ports Climate Initiative with input from the Pacific Merchant Shipping Association, is the first of its kind in North America and the Pacific Rim.

The initial shipping lines registered are Evergreen, Hamburg Sud North America, Inc., Hapag-Lloyd AG, Maersk Line, Nippon Yusen Kaisha and Yang Ming.

Registration is free for the web-based system that has already been implemented at 14 European ports.

The Port of Los Angeles said it has committed $450,000 to get the program off and running by rewarding vessel operators for voluntary engine, fuel and technology enhancements that reduce emissions from ships beyond the regulatory environmental standards set by the International Maritime Organization.

The port said up to 30 percent of the ships calling there are expected to qualify for the ESI incentives, which would cut diesel particulate matter emissions by 16 tons within the first year and reduce emissions of other pollutants such as nitrogen oxides, sulfur oxides, and carbon dioxide.

Norfolk Southern ordered by feds to pay over $300K to whistleblower

The U.S. Department of Labor announced that Norfolk Southern Railway violated provisions of the Federal Railroad Safety Act and must pay over $300,000 to an employee, or "whistleblower."

The Chattanooga-based employee reported an injury when he hit his hard hat against a horizontal support beam, according to the DOJ.

The railroad charged the employee with falsifying his injury and subsequently terminated him on Oct. 8, 2010, the DOJ said.

The employee appealed and his termination was reduced to a suspension with no back pay.

The DOJ said in a statement that OSHA found the railroad's investigative hearing "was severely flawed and orchestrated to intentionally support management's decision to terminate the employee."

As a result of OSHA's investigation, Norfolk Southern has been ordered to pay the employee $200,000 in punitive damages, $75,000 in compensatory damages, and $25,123.40 in attorney's fees. The railroad must also expunge the disciplinary record of the employee as well as post a notice regarding employees' whistleblower protection rights under the FRSA and provide training to its employees about these rights, the DOJ said.

Either party to this case can file an appeal to the Labor Department's Office of Administrative Law Judges.


Thursday, August 9, 2012

Top Story

Container, breakbulk shipping spared Panama Canal toll hike in October

The container-and breakbulk-shipping sectors were spared, for now, from newly restructured toll pricing that goes up in October at the Panama Canal.

The highly anticipated completion of the over $5 billion project to widen the Canal for larger commercial ocean-going vessels is still at least a few years away, and the waterway's authority increased the number of shipping segments from eight to ten that will have to pay the piper.

"The new structure offers price stability to the Panama Canal clients during the next two years, while the approved tolls remain below the value it offers as a safe, reliable and efficient route," said Panama Canal Authority Administrator and CEO Alberto Alemán Zubieta in a statement.

The tanker sector has been broken into three segments, while ro-ro vessels have been rolled into into the vehicle carrier segment, the ACP announced.

The Canal's new market segmentation structure includes the following breakdown: full container, reefer, dry bulk, passenger, vehicle carrier and ro-ro, tanker, chemical tanker, LPG, general cargo and "others."

The containerized and breakbulk shipping sectors were to have been included in the ACP's original toll hike proposal that was subsequently postponed October 2012 and October 2013, respectively, but 
were spared from the higher charges for the time being.

"The [container, breakbulk segments] will not be adjusted at this time, nor will the price per TEU for containers carried onboard a vessel," the ACP's statement said.

Port of Portland to pay terminal operator up to $4.7 mil in stimulus amid labor strife

The Port of Portland commission voted 6-1 this week in favor of a stimulus payout to its container terminal operator that could reach $4.7 million amid an ongoing labor dispute that has impacted the shipping business there.

The Oregonian reported International Longshore and Warehouse Union representatives objected to the port's bailout of the port's Terminal 6 operator – ICTSI – that they say is run by a billionaire in the Philippines.

One of the terminal's biggest customers, South Korea's Hanjin Shipping, will reportedly go back to calling weekly at the port after circumventing Portland for the past month as other shipping lines had done, while ICTSI waits for a labor dispute to be resolved.

The longshoremen's union and the electrician's union are battling in court over which labor union has jurisdiction over two jobs plugging, unplugging and monitoring refrigerated cargo containers at the port.

For the moment, under a temporary arrangement, workers from the longshoremen's union will be performing the two disputed jobs.

The last Hanjin ship that called at Portland in June reportedly experienced significant delays.

Hapag-Lloyd, which also went on hiatus due to dock delays, resumed service to Portland after two weeks, although it is said to be reevaluating the situation each week.

On Tuesday testimony continued in federal court regarding the International Longshore and Warehouse Union's tactics in the dispute.

The National Labor Relations Board accused ILWU of using work slowdowns to pressure terminal operator ICTSI to hand over the reefer work. The trial is currently on hold until August 20.

Bill Wyatt, executive director of the Port of Portland reportedly said the maximum stimulus payment would equal ICTSI's annual rent and would not come from tax revenues.

The one opposing vote for the port's payout was from Commissioner Bruce Holte, who is a member of the ILWU's Local 8 in Portland.

The following Oregonian sources were for this story: and

U.S. freight index fell 0.1 percent in June

For-hire freight volume dipped 0.1 percent in June compared to May, according to the U.S. Department of Transportation's Bureau of Transportation Statistics' Freight Transportation Services Index.

The bright spot was the June 2012 index level of 109.5 was 16.1 percent above the April 2009 low during the recession, although 3.9 percent below the all-time high of 114.0 in December 2011, according to the BTS report.

"The Freight TSI remained stable in the second quarter of 2012, continuing a pattern of little change since January. This appears to reflect the rate of growth in the general economy," the BTS report said.

Gross Domestic Product growth in the U.S. slowed to 1.5 percent in the second quarter and a revised 2 percent in first quarter of 2012, from 3 percent in fourth quarter of 2011, according to the Bureau of Economic Analysis.

The TSI revealed rail and truck freight growth in June, but was offset by declines other modes, most notably waterborne freight, which the BTS report could be attributed in part to the impact of low water conditions on the Mississippi River system.

Roman ship with cargo intact found off coast of Italy (incl. link to video)

A Roman trading ship that dates from between the first and second centuries B.C was reportedly found in surprisingly good condition at a depth of 230 feet in the waters off the port city of Genoa, Italy.

After a tip by a local fisherman who caught a jar from the sunken ship in his net, the Genoese police used a remotely operated vehicle to locate the ancient vessel and its cargo that has been preserved in layers of mud for centuries.

Jars of food that include pickled fish, grain, wine, and oil could reportedly be well preserved on the ship that experts think may have been working a trade route between Spain and central Italy before it sank.

For the full story and a link to a video of the archaeological find:


Friday, August 10, 2012

Top Story

NOL container line sees profits rise for the first time since 2010

Neptune Orient Lines' container division, APL, saw profits in the second quarter of 2012. These are the first profits for APL since 2010, according to Wednesday's announcement. APL experienced a bump after adjusting their freight rates higher and other cost cutting measures in the face of increasing fuel costs and overcapacity.

APL reported earnings of $7 million in the second quarter ended in June compared with a $53 million loss the same time last year. Due to $112 million in restructuring monies, parent company NOL experienced a net loss of $118 million.

The shipping division's average rates rose 3 percent in the second quarter due to improved industry cooperation that ended the destructive 2011 price wars. APL used 7 percent less fuel than a year earlier, even as volumes rose 4 percent, and saved $19 million in the first half of 2012 by refining how it returns empty containers to Asia, according to the announcement.

The company's Asia-Europe rates rose 15 percent in quarter two, and volumes dropped 4 percent. Transpacific route rates dropped 7 percent and volumes jumped 5 percent.

Container shipping lines, including APL and Maersk Line, raised Asia-Europe rates once in the first quarter and three times in the second quarter. On Asia-U.S. route, 15 lines including APL set a $500 per-TEU guideline for increases in annual contracts beginning after May, according to the Transpacific Stabilization Agreement.

NOL acquired six new 10,000-container ships in the first half, and four more are coming by the end of 2012. The firm will receive 20 new ships in 2013 and four in 2014. The vessel influx includes ten 14,000-container ships, half of which will be chartered out to Mitsui O.S.K. Lines.

NOL's fleet totaled 141 ships with a capacity of 630,000 TEUs at the end of June 2012.

For more of the Bloomberg story:

New York port could rival LA-Long Beach for number one ranking

The Port of New York ranks third in the nation for container volume, but its trade is growing so quickly it could rival Los Angeles and Long Beach for the number one position, according to Crain's New York.

Shipping through New York's seaports and airports surged 18 percent last year to $418.3 billion due to increased trade with China, while trade in L.A. grew 12 percent, according to Baruch College's Weissman Center for International Business.

"It is not inconceivable that New York could surpass Los Angeles as the largest trade area in the country," wrote Eugene Spruck of Weissman Center, a former chief economist for the Port Authority.

The New York port reported June as its second-best ever, with 276,225 TEUs lifted off ships. Rail traffic from the port increased 10 percent, while truck traffic increased 29 percent.

"As the cost of labor and manufacturing in China continues to increase relative to other parts of the world like India and Bangladesh, we believe a significant portion of that trade will end up in New York," said Port Authority executive director Patrick Foye to New York Daily News.

For more of the New York Daily News story:

Massive Boston cargo terminal a go

South Boston is resuming the development of a huge cargo terminal after a five-year delay. The terminal complex will be built on 30-acres of city-owned seaport district land that's under long-term lease to the Massachusetts Port Authority.

Developer Cargo Ventures of Doral, Fla., downsized the project to make it fiscally viable, dropping about 50,000 square feet from the three-building complex.

The $130 million project, which includes a mix of seafood processors, cold-storage facilities, warehouses, and a bulk cargo handling facility at the North Jetty, received approval from the Boston Redevelopment Authority in September 2007, but has been waiting out the recession.

The BRA voted on the new downsized proposal Thursday. Cargo Ventures is ready to start construction this year, according to a March filing by his lawyer.

"It's exciting that this project is moving forward," said Vivien Li, president of the Boston Harbor Association. "It complements very well the Innovation District because this space will be for industrial activities."

For more of the Boston Herald story:

Baltic Index falls on sluggish activity

The Baltic Exchange main sea freight index, which tracks rates for dry commodity shipping, dropped on Thursday for the 23rd consecutive day on sluggish shipping activity.

The main index, which follows daily freight market prices for Capesize, Panamax, Supramax and Handysize dry bulk transport ships, decreased by 22 points or 2.71 percent to arrive at 790 points, the lowest since March 2012.

The Baltic's Capesize index fell 1 percent to 1,192 points. The average daily earnings of Capesizes dropped $143 to $4,067.

The Baltic Exchange's Panamax index dropped 2.02 percent or 17 points to 823 points. Daily earnings for Panamaxes, which usually carry 60,000 to 70,000 ton cargoes of coal or grain, ended at $6,561, a decrease of $137.

The average daily earnings for Handysize and Supramax vessels dropped to $7,762 and $9,472.

The overall index, which gauges the cost of shipping commodities including iron ore, coal and grain, has decreased by almost 55 percent in 2012.

For more of the Reuters story:

Burn victim rescued from cargo ship off San Diego

On Saturday afternoon a Coast Guard helicopter rescued a burn victim from a cargo ship 30 miles west of San Diego.

The victim, a 55-year-old crewmember with burns over 50 percent of his body, was hurt in a fire that started aboard the Motor Vessel Jupiter.

The Coast Guard aircrew reached Sector San Diego with the burn victim just before 4 p.m., and he was then conveyed to UCSD Medical Center for treatment.

For more of the NBC San Diego story:


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