Cargo Business Newswire ArchivesSummary for August 19 through August 23:
Monday, August 19, 2013
Top Story
Maersk Line Q2 earnings almost doublen
Photo credit: APM Terminals A. P. Moller-Maersk upped its 2013 profit forecast Friday, mainly due to the performance of its shipping line, citing lower fuel costs and effective cost cutting measures.
Maersk Line, which controls 15 percent of the world's container shipping capacity, made a second-quarter net profit of $439 million, compared with $227 million year over year, and significantly exceeding an average analyst forecast of $99 million.
"The very strong cost control program at Maersk Line is helping the company to a large profit and guidance increase," said Alm Brand Markets analyst Jesper Christensen.
While advising caution in calling an end to a shipping downturn that has decimated the industry since 2008, Chief Executive Nils Smedegaard Andersen forecast greater stability.
"It is currently our expectation that we can maintain freight rates at the level we have reached now for the rest of the year," Smedegaard said on a conference call.
Shares of A.P. Moller-Maersk rose 6 percent in Europe to their highest level in 18 months. The company's second-quarter group net profit fell 11 percent to $856 million, besting the 30 percent drop to $667 million predicted by a Reuters survey of analysts.
"The biggest swing factor in Maersk's result is always Maersk Line, and the unit's result today nearly knocks you off your chair," said Sydbank analyst Jacob Pedersen.
Senators Murray and Cantwell author bill to revise U.S. port tax structure
Washington’s senators say they want to change regulations that they claim give a cost advantage to shipping companies that divert U.S. container imports through Canada or Mexico.
Senators Patty Murray and Maria Cantwell of Washington announced plans to introduce the Maritime Goods Movement Act for the 21st Century, which, if passed, would impose an import tax not only at U.S. seaports but also at points-of-entry over land.
Officials from the ports of Seattle and Tacoma are saying that shipping firms can avoid the U.S. harbor maintenance tax by unloading in Canada, then sending the good by land via train or truck.
That cargo rerouting applies to approximately 400,000 TEUs a year, according to Port of Seattle CEO Tay Yoshitani.
"That means that fewer cargo containers are coming into our ports today. It means less work for longshoremen and pilots. And it means we can’t make investments in infrastructure that our ports need to be state of the art and competitive," Murray said. "If that’s not a perfect example of an outdated law, I don’t know what is."
The bill would also broaden the uses for the funds the tax raises.
Singapore reveals master plan to revamp port and waterfront
The Singapore government released a master plan Sunday for a to relocate its ports, build a new waterfront city, and double capacity at its airport.
In an annual national Day address, Prime Minister Lee Hsien Loong noted the increasing discontent in the city over an influx of foreign workers and expatriates that are blamed for a range of problems, such as overburdened infrastructure and the high cost of living.
Lee reported Singapore’s long-term plans, including moving its port, the world’s second busiest container hub, to a new location in Tuas in western Singapore, starting in 2027.
The port move would free up land in Tanjong Pagar, next to the central business district, to create a new waterfront city, Lee said.
"This is how we can stay the hub in Southeast Asia and create many more opportunities for Singaporeans," Lee said.
July cargo volume up 7.7 percent at Port of Long Beach, down slightly at POLA
Container volumes through the Port of Long Beach rose 7.6 percent in July year over year, while dropping slightly at the Port of Los Angeles.
Approximately 562,166 containers were handled by Long Beach in July, up 7.6 percent from the same period in 2012. Imports surged 12.9 percent with 294,926 TEUs, and exports rose 6.2 percent with 132,290 TEUs.
In Los Angeles, cargo volume for July dropped 1.48 percent with 715,640 TEUs when compared to July 2012. Imports were down 0.30 percent to 370,745 TEUs, and exports were down 4.83 percent to 157,585 TEUs.
“The strength in loaded inbound numbers in Long Beach is indicative in the improvement in the U.S. economy, but it’s a far cry” from pre-recession levels, said Robert Kleinhenz, chief economist for the Kyser Center in Los Angeles. “It’s growing, but it’s growing slower than we like.”
Ferry collides with cargo ship in Philippines resulting in 31 dead, 171 missing
Thirty-one people are dead and up to 171 are missing after a ferry carrying 831 people collided with a cargo ship near the Philippine port of Cebu on Friday night.
The captain of the ferry MV Thomas Aquinas ordered all to abandon ship when it started to sink minutes after the crash late Friday with the MV Sulpicio Express Siete, according to coast guard deputy chief Rear Adm. Luis Tuason.
Transportation and Communications Secretary Joseph Abaya announced the ferry was transporting 831 people - 715 passengers and 116 crewmembers. He said the death toll is currently 31 with 629 rescued.
Navy divers are currently searching for the missing passengers and crew.
Truckers shut down Port of Oakland’s SSA Marine terminal
Photo credit: Laura A. Oda/Bay Area News Group Truckers shut down the SSA Marine terminal at the Port of Oakland on Monday, protesting chronic delays that have kept them in line for up to six hours to load their trucks.
Most of the truckers are independent contractors that get paid by the load, and long waits cut into their profits. In addition, once in line they can’t leave their trucks due to safety issues.
"We are not allowed even to go to the bathroom," said Cesar Parra, one of more than 100 truckers who participated in the protest.
The truckers shut down the terminal where they had experienced some of the longest wait times. The SSA Marine terminal is comprised of five berths that were consolidated into a single terminal last month by the terminal operator.
The terminal suffered a severe backlog after the consolidation.
Melvin MacKay, a former longshoremen's union president, said the terminal had extended the yard and changed the numbering system, making it harder for workers to find containers. "Everything is slow now because we are not acclimated to the system," he said.
Bob Watters, SSA Marine senior vice president, said the problem has been addressed and the turnaround time for truckers is no longer than it was before the consolidation. "It is unfortunate that a small faction of the trucking community ... is inconveniencing all the port's customers and workers," Watters said.
When dockworkers discovered truckers blocking the terminal's gates they did not cross the picket line, according to union officials.
Port spokeswoman Marilyn Sandifur said that when the truckers also started to block entry into other terminals, the Oakland police were called to restore access. Longshoremen at these terminals stayed on the job.
The chief executive of A.P. Moller-Maersk said he believes emerging markets have growth potential, despite growing investor concern that their momentum has played out.
“The underlying story is very good,” said Maersk CEO Nils Smedegaard Andersen said in an interview on Aug. 16. “Our expectation remains that the U.S. will be the key driver of growth, but we’re also relatively optimistic on emerging markets. There is growth potential, even if we have a temporary set-back in commodity prices.”
The MSCI Emerging Market Index lost 9.1 percent in the three months through June, and the JPMorgan Emerging Markets Bonds Index dropped 5.6 percent.
The sell-off was last quarter was prompted by signals from the U.S. Federal Reserve that it might scale back the stimulus that’s triggered demand for higher-yielding securities and followed a collapse of China’s export growth in May.
But there are signs that emerging market economies are poised to surge again, including stronger data from China with regards to industrial output, imports, and exports.
Andersen said a key driver behind emerging market growth is rising household wealth, which drives demand for container imports.
“A lot of people there are entering the middle class,” he said. Gains in household wealth are also clear in the U.S., where a housing recovery is upping consumer demand, Andersen said.
“We still believe that the U.S. will be a positive story for the coming years, in the short-term supported by more consumption following real estate prices going up and deleveraging taking place,” he said.
RoRo shipping giant Wallenius Wilhelmsen Logistics will expand its ocean transportation service from Veracruz, Mexico to the U.S. East Coast and Europe.
WWL will offer two to three sailings per month from Veracruz to the U.S. East Coast beginning September 2013. Service calls include the ports of Veracruz, Galveston, Brunswick, Charleston, and Baltimore, and then on to the European ports of Antwerp, Bremerhaven and Southampton.
“WWL is excited to support manufacturer needs for ocean transportation from Mexico to the U.S. East Coast and beyond,” says Rich Heintzelman, EVP and head of commercial for Wallenius Wilhelmsen Logistics Americas. “As we see a shift toward greater domestic manufacturing in Mexico, it will become increasingly important to strengthen export-bound ocean services from Mexico around the globe.”
The first vessel to launch the service in September will be the Freedom.
Crowley Maritime triples warehouse space in Panama
Crowley Maritime has tripled its warehouse and distribution space and consolidated its liner and logistics divisions in Panama, moving to a location close to Panama City’s major highways, seaport and airport.
The Panama facility is a 25,300 square-foot warehouse with eight dock doors, featuring a 38,426 square foot container yard and a business office. The building also offers integrated communication and data interchange systems.
“Our new warehouse and distribution center at Parque Sur is unlike any other,” said Crowley’s Miguel Artiga, vice president of logistics, Central America. “In addition to being the only company in the area that can handle nationalized and bonded cargo, our proximity to major transportation arteries gives us the capability to offer faster and more efficient services for local shippers.”
Crowley’s new Panama office offers regular liner shipping services twice weekly, to and from Colon. Other featured service areas include airfreight, consolidation and deconsolidation, cross-docking, customs clearance/brokerage and local and regional distribution services.
Coal ship runs aground off South Africa, 20 rescued
More than 20 sailors were rescued after a cargo ship carrying coal ran aground in rough seas off of South Africa's Richards Bay port, according to maritime officials.
Tugboats were trying to pull the SMART off a sandbank when "the structural integrity of the ship was compromised,” National Sea Rescue said in a statement.
The single-hull, 151,279-metric-ton ship was supposed to deliver its cargo to the Fangcheng port in China.
Drewry: Container ports remain profitable while facing big change
Photo credit: Charles Csavossy The container port sector remains profitable even as terminal operators contend with growth in container demand and ship sizes, according to the latest annual report from Drewry Maritime Research on global and international container terminal operators.
Global container port demand is forecast to exceed 800 million TEUs per year by 2017, growing by just over 5 percent per year, or 186 million TEUs, Drewry said. This is is more than the entire 2012 throughput of North America, Europe and the Middle East combined.
Container ship sizes are increasing dramatically, with the biggest vessels quadrupling in size since 1992, which has spurred increasingly larger operational alliances, including the P3 alliance between Maersk, MSC and CMA CGM. This results in larger ships sailing on secondary trade lanes, Drewry says, which could create more port problems than the 18,000-TEU mega ships built for the Asia-Europe trade lane.
“Container terminal operators remain successful and highly active but there are many changes coming,” said Drewry’s Neil Davidson, senior analyst, ports and terminals, “(including) changes in ownership as cash strapped shipping lines are forced to sell more stakes in their terminals, and aggressive terminal buyers chase expansion opportunities.”
Davidson notes shifts in operations and infrastructure coming, as ever larger container ships have to be accommodated around the world. He foresees changes in demand, as even modest growth will generate large absolute volume increases.
“For example,” said Davidson, “even if they only perform at the world average, Shanghai or Singapore will add almost 10 million TEUs to their total throughput by 2017. A figure of 10 million TEUs is more than the entire container port throughput of the UK, India or Brazil.”
Puget Sound region real estate market surges
Seattle has emerged as a top real estate investment market on the West Coast, according to a report from Jones Lang LaSalle.
As a hub for technology, biotechnology, manufacturing and world trade, the Seattle commercial real estate market is booming, with six major properties sold in the second quarter of 2013 with a sales volume of nearly $900 million.
Seattle represents major real estate investment opportunities, according to Jones Lang LaSalle’s Capital Markets experts. Since 2010, the City of Seattle has committed $2.9 billion in capital improvements, which created or retained 9,531 jobs. Construction permit values have increased by almost 63 percent, from $1.6 billion in 2010 to an estimated $2.6 billion in 2013.
“Seattle has established itself as a tier one gateway market for institutional investors and saw $3.51 billion in assets trade hands through YTD June 2013,” said Stuart Williams, managing director with Jones Lang LaSalle’s Capital Markets. “Seattle has become a target market for institutional capital and REITs, and we anticipate continued interest from foreign investors.”
The Seattle office market has seen $1.47 billion of investment through June year-to-date, the study says. Office sector pries have returned to pre-recession levels with a new price per-square-foot high watermark set at $642.
JLL reported that Seattle’s industrial vacancy rates fell from last year, reaching 5.7 percent in 1Q 2013. Demand for high-tech big box space is driving construction and pre-development activity, with more than 5.7 million square feet under construction.
The Seattle market saw a surge in population growth this year, which is driving retail demand, according to JLL. With the population growth, consumer sales are coming back, although remaining below their pre-recession high.
“Nearly $375 million of retail transactions occurred in Seattle through the first half of 2013, with cap rates averaging in the low 7 percent. We expect Seattle’s retail market to continue to do extremely well, with domestic and Canadian capital acquiring assets in the coming year,” concluded Hill.
The Seattle multifamily market ranks sixth in JLL’s U.S. Apartment Performance Index, which rates each area’s pace of rental demand and its impact on multifamily fundamentals over the past 12 months.
“The metro continues to see occupancy gains in the multifamily space, and investor demand is up with total sales volume in the first half reaching $1.25 billion,” said David Young, managing director of JLL’s Capital Markets.
Study: U.S. manufacturing advancing on rivals
A new report states that U.S. manufacturing is gaining compared to rival countries, and is poised to take up to $115 billion more in export business from competitors by 2020.
The Boston Consulting Group study forecast that a more robust U.S. factory sector, with cheaper energy and lower wages, will pull business from European countries, Japan and China.
The group said that within six years, the U.S. will capture $70 billion to $115 billion in annual exports that would have come from other countries. Along with "reshored" manufacturing from China, where higher wages are sending American companies back home, the shift could add from 2.5 million to 5 million jobs in the country, the study said.
"The US is steadily becoming one of the lowest-cost countries for manufacturing in the developed world," BCG said, projecting that by 2015, average manufacturing costs in the five major advanced export economies, including Germany, Japan, France, Italy and Britain, will be eight to 18 percent higher than in the U.S.
Another important competitive advantage in the U.S. is cheaper energy prices due to the boom in shale gas production, the report said.
Port of Tampa to build express rail linking to Midwest
The Tampa Port Authority signed a letter of intent with Green Express to build a brand new express rail service out of the Port of Tampa that will connect to the Midwest.
The service, operated by CSX Transportation, will haul a combination of refrigerated and dry cargo. Two express trains per week will travel between Tampa and Kingsbury, Indiana, which is in close proximity to Chicago.
Port officials say the express rail service will help the food and agricultural industry in both markets, and also will give ocean carriers a faster, more efficient option.
The Russian government is planning to build a $7 billion port on the Black Sea.
The Port of Taman will open in 2019 to handle dry cargoes, such as grain and coal, according to Transportation Minister Maxim Sokolov.
The Kemlin said Sokolov recently gave the first of a series of port updates to President Vladimir. Putin said he initiated the meetings because of high congestion at most of the Russia’s ports, backlogs that dampen global trade.
"The terminals are now strained to the limit," Putin said. "It's a downright loss of revenues for Russia."
Sokolov said Russia wanted to lessen its dependence on ports in the Baltic countries.
Seattle ILWU workers block tunnel dig site in protest over jobs
Photo credit: KOMO News Union dockworkers picketed Tuesday at the site of the Bertha tunnel dig in Seattle, preventing some workers from accessing the site.
Members of the International Longshore and Warehouse Union started their protest at 6:00 a.m., due to a dispute over the jurisdiction of four tunnel-related port jobs.
The ILWU claims that Seattle Tunnel Partners is in violation of a contract that stipulates they would hire four ILWU members for port work loading barges with the dirt that is excavated from the tunnel. The company gave the jobs to four construction workers from different unions.
ILWU Local 19 President Cameron Williams said the mobilization will continue until there is movement toward returning the four jobs to the longshoremen, according to the Seattle Times.
Chris Dixon, project manager for contractor Seattle Tunnel Partners, said the April contract was signed under duress because the ILWU was refusing to offload the boring machine unless officials agreed to provide them the four jobs.
An arbitrator ruled last month that the jobs should go to building trades workers under a larger project labor agreement, Dixon said.
Approximately thirty workers were involved in the Tuesday protest.
Bertha, the world’s largest tunneling machine, is digging a path under downtown Seattle that will ultimately be a road for vehicles to pass through, and is part of a major renovation of SR 99.
China manufacturing gauge reflects growth in August
China's manufacturing activity was back up in August, according to a preliminary HSBC survey, allaying worries of a slowdown in the country’s economy.
The HSBC Purchasing Managers' Index, a key barometer of the industry’s health, rose to 50.1 from 47.7 in July. A reading above 50 indicates growth.
China has experienced slowed economic growth for the past two quarters.
Hongbin Qu, chief China economist at HSBC, said that the rebound in the sector was in part due to measures taken to emerge from the slowdown.
"This is mainly driven by the initial filtering-through of recent fine-tuning measures and companies' restocking activities, despite the continuous external weakness," he said.
China has suffered from a decline in demand for its exports from the U.S. and Europe. As a result, Beijing has been working to boost domestic demand in an attempt to boost its economy and sustain higher levels of growth. For example, China has suspended the value-added tax and turnover tax for small businesses with monthly sales of less than $3,257, saying the move would benefit more than six million small companies.
China is also implementing changes to simplify customs clearance procedures, reduce operational fees and foster the exports of small and medium-sized private enterprises.
SC ports report gains in container volume, revenue for FY2013
After announcing a 9 percent gain in container volume and 14 percent hike in non-containerized cargo at its two ports for fiscal year 2013, the South Carolina Port Authority just reported a 7 percent year-over-year revenue increase.
SCPA operating revenues were $140.49 million for the 12-month period, a 7 percent increase over FY2012’s $130.95 million. The SCPA’s FY2013 operating expenses were $127.77 million, with operating earnings of $12.72 million, resulting in a net gain of $5.45 million compared to 2012.
The SCPA is in its second year of a 10-year, $1.3-billion capital plan, which includes terminal upgrades, new equipment for ultra large post-Panamax ships, information systems and new facilities such as the new South Carolina Inland Port in Greer.
“Given our aggressive capital investments over the next several years, it is essential to maintain a solid financial position and a steady stream of funds toward these important projects,” said Jim Newsome, the SCPA’s president and CEO.
The Port of Charleston handled 136,159 TEUs at its two container terminals last month, a 3 percent gain year-over-year. This represents a more than three percent gain over the same month last year and a 20 percent increase from July 2011. The port handled 51,375 tons of breakbulk cargo, a nearly 4 percent gain from the same month last year.
The Port of Georgetown handled 59,731 pier tons of non-containerized cargo, a nearly 70 percent increase from the same month last year.
China tests new container shipping route through Arctic
China is the first country to pilot a container chip via the Northern Sea Route, a trip from China to Europe that lessens travel time by at least 12 days compared to the traditional Suez Canal route.
The 19,000-ton Yong Sheng, run by Cosco Group, departed the Chinese port of Dalian on August 8 and is scheduled to reach Rotterdam on September 11. The projected transport time, via the Bering Strait, is 12 to 15 days less than going through the Suez Canal.
The volume of Russia’s shipments through the NSR has gone down considerably since the 1980s, and they might benefit from partnering with China on the container route.
“In the meantime, operating a transport route from Arkhangelsk to Chukotka and further to Vladivostok is vital for Russia,” said Andrey Ostrovsky, director of the Institute of the Far Eastern Studies, to Russia’s Free Press. “That’s why I see a solution in cooperating with China and signing a special agreement on joint exploitation of the Northern Sea Route.”
However, Russia has concerns over China gaining control over the Arctic, as Beijing is calling itself a “subarctic state” and is a member of the Arctic council, which regulates access to the Arctic’s energy sources. The Arctic’s oil reserves are estimated at 90 million tons, or 13 percent of the world’s supply.
Sick crewmember from bulk carrier airlifted to Dutch Harbor
An ill crewman was medevaced from the bulk carrier Jamaica Bay 92 miles west of Dutch Harbor on Tuesday.
An Air Station Kodiak Coast Guard MH-65 Dolphin helicopter crew airlifted the 37-year-old Chinese sailor, who was suffering from severe abdominal pain, and took him to emergency medical personnel in Dutch Harbor for treatment.
The Jamaica Bay is a 537-foot freight bulk carrier flagged out of Hong Kong.
A. P. Moller-Maersk upped its 2013 profit forecast Friday, mainly due to the performance of its shipping line, citing lower fuel costs and effective cost cutting measures. 
Truckers shut down the SSA Marine terminal at the Port of Oakland on Monday, protesting chronic delays that have kept them in line for up to six hours to load their trucks. 
The container port sector remains profitable even as terminal operators contend with growth in container demand and ship sizes, according to the latest annual report from Drewry Maritime Research on global and international container terminal operators. 
Union dockworkers picketed Tuesday at the site of the Bertha tunnel dig in Seattle, preventing some workers from accessing the site.