Cargo Business Newswire Archives
Summary for September 10 - September 14, 2012:

Monday, September 10, 2012

Top Story

CMA CGM's Q2 fortunes improve; forecasts full-year profit

France's shipping giant, CMA CGM, posted improved financial results that the ocean carrier said followed "a first quarter that was challenging for the entire maritime container shipping industry" on the back of "a very substantial upturn in freight rates," and expects to end the year in the black.

After reporting a net loss of $248 million in the first quarter of 2012, CMA CGM swung to $174 million net profit in its second quarter, with revenue up 12 percent year-on-year to $4.149 billion, and 2.7 million TEUs carried – up 8 percent over the same period last year; a slight rise over the 2.6 million TEUs the carrier shipped the previous quarter.

CMA CGM reported earnings before taxes, depreciation and amortization of $460 million for the second quarter that the shipping group said resulted in an 11 percent margin, claiming it was "the industry's best performance."

The French shipping line said in a statement that the quarter "delivered $294 million savings over the first six months of 2012, well ahead of the initial $400 million target for full-year cost savings."

"The second quarter's favorable trends have continued since July, and the Group expects that its operating and financial performance will still be highly positive in the third quarter. As a result, it has confirmed its forecast of reporting a profit for the full year," the shipping line said.

China's next stimulus measures could include expanded tax rebates on exports

In order to inject new life into its sagging economic growth, China could reportedly expand tax rebates this month to exporters as part of stimulus efforts to help counter weakened global demand for the manufacturing giant's goods.

The Chinese government has indicated it might offer a full rebate of the 17 percent value added tax on products like furniture, shoes and toys, according to a Bloomberg report. The current rebate reportedly ranges from 13 to 15 percent.

Premier Wen Jiabao has said the central government would engage in "fine tuning" to help curb the slowdown in the world's second-largest economy.

China slowed considerably to 1 percent export growth in July after an 11-percent gain in June.

Westbound trans-Pac lines plan for $200 per-FEU dry cargo increase

The shipping lines that form the Westbound Transpacific Stabilization Agreement announced a recommended general rate increase for dry containerized cargo transiting from the U.S. to Asia that would be $200 per-forty-foot container and $160 per-twenty foot box as of Oct. 1.

The WTSA said in a statement that "westbound revenues have declined considerably from levels seen earlier in the year, as demand in Asia has slowed and carriers have made concessions in their pricing to accommodate customers during the difficult period."

The WTSA reported first quarter 2012 cargo volume of 800,000 FEUs vs. 774,200 FEUs for the same period in 2011 - a 3.5 percent increase year on year.

"More recently, carrier bookings indicate that those volume gains have since narrowed over the summer, and freight rates have followed," the WTSA said.

"The problem is that moving rates for many commodities have slipped to levels that no longer reflect the value of the service or make an adequate contribution to the round trip voyage," said WTSA Executive Administrator Brian M. Conrad.

"Carriers anticipate an upturn in the typically busy months ahead and feel a need to make up lost ground in terms of revenue," he said.

Venezuela to release crew of U.S.-flagged cargo ship

Authorities in Venezuela will reportedly release the crew of a U.S. -flagged cargo ship that has been held in that country for over a week when they were initially accused of trafficking arms.

"While we haven't left yet, it looks like a positive solution has been reached," said a crewmember who emailed CNN on condition of anonymity.

A U.S. State Department official reportedly confirmed the charges were dropped on all 14 of the crew of the Ocean Atlas, operated by Intermarine and managed by Crowley Maritime, that first made port in Maracaibo on August 29.

A couple of days after docking, the crew was informed that an investigation was underway into suspected arms trafficking and the ship's captain, Jeffrey Raider of Texas was taken into custody and made to appear in court.

The crewmember that emailed CNN, said the Ocean Atlas' security team keeps rifles in a locker on board the vessel and that the captain declared them on arrival the Port of Maracaibo, claiming he was cleared to have the weapons.

However, Venezuelan authorities at the time denied permission has been given for the weapons and confiscated them, according to the crewmember.

For the full CNN story:


Tuesday, September 11, 2012

Top Story

Retail imports at major U.S. container ports to rise 8.5 percent this month

Imports at primary U.S. retail container ports are projected to increase 8.5 percent this month year on year, and the holiday season is expected to be strong even though a labor strike looms at East Coast and Gulf Coast ports, according to the monthly Global Port Tracker report.

The National Retail Federation and Hackett Associates released the report, which covers the ports of Long Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston, Savannah, Port Everglades and Miami on the East Coast, and Houston on the Gulf Coast.

"Retailers are bringing in more merchandise for the holiday season this year. The question at some ports is whether longshoremen will be on the docks to unload it," said Jonathan Gold, NRF vice president for supply chain and customs policy.

"Regardless of what happens with contract talks, retailers have contingency plans in place to ensure that merchandise reaches store shelves in time and that there is no disruption for shoppers," he said.

The August talks between the International Longshoremen's Association and United States Maritime Alliance were unsuccessful, and a major ILA local comprised of New York and New Jersey dock workers has already voted to strike if an agreement has not been made by the time the current contract expires on September 30.

Labor negotiations will start again next week with the Federal Mediation and Conciliation Service as arbitrator.

In the meantime, retailers are considering viable contingencies, such as rerouting cargo through West Coast ports.

The nation's major ports followed by Global Port Tracker handled 1.41 million TEUs in July, up 2.2 percent from June and 2.5 percent from July 2011.

August volume was projected at 1.43 million TEU, up 4.4 percent year on year. September is forecast at 1.49 million TEU, up 8.5 percent; October at 1.48 million TEU, up 11.7 percent; November at 1.32 million TEU, up 1.9 percent; and December at 1.25 million TEU, up 2.7 percent.

The first half of 2012 totaled 7.7 million TEU, up 3 percent from the same period last year. For the full year, 2012 is expected to total 16 million TEU, up 4.2 percent from 2011.

Shipping industry probed for possible cartel

The European Union, the U.S. and Japan are "investigating the possibility of anticompetitive practices involving the ocean shipping of cars, trucks, construction equipment and other products," according to Gina Talamona, a spokeswoman for the Justice Department in Washington.

The EU's antitrust regulator, the European Commission, and the U.S. Justice Department are actively looking into possible violations.

The European Commission conducted surprise inspections yesterday at several maritime companies that ship cars, construction and agricultural rolling machinery, according to a commission statement released today.

No companies were named.

"We are coordinating with the European Commission, the Japanese Fair Trade Commission and other international competition authorities," Talamona said.

For more of the Bloomberg story:

Global auto production and sales up, China sees meteoric rise

Global passenger vehicle manufacturing increased from 74.4 million in 2010 to 76.8 million in 2011. China, the U.S., Japan, and Germany, the top four producers of light vehicles, are responsible for more than half of global output.

According to a report by the Worldwatch Institute, the trend, which projects that 2012 production may hit more than 80 million for the first time, is being led by China and other countries with emerging economies. The passenger vehicle fleet in China grew at an annual average rate of 25 percent during 2000-11, from fewer than 10 million cars to 73 million cars.

Worldwide sales of cars and light trucks hiked from 75.4 million to 78.6 million over the same period, with 81.8 million forecast for 2012, according to Worldwatch senior researcher Michael Renner.

By the end of 2012, the global fleet could be more than 1 billion vehicles, one for every seven people on the planet. Approximately 691 million cars were on the road in 2011. Including trucks, the number soars to 979 million vehicles, 30 million more than in 2010.

Hybrid and electric vehicles are increasing, but stay below 2 percent of total vehicle output. China, for example, intends to put 5 million hybrid-electric and fully electric vehicles on its roads by 2020, but Deutsche Bank analysts say production of 1.1 million EVs and a fleet of 3.5 million in China is more in line with reality.

APM invests $860 million stake in Russian ports deal

APM Terminal will purchase a 37.5 percent stake in Russia's Global Ports for $860 million from N-Trans to establish a presence in the Russian cargo market. APM will run the company equally with N-Trans, each owning 37.5 percent, with 25 percent being listed in London.

The agreement, in which APM Terminals will pay $840 million in cash and owe $20 million, was struck on the heels of Russia's acceptance into the World Trade Organization in August.

This is the largest direct foreign investment in Russia's transportation sector to date, APM chief executive Kim Fejfer told Reuters Monday. "We have now created a platform with Global Ports that will be our strategic partnership in the coming years," he said. "We expect long-term growth and, of course, we will seek to expand where demand allows."

Global Ports, which raised $588 million in a London initial public offering last year, owns container terminals in Russia, on the Pacific and Baltic Sea coasts and in Finland

For more of the Reuters story:

9-11 maritime evacuation remembered

The American Maritime Partnership released the following statement today, praising the U.S. Merchant Marine evacuation of New York City on 9-11-01.  
"As we reflect on the infamous events of eleven years ago and those who were lost, we also remember the selfless acts of the U.S. Merchant Marine to evacuate citizens in harm's way in Lower Manhattan. The American maritime industry in New York and New Jersey, along with the assistance of U.S. Coast Guard, public safety, and U.S. Merchant Marine Academy personnel and vessels, engaged in the largest and safest evacuation of citizens in U.S. history. 
The quick response and skilled actions of maritime officers and crews on that day exemplified the values of perseverance and courage on which this country was founded and provided hope during the darkest hours of many Americans' lives. Through their actions, America's ferry operators, tugboat crews, passenger vessels, public sector workboats and pleasure craft exemplified the meaning of bravery and patriotism."


Wednesday, September 12, 2012

Top Story

California's Governor extends marine fuel tax exemption

Governor Jerry Brown signed a bill into law that extends a partial tax exemption on marine fuel purchased in California that had been set to expire on January 1, 2014 to 2024.

The bill, SB 1243, was authored by state Senator Alan Lowenthal (D-Long Beach), and was originally intended to make the exemption permanent as a form of stimulus to California's marine fuel sales sector that reportedly employs close to 2,000 people.

The marine fuel tax exemption has lapsed twice in past years with the corresponding sales reportedly dropping close to 50 percent.

"The exemption has gone away twice, and each time we saw the same economic impacts," said Senator Lowenthal in a statement previous to the Governor's signing of the exemption.

"We cannot allow this to happen again. Not to the workers, not to our ports, and certainly not to our environment," Lowenthal said.

California's marine fuel is reported to be less polluting than out-of-state offerings.

The partial exemption covers fuel consumed outside of California and in international waters. The sales tax still applies for fuel used within the state's waters.

"We're very pleased Gov. Brown understood this legislation is needed to keep the marine fuel industry alive and well in our state," said John Berge, vice president of the Pacific Merchant Steamship Association in a statement. 

Support for the fuel exemption extension legislation was broad, including from the California Labor Federation, the Inlandboatmen's Union, Sailors Union of the Pacific, the International Longshore and Warehouse Union, state cities, port authorities, shipping companies and various organizations.

Top tier Chinese shipping firms lost $1.2 bil in H1

China's top listed shipping companies reportedly lost a collective $1.2 billion in the first half of 2012 with second-half performance not looking to show much improvement due in part to over-capacity and rising fuel prices.

Only four of China's top 13 shipping firms turned a profit in this year's first half, including COSCO Shipping Co Ltd and China Merchants Energy Shipping Co Ltd, according to the Chinese news outlet 21st Century Business Herald.

Conversely, China COSCO Holding Co Ltd lost $770 million, a precipitous drop from its $270 million loss for the same period a year earlier.

COSCO Holdings announced at its shareholders' meeting on Aug 30 that a loss is forecast for the third quarter despite the peak shipping season being in full swing.

European Union sets stricter sulfur limits for ship fuel

The European Union voted overwhelmingly in favor of enforcing International Maritime Organization agreements to reduce sulfur in ship fuel in European seas to .5 percent by 2020 from the current 3.5 percent, with the exception of the Baltic Sea, English Channel, and North Sea emissions control areas, where those limits would be .01 percent in 2015 compared to what is presently 1 percent.

"Highly polluting shipping fuels have a serious impact on the environment but this is also the most important health reform of this parliamentary mandate. With air pollution from shipping expected to outstrip land-based emissions by 2020, urgent remedial action is needed," said EU member Satu Hassi in a statement. Hassi was reportedly directly involved with driving the draft legislation through the 27-nation EU assembly this week in Strasbourg, France that produced a 606 to 55 voting result.

The EU said in its statement that shipping firms could meet the new low sulfur requirements "by using cleaner fuels or technology, such as scrubbers, that can deliver an equivalent result."

Miami-based logistics company urges ILA-USMX resolution

The negotiations between the International Longshoremen's Association and their employer group, the United States Maritime Alliance, are set to resume next week under the, and at least one major logistics firm with a client base of exporters and importers has publically weighed in with an urgent call for a contact agreement before the September 30 master contract deadline.

"A resolution between the two sides is extremely important for shippers. Without an agreement, the adverse effects on the national and global economy will be extremely dire. It is in the best interest for both parties at the negotiating table to facilitate the movement of goods at East and Gulf Coast ports prior to the holiday season," said Nelson R. Cabrera, business development manager of Miami-based Lilly & Associates in a statement.

Reports of shipping industry-wide fear of a possible labor strike if a contract agreement is not struck by the deadline have permeated with possible re-routing of supply chains through alternative gateways such as West Coast ports.

"The increased congestion at West Coast ports will result in a chaotic bottleneck affecting the flow of goods in and out of the United States at the height of the shipping peak season," said Cabrera. "This places an enormous hurdle in the increasingly lean supply chains of our nation's importers and exporters."

Lilly & Associates cited what the company said would be "costly ocean freight reroutes, coupled with excessive congestion surcharges in excess of $800 per 20-foot container, [as being] especially devastating for shipper's slim margins during this economic recession."


Thursday, September 13, 2012

CBN Labor Update

Pressure from industry for ILA-USMX resolution mounts

Interests representing a spectrum of shipping industry sectors that range from agriculture to retail have publically, and urgently, called for a resolution of the soon-to-expire master contract between the International Longshoremen's Union and their employers represented by the United States Maritime Alliance at ports that run from Maine to Texas, or cargo customers will be faced with some difficult decisions.

The stalled talks between the two sides are scheduled to resume next week with a U.S. federal mediator presiding after several months of off-and-on negotiations and at times, contentious public bickering over issues such as benefits and wages.

"We urge you to enact a resolution of these negotiations immediately, as companies need to make shipping decisions now and cannot risk the possibility of shipments being held up at the ports in the event an agreement is not reached by September 30," was the plea in a letter sent last week to the ILA and USMX that was signed by the American Apparel & Footwear Association, Travel Goods Association, Fashion Accessories Shippers Association, and the Gemini Shippers Association.

The National Retail Federation's president and chief executive officer, Matthew Shay, said in his group's own letter to the same two groups that without the "certainty" of a "secure, long-term" longshore labor contract, retailers and other shippers "will surely reevaluate their supply chains and the short-term and long-term reliance on these ports."

The short-term re-evaluation of supply chains in the event of a potential waterfront labor stoppage or slowdown appears to be shifting more Asia-U.S. cargo through the North American West Coast intermodal gateways in what would be a reversal of what transpired a decade ago when a labor-management meltdown at ports from California to Washington State reportedly caused permanent shifts of shipping business to alternative routes such as shipping direct to the eastern part of the country with smaller containerships through the Panama Canal.

However, the specter of possible congestion through West Coast ports is a cause of concern for shippers who may be forced to re-route more global freight.

"The increased congestion at West Coast ports will result in a chaotic bottleneck affecting the flow of goods in and out of the United States at the height of the shipping peak season," said Nelson R. Cabrera, business development manager of Miami-based logistics firm Lilly & Associates. "This places an enormous hurdle in the increasingly lean supply chains of our nation's importers and exporters," he said.

Exporters stand to face the increased transportation costs of West Coast congestion, according to the Agriculture Transportation Coalition and its membership.

"If the transportation costs increase, if ports are not operational and the cargo just sits, the foreign customers will look elsewhere for their almonds, cotton, rice, hay, pork, beef, poultry, fruit, dairy, soybeans, grain, citrus, lumber, plywood, paper, potatoes, French fries, wine, and the myriad other food, farm and fiber we grow and process here in the U.S.," said the AgTC in a statement.

"While we produce the best of many of these products, the fact is, there is nothing that we export in agriculture and forest products, that cannot be sourced somewhere else in the world", said Peter Friedmann, executive director of AgTC.

Hearkening back to the U.S. West Coast waterfront disaster when then-President George W. Bush invoked the Taft-Hartley Act to force a resolution between the International Longshore and Warehouse Union and the Pacific Maritime Association, the AgTC said "the injury from that West Coast port shutdown has been felt for years since."

"For instance, when confectioners in Japan could not get the superior California nuts and raisins, they were forced to substitute from Turkey and elsewhere. And once the customer finds another source, it can be very reluctant to return to the source, which could not deliver. The fact that the U.S. ag producer was not at fault, that it was a port labor dispute, doesn't always convince the foreign customer to return to us. So, once a port shuts down, the economic injury to the U.S. producer lingers long after the ports get back to work," the AgTC said.

Anonymous exporter members of the AgTC weighed in on the dispute, forecasting some of the transportation and supply chain problems they say could manifest from ILA work stoppage or slowdown; especially due to a suddenly congested West Coast port pipeline this fall.

"The impact from the Port labor strike would have irreparable consequences on our business. The $1000/container fee added to our West Coast shipments is something we simply cannot absorb when shipping 800 containers per month...or, $800,000 in added fees," said one U.S. exporter.

"We export our frozen foodstuffs and agricultural products exclusively from the USWC ports; therefore, the potential impact of an ILA strike and subsequent implementation of the [U.S. West Coast] Congestion Surcharge by the ocean carriers would cause us serious financial implications. In reviewing our October export shipping forecast, and taking into account the Congestion Surcharge of $1000/40' container and $800/20' container, our ocean shipping costs would increase $145,000/week. This represents a 55% increase in freight costs," said another exporter.

The AgTC also referenced what it says could be a "devastating impact" on the U.S. pulp and paper mill industry, with a possible $1,000 per-FEU congestion surcharge looming that the industry group said could imperil "thousands of U.S. manufacturing jobs and damaging an important U.S. industry sector."

The Federal Mediation and Conciliation Service's director, George H. Cohen, said last week that the ILA and USMX "have agreed to resume negotiations under our auspices during the week of September 17, 2012."

The FMCS is an independent U.S. government agency created in 1947 to operate as a conflict resolution buffer between contentious labor and management issues.

"Due to the sensitivity of this high profile dispute and consistent with the Agency's longstanding practice, we will not disclose either the location of the meeting or the content of the substantive negotiations that will take place," Cohen said.


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