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Summary for September 12 - September 16, 2011:
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Tuesday, September 13, 2011

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California to get $800 mil for infrastructure from CalPERS

The state of California found out today that $800 million has been earmarked for investments in its infrastructure over the next three years; thanks to the group that provides retirement and health benefits to 1.6 million public employees there.

The board of the California Public Employees’ Retirement System (CalPERS), the largest public investment fund in the U.S. with $227 billion in market assets, announced the $800 million earmark would include investments in, but not limited to, transportation, energy, natural resources, utilities, water, communications and other social support services.

“We remain committed to California’s future and the investment opportunities that run deep between our coastline, mountains and valleys,” said Rob Feckner, President of the CalPERS Board of Administration in a statement.

“We are prepared to increase our investments in infrastructure with our first and foremost goal being on investment returns, and a secondary goal of supporting essential community services that are crucial to continued economic development, a safe environment, and healthy schools and communities.”

CalPERS said it has already invested $203 million in physical infrastructure and infrastructure-targeted private equity funds around the state.

CalPERS said its pension fund has also lent its “AAA” rating to California cities and counties for credit enhancement of more than $326 million in infrastructure bonds.

“Infrastructure is an integral part of the CalPERS investment portfolio,” said George Diehr, chair of the CalPERS investment committee.

“We’re looking for long-term economic value by providing safe, reliable, efficient and high quality services that are vital to California that not only meet our risk-return objectives, but that we believe have the extra benefit of creating jobs and ultimately improving the economic climate,” Diehr said.

The CalPERS investment staff is expected to bring an outreach and implementation plan back to the Pension Fund’s Investment Committee in October.

Forecast report: Global ocean freight data suggests weak growth ahead

A report on global freight suggests a macroeconomic slowdown with ocean-shipping trade in the U.S. and E.U. stabilized below pre-recession levels, down 3 percent and 4 percent, respectively.

According to September’s “Statistics Brief” by the International Transport Forum, there are “risks of dependence on Asia-led global growth,” as U.S. and E.U. ocean-bound exports have declined since February in terms of tonnage moved there, with total global waterborne trade for the U.S. and E.U. down 4 percent and 3 percent for this year’s second quarter.

Japanese auto manufacturers’ post-tsunami reboot could be boon its shipping lines

In the global container-and-dry-bulk-shipping markets of sagging freight rates, the ramped up auto production by Toyota Motor Corp. and Nissan Motor Co. in the wake of Japan’s devastating March 11 earthquake and tsunami could reportedly help boost the car-carrying fortunes of firms like Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd., with a forecast of 3.8 million vehicles being hauled in the next six months – the most such collective volume in at least five years.

“The one thing that’s supporting their business is car carriers,” said Janet Lewis, a Hong-Kong based Macquarie Group Ltd. analyst in an interview with Business Week.

“Dry-bulk is at an abysmally low level and container ships are making a loss,” she said. The ocean auto-carriage sector with its specialized vessels has reportedly been immune to the drop in rates in other shipping markets due to long-term contracts that make it difficult for any new potential competitors to enter that marketplace.

“It’s very difficult for lines to enter the Japanese and South Korean markets because local companies are so strong,” said Huang Xiaowen, managing director of China Shipping Container Lines Co in the Business Week report.

After Japan’s auto exports took a server hit after that country’s major natural disaster in March, a rebound could reportedly occur in part due to domestic manufacturing facilities getting back to full production speed by the end of October.

Europe’s largest auto-carrier, Wallenius Wilhelmsen, reported a “strong rebound” in its Japan business in June, according to an email to Business Week by the shipping firm’s chief financial officer, Benedicte Bakke Agerup.

“The Japanese car producers have shown an impressive performance in getting production and export back to almost pre- tsunami levels,” she said.

For the full Business Week story:

CMA CGM reshuffles U.S. East Coast service

France’s CMA CGM Group announced the “reshuffling” of its CAGEMA Main Liner service that links the U.S. East Coast and the Caribbean that includes adding two direct calls to New York and Jacksonville.

In addition, the shipping line said in a statement that the ports of Castries (Saint Lucia), Port of Spain (Trinidad and Tobago), El Guamache (Venezuela) and Oranjestad (Aruba) would be serviced via trans-shipment onto other CMA CGM Group services.

Goods to and from Castries are to be carried on the CAGEMA Inter Island feeder service, via Vieux Fort, the liner said.

Goods to and from Port of Spain (Trinidad and Tobago) will be transferred at the dedicated Kingston hub to loop 2 of the PEX 2 service (linking Asia, Mexico, the Caribbean and North Brazil), the shipping firm said.

El Guamache’s port will be served by the Caribraz service (linking the Caribbean to Brazil), while goods to Oranjestad will be transported on the Venezuela Feeder, via Cartagena, according to CMA CGM.

The new CAGEMA Main Liner service rotation will now be: New York – Savannah – Jacksonville – Miami – Kingston – Rio Haina – San Juan – Philipsburg – Vieux Fort – Bridgetown – New York.

The CAGEMA Main Liner service made its inaugural call at Jacksonville on September 9 and will do the same in New York on September 24, the shipping line said.

U.S. lifts sanction on parent company to Zim

The U.S. State Department lifted one of a group of sanctions against an oil tanker that was sold to Iran last year by a consortium headed up by Israel’s Ofer Brothers, the owners of container-shipping line, Zim.

Today’s surprising decision by the State Department arrived after months of lobbying on behalf of the Ofer Brothers amid public outcries in Israel against such a business agreement with Iran, considered a “mortal enemy” of Israel.

Unfortunately, the two brothers who ran the multi-billion-dollar holding company, Sammy Ofer and Yuli Ofer, did not live to see the sanction lifted as the former died in June and his brother passed away last week.

Sanctions against three other companies involved in the $8.5 million tanker transaction with an Iranian “shell” company were not lifted.

For the full A.P. story:


Wednesday, September 14, 2011

Top Story

Maersk acknowledges Asia-Europe vessel glut; introduces daily service

Denmark’s shipping giant, A.P. Moeller-Maersk A/S, admitted a glut of new big vessels entering the Asia-Europe shipping trade, the second largest in the world, is having an impact on its ability to raise Peak Season rates, while the liner group also introduces a new daily service into that market.

In an interview in London, Maersk Chief Executive Officer Eivind Kolding said some European shipping regions are more impacted than others with regard to capacity.

“Most of the new big ships actually go to northern Europe, so this is where you have the bigger problem,” he said.

Maersk has reportedly had more success with Peak Season rate increases for some of its Mediterranean services.

Kolding said fleet utilization is at over 90 percent in the Asia-Europe trade, which matches the global average, offering small incentive to cut capacity with new vessels arriving later in the year.

“It’s difficult to make a decision to pull a lot of capacity, especially if hypothetically one line should decide to do it, then actually the rest of the market will benefit,” Kolding said.

Europe’s Peak Season is reportedly busiest in the third quarter, although the continent is in the throes of economic instability, with concerns over Greece’s financial issues causing a domino effect throughout EU countries.

“We have a much more mixed picture than in 2009, where we saw a collapse basically across the board,” Kolding said.

“We’re slightly concerned because we did see a good momentum of recovery, not a fast, but a fairly fast, recovery,” he said.

Meanwhile, Maersk announced it would introduce daily shipping service in the Asia-Europe tradelane utilizing 70 vessels between Ningbo, Shanghai, Yantian, Tanjung Pelepas, Felixstowe, Rotterdam, and Bremerhaven.

"Regardless of which of the four Asian ports the cargo is loaded at, the transportation time - from cut-off to cargo availability - is fixed," Maersk said in a statement.

"Daily cut-offs mean that cargo can be shipped immediately after production without the need for storage," the company said.

For the full Bloomberg Businessweek story on vessel glut:

Volumes down at Southern Cal box ports

Containerized volume at the busiest port complex in the Americas took a hit in August over the same month last year.

At the number one container port by volume, the Port of Los Angeles, imports slipped 5.75 percent in August over the same period in 2010 at 376,190 TEUs, with number two Port of Long Beach’s imports tumbling 14.2 percent to 267,198 TEUs over August 2010.

Exported containers were up 25 percent at Port of L.A. at 184,232 TEUs over August of last year, as the port heads towards a record year in export traffic, while Long Beach’s exports dipped 3.8 percent to 121,277 TEUs in August over last year.

Report: North American spot market truck freight soared 47 percent in August

North American spot market truck freight soared 47 percent in August compared to the same period last year; the eighth consecutive month where spot market availability hit an all-time same month high, according to TransCore’s Freight Index.

Spot market freight volume increased 4.5 percent in August over July, an atypical trend as freight volumes tend to go down in August from the previous month, according to TransCore’s report.

Average truckload rates dipped 0.8 percent for dry vans compared to July, but increased 2.4 percent compared to August 2010, the report said.

Refrigerated van rates were down 0.6 percent versus July, but rose 2.6 percent compared to August 2010.

Flatbed rates lost 1.1 percent compared to July, but increased 9.6 percent versus August 2010, TransCore reported.

Damco launches online emissions calculator

Third party logistics firm Damco announced it customers are able to access online calculation of carbon dioxide emissions for their air and ocean shipments at the myDamco interface.

“Our customers are faced with increasing requirements for more efficient and sustainable supply chains. Experience shows that greening your supply chain can reduce logistics cost and emissions from your inbound supply chain by up to 15 percent,” said Erling Johns Nielsen, Damco's global head of supply chain development in a statement.

“Online visibility of carbon emissions will enable you to take earlier corrective action if operations [are] not in sync with your carbon reduction and efficiency goals” Neilsen said.

Damco says customers can evaluate emissions from an air-freight shipment, or from an overview of top 10 emissions separated by mode of transportation, origin and country destination, based on reports from the online tool.

Tanker with crew of 23 hijacked in growing West African problem area

A Cyprus-flagged tanker and its of 23 crew were hijacked by armed men off the increasingly dangerous coast of Benin in West Africa today, according to the International Maritime Bureau.

"Armed men boarded the product tanker, which was in the midst of a ship-to-ship transfer about 62 nautical miles southwest of the port of Cotonou, and hijacked it," said IMB manager Cyrus Mody in an interview with Reuters.

Mody told Reuters pirates also attacked a different vessel in the region today, however the crew locked itself in the engine room and the pirates gave up.

The IMB has recorded 19 pirate attacks off of Benin so far this year, up from none in 2010.

For the full Reuters story:


Thursday, September 15, 2011

Top Story

Virginia state leadership shaking things up at its port authority

On the heels of an almost complete overhaul of the board of the Virginia Port Authority in July, the state’s Department of Transportation Secretary Sean Connaughton said nothing is “off the table at this point,” with regard to continued shakeups at the major East Coast port, including possible changes to the long-entrenched management structure there.

"Our issue right now is to take a look at what's been happening and where we are today and how do we end up improving the performance of the port going on from here on out," Connaughton said in an interview after speaking at a Hampton Roads Global Commerce breakfast function as reported by the Virginian-Pilot.

Virginia Governor Bob McDonnell replaced 11 of 12 VPA board members this summer amid reported concerns from state leadership over the port authority’s slower rebound from the recession than close competitors New York-New Jersey and Savannah.

"The thing is that we just were looking at the board and saying, 'OK, how do we get the strongest board possible to deal with the situation?'" Connaughton said.

The state D.O.T. secretary reportedly said VPA Executive Director Jerry Bridges’ job is secure, but that several areas of the port’s business will be scrutinized.

"Is it the structure? Is it the people? Is it the focus?" he queried.

The VPA receives $35 million a year from the state for capital improvements combined with millions of dollars in revenue bonds, the Virginian-Pilot reported.

The port has a capital plan that projects its Hampton Roads facility should have the capacity to handle 9.5 million TEUs by 2040.

"To get there, that means [the port has] to start growing - today - 250,000 TEUs per year," Connaughton said. For the full Virginian-Pilot story:

Hapag-Lloyd majority owner rules out public offering for 12-15 months

The general manager of the group that owns the majority stake in German container-shipping line Hapag-Lloyd, said a planned $4.1 billion public offering of the firm would be delayed for at least the next 12 to 15 months, according to a report in the Financial Times.

Karl Gernandt, chief executive of Kuehne Holding, one of the members of the Albert Ballin consortium that currently holds 62 percent of Hapag-Lloyd, said the planned IPO has been held up due to differences of opinion, the FT reported.

“As long as we do not have clarity about the final ownership structure, an IPO is not going to come. I don’t see it in the next 12-15 months,” Gernandt said.

“Our discussions with potential investors are very difficult as there have been different interests ... Tui (38 percent owner of Hapag-Lloyd) wants to sell and some investors presented their ideas, but unfortunately it was not possible to realize a deal,” Gernandt said.

For the full Financial Times story:

Japan’s distribution centers rebounding

Japan’s distribution centers are experiencing a rebound from vacancies that hit record highs during the height of the global recession as logistics warehousing demand has surged there since the destruction of such spaces from the March 11 earthquake and tsunami.

Distribution logistics investment in Japan could $26 billion this year from close to zero in 2002, according to CB Richard Ellis Group Inc.

Global Logistic Properties Ltd., the second-largest owner of industrial warehouses in Japan after market-leading Prologis, has reportedly been pursuing the acquisition of approximately 20 industrial properties from LaSalle Investment Management Inc., according to a Businessweek.

Sales of industrial properties have almost doubled in the first half of 2011 over the same period in 2010 at $1.14 billion, according to Real Capital Analytics, Inc.

Industrial spaces in Japan showed a 9.2 percent average return on investment for the year ended April 30, more than outpacing residential and office buildings, according to Investment Property Databank Ltd.

For the full Businessweek story:

UPS launching consumer-friendly service in time for Peak Season “e-tailing”

United Parcel Service announced it is launching its new My Choice shipping service for consumers in anticipation of a record “e-tailing” peak holiday season, by offering them more leverage over how and when their packages are delivered.

The basic level of My Choice is free and offers residential customers options that include alerts the day before a shipment is due via phone, e-mail or text alerts, with a four-hour delivery window.

Customers can also electronically authorize release of a package and can reroute a package for a $5 fee.

UPS will also offer a My Choice Premium Membership, for a $40 annual fee, that includes an online delivery calendar that displays delivery status with a two-hour delivery window.

For the full Reuters story:

Ship could sink after tankers collide in South China Sea

Efforts are afoot to repair a tanker to keep it from sinking after the vessel suffered major damage from a collision with another tanker after a possible “hit and run” in the South China Sea near Malaysia on September 11.

The MT Cendanawati was reportedly rammed by the MT Cosmic approximately 8 nautical miles from the Malaysian island of Pulau Tioman.

The MT Cosmic reportedly continued on its journey after hitting the Cendanawati. The latter’s crew of 19 were subsequently rescued.

The captain of the MT reportedly said he and his crew were almost killed by the collision.

Malaysia’s Marine Department says it has started its investigation of the incident.

For the full New Straits Times story: Fishermen advised to keep away from MT Cendanawati - MMEA


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