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Summary for September 13 - September 17, 2010:
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Monday, September 13, 2010

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Tuesday, September 14, 2010

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COSCO predicts “good year” in 2011

China Cosco Holdings Co., Asia’s largest shipping line by market value, expects 2011 to be a “good year” as an economic rebound will encourage businesses and consumers in the U.S. and Europe to resume spending.

“People have money but they have been reluctant to spend it,” Chairman Wei Jiau said in an interview yesterday in Tianjin, China. “Now, everyone will think it’s a good time to invest.”

The return in confidence means that the fourth quarter of this year will probably be the peak season for container- shipping, while commodity-freight rates may climb for a second straight year in 2011, he said. Shipping lines returned to profit this year after the global recession and a trade slump caused industrywide losses in 2009.

“Next year will be a good year,” Wei said while attending the World Economic Forum.

Wei’s optimism contrasts with A.P. Moeller-Maersk A/S, the world’s largest container line, which last week said shipping companies may have to cut capacity from the fourth quarter because of slowing demand.

The National Retail Federation, a U.S. trade group, forecast that year-on-year container volume growth at major U.S. ports will slow to 2 percent in December. Traffic will likely fall 2 percent in January, it said last week.

Container-shipping demand growth will slow in the fourth quarter compared with the first half of this year because of the high volumes carried in the final three months of last year, Wei said.

“There will be growth, though,” he said.


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Kraft to double Cadbury line’s distribution in China

US food giant Kraft Foods is reportedly planning to double the number of Chinese cities in which Cadbury products are sold in just two years.

Lorna Davis, president and chairman of Kraft’s business in China, told Reuters yesterday (13 September) that the company would use its current distribution network in the country to build Cadbury’s presence.

The company plans, according to the report, to sell Cadbury products in around 40 Chinese cities within the next two years.

-Australian Food News

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CenterPoint presses ahead with huge DC in Virginia

CenterPoint Properties Trust still plans to develop nearly 6 million square feet of distribution center space off U.S. 58 even though state officials are no longer considering its port privatization proposal.

In January 2009, the Suffolk City Council approved CenterPoint's rezoning request, allowing the construction of one of the region's largest warehouse and distribution centers.

About 20 miles from the port, the roughly 920-acre CenterPoint project site sits off U.S. 58 and Holland Road, bordered by a CSX Corp. rail line and across the street from an existing Target warehouse, according to CenterPoint's website.

Two months later, in March 2009, CenterPoint submitted an unsolicited proposal under the state's Public-Private Transportation Act to take over the operations of the Port Authority's terminals for 60 years.

CenterPoint's proposal was followed by two others - from a partnership of Carrix Inc. and Goldman Sachs, and The Carlyle Group private equity firm.

On Friday, state Transportation Secretary Sean Connaughton announced that the state was ending its consideration of the three proposals, citing changes in the port's value tied to improvements in cargo volume and overall economic conditions, as well as the Port Authority's recent 20-year lease of APM Terminals' $500 million cargo facility in Portsmouth.

Mullarkey said CenterPoint intends to respond formally to the state's decision this week.


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Greek truckers stop work amid fuel shortage fears

The Greek truckers' union's decision to stop work on Monday to protest liberalization of the sector has reignited fears of a severe fuel shortage after a paralyzing strike in July.

A bill to open up the closed truckers' industry will go before parliament this week. In response, 1,000 drivers parked their vehicles on the side lane of Greece's national highway linking Athens to the northern city of Thessalonica, creating traffic jams.

The line stretched for four kilometers, or 2.5 miles, on both sides of the major artery.

The action was the newest in a long line of protests against the Socialist government's austerity agenda, imposed on the debt-strapped nation by its international lenders.

Several thousand took to the streets on Saturday in Thessalonica to protest the prime minister's key policy speech at the inauguration of the 75th International Trade Fair. An overwhelming police presence, in part, kept the rallies from turning to the kind of violence that claimed the lives of three people in similar demonstrations in May in Athens.

Greek motorists hit hard in July by a five-day trucking strike that cut off fuel supplies are wary. Some long lines have formed at gas stations in suburban Athens.

The government has decided to impose a week-long cap on the price of fuel, with a limit of €1.473 a liter ($7.18 per gallon) of unleaded, to prevent price gauging. In Athens, prices had shot up to €1.57 a liter on Sunday.


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Black box from deadly UPS cargo plane crash in Dubai sent to U.S.

The data and voice recorders from a Boeing 747-400 plane operated by U.S. parcel delivery firm UPS that crashed in Dubai this month have been sent to the United States for analysis, the UAE state news agency said on Tuesday.

Two crew members died when the cargo plane, which was en route to Cologne, Germany, crashed in a military compound near Dubai's airport on September 3 after the pilot reported fire and smoke in the cockpit.

The United Arab Emirates civil aviation authority sent the cargo plane's "black boxes" — a flight data recorder and cockpit voice recorder — to the U.S. National Transportation Safety Board's (NTSB) last week, state news agency WAM said.

The NTSB's initial findings confirmed there had been a fire warning on the plane followed by smoke in the cockpit around half an hour after takeoff, which led to the crew encountering visibility and communication problems


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Wednesday, September 15, 2010

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L.A.-Long Beach ports continued box upsurge in August

The nation's largest seaport complex handled unexpectedly strong cargo traffic in August, particularly in imports from Asia, defying economists' predictions that its numbers had peaked in July and would head lower for the remainder of the year.

The Port of Los Angeles, which ranks first in the nation in cargo container traffic, moved 23% more containers filled with imported goods than in August 2009, during the depths of the global recession. More important, perhaps, it was also an 8% increase from the port's July import numbers, which had been the best of the year.

At the neighboring Port of Long Beach, which ranks second in the U.S. in cargo traffic, import numbers were similar to those posted by Los Angeles, with an increase of more than 24% from August 2009.

Overall, Los Angeles handled 763,837containers in August, including empties, an increase of nearly 25% overall compared with last year. In July, the port moved 730,736 containers. During the first eight months of the year, the Port of Los Angeles handled almost 5.2 million containers, up nearly 18% from the same period in 2009. Final numbers for August were not available from the Port of Long Beach.

Long Beach reported an overall cargo traffic increase of nearly 24% in August to 611,002 containers, up from 493,339 in the same month a year earlier and up 4% from July. That figure included a rise of more than 24% in imports to 311,240, up from 249,920 a year earlier. Through August, cargo traffic at Long Beach is up more than 22% overall to 4 million containers, compared with the same period last year.

-L.A. Times

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N.Y.-N.J. port authority authorizes $1bil for Bayonne Bridge fix

In a move hailed by industry and elected officials, the Port Authority of New York and New Jersey yesterday authorized spending up to a $1 billion to insure that the Bayonne Bridge does not impede future shipping traffic at the Newark and Elizabeth container port complex.

The board’s action came less than three weeks after the Port Authority finalized a billion-dollar financing deal with World Trade Center developer Larry Silverstein, when Gov. Chris Christie conditioned his support for the deal on the agency’s pledging to fix the Bayonne Bridge height clearance problem.

-New Jersey Star-Ledger

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Great Lakes cargo dipped in August

U.S.-flagged ships carried just over 10 million net tons of cargo in August, a decrease of 5.1 percent from July, but an increase of 39.3 percent compared with a year ago, according to a monthly report released Tuesday by the Ohio-based Lake Carriers Association.

Iron ore tonnage in August more than doubled compared with a year ago, while coal was up 8.6 percent and limestone increased 10.5 percent, according to the report.

So far this year, U.S. ships have carried 53.4 million net tons of cargo, a 50 percent increase from the same time last year. While that figure is up dramatically from 2009, it is still lags the five-year average by 9 percent, according to the report.

-Green Bay Press Gazette

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Seattle City Council creates freight advisory board

The Seattle City Council Tuesday created a city freight advisory board, with members directed to advise the city on freight transportation projects and policies.

The freight advisory board, according to council statement, “will focus on preserving and improving mobility and access for the transport of goods and connecting the community through the newly created board.”

“The importance of freight mobility to the economic viability of our City demands the formal establishment of this board,” stated Councilmember Tom Rasmussen, chair of the Transportation Committee. “The new board will provide advice to the City Council and to the Mayor to ensure the efficient movement of freight throughout Seattle.”

-Puget Sound Business Journal

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Brazil temporarily eliminates cotton import tariff

Brazil temporarily eliminated a tariff on cotton imports as domestic supplies fall short of demand, Agriculture Minister Wagner Rossi said.

The tax cut to zero from 10 percent will be in effect from October to May, Rossi told reporters today in Brasilia. It will apply to imports of as much as 250,000 metric tons of cotton.


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China postpones official visit to Japan in wake of vessel collision flap

Japan said Tuesday that China has postponed a senior official's visit to Tokyo in an escalating diplomatic battle over the arrest of a Chinese fishing boat captain after a ship collision near islands claimed by both countries.

The dispute has touched off a war of words between the world's second- and third-largest economies and prompted anti-Japanese activists in China and Taiwan — which also claims the islands — to sail to the area in protest missions.

Li Jianguo, vice chairman of the Standing Committee of the National People's Congress, was scheduled to visit Japan for a five-day trip starting Wednesday at the invitation of the Japanese lower house of parliament.

In Beijing, the government accused Japan of provoking the situation and repeated its demand Tokyo hand over the Chinese captain, who was arrested after his ship and two Japanese patrol boats collided nearly a week ago near a set of disputed East China Sea islands.

Japan sought to ease tensions Monday by freeing 14 crew members of the Chinese trawler. But a Japanese court has granted prosecutors permission to keep Zhan Qixiong in custody until Sept. 19 to decide whether to formally indict him on charges of obstructing public duties.

Beijing sees the case against the captain as a provocation against its claim of sovereignty over the disputed islands, called Diaoyu in Chinese and the Senkakus in Japanese. Located about 120 miles (190 kilometers) east of Taiwan, the islands are controlled by Japan, but also claimed by Taiwan and China.


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Thursday, September 16, 2010

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Sen. Rockefeller wants to reform U.S. railroads

Freight Railroads use their market power to overcharge certain shippers, and new legislation or regulation is necessary to ensure fair pricing, a U.S. Senate committee chairman said on Wednesday.

"Things are going to have to change, and change big time," John Rockefeller of the Commerce Committee said in criticism of an industry he called disingenuous in its dealings with Congress.

New restrictions could crimp rail companies' profits while bringing relief to large shippers such as commodity producers.

Rockefeller said at a hearing that freight railroads are some of the healthiest companies in the economy but claim otherwise when asked by lawmakers to compromise on pricing reform. He said the industry should no longer benefit from a law enacted 30 years ago to help restore their viability.

Top rail companies include Union Pacific Corp, Burlington Northern Santa Fe, which is privately held by Berkshire Hathaway Inc, CSX Corp, and Norfolk Southern Corp.

Edward Hamberger, president of the industry's top trade group, the Association of American Railroads, strongly disputed the findings of the committee report and Rockefeller's conclusions.

"New Washington regulations will undermine railroads' ability to sustain the private investments in the nation's rail network," Hamberger said in a statement.

With legislative efforts in doubt as Congress winds down its session and pro-business Republicans eye majorities in one or both houses, Rockefeller and another key Democrat, antitrust subcommittee chairman Herb Kohl, said changes may have to come through regulation.

Under federal law, railroads have a limited antitrust exemption and are permitted to negotiate rates with their customers, as opposed to having rate increases fixed by regulators.

Certain shippers, those with no alternatives to rail transport, complain they long have been gouged by an industry that can afford to charge more competitive rates for moving goods.

Rail transports roughly 40 percent of domestic freight and in July posted results that exceeded Wall Street expectations. Affected shippers include agricultural, chemical and steel companies and utilities. Coal companies, a crucial component of West Virginia's economy, are also impacted.

Daniel Elliott, the chairman of the independent Surface Transportation Board (STB), which regulates freight rail economics, said at the hearing he would reexamine rules covering freight rail competition in light of consolidation.
He also said the board was "open for business" to hear shipper pricing complaints.

Transportation Department Deputy Secretary John Pocari said that freight companies will need to be profitable to continue to attract private investment. But he noted that policy needs to be sensitive to shippers.

-Yahoo News/Reuters

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Rail America carloads rose 3.6 percent in August

Short line and regional freight railroad operator RailAmerica Inc. said Wednesday its August carloads rose 3.6 percent from a year earlier, mostly due to higher shipments of metals, chemicals and minerals.

Shipments rose in half of the company's 12 commodity groups. The largest declines were in coal, waste and scrap materials, and motor vehicles.

The company expects carloads to grow about 5 percent in the third quarter, which ends this month, compared with the same period in 2009.

RailAmerica operates 40 individual railroads with about 7,400 miles of track in 27 U.S. states and three Canadian provinces. Railroads are indicators of broader economic health because they move so many raw materials and products used by consumers every day.


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FedEx to eliminate 1,700 jobs on news of lower earnings forecast

FedEx Corp., the second-largest U.S. package-shipping company, forecast earnings for the current quarter that fell short of analysts’ estimates, and said it will eliminate 1,700 jobs.

FedEx fell as much as 3.7 percent in New York trading as results indicate an uneven global recovery, with U.S. shipments trailing growth in more-profitable international express packages. FedEx and United Parcel Service Inc. are considered economic bellwethers because they deliver goods ranging from industrial parts to pharmaceuticals and financial documents.

The company said it will eliminate jobs and close about 100 facilities as it combines freight and less-than-truckload operations starting in January. Most of the closings are transfer stations and warehouse space FedEx acquired when it bought Watkins Motor Lines in 2006. Combining the freight operations will cost $150 million to $200 million and “substantially” improve profitability for the freight unit in fiscal 2012, the company said. The 1,700 job cuts represent less than 1 percent of the company’s global workforce.

Net income for the three months ended Aug. 31 was $380 million, or $1.20 a share, which fell short of the average $1.21 estimate of 19 analyst projections in a Bloomberg Survey. Net income more than doubled from the year-earlier $181 million, or 58 cents a share. Revenue rose 18 percent to $9.46 billion.

FedEx posted a 19 percent jump in international priority packages, which are its most profitable offerings, while U.S. domestic package volumes increased 2.7 percent. The company said in April 2009 it was eliminating 1,000 jobs under a plan to save $1 billion as the recession crimped sales, following the Feb. 1, 2009, suspension of matching contributions to 401(k) retirement plans. FedEx had also reduced merit salary increases for some U.S. employees. The company reinstated 401(k) matches this year.


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Five container-shipping lines reportedly show interest in using derivatives

Five container lines have shown “strong interest” in using derivatives, boosting efforts to develop a cargo-box swaps market, according to a trade group.

“Container lines are obviously important for the development of the market and to add liquidity,” Brian Nixon, president of the Container Freight Derivatives Association and an executive director at Morgan Stanley, said in a Sept. 14 interview in Shanghai after the group’s first annual meeting. He declined to name the five shipping companies.

Attracting container lines is key to expanding a derivatives market that the group expects to cover as much as 20 percent of Asia-Europe shipments within five years. So far only two lines, including Compania Sud Americana de Vapores SA, the largest in Latin America, have used swaps tied to a Shanghai container index set up last year to act as a benchmark, Nixon said.

Dealing in derivatives linked to containers is small relative to the trade in contracts used in the commodity- shipping business. About $31 billion of derivatives covering cargos such as coal and iron ore traded in 2009, according to brokerage Freight Investor Services Ltd. The Baltic Dry Index in London tracks dry-bulk cargo rates.

Swaps allow shipping lines and customers to guard against fluctuations in rates. Investors can also speculate in the market.
In container-shipping, contracts covering a few thousand boxes will likely be traded worldwide in the fourth quarter and first half of next year, Nixon said. The tally may hit 2 million annually on Asia-Europe routes within five years, he said.

The Shanghai Shipping Exchange draws data from 30 shipping lines and freight forwarders for its weekly Shanghai Containerized Freight Index, which covers spot rates for shipments to markets including Europe, the Mediterranean and the U.S. Clarkson Plc, the world’s largest shipbroker, executed the first swap settled against the index in January.

The index was devised as a benchmark for container- shipping costs, which are more difficult to follow than commodities rates. A container vessel usually carriers a wide variety of cargos for numerous different customers. Bulk ships generally carry one type of freight for one customer.


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Oil tanker finally freed from sandbar in Northwest Passage

A ship carrying 9m litres (2m gallons) of oil has been freed after running aground two weeks ago off the coast of northern Canada.

A Department of Transportation spokeswoman told AFP news agency the ship's owner had lightened the vessel's load by pumping out some of the oil.

The oil tanker was dislodged without leaking any oil into Arctic waters, the Canadian Coast Guard said.

The MV Nanny became stuck when it hit a sandbar in the Northwest Passage.

The operation to free the ship, which is owned by Newfoundland-based Woodward's Oil, took place over a period of two days near the village of Gjoa Haven in the Nunavut federal territory.

The Department of Transportation is conducting an investigation into how the oil tanker became stuck on the sandbar.
Gjoa Haven, or Uqsuqtuuq in the Inuktitut language, is the only settlement on King William Island.

The Northwest Passage is one of the most fabled sea routes in the world - the most direct shipping route from Europe to Asia through the Canadian Arctic. Historically, it has been ice-bound throughout the year.


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Tuesday, September 14, 2010

Top Story

FedEx Corp.’s shipments in the U.S. reinforce projections that it will take time for the economy to return to pre-recession levels of output.

Average daily volume at the company’s domestic express delivery unit totaled 1.792 million envelopes and boxes in the quarter that ended Aug. 31. While up 2.6 percent from the same three months a year ago, shipments were little changed from the two prior periods and down 5.9 percent from the pre-recession peak in the fourth quarter of 2005.

The lack of improvement in demand for overnight delivery services may signal consumers and companies are lacking optimism about the economy and either not spending or choosing cheaper, slower shipping options. The figures from FedEx, the second- largest U.S. package-shipping company, also underscore the Federal Reserve’s view that the recovery cooled entering the second half of the year.

The Fed said in its Beige Book survey of regional Fed banks last week that there were “widespread signs of a deceleration” in the economy from mid-July through the end of August. Central bank policy makers are scheduled to meet next week to determine the direction of the benchmark lending rate and also whether more stimulus is needed to support the recovery.

Economists earlier this month lowered projections for growth through next year, and said unemployment near 10 percent is tempering consumer spending as companies trim investment plans. The world’s largest economy will grow 2.5 percent in 2011, less than the 2.8 percent projected last month and slower than the 2.7 percent estimated for this year, according to the median forecast in a Bloomberg survey taken Sept. 1 through Sept. 9.


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Georgia port chief frustrated with dredging delays

The Georgia Ports Authority's chief said Thursday shippers tell him they're willing to wait for a deeper Savannah harbor as long as work gets under way by the time bigger ships start using an expanded Panama Canal.

Still, Georgia Ports executive director Curtis J. Foltz said he's frustrated by delays from the U.S. Army Corps of Engineers, which is two years overdue with a study that's required for the project to move forward.

Georgia has been in a race to deepen the shipping channel to the Port of Savannah, the nation's fourth busiest seaport, by up to 6 feet to accommodate giant cargo ships expected to start using the Panama Canal by the end of 2014.

Earlier this month, Foltz said for the first time that the $588 million Savannah project won't likely get done until 2015. Further delays, he said, could cause shippers to abandon Savannah in favor of deeper seaports.

After delivering his the annual State of the Ports speech Thursday, Foltz told reporters he's been assured by shippers they won't pull out of Savannah if the work's not done as soon as the Panama expansion is completed.

The Army Corps of Engineers plans to issue a final study on the project's economic and environmental impacts next month. The report was originally slated to be finished in 2008, and the Corps has cautioned it could be pushed back again.


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Billionaire shipping magnate re-negotiates ship orders

Shipping companies led by Norway- born billionaire John Fredriksen renegotiated the terms of orders for oil tankers and coal and iron ore carriers due to be built by a Chinese shipyard.

Frontline Ltd., the world’s largest supertanker operator, and Golden Ocean Group Ltd. increased the number of vessels they are having built at Zhoushan Jinhaiwan Shipyard Co. and secured lower prices, according to statements from both companies today. Fredriksen is chairman of the two shipping lines.

A decision to place additional orders may indicate Fredriksen’s longer-term confidence in tanker and dry-bulk freight markets. There “won’t be much money to earn” in shipping for the next two to three years after owners placed orders for too many new carriers, he said Sept. 1.


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Port of Tacoma distributes clean truck stickers

The Port of Tacoma announced it has made special stickers available as part of its clean truck program.

The stickers can be placed on the driver-side door of trucks that have 1994 or newer model year engines, the port said in a statement.

The deadline for all port trucks to comply is January 1, 2011.

Between October 1, 2010 and December 31, 2010 the Port of Tacoma said it would begin identifying trucks without stickers and informing drivers of the clean truck program standards and the requirement to display the clean truck sticker.

The port said more than 500 stickers have already been distributed to trucks that are pre-registered under the port’s best management practices list

Ship with whale attached docks at Oakland port

A container ship heading toward the Port of Oakland on Thursday struck a whale with such force that its body was wedged into the bow for miles, even as the vessel docked.

No one is quite sure how it happened.

Marine biologists believe the whale was alive before it was struck somewhere between the ship's origin in Los Angeles and the Bay Area.

When the ship arrived in Oakland, the mammal's head was missing and sharks had been feeding on it.

"It's an unfortunate incident," said Joe Cordaro, a wildlife biologist in Long Beach who is with the National Marine Fishing Service. "Our goal is to minimize these incidents in the future."

What is known is that the 642-foot Northern Vitality ship came into the Port of Oakland Thursday at 8:50 a.m. Because the 20-to 30-foot-long whale's body was ravaged, biologists were not able to discern whether it was a minke whale or a blue whale; the latter is on the endangered species list.

The U.S. Coast Guard said the whale's body was badly decomposed and shark-bitten, and that it must have been a floating carcass when the cargo vessel struck it.

But the whale's position on the bow indicates that the whale was probably alive when it was struck, said Cordaro, whose organization is overseeing the investigation.

-SF Chronicle

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