Cargo Business Newswire ArchivesSummary for September 14 through September 18, 2015:
Monday, September 14, 2015
XPO Logistics makes $3B deal to acquire Con-way
Photo credit: The Ann Arbor News
XPO Logistics announced it would buy trucking and logistics company Con-way for $3 billion, including debt, making it the second largest provider of less-than-truckload services in North America.
The $3 billion transaction will increase XPO's revenue to $15 billion and will nearly double EBITDA to $1.1 billion, according to the company statement.
XPO's offer of $47.60 per Con-way share in cash represents a premium of nearly 34 percent to the stock's close on Wednesday, according to Reuters. The company said it would capitalize on synergies from the combination with Con-way's managed transportation, truckload and freight brokerage businesses.
XPO intends to increase Con-way's annual operating profit by $170 million to $210 million over the next two years through synergies and operational improvements.
Headquartered in Ann Arbor, Mich., Con-way is a Fortune 500 company with a transportation and logistics network of 582 locations and approximately 30,000 employees serving over 36,000 customers. For the full year 2015, consensus analysts' estimates for Con-way are $5.7 billion of revenue and $528 million of adjusted EBITDA. The transaction is expected to be substantially accretive to XPO's earnings in the first 12 months.
All of the acquired operations - Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal - will be rebranded as XPO Logistics.
Port of Long Beach cargo numbers surge again in August
For the second month in a row, the Port of Long Beach broke its own record for cargo volume in its 104-year history. In a clear sign that customers are confident in the Port, overall cargo volume grew by 22.8 percent in year-over-year.
Cargo volume, measured by the number of containers moving through the Port, reached 703,652 TEUs. The amount beats July’s cargo volume and marks two consecutive months of record-breaking volumes. A total of 1,393,896 TEUs moved through the Port of Long Beach in July and August.
"Our partners once again have expressed their confidence in the Port of Long Beach and we thank them for their business," said Port of Long Beach CEO Jon Slangerup. "We have been working with all our stakeholders and the results are our best month ever."
As consumer confidence grows, the dollar strengthens and retailers’ stock shelves, the Port of Long Beach’s strategic partnerships continue to yield positive results. Through the first eight months of 2015, Long Beach cargo numbers are growing faster than the overall economy and are up 5.4 percent compared to the first eight months of 2014.
"We thank our partners for choosing the Port of Long Beach," said Slangerup. "We’re building the port of the future by investing $4 billion in improvements because as the economy grows, we will grow. We have not seen volume like this in our entire 104-year history and that is the clearest sign that consumers are buying."
Not only did imports climb by 358,262 TEUs, or a 19.1 percent increase over last year, but exports grew 9.4 percent to 138,765 TEUs. Empty containers, meanwhile, rose 42.1 percent with 206,625 TEUs.
U.S. import prices in August record biggest drop in 7 months
August U.S. import prices posted their biggest fall in seven months, as the cost of fuel and a range of goods fell, indicating that a strong dollar and weak global demand continued to put downward pressure on imported inflation.
The Labor Department said on Thursday import prices dropped 1.8 percent last month, the largest decline since January. Import prices have now declined in 12 of the last 14 months.
Analysts had predicted import prices falling 1.6 percent.
In the 12 months through August, prices declined 11.4 percent, the largest drop since September 2009.
Very low inflation, in the face of a tighter labor market and stronger economic growth, poses a challenge for Federal Reserve officials as they consider raising interest rates for the first time in almost ten years.
The Fed's policy-setting committee will meet on Sept. 16-17.
Taiwan carrier Yang Ming Marine ordered five 14,000-TEU containerships from Imabari Shipbuilding, with options for another five.
The ships, worth $125 million each, are scheduled for deliveries in 2018 and 2019, and will be chartered to Shoei Kisen Kaisha.
The newbuilds will bring Yang Ming's 14,000-TEU box ship fleet to 20 vessels when they’re delivered.
The shipping line said its revenue in August was $346 million, up 9.08 percent on a year ago, but its revenue for the first eight months this year declined 0.24 percent.
Yang Ming Chairman Frank Lu said the container ships industry will perform better in the fourth quarter of 2015, as the global economy is recovering.
Canada regulator orders CP to address safety violation
Canada's transportation watchdog Transport Canada has ordered Canadian Pacific railway to address an alleged safety violation after it found the company was not carrying out a mandatory brake safety test on some of its trains in Western Canada, according to a letter obtained by Reuters.
An inspector from agency told the company in the Sept. 3 letter that it had confirmed CP was not doing a required emergency brake test on trains originating in Moose Jaw, a town in the province of Saskatchewan.
"This information has been confirmed by conversations with Moose Jaw mechanical supervisors and staff that this is the current process," the inspector wrote in the letter.
The test checks whether brakes are applied on the last car of a train when emergency brakes are activated from the locomotive controlling the train, the letter said.
Drewry: A smaller, more agile fleet is valuable in a weak market
The race to build fleets of Ultra Large Container Vessels of 18,000-TEUs and above continues, but carriers need to be more creative as they decide how to deploy smaller deliveries, according to the latest issue of Container Insight from Drewry Maritime Research.
China COSCO, still suspended from trading amid merger talks with China Shipping, has confirmed the $1.5 billion order of eleven 19,000- TEU ships from four different Chinese shipyards for delivery in 2018.
Cosco’s orders means that there are now nine carriers who either have ships of this size currently in their fleet or on order, Drewry says. More are expected to follow as CSCL is reportedly on the verge of ordering 11 more ULCVs, while Japanese shipyard Imabari has also reportedly received an order for four 20,000-TEU vessels with an as yet unnamed owner.
The industry has made it very clear that they see ULCVs as the future, analysts say, but recent developments have exposed their inflexibility. The alarming drop in Asia-to-Europe traffic and a crash in rates caused two of the big carriers groups to make the unprecedented decision to suspend services in peak season, while the two other alliances have been tinkering with missed sailings in order to try and support higher rate requests, according to Drewry.
The G6 Alliance is the latest to announce an array of voided voyages in Asia-Europe, while the Ocean Three carriers (CMA CGM, CSCL and UASC) will next month merge the FAL2 and FAL3 into a single loop dubbed FAL23 that will deploy 12 ships of between 12,000-15,000 TEUs. The 2M carriers (Maersk Line and MSC) had previously announced they are cancelling their AE9/Condor service that uses 10 ships averaging 10,300 TEUs. It is not yet clear what will happen to the 22 ships that are being displaced by 2M and Ocean Three, although Maersk’s release suggests the loop could still be reactivated on-demand, Drewry reports.
The researchers note the inflexibility of ULCVs that can’t operate in any other trade besides Asia-Europe, which makes it hard for carriers to react to changing demand and juggle ships. All of the 10,000 TEU+ newbuilds delivered this year to the end of August have been deployed in Asia-Europe, but it’s where carriers are putting the ships of between 8,000-10,000 TEUs that shows how they are trying to spread the burden of the new capacity as thinly as possible to avoid contaminating too many other trades.
The rush to purchase ULCVs is triggered by the desire to reduce slot costs and not be left behind, but Drewry says the impact on the wider industry in terms of heavily discounted freight rates has been entirely predictable. While the bigger ships will always have some form of cost advantage, the economies-of-scale argument is being diminished by the falling price of marine fuel.
In conclusion, the researchers say shipping lines worry about being left behind in the race for ULCVs, but while they will always retain a competitive advantage (now diminishing), the value of having a smaller, but more flexible fleet in a slowing market should not be overlooked.
Truck drivers escalate picketing of Pacific 9 Transportation
Striking port truck drivers in California escalated picketing at Pacific 9 early Monday (9/14) morning, according to the American Journal of Transportation.
Thirty-eight port truck drivers who say they have been misclassified as "independent contractors"—many of whom have been on strike against their employer, Pacific 9 Transportation (six times in the last two years)—are now entering the tenth week of their sixth strike. That strike concluded six weeks of testimony in back-to-back individual hearings before the California Division of Labor Standards Enforcement, during which drivers claimed more than $6 million in wage theft.
Drivers from recently-unionized trucking companies Shippers Transport Express and Eco Flo Transportation joined the striking drivers’ picket line at the company’s truck yard in Carson, CA.
In the coming weeks, the Labor Commissioner’s Office is expected to issue a decision determining whether or not the drivers are in fact employees and how much they are owed by Pac 9.
JaxPort says partial funding to deepen channel due within one year
Container cargo through JaxPort may triple by 2035, with the regional economic impact topping $850 million per year, according to a 2013 port study.
But before that can happen, $684.2 million must be spent to deepen JaxPort’s shipping channel from 40 to 47 feet in order to accept larger container ships. The first installment of the money is due within a year or else JaxPort will fall off a timeline, which would affect market confidence.
"I don’t think we’re running out of time as we sit here today," said JaxPort CEO Brian Taylor. "On the other hand, if we were to reach a point in time where our customers see we’re not moving and other ports are, then I think that’s the tipping point."
Research completed this summer by The Boston Consulting Group said the 2016 completion of the Panama Canal expansion will divert as many as 9 million East Asia containers per year from West Coast to East Coast ports by 2020.
"It’s going to be more than any one port can handle," Taylor said.
Now, the port is eight to 12 months away from completing its final preparation — a partnership agreement with the U.S. Army Corps of Engineers.
"What JaxPort needs is to send some kind of signal to the market as to whether they’re actually going to get deeper water," Mark Szakonyi, executive editor of the Washington D.C.-based Journal of Commerce. "And the only way to send that signal is to say, ‘We’ve secured this much funding.’"
With federal support falling short, states have been picking up more of the tab for infrastructure projects. How Florida might pay for deepening at JaxPort is speculative, said Doug Wheeler, president and CEO of the Florida Ports Council.
The funding won’t need to arrive all at once, said Taylor, since the project will proceed in three or four phases. But each phase will need to be fully funded in order to begin.
JaxPort is in competition with the ports of Savannah and Charleston. All three cities are positioned to not only capture container cargo for its own area, but for transport to destinations inland — Atlanta, Nashville, Memphis and Chicago.
G6 Alliance announces Asia - Europe schedule update
Members of the G6 Alliance on Monday (9/14) announced additional void sailings within their Asia-Europe services in response market demand changes, according to a OOCL.
The following void sailings are planned for the subsequent services and weeks:
- Loop 6 service in week 44, 48, 52 (westbound ETA Fuzhou, 29 October, 26 November & 24 December 2015). Kaohsiung will be added as a westbound call, while Jebel Ali will be inserted on the eastbound leg of Loop 7. The westbound Colombo and Xiamen calls will be added into Loop 4.
- Loop 7 service in week 45 and 49 (westbound ETA Qingdao 02 November & 30 November 2015). Qingdao will be added to Loop 4 on the westbound leg in the corresponding week, while Gdansk, Gothenburg and Antwerp calls being covered by Loop 5 on the eastbound direction during the same timeframe.
- Loop 4 service in week 46 and 50 (westbound ETA Ningbo 13 November & 11 December 2015). The westbound Le Havre call will be covered by Loop 6 in the respective week.
- Loop 5 service in week 47 and 51 (westbound ETA Kwangyang 20 November & 18 December 2015). The westbound Kwangyang and Pusan calls will be added in Loops 7 in the respective week.
- Loop 1 service in week 53 (westbound ETA Kobe 02 January 2016)
The G6 Alliance members are: APL, Hapag-Lloyd, Hyundai Merchant Marine, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Orient Overseas Container Line.
Worker hurt on cargo ship in Port Everglades
A 48-year-old man suffered injuries to his face while working on a cargo ship at Port Everglades, according to a fire-rescue official.
The man was tugging at a metal rod that swung his way and hit him in the face while he was on an upper deck of the ship, said Broward Sheriff Fire Rescue spokesman Mike Jachles.
The technical rescue team set up an aerial platform on the dock to remove the injured worker from the ship. While on a stretcher, the worker was propped onto the aerial platform's basket and lowered to the dock where he was loaded onto a rescue truck.
Officials said the man’s injuries are not life-threatening.
Container imports are up at the Port of Oakland as peak shipping season approaches, with imports surging 15 percent in August year-over-year. It was the sixth-straight month.
"We're building momentum before the peak," said Maritime Director John Driscoll. "It's an indication that the season could be a good one; but more importantly, it's a sign that customers are counting on the Port of Oakland to deliver."
Overall container volume in August - imports, exports and empty boxes - was up 6 percent. Year-to-date total volume is still down 4.8 percent from a year ago, but up from double-digit volume declines in winter.
Imports have led Oakland's volume rebound. The port said it handled 82,492 TEUs last month. That was the most since March when the Port's import rally began. Import growth has been continuous since the Feb. 20 tentative settlement of a West Coast waterfront labor dispute. August exports at Oakland came in at 77,657 TEUs.
The Port of Oakland said an increase in longshore labor is helping to absorb volume growth. About 150 more dockworkers are being deployed at Oakland's five marine terminals.
WWL wins deal to transport Toyota cars from Japan to N. America
Wallenius Wilhelmsen Logistics (WWL), has been won a deal from Toyota to transport their passenger cars from Japan to North America.
WWL already provides Toyota Motor Corporation with ocean services for completely built units from Japan to Europe and Toyota Group companies in Europe, the US, Australia and Africa.
The Japan to North America Ocean Service award is the latest extension of the partnership between the two companies. The first vessel departed from Japan September 12 and will arrive at the U.S. East Coast in early October. Toyota uses the Tahara ocean terminal located next to the Toyota Tahara plant in Japan's Aichi prefecture. The ports of discharge will be Jacksonville, Florida and Newark, New Jersey.
WWL is continuing to strengthen its global ocean and land-based service network to support the needs of its customers for the transportation of Automobiles, High- and Heavy Equipment and a broader range of RORO Cargo.
Corps of Engineers okays Charleston dredging project
The Port of Charleston received approval this week for the Harbor Deepening Project, which will dredge their harbor to 52 feet to accommodate mega container ships calling at port terminals, according to a port statement.
The Corps report outlines the recommendation of deepening the Charleston Harbor channel to 52 feet and entrance channel to 54 feet, as well as enlarging turning basins. After review by the Secretary’s office, the report moves to the Office of Management and Budget for review and then to Congress for review and authorization, expected early next year.
"Receipt of the Chief’s Report is tremendous news for SCPA," said Jim Newsome, SCPA president and CEO. "By the end of the decade, we will achieve 52 feet of depth and Charleston will be the deepest harbor on the East Coast. This depth advantage will provide our customers with 24-hour access to deepwater, a requirement for significant long-term volume growth in today’s big-ship environment. We are grateful for the expertise and leadership of our partners, the US Army Corps of Engineers, who deliver today’s news just four years after we began the deepening process."
Chinese-financed Kenya Railways lays track
The tracks for a new, faster railway linking the Indian Ocean port of Mombasa to Kenya's capital will be laid by late 2016 and will be operational in June 2017, according to the chairman of Kenya Railways.
The Chinese-financed endeavor is in the first stage of a project that aims to extend to Uganda and other land-locked states. The goal is to cut the cost of transport and increase trade by replacing a narrow-gauge line that has slower top speeds.
"We're ahead of schedule," said Kenya Railways managing director Atanas Maina. "There's government commitment, there's been a lot of push for land acquisition, there's been very heavy mobilization, and the funding has gone very well."
Kenya intended to complete 40 percent of civil works, ranging from laying track to fixing bridges, by the end of 2015. It is now on track to complete half by year end.
Maina said he hoped to have a private management company in place by mid-2016.
A cargo ship with a Russian crew caught fire over the weekend while docked at the Manila International Container Terminal in Tondo, Manila.
Reports from the Philippine Coast Guard said smoke was first seen billowing from freight containers onboard MV Cape Moreton around 9:15 a.m.
The PCG said around 20 fire trucks of the Bureau of Fire Protection were sent to put out the flames, with some responders also using tugboats to approach the vessel. BFP personnel boarded the vessel and assisted the ship’s crew.
Cargo loss from Tianjin explosions $1.5 billion+, says trade group
Explosions at the Chinese port of Tianjin last month will lead to cargo losses of at least $1.5 billion, and are having a "significant impact" on the marine insurance sector, according to the International Union of Marine Insurance.
"We are expecting to see cargo losses of at least $1.5 billion, with some reports stating that the final figure could be as high as $6 billion," said Nick Derrick, chairman of the trade group’s cargo committee, adding that the incident should provide a "substantial wake-up call to all cargo insurers."
Reinsurance broker Guy Carpenter, a division of Marsh & McLennan, had said earlier this month that insurance losses for buildings, cargo, containers and property as a result of the explosions could total up to $3.3 billion.
Credit Suisse estimated losses of between $1 billion and $1.5 billion days after the blast in August.
COSCO and China Shipping: Merger may involve "asset restructuring"
COSCO and China Shipping Group, two of the China’s largest shipping firms, said shares in their listed companies would remain suspended pending a complex matter under research that "may involve asset restructuring."
The listed units of the two state-owned carriers, including Cosco's flagship China Cosco and China Shipping's China Shipping Development, stopped trading their shares starting Aug 10, saying at the time that they were "planning major issues."
The announcement from both companies on the Shanghai Stock Exchange website this week was the first public mention by either company of possible merger talks. A source with direct knowledge of the matter told Reuters earlier that a possible merger between the two firms was being discussed.
Cosco and China Shipping are the world's sixth and seventh largest container shipping firms, respectively, according to consultancy Alphaliner.
Rotterdam World Gateway opens at Port of Rotterdam
Rotterdam World Gateway and DP World celebrated the official opening of a high tech automated container terminal last week at Maasvlakte 2 at the Port of Rotterdam.
RWG is able to handle the largest vessels afloat, and with dedicated handling facilities for barge, rail, road and extensive automation, the terminal looks very different than a traditional marine terminal, according to the port statement.
Featured guest speakers at the launch event included Ronald Lugthart, managing director of RWG; Allard Castelein, CEO of the Port of Rotterdam Authority; and Sultan Ahmed bin Sulayem, chairman of joint shareholder DP World.
"Our terminal, with its fully automated cranes, is run by a team of no more than 10 to 15 people on a day-to-day basis," said Lugthart. "Most of our employees are IT specialists. It is a completely new way in container operations. We are, in fact, an IT company that handles containers: a container terminal 3.0. With this, RWG wants to set an example for the world."
With an annual capacity of 2.35 million TEUs, the terminal can handle the newest generation ULCCs, according to the RWG statement. It also provides ample container storage and transhipment services.
The terminal features eleven deep-sea cranes, three barge/feeder cranes, two rail cranes and 50 automatic stacking cranes which provide access to both deep-sea vessels and all hinterland connections.
RWG is an international consortium that consists of four shipping lines — APL (Singapore), MOL (Japan), HMM (South Korea) and CMA CGM (France) — and terminal operator DP World (Dubai).
Inchcape Shipping Services wins major contract with LNG giant Cheniere
Inchcape Shipping Services announced it has won a new hub agency contract for the Asia-Pacific with LNG energy giant, Cheniere Energy. Under the two-year contract, ISS will manage approximately 100 port calls annually for Cheniere Energy across the Asia-Pacific.
Cheniere is developing LNG export terminals along the Gulf of Mexico, according to ISS. Through its subsidiary, Cheniere Marketing, it has sold a portion of the production from these facilities under delivered ex-ship contracts in which Cheniere Marketing will deliver LNG to the customers’ terminals. ISS says its services will facilitate these deliveries as well as other deliveries arranged by the company’s marketing arm.
"We’re delighted to be working in the Asia-Pacific with our new client Cheniere," said Tim Whitmore, Liquid & Gas Specialist at ISS, in the statement. "Along with quality hub agency, our operational processes, innovative technology platforms such as YourISS2 and, focus on customer requirements helped secure this significant new contract."
Cargo ship and ferry collide off Turkey coast
The Maltese-flagged cargo freighter Ganda, sailing between Russia and Albania, crashed into a 50-meter Turkish ferry traveling between Gelibolu and Çardak, according to local authorities.
The Directorate General for Coastal Security sent rescue boats to Turkey’s Dardenelles Straight to assist the vessels.
No injuries were reported, but both ships were damaged, authorities said.