Port of L.A. cargo volume up 3.8 percent in August
August 2015 container volumes at the Port of Los Angeles increased 3.8 percent year-over-year.
The L.A. port handled a total of 786,677 TEUs in its strongest August performance since 2006 (790,726 TEUs), according to a port statement.
"The numbers are strong indicators that our terminal operators, longshore labor and supply chain partners are adjusting to the new industry dynamics of carrier alliances, deploying larger ships and delivering higher container volumes per call," said Port of Los Angeles Executive Director Gene Seroka. "Our San Pedro Bay supply chain optimization working groups, overseen by the Federal Maritime Commission, are providing valuable insights that contribute to our mission to improve cargo-flow efficiency and velocity."
Imports surged 6.3 percent, from 383,551 TEUs in August 2014 to 407,804 TEUs in August 2015. Exports dropped 14 percent, from 168,248 TEUs in August 2014 to 143,936 TEUs in August 2015. Factoring in empties, which went up 14 percent, overall August 2015 volumes increased 3.8 percent.
For the first eight months of 2015, overall volumes (5,389,316 TEUs) are down 2.5 percent compared to the same period in 2014, according to the port website.
China Merchants and partners buy Turkey terminal stake for $920M
China Merchants Holdings International, which runs terminals in Hong Kong and Shanghai, said it led a group of investors to acquire a 64.5 percent stake in a Turkish company to get control of its port facility.
China Merchants, COSCO Pacific and a subsidiary of China Investment Corp. bought the stake in Fina Liman for $920 million, the port operator said in a statement to the Hong Kong stock exchange. The purchase gives the consortium access to the terminal of Fina’s subsidiary Kumport.
International expansion will help diversify revenue at China Merchants, which received 92 percent of its revenue last year from the Pearl River Delta region, according to data compiled by Bloomberg.
The agreement also includes buying a 1.35 percent stake in Kumport for $20.3 million. Kumport owns and operates a terminal in Ambarli Port Complex of Marmara region in Turkey, according to the statement.
Long Beach Council confirms Harbor Commission reappointments
This week the Long Beach City Council confirmed the appointments of Long Beach City College executive Lou Anne Bynum and former City Council member Doug Drummond to second terms on the Board of Harbor Commissioners.
Both Bynum, the vice president of the harbor board, and Drummond, a former board president, were originally appointed by Mayor Robert Garcia’s predecessor, Mayor Bob Foster, according to the statement.
"These commissioners have done outstanding jobs helping to lead the Harbor Department," Garcia said. "Their commitment to continuing public service will provide stability and consistency to the decisions governing Long Beach’s most important economic engine."
Bynum is executive vice president of college advancement and economic development at Long Beach City College, where she’s worked since 1997. Her May 2014 appointment to the Harbor board marked its first female majority since its founding in 1925.
Drummond represented the 3rd District on the Long Beach City Council from 1990 to 1998. He was a Long Beach Police Department officer from 1959 to 1988, retiring as a commander. Before he became a Harbor Board commissioner in 2011, Drummond was a member of the City of Long Beach Civil Service Commission and the Board of Directors of the Long Beach Transportation Company.
The city said that although commissioners serve six-year terms, Drummond, 78, plans to retire June 30, 2017, concluding almost 60 years in public service.
Worker sues over injuries sustained on board vessel
A worker who claims he was injured aboard the ship after stepping onto an improperly covered manhole is suing the owners of the vessel.
Kevin Newton filed suit against Coastal Well Services and Belle Chasse Marine Transportation in the 24th Judicial District Court in Louisiana on July 10.
Newton alleges on July 26, 2012 he was working aboard the vessel M/V Energy II (owned by Belle Chasse). The plaintiff contends he stepped backwards onto a manhole cover on the ship when the cover flipped and struck him in the chest and his right leg slid into the hole. Newton said he suffered serious injuries in the incident including a left knee injury, a fractured rib as well as injuries to his head, right flank and neck.
An unspecified amount in damages is sought for loss of earnings, pain and suffering, physical disability, permanent disabilities, medical expenses and loss of enjoyment and life’s pleasures.
Drewry: Lower fuel costs will save carrier profitability in 2015
In the latest issue of Container Insight, Drewry says revenues at virtually every major carrier were down in the first half of the year, yet profits up due to lower fuel costs saved the bottom line. Can it last?
Out of the 16 carriers in the so-called Top 20 that report financial results, only two (Taiwan carriers Yang Ming and Wan Hai) improved sales in the first-half. A combination of slow demand growth and lowered freight rates meant that these two lines – together controlling approximately 65 percent of the world’s containership fleet – collected almost $60 billion in container revenues in the first six months of 2015, down 5 percent year-over-year. (The 16 carriers are APL, Hapag-Lloyd, Zim, CSCL, MOL, HMM, Maersk Line, Hanjin Shipping, OOCL, NYK, K Line, Evergreen, Cosco, CMA CGM, Yang Min and Wan Hai.)
Despite their lackluster sales performance, analysts say the same carriers were able to more than triple their average operating margin, which surged from 1.7 percent in 1H14 to 5.6 percent in 1H15. In dollar terms this means that the operating profit for these 16 carriers jumped from $1.1 billion to $3.3 billion.
Lower fuel costs mean that carriers’ costs are falling faster than freight rates, allowing them to continue posting profits, although the profits have been shrinking with each passing quarter. Drewry estimates that industry-wide unit costs fell by about 11 percent in the first-half of 2015 versus the same period last year, whereas unit revenues were down by approximately 7 percent.
The researchers note that events outside their control are dictating the bottom lines of these companies and that represents a serious risk to sustained profits. Carriers face the challenge of finding a way to make GRIs stick and boosting revenue before costs start rising again.
Based on prevailing fuel and rates in 3Q15 so far, Drewry predicts that the accumulation of profits over the first 9 months will be enough for carriers to walk away with okay sums for the full year, regardless of what happens in the fourth quarter.
U.S. eases trade restrictions on Cuba
The U.S. issued regulations Friday easing restrictions on American companies that want to do business in Cuba and opening up travel.
The rules, which took effect on Monday, Sept. 21, target travel, telecommunications, Internet-based services, business operations and banking, and allow U.S. companies to establish a presence in Cuba. They also eliminate limits on the amount of money people can send back to the Communist nation.
"A stronger, more open U.S.-Cuba relationship has the potential to create economic opportunities for both Americans and Cubans alike," said U.S. Treasury Secretary Jacob Lew in a statement. "By further easing these sanctions, the United States is helping to support the Cuban people in their effort to achieve the political and economic freedom necessary to build a democratic, prosperous, and stable Cuba."
The action comes as Washington and Havana move toward normal relations between the one-time Cold War foes for the first time in more than half a century. The two neighboring countries restored diplomatic ties and reopened embassies earlier this summer.
Under the rules released by the U.S. Treasury and Commerce Departments, companies can establish subsidiaries or joint ventures as well as open offices, stores and warehouses in Cuba. They also allow for telecommunications and Internet services between the nations.
Although they do not change who can travel to Cuba, the rules do ease movement of authorized travelers by licensing transportation providers. The regulations also abolish the cap on remittances and allow the travelers to open and maintain bank accounts there.
Port of Savannah container trade up 17 percent YTD
Container trade through the Port of Savannah has grown 17 percent so far this year, according to the Georgia Ports Authority.
If current trends persist, despite China’s slowing economy and a resurgence of West Coast traffic, Savannah is on track for a big year. In 2014, the state’s container port moved 3.3 million containers. Through August of this year, Savannah moved 2.6 million TEUs.
In August alone, the port handled 315,000 TEUs, up 4 percent over last year.
Port of Charleston planning to become a "Top 5" port
The South Carolina State Ports Authority is embarking on a critical five-year plan to boost its competitiveness and expand its business.
The Army Corps of Engineers approved the Port of Charleston’s dredging project last week, paving the way for the harbor to be dredged to 52 feet and the port to receive some of the world’s largest ships.
The $521 million harbor deepening is one key to the SPA’s goal of making the Port of Charleston a top-5 ranked U.S. port (from its current No. 9 position) by 2020, Newsome said. The cost will be split between the SPA and the federal government. State lawmakers already have set aside the port’s $341 million share.
The dredging project will be finished by 2020, the same time the SPA opens the first phase of a new cargo container terminal at the former Navy base in North Charleston. An access road connecting the terminal to U.S. Interstate 26 and an intermodal rail center, where cargo will be loaded onto trains without ever having to travel on public roads, also will be completed in that time frame.
"Significant investment is required to be a major U.S. container port, and earning adequate return on capital will be a challenge for us in the years ahead," said Jim Newsome, the SPA’s chief executive officer, in his annual State of the Port address Monday in North Charleston. "In addition to maintaining above-market growth and delivering high value for the reliability and cost of service we offer, there are a number of actions required to realize these investments: an improved contractual structure and revenue model from port clients; firm prioritization of capital expenditures; and an inward focus on organizational streamlining, effectiveness and productivity."
Cargo ships take on more risks as they rescue refugees
Since January 2014, more than 1,000 merchant ships have helped rescue more than 65,000 people, according to estimates from the International Chamber of Shipping. That’s more than one in 10 of the estimated 585,000 migrants and refugees who crossed the Mediterranean over the period. Commercial shipping companies have been "absolutely heroic," said Melissa Fleming, chief spokeswoman for the United Nations refugee agency.
But shipping companies are increasingly frustrated with that role. They are prepared to help, they say. But they want governments to take more of the burden.
One problem is cost. Insurance covers some expenses when a ship is forced to conduct a rescue - but not the loss of business, which ranges from $10,000 per day for cargo ships to more than $50,000 for oil tankers. A more important concern is security.
China’s well-documented economic slowdown and currency exchange rate steps could indicate the country is slipping into a recession that could tip the world’s economy into a recession — and that would mean tough times ahead for ocean shipping.
One problem that is almost always in play when talking about China and its numbers is that economists and trade analysts don’t really know how accurate the economic data is. Is it just the normal financial ups, downs and corrections — or an indication of changes in global trade?
Steve Banker, a supply chain management expert who writes for Logistics Viewpoints, advises that companies might be "well advised to start doing contingency planning assuming that China is in recession." In a recent article he quoted Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management, who said that a continuation of China’s slowdown in the next years will likely drag global economic growth below two percent, a threshold he defines as a world recession.
World trade volume declined by 0.5 percent in the second quarter this year, according to the World Trade Monitor (Netherlands Bureau for Economic Policy Analysis), and that followed a first quarter decline of 1.5 percent. While those are fairly negligible declines, they could be important indicators because until recently, global trade has been growing at twice the rate of the global economy. Thus a slowdown in trade raises concerns about the causes and effects going forward for various regions, commodities, finished goods, and trade routes.
China’s slowdown poses some significant risks for container shipping, according to Drewry Maritime Research. "Greater China (including Hong Kong) represents approximately 30 percent of all container moves in the world, having nearly doubled its share since the start of the century when its expansion was given a major boost following entry into the World Trade Organization (WTO)," Drewry said.
With such a large share of the pie, the consultancy continued, "The direction of the Chinese economy has a huge bearing on world port throughput growth. The IMF was not moved to change its forecast for China in its latest World Economic Outlook, keeping GDP growth pegged at 6.8 percent for this year and 6.3 percent in 2016. These are still numbers that most other economies can only dream of, but the slowing trend has prompted Drewry to downgrade its outlook for Greater China, and subsequently, world container traffic."
Drewry’s analysis of the numbers coming from the WTO, the China Federation of Logistics & Purchasing and China’s National Bureau of Statistics has led Drewry to cut its 2015 growth forecast for Greater China port throughput from 5.8 percent to 4.9 percent, which represents a shortfall of approximately 1.85 million TEUs, or roughly 1 percent of world traffic in 2014.
China’s imports fell 14.3 percent year-on-year in August, and they fell 8.6 percent in July, London's Financial Times reported. Meanwhile, August exports dropped 6.1 percent after an 8.9 percent decline in July.
Drewry’s bottom line: "The risks from a slowdown in Chinese consumption to container shipping are far smaller than for the dry bulk sector, but they are not inconsiderable and will contribute to slowing world box growth."
It seems clear then that China’s domestic economy has weakened. Another indication that things are not going well in China — or in the global economy — is the plunge in box rates that carriers charge to ship containers from China to its trading partners. Those prices have "totally collapsed," said Sydney's Business Insider last month. Container rates from China to the rest of the world have been in a steep decline, with some fluctuations, since February.
Recession or no, companies that manufacture in China will have to carefully monitor demand, production and inventory, perhaps on a more frequent basis than usual, to make sure they stay on top of the situation there. They will also need to carefully monitor the financial health of their suppliers, and the resiliency of their supply chain components, including of course transportation and logistics. Companies with flexible, responsive supply chains will weather a global recession, or whatever disruptions that may come out of China, better.
Georgia ports volume up on West Coast diversion
This week, the Georgia Ports Authority board heard from Executive Director Curtis Foltz, who reported that volume growth was up on West Coast diversion but cautioned that 2016 trade levels are uncertain due to weakening global markets.
"Container volumes were surprisingly strong in August, setting a new record for the month and signaling the resilience of the market during a normally slow period," Foltz told his board.
As reported in CBN Tuesday, the GPA moved 315,175 TEUs last month and a total of 639,416 for July and August, 7.3 percent higher than the first two months of fiscal 2015. For the calendar year, container volumes were up 16.6 percent.
Foltz asserts that at least part of that increase is due to the port keeping more of the cargo that was diverted from the West Coast than was anticipated — cargo that was rerouted amid unsettled W.C. labor issues and chronic cargo congestion in late 2014 and early 2015.
"There were, of course, some shippers that needed to return to West Coast ports for a variety of reasons," Foltz said. "But, as the dust settles, it has become clear that we are going to permanently retain a higher percentage of diverted cargo than I expected."
Foltz attributed the shift to the quality of services provided by GPA, even while dealing with some 500,000 additional containers during the height of the diversion.
"This is a real plus, not only for us, but the entire Southeast."
That said, he cautioned that the rest of FY 2016 remains uncertain as international markets continue to struggle.
"If you look at the global economy, there’s not much to cheer about right now," Foltz said. "But the effect this uncertainty will have on international shipping remains to be seen. We just have to continue watching this closely."
Breakbulk cargo also was up, with GPA reporting an increase of nearly 4 percent. Ocean Terminal in Savannah had the strongest growth — more than 10 percent — with increases in autos, wood pulp, machinery and rubber.
Liquid and dry bulk experienced significant decreases, Foltz reported, down nearly 24 percent for the first two months of the years.
Revenue for the first two months was $60.5 million, nearly 8 percent higher than the same period last year. Expenses for the year were favorable to budget, due mostly to lower fuel and benefit costs combined with productivity improvements, Foltz said.
Virginia Port Authority granted 40-year lease at Richmond port
The Virginia Port Authority has been granted a 40-year lease at the Port of Richmond.
This week the Richmond city council approved the deal, which will help modernize the port and bring more jobs and investment to the region, but is viewed by opponents of the move as a potentially risky concession of city-owned property.
The city will receive rent payments of up to $180,000 a year to use the port, which sits on 120 acres along the west bank of the James River.
About $18 million in capital investments are planned for the facility. The city contemplated a shorter lease of five years, but officials said a long-term lease would ensure more infrastructure upgrades. The port authority already leases the Port of Richmond.
The authority also operates terminals in Newport News, Portsmouth, Norfolk and Front Royal.
Malaysian port on track to handle 9.2M TEUs in 2015
The Malaysian Port of Tanjung Pelepas (PTP), a 70 percent-owned subsidiary of MMC Corp, is on track to achieve its total container volume target of 9.2 million TEUs for 2015 after hitting a record 800,000 TEUs in August.
With the August record, PTP said in a statement today it has strengthened its position as the busiest port in the country while registering a growth of 8.9 percent in the first eight months of this year compared to the corresponding period last year.
It did not disclose the first eight months’ figure, but based on the growth rate above, it is estimated that the port recorded about six million TEUs for the period, compared to about 5.5 million seen in the same period last year.
Massive amount of rupees found in container at Chittagong Port
Customs officials detained five people for allegedly smuggling a massive amount of Indian rupees into Bangladesh through the Chittagong Port.
However, the officials are not certain whether the rupees, amounting to nearly 27.2 million, are genuine or counterfeit currencies. Bangladesh has no machine to identify counterfeit foreign currencies, Customs Intelligence and Investigation’s Director General Mainul Khan told reporters.
"Most of the Indian currencies seized in Bangladesh were counterfeit and that might be the case with these as well," he said.
The rupees were found in four cartons in a container on Sunday night.
The container was brought through Clearing and Forwarding (C&F), Flash Trade International agent Khan said.
Port of Long Beach seeks input on undeveloped Terminal Island pier
The Port of Long Beach will solicit input from stakeholders on how to best use a largely undeveloped 150-acre pier on Terminal Island, port officials recently announced.
About 30 acres known as Pier S is being used as an overflow storage facility for loaded cargo containers and chassis, according the port statement. The Pier S temporary depot originally opened on December 2014 to store empty cargo containers and free up truck chassis.
The Board of Harbor Commissioners approved a six-month extension for the facility before it was due to close on March 31, 2015.
Currently, there are no specific proposals, but port and industry stakeholders who are part of the port’s supply chain optimization effort may give suggestions about improving cargo flow, port spokesman Lee Peterson said. A full environmental review would have to be done for any proposal.
"The success of the Pier S demonstration project has encouraged us to consider a more expansive use of the property to build on what [we] learned about the efficiency of near-dock operations," said Port CEO Jon Slangerup in a statement. "The closing of the temporary depot on Pier S gives the port an opportunity to study a more permanent use for the site, one that will mesh with our ongoing supply chain optimization effort."
Port staff will prepare a recommendation on the study process for the Harbor Commission in the near future.
Pasha Stevedoring and Terminals has been operating the temporary depot.
Oakland city officials examine health risks posed by coal exports
City officials may be able to block the export of coal and other fuel from a new shipping terminal being built on the old Oakland Army Base — if they find those exports seriously threaten the health and safety of residents.
The City Council will hold a public hearing Monday to collect testimony on the potential health risks of transporting millions of tons of coal and petroleum byproducts through Oakland each year.
"There’s a lot of discussion going on in the community," city spokeswoman Karen Boyd said. "[The] council wants to be well-informed and really wants to hear from the community, and that’s why they devoted extra time to the issue."
Councilman Dan Kalb called for the hearing after news broke that four coal-producing counties in Utah wanted to invest $53 million to be able to ship "energy commodities" through the West Oakland terminal, which is expected to open in 2017.
Kalb and other city leaders say coal exports would violate Oakland’s 2014 resolution opposing the transportation of coal and petroleum coke, an oil refinery byproduct.
But the council passed that resolution after city officials agreed to let California Capital and Investment Group develop the export terminal and approved an environmental review of the $260 million project.
An Oakland city staff report issued earlier this month says the agreement with CCIG is subject only to regulations that existed at the time.
NYK to launch monthly car service from Port Canaveral to S. America
NYK will start a monthly service from Port Canaveral to Central and South America for Central Florida’s auto and heavy equipment businesses. The first ship will be the MV Neptune Leader V 65, according to a port statement.
"With the relatively short trucking distance between Port Canaveral and the numerous auto and heavy equipment auctions located in Central Florida, the NYK service will provide area businesses with cost-effective options and positions us competitively with other Florida seaports," said Alberto Cabrera, Port Canaveral’s senior director of cargo business development.
The port release said Ambassador Services Inc. will be the vessel agent and terminal operator. Ceres will provide the stevedoring for NYK, which will call at Port Canaveral once a month.
U-Ocean offers weekly Shenzhen-Oakland LCL service
The U-Freight Group’s (UFL) ocean freight arm, U-Ocean, says that it is the only forwarder in Shenzhen that offers a guaranteed regular weekly consolidation service between Shenzhen and Oakland, which also accepts cargoes from the Guangzhou and the Pearl River Delta areas and has an 18-day transit time.
The company also offers twice-weekly ocean freight consolidation services in both directions between Hong Kong and Shanghai, each with a transit time of three days.
U-Ocean also has several other regular ocean freight consolidation services in the intra-Asian and trans-Pacific trades. Simon Wong, the company’s chief executive officer, says that UFL will look at more destinations for new consolidation services, led by demand.
U-Ocean said consignments shipped on the U-Ocean consolidation services have full track and trace visibility from origin to destination via the U-Freight Group’s website.
Trucker’s family wants answers about death at Port of Long Beach
The family of a truck driver who was killed at the Port of Long Beach is seeking answers surrounding his death.
At a press conference Tuesday in Los Angeles, port truck driver Wilfredo Vasquez stood with attorneys Juan J. Dominguez and George Singer of The Dominguez Firm and other truck drivers asking the public for help in finding out what happened to Vasquez’s son, William.
William Vasquez, 26, an independent contract truck driver for Signal Hill-based California Multimodal LLC, was killed Sept. 16 while picking up a cargo load at 8:30 a.m. at Pier A at the Port of Long Beach.
The port has not been forthcoming with information despite numerous calls, Dominguez said. On Monday, an attorney for the port responded to the family, saying the port had little to no information, he said.
In a statement Tuesday, port head Jon Slangerup called Vasquez’s death unfortunate. "Our sympathies go to his family and friends," he said. "Cal/OSHA is currently investigating his death, which occurred Sept. 16 at a privately operated terminal."
Representatives with California Multimodal did not return calls for comment.
A representative from the state’s Division of Occupational Safety and Health, or Cal/OSHA, said it is actively investigating Vasquez’s death but could not release more information. By statute, Cal/OSHA has six months to close an investigation.