Cargo Business Newswire Archives
Summary for September 22 through September 26, 2014:

Monday, September 22, 2014

West Coast port labor negotiations tackle automation

As they negotiate a new contract for up to 20,000 West Coast dockworkers, the International Longshore and Warehouse Union and the Pacific Maritime Association must address the thorny issue of increasing automation, as terminal operators replace as many as half the laborers at some ports with robots in the biggest technological change in 50 years.

The two parties are discussing how to retrain and preserve jobs for longshore workers, since automation will decrease the number of jobs at one Los Angeles terminal by 40 to 50 percent once changes are completed in 2016, according to a Harbor Department report released in April.

"In the U.S., the extent to which automation of container terminals affects the number of longshoremen’s jobs depends on negotiations between the employers and unions," said Neil Davidson, a senior analyst at Drewry Maritime Research via e-mail. "Employers aren’t simply free to decide to reduce jobs. In addition, it depends on the nature of the automation."

More than two months after a six-year agreement expired, the ILWU and the PMA are trying to strike a new contract for West Coast dockworkers. A strike or lockout could cost the U.S. economy up to $2 billion a day, according to the National Retail Federation and National Association of Manufacturers.

Los Angeles and Long Beach port terminal operators are installing equipment that moves containers from ships to shore cranes and trucks with minimal human labor. The first large-scale automation project will involve a TraPac Inc. terminal at the Port of Los Angeles in 2016. Orient Overseas Container Line at Long Beach will add robots as part of a $1.3 billion project to upgrade two container terminals by 2019.

"New technology is a fact of life," said Craig Merrilees, a spokesman for the union. "The best approach is for workers and management to agree on terms that are fair and beneficial for all involved. That approach was successful when containers were introduced on the waterfront over 50 years ago, and it remains the best approach today."

PMA spokesman Wade Gates declined to comment on the talks or the role of automation.

According to the Los Angeles Harbor Department report, technology at L.A.’s TraPac terminal will probably reduce the number of workers needed per crane by about 53 percent, and by 85 percent at transtainers, which are hoisting devices for loading and unloading cargo from rail cars or trucks.

The 27 West Coast ports are worried about competition from rivals on the East Coast and Texas once the Panama Canal opens in 2016.

The port labor talks are continuing as West Coast dockworkers stay on the job.

For more of the Bloomberg story:

Maersk talks 2M with Chinese regulators

Maersk Line’s chief executive Soren Skou met on Friday with Chinese authorities about its prospective vessel sharing alliance with Mediterranean Shipping Company.

Skou met with the director-general of Ministry of Commerce’s anti-monopoly bureau, Shang Ming, who said in a July interview with China's state broadcaster he was worried the new pact could affect China's import-export firms' ability to bargain with large shipping firms. The two discussed the ministry's decision to block the previous alliance, the new pact and monopoly issues.

China’s Ministry of Commerce previously blocked the P3 Alliance, a larger ship-pooling deal that included Maersk, MSC and CGM CGA, due to competition concerns. Analysts say the new 2M pact has a better chance of gaining China's approval since it will give the container lines under30 percent of capacity on Asia-Europe trades, much less than the P3 had planned.

Skou also met China's Vice Minister of Transport, He Jianzhong, on Thursday during which they discussed the Chinese shipping market, a government statement said.

2M is currently awaiting U.S. regulatory approval. A.P. Moller Maersk's chief executive on Wednesday said U.S. approval was a formality.

For more of the Reuters story:

S.C. port volume up 13 percent, port CEO gets raise and bonus

SC Ports Authority posted container volumes that were up 13 percent fiscal year to date, a strong start to the first two months of the fiscal calendar.

The SCPA said it handled 163,970 TEUs in August, an increase of about 12 percent compared to the 144,649 TEUs moved during August 2013.

In non-containerized cargo, Charleston handled 134,105 tons of breakbulk cargo in August. Georgetown handled 124,080 pier tons in July and August, up 6.6 percent yare-over-year.

"Strong container volumes are driving exceptional fiscal year to date operating earnings, which were nearly 70 percent higher than last July and August," said SCPA president and CEO Jim Newsome. "Over the next several months, we will be watching the development of vessel sharing agreements and evaluating the impacts they will have on our FY2015 volumes, as well as implementing our new customer contract approach."

In related news, S.C. State Ports Authority is giving Newsome a raise, a performance bonus and a contract extension that will keep him leading the port for another seven years, according to the Post and Courier. The port head will earn $410,000 annually starting Jan. 1, 2015. The $15,000 raise equates to a 3.8 percent increase.

He also will receive a $120,574 annual bonus based on the port's cargo-volume growth and its cash-flow performance for the fiscal year that ended June 30.

Newsome reportedly said he was honored by the confidence the board indicated by offering him a new, long-term contract that runs through December 2021.

Oil-by-rail continues to stall shipment of U.S. grain bumper crop

The shale-oil boom is backing up rail lines to ports, which will likely cause shipping lines to miss out on exports from this year’s record U.S. grain harvest.

Although U.S. will reap the highest grain crops in history, fourth-quarter export cargoes will be 15 percent lower than last year, according to RS Platou Markets AS, a Norwegian bank specialized in shipping. Rates for Panamaxes, most routinely used for grains, averaged $7,574 a day this year, headed for the lowest level since 1999, Baltic Exchange data indicate.

Energy shipments are dominating rail at the expense of grains. The Association of American Railroads says crude moved by rail almost doubled last year and the Energy Department is predicting the most oil output in 45 years in 2015.

"If you’re an owner, you’re banking on a bumper season of exports," Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo. "The fact you see a situation where grains don’t come to the port: that’s a negative surprise for the shipping market."

For more of the Bloomberg story:

Crane collapses at Lyttelton Port

The shale-oil boom is backing up rail lines to ports, which will likely cause shipping lines to miss out on exports from this year’s record U.S. grain harvest.

Although U.S. will reap the highest grain crops in history, fourth-quarter export cargoes will be 15 percent lower than last year, according to RS Platou Markets AS, a Norwegian bank specialized in shipping. Rates for Panamaxes, most routinely used for grains, averaged $7,574 a day this year, headed for the lowest level since 1999, Baltic Exchange data indicate.

Energy shipments are dominating rail at the expense of grains. The Association of American Railroads says crude moved by rail almost doubled last year and the Energy Department is predicting the most oil output in 45 years in 2015.

"If you’re an owner, you’re banking on a bumper season of exports," Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo. "The fact you see a situation where grains don’t come to the port: that’s a negative surprise for the shipping market."

For more of the Bloomberg story:


Tuesday, September 23, 2014

Drewry: Container reefer capacity to grow 22 percent over 5 years

Reefer capacity on the container ship fleet will increase by 22 percent over five years at the expense of a declining specialized reefer fleet, according to the latest projections in the Reefer Shipping Market Annual Review and Forecast by Drewry Maritime Research.

The analysts predict that reefer container will grow from 1.6 million FEUs in 2013 to 1.9 million FEUs in 2018. Fleet growth over this time period is not expected to hurt vessel utilization levels due to strong cargo growth.

Reefer container volumes are forecast to rise by 20.5 million tons over this same period—16.5 million tons through organic growth and 4 million tons at the expense of the shrinking specialized reefer industry, says Drewry.

Overall seaborne perishable reefer trade will go up 17 percent between 2013 and 2018, providing an additional 16.5 million tons of cargo, according to the report.

"As a result of the expected cargo growth, reefer container slot utilization levels will be unchanged in 2015 and only marginally lower thereafter," said report editor Kevin Harding. "Meanwhile, the specialized reefer sector is forecast to shrink further as a result of scrapping and a virtually empty order book."

"The specialized reefer operators peaked some years ago, in terms of cargo volumes, and now face continued falling volumes and market shares. However, this does not necessarily affect their profitability. In fact, from the limited number of public companies reporting financial returns, profitability is indeed achievable. Specialized reefer companies are now looking to reinvent themselves to protect their undoubted expertise in their field."

The world’s largest specialized reefer operator, Seatrade, announced in July it had ordered two high-reefer-capacity, eco-designed, 2,200-TEU ships for delivery in January 2016, saying the order represented its commitment to further develop "fast, direct and dedicated" services. Emphasizing speed, specialized reefer vessels can compete with the slow sailing mega-container ships on the basis of transit times.

The report estimates that the global seaborne perishable reefer trade increased at an annual rate of 3.2 percent in the 10 years to 2013, reaching 98 million tons last year. Sectors driving this growth have been meat and exotic fruit, researchers say, with the latter rising as much as 9.3 percent each year over the period.

Drewry concludes that the specialized reefer fleet will need to diversify in order to shield themselves from losing market share to the container fleet, which will likely continue to increase their interest in the reefer business.

Egypt raises $8.5B for Suez Canal revamp

Egypt has raised the $8.5 billion to expand the Suez Canal, according to the country’s central bank governor.

Hisham Ramez told Reuters the target was reached in eight days after banks issued investment certificates to Egyptian citizens to finance the project.

The Suez Canal project includes the development of 29,000 square miles around the canal into a global industrial and logistics center to draw more ships and generate income.

Officials have said the new development would increase annual revenues from the state-owned Suez Canal to $13.5 billion by 2023, up from the current $5 billion.

Canal revenues are crucial for the country, which has suffered a downtrend in tourism and foreign investment since the 2011 uprising that ousted ruler Hosni Mubarak.

For more of the Reuters Africa story:

Kinder Morgan builds $1.5B oil logistics hub in Houston

To establish its position in the shale boom market and exploit the surge of domestic/Canadian crude flowing through the U.S. Gulf Coast, logistics giant Kinder Morgan Energy Partners is spending over $1.5 billion in Houston to build the most flexible oil and fuel transport hub in the country.

The company's expanding infrastructure buffet, located at the jam-packed Houston Ship Channel, is adjacent to the largest concentration of refiners in the nation.

Kinder Morgan executives say customers want multiple options to switch delivery modes quickly and grab the best price for refinery feedstocks. They need more dock and storage space to handle swelling volumes of fuel being shipped overseas.

"More of them are producing more than they can consume in the U.S. So they want to take it to water, either for movement up and down the coast ... or to export because you see a tremendous amount of growth," said John Schlosser, president of Kinder Morgan's terminal division, talking about refiners.

The company’s latest move is to add storage and pipeline connections to final domestic destinations, a huge oil-by-rail offloading operation, and a wider export platform.

"It gives us the opportunity to touch customers in an additional way beyond just the terminal or the pipeline footprint," Schlosser said.

For more of the Reuters story:

BMW opens vehicle distribution center at Port of Baltimore

BMW Group celebrated the opening of its newest vehicle distribution center Friday at the Port of Baltimore, which will serve 96 dealers within the Central and Eastern regions of BMW’s dealer network.

"BMW Group year-to-date sales in the U.S. set a new benchmark, topping 246,000 vehicles in the first eight months of this year, and we are full of confidence that we will follow our success through the remaining months of 2014," said Ludwig Willisch, President and CEO, BMW of North America.

The new center will import an estimated total of 166,000 vehicles through 2016, according to a company statement. The facility will also handle vehicle inspection, repairs, accessory installation, vehicle programming and vehicle maintenance.

Customs finds stolen vintage cars at Port of LA

U.S. Customs and Border Control at the Ports of Los Angeles and Long Beach called back a ship that was already out to sea to find a classic stolen car.

One of the vintage automobiles is a beat-up 1967 Jaguar XKE convertible, which Customs officials said would be worth almost $100,000 if fully restored.

"This was destined to go to the Netherlands. We ordered the container to come back and when it got here we were able to identify that it did have a Jaguar," said Customs Section Chief Javier Larios.

Other cars that were netted by a joint effort with Customs, the California Highway Patrol and the National Insurance Crime Bureau, include a 1976 Mercedes and a 1969 bright blue Chevrolet Corvette, which was stolen from an owner Portland, Oregon 26 years ago.

"They have 500 to 1,000 cars a day that go out, so when you think about that every day we're checking that many vehicles, looking for stolen vehicles," said Lou Koven, a special agent with the NICB.

For more of the ABC 13 Eyewitness News story:


Wednesday, September 24, 2014

Former Maersk executive believes West Coast strike unlikely

While West Coast labor talks between the International Longshore and Warehouse Union and the Pacific Maritime Association have been under way since May, signs now point toward a deal, according to Anthony Scioscia, former senior vice president of labor relations of A.P. Moeller-Maersk’s Maersk Agency U.S.A., who is currently a consultant to the industry.

Speaking at the Intermodal Association of North America’s 2014 expo in Long Beach, Calif., Scioscia said negotiations for a new labor contract for 20,000 dockworkers at West Coast ports would probably conclude without a labor disruption.

Seeking to replace the six-year contract that expired in July, the ILWU and the PMA are discussing how to retrain and preserve dockworker jobs with the rise of automation, as well as salaries and work rules.

Retailers and other stakeholders have been worried about a labor strike in the midst of negotiations that might disrupt the flow of goods at West Coast ports.

"The environment has been civil and constructive with operations being normal," Scioscia said at the industry conference on Monday. "It’s been relatively uneventful."

David Adam, chief executive officer of U.S. Maritime Alliance, which represents container-carrier companies, agreed that a strike or work stoppage is unlikely.

Labor and management met Monday in San Francisco, according to union spokesman Craig Merrilees, who declined to comment on negotiations or prospects for a settlement.

The two parties announced in August that they have resolved the thorny issue of health-care expense, without revealing details.

For more of the Bloomberg story:

Port of Virginia appoints leadership positions from within

Joseph P. Ruddy will transition from COO to chief innovation officer for The Port of Virginia and Shawn Tibbets will take over as chief operations officer, according to a statement form John F. Reinhart, CEO and executive director of the Virginia Port Authority.

"It is Joe’s strong operational ability and dedication to the port that led me to choose him for this important role," Reinhart said. "Shawn has been the senior vice president of operations for VIT and those colleagues within the organization that have worked with Shawn are well aware of the value he brings to the organization with operations and overall leadership. This move completes our reorganization effort."

As chief innovation officer, Ruddy will oversee the strategic planning, engineering, information technology and the sustainability teams, according to the port authority. Tibbets will continue to focus on launching several initiatives created to increase efficiency, improve cargo velocity and develop consistency in all areas of the operation, the statement said.

Chiquita makes shipping deal with MSC

Chiquita Brands International shipping line Great White Fleet has reportedly entered into a vessel-sharing agreement with Mediterranean Shipping Co. to create a service that will utilize five MSC container ships to haul Chiquita fruit.

The MSC ships will sail from Central America to the U.S. East Coast, Gulf Coast and the Bahamas, according to a Federal Maritime Commission filing.

Chiquita said in May it would move its Gulf Coast operations from Gulfport, Miss., to New Orleans, and MSC routinely berths its ships at the Port of New Orleans’ Napoleon Avenue Container Terminal.

The produce company has been looking for a location at the Port of New Orleans to construct a 40,000-square-foot ripening shed or move into an existing facility and wants to move out of leased space in Gulfport to start operating in New Orleans by October.

Port of New Orleans officials said Friday they have not heard whether the agreement between Great White Fleet and MSC means that Chiquita has found the space it needs for a ripening facility.

Meanwhile, Chiquita has pushed back a vote until October on its prospective merger with Irish fruit company Fyffes, which would form the world’s largest banana supplier. Chiquita is awaiting a final offer from Cutrale and Safra, a Brazilian partnership that had previously offered $611 million.

For more of the New Orleans City Business story:

FMC to hold port congestion forum October 1 in Baltimore

The Federal Maritime Commission will hold a forum on port congestion on October 1 at the World Trade Center in Baltimore’s Inner Harbor, where maritime industry stakeholders can listen and share viewpoints on congestion.

The FMC says officials representing the ports of Virginia, Baltimore, Philadelphia and New York/New Jersey participate in the discussion, along with representatives from the Georgia Ports Authority and the Texas Department of Transportation

Marine Terminal Operators including Ports America and Global Container Terminals are panelists, and all the major chassis leasing companies and pools will provide testimony, according to the FMC statement. 

Container lines will be represented by COSCO, "K" Line, Maersk Line, and MSC, as well as OOCL and CMA CGM.

Senior officials from the ILA will represent labor, motor carriers such as Lightning Transportation and Evans Delivery Company will attend, and cargo owners including Target and Wal-Mart will be on hand to offer their insights on the import/export chain. 

"Port congestion is a nationwide issue affecting not just our ports and coasts but the nation’s interior, too," said U.S. Federal Maritime Commissioner William P. Doyle. "Federal, state and local governments are spending billions of dollars preparing for larger ships and the opening of an expanded Panama Canal. We’re going to get into the details, and have open and frank discussions between and among the stakeholders."

To read more about the forum agenda:

Port of Los Angeles fire contained Monday night

A fire at the Port of Los Angeles that burned 150 feet of docks and threatened a warehouse and ship was mostly contained Monday night, according to the L.A. Fire Department.

The NYK and APL terminals in Wilmington were evacuated, according to a firehouse tweet.

The flames broke out about 6:40 p.m. in the 800 block of South Fries Avenue, the majority of the fire was under control by about 8:30 p.m. and contained about two hours later, said Katherine Main, a fire department spokeswoman.

The four-alarm blaze underneath a steel warehouse also threatened nearby cargo ships, Main said. More than 100 firefighters fought the inferno from land, air and via several vessels.

The warehouse didn’t seem to catch fire, Main said, but the dock beneath it was burned. Four employees were evacuated and large cargo ships were asked to move away from nearby berths, Main added.

For more of the L.A. Times story:


Thursday, September 25, 2014

Maersk Line ramps up cost cutting to offset low freight rates

As freight rates continue to fall, Maersk Line can deepen its cost cutting through slow sailing, according to parent company A.P. Moeller-Maersk, adding that its prospective vessel-sharing deal with MSC would result in $350 million annual savings.

Handling 15 percent of global container trade, Maersk Line has been fighting industry overcapacity. The carrier has successfully reduced spending this year, besting the industry’s average profitability rate, and in August raised its profit forecast for 2014.

"We will continue to drive out costs and will have a deflationary mind-set," Soeren Skou, chief executive officer at Maersk Line, said in a presentation. He noted that in a market where rates decline, the "lowest costs win," and that the current gap between supply and demand will be "constant in the near term."

The CEO asserts that Maersk Line won’t need to add new ships until 2017, a year later than the company estimated in 2013. It plans to invest $3 billion a year from 2015 to 2019 on new vessels and retrofits as well as adding containers, he said.

According to Maersk, global container shipping demand will rise 4 percent to 6 percent in 2015 and again in 2016, and worldwide vessel capacity will grow 7 percent next year and 4 percent to 6 percent in 2016.

For more of the Business Week story:

Cosco adds fuel-efficient ships to revive profits

China Cosco Holdings Co., which posted three consecutive annual operating losses, said that adding more fuel-efficient vessels will help it beat overcapacity, allowing the company to cut enough costs to revive profitability.

"The ships need to be filled for the cost savings to be achieved," said Guo Huawei, board secretary, in a Sept. 19 interview. He said operating larger carriers could be "a double-edged sword," as he declined to give an estimate for earnings or estimate when the company would likely turn a profit.

Cosco has ordered five fuel-efficient 14,500-TEU container ships for delivery between 2017 and 2018. The ships are a bit smaller than the industry’s largest 19,100-TEU mega-vessels on order by carriers such as Maersk Line and China Shipping Container Lines Co., which are betting on economies of scale.

Cosco’s container arm decreased fuel spending by 18 percent in the first half of the year through slow sailing, according to the company’s first-half earnings statement.

"Most of us thought the market would have improved considerably by now, but we have still the same overcapacity concerns today," said Guo. "It’s unclear when this will end. Under these circumstances, reducing costs is the most realistic strategy."

For more of the Bloomberg story:

ICS: Global shipping emissions down 20 percent

The total greenhouse gas emissions from global maritime transport were approximately 20 percent lower in 2012 than in 2007, according to the International Chamber of Shipping.

ICS said the global shipping industry, which transports about 90 percent of all trade, is thought to have produced only about 2.2 percent of the world’s total GHG emissions during 2012 compared to 2.8 percent in 2007.

The estimates are contained in the latest comprehensive study of the shipping industry’s greenhouse gas emissions prepared by the International Maritime Organization, the statement said, which will be considered by its Marine Environment Protection Committee next month.

"The latest IMO study, which uses satellite tracking, suggests there’s been a significant reduction in absolute CO2 emissions from ships due to the introduction of operational efficiency measures across the whole fleet," said ICS Secretary General Peter Hinchliffe at the United Nations Climate Summit in New York this week. "This includes operating at slower speeds, combined with more fuel-efficient designs on board the large number of newbuild vessels that have recently entered the market."

Saltchuk completes acquisition of Tropical Shipping

Saltchuk has competed its acquisition of Tropical Shipping and its related companies, according to a company statement.

Three gatherings were held last week in Palm Beach and Miami, bringing together more than 550 of the company’s 1,000 employees.

"It was important that this be about our employees. It was an opportunity for them to meet our new owners and to celebrate this next chapter in our company’s story," said Mark Chapman, Tropical’s Vice President of Organizational Support.

While the ownership transition is significant, the company doesn’t expect any change in day-to-day operations of the Caribbean Shipping Line. Tropical Shipping will continue to operate as a standalone operation, the statement said.

Saltchuk said the buy includes Tropical Shipping, a top shipping and logistics company for the Bahamas and Caribbean, and all its related transportation, consolidation and cargo insurance companies.

"Most importantly, Tropical shares our values," said Saltchuk Chairman Mark Tabbutt and President Tim Engle in an announcement to employees. "The Company has a strong safety culture, has the best on time service in its region, and is committed to giving back to the communities which it serves."

Tropical and its related companies will become Saltchuk’s sixth line of business, along with sister companies TOTE, Foss, North Star Petroleum, Northern Aviation Services and Interstate Distributor. The recent purchase brings Saltchuk’s portfolio up to almost $3 billion in annual sales, the statement said.

Cargo ship rescues 55 from Libyan waters

A Singapore-flagged cargo ship has rescued at least 55 migrants from Libyan waters, after their rubber boat capsized.

The Italian Coast Guard said as many as 30 people may be missing.

Thousands escaping from war or poverty have been arriving weekly in smugglers' boats on Italian shores, often needing rescue at sea.

For more of the 9&10 News story:

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