Cargo Business Newswire Archives
Summary for September 29 - October 2, 2009:
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Tuesday, September 29, 2009

Top Story

The recession is over. But don’t relax just yet

By Peter Hull

 CHARLOTTE, N.C. – The recession is over. But don’t relax just yet.

Matthew Martin, senior vice president for the Federal Reserve Bank of Richmond and Charlotte regional executive, opened the inaugural Southeast Freight Conference Sept. 29 here by saying the U.S. economy has moved into the recovery stage.

 “As I stand here today I’m going to make the bold statement that the recession is over,” Martin said. “It’s not boom-time again – it just means the slide has stopped.”

 The question now becomes: What shape will the recover take? The weight of the recover sits on the shoulders of consumers, Martin said.

 Nationally, most forecasters are calling for a generally weak economy during the next year. The recession pushed consumer confidence down as many households saved what money they had, wary of what the future held.

 The good news is that U.S. post-World War II economic trends show that the steeper the downturn, the faster the economy bounces back. It’s called the “beach ball theory,” Martin said. Push a beach ball down hard into the water and it’ll spring right back up.

 The Southeast is likely to reflect any national recover, he said.

 The recession hit the manufacturing and construction sectors hard across the Southeast. The silver lining, for the Carolinas, at least, is that the boom-bust of the housing market wasn’t as severe as in other parts of the region, such as Florida.

 “That suggests the Carolinas is better positioned to recover,” Martin said. “It’s not a cause for celebration, but it is a step in the healing process.”

Signs of life are returning to the global container trade

By Peter Hull

 CHARLOTTE, N.C. – Signs of life are returning to the global container trade, but won’t be seen until at least next year, Joe Bryan vice president of transportation and logistics for consultancy firm Halcrow told the Southeast Freight Conference Sept. 29.

Bryan said the global container industry is still in a slump, and warned that the heady days of double-digit growth are likely a thing of the past. But the economic slump has hit the bottom, he said.

“There continues to be bad news, but the drivers generally are in the past,” Bryan said.

For the Southeast region, imports will grow at a faster rate than exports, he said, propping up any recovery. Growth will come in the 7 percent to 8 percent range – but be patient.

“The rough stuff is behind us, but the recovery won’t feel like a recovery for a while,” Bryan said.

Call it German efficiency

By Peter Hull

CHARLOTTE – Call it German efficiency.

 Andrew Oleszczuk, transportation manager for BMW Manufacturing in Spartanburg, S.C., gave the Southeast Freight Conference Sept. 29 interesting insight into how the auto giant does business.

 Doing business with BMW means that all links in the supply chain must work together, he said.

 The company builds cars for specific customers, not to sit on lots waiting for dealers. The same applies to the manufacturing process, he said.

 Warehousing parts costs money and use valuable time and labor to store and retrieve. The company uses sea, rail, air and road to transport parts, and BMW looks for flexibility and zero waste in a constant flow.

 “When we want parts delivered we expect them delivered on time,” Oleszczuk said. “And early is not on time.”

 BMW ships 40 percent of its parts to the South Carolina plant via sea. That volume is projected to increase by 65 percent in 2011 as the plant is expanded, he said.

Maersk wants to be friends with you

By Peter Hull

CHARLOTTE, N.C. – As the world’s largest ocean carrier, who wouldn’t want to be friends with Maersk Line? The good news is that Maersk wants to be friends with you.

Gordon Dorsey, Maersk senior vice president and the shipping giant’s U.S. operations manager, told the Southeast Freight Conference here Sept. 29 that it’s “all about the customer.”

“This economic crisis provides us with an opportunity to listen to our customers – to really listen,” Dorsey said. “We need to listen and adapt.”

Since the economic meltdown took hold – a time when global cargo shipping volumes plummeted forcing steamship lines to idle ships in ports around the world – ocean carriers reacted by cutting costs.

Staff reductions, cut services, formation of strategic partnerships and other streamlining have all played out, Dorsey said. The industry has done all it can do, he said.

“But you can’t cut your way out of a crisis,” he said. “And quite frankly, we’ve picked all the low-hanging fruit.”

So do shipping rates need to increase? “Absolutely,” he said.

Current rates are outdated. But such measures require companies like Maersk to work closely with customers and change with the changing environment, he said.

Put simply: “Cargo will follow the path of lowest cost,” Dorsey said.

Who is "Big Ship" ready in the Southeast

By Peter Hull

CHARLOTTE, N.C. – As vice president of sales and marketing for the South Carolina State Ports Authority, Fred Stribling knows the value to steamship lines of terminal operators that can turn vessels and trucks around as quickly as possible.

The No. 1 issue facing East Coast ports right now is being ready for big ships, or “big ship ready,” as Stribling calls it.

An estimated 64 percent of vessels traveling to East Coast ports through a widened Panama Canal five years from now will carry post-Panamax volumes, meaning ports must invest in deep water and dockside equipment to handle large vessels.

That’s one of the reasons why the authority is expanding the Port of Charleston with a $700 million three-birth terminal at the former Navy base, he said.

Slightly to the north, Glenn Carlson, vice president of business and economic development at the North Carolina State Ports Authority, said the authority and the state have invested more than half-a-billion dollars in infrastructure improvements that includes road and terminal equipment.

The outlay already has paid off with the state landing two new shipping lines, he said.

“That shows what you get for the investment,” Carlson said.


Wednesday, September 30, 2009

Top Story

Location, Location, Location!

By Peter Hull

CHARLOTTE, N.C. – Commercial real estate is no different to any other kind of real estate. It’s all about location.

Tom Scorsune, executive vice president of industrial and logistics for real estate services firm Jones Lang Lasalle, told the Southeast Freight conference Sept. 30 that the cost of real estate represents only about 4 percent of a company’s total operating budget.

So it’s critically important the facility is properly located, he said.

“It’s not about getting the best price anymore,” Scorsune said. “It’s about getting the best location.”

Part of his role for is to find that perfect spot, then hand the preferred site over to the commercial real estate people to secure the best possible deal for the property.

At Norfolk Southern Corp., Robert Martinez, vice president of business development for rail giant and former secretary of transportation for the Commonwealth of Virginia, runs a unit that manages an inventory of about 2,500 properties along its rail lines.

Norfolk Southern does not own about 95 percent of those properties. His role is to find the best customer for a particular site.

We're not out of the woods yet

By Peter Hull

CHARLOTTE, N.C. – The inaugural Southeast Freight Conference closed here Wednesday with a sobering note of caution. While the worst may be over, the industry’s not out of the woods yet.

David Bennett, vice president for global sales at Schneider Logistics and Cargo Business News columnist, said that the supply chain has become “a minefield” during the current economic climate.

The yo-yo effect of oil prices has played havoc with logistic companies and the impact has been dramatic. In July, for example, oil ran at $147 a barrel. During the spring it was $39 a barrel.

Since 2001, cargo volume raced forward at a pace that could not be sustained, he said. The net result of that trade growth was that long-term plans were based on short-term trends.

Meanwhile, steamship lines idled 10 percent of the world’s container fleet and trade through West Coast ports, traditionally the U.S. primary cargo gateway, fell by 20 percent.

As companies continue to wrestle with the ups and downs of today’s marketplace, Bennett urged caution within the optimism.

“History shows that demand can return as quickly as it evaporated,” he said. “Stay vigilant.”


Thursday, October 1, 2009

Top Story

Over 5,000 L.A.-Long Beach port trucks meet 2007 air standards

More than 5,000 trucks meeting 2007 federal emissions standards are hauling more than half of the cargo containers coming in and out of the ports of Los Angeles and Long Beach, officials reported to mark today's first anniversary of the disputed Clean Trucks Program.

At this rate, the nation's busiest port complex could very well meet its goal to reduce diesel truck emissions by 80 percent at the start of 2010, two years earlier than originally anticipated by the program's proponents.

-Daily Breeze (San Pedro)

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Credit Managers’ Index improved in September

The just-released Credit Managers’ Index (CMII) for September rose 49.8, showing what it termed “big improvement” in the rate of dollar collections and a drop in bankruptcy filings. The CMI reported September’s results bode well for the year’s fourth quarter.

The CMI reported that companies surviving the downturn were likely falling behind in bills or choosing to delay payments in an attempt to preserve cash flow. However, the latest numbers indicate customers are starting to catch up and get current with their creditors.

The latest index readings suggest that there is a marked improvement in credit performance, the CMI said.
“In order for the CMI to move into expansion territory—above 50—it will take the coalescing of three trends in credit: more credit availability, more sales that require the acquisition of credit and more prompt and regular payments on credit granted,” said Dr. Chris Kuehl, NACM’s economic analyst. “There has been some movement in sales and some positive movement in terms of credit availability, but up to this point there hadn’t really been positive news regarding payment on that debt. Now all three factors seem to be moving in a generally positive direction,” he said.

The Federal Reserve’s Open Market Committee (OMC) has said the recession has reached an end and that the focus could now shift to recovery. This news by the Fed was confirmed by Matthew Martin, senior vice president for the Federal Reserve Bank of Richmond and Charlotte regional executive, at Cargo Business News’ Southeast Freight Conference in Charlotte earlier this week.
 “As I stand here today I’m going to make the bold statement that the recession is over,” Martin said. “It’s not boom-time again – it just means the slide has stopped.”

The CMI was expected to crest 50 in this month’s survey, but the availability of credit was not quite what was hoped and the final number was just a fraction under the point that signals expansion, it reported. With the combined index now at 49.8, Kuehl said he is confident that the fabled 50-point will be reached and reported in October’s survey.

Seven straight months of China manufacturing recovery

China's manufacturing activity in September could be signaling the recovery in the domestic economy is sustainable, a government-backed index showed Thursday.

China's Purchasing Managers Index, a gauge of nationwide manufacturing activity issued by the China Federation of Logistics and Purchasing, rose to 54.3 in September from 54.0 in August.

It was the seventh straight month the PMI has remained above 50, the threshold between expansion and contraction, as six out of the 11 subcomponents, including new orders, new export orders, output and employment, rose; and five fell last month compared to August.

-WSJ/Dow Jones Newswire

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Port of Los Angeles to expand vessel speed reduction incentives

The Los Angeles Harbor Commission announced it approved expansion of the port’s Vessel Speed Reduction Incentive Program (VSRIP), allowing all ocean-going vessel operators to qualify for further financial incentives in its efforts to save fuel and reduce pollution.
A voluntary speed reduction program has been in effect since 2001, where vessels reduced speed to a voluntary 12-knot speed limit within 20 nautical miles of the port.

In June 2008, the Port of Los Angeles added a financial incentive, rewarding vessel operators whose fleets achieved 90 percent or better year-round compliance of the speed reduction program with a 15 percent discount on first-day dockage fees. Ninety percent of vessel operators are participating in the current program, the port said.

Tuesday’s action by the Harbor Commission gives vessel operators the option of slowing down within 40 nautical miles of Point Fermin instead of 20 nautical miles. Vessel operators achieving 90 percent compliance at the 40-mile range would receive a 30 percent discount on first-day dockage fees. Operators adhering to the 20 nautical mile speed reduction would remain eligible for the 15 percent discount, the port said.

Rickmers-Linie and ECL to expand trans Pac trade

Rickmers-Linie, the Hamburg based break-bulk, heavy lift and project cargo service provider and Eastern Car Liner, Ltd, Tokyo, announced they would expand their cooperation in the trans Pacific trade.

Since 2006 Rickmers-Linie has deployed ECL’s vessels from the U.S. to Asia. Under the new agreement Rickmers-Linie said it would also utilize the ECL vessels eastbound from Asia to the U.S. Gulf and East Coast. The new agreement will launch with the sailing of the Fortune Epoch (V514) sailing from Japan in early October, Rickmers said.

The service will deploy four 11,000-dwt vessels with heavy lift gear capable of lifting loads of up to 120 tons. The vessels were built between 1995 and 1998 and are equipped with Ro-Ro ramps. Regular loadings ports within Rickmers-Linie’s eastbound service will include Moji, Kure, Nagoya, Hitachi and other ports not presently served by Rickmers’ “Round-the-World” vessels, the company said.

The four vessels in the service are Fortune Epoch, Reina Rosa, Del Sol and Millennium Falcon


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