Cargo Business Newswire Archives
Summary for October 5 - October 9, 2009:
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Monday, October 5, 2009

Top Story

Report: CMA-CGM seeks to reduce $5.6 bil in debt

CMA CGM SA, the third-biggest container-shipping operator, is seeking equity investors to reduce $5.6 billion of debt, according to three people briefed on the company’s plan.

CMA CGM used more than $1.2 billion of cash in the first half, the majority on ship purchases, reducing its reserves to $599 million as of June 30, according to two of the people, who were briefed on a conference call Oct. 1 and asked not to be identified because the call was confidential.

The closely held company, based in Marseille, is in breach of the terms governing about $3.9 billion of its loans, according to two of the people. CMA CGM, which has began talks with banks about a restructuring, has asked the lenders to waive their claims, two of the people said.


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GPA nets over $21 mil in congressional approval for harbor work

The Georgia Ports Authority announced a total of $21.712 million was approved in the joint U.S. Senate and House conference report to go towards deepening and expansion at the Savannah and Brunswick harbors.

The funding would include Savannah harbor construction at $1.429 million; Savannah Harbor maintenance dredging at $13.482 million; and Brunswick Harbor maintenance dredging at $6.8 million.

Horizon Lines launches inaugural Puerto Rico service out of Tampa

The Tampa Port Authority announced the arrival of the vessel Horizon Discovery and the launch of a new direct container service between Tampa, Florida, and San Juan, Puerto Rico by Horizon Lines.

The 1,402 TEU capacity Horizon Discovery will now serve Tampa as part of Horizon Lines’ Gulf Express Service with a fixed-day, bi-weekly schedule, the port said.

The port authority said it is currently expanding container terminal facilities from 25 to 40 acres to be completed later this year, and together with terminal operator partner Ports America, has plans to expand the terminal to over 160 acres in the next few years.

CN names $100 million Memphis rail facility after CEO

Canadian National Railway (CN) announced the completion of its $100 million multi-year rail facility upgrade and would call it the Harrison Yard for the rail line's retiring CEO, E Hunter Harrison.

The Harrison is CN’s second largest in the U.S. with capacity for 3,100 cars and 45 tracks. The facility also has 12 receiving and departure tracks, ranging from 5,000 to 10,000 feet. The rail complex can handle 35 freights a day, near doubling its previous capacity, CN said.

"This project transformed an aged, inefficient rail yard into a state-of-the-art, effectively designed, major terminal capable of handling existing and future traffic quickly and efficiently," said CN executive vice-president Claude Mongeau, who will succeed Harrison in January.

Harrison has served as president and CEO since January 1, 2003.


Tuesday, October 6, 2009

Top Story

AAR touts tax incentives to help expand freight rail

LONG BEACH – Freight infrastructure stimulus funding was a highlight on the first morning of Cargo Business News’ fourth annual Port Productivity Conference.

Of all the potential funding mechanisms available for rail infrastructure expansion, the American Association of Railroads favors investment tax incentives, according to John Gray, the group’s senior vice president of policy and economics.

Gray said the industry will need to invest over $9 billion worth of unfunded public mandates including environmental requirements, along with $860 million per year in ongoing maintenance and operational requirements.

Gray outlined the various funding options for rail projects including: trust and freight funds; loan programs; federal TIGER funds, high-speed rail monies, and investment tax incentives.

“TIGER is best suited to large projects,” Gray said. The federal TIGER stimulus also has a demand that exceeds available funding over 25 times said Leslie Blakey, executive director of the Coalition for America’s Gateways and Trade Corridors.

Gray said the AAR favors the investment tax incentive approach because it is ‘based on market value” and not as politically motivated.

An efficient rail system is certainly critical to the Port of Tacoma’s success, according to John Wolfe, the Pacific Northwest port authority’s deputy executive director and chief commercial officer. Sixty percent of that port’s intermodal rail heads to the upper Midwest.

SSA wants to further automate, centralize ops on West Coast

Everyone wants everything but no one wants to pay for it, said Ed DeNike, the president of Seattle-based terminal operator SSA Containers, at Cargo Business News’ fourth annual Port Productivity Conference.

“We feel the only way we’ll survive is to cut costs,” such as through technology applications like automation, DeNike said.

SSA looked at productivity opportunities including dual-hoist of containers, which has been utilized by some terminal operators in Asia. “We’d love to be the first on the West Coast to do it but you need more people to do it,” DeNike said referring to the cost of labor at the U.S. Pacific ports.

DeNike said SSA is planning, in part, to cut costs and improve container throughput productivity via centralized gate operations, and implementing an automated container-handling grid at the Port of Long Beach.

The terminal gate command center, or ”kitchen” in marine terminal parlance, would be run from a centralized location, and would reduce the number of clerks required at desktop stations, according to DeNike.

“You don’t need clerks in every terminal,” he said.

SSA is also working with the Port of Long Beach to install an electric grid where a container is offloaded from a containership and placed into a dock-side grid network, then shuttled via a network of electric trolleys to a receiving yard, and then onto on-dock rail.

Crane-and-trans-tainer operators would operate that yard equipment from a centralized office, rather than up in a cab.

When pressed on whether the West Coast labor force represented by the ILWU, would embrace these new automated and centralized business models, DeNike said employers on the Coast already won these concessions in the past two labor contract negotiations, especially after the highly contentious agreement signed in 2002.

“Labor needs to be convinced,” DeNike conceded, noting they are concerned over losing jobs, but he said it would be good for both parties over the longer term and that SSA would take the new technology advancements to arbitration if necessary.

“If we can cut the cost $50-$60 per container, we can be competitive,” he said.


Wednesday, October 7, 2009

Top Story

Canada tries to standardize port performance metrics

LONG BEACH - The sharing of port and terminal performance metrics has been a considerable challenge in the U.S. and Europe, but Canada’s port network has a program underway, shipping industry attendees heard at Cargo Business News’ fourth annual Port Productivity Conference.

Tom Ward, chief engineer for the largest U.S. terminal operator, Ports America, said he’d like to see other supply chain stakeholders’ metrics, but doesn’t want to share his.

From the European perspective, the sharing of metrics will need to be done by everyone at once or else it won’t work, according to Maria Feliciana Monteiro with the transport and applied economics department at the University of Antwerp.

There is an initiative in Europe to create a Container Terminal Quality Indicator (CTQI).

In Canada, Transport Canada, the federal transportation arm of the Canadian government, has already launched what it terms a national gateways and trade corridors system-wide approach.

Canada has already invested $1 billion in its federalized port system, including the recent amalgamation of the British Columbia ports, according to Daniel Oliver, a senior analyst with Transport Canada.

The impetus for establishing a system-wide benchmarking program for Canada’s supply chain was from a marketing angle, Oliver said. The Canadian government went to Asia to meet with trading partners there and received some critical feedback on Canada’s port network, jumpstarting what Oliver explained was the development of key indicators on the reliability and competitiveness of that country’s supply chain networks.

Stakeholders in the Canadian program include big retailers like Wal-Mart and Canadian Tire, Oliver said.

Striving for greater accountability in the management of federal assets and studying international trends helped Transport Canada and its partners evaluate how Canada’s gateways compare to others around the world, Oliver said.

Transport Canada came up with aggregated numbers in order to protect proprietary information from stakeholders, specifically with the British Columbia ports.

British Columbia’s benchmarking results include: gate fluidity in minutes; avg. truck turn time in minutes; berth utilization by TEUs; vessel turnaround time by seconds and per-TEU; vessel dwell in hours; average container dwell; port productivity; crane productivity; and container throughput.

Oliver conceded only 4.6 million TEUs are handled throughout Canada; however he also pointed out the government there has identified its ports as national assets.

He said the biggest risk to the program is that participation thus far has been voluntary and “any operator could pull the plug.”

Ports America’s Tom Ward commented he found mountains of data culled from Ports Americas’ terminal operations, “but when 25 trucks arrive at the same time, it makes sorting the data more difficult.”

“I don’t see the [return on investment]” on a CTQI approach in the U.S., Ward said.

Stacey Jones, the ports practice manager for consulting engineer firm, Halcrow, said “cooperative performance [in the U.S.] will [mean] better performance, and attract more funds.”


Thursday, October 8, 2009

Trans-Pacific carriers aim for $800 and $1,000 per-FEU GRIs for 2010

Container shipping lines in the trans-Pacific took the first shot across the bow of of next year's contract negotiation season with customers by stating would go up significantly - way up - to levels achieved in halcyon days of 2008.

The 13 members of the Transpacific Stabilization Agreement (TSA) announced there would be a general rate increase of $800 per FEU for West Coast-bound cargo, and $1,000 per FEU for cargo intermodal and U.S. East-and-Gulf-coast all-water cargo. A $400 peak season surcharge is to take effect from August 1, 2010, in order “to address higher cargo handling, equipment positioning and contingency planning costs during periods of peak cargo volume," the TSA said.

"The dire situation the industry finds itself in as a result of the unprecedented events that have played out in 2009 must be reversed," said TSA chairman Ron Widdows, CEO of Neptune Orient Lines, parent company of APL.

"Carriers must deliver on the contractual commitments they have undertaken, however, a dialogue between carriers and shippers needs to begin straight away so all can plan for the changes needed in 2010-11 contracting," Widdows said.

The TSA members are: APL, CMA-CGM, COSCO, CSCL, Evergreen, Hanjin, Hapag-Lloyd, Hyundai, "K" Line, MSC, NYK, OOCL, Yangming, and Zim.

Panama Canal extends cost-reduction relief program by seven months

The Panama Canal Authority (ACP) announced it would extend its short-term cost reduction relief program by seven months
to April 30.

"Our customers find value in the temporary measures," said ACP chief executive Alberto Aleman Zubieta.

The ACP said the decision was due to requests from customers and shipping associations.

The relief program includes the ability of shipping vessels that arrive behind schedule to pay less in order to keep their reserved canal schedule on the same day. Ocean carriers can also secure free slot substitutions 30 days instead of 60 days in advance of the transit time, the ACP said.

Liz Claiborne goes exclusive with J.C. Penney and QVC

Liz Claiborne Inc. announced Thursday that its brand of clothing would be sold exclusively at J.C. Penney Co., as part of a 10-year licensing agreement.

J.C. Penney will sell the Liz Claiborne lines of women's wear, including Liz & Co., Concepts by Claiborne brands, and accessories, shoes, household products and men's clothing.

In addition, the Liz Claiborne New York brand, designed by Isaac Mizrahi, will exit what it termed “the department store channel” and move to the shopping channel QVC Inc. under a multi-year deal.

Liz Claiborne said it expects to rebound from a 2009 operating loss with an operating profit in 2010 due to these agreements.

Long Beach port affirms $1.1 bil harbor bridge replacement as top priority

LONG BEACH - The Port of Long Beach announced through a statement, and at Cargo Business News’ Port Productivity Conference that the proposed $1.1 billion replacement of the Gerald Desmond Bridge is a top priority and has earned a top ranking among planned improvements to highways, roads and railways from the Los Angeles County Metropolitan Transportation Authority (Metro).

The bridge replacement project was recently approved for $11.3 million by L.A. County The port said approximately 15 percent of all U.S. shipping containers pass over the bridge.

The proposed project was named as “Project of National and Regional Significance” in the federal 2005 SAFETEA-LU highway-funding bill passed by Congress, the port said. The bridge project was also recently named one of the most critical transportation projects to improve mobility throughout Southern California by Mobility 21, the port said.

The new bridge would have three vehicle lanes in each direction plus shoulders on both sides to, according to the port, reduce traffic delays and safety hazards from accidents and breakdowns.

The Port of Long Beach said it has identified about $700 million of the bridge replacement project’s cost, and plans to release the Draft Environmental Impact Report for the project later this year.

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