Cargo Business Newswire Archives
Summary for October 12 - October 16, 2009:
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Monday, October 12, 2009

Top Story

RailAmerica ready to go public

The economy hasn't been kind to railroads in the past year, but RailAmerica Inc. is chugging full steam ahead this week with an IPO that is riding on investors' outlook for better times ahead.

Despite the dropping demand, RailAmerica, like many of its larger cousins, has been able to negotiate rate increases; rail transport is still seen as the cheapest way to move heavy materials across long distances. The company has also had success cutting costs and managed to raise its operating income in the first half of the year by 10%.

Based in Jacksonville, Fla., RailAmerica is reappearing on the market 2½ years after private-equity firm Fortress Investment Group LLC took it private in a $1.1 billion deal. Half of the shares in the offering will be sold by Fortress, so those proceeds won't benefit the railroad; the half that the company sells will be used to pay down debt and for possible investments of acquisitions.


Oakland’s clean truck plan will have second reading Oct. 20

The Oakland Board of Port Commissioners last week adopted a strict truck ban effective Jan. 1, 2010. Drayage trucks with engine year models earlier than 1994 will be banned at the Oakland seaport, and drayage trucks with engine year models between 1994 and 2003 have to be retrofitted with diesel particulate filters to enter Port of Oakland maritime facilities.

The ordinance that includes the drayage truck ban will go through a second reading scheduled for Oct. 20.

The truck ban would require that the seaport facility operator deny entry to drayage trucks, with limited exceptions, for those who cannot demonstrate compliance with the CARB January 2010 clean trucks deadline.


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Tire importer to build 1.1 mil sq. ft distribution center near Charleston

Tire importer TBC Corp. announced today that it has picked a site near Summerville for a mammoth, 1.1 million-square-foot distribution center that will become one of the largest customers for the Port of Charleston.

Construction is expected to begin by the end of the year, with completion set for late 2010. The warehouse will handle imported and domestic tires and prepare them for delivery to dealers throughout the Southeast.

-Charleston Post and Courier

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NOL container volume increased almost 1 percent

Neptune Orient Lines' (NOL) container shipping volume for the four weeks to September 18, 2009 increased 1 per cent to 205,700 forty-foot equivalent units (FEUs) from 204,000 FEUs a year ago.

Average revenue per FEU (Forty-foot Equivalent Unit) declined 29 per cent to US$2,247, compared to US$3,151 a year ago.

Year to date, the container shipping volumes have declined 18 per cent to 1.56 million FEUs while average revenue per FEU declined 23 per cent to US$2,316 per FEUs compared to the same period 2008.

-Business Times (Singapore)

Story source:

Japanese shipping lines to provide disaster relief

Two Japanese shipping lines, Mitsui-OSK (MOL) and NYK, are providing disaster relief to the Philippines and Samoa, respectively.

In the wake of Typhoon Ketsana that hit the Philippines end of last month, MOL announced it is donating $40,000 to victims of that natural disaster.

Donations and free ocean transport for relief supplies, in response to the typhoon and tsunami that struck the Phillipines and Samoa, will be provided by NYK Line, the company announced.

Relief shipments will be conducted by NYK on behalf of the Japan Platform (JPF), an international humanitarian assistance organization.

The NYK Group said it is also taking collections from employees and will match those donations


Tuesday, October 13, 2009

Top Story

UPS offers customers fee-based carbon offsets

UPS is offering customers a chance -- for a fee -- to offset the environmental effect of shipping their packages across the country or around the world.

The Sandy Springs-based shipping giant announced that its 1 million online account holders can buy a so-called carbon offset for their shipping, at a cost of 5 cents for ground packages and 20 cents for those shipped by air.

UPS also is offering an audit that will customize a carbon offset program for large shippers.

UPS will buy the carbon offsets through a third party that will in turn invest in waste water treatment, reforestation and landfill methane mitigation projects, said Bob Stoffel, UPS's senior vice president of engineering, strategy, supply chain and sustainability.

UPS will match the offset purchases  in 2009-2010, up to $1 million.

-Atlanta Journal Constitution

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Analysis: Banks don’t want YRC to fail

A consortium of lenders has given YRC Worldwide, the nation's largest trucking company, two more weeks before a provision that requires the Overland Park, Kan.-based LTL carrier to maintain $100 million in liquidity. The company says it has been given until Oct. 30 before the amendment, the company's 11th such change, takes effect.

If you ever had doubt that the banks much prefer YRC Worldwide to be alive than dead, this latest saga could convince you.

YRC has been given a two-week extension on an amendment that would require the nation's largest trucking company to maintain $100 million in liquidity. The amendment is the 11th such amendment for YRC in the past couple of year.

YRC, which has lost in excess of $2 billion in the last 10 operating quarters, is scheduled to release its third-quarter earnings report on Oct. 30. Presumably, the company will have some good news regarding the liquidity minimums at that time.

Why are the banks doing this? 

Simply put, they place the value of YRC as an operating entity greater than it would be if it were to liquidate.

-Gerson Lerhman Group

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Palm Beach’s inland port project hits environmental hurdles

Palm Beach County's push to create a job-producing "inland port" on western agricultural area targeted for Everglades restoration faces new hurdles from state environmental regulators.

The Florida Department of Environmental Protection considers the proposed Palm Beach County location for an industrial distribution center as "incompatible" with efforts to store, clean and redirect water to the Everglades.

The County Commission in August agreed to change county codes to allow industrial development on 318 acres of land owned by sugar giant Florida Crystals. The site, near the company's Okeelanta power plant, is among four near Lake Okeechobee that are vying to become home to the inland port.

The distribution center would connect coastal ports from Miami to Palm Beach County, delivering cargo to and from the coast via truck routes and rail lines crisscrossing the state and linking with routes to the rest of the country.

-South Florida Sun-Sentinel

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RailAmerica down 4 percent from initial public offering

The IPO of freight railroad operator RailAmerica Inc. was derailed by a poor reception from investors on its first day of trading on Tuesday.

The stock opened at $14.35 a share on the New York Stock Exchange, down 4% from its initial public offering price of $15. A total of 22 million shares were sold in the offering, 1 million more than expected, at a price below its expected $16 to $18 range.

RailAmerica owns and operates short lines, which are tracks that carry private facilities and plants' freight to major railways.


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CMA-CGM tests INTTRA’s new “eInvoice” solution

French shipping group CMA CGM announced it is testing a pilot program with electronic service provider INTTRA on its Web-based “eInvoice” solution with some of its customers in North America.

"Our customers in North America have welcomed this cost savings initiative," said Terry Grange, senior director, eCommerce, CMA CGM (America). "We anticipate that it will significantly help both our customers and CMA CGM cut down on the time and costs associated with the payment process."

INTTRA describes eInvoice as an “industry invoicing platform for streamlining the submission, dispute resolution and payment processes for the ocean shipping industry.”

INTTRA said that heretofore customers “have had to navigate multiple systems across the industry when doing business with different carriers.”



Wednesday, October 14, 2009

Top Story

CSX hints economic corner turned

Freight rail operator CSX announced Tuesday night that its total volumes slipped 15% since last year, helping to send revenues down 23%. Still, the railroad concern topped third-quarter profit estimates, as CEO Michael Ward hinted that the company might have turned an economic corner.

"The third quarter reinforces our view that the worst of the recession is likely behind us," Ward said in a statement.

On Wednesday morning, investors were sending CSX shares higher by $2.25, or 5.1%, at $46.53.

According to a release after the closing bell on Tuesday, CSX said its net income slipped to $293 million, or 74 cents per share.

According to a survey by Thomson Reuters, though, several analysts forecast the company to post 71-cent figure for the quarter. A year-earlier, the railroader's profit landed at $382 million, or 93 cents per share.

-The Street

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China Shipping predicts no price war

China Shipping Container Lines Co., that nation’s second-largest cargo-box carrier, said shipping lines will avert a price war at the end of the peak season after overcapacity caused industrywide losses.

“There’s not going to be a plunge” in rates when the peak season ends within the next month, Managing Director Huang Xiaowen said by phone yesterday from Shanghai. “Even if we return to half-price rates, we can’t fill up our ships.”

CSCL and other shipping lines made coordinated rate increases in the peak season after fees slumped to as low as zero, excluding some fixed costs, in the first half amid tumbling trade. Larger rival China Cosco Holdings Co. and CMA CGM SA, the world’s No. 3 container line, have also begun talks on axing orders to pare growth and revive rates.

CSCL rose 1 percent to HK$3.12 in Hong Kong trading. The stock has more than doubled this year.

The shipping line achieved planned peak season rates rises on Asia-Europe, Transpacific and Australia routes, Huang said. The shipping lane intended to raise Asia-Europe rates by $300 to as much as $1,300 per 20-foot box starting Sept. 15, Huang said in August. Transpacific rates were due to go up by $400 to as much as $1,800 the same day, while Australia rates were scheduled to rise by around $200 to as much as $1,300.


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Yemen solicits bids for first freight railway

Yemen's Ministry of Transport invited bids for a contract to manage construction of the country's first railway, which will link the nation with its oil-rich Gulf neighbours.

Three rail lines will be built: one along the coastline from Yemen's northwestern border with Saudi Arabia to the eastern border with Oman and two connecting the northwestern population centers to Red Sea and Arabian Sea ports, according to a tender notice in the state-run Al Thawra newspaper today.

The lines will connect with a 1,500-kilometre (930-mile) regional freight rail network that's scheduled to be completed by 2017. The network is to be built in Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman.

-Gulf News

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Top Somali police official says anti-piracy efforts having little impact

A top police official in Somalia says an international naval force has done little to combat the scourge of piracy off the Horn of Africa.

The Somali police chief also says the pirates are becoming increasingly sophisticated. He also notes that, since Somalia has no functioning central government, its police have "no power to chase or control" Somalia's nearly 2,000-mile long coast.

Australia's transport security inspector says pirates have successfully hijacked 34 ships worldwide so far this year. Those were mostly off the Somali coast.

Experts estimate that each successful hijack costs shipping companies about $7 million in ransom and other fees.

The U.S., China and Russia have sent military vessels to the Gulf of Aden this year to protect shipping lanes. Each year, some 20,000 ships pass through the Gulf of Aden, which connects the Red Sea and the Indian Ocean.

-ABC News 13

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Thursday, October 15, 2009

Top Story

DOT Secretary optimistic over August Freight transportation increase

The Freight Transportation Services Index (TSI) rose 0.7 percent in August from its July level, the second consecutive monthly increase, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS), and U.S. Transportation Secretary Ray LaHood was optimistic over the results.

“The continued rise of the freight transportation service index is evidence that America is moving towards economic recovery,” said Secretary LaHood.

“The impact of the American Recovery and Reinvestment Act and other actions taken by this Administration are only beginning to be felt around the nation, but economic data like this should give us hope that our worst days are behind us,” he said.

“However, there is still a long road ahead and we will not let this positive sign lull us into complacency. This Administration remains committed to investing in transportation in order to insure a prosperous future,” he said.

The Freight TSI has gone four consecutive months without a decline after dropping in 9 of the previous 12 months.

The Freight TSI measures the month-to-month changes in freight shipments in ton-miles, which are then combined into one index. The index measures the output of the for-hire freight transportation industry and consists of data from for-hire trucking, rail, inland waterways, pipelines and air freight.

Vietnam to launch its first cargo airline

The Ministry of Transport licensed Trai Thien Air Cargo Joint Stock Company to provide air cargo services, making it the first cargo airline in Vietnam.

The private airline, with charter capital of VND500 billion (US$28 million), received approval from the Prime Minister last month.

Vo Huy Cuong, head of the Air Transport Department under the Civil Aviation Administration of Vietnam (CAAV), told The Saigon Times Daily on Tuesday the aviation authority would deliver the license to the company later this week.

Cuong said the Ho Chi Minh City-based company is in talks with a partner to lease a Boeing 737-300F which has been converted from civilian use.

The company will start from next year on the country’s north-south route before expanding its operations to Northeast and Southeast Asia.

Cuong said the private airline has a license to use five planes but only one would be used initially.

-Vietnam Business Finance News

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Former Hapag-Lloyd shareholder plans to launch low-cost container line

Norwegian shipping tycoon John Fredriksen plans to set up a low-cost container shipping line modeled on budget airlines, his top aide told Reuters on Thursday.

Container shipping lines are going through a severe crisis as worldwide trade has collapsed amid the economic crunch. Shippers have mothballed one out of 10 vessels and are expected to lose hundreds of millions of dollars this year.

Fredriksen's plan is to make money by offering less extensive services than big shipping lines do. He wants to start by chartering some of the idled ships.

Fredriksen already has several shipping groups, including oil tanker operator Frontline and dry bulk shipping operations.

He is also the biggest shareholder of German tourism group TUI, which sold a majority of its container shipping line Hapag-Lloyd this year.


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Bulk freight rates down 74 percent from June peak

The baltic dry index, which measures dry bulk ocean freight rates in a collection of lanes, has dropped steadily from a recent peak in June above 4,000 to its close Sept. 23 of 2,175. Reuters reports that average Capesize earnings, for example, fell to $23,762 in late September, down 74% from their June peak. "Panamaxes are beginning to feel the pressure as well on increased competition from Capes as well as lighter volumes than last week," Dahlman Rose & Company said in a note.


Story source:

Report: JB Hunt to sign long-term intermodal deal with Norfolk Southern

US freight company JB Hunt Transport Services is likely to sign a long-term intermodal deal with shipping and transportation company Norfolk Southern, reported Reuters.

According to the news source, the deal will benefit both JB Hunt and Norfolk Southern. While the agreement is expected to help JB Hunt reduce transportation costs, strengthen its domestic intermodal franchise and lower pricing pressure in the near term, it may also help boost Norfolk Southern's intermodal business.

Both the companies are reportedly in discussions for a long-term exclusive intermodal agreement for the eastern half of the US. However, both JB Hunt and Norfolk Southern refused to comment on the deal.

-Trading Markets

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Friday, October 16, 2009

Top Story

Prelim National Rail Plan highlights freight rail vs. high-speed commuter issue

The U.S Department of Transportation’s Federal Railroad Administration released its preliminary National Rail Plan on Thursday. The 41-page document doesn’t identify a specific blueprint for a long-range plan, but at it’s core, seems to reaffirm the Federal government’s support for improved U.S. freight rail, the need for inter-city high-speed passenger rail, and that the two distinctly different modes will need to find a way to efficiently co-exist.

According to the report, rail tonnage is expected to increase 88 percent by 2035, and will experience severe over-capacity if infrastructure and related improvements are not addressed.

On the passenger side, there are more than 20 commuter rail systems serving 25 major metropolitan areas, the report said. Commuter rail rider ship increased 28 percent, or by almost 100 million riders, from 1997 to 2007, the report said.

Commuter rail systems operate over rights-of-way that tend to be either publicly owned, or owned and maintained by freight railroads.

The growth of high-speed inter-city services is an issue, the report said, with the current, limited number of rail corridors routed through metropolitan areas.

“Passenger and freight rail needs are vastly different. Yet because they are inescapably linked and amenable to economies of scale and joint benefits, the development of a National Rail Plan cannot consider one method in isolation from the other,” the FRA report said.

“Both passenger and freight rail operations can interfere with one another, and the delay of either passengers or freight seriously diminishes productivity and customer satisfaction”

The FHA report goes onto say: “if freight rail is to play a larger role in the national transportation system, its performance must improve. This will require expanding capacity, improving connections, reducing chokepoints, and providing new and expanded services.”

In order to help pay for these improvements, the FHA report touts the Kansas City Flyover and the Alameda Corridor rail projects as examples of successful public-private partnerships, such as the latter’s user-fee approach to help “repay a portion of the initial outlays by government.”

The federal government’s Recovery Act contains more than $48 billion in transportation funding but are to be primarily used for the modes of transportation that have been traditionally funded publicly. However, the report said the Recovery Act specifies some investments “can be used for meaningful transportation enhancements regardless of mode; these funds, therefore, are available for rail infrastructure improvements.”

In addition, $8 billion was specifically designated for the development of high-speed intercity rail. The Federal Government said it is determining how and where to invest in an efficient, high-speed intercity passenger rail network, consisting of 100–600 mile intercity corridors.

Freight infrastructure stimulus funding was a highlight last week at 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 would 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.

The Feds said the National Rail Plan would next go into outreach mode through a variety of stakeholder and public meetings between now May of 2010.

U.S.D.O.T approves $341 Million loan to build Port of Miami tunnel

The U.S. Department of Transportation approved a $341 million loan to help build what had been the on-again, off-again, $1 billion Port of Miami Tunnel project. The project appears to be on again with the latest news out of the D.O.T.

“This tunnel will create a vital transportation link that will improve safety and reduce traffic congestion in the Miami area,” Secretary LaHood said. “It will also save money for millions of drivers because they will be spending less time on congested roads,” said U.S. Transportation Secretary Ray LaHood.

The tunnel’s goal has been to serve as a direct connector to and from the Port of Miami, with the goal of removing thousands of commercial trucks and cruise line buses from local streets.

Federal Highway Administrator Victor Mendez said. “This project is a great example of how these advances will improve everyday life for motorists and pedestrians in Miami.”

U.S.P.S. says it won’t raise rates in 2010

The U.S. Postal Service announced it would not increase rates in 2010 for products as first-class and standard mail, periodicals and single-piece parcel post.

“We want mailers to continue to invest in mail to grow their business, communicate with valued customers and maintain a strong presence in the marketplace,” Postmaster General John E. Potter said in a statement.

“We are committed to working with customers to find ways to grow the mail through innovative incentives like the Summer Sale and contract pricing,” Potter said.

Evergreen and CSCL merge Asia-PNW loops

Evergreen and China Shipping announced their joint efforts to merge their two trans-Pacific services into a single loop that links Asia with the Pacific Northwest.

Six 5,500 TEU vessels (three from each shipping line) will service the weekly rotation that will be: Ningbo, Shanghai, Kaohsiung, Guangzhou (Nansha), Hong Kong, Shenzhen (Yantian), Tacoma, Seattle, Vancouver, BC, Tokyo, Osaka and back to Ningbo.


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