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Summary for October 14 through October 18, 2013:
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Monday, October 14, 2013 Top StoryPort of Long Beach bridge project $163M over budget
The Long Beach Harbor Commission was scheduled to vote on upping the $1.1 billion budget to $1.26 billion on October 7, but the item was reportedly removed from the agenda for some "fine tuning", according to Pope, who said the matter might be addressed at the October 21 meeting. Pope said about $68.5 million of the estimated increase is related to a contingency for oilfield and utility relocation. The original budget allotted $175 million for oil-well related issues, but Pope said the challenges in clearing the ground were more complex than anticipated. "A little bit of the backstory is that 6,000 oil wells were drilled in this general area to tap into the Wilmington oilfield," he explained. Over the years, some of these oil wells were abandoned - sometimes sealed, at times sealed improperly and occasionally not sealed at all, without any record of their location left behind. Other wells were recorded, but subsidence - sinking of the earth sometimes due to pumping oil - caused some to sink well below their mapped location. In other cases, oil wells were not capped properly and had to be re-sealed. Undocumented and abandoned utility lines also interfered with progress. Port staff had to identify the owners of abandoned lines to ensure they were inactive, and some active lines had to be rerouted. All of this work must be done, Pope said, to ensure that the replacement for the Gerald Desmond Bridge has solidly placed, safe foundations that extend 200 feet below the surface. Pope says many costs, including an additional $3 million needed for bridge demolition, are due to inflation, including possible higher costs for labor and materials. The next step is building the new bridge, which is designed to accommodate more road traffic and to allow larger vessels to pass beneath it, after which the old Gerald Desmond Bridge may be demolished. Photo credit: Eric Fredericks Fore more of the Long Beach Business Journal story: lbbusinessjournal.com Oregon Iron Works sues Oregon DOT over Columbia River CrossingOregon Iron Works is suing the Oregon Department of Transportation over the amount of a mitigation deal it made with Oregon and Washington over the height of the Columbia River Crossing. The agreements were made in order to offset the potential economic impacts to several companies whose products could not be barged below the 116-foot proposed height of the replacement bridge. Under the mitigation agreements, Oregon Iron Works was to receive $11.8 million, Greenberry Industrial was promised $24.8 million, and Thompson Metal Fab would get $49.8 million. Oregon Iron Works sent a letter to the Oregon DOT asserting that the disparate payments represented a violation of the company's rights under the mitigation agreement. "Greenberry and Thompson are direct competitors of OIW," said Terry Aarnio, chairman of the board of directors of Oregon Iron Works in the letter. ODOT officials say they will move to dismiss the suit in court. For more of the Oregon Live story: oregonlive.com Georgia's Brunswick port No. 1 in new vehicle importsThe Port of Brunswick handled the most new car imports in the U.S. in 2012, said Curtis Foltz, the executive director of the Georgia Ports Authority. "According to the latest figures available, the Port of Brunswick is now the nation's top location for the import of new vehicles," said Foltz in his annual State of the Brunswick Ports address. According to the latest poll by the American Association of Port Authorities, Brunswick imported 487,622 new vehicles in 2012, followed by the Port of New York/New Jersey at 404,975 and the Port of Baltimore with 313,674. For more of the Atlanta Business Chronicle story: bizjournals.com Washington governor appoints new maritime sector leaderGov. Jay Inslee has appointed former Port of Seattle attorney Steve Sewell to the newly created position of "maritime sector lead" within the state's Department of Commerce, to help boost the Washington's maritime industry. The new post will help drive policies important to the growth of the maritime sector, according to Commerce Director Brian Bonlender. "Steve Sewell is a dynamic and well-respected leader who has developed strong local, national and international relationships over more than 25 years in the maritime industry," Inslee said in a statement. "He will be an outstanding asset in our efforts to expand our working waterfront as a job creation engine for Washington's economy." For more of the Puget Sound Business Journal story: bizjournals.com Matson subpoenaed by feds regarding Hawaii molasses spillA federal grand jury subpoenaed Matson Inc. for documents related to a molasses spill that killed more than 26,000 fish and other marine life in Hawaii. Matson said in a Securities and Exchange Commission filing, that while it had received a small number of third-party claims, that government agencies haven't presented an accounting of claims for costs, penalties or damages. The spill of 1,400 tons of molasses occurred in early September in an industrial area about 5 miles west of Waikiki's hotels and beaches. The EPA and state Department of Health are jointly investigating the spill to determine whether there were any violations of the Clean Water Act. For more of the Washington Post story: washingtonpost.com
Tuesday, October 15, 2013 Top StoryChief city engineer becomes interim director at Port of Los Angeles
"It's a real honor," Moore said. "The port is such an economic engine, not just for Los Angeles but for the entire country." Moore, appointed by Los Angeles Mayor Eric Garcetti, will travel to Japan with Knatz this month to meet with port clients. Although she will vacate her office on Nov. 8, Knatz will remain with the port through early January to aid in the transition. This week Moore has taken meetings with port executives as he integrates himself into the Harbor Department, which oversees the 7,500 acres of land, water and terminals that comprise the country's busiest port. "It's really about bringing those jobs here to Los Angeles and building these projects so that the shipping companies see there's no other port they'd want to come to," he said. " ... I truly want the world to know what a great port we have." Moore, who has an engineering degree from UCLA and has worked with other leaders on the plan to revitalize the Los Angeles River, said 10 years as the city's lead engineer has prepared him for the port job. "I have a strong history in delivering projects — $1 million projects worth over $4.5 billion to all 469 square miles of the city," Moore said. It's not clear when a permanent appointment for the head of the Harbor Department will be made. For more of the Press-Telegram story: presstelegram.com Kuehne & Nagel lags behind Q3 forecasts, blames Maersk Triple-EsFreight forwarding giant Kuehne & Nagel announced less than expected third-quarter profits this week, stating that Maersk's massive Triple-E class ships gas have worsened industry overcapacity, keeping shipping rates low and eroding earnings. Kuehne's earnings before interest and taxes rose 8.3 percent to $265 million in the three months through September, 3 percent below analyst predictions. Three of Maersk Line's Triple-E class ships, the largest on the planet, are worsening the effects of slowed demand on the Asia to Europe trade route, said Kuehne & Nagel CFO Gerard van Kesteren in an interview after the company announced its third-quarter profit missed analyst estimates. Maersk ordered 20 Triple-E carriers to help cut costs per container and increase its market share. Kuehne & Nagel is among companies that are the most exposed to vessel overcapacity as it buys deck space from Maersk and its rivals to consolidate shipments. Shares in the freight forwarder dropped the most since March after the release of its Q3 profits. "There is structural overcapacity, and now the 18,000-container ships are being put into production by Maersk, creating extra overcapacity," van Kesteren said. "Shipping lines are trying to get business back. It's cutthroat competition." "There is persistent overcapacity, and the shipping companies are not reducing it enough," said Philip Damas at Drewry Maritime Equity Research. "The Triple-E is one factor, but there are a lot of big ships around." "Price increases by the shipping lines are imminent, but we doubt they will stick," van Kesteren said. "Volatility of freight rates remains extremely high." For more of the Bloomberg story: bloomberg.com Global Shippers Forum raises concerns about the P3 allianceThe Global Shipper's Forum has raised its concerns with the European Union about the prospective P3 Global Alliance between Maersk Line, CMA-CGM and the Mediterranean Shipping Company, according to a GSF statement. GSF has described the proposed P3 Global Alliance as an industry game-changer that will fundamentally change the structure and competition of the world's container shipping market. The organization said it submitted detailed questions to the European Commission Competition Directorate in Brussels, requesting the details of the alliance so that the GSF can complete its own legal analysis of the proposed agreement, especially its views on competition law and market impact issues. "We have raised these questions with the European competition authorities on behalf of shippers from all over the world because they are rightly concerned about the market impact of the P3," said GSF Secretary General Chris Welsh. "The question on every shipper's mind is - what will be the impact on my rates and the quality of services?" The GSF has asked the European Commission if it is formally investigating the proposed alliance, the statement said. "GSF members are equally focused on expected future inquiries of other national competition authorities with competency and regulatory oversight of the maritime transport sector," said Welsh, "especially in Asia and in the United States where the Federal Maritime Commission is uniquely positioned to assess the potential competitive impacts of this never-before-seen aggregation of market share." The GSF is an international trade association that represents the interests of shippers from Asia, Europe, North and South America and Africa. Chrysler invests $1.25B in two manufacturing plants in MexicoAuto manufacturer Chrysler Group has invested $1.25 billion in two facilities in Saltillo in the Mexican state of Coahuila. Approximately $1 billion was spent to construct a new van assembly plant for the production of the Ram ProMaster commercial vehicle. The vehicles assembled there will be sold in Mexico, Canada and the U.S. Mexican development banks Bancomext and Nafin provided the funds for the Van Assembly Plant project. The remaining $164 million of the investment will be used to launch a new production line to assemble Tigershark engines at the Saltillo North Engine Plant. The plant will assemble the 2-l and 2.4-l Tigershark engines will be assembled at this plant, as well as the Chrysler's flagship HEMI V-8 engines. For more of the ABR story: manufacturing.automotive-business-review.com Logger crew rescued from ship fire (video)A fire erupted aboard the Panama-flagged Super Sun as it was sailing the Yangtze River in eastern China. The log carrier's 23 crewmembers were successfully evacuated and its cargo was untouched thanks to the quick work of rescue workers. View the video of the rescue at sea: uk.reuters.com
Wednesday, October 16, 2013 Top StoryTSA lines float mid-November GRI
Member carriers in the TSA are recommending a general rate increase of $400 per-FEU for all origins and destinations, effective November 15, 2013. "The trade is seeing modest but healthy cargo growth over 2012, while cargo handling, equipment and other costs continue to rise and most carriers are operating at a loss," said TSA executive administrator Brian Conrad. "It makes no sense for rates to be at current levels, and it threatens the ability of individual carriers to maintain service levels heading into 2014." Conrad said cargo volumes have risen steadily since mid-August and are forecast to remain strong through mid-November when typical seasonal easing begins. TSA carriers include APL Ltd., China Shipping Container Lines, CMA-CGM, COSCO Container Lines, Evergreen Line, Hanjin Shipping Co., Hapag-Lloyd AG, Hyundai Merchant Marine Co., K Line, Maersk Line, Mediterranean Shipping Co., N.Y.K. Line, Orient Overseas Container Line, Yangming Marine Transport and Zim Integrated Shipping Services. Inland S.C. port opens for business this week, gets additional fundingThe South Carolina inland port in Greer opened this week, according to Jim Newsome, president and CEO of the S.C. Ports Authority, which approved an additional $2.7 million in funding for the port on Tuesday. The funding will address unexpected construction costs triggered by rain delays, expediting the project, and "unknown typography," according to GSA Business journal. The new facility will connect upstate South Carolina to the Port of Charleston via overnight Norfolk Southern rail services. Upstate economic development groups have had more than 200 inquiries from companies about using the inland port facilities, said Jack Ellenberg, senior vice president of economic development and projects. "The inland port adds another intermodal rail in the Southeast," Newsome said. "Greer was not previously on the map for intermodal rail." The SCPA spent approximately $43.9 million on the Greer port, including the latest allocation. Construction is forecast to cost $51.4 million, with Norfolk Southern contributing the remaining funds. For more of the GSA Business story: gsabusiness.com Report: Governor's Virginia Port Authority shake-up eroded customer confidenceGov. Bob McDonnell's shakeup of Virginia Port Authority board in 2011 had a negative impact on the port's customers, according to a report by the Virginia's Joint Legislative Audit and Review Commission. The report, ordered by the General Assembly earlier this year, said the Governor's replacement of 10 out of 11 VPA board members in 2011, as well as the long debate over port privatization, led to uncertainty that "was negatively viewed by port customers." A staff report to the watchdog commission recommended that the legislature consider restricting the governor's power to replace Port Authority board members to "instances of malfeasance, misfeasance, or gross neglect of duty." "We were apprehensive when we found out this was coming, no doubt about it," said Jeffrey Wassmer, the new chairman of the VPA board. "We had quite a few discussions with them, but I think this is very helpful, and I think it re-emphasizes some of the things that the board knows that we need to do, the staff knows that we need to do." The report, based partly on interviews with 24 container lines, shipping customers and third-party logistics providers, noted that Hampton Roads was successfully competing against other East Coast container ports, but added that it has the "highest or second-highest prices on the East Coast," which may have led to the loss of some cargo. For more of the Virginia-Pilot story: hamptonroads.com Record-breaking year expected for U.S. dairy exportsThe U.S. Dairy Export Council predicts that 2013 dairy exports will total $6.5 billion, up more than 25 percent year-over-year, marking a fourth consecutive record year for the nation's dairy exporters. "Credit for another record year for U.S. dairy exports must go to our suppliers and traders, who are showing more ambition, more commitment and more capability to pursue export markets," said Tom Suber, president USDEC. Suber said U.S. exporters have capitalized on reduced supply from other countries, steady global dairy demand and favorable pricing. More than 15 percent of U.S. milk production now goes to exports. For more of the Dairy Heard story: dairyherd.com Nine crew dead after cargo ship hits a seawall and sinksNine crewmembers died and eight were rescued after a Chinese cargo ship hit a seawall off the Southeast coast of South Korea and partially sank on Wednesday, according to coast guard officials. The ship, carrying about 130 tons of bunker oil and diesel fuel, was anchored off Pohang when rough seas forced it against the seawall on Tuesday, officials said. For more of the South China Morning Post story: scmp.com
Thursday, October 17, 2013 Top StoryLocal ILA strike shuts down Baltimore port
The conflict involves a contract signed by the ILA that covers ports form Maine to Texas on the East Coast and the Gulf, which must be ratified by all local unions. Baltimore's Local 333 rejected the contract and called for a walk out on Oct. 15. Local 333 is protesting the Steamship Trade Association of Baltimore Inc.'s refusal to negotiate "in good faith" over a new contract covering workers terms and conditions, the union said in a statement yesterday. "Local 333 is eager to enter into a new contract with the STA," its president, Riker McKenzie, said in the statement. "But the dedicated men and women working at the Port of Baltimore deserve a fair and just contract. We cannot accept STA's refusal to negotiate over matters that the law requires them to negotiate." The STA declined to comment. "If an agreement can be reached within the next day or two, we don't think there will be a huge economic impact," Richard Scher, a spokesman for the Maryland Port Administration, said in an interview. "If it continues a week or two weeks, then you're looking at some significant economic impacts." The strike comes at a time when Baltimore is attracting business away from ports in New York and New Jersey. The Maryland port inked a contract in August with Mazda, which will import up to 65,000 cars a year through Baltimore, and another agreement with Fiat that will ship up 30,000 vehicles a year. Approximately 15,000 Marylanders work for port-related businesses and tens of thousands more are supported by the port, according to the Maryland Port Administration. The port is responsible for $3 billion a year in personal wages and salaries and more than $300 million a year in state and local taxes. For more of the Baltimore Sun story: articles.baltimoresun.com For more of the Bloomberg story: bloomberg.com Maersk Line, Limited announces retirement of CEOJohn F. Reinhart, president and CEO of Maersk Line, Limited will retire in late January, according to a company announcement. "I have been blessed to be part of the A.P. Moller-Maersk Group for almost 23 years, and it has been my privilege and honor to work together with you for the past 14 years," Reinhart wrote to his colleagues. "I will be working with the board and leadership team to finalize a smooth transition plan for the future, Reinhart said. "MLL has a strong team and financial base, and the company is in position to continue its 30-year tradition of service and growth." MLL, a U.S. company based in Norfolk, Virginia, offers U.S. flag transportation, ship management and maritime technical services to government and commercial customers. With the largest U.S. flag fleet in global commercial service, it employs approximately 4,200 U.S. mariners a year. For more of the Virginia-Pilot story: hamptonroads.com Port of Los Angeles volume down 4.5 percent in SeptemberSeptember cargo volume at the Port of Los Angeles was down 4.5 percent year-over year on business shifting to the Port of Long Beach. On the up side, this is the third consecutive month that traffic at the port has topped 700,000 containers, as cargo from Asia arrives for the peak season. "Anytime we hit over 700,000, that's a good month for us. It shows some strength in the overall demand," said Phillip Sanfield, director of media relations. September container volume was 710,892 TEUs. Imports dropped 3.75 percent, while exports fell 13 percent compared to September 2012. The decline was mainly due to cargo services moving from the Port of Los Angeles to the Port of Long Beach, Sanfield said. CSX railroad ups annual profit forecastCSX Corp., the largest railroad in the Eastern U.S., unexpectedly increased their annual profit forecast, betting that efforts to boost intermodal freight will sufficiently supplement their primary cargo of coal. "They're doing the best they can to manage the changing nature of freight on their system," Mark Levin, an analyst at BB&T Capital Markets in Richmond, Virginia, said in a Bloomberg interview. "Coal is an exceedingly profitable component of their business. As intermodal grows and coal accounts for less of the overall operating earnings, that's going to be a headwind." As the volume of fossil fuels falls due to utilities' switch to cheaper natural gas, the CSX forecast is a positive note for the rail industry. Union Pacific, the nation's largest railroad, recently announced a third quarter earnings forecast that fell short of analysts' predictions. For more of the Bloomberg story: bloomberg.com N.Y-N.J Port Authority: Sandy damage tops $2.2BThe total damage from Hurricane Sandy to the Port Authority of New York and New Jersey came to $2.2 billion, the agency announced today as the one-year anniversary of the storm draws near. "No one in New Jersey or in New York or at the Port Authority has forgotten the impact of Hurricane Sandy and the lives that we lost," Deputy Executive Director Bill Baroni said during at the authority's monthly board meeting. "Hurricane Sandy resulted in an estimated 2.2 billion dollars in damages and losses to our agency." Baroni said Sandy had delayed or canceled flights for 900,000 airline passengers, diverted 25,000 shipping containers to other ports, spilled 125 million gallons of sea water into the World Trade Center site, and caused the "compete inundation of the PATH tubes from New York to New Jersey." For more of the Star-Ledger story: nj.com
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The Port of Long Beach project to replace the Gerald Desmond Bridge is estimated to be $163.5 million, which is approximately 15 percent over budget, according to John Pope, the project spokesperson. Cost overruns are caused by problems associated with relocating oil wells and utility lines to clear the way for the bridge's foundation.
Following the retirement of executive director Geraldine Knatz, chief city engineer Gary Lee Moore is taking the helm at the Port of Los Angeles until a replacement can be recruited.
Transpacific Stabilization Agreement container lines on the Asia-to-U.S. trades are boosting rates in an effort to restore baseline freight rates for holiday shipments and 2014 contract negotiations. 
Baltimore port operations shut down Wednesday after 2,000 dock workers from the local International Longshoremen's Association walked off the job due to a contract dispute, causing a cargo back-up that included car shipments from Mazda and BMW.