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Summary for October 22 - October 26, 2012:
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Monday, October 22, 2012 Top StoryPort of Oakland puts Kwon on administrative leave, announces new interim management assignments
It was recently discovered that Kwon spent $4,500 in port funds entertaining shipping executives at a strip club during a conference in Houston in 2008. The finding has led to a broader investigation of the port's use of public funds. The board put Executive Director Omar Benjamin on administrative leave with pay effective immediately, according to a statement released on Thursday. No reason for the leave of absence was disclosed. Flint also took action on Friday to make a number of management assignments, according to a port statement. Deputy Executive Director Jean Banker will take on the additional role of acting director of maritime. Aviation Planning and Development Manager Kristi McKenney will assume the role of acting director of aviation. Associate Aviation Project Manager Hugh Johnson will assume the additional role of acting aviation planning and development manager. "I am taking these actions to ensure that our 24/7 operations continue to meet our customers needs," said Flint. "These actions are also critical so that the port can continue being the economic engine of the region that it is. We must remember that we are a $437 million per year operation that drives over 73,000 jobs in this region." Real estate equity strong into next year, says global investment firmInstitutional equity for real estate assets is expected to remain strong for the rest of the year and into 2013, even in the face of uncertainty surrounding the European debt problem and the U.S. presidential election, according to a global investment firm. Retail is attracting the most interest, with multifamily, industrial and office close behind. Equity capital markets are active as pension funds, endowments, insurance companies, co-mingled funds and open-ended funds look for investments, according to capital markets experts at Jones Lang LaSalle, an international financial firm specializing in real estate. Product demand is outpacing transaction supply, but investors are being more careful about their real estate allocations compared to pre-recession times, said the company. "In an effort to match post-recession risk tolerances with the current desire to deploy capital, we are seeing a great deal of creativity in the venture structures being offered by institutional equity investors. The idea is to mitigate risk while still achieving the base-case yields they solved to before, while at the same time adequately compensating the operating partner for their value-add component to the deal," said James Tramuto, managing director with Jones Lang LaSalle Capital Markets. "Equity investors are more disciplined than they have been in the past and comprehensive underwriting and due diligence are the name of the game as we ride the slow wave of recovery," said Fish. Port of Tacoma container volume up 37 percent in SeptemberContainer volumes at the Port of Tacoma were 37 percent higher in September than during the same month in 2011. Port terminals handled 195,718 TEUs last month compared to 142,920 TEUs in September 2011. For the year, container volumes are up more than 11 percent to 1,220,615 TEUs. Tacoma's container volumes continue to reflect the addition of the Grand Alliance shipping consortium of NYK, OOCL, Hapag-Lloyd and Zim, which moved its operations to the Port of Tacoma from Seattle in July. The port saw 113 vessel calls in September, an increase of almost 32 percent year on year. With peak holiday shipping season well under way, import container volumes increased nearly 22 percent year to date as retailers stock up for the holiday shopping season. A record Washington apple crop is adding to Tacoma's higher export container volumes, which grew 14 percent year to date. Meanwhile, domestic volumes were down less than 1 percent for the year. U.S. flexes muscle in disputed South China SeaA U.S. aircraft carrier group sailed through disputed South China Sea territory on Saturday, an area that may be part of a new U.S. strategy in its competition with China. The oil-filled waters are home to islands disputed between China and the other smaller Asian nations. Vietnamese government officials were flown onto the USS George Washington, highlighting the military relationship between Vietnam and the U.S. The mission came one day after China launched military exercises near islands in the nearby East China Sea it disputes with U.S ally Japan. The U.S. is building closer fiscal and military ties with Vietnam and other nations in the region, a change meant to counter strong Chinese influence, as China becomes bolder in asserting its claims there. China claims almost the entire South China Sea, where the U.S. says it has a national interest in making sure major shipping lanes navigation is unimpeded. "It is our goal to see the region's nations figure out these tensions ... on their own, our role of that to date is to conduct freedom of navigation exercises within international waters," Capt. Gregory Fenton said to the Washington Post, adding that the mission was aimed in part at improving relations with Vietnam and ensuring the U.S. had free passage in the South China Sea. For more of the Washington Post story: washingtonpost.com Japan coast guard rescues 64 Chinese crewmembers from cargo vesselCrewmembers of the 12,703-ton cargo ship Ming Yang, were rescued after the ship caught fire near Okinawa. The Japanese Coast Guard recovered the entire 64-member Chinese crew in good condition. Three men had minor injuries. On Saturday night the Japan Coastguard converged on the scene, which was about 150 km southeast of Okinawa Island. For more of the Japan Times story: japantimes.co.jp
Tuesday, October 23, 2012 Top StoryMaersk and others up on U.S. import surge, higher rates
The cost of shipping per-FEU from China to the U.S. West Coast surged 48 percent to $2,510 in 2012, according to shipbroker giant Clarkson Plc. Shipping companies will ask $800 more per-FEU for yearly contracts that begin in May, based on info from the Transpacific Stabilization Agreement, a consortium of 15 shipping firms. "The imports are consistent with the macroeconomic picture in the U.S., and things just turned significantly better," said Nigel Prentis, the head of research at London shipbroker HSBC Shipping. "As far as that translates into freight rates for box ships, that will depend on the supply side. There are an awful lot of ships." Maersk stock is expected to increase 19 percent over the next year, according to Bloomberg analysts. Maersk owns the most ships carrying Asian goods to the U.S. Other good news on the nation's improving economy is on the horizon. According to government figures, in September builders started constructing the first new houses in four years and people are buying cars at the briskest rate since 2008. Maersk Line will post a 44 percent gain in net income to $3.8 billion for 2012, project Bloomberg analysts. For more of the Bloomberg story: bloomberg.com FedEx: 13 percent boost in peak season deliveriesFedEx on Monday projected that the company's deliveries during the current peak season will increase by up to 13 percent year on year, and that the company also expects to experience their highest volume day ever over the 2012 holiday season. Online purchases are likely to drive the total to 280 million deliveries over the period between Thanksgiving and Christmas. On December 10, Fed Ex forecasts they may hit more than 19 million deliveries, which would be 10 percent more than last year's highest day. FedEx also announced it will hire 20,000 seasonal workers, comparable to 2011. For more of the Kansas City Star story: kansascity.com China shields domestic shipping industry from outsidersChina is limiting its domestic companies, requiring them to only operate China-made ships on domestic waters and preventing foreign shipping companies from selling their services on domestic routes, according to new rules issued by Beijing's State Council. The new regulations, effective Jan. 1, keep "foreign companies, financial organizations and individuals from operating waterway transport services," said the council statement. The new rules shield domestic shipping in China during a time when the industry is plagued by overcapacity and low demand. Moving forward, China could limit foreign investment in the $160 billion marine infrastructure development package that was sanctioned in September. For more of the Reuters story: reuters.com Piracy at lowest level since 2006Beefed up security such as increased naval monitoring and the use of armed guards have consistently foiled attacks this year on vessels traversing the Asia-to-Europe trade route. In fast, Somalia piracy highjack events have dropped to their lowest level since 2006. The International Maritime Bureau announced there was one attack reported last quarter, compared to 36 attacks during the same period in 2011. Attacks cost the industry and governments $6.9 billion last year, according to the One Earth Future Foundation. "We welcome the successful robust targeting of pirate action groups by international navies in the high-risk waters off Somalia," IMB Director Pottengal Mukundan said in the report. "There can be no room for complacency. These waters are still extremely high-risk and the naval presence must be maintained." For more of the Businessweek story: businessweek.com $3.4M in ivory seized by Hong Kong CustomsHong Kong Customs officials discovered two shipping containers filled 8,000 pounds of ivory, a value of $3.4 million, one of the largest ivory smuggling seizures in that city's history. The authorities confiscated the illegal material, which arrived in containers from Tanzania and Kenya, Hong Kong customs said. There were 1,209 chunks of ivory tusks and three pounds of decorations. Seven were arrested in connection to the crime, said a customs spokeswoman. For more of the CNN story: cnn.com
Wednesday, October 24, 2012 Top StoriesILA-USMX update: Parties continue to meet on "outstanding issues"
"I am pleased to report that the parties met today under the auspices of the Federal Mediation and Conciliation Service and discussed a number of major issues, said FMCS Director George H. Cohen in a statement. “As a result of today's discussions, the parties will have their respective committees review their positions and analyze associated costs,” Cohen said. A collective sigh of relief was heard from the shipping industry in mid-September over the news the ILA and USMX had agreed to extend the deadline of their collective bargaining agreement from September 30 to December 29 in an effort to do so "for the good of the country" in order to avoid any work disruption, after the FMCA announced it would be presiding over the jump-started negotiations. News of the labor-management contract extension to year's end came during the critical peak shipping season and reportedly allayed industry fears over what had been the potential for disrupted, and costly re-routed, supply chains. Canadian Pacific and Canadian Northern railways third quarter profits rise
In the midst of major restructuring, Canadian Pacific Railway reported a net third quarter profit of $224 million, up 20 percent from the same time last year. On a per-share diluted basis, profit was $1.30, 18 percent higher than the third quarter of 2011. "The team has made significant progress on operational improvements, controlling costs and on delivering results. And this is just the beginning," said rail veteran Hunter Harrison, CP's new president and chief executive officer, in a statement before the markets opened on Wednesday. Canadian Northern Railway did better than predicted in its third quarter, but voiced concern about the fourth quarter due to doubts about the global economy and rising costs, including a potential $250 million voluntary pension contribution due by the end of the year. CN's third quarter net earnings were a bit better than predicted, with a net profit of $664 million, or $1.52 a diluted share, up year on year from $659 million. CN's revenue rose 8 percent since 2011 during the third quarter to $2.5 billion on a 3 percent increase in carloads. Petroleum and chemical sales rose by 15 percent during the quarter. Claude Mongeau, CN chief executive, said the railway would wait until the end of the December to give its forecast for 2013. "We don't know where the economy will be, and we will update you in January, but we are looking to make our own lunch and grow faster than [the] base market," he said. Mongeau said there had been a slowdown toward the end of quarter that is expected to last through the year, even though the railroad is growing faster than the economy. Segments that are growing include crude shipments, the fracking oil and gas market, and coal volumes, which utilize the company's "super coal trains" that are twice the size of standard trains. CN also said it had sealed a deal with a major unnamed retailer that some industry insiders say is Target. For more of the Canada.com and the Globe and Mail stories: canada.com and theglobeandmail.com C.H. Robinson third quarter profits improveC.H. Robinson's third quarter earnings increased 1.7 percent on improved sales. Total revenue rose 6.9 percent to $2.88 billion. The logistics company posted a profit of $116.3 million, or 72 cents a share, up from $114.3 million, or 70 cents a share. C. H. Robinson experienced particular strength in its trucking business, with revenue rising 2.1 percent and volumes improving about 8 percent in that division. Intermodal revenue dropped 4.4 percent and air revenue decreased 9 percent, while ocean sales were up 3.5 percent and other logistics services rose by 17 percent. The stock hit its lowest rate in two years in July 2012 and is down 13 percent since the beginning of the year. For more of the Wall Street Journal story: marketwatch.com Delta air cargo business tops U.S. rivalsDelta is beating its air cargo rivals, with cargo creating $1 billion in yearly sales and profit margins of 50 percent as goods are flown on planes along with fare-paying passengers. The company created a bigger market and a better on-time record after the completion of the 2008 merger with Northwest Airlines. Now, Delta is expanding its cargo share while United Continental Holdings deals with its own merger and American Airlines (parent AMR Corp) deals with bankruptcy reorganization. "People underestimate the benefit of Delta having integration behind them," said Savanthi Syth, an analyst with Raymond James and Associates. "United is still trying to combine networks and cargo space tends to be one of the last things that gets optimized. And American has been so focused on their bankruptcy." Delta stock increased 25 percent in 2012, closing yesterday at $10.14. Delivery giant FedEx gained 9.5 percent in the same period, and UPS dropped 2.2 percent. "We have definitely outpaced our peers," Chief Cargo Officer Tony Charaf said in an interview with Bloomberg. Bloomberg analysts project Delta's third-quarter net income will jump 44 percent while United's could drop by 12 percent. For more of the Bloomberg story: bloomberg.com CSX names Indiana logistics park a key distribution and manufacturing siteINland Logistics Port in Kingsbury is Indiana's first location to receive CSX "Select Site" designation, according to a statement released by CSX, a transportation company that provides rail, intermodal and rail-to-truck transload services. CSX Select Sites are choice manufacturing and distribution development sites along the CSX network that can easily and quickly use freight rail service based on land, rail and road configurations and other defining traits. The industrial business site in Kingsbury will help area businesses connect to quick and easy freight transport and create jobs. CSX introduced the Select Sites program in January to help companies find top rate manufacturing properties in the east part of the country that provide easy and reliable access to freight rail service. "Companies continue to seek development-ready sites, with reduced development risk and better access to market," said Clark Robertson, CSX's assistant vice president of regional development. "We believe the INland Logistics Port will be an attractive option for companies searching in the area for a home in the Kingsbury area." Port of Tampa longshoreman killed by falling pipe, co-worker injuredA St. Petersburg, Fla. longshoreman was killed and a co-worker hurt when a load of steel pipes fell on them aboard a ship in the Port of Tampa on Tuesday. Two other stevedores were present but not injured. Hercules Gilmore, 56, died in the accident, according to the Hillsborough County Sheriff's office. Andre Futrell was being treated at Tampa General Hospital for non-fatal injuries. The International Longshoreman's Association workers were in the cargo hold bundling 4-inch steel pipes for a crane when a bundle broke open, said the sheriff's office. The pipes crashed down upon all four men. Salavarria said the pipes were being moved in 1-ton bundles. "They were moving about 10 (bundles) at a time when the straps gave way and dropped that bundle onto the deck of the ship, onto the dock and back inside the hull of the ship where the workers were working to bundle the material to have it removed from the ship itself," Salavarria said. "The pipes that came back crashing down into the cargo hold came down at many different angles and many different sides ... causing a very unstable and uneven platform for our emergency workers to work in in order to reach those two that were trapped," he said. For more of the Tampa Bay Online story: www2.tbo.com
Thursday, October 25, 2012 Top StoryPort of Oakland strip club scandal expands on further investigation
The name of port Executive Director Omar Benjamin was handwritten on the expense report that Kwon submitted for the 2008 party at the strip club, according to information obtained by Chronicle reporters. Benjamin's name was redacted from copies of the receipts that were released to reporters and others, in answer to public-information requests. Kwon's attorney said his client "looks forward to the opportunity to set the record straight and resume his duties." Benjamin said, "I am cooperating with the port inquiry and will do whatever I can to resolve this matter constructively and in the interests of the Port of Oakland." Port spokesman Isaac Kos-Read said the port has "a standard protocol of redacting the names of all persons that appeared on the reports," except for the person named in a public-records request. Written on the strip-club receipt was a list of executives from BNSF Railway, as being in attendance, but Lena Kent, public affairs director for BNSF, says her company's travel records and interviews with senior staffers has turned up no evidence its executives were at the party. According to the agenda of the North American Port and Intermodal Finance and Investment summit, it does seem that Benjamin was a panelist in Houston at the maritime finance conference on Oct. 21, 2008, the day of the party. For more of the San Francisco Chronicle and Oakland Tribune stories: sfgate.com and insidebayarea
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Deborah Ale Flint, Port of Oakland's acting executive director, ordered Director of Maritime James Kwon to return from overseas business travel in China on Friday and placed him on administrative leave with pay, effective immediately.
Container carriers such as Maersk Line and others are benefiting from the uptick in rates for U.S. imports, since import container volume is at the highest level since before the downturn in the economy, according to Bloomberg.
The labor contract negotiations between the International Longshoremen's Union and the group representing shipping industry management at East and Gulf Coast ports – the United Maritime Alliance – “continue to meet in an effort to resolve additional outstanding issues,” according to the Federal Mediation and Conciliation Service.
Canadian Pacific and Canadian Northern railways recently posted third quarter earnings with results better than expected for CP profits, which rose 20 percent year on year, while CN was up 1 percent.
Further investigation of the Port of Oakland misuse-of-public-funds scandal has raised questions about a possible cover-up of the $4,500 Houston strip club bill incurred during a 2008 maritime finance conference by the port's Maritime Director James Kwon.