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Summary for November 08 - November 12, 2010:
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Monday, November 08, 2010

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Global bulk fleet could outpace demand in 2011

The global fleet of dry bulk carriers is expected to outpace economic demand in 2011, a result of the industry's buying spree two years ago before the financial crisis severely slashed sea trade.

Low freight rates from an oversupplied market have allowed China to import an unprecedented amount of commodities, helping to fuel continued growth in the world's second largest economy.

China's coal consumption is expected to soar to 2.7 billion tons in 2015 from 1.8 billion tons last year, while steel output is seen climbing to 880 million tons from 568 million in the same period, according to Australia and Chinese government estimates.

Coal and the steel-making ingredient, iron ore, are the two biggest commodities by volume for the world's dry bulk fleet, which transports about 40 percent of total seaborne products.

While rates for dry bulk vessels have recovered from last year's low levels, the Baltic Exchange's benchmark sea freight index. The BDI remained 77 percent below its 2008 peak.


For the full story:


U.S., India agree to $10 bil infrastructure debt fund

India and U.S. agreed to set up a $10 billion debt fund to finance the South Asian nation's infrastructure projects, highlighting the country's resolve to secure long-term funding to fix its shabby roads and clogged ports that hurt growth.

"The governments (of U.S. and India) have yet to take a final view. In principle it has been agreed that the governments will be fully supportive of the recommendations (of the CEOs forum)," Indian Trade Minister Anand Sharma said on the sidelines of a conference Monday.

The infrastructure fund is one of the recommendations made at an ongoing conference for the CEOs of the two countries.

Asia's third-largest economy plans to spend $1 trillion in five years through March 31, 2017, to develop its shabby infrastructure, which economists estimate to shave off two percentage points from annual economic growth.

Investments in the country's roads, bridges and power plants are so far mostly funded out of local savings, which hover around 35% of the gross domestic product. Banks are usually averse toward lending for projects that take up to 20 years to complete.


For the full story:


Starbucks to end distribution agreement with Kraft

Starbucks and Kraft Foods are going through an unhappy ending after the former criticized the latter recently for publically disclosing the terms of a distribution agreement for packaged Starbucks coffee.

Kraft Foods, which had been distributing Starbucks packaged coffee to retail outlets since 1998, was reportedly informed by Starbucks in October that it would end the distribution agreement.

Starbucks made its public announcement to end the agreement in a statement released on November 4. “The details and timing around any transition will be subject to further private dialogue. Starbucks intends to work closely with Kraft to ensure an orderly transition, putting an emphasis on ensuring their mutual customers are well served,” Starbucks said.

In response Kraft issued a statement the same day sharing some details from the agreement.

“Kraft Foods' agreement with Starbucks regarding the sale of packaged coffee in grocery stores and other channels is perpetual. Importantly, if Starbucks decides to exit its relationship with Kraft Foods, the agreement requires Starbucks to pay Kraft Foods the fair market value of the business plus, in certain instances, a premium,” the food giant said.

Starbucks responded with: “We consider it unfortunate that Kraft has chosen to make public statements that we believe mischaracterize the nature of the agreement between our companies, including the term of the agreement, It has been, and continues to be, our intention to keep these conversations private. There is a specific mechanism within the agreement for the resolution of disputes.”


Southeastern Freight Lines takes Home Depot's LTL Carrier of the Year award

Southeastern Freight Lines announced The Home Depot, the largest home improvement retailer in the U.S, has named it LTL Carrier of the Year for 2010.

Southeastern said in a statement that it led in all of The Home Depot’s performance requirements which include on-time delivery and electronic shipment status metrics. The motor carrier said Home Depot also referenced Southeastern’s efforts to help the company with special projects to improve their shipping system.


Alleged video of China-Japan vessel collision

Japan has said it is investigating whether online video clips that appear to show a Chinese fishing boat colliding with Japanese patrol vessels are authentic.

The collision in September near disputed isles in the East China Sea, the site of vast potential gas and oil reserves, sparked a diplomatic spat between the two Asian giants.

Japan detained the Chinese skipper of the trawler, which made him a hero in China.

The clips were posted on the video sharing website YouTube early on Friday, threatening to reignite the China-Japan row.

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Tuesday, November 09, 2010

Top story

Report: U.S. government, freight companies knew of air cargo security gaps

Despite knowing for decades that terrorists could sneak bombs onto planes, the U.S. government failed to close obvious security gaps amid pressure from shipping companies fearful tighter controls would cost too much and delay deliveries.

Intelligence officials around the world narrowly thwarted an al-Qaida mail bomb plot last month, intercepting two explosive packages shipped from Yemen with UPS and FedEx.

But it was a tip from Saudi intelligence, not cargo screening, that turned up the bombs before they could take down airplanes. Company employees in Yemen were not required to X-ray the printer cartridges the explosives were hidden inside. Instead, they looked at the printers and sent them off, U.S. officials said.

The scare is prompting officials in Washington and around the world to rethink air cargo security. On Monday the Obama administration announced new cargo rules banning freight out of Yemen and Somalia. It also restricted the shipment of printer and toner cartridges weighing more than a pound on all passenger flights and some cargo flights. Overall cargo security rules were unchanged.

Lobbying by the multibillion-dollar freight industry has helped kill past efforts to impose tough rules.

In 2004, when the Transportation Security Administration considered requiring screening for all packages on all flights, the Cargo Airline Association downplayed a terrorist threat. It argued slowing down shipping for inspections would jeopardize the shipping industry and the world's economy.

The U.S. requires all packages be screened before being loaded onto passenger flights originating in the U.S. But there's no such requirement enforced for all cargo loaded onto U.S.-bound international passenger flights or on cargo-only flights, such as UPS and FedEx planes.


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DHL tweaks 2010-2011 outlook upward

Deutsche Post tweaked its 2010 outlook and said it expects earnings growth to continue into next year after global economic recovery boosted transport volumes and freight rates in the third quarter.

"Freight rates are extraordinarily high, especially on trans-Pacific trade lanes," Europe's biggest mail and express delivery company said as it reported consensus-busting quarterly operating profit on Tuesday.

Revenue in its freight business jumped by almost half in the three months through September, helped by improved demand for ocean freight in the Middle East, North Asia and South America.

Deutsche Post said it now sees underlying earnings before interest and tax at 2.0-2.1 billion euros ($2.8-2.9 billion) this year on growth at its DHL division, which bundles express, freight and supply chain services.


For the full story:


Asian container-shipping companies ready to order new vessels

Hanjin Shipping Co., South Korea’s largest shipping line, and China Shipping (Group) Co. said they were close to ordering new vessels as world trade rebounds from the global recession.

Hanjin may announce a deal for mid-size container ships by as early as year-end, Chief Executive Officer Kim Young Min said today at a conference in Guangzhou, China. China Shipping will make an order soon, President Li Shaode said at the same event. He declined to say which type of ships the group was looking at.

Evergreen Group is also near to ordering about 10 ships, part of plans to buy 100, as trade recovers from a slump last year that caused industrywide losses. Global container-shipping volume may jump as much as 8 percent next year, as economic growth in the U.S. and Europe spurs demand for Asian-made goods, Kim said.


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AECOM lands additional $58.8 mil deal for New Doha Port project

The consulting engineering firm AECOM Technology Corporation, announced it has been awarded additional work on its existing six-year, 149.3-million agreement to provide program management services to the New Doha Port project in Qatar.

The latest development includes a 20-month project extension valued at $58.8-million, bringing its total on the contract to $208 million, the firm said in a statement.

The Government of Qatar’ the port project is estimated to cost $6 billion, and is reportedly the world's largest "greenfield" port-development.

AECOM said the add-on work is related to program management services for an expansion of Phase 1 of the new commercial port development, the addition of a Qatari naval base, and the creation of an industrial canal for a new economic development zone.


Russian cargo vessel sinks just shy of Japanese port berth

News reports out of Japan and Russia are that the cargo ship Damanta with a cargo-load of crabs arrived at Japan’s Port of Wakkani from Russia’s Sakhalin port and promptly sank Tuesday off Japan's northernmost Hokkaido Island.

Water reportedly flooded the ship amid gale-force weather and it sank just 10 meters from its berth. The crew of seven Russian national on board the Cambodian-registered vessel were rescued.

There was an oil spill from the but it was reportedly contained. Japanese authorities say they are looking into the incident.


Wednesday, November 10, 2010

Top story

COSCO chief sees 3-5-year shipping recovery

World trade is recovering at a faster-than-expected rate but the shipping sector will experience more fluctuation and volatility ahead, according to industry leaders.

"Given the sophisticated global economic environment, cyclical turbulence will become more obvious, while volatility will grow more dramatically," said Wei Jiafu, president of China Ocean Shipping (Group) Company (COSCO Group), the second-largest shipping company in the world, at the World Shipping (China) Summit on Tuesday.

The market will also face challenges from clients' increasing concern over clean and green transportation, and enterprises will have to be more flexible, Wei said.

According to the World Trade Organization, global trade growth will increase 13.5 percent this year, the biggest year-on-year increase since 1950, following a faster-than-expected recovery in trade flows.

Still, the development of the shipping industry will be restricted by excess freight capacity as newly built ships are delivered to owners, Wei said.

"New deliveries and over-capacity are hurting the recovery of shipping," he said.
Amid these challenges, China's economy, defined by its structural transformations, will help generate new momentum, Wei said.

"In the future, China's domestic consumption will contribute more than ever as it imports more finished products, maintains strong demand for energy and resources, and creates more opportunities for the green economy," he said.

-China Daily

For the full story:


U.S. containerized import trade down 2.72 percent in October

Import container volume into the U.S. fell 2.72 percent in October from the previous month according to the trade intelligence firm Zepol Corporation.

Containerized import trade increased 12.84 percent over October 2009, while the total number of shipments also fell 2.72 percent from September and rose 10.23 percent over last October. the Zepol report said.

Year to date, total import shipments are up 14.21 percent over 2009 and down 2.38 percent from 2008, the report said.

Total shipments from Asia are down 4.53 percent from September based on statistics from U.S. ports, the report said.

U.S. Pacific ports were down 6.55 percent, while East Coast ports were up 3.29 percent, and Gulf ports up 0.71 percent in terms of total TEUs, the report said.

While total volume is down, two shipping lines, Maersk and CMA CGM, saw increases over September for total TEUs. The rest of the top ten carriers had their volumes to the United States shrink for the same time frame, according to Zepol.


Report: U.S. trucking declined in October, showing possible Q4 letdown

Domestic shipping by over-the-road trucking declined in October indicating a possible letdown in the fourth quarter for industrial production, nominal GDP and retail sales, UCLA economists reported Tuesday.

The UCLA Anderson School of Management along with business service company Ceridian released the Ceridian/UCLA Pulse of Commerce Index Tuesday which tracks real-time fuel consumption of domestic road trucking in the U.S. and correlates closely to the trajectory of the Federal Reserve's Industrial Production number, GDP and retail sales.

October's report showed over-the-road trucking declined by 0.6 percent in the month after a 0.5 percent drop in September, and 1.0 percent decline in August which made for the first three-month decline since January 2009.

"While it's discouraging to see the PCI decline for the third consecutive month, October represents the eleventh straight month of year over year growth in the index," Craig Manson, senior vice president and index expert for Ceridian said.

"This means that the holiday sales season will likely be better than last year, but potentially disappointing versus current expectations in the marketplace," Manson added.

-iMarket News

For the full story:


Hanjin nets close to $200 mil profit in Q3

Hanjin Shipping announced 2010 third-quarter business results with total sales of $2.327 billion, operating profit of $314 million and net profit of $196 million.

As a result of cargo volume increases in major trades, the container division saw a 2.5% upturn in cargo volume to 977,386TEU quarter-on-quarter.

Total sales also experienced a 18.6% rise up to US$1,981 million and operating profit was up 156.3% with US$323-million quarter-on-quarter driven by the rate restoration of Asia-Europe and Transpacific trade and peak season surcharges.

Regarding the 4th quarter's business outlook, Hanjin said: "For the container division, efficient fleet/service operations will be initiated as the traditional slack season will return in 4th Quarter."

-Manila Bulletin

For the full story:


Norfolk Southern train hits, kills herd of cattle

A train conductor tells Clark County deputies he could not get a freight trained stopped in time and hit a herd of cattle around 6 a.m. Tuesday.

The conductor for the Norfolk and Southern Railroad told deputies the 6,700-foot long train was doing about 38 mph when they passed the crossing for South Buena Vista Road near Plattsburg.  That’s when the engineer saw the cattle on the tracks.

The engineer says because of the size and speed of the train, he could not stop before crossing the railway intersection with state Route 54. 

The locomotive collided with the herd killing at least 20 head of cattle.

The primary locomotive was damaged in the crash and took three hours to repair.

The cattle were from a local farm, but deputies say they’re not sure how they were able to wander onto the tracks.

None of the railroad personnel were hurt in the collision.

-NBC Columbus, Ohio affiliate

For the story source:


Thursday, November 11, 2010

Top story

AP Moller-Maersk reports $4.42 bil net profit

Danish container shipping and oil group AP Moller-Maersk A/S has reported a net profit of 23.77 billion kroner ($4.42 billion) for the first nine months of the year, citing improved freight rates and higher crude prices.

The result was up from a loss of 3.86 billion kroner in the same period in 2009.

Revenues jumped 22 percent to 234.78 billion kroner from 193.14 billion kroner for the Jan. 1-Sept. 30 period.

CEO Nils Smedegaard Andersen on Wednesday called the result "exceptional."

The Copenhagen-based group said it raised its full-year profit outlook to be "in the order of $5 billion" against a previous guidance of $4 billion.

-Bloomberg BusinessWeek

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U.S.D.O.T. grants anti-trust immunity to AA and JAL

The U.S. Department of Transportation granted antitrust immunity to American Airlines Inc. and Japan Airlines International Co. on Wednesday so they can cooperate more deeply on their U.S.-Japan service.

Transportation officials also gave their final approval to a similar request for antitrust immunity submitted by United Airlines Inc., Continental Airlines Inc. and All Nippon Airways Co.

DOT made the approvals contingent upon the U.S. and Japanese governments signing an "open skies" treaty that will allow more flights between the two countries and permit U.S. carriers to fly into Tokyo's Haneda International Airport.

-The Dallas Morning News

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Delaware port board member wants unspent $50 mil frozen

A member of the board of the embattled agency that operates bridges between Pennsylvania and New Jersey says more than $50 million in unspent economic development funds should be frozen.

The Delaware River Port Authority voted in August not to spend such money on projects not directly related to operating the four toll bridges and the commuter rail service linking Philadelphia and southern New Jersey.

Pennsylvania Auditor General Jack Wagner says he views any further expenditure of the funds to be "contrary to the spirit, if not the letter" of that resolution. The Philadelphia Inquirer says Wagner sent a letter to the board chairman saying better uses for the money might be reducing the authority's debt burden or lowering tolls.

-New Jersey Star-Ledger/AP

For the full story:


Pennsylvania to invest $32.5 mil in 38 rail projects

A $32.5 million state investment in 38 rail projects in 28 counties will upgrade and add capacity, stimulate local economies and provide as many as 2,500 jobs, Governor Edward G. Rendell announced at a York manufacturing and distribution facility.

More than two-thirds of the funding, $23.9 million, will come from the 2010-11 Rail Capital Budget/Transportation Assistance Program funded through state capital bond dollars approved in the General Fund budget.

The remaining $8.6 million comes from the 2011-12 Rail Freight Assistance Program, which is provided through the state's General Fund.

-The GovMonitor

For the full story:


Activist hostages taken on ship bound for Gaza

Diplomats were working Thursday to resolve a reported hostage-taking on a ship with a Gaza-bound convoy.

The ship is the Strofades IV -- part of a convoy sponsored by the Road to Hope, an independent group of activists working to break Israel's siege of Gaza.

Ten convoy members -- six Britons, two Irish citizens, an Algerian, and a Moroccan -- were taken hostage, the group said. Also taken hostage were the manager of Libya's Derna port and two port authority police officers, it said.

It was not immediately clear who was thought to have taken them hostage.

The British Foreign Office said Thursday the vessel departed Libya and is headed toward Greece.


For the full story:


Cargo ship sinks off Japan's southern islands

A cargo ship with 25 Chinese crew on board sank off Japan's southern islands, with only five crew accounted for including one fatality, Japanese and Taiwanese coastguards said Thursday.

Taiwanese maritime authorities informed Japan's coastguard that the Panama-registered ship went missing some 340 kilometres (210 miles) south of Iriomote island in the Pacific early Wednesday, coastguard officials said.

The 17,000-tonne Nasco Diamond left Indonesia on November 4 for China carrying 55,000 tonnes of nickel.

Five crew members have so far been accounted for, with some of them telling rescuers that their ship sank, Japanese officials said as search and rescue operation continued.

It was not immediately clear what caused the ship to sink, as weather conditions in the area were calm with moderate wind, good visibility and no rain, according to the Japan Coast Guard.

Japanese and Taiwanese patrol boats have recovered one body, rescued three crew members and found another in critical condition, officials said.


For the full story:


Friday, November 12, 2010

Top story

FedEx projects 11 percent increase in Holiday volume

FedEx Corp. is projecting its volume to increase 11 percent over the holidays, perhaps besting its chief rival.

United Parcel Service Inc. based in Atlanta, previously said it expects volume to rise 7.5 percent between Thanksgiving and Christmas.

FedEx based in Memphis, Tenn., on Thursday predicted more than 223.3 million shipments will move through its global networks between Thanksgiving and Christmas. And it expects to see the busiest day in company history when it moves almost 16 million shipments around the world on Dec. 13.

Items such as books from large Internet retailers and retail inventory such as apparel, personal consumer electronics and luxury goods will drive FedEx holiday volumes, it said.

-Orlando Business Journal For the full story:


Canadian official visits Vietnam for shipping cooperation

A Canadian official met with local officials in Ha Noi and HCM City this week to promote trade relations and encourage the use of the port and transportation infrastructure on Canada's western coast.

Stockwell Day, president of Canada's Treasury Board and Minister for the Asia-Pacific Gateway, and his delegation visited ports along the Sai Gon River, following a two-day trip to Ha Noi.

Day met with the ministers of Home Affairs and Planning and Investment in Ha Noi to discuss further cooperation and investment opportunities.

He said the Canadian government was interested in pursuing Public-Private-Partnerships with Vietnamese companies, adding that logistics was another area Canadian businesses were interested in pursuing in Viet Nam.

-Vietnam News

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Panalpina decided resistance was futile with U.S. in bribery case

A Swiss freight forwarder, like Siemens AG before it, faced potentially crippling penalties when U.S. prosecutors began investigating the bribes it paid to government officials around the world.

The freight company, Panalpina World Transport Holding Ltd., could battle the probe and risk an indictment, or clean up its practices and help prosecutors unearth its wrongdoing. Like Siemens, Panalpina chose cooperation.

On Nov. 4, the Justice Department rewarded Panalpina, letting it avoid prosecution by paying $81.5 million, admitting “a culture of corruption,” and strengthening compliance programs.

Surrender by companies such as Panalpina and Siemens is now the norm under the 33-year-old Foreign Corrupt Practices Act.

No company has risked an FCPA court fight in two decades out of fear that a conviction could lead to a loss of public contracts and higher penalties, lawyers said. After resolving two or three cases a year, the U.S. settled 47 corporate cases since 2005 without trial, reaping $3.3 billion for the U.S. treasury.


For the full story:


Hamburg-Sud exec to be honored by NY/NJ forwarders

Juergen Pump, senior vice president of Hamburg Süd North America, Inc. was selected by the New York/New Jersey Foreign Freight Forwarders and Brokers Association, Inc. as its 2011 Person of the Year.

The award will be presented during the 94th annual dinner at the Marriott Marquis Hotel in New York on January 26, 2011.

Pump joined Hamburg Süd in 1995 and became responsible for the Australian/New Zealand services in 1997. Prior to joining the company, he held several executive positions for Hapag-Lloyd AG in Hamburg, Germany; New York, Atlanta, and San Francisco.


Somali pirates have set up a lucrative network

Somali pirates have set up a sophisticated network of agents to negotiate and launder ransom money that has turned the seizing of ships into a lucrative business, experts say.

The sea pirates use the financial hub of Dubai and Somalia's southern neighbor Kenya as key transit points to launder the millions of dollars in ransom money by organized and wealthy gangs.

The U.S. State Department has also identified the UAE, whose seven emirates include Dubai, and Kenya as centres pirates are using to run their illegal operations.

Somali pirates are currently holding 20 ships and more than 400 sailors and passengers, according to the International Maritime Organization.

And as they grow more brazen, the business of piracy flourishes into a multi-tiered economy with many profiting from it, according to Turkish politician Birgen Keles.

"As a matter of fact, a new economy flourishes all over the world with security companies, law and specialised negotiators gaining profit from their involvement in solving piracy cases," Keles wrote in a report for NATO.

"London seems to have become the hub for firms that help ship owners deal with the legal aspects of paying the ransoms," she said.


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