Cargo Business Newswire ArchivesSummary for November 30 through December 4, 2015:
Monday, November 30, 2015
DOT issues final word on truck driver coercion rule
The U.S. Department of Transportation's Federal Motor Carrier Safety Administration has announced a Final Rule to help safeguard commercial truck and bus drivers from being compelled to violate federal safety regulations.
The rule provides FMCSA with the authority to take enforcement action not only against motor carriers, but also against shippers, receivers, and transportation intermediaries.
"Our nation relies on millions of commercial vehicle drivers to move people and freight, and we must do everything we can to ensure that they are able to operate safely," said U.S. Transportation Secretary Anthony Foxx. "This rule enables us to take enforcement action against anyone in the transportation chain who knowingly and recklessly jeopardizes the safety of the driver and of the motoring public."
The Final Rule addresses three key areas concerning driver coercion: procedures for commercial truck and bus drivers to report incidents of coercion to the FMCSA, steps the agency could take when responding to such allegations, and penalties that may be imposed on entities found to have coerced drivers.
"Any time a motor carrier, shipper, receiver, freight-forwarder, or broker demands that a schedule be met, one that the driver says would be impossible without violating hours-of-service restrictions or other safety regulations, that is coercion," said FMCSA Acting Administrator Scott Darling. "No commercial driver should ever feel compelled to bypass important federal safety regulations and potentially endanger the lives of all travelers on the road."
Wilhelmsen Ships Service advises caution as R-22 ban approaches
Wilhelmsen Ships Service is reportedly warning of price, supply and safety risks in the run-up to the global ban on R-22 (chlorodifluoromethane or HCFC) refrigerant.
The colorless gas, which has high ozone depletion and global warming potential, is still used on up to 8,000 vessels worldwide.
"R-22 is a versatile and effective refrigerant gas that has served the shipping industry well, but it is fast approaching the end of the line," comments Svenn Jacobsen, technical product manager of refrigeration at Wilhelmsen Ships Service. "The compliance deadlines are approaching and this has, quite rightly, impacted tremendously on global production. As availability goes down price and supply risks go up, and this is potentially bad news for the owners of those remaining vessels that still use R-22."
According to the American Journal of Transportation, Jacobsen said if ships are slow to switch to ozone friendly refrigerant alternatives, costs "could easily double over the course of the next year."
"When prices increase and/or availability shrinks, alternative and illegally produced products suddenly start appearing on the market," he states. "This is happening already, and will only increase with demand.
"Gases are being smuggled into countries, mis-declared and counterfeited. The consequences of this can be serious for vessels, catastrophic for equipment, with adulterated refrigerant causing poor mechanical performance and breakdown, and potentially deadly for individuals."
Jacobsen said heavy fines will be levied for not complying with regulations, noting the EPA can assess fines of up to $37,000 a day for violations – and real risks to vessels and crews in not doing so. R-22 is on its way out; the industry has to be aware of how it can bid farewell in the safest, securest and most appropriate manner."
Matson to raise cargo rates
Hawaii’s largest shipping company, Matson, has announced that beginning next year it will raise its cargo rates as the effect of Horizon’s departure from the industry starts to make an impact.
Matson Navigation Company, part of Matson, Inc. said it would raise its rates for its Hawaii service by $225 per westbound container and $110 per eastbound container. The new prices will start on January 3 of 2016 and are a result of increased operation costs and to fund improvements for the Hawaii service.
"Matson remains committed to investing in our service to ensure that Hawaii continues to have a modern, reliable and efficient ocean transportation infrastructure," said John Lauer, senior vice president of Ocean Services.
Washington state releases review of proposed oil-by-rail terminal
A Washington state council released a government review of Tesoro's prospective $210 million rail-port, bringing the company one step closer to building the largest oil-by-rail terminal in the U.S.
The project, which would produce 360,000 barrels-per-day, would move domestic and Canadian crude via train to Washington's Port of Vancouver on the Columbia River, where vessels would take it to West Coast refineries, largely in California.
Tesoro had originally targeted late 2014 for the startup, but the massive state review and growing opposition due to a number of fiery crude train crashes since mid-2013 led to repeated delays.
The release of Washington's Energy Facility Site Evaluation Council draft environmental impact statement on the project opened a 45-day stretch for public comment. After that, the council will submit its final report and recommendation to Gov. Jay Inslee, who has the final decision on whether it will be built.
The report, which exceeds 1,000 pages including lists of resources used to compile it, does not take a position on the project. It said all tank railcars that move crude to the proposed facility must meet the latest federal standards announced earlier this year with thicker hulls, steel shields on the front and back, and protections for valves and fittings where crude goes in the top and drains out the bottom.
Dockworkers at the Port of Rotterdam have voted to hold a series of 24-hour strikes in December and January in protest at possible job cuts, threatening to freeze the movement of goods through Europe's largest port.
Niek Stam, leader of the FNV Havens union, said in a statement that members of the union had voted to strike to back their demand for guarantees of no layoffs for the coming nine years.
Major container employers ECT, APMT and RWG have rejected that demand in contract negotiations that have been running since April.
"The employers have said that they think that demand is not realistic, something of a different era," said Sjaak Poppe, a spokesman for the Port of Rotterdam, which is brokering the now-stalled talks and which has been asked by the employers to speak on their behalf.
The source of the conflict is the commissioning of two new highly automated container terminals, expected to lead to the loss of 700 out of 4,000 jobs in container throughput at the port in 2017.
Moffatt & Nichol wins award for Savannah port project
California infrastructure firm Moffatt & Nichol has provided various engineering, consulting, design and construction administration services for the Port of Savannah since 2004.
Earlier this month, one of those projects — the Mason Empty Depot and Mason Gate Project at GPA’s Garden City Terminal — won the Georgia Partnership for Transportation Quality’s Preconstruction Design Award for innovation and ingenuity.
The $30-million expansion will provide a designated location to store empty containers as part of a goal to improve container-handling operations. The project includes the construction of a 31-acre container yard, a roundabout and a new gate.
"This facility is a big deal," said Chris Novack, the director of engineering and facilities maintenance for the Georgia Ports Authority. "We’re processing containers at a record pace within a constrained urban area, and we are constantly developing and honing improvements."
"Thanks to Moffatt & Nichol’s expertise and ability to work closely with the contractor, we’re on track to finish this expansion on an accelerated schedule of nine months."
Majority of Port Metro Vancouver truckers sign union contracts
Close to 300 union truckers at Port Metro Vancouver have signed new collective bargaining agreements with six companies, according to union officials, while 110 are still working without a new deal.
"We've managed to tweak some of the key rates that were out there, get some benefit contributions going forward for both owner-operators and employees, and really bring some fairness back to the working conditions of the drivers," said Gavin McGarrigle Unifor's B.C. area director.
The six new collective bargaining agreements include companies AG, Aheer, Forward, Prudential and Sunlover, and come after more than a year of negotiations.
In a release, Unifor said the new collective agreements won't expire until July of 2019, "a major step towards stability at Port Metro Vancouver."
Unifor says the agreements include "outstanding retro pay to be paid to drivers within 30 days, improved and fixed rates, job security protections, better dispatching language, and company contributions to benefit plans for owner-operators and company drivers."
Up to 110 drivers are still without a new collective agreement, the one they were working under expired in 2014.
Unifor says two companies, Port Transport and Harbour Link "remain unwilling to bargain deals" and some workers have been on strike for a week in protest.
Drivers plan to picket at Harbour Link's main yard at 7420 Hopcott Road in Delta on Monday morning.
In a bid to operate one of the newest and most competitive reefer container fleets in the liner shipping industry, NYK has ordered 5,500 high-tech 40-foot refrigerated containers. Delivery of the new units has already begun.
The new order includes 700 controlled atmosphere (CA) containers. The advanced technology of these units ensures that the quality and freshness of perishable agricultural products, such as fruits and vegetables, is maintained during long ocean transits, according to a company statement.
The CA technology regulates not only the temperature within the reefer unit but also the oxygen and carbon dioxide levels, the statement said.
Federal Railroad Administration warns railroads to meet PTC deadline
The U.S. government will "aggressively enforce" an extended deadline for railroads to adopt new safety technology that will help avoid derailments and other major accidents, according to the Federal Railroad Administration.
The railroad industry lobbied to extend a previous year-end deadline for positive train control (PTC) implementation by at least three years, until Dec. 31, 2018. The extension was enacted by Congress and signed by the president late last month.
In a Nov. 19 letter to railroads, Federal Railroad Administration chief Sarah Feinberg warned that rail operators could face a daily civil penalty of at least $5,000 if they do not submit a PTC implementation plan by Jan. 27.
"FRA intends to aggressively enforce the deadlines and requirements," she said in the FRA letter.
PTC involves complex safety and communications technology that can slow or stop a train under circumstances that could pose a safety risk.
The National Transportation Safety Board, which has been calling on railroads to adopt the new technology since the late 1960s, says it would have prevented the Amtrak derailment that killed eight people and injured more than 200 others last May in Philadelphia.
Maersk Line has confirmed market rumors that it has temporarily idled one of its largest vessels in another sign that the industry is in trouble.
The Morten Maersk, a Triple-E megaship with a capacity of 18,000 TEUs, plies the Asia-to-North Europe route, calling at Singapore along the way.
The ship has been idle in the East China Sea off Shanghai since mid-October, due to the Chinese Golden Week holiday, Maersk said. But it is expected to resume service in Busan, South Korea, in December.
COO Soren Toft said in a briefing that Maersk Line expects its deployed capacity to remain "more or less flat" through 2016, amid tepid market conditions.
He noted the company's average freight rates have fallen 1.9 percent each year since 2004, and said this "slow erosion" in rates will likely continue due to the severe imbalance in global supply and demand. "We're taking the starting point that there will still be tough competition," he said.
French shipping giant CMA CGM is in talks with lenders to finance its possible takeover bid for Singapore’s Neptune Orient Lines, according to inside sources.
The French shipping company is in discussions with banks including BNP Paribas, HSBC Holdings and JP Morgan Chase for loans to back an offer for NOL, the sources said, asking not to be identified.
CMA CGM needs to demonstrate it has sufficient financial resources before making a definitive bid for NOL, which reportedly has a market value of $2.2 billion.
Buying NOL would help CMA CGM consolidate its position in the global container market as it competes with Maersk Line and MSC. CMA CGM is seeking to combine with its rival as shipping companies struggle to be profitable in the face of a glut of vessels, shrinking demand and declining rates.
"It may not be a done deal yet, but CMA needs to demonstrate they have the financing capability to go ahead," Soo Hai Lim, a Hong Kong-based money manager at Baring Asset Management (Asia), said by phone Tuesday. "They should be able to get some synergies from this acquisition. Consolidation should be good for the industry."
Neptune Orient and its controlling shareholder, Temasek Holdings, said last month they are in exclusive talks with CMA CGM. The French company has until Dec. 7 to complete due diligence and negotiate a definitive offer.
Panama Canal: Traffic back to normal but expansion could face delay
Waiting times for ships at the Panama Canal have returned to normal after poor weather and a spike in traffic caused delays for several weeks, the waterway's operator said on Monday.
"Today ... the line is 45 ships, which represents a maximum waiting time of two days," the Panama Canal Authority (ACP) said in a statement, noting that better weather and extra funding aimed at freeing up the traffic had reduced the bottleneck.
The ACP said the problems caused delays for more than 10 days in October and though they were easing by-mid November, the delays were beyond the 24-to-36 hour normal waiting times.
Tracking systems showed that at the height of the delays, more than 130 ships were held up at the canal's two anchorages, prompting some companies to complain.
The expansion of the Panama Canal could face a new delay due to cracks that emerged a few months ago in one of the locks, a spokesman for the waterway’s authority said on Thursday.
The consortium leading the construction project - led by Italy’s Salini Impregilo and Spain’s Sacyr - expects to finish repairing the cracks by mid-January, but it has not given a new date for completing the work, the Panama Canal Authority said.
WWL to increase frequency of Europe-to-U.S. West Coast service
Wallenius Wilhelmson Logistics will increase the frequency and capacity on its service from Europe to the U.S. West Coast. Starting in January 2016, it will offer a regular weekly service from key ports in Europe to the West Coast in the U.S.
Previously, WWL offered a fortnightly service from Europe to the West Coast. These two additional sailings per month strengthen WWL’s market-leading connectivity between Europe and Baltimore and boost transshipment opportunities to Latin America, the Caribbean and Asia via its port hub in Manzanillo, Panama.
WWL will deploy its latest generation vessels on this route, which represent the largest modern RoRo ships in the world and can accommodate cargo in excess of 200 tons. Once the new locks debut on the Panama Canal, WWL said it would introduce the Post-Panamax HERO class of vessels to the Americas trade markets.
"Doubling the frequency and capacity for its Europe to U.S. West Coast service allows WWL to lead the market — by offering an unmatched frequency and reliability to effectively accommodate the growing needs of heavy equipment and breakbulk shippers and, in particular, demand by car manufacturers," said Flavio Batista, EVP and head of commercial for EMEA at WWL.
Pirates attack cargo ship, kidnap captain and 4 sailors
Pirates attacked a Polish-owned cargo vessel off the Nigerian coast last week and kidnapped its captain and four crewmembers, according to Polish authorities.
On Thursday night the cargo ship Szafir was boarded by armed attackers, who abducted the captain, three officers and a seaman in Nigerian waters. The remaining 11 crewmembers barricaded themselves inside the ship and were left unharmed.
The captain and the four other Polish seamen abducted from the ship are reportedly fine and called their families at home, Poland's Foreign Ministry said Sunday.
Poland was liaising with Nigerian authorities, Foreign Minister Witold Waszczykowski told media in Warsaw, and will continue efforts to have the kidnapped crewmen released.
The ship was anchored around 30 nautical miles off the Nigerian coast, and the operator was arranging for a new crew to take it back to port.
XPO Logistics’ $3 billion acquisition of Con-way, completed last month, created — in what seemed like a heartbeat — the world’s second-largest contract logistics provider behind DHL Supply Chain and ahead of other global logistics players, including as Kuehne + Nagel, Ceva, UPS and DB Schenker Logistics.
Instead of XPO who? — it became XPO wow! The planned acquisition was announced in early September and the deal closed by October 30. Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, "We're moving quickly to eliminate redundancies and leverage our scale to better serve our more than 50,000 customers."
As of October 30, Con-way Freight, Menlo Logistics, Con-way Truckload, and Con-way Multimodal are operating under the single global brand of XPO Logistics. Analysts expect XPO’s annual revenues will increase to around $15 billion, and operating profits will nearly double to $1.1 billion.
Last year was the best year for freight transportation since the Great Recession, according to the Council of Supply Chain Management Professional’s "26th Annual State of Logistics Report," released in mid-2015. Can that momentum continue when the numbers are tallied for 2015?
That’s an open question, but the XPO story is a strong indicator of more good things to come for the logistics industry through more consolidation, economies of scale and the efficiencies that result. In fact, consolidation has been a major part of the logistics story since 2014.
In a recent article for Supply Chain Quarterly, Robert C. Lieb professor of Supply Chain Management at the D'Amore-McKim School of Business at Northeastern University, noted that the wave of mergers and acquisitions (M/As) in 2014-2015 are reshaping the structure of the logistics industry, particularly third-party logistics providers.
Over the past 30 years, Lieb wrote, "3PLs have used [M/As] for such purposes as achieving scale, broadening service offerings, expanding geographic coverage, obtaining assets and/or technology, securing management talent, acquiring new customers, increasing market share, supporting earnings growth, gaining knowledge in a targeted industry (health care, for example) and in some instances, reducing competition."
M/As have not only been used strategically by individual 3PLs to strengthen their market positions, he continued, "but also were used by private equity companies to build large-scale service providers."
Lieb’s survey of industry CEOs revealed that there were relatively few large-scale mergers and acquisitions between 2008 and 2014, but they nevertheless identified M/As as a major industry dynamic in that "they continued to expect a related industry restructuring to begin the next year."
The dam broke in early 2014, Lieb said, when a wave of large-scale mergers and acquisitions occurred in the 3PL industry.
It started in January 2014 when XPO Logistics acquired Pacer International. This was the first of several recent acquisitions by XPO. At the time Pacer was an asset-light intermodal service company that was the leading provider of cross-border U.S-Mexico intermodal services. In April 2015, XPO acquired Norbert Dentressangle, the French transportation and logistics company. In July 2014, Norbert Dentressangle had acquired Jacobson Companies, a U.S.-based value-added warehousing company, for $750 million from the private equity company Oak Hill Capital Partners. Then came XPO’s big Con-way acquisition.
In April 2014 FedEx reported its intention to acquire the reverse logistics provider Genco, The acquisition was completed in January 2015.
In February 2015 Kintetsu World Express, a large Japanese freight forwarding company, announced it was buying APL Logistics, a subsidiary of Neptune Orient Lines for $1.2 billion.
In March Penske Logistics acquired Transfreight, a company with extensive experience in providing logistics services to clients in the automotive industry.
In April, FedEx announced its intention to acquire the Dutch company TNT Express for $4.8 billion. The acquisition of TNT Express, if it receives approval from the European Union, will provide FedEx with an extensive road delivery network in Europe. Lieb noted that decision could come later this month, but approval "is by no means a certainty."
UPS joined the acquisition frenzy in July 2015 with an announcement that it was acquiring Coyote Logistics, a non-asset-based truckload carrier that was also active in the freight brokerage business.
Then in August 2015, Geodis SA, a 3PL owned by the French national railroad SNCF, acquired U.S.-based OHL from a private equity company.
And in October 2015, the Danish logistics giant DSV, said it would buy U.S.-based UTi for $1.35 billion.
So between early 2014 and September 2015 these companies spent nearly $20 billion on acquisitions.
Lieb’s conclusion? The urge to merge isn’t over yet.
China’s DNV GL orders three ULCVs for COSCO
DNV GL announced it has signed a deal with Shanghai Waigaoqiao Shipbuilding to construct three 20,000 TEU ultra large container vessels for COSCO Container Lines.
Scheduled for delivery beginning in January 2018, the vessels will be dual classed by DNV GL and China Classification Society (CCS) and will be deployed in the Far East-Europe trade.
"This contract is another milestone in China’s evolution into one of the world’s leading shipbuilding nations," said Jan-Olaf Probst, head of Business Development, Hamburg. "SWS has been on a very strong development path and has consistently been one of the top Chinese yards in terms of efficiency and innovation, so it is only fitting that they are the first yard to top the 20,000 TEU mark in China."
Designed by the Marine Design & Research Institute of China, this next generation ULCV represents the first 20,000-TEU plus container ship built in China.
The vessels will have DNV GL’s Gas Ready notation, which will give COSCON a much easier pathway for a future conversion to operation with LNG as fuel if desired. They will also have DNV GL’s Route Specific Container Stowage (RSCS) notation, which offers further efficiency gains in the vessel’s cargo capacity. The RSCS notation was developed by DNV GL to provide a more efficient usage of cargo capacity by giving more flexibility for laden containers on board on specific routes.
Additionally, DNV GL said the vessels will be constructed to the highest environmental requirements, meeting the highest EEDI standard and ECA requirements. They also have double-hull protection of fuel tanks and ballast water treatment systems in anticipation of upcoming regulations.
Ag issues could sink U.S. free trade deal with EU
Differences between the U.S. and the European Union over issues such as genetically modified crops and hormone-treated beef could ruin a free trade deal, U.S. Agriculture Secretary Tom Vilsack said this week.
The EU and the U.S. hope to seal a Transatlantic Trade and Investment Partnership (TTIP) that would encompass a third of world trade and nearly half of global gross domestic product.
The two sides have made limited progress after 11 rounds of negotiations, but food and farming issues tend to be among the thorniest in trade talks.
Vilsack singled out three issues that had to be addressed: European opposition to U.S. exports of beef and genetically modified organisms, and U.S. opposition to the EU's system of geographical indications, or designation of origin protection.
"If we don't address these difficult, tricky issues ... decide not to deal with them because they are too hard, then in my view you are not going to have a TTIP agreement," Vilsack told reporters.
"The agricultural interests in the United States, by themselves, are not politically powerful enough to get an agreement passed, but they are certainly powerful enough to stop agreement that's been negotiated," he said.
The U.S. says science shows U.S. products from genetically modified crops to hormone-treated beef are safe, but those claims are met with suspicion in much of Europe.
Geographical indicators, a list of more than 1,000 products ranging from champagne to Parma ham, are a cornerstone of EU trade policy. They are designed to ensure only products from a specific region can carry a specific name. To the U.S., that smacks of protectionism.
The Port of Olympia in Washington state announced plans to move 1,400 head of dairy cattle to Vietnam in late November on the M/V Falconia, a specialized humane animal-carrier.
Vietnam has launched a campaign geared toward minimizing childhood malnourishment through a strategy of providing "one glass of milk per child per day." In doing so, they have followed the example of other countries that have been importing dairy cattle from the U.S. East Coast.
The dairy heifers will come from California farms and will be quarantined for 28 days at a U.S. Department of Agriculture approved farm facility. There, veterinarians will observe the condition of the animals prior to transporting them overseas.
Following the USDA-regulated holding period, the dairy heifers will be moved to the port and directly loaded to the ship. The cattle will board on a specialized platform and gangway that keep any hoof from touching the dock. The loading process is expected to take two days.
The loaded vessel will make way for Vietnam on about a three-week voyage due to the ship heading south for calmer seas and a better voyage for the heifers, with a veterinarian on board to ensure the cattle receive the best treatment. The USDA has vetted all parts of this supply chain to ensure the most humane handling of the animals, according to the port statement.
Tote’s North Star loses power off B.C.
Tote Maritime’s MV North Star spent more than half a day adrift last week off the coast of British Columbia, Canada.
The Canadian Coast Guard reported that the cargo ship lost propulsion and was adrift near the coast of Haida Gwaii.
The Coast Guard sent the CCGS Gordon Reid and a tug to assist the vessel.
The ship has since regained power and is again on its way to Tacoma, Wash.