Cargo Business Newswire ArchivesSummary for December 8 through December 12, 2014:
Monday, December 8, 2014
TSA recommends Dec. 15 general rate increase
Member container lines in the Transpacific Stabilization Agreement have announced a $1,000-per-FEU recommended general rate increase, effective December 15, due to stronger than expected holiday traffic and related service demands.
TSA cited press reports of double-digit import growth in September and October, and forecasts of continued market momentum through the rest of the year. As in recent years, the holiday retail season is likely to extend into January via gift cards and post-holiday sales promotions.
"With rates as low as they have been since 2011," said TSA executive administrator Brian Conrad, "lines have steadily reduced and consolidated services; they continue to play catch-up as demand ramps up beyond what had previously been expected."
TSA is a research and discussion forum of major container shipping lines serving the trade from Asia to ports and inland points in the U.S.
TSA member lines include APL, China Shipping Container Lines, CMA CGM, COSCO, Evergreen Line. Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, Kawasaki Kisen Kaisha, Ltd. (K Line), Maersk Line, MSC, N.Y.K. Line, Orient Overseas Container Line, and Yangming Marine.
G6 service suspends call at L.A./Long Beach due to port congestion
The G6 shipping alliance has reportedly suspended eastbound calls at the Port of Los Angeles for the next four sailings of its Asia-U.S. West Coast service, Pacific Atlantic 1, due to "ongoing congestion."
It was also reported that the G6 will skip other calls at APLís Global Gateway South terminal in Los Angeles in order to "remain fluid," according to an APL customer advisory.
The alliance has been significantly impacted by chronic backlogs that have plagued the Los Angeles/Long Beach port complex over the past few months.
G6 is comprised of APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK Line and OOCL.
Big truck orders strong in November
Indicating an extremely strong truck market, North American Class 8 heavy-duty truck orders came in at 40,560 units in November 2014, according to preliminary data from research firm FTR.
This is the second straight month the Class 8 order numbers rose above 40,000, researchers say.†November order activity, similar to October, was concentrated at a few truck makers, FTR said. The remainder fell short of October totals. Class 8 orders totaled an impressive 363,000 in the last 12-month period.
"The rare back-to-back 40,000 unit months in October and November is a result of fleets placing orders into the middle of 2015 to secure build slots due to tight production capacity in the economy and positive factors in the trucking sector are motivating fleets to place orders very early in this cycle," said Don Ake, FTR vice president of commercial vehicles confidence. "Trucking capacity remains tight and fleets continue to need more trucks. Orders may be weaker at the beginning of 2015, since some fleets have half of their expected 2015 requirements already in the backlog."
Over the past 12-month period, truckers ordered 363,000 Class 8 trucks, FTR found.
Class 8 trucks have a gross vehicle weight above 33,000 pounds, and include most tractor-trailers.
C.H. Robinson to buy online freight broker Freightquote.com
Logistics giant C.H. Robinson Worldwide announced it would buy online shipping provider Freightquote.com for $365 million.
Freightquote.com is one of the largest internet-based freight brokers in the U.S., making more than 1 million shipments across North America annually.
"E-commerce is going to be a bigger part of future supply chain services and Freightquote brings us a leading solution in our industry," said John Wiehoff, C.H. Robinsonís CEO.
C.H. Robinson said it would likely increase its existing revolving credit facility to finance the acquisition. which is expected to close in the first quarter of 2015.
Freightquote.com, founded by Tim Barton in 1998, has annual revenue of more than $600 million and operates truckload, less-than-truckload, expedited services and intermodal freight businesses, according to its website.
New owners pay crew of stranded cargo ship in Newfoundland
New owners bought a cargo ship that was stranded at the port of Argentia in Newfoundland, along with its crewmembers, since August 4.
A statement from the Fish, Food and Allied Workers-Unifor union says eight Ukrainian and three Russian crewmembers on board the Jana have finally been paid.
Last month donations poured in after it was publicized that the sailors were low on water and food. They were owed about $160,000 in total after the ship's former owners filed for bankruptcy in Germany.
Gerard Bradbury with the International Transport Workers Federation says six of the men will fly home this week, and some of the crew have chosen to stay on the vessel to work for the new owners.
Port of L.A.: Majority of holiday shipments unaffected by slowdowns
Photo credit:†Brian van der Brug / Los Angeles Times
Most retail holiday import goods have already made it to store shelves, according to Port of Los Angeles spokesman Philip Sanfield, since many shippers sent peak season inventory early to avoid possible labor disruptions at the Ports of Los Angeles and Long Beach.
Both Southern California ports saw significant rises in cargo in the first several months of 2014, because customers feared a work stoppage at the ports that would strand shipments. They were worried that talks to replace the West Coast dockworker contract which expired July 1 might go awry, resulting in a strike or lockout.
According to data from INTTRA, the time between a ship docking and when a container from the ship is available for pickup more than doubled to about 80 hours at the port complex from September 2013 to September 2014. In recent weeks, about 12 ships have sat at anchor waiting for a berth, according to data from the Marine Exchange of Southern California.
While both work pace and equipment shortages are a factor, retailers say most holiday goods are arriving safely through the ports. The restocking of "must-have" toys or other surprise bestsellers would be at greatest risk, they said.
The West Coast labor contract talks got rough in the fall when the Pacific Maritime Association, negotiating on behalf of employers, accused members of the International Longshore and Warehouse Union of staging slowdowns to gain an edge in collective bargaining. The ILWU said delays were due to a lack of available truck chassis and larger ships with greater cargo volume that take longer to process.
The two parties sat down to continue contract talks on Tuesday, Dec. 2., after 12 days of smaller, breakout sessions. Reportedly, they just wrapped up another weekend of face-to-face negotiations on Sunday, Dec. 7.
Global Logistics Properties and GIC invest $8B in U.S. portfolio
Singapore-listed Global Logistic Properties has partnered with Singaporeís sovereign wealth fund GIC to invest $8.1 billion in logistics real estate properties in the U.S.
GLP, which provides logistics facilities in China, Japan and Brazil, said it would hold a 55 percent stake in the venture, which is itís first foray into the U.S. market. GIC would hold the remaining 45 percent. They are taking over the portfolio from various companies affiliated with the Blackstone Group L.P.
GLP said it would cut its stake to 10 percent by August 2015, noting it has received interest from other investors.
"This transaction gives us immediate scale as well as the best team in the U.S. logistics market," said GLP co-founder and chief executive officer Ming Z. Mei.
Maersk Line will close down its Trans-Pacific 5 (TP5) US-flag service in January 2015 as part of a strategy to eliminate unprofitable Pacific services.
The end of the current TP5 service from North Asia to Los Angeles-Long Beach and Oakland wonít produce a significant reduction in the total capacity on the trade route because it is a comparatively small service.
The five ships on the route include four 4,300-TEU vessels formerly owned by Sea-Land Service and one ship chartered from Mediterranean Shipping Co.
In a customer advisory, Maersk Line said the overall trans-Pacific trade and its TP5 service between North China, South Korea and Japan to the West Coast in particular had been unprofitable for nine out of the last 10 years.
The world's largest shipping company said that the cancellation of the service "by no means suggests our commitment to the trans-Pacific trade has wavered. In fact, we see it as very much the opposite."
The termination of the TP5 route will cut Maersk Line's current capacity between Asia and Southern California by 13 percent and its overall trans-Pacific capacity by 10 percent. But the company plans to fill the void by covering ports in the region with calls made by the new 2M Alliance it has made with MSC, which will start in Jan. 2015.
The action is part of a plan to drop unprofitable services and position the shipping giant so that it can negotiate higher freight rates during next springís annual trans-Pacific contract talks.
Canada safety agency issues warning about possible defect in Chinese-made crane
Canada's Transportation Safety Board took a rare step and issued a warning about a possible defect in a widely used Chinese-made cargo crane after a worker was injured in Quebec.
Tests are still being done, but the federal watchdog issued the warning because it believes many similar cranes are in use. The TSB is not aware of any other incidents and does not know exactly which cranes could be vulnerable.
"We felt that we had to send this information as widely as we could and as fast as we could," TSB investigator FranÁois Dumont told Reuters.
In August, a crane on a bulk carrier in Bťcancour, Quebec collapsed after a slewing ring bearing fractured. Its cab was partly crushed and the operator injured.
China's Wuhan Marine Machinery Plant, a subsidiary of state-owned China Shipbuilding Industry Corp, manufactured the crane for Japan's Ishikawajima-Harima Heavy Industries, now IHI Corp.
Torpedoed ghost ship found in Oahu waters 60 years later
A ghost ship lost for more than 60 years was discovered by a small submersible vehicle off Oahu, a half-mile under the sea, according to researchers at the University of Hawaii.
Despite being torpedoed after World War II, many parts of the ship, including the ship's wheel, are still in their original locations.
"The upper deck structures from the bow to the stern were well-preserved and showed no sign of torpedo damage," said Terry Kerby, a submersible pilot with the university's Hawai'i Undersea Research Laboratory.
The ship, originally named The Dickenson, was part of a fleet of ships that maintained the growing submarine telecommunications network from 1923 to 1941. During the war the Dickenson was renamed the USS Kailua and was sent to maintain cables in other locales in the South Pacific.
On Feb. 7, 1946, the ship was torpedoed and sank into the waters off Oahu, but no one recorded its final resting place.
Government funding bill revives debate over truck driver hours
The government funding bill currently before Congress has revived a long-running debate over how many hours truck drivers can spend on the road.†
Lawmakers are pondering whether to include a trucking amendment thatís reportedly buried in the so-called "cromnibus" funding legislation, designed to relax trucker-scheduling regulations meant to prevent driver fatigue.
The proposal would eliminate the current mandate that truck drivers take breaks between 1 a.m. and 5 a.m. on consecutive nights before they can work again. It would also remove a limit on the number of times they can declare the start of a new workday.†
Truckers would still be limited to working 70 hours in one week under the rules that would remain. After reaching that limit, they would be required to take an immediate 34-hour break before driving again.
Congress reportedly needs to pass the $1.1 trillion omnibus spending bill by midnight of Dec. 12 to avoid a government shut down.
Chinaís exports/imports fall in November against expectations
China's imports unexpectedly fell 6.7 percent in November year-over-year, dropping far below analystsí forecasts of a 3.9 percent gain. The nationís weak performance triggers concerns about its economy, adding pressure on Beijing to issue more stimulus measures.
"If you think about domestic demand in China the two components that are most import intensive are both very weak," said Louis Kuijs, an economist with RBS in Hong Kong. "They are real estate, which drives a lot of commodity imports and corporate investment, which drives capital goods imports. Both of these are particularly weak."
Exports were also much weaker than forecast, growing 4.7 percent versus expectations of 8.2 percent.
"Export growth is pretty subdued, which is in line with export data from South Korea and some other indicators from the region." Kuijs said. "Exports from Asia are quite weak in November and that's putting some cold water on hopes of firming up of the global trade cycle."
$9M project to fix Tacoma port road starts in spring 2015
A $9 million revamp of the Port of Tacoma's main road has been planned to fix and fortify more than 1.4 miles of the port's main drive. The port construction project is scheduled to begin in spring 2015.
Port of Tacoma Road is the major heavy-haul arterial serving the port. The crumbling road needs to be rebuilt from the base up, according to the statement. Grant funds were reportedly obtained via a city-port partnership, paying for design and construction†costs to replace 7,800 feet of the road from East 11th Street to Marshall Avenue.
The existing asphalt pavement will be fortified with concrete to withstand heavy-haul truck traffic, the port noted. It said construction work will take place while traffic access to marine terminals and businesses†is maintained for a variety of†vehicles.†
In addition to the new road surface, the project will provide improved pedestrian access, completing missing segments of sidewalk to ADA standards. A permanent traffic signal will be built at the entrance to the Washington United Terminal and a new signal inserted at Lincoln Avenue.†Conduits will be installed to support a future Intelligent Transportation System.
The infrastructure project should be finished by winter of 2015, according to the port website.
Ivory Coast port receives $875M loan from China Eximbank
China Eximbank has loaned Ivory Coast around $875 million to build a second container terminal at Abidjan port, according to the director general of the port.
Ivory Coast will increase capacity at the port in Abidjan, one of the busiest in Africa. The port serves as a gateway for landlocked nations to the north and a transit point for beans from the planet's top cocoa grower.
"The financing has been concluded with China Eximbank," Hien Yacouba Sie said at a news conference, adding that construction would include the enlargement of the Vridi canal, the construction of the second container terminal and a roll on/roll off terminal.
He said construction would start in the first quarter of 2015 and it should be completed by 2021. The contract to manage the new terminal was awarded last year to a consortium led by France's Bollore.
Cargo traffic has grown as the nation recovers from a decade of political stability. Total tonnage topped 21 million tons in 2013.
Supreme Court rejects BPís appeal to mitigate oil spill liability
On Monday the U.S. Supreme Court turned down BPís request for an intervention in the multibillion-dollar litigation stemming from the April 2010 disaster that killed 11 offshore rig workers and spewed millions of gallons of crude in the waters off Louisiana.
The Supreme Courtís unwillingness to wade into the spill litigation means that an open-ended settlement of one portion of BPís liability will now cost billions of dollars more than the original $7.8 billion estimate.
Now that federal trial judge Carl Barbier of New Orleans no longer has to worry about the Supreme Court second-guessing his supervision of the BP case, BP will probably pay for repeatedly challenging the integrity of the settlement process he has overseen and defended.
West Coast port leaders ask for federal mediator in labor talks
The heads of the Ports of Los Angeles and Long Beach joined a group of stakeholders in asking President Obama to appoint a federal mediator to help employers and union dockworkers to reach an agreement on a new labor contract.
Gene Seroka, executive director of the Port of Los Angeles, and Jon Slangerup, executive director of the Port of Long Beach, are reportedly ready for help from the White House to apply some pressure to the labor talks. This week both executives have been making public statements requesting federal arbitration.
Representatives of the Pacific Maritime Association and the International Longshore Workers Union continued to negotiate over the weekend. They attempted to reach some sort of tentative agreement before the ILWU holds a caucus in San Francisco on Dec. 15. If the two parties can agree upon a tentative contract by Dec. 15, the caucus will be held on whether to accept or reject the agreement.
Usually a federal mediator isnít called into the negotiations unless both sides agree to ask for help.
The Pacific Maritime Association, which represents employers at West Coast ports, has been negotiating with the International Longshore Workers Union since May, trying to reach a new contract to replace the 6-year contract that expired July 1.
Port productivity has declined dramatically since Oct. 31, after the two sides concluded a largely unsuccessful bargaining session. The PMA accused longshore workers of deliberately slowing work. The union insists the slowed pace is a result of a chronic list of problems that range from processing super-sized ships to chassis shortages and terminal mismanagement.
The slowdown continued Monday in Tacoma, Seattle, Los Angeles and Long Beach.
Agricultural exporters have reported the shipping delays are backing up supply lines and creating serious economic damage, hurting their reputation among overseas buyers.
Drewry: Merger and acquisition activity in shipping sector indicates optimism
Mergers and takeovers in the container shipping sector are on the rise, according to the latest issue of Container Insight from Drewry Maritime Research.
The researchers summarized some of the latest partnerships. Horizon Lines is selling its Hawaii operations for $141.5 million to the Pasha Group, and its Alaska services to Matson for $69.2m. CMA CGM recently bought OPDR for an unknown amount. Hamburg SŁd purchased the container services of CCNI for $160 million. And Hapag-Lloyd and CSAV will complete their merger in the second quarter of 2015, forming the fourth largest shipping concern in the world.
Drewry says that these smaller deals, along with the more advanced transactions such as the merger between CSAV and Hapag-Lloyd and Hamburg SŁdís purchase of CCNIís container activities, will not dramatically reshape the container shipping market. They do indicate that carriers are more confident and looking to expand.
Due to the high expense and complexity involved, Drewry predicts M&A activity will not occur between any of the big shipping lines, who are protecting themselves through more broad vessel sharing agreements.
Drewry concludes that container shipping M&A is gaining momentum but will be limited to smaller, regional deals for the time being.
Ports of NY/NJ post record monthly volume in October
The Port Authority of New York and New Jersey set a monthly cargo volume record in October, handling 306,805 TEUs, according to a port statement. The previous monthly record was 306,051 TEUs handled in August 2013.
"While the improved economic conditions across the country play a large part in our success story, we're equally pleased that the entire port community is now working together to move more cargo more quickly and efficiently," said Port Authority Port Commerce Director Richard Larrabee.
Cargo shipped on the port's ExpressRail system also grew, with 42,950 containers transported on rail, up 14.2 percent over October 2013, according to port statistics. More than 14 percent of the total port traffic is now hauled by rail.
Virginia port chief Reinhart exceeding job objectives
When John Reinhart became chief of the Virginia Port Authority in February he vowed to keep the port's losses for the fiscal year under $16.6 million.
It now appears he has been successful. According to errors found by the auditing firm of PBMares, a $17.1 million operating loss reported in June was adjusted to $16.5 million.
"The 17.1 was an unaudited figure," said VPA spokesman Joe Harris. "It was pretty close, but the auditors were able to bring it down."
The news means that not only has Reinhart met his February objective, but he has also met a requirement that could entitle him to an additional $22,500 in incentive pay.
"It doesn't mean he'll receive it all," Harris was quick to add last week. "It just means he's eligible."
John Milliken, the authority's board chairman, told The Virginian-Pilot last week the revised loss means that Reinhart will have met a $16.6 million "stretch goal," or fund target.
Milliken said that most of what Reinhart could earn in incentive pay - up to $225,000 - hinges on the port director remaining in office for a full year.
Since Reinhart came on board earlier this year, his base salary has been $450,000 a year. After his first year, the salary is set to climb to $618,750 automatically. The remaining $56,250 for the first year, including that $22,500 incentive pay, is tied to various performance objectives.
Reinhart is meeting objectives month by month, said Milliken.
According to Reinhart, the port's net income for the first four months of the new fiscal year now totals $4.6 million.
U.S. Supreme Court declines to hear BP case challenging oil spill damages
On Monday the U.S. Supreme Court rejected BP's challenge to its multibillion-dollar settlement agreement for the 2010 Gulf of Mexico oil spill, which the company asserts has included payouts to some businesses that cannot trace their losses to the disaster.
The court's decision not to hear the oil giant's appeal is the latest disappointment for BP, which is trying to limit payments over a disaster that killed 11 people and triggered the largest U.S. offshore oil spill.