Cargo Business Newswire ArchivesSummary for December 15 through December 19, 2014:
Monday, December 15, 2014
NRF: U.S. West Coast port congestion delays goods up to 2 weeks
Cargo congestion at U.S. West Coast ports perpetuated delays for a third month amid industry reports Thursday of lengthy shipment delays for goods ranging from yoga apparel to apples and frozen French fries.
Goods that usually take two to three days to navigate the affected ports now have lag times of up to two weeks, according to the National Retail Federation.
The congestion has been most pronounced at the port complex of Los Angeles and Long Beach, the country’s busiest cargo hubs. Officials reported 11 ships anchored on Thursday waiting for berths to open up.
The number of freighters kept waiting outside the two ports has varied from about eight to 18 on any given day since the slowdown began there around mid-October, said port of Los Angeles spokesman Phillip Sanfield.
Other West Coast ports, including in Seattle and Tacoma in Washington State, are facing smaller scale delays.
The slowdowns have dovetailed with ongoing labor talks between 20,000 International Longshore and Warehouse Union dockworkers and the Pacific Maritime Association, representing employers at 29 West Coast ports. The latest six-year contract expired June 30.
The PMA has accused the ILWU of staging some port slowdowns to gain an edge at the bargaining table. Union officials deny organizing protest delays but admit individual dockworkers may have acted out of frustration over the pace of contract talks.
Vancouver retailer Lululemon Athletica blamed West Coast port congestion for its lower sales forecast on Thursday. The yoga-wear seller said 1 million of its garments were stuck in port, delaying shipments to stores for up to 10 days.
Exports have been hard hit as well. Washington state apple growers, who had a record harvest of 150 million cartons this year, have been thwarted in selling as much of their surplus as they wanted to Asian markets.
Fast-food giant McDonald's Corp said its Japan outlets are among that country's eateries grappling with a french-fried potato shortage blamed on port backups.
The Port of Portland will extend its subsidies to container shipping lines so they don't stop calling at its container terminal facility, which is used extensively by agricultural exporters.
On Dec. 10, the Port of Portland commission voted to pay up to $4 million in subsidies to Hanjin and other carriers, which are at risk of avoiding the facility due to slow container productivity numbers.
Oregon’s agricultural exporters hope to keep the container terminal open, since they would otherwise have to ship farm goods more expensively through the more distant ports of Seattle and Tacoma.
The subsidies were approved over the objections of the ILWU, which is engaged in a dispute with the contractor that operates the terminal, ICTSI Oregon. The terminal operator accuses the union of staging slowdowns that threaten its relationship with carriers.
According to International Longshore and Warehouse Union, the subsidies are mitigated by the higher rates that ICTSI charges the carriers.
Movements of containers on and off ships have dropped from about 26 per hour in 2010, when ICTSI signed its contract with the port, to about 13 per hour now, said Greg Borossay, senior manager of trade and cargo development for the port.
The reduced productivity convinced the port to begin paying per-container subsidies to ocean carriers, which see slowdowns as unacceptable due to tight loading schedules in Asian ports, he said.
At Borossay’s urging, the commission agreed to extend the subsidies through 2015 at a rate of $25 per-TEU, with the possibility of an incentive payment of up to $25 per-TEU if they increase volumes.
Mike Stanton of ILWU said the subsidies are a waste of resources because ICTSI recently began charging carriers $120 more per container.
"We don’t have a competitive market here," Stanton said. "ICTSI has a monopoly on this market."
Planet’s longest rail route to increase China-Spain trade
The first freight train to connect China directly to Spain arrived in Madrid on Tuesday. It covered more than 8077 miles on a pilot run of a planned regular service.
The train departed Yiwu, a wholesale center for small consumer goods, in eastern China on November 18 and traversed Kazakhstan, Russia, Belarus, Poland, Germany, and France during its 21-day journey.
It is the longest railway route in the world, longer than Russia's famous Trans-Siberian railway that links Moscow to Vladivostok.
The travel time was more than 10 days shorter than if the goods had been shipped by sea, according to Spain's public works ministry.
The train's 40 shipping containers were filled with goods made in Zhejiang province, including spinning tops for children and cutting tools. The train will return to China with wine, olive oil and cured ham.
Speaking at a ceremony in Madrid, Zhejiang governor Li Qiang said the route was important to "implement the strategy of developing a new silk road."
For more of the South China Morning Post story: www.scmp.com
N.C. governor appoints new head of N.C. State Port Authority
Gov. Pat McCrory has appointed Tom Adams the new chairman of the N.C. State Port Authority board of directors.
Brunswick Country developer Tom Adams, who has been on the board since January and is president and CEO of Adams Building and Consulting Co., said he’s excited about the challenges ahead.
"We’re looking forward to revitalizing the ports," he said, noting the work CEO Paul Cozza already has underway to grow the ports’ operations and take advantage of its excess capacity.
Along with the Port of Wilmington, the state ports operate a deep-water port in Morehead City and inland terminals in Charlotte and Greensboro.
Adams takes over the board’s chairmanship from Michael Lee, who resigned in August when he was appointed to the N.C. Senate to serve out the remaining term of retiring Sen. Thom Goolsby, R-New Hanover.
German stowaway caught on container ship at Port of Oakland
A German citizen has been charged in federal court for sneaking onto a container ship at the Port of Oakland to try to catch a ride to South Korea to be with his pregnant wife.
According to court documents, in September Andreas Guenther rowed an inflatable raft through the port to the Hong Kong-registered Cosco Oceania.
He boarded the ship, but was discovered by crewmembers a short time later and removed by the Coast Guard.
Businesses reroute shipments to avoid L.A./Long Beach port congestion
Businesses have been rerouting their shipments via air or diverting goods to other ports to avoid the congestion at the Ports of Los Angeles and Long Beach, caused by what port officials say is the lack of available chassis and unresolved contract talks between West Coast dockworkers and their employers.
That "perfect storm" has caused the Southern California seaports to lose business to competing seaports such as those in Oakland, Georgia, and others on the East Coast and even Canada, according to the port.
Eleven ships were reportedly anchored off the nation’s largest port complex on Thursday, awaiting a berth.
Airports that handle air freight have also seen a recent boost in cargo volumes. Los Angeles World Airports saw freight air cargo jump from 161,064 tons in October 2013 to 174,175 tons in October 2014, according to the LAWA’s latest statistics.
UPS officials said the company has seen double-digit growth in air freight year-over-year, adding that the company began communicating with customers with their logistics needs as early as February.
"Based on what we’ve seen in the past, there’s this risk of congestion developing and that customers need to develop or refresh their contingency plans and plan and prepare," said Eric Souza, director of global forwarding marketing for UPS.
Los Angeles and Long Beach port officials say it is difficult to quantify exactly how much business has been diverted away from their ports but believe the loss to be relatively small.
"We continue to see vessels coming to the port and are full," said Noel Hacegaba, chief commercial officer for the Port of Long Beach. "We’re optimistic that this will not affect our long-term projections."
Still, Taiwanese shipping firm Evergreen plans to drop the ports of Los Angeles and Oakland from its East Coast-North Asia service starting on Jan. 1 because of the congestion.
"It has to improve," said Guy Fox, chairman emeritus of the District Export Council of Southern California. "We need to get all the players together and resolve it. If it doesn’t improve, (imports through the L.A. and Long Beach ports) could drop (from 40 percent) to 30 percent. Then, there goes the jobs. Warehousing and distribution will move elsewhere."
UPS expanding into 4 new facilities in North America
UPS has announced the addition of three buildings and the expansion of a fourth North American location, increasing its supply chain network size by nearly 1.2 million square feet.
Rapid growth of customers in the high-tech, industrial manufacturing and retail industries fueled the demand for new or expanded facilities in Mira Loma, California; Hebron, Kentucky; Louisville, Kentucky; and Toronto, Ontario, Canada.
"These investments are needed to not only support our existing customers and their growth but to also create capacity to support our new business expansion," said Stephen Hydrick, UPS vice president of North American distribution. "As our customers grow, we will continue to find and invest in solutions."
UPS's global supply chain solutions network includes 596 facilities and nearly 32.8 million sq. ft. Services and capabilities offered at UPS supply chain facilities include: warehousing and fulfillment; inventory, transportation and returns management; custom kitting and packaging; and store-ready displays. These modern facilities are critical for customers as 99 percent of the U.S. population is within a two-day time-in-transit of inventory.
After increasing the Mira Loma, California, campus by 309,000 sq. ft. in April, this building in Fontana, Calif., added an additional 228,000 sq. ft. The campus is one hour from the two largest seaports in the U.S. It is also just five minutes from LA/Ontario Airport, a UPS regional air hub, within eight miles of four major freeways, and just 15 minutes to transcontinental rail connections. Total campus size of Mira Loma now includes 1.6 million sq. ft.
The Hebron, Kentucky campus - considered a key logistics operation serving the retail industry - has access to 62 percent of the U.S. population within two days via UPS Ground and 64 percent using UPS Freight. The campus, which increased in size by 151,000 sq. ft. in April, added an additional 274,000 sq. ft. with this investment. The campus is minutes from the Greater Cincinnati Airport and is within 600 miles of 30 major metropolitan markets. Total Hebron campus size now includes 1.25 million sq. ft.
This Shepherdsville, Kentucky location increased by 606,000 sq. ft. The building is located within 20 minutes of Louisville-based UPS Worldport, the largest fully automated package handling facility in the world. Total supply chain solutions size in the Louisville area is now 4.4 million sq. ft.
The Toronto, Ontario, expansion added 62,000 sq. ft. to the Mississauga-based facility, which is located less than 10 minutes from Toronto's Pearson International Airport. Total size in the greater Toronto area now includes 2 million sq. ft.
Two years of unusually heavy rainfall have finally ended record low Great Lakes water levels — good for long-suffering cargo shippers and recreational boaters — although scientists say it’s uncertain whether the recovery is temporary or heralds a lasting change.
Four of the giant lakes — Superior, Huron, Michigan and Erie — were above their average monthly levels in November, while Lake Ontario was slightly below. In September, all five were above average for the first time since the decline in the late 1990s. A newly released forecast predicts little change over the next six months.
It’s a dramatic and remarkably swift rebound from January 2013, when Michigan and Huron —reached their lowest point since the government began keeping records nearly a century earlier. The others were mired in a prolonged slump.
"On Superior, Michigan and Huron, we haven’t seen two-year water-level increases of this magnitude" in recorded history, said Keith Kompoltowicz, a hydrologist with the U.S. Army Corps of Engineers district office in Detroit.
World Bank provides $1.1B loan for India infrastructure project
The World Bank will give the government of India a $1.1 billion loan to develop the Eastern Dedicated Freight Corridor, which will speed up the transportation of raw materials and goods between the northern and eastern parts of the nation.
The World Bank had approved the project in April and will be supporting EDFC, which will roll out its total route length of 700 miles in three phases, but with construction overlaps.
While EDFC extends over a length of 1,142 miles from Ludhiana to Kolkata, the EDFC 2 will be 240 miles long from Kanpur-Mughal Sarai section in Uttar Pradesh state.
"We are determined to adhere to the scheduled completion target of Eastern Corridor by December 2019," said DFCCIL managing director Adesh Sharma. "Ninety percent of land acquisition for Kanpur-Mughal Sarai section, for which the loan agreement is being signed today, has been completed, and the contract for the civil works will also be finalized by January 2015. With the finalization of these contracts, the work will be progressing in two-thirds of the total length of the Eastern Corridor."
Besides raising the capacity of the freight lines with increased axle-load limits and speed, the project is also aimed at boosting transportation capacity of Indian Railways.
Singapore fines Japanese freight firms $7M for price fixing
The Competition Commission of Singapore has imposed penalties totaling $7.15 million on 10 Japanese freight forwarders, including some of the industry’s biggest names, and their local subsidiaries for price fixing.
Another company, DHL Global Forwarding, escaped the fine by being the first to blow the whistle and provide evidence to the competition watchdog.
The 10 companies fined were Hankyu Hanshin Express, "K" Line Logistics, Kintetsu World Express, MOL Logistics, Nippon Express, Nishi-Nippon Railroad, Nissin Corp, Vantec Corp, Yamato Holdings and Yusen Logistics.
CCS found that the firms and their local units or affiliates infringed Section 34 of the Competition Act by collectively fixing certain fees and surcharges and by exchanging client and price information for shipments on the Japan-Singapore route.
Port officials: New labor contract for West Coast ports may soon be reached
A tentative agreement to resolve the West Coast longshoremen’s work slowdown may be reached soon, port officials of Tacoma and Seattle told the Washington Apple Commission.
"We hope there is a tentative agreement in place today or tomorrow to be discussed at the caucus next week and some sort of vote the week after that. Our hope is productivity would get back to normal. This is speculation," Dustin Stoker, director of operations for the Port of Tacoma, told commissioners during a conference call on Dec. 11.
A weeklong caucus of the International Longshore and Warehouse Union began Monday in San Francisco, and has reportedly already sent comments to the Pacific Maritime Association regarding a contract offer that employers put on the table on Thursday. No details of the offer or comments were available.
A contract agreement for West Coast dockworkers is expected soon, since the union loses much of its leverage once the holiday season is over.
Among many commodities affected, the Washington apple industry estimates it is losing tens of millions of dollars worth of exported apple shipments weekly due to the work slowdown. December and January normally are heavy shipment months for Washington apples to Asian countries in advance of the Chinese New Year in February. Apples are instead being diverted to an already full domestic market, lowering prices.
Even if dockworkers are fully back to work the week of Dec. 22, it takes time to clean up facilities, moving empty containers and such, and Stoker said it probably would be Jan. 15 before operations would be fully back to normal at most ports. Steve Balaski, director of operations at the Port of Seattle, agreed, noting that perishable commodities will be expedited as quickly as possible.
Automation is the main sticking point in negotiations, Stoker said. "Automation leads to jurisdictional discussions. That’s the heart of the issue," he said.
McDonald’s Japan rations french fries due to West Coast port slowdown
McDonald’s restaurants in Japan are rationing french fries after slowdowns at U.S. ports have curtailed potato supplies.
The company will only offer small fries to customers as it copes with the shortage, according to the website of McDonald’s Japanese business. The policy will continue until a steady stream of spuds is flowing in once again, the fast-food chain said.
For the Japanese operations of McDonald’s, the fry shortage deals another blow to a business already plagued with a vendor scandal. The company, Japan’s biggest restaurant chain, had to remove chicken products that used meat from China from its menus in July after Shanghai Husi Food Co. acknowledged that it had changed sell-by dates. The fallout continued last month, when McDonald’s store sales in Japan fell 12 percent.
Monday, December 15th, was the busiest shipping day of the year, as people across the U.S. got their holiday shipping off before the holiday shipping deadlines.
UPS projected that Monday would be the single busiest day in UPS history for its processing centers, in which it estimates 585 million packages will be processed, according to USA Today. Next Monday, the 22nd, is expected to be UPS' busiest delivery day with about 34 million packages moved globally.
FedEx expected to process around 22.6 million packages Monday, up from 22 million packages shipped on Dec. 16, 2013. Just seven years ago, only 11.5 million packages were shipped on the busiest day.
Between Thanksgiving and Christmas Eve, the shipping firm expects to handle 290 million packages, an 8.8 percent jump over last year.
The United States Postal Service is also seeing a jump in volume this year. USPS estimated it carried around 640 million pieces of mail Monday, up from 607 million on the busiest day in 2013.
The Virginia Port Authority, which runs terminals in Portsmouth, Newport News and Norfolk, announced it moved a total of 208,764 TEUs through its port in November.
That's an 8.2 percent year-over-year increase, and becomes the port's fifth straight month of total cargo volume exceeding 200,000 TEUs.
Overall, year-to-date container volumes are outperforming previous records, with 2,189,762 TEUs being imported and exported through the port — up 7.2 percent year-over-year, the port said.
"Though we're past peak season, we're not seeing a significant let-up in our volume," said John F. Reinhart, Virginia Port Authority executive director and CEO. "We are making some headway at the terminals to adapt to, and manage, this kind of throughput. We still have a long way to go to reach the consistency in delivery of service that our customers and stakeholders seek."
Some say the reason for the increased cargo is that some major retailers have been shifting their shipments from West Coast to East Coast ports.
Since July 1, the port has posted a $5.53 million profit during the first five months of the first quarter of the 2015 fiscal year, up from a $7.8 million loss during the same period last year, according to the report.
11 die after fishing boat and cargo ship collide in Gulf of Suez
An Egyptian fishing boat collided with a container ship Sunday in the Gulf of Suez, killing 11 fishermen and injuring 11. Twenty-three men are missing, officials said.
Egyptian naval vessels and medical teams raced to the shores of the town of Al-Tur, the capital of southern Sinai, to rescue the fishermen.
The container ship was a Panama-flagged vessel carrying 220,000 tons of cargo coming from an Italian port, according to Abdul-Rahim Mostafa, spokesman for the Red Sea Ports Authorities.
FedEx Corp. has signed an agreement to acquire GENCO, one of the largest third-party logistics providers in North America, to help expand existing FedEx services in retail and e-commerce markets.
Processing more than 600 million returned items a year from many of the world’s leading brands, GENCO is considered a market leader in reverse logistics, providing triage, test and repair, remarketing and product liquidation solutions.
With $1.6 billion in annual revenue and more 130 operations, GENCO offers a broad range of logistics services to customers in the technology, consumer, industrial, retail, and healthcare sectors.
"The acquisition of GENCO will transform our global portfolio through the addition of new best in class supply chain management services," said Frederick W. Smith, Chairman and CEO of FedEx Corp. "As e-commerce continues to grow, customers of both companies will reap the benefits from the broadened capabilities and powerful new services."
GENCO will continue to operate as an independent company until the transaction is closed in the new calendar year. GNCO CEO Todd Peters will continue in his position after the deal is done, FedEx said.
Canadian Pacific to increase oil shipments by 67 percent in 2015
Canadian Pacific railway is positioned to increase crude shipments by at least 67 percent in 2015 as oil producers and pipeline companies continue to build terminals even amid a bear market for the commodity.
"From the intelligence we get from our customers that are buying the crude, I don’t think the bottom is going to drop out" of the business, said COO Keith Creel. "Will it slow down and will some consolidation happen? Yes, but I think our supply partners are in a position of strength."
Creel’s verification of the railroad’s intention to increase crude carloads to 200,000 in 2015 from approximately 120,000 this year is occurring as crude futures in New York dropped below $55 a barrel today for the first time in five years.
While crude demand will likely "level off" at some point, Creel said Canadian Pacific’s targets for 2015 are conservative because they’re based on actual demand.
"We weren’t aggressive, so that allows me to sleep better at night," he said. "If I thought they were aggressive assumptions I might be a little bit more nervous. I’m certainly aware of what’s going on but I’m not losing any sleep over it."
Canadian Pacific is also shifting its source of crude. Western Canadian crude will probably account for 60 percent of the company’s oil revenue in 2015, and North Dakota’s Bakken crude will making up the rest, Creel said.
Maersk Asia-Pacific expects boost in regional demand
Shipping giant Maersk Line expects stable but slower growth in regional demand in Southeast Asia, according to Lars Mikael Jensen, Maersk’s Asia-Pacific chief executive.
He also said the container line has yet to see any major benefits from the recent fall in bunker and crude oil prices.
"Our long-term contracts have a mechanism called bunker adjustment factor, which allows us to adjust our pricing depending on the rise and fall of bunker prices," Jensen said. "This ensures mutual hedging and we're not profiting from low fuel prices."
Oversupply has seen Brent futures continue to plunge this year, briefly touching a 5.5-year low at $62 a barrel last week.
"How the lower fuel prices can benefit us is that it will potentially stimulate economic and trade growth," he said. "We have yet to see that happen."
Stronger trade growth in Southeast Asia will be a key focus for Jensen, who was appointed regional head in September.
"Globally, we expect 3 to 5 percent growth in trade - still stable, but a far cry from the 8 to 10 percent, say, a decade ago," he said. "But Southeast Asian trade with the world is likely to be higher than that average, at 6 to 7 percent going forward. My ambition is to grow Maersk Line in the Asia-Pacific in tandem with that above-average trade growth."
Jensen noted the competition is fierce as industry players vie aggressively over pricing amid over-capacity and slowing global trade.
"Margins are indeed under pressure and freight rates have remained on a general downtrend," Jensen reported. "We are only in the middle of the pack when it comes to regional market share - but we will not grow that by being dirt cheap. We will grow because of our operating efficiency, our product range and our ability to help global customers enter new territories in the emerging South-east Asia."
For the very first time, Port of Stockton dockworkers were unloading 480-foot-long bundles of steel from a ship and gently placing them on six railcars at a time this week.
"It’s a very, very new and unusual process," said Mark Tollini, port deputy director of operations. "They’re being very careful with the discharge operation."
The Pacific Spike, a vessel specially designed to haul the long lengths of rail from Japan to Stockton, has three built-in 50-ton cranes, Tollini said. A single operator directs the cranes, which lift bundles of five rails from the ship’s hold and onto the railcars on the docks.
No other U.S. port is receiving that type of cargo and delivering from ship to rail.
"This is the first time this has been attempted," Tollini said. "We’re sort of training the workers on the job."
That steel rail, ultimately destined for Union Pacific Railroad Co. track replacement and expansion projects throughout the West, is being moved from Rough and Ready Island’s dock to another part of the island where an $18 million rail welding facility is under construction.
The steel rail, about 10,000 metric tons in all, will be stored until the welding facility is completed early next year and then joined into quarter-mile lengths of "ribbon rail."
"They’ll be ready to go in February to start welding, maybe a little sooner," said Dave Buccolo, general manager of Central California Traction Co. and who is helping oversee the project.
Shipping sector changes freight contracts to reflect Ebola dangers
Some of the shipping industry's largest trade associations are altering freight contracts to reduce commercial exposure for firms whose ships travel to countries affected by the Ebola outbreak and to protect crews from the fatal virus.
Uncertainty about the spread of Ebola adds to legal and financial issues for companies involved in shipping oil, cocoa and minerals from the region. Last month, Reuters reported that some shipping lines were starting to modify contracts to protect themselves.
INTERTANKO, whose members own the majority of the planet’s tanker fleet, has introduced an Ebola clause that includes stipulations to find alternative ports if there is risk to the crew. Charterers will be liable for costs if a vessel is quarantined.
BIMCO, the world's largest global shipping association whose members include owners and brokers, is about to introduce a clause, but not one that will be Ebola specific.
"We consider the generic clause approach to be more pragmatic than issuing a 'single issue' clause," Grant Hunter of BIMCO said.
The worst outbreak of Ebola on record has killed 6,583 people in three West African countries, Sierra Leone, Liberia and Guinea, and infected 18,188 people, according to the World Health Organization.
Cargo congestion at U.S. West Coast ports perpetuated delays for a third month amid industry reports Thursday of lengthy shipment delays for goods ranging from yoga apparel to apples and frozen French fries.
Businesses have been rerouting their shipments via air or diverting goods to other ports to avoid the congestion at the Ports of Los Angeles and Long Beach, caused by what port officials say is the lack of available chassis and unresolved contract talks between West Coast dockworkers and their employers.
A tentative agreement to resolve the West Coast longshoremen’s work slowdown may be reached soon, port officials of Tacoma and Seattle told the Washington Apple Commission.
FedEx Corp. has signed an agreement to acquire GENCO, one of the largest third-party logistics providers in North America, to help expand existing FedEx services in retail and e-commerce markets.