Cargo Business Newswire ArchivesSummary for December 22 through December 26, 2014:
Monday, December 22, 2014
West Coast port slowdown causes FedEx to shift resources, limit shipments
The founder and CEO of FedEx Corp. said last week that slowdowns triggered by West Coast labor contract negotiations are causing delays in deliveries to some retailers and stressing out logistics companies just before Christmas.
In an earnings conference call, the FedEx CEO Fred Smith said the backlog has already caused FedEx to shift resources and limit shipments from some customers, according to a Bloomberg report. FedEx expects to deliver a record 290 million packages during the peak holiday season.
"The slowdown in the West Coast ports has been a much bigger deal than people think, and a tremendous amount of inventory was simply not put through the ports in the time frame that the retailers had expected," Smith said. "I suspect that you'll see a lot of purchases of gift cards in lieu of merchandise."
United Parcel Service, the world's largest package-delivery firm, also has "seen some examples at selected retail customers where the dock workers issue has impacted their ability to add inventory," said Andy McGowan, a company spokesman, to The Oregonian.
Pacific Maritime Association spokesman Steve Getzug said Wednesday that the two sides "remain far apart on several issues" that have been vexing negotiators for months, according to the Associated Press.
A week ago, PMA gave the ILWU what Getzug termed as "a comprehensive proposal," but the union's response Monday "made clear that we're still far apart and there's still a lot more to do," AP reported.
Warehouse workers at L.A. port sue over wages, working conditions
A group of warehouse workers at the Port of Los Angeles has filed suit against a major distribution company over low wages and harsh working conditions.
The class action suit against California Cartage Co. and several staffing firms alleges that more than 500 workers are owed millions of dollars in unpaid wages and overtime going back to 1999.
Filed in Los Angeles County Superior Court, the complaint alleges that California Cartage is required to pay higher than the state minimum wage because it is leasing land from the city of Los Angeles. The city requires contractors and lessees to pay what is known as a "living wage" of at least $11.03 an hour, or $12.28 an hour if the company doesn’t pay for medical benefits.
An attorney for California Cartage was unavailable for comment.
Port Metro Vancouver short haulers threaten strike over proposed pay rates
Proposed pay rates for Port Metro Vancouver container truck drivers put forth by the provincial government will not resolve issues of undercutting and low levels of compensation, according to groups that represent drivers.
Pay rates were of prime importance in the conflict in which 2,000 union and non-union port drivers walked off the job for 28 days in February and March of this year. The rate structure released by the Ministry of Transportation this week is aimed at "providing fair wages" for drivers based on the agreement that was negotiated at the end of March to end the dispute.
"This is not even 75 percent of what was agreed, if we just (look at) the rates," said Manny Dhillon, a spokesman for the United Truckers Association, a group that represents about 1,300 independent (non-union) truckers at the port.
The suggested structure provides minimum pay rates for all drivers, including minimum hourly wages of $26.28 for drivers employed by trucking companies, with rates set retroactively to April 3. The array of rates is complex since some drivers are paid flat per-container or per-trip rates and other drivers are paid by the hour.
Dhillon says the rates set for drivers who are employed by companies but paid on a per-trip basis, not by the hour, are lower than they are paid now and could result in them being paid less than hourly drivers if they can’t get more than four trips a day.
The per-trip rate in the rate structure is set at $40, but Dhillon said previously the per-trip rate was about $45.
"We need drivers to be hourly paid," Dhillon said. "Drivers were making more before (the dispute)."
Chief Engineer of bulker could face 35 years in jail for environmental crime
A federal jury in New Orleans convicted the chief engineer of the bulk cargo ship Trident Navigator of environmental crimes, obstruction of justice and witness tampering, according to a statement issued by the U.S. Department of Justice's Environment and Natural Resources Division and the U.S. Attorney's Office for the Eastern District of Louisiana.
Matthaios Fafalios of Greece was convicted of knowingly falsifying the ship’s oil record book, obstruction of justice, and witness tampering, after two crewmembers reported the illegal discharge of oily wastewater to the Coast Guard, the DOJ said.
In late December 2013, Fafalios ordered his engineering crew to construct the "magic pipe" that could be connected between the vessel’s bilge pump and overboard discharge valve, according to the statement. The purpose of the bypass was to discharge the contents of the ship’s bilge tank directly into the sea, circumventing the ship’s Oil Water Separator and Oil Content Monitor.
Freight train derails, spills 260,000 pounds of coal
Crews are cleaning up a coal spill from a freight train derailment Friday near Michigan City, Indiana.
A 10-car freight train carrying coal derailed while approaching the NIPSCO generating station around 5:20 a.m.
Two cars overturned, spilling 260,000 pounds of coal, South Shore Freight officials said. No injuries were reported.
The members lines of the Transpacific Stabilization Agreement recommended raising Asia-U.S. freight rates by at least $600 per-FEU starting Jan. 15 — a 26.6 percent increase over the current level.
The container carrier organization said the planned increase was part of an ongoing effort by members to reverse the decline in spot rates in the Asia-U.S. freight market.
The organization also advised that shipping companies should reinstate a $400 per-FEU peak season surcharge ahead of the Chinese Lunar New Year, with effect from Jan. 15.
Its members include 15 of the world's biggest container shipping lines, including Maersk Line, Mediterranean Shipping Company, CMA CGM, COSCO Shipping, and Hanjin Shipping, among others.
"It is critical, after another year of only very slight net gains at best, that carriers shore up rate levels and hold the line on rising costs as we head into a new contracting season and ramp up to meet Lunar New Year seasonal demand," Executive Administrator Brian Conrad said in a statement.
Over 90 percent of the world's trade is carried by sea, but freight rates plunged to unprofitable levels for most carriers in 2013 as a result of overcapacity in the market. That trend continued in the first six months of 2014.
Spot freight rates are calculated and published every week by Shanghai Shipping Exchange. Last week, FEU rates from Asia to the U.S. West Coast stood at $2,259.
PMA and ILWU continue struggle to come to terms on new contract
The Pacific Maritime Association and the International Longshore and Warehouse Union are still struggling to come to a compromise on a new labor contract for West Coast dockworkers.
The two sides met separately last Wednesday, two days after the union provided employers a counter-offer to a new set of management proposals delivered by the PMA last week.
"We are awaiting their reply, and perhaps they will have a response to all or part of our proposal" when talks resume, said union spokesman Craig Merrilees.
At the beginning of last week, 90 union delegates from all 29 West Coast ports met in San Francisco, voting unanimously to endorse their negotiating team. Both sides had said before the union caucus that they were making slow progress.
On Wednesday the PMA issued a short statement denying any "statements and rumors that our negotiations are 'close' to a final contract."
The employers have repeatedly accused the union of trying to gain bargaining leverage by staging cargo slowdowns at several West Coast ports since October, especially at the ports of Los Angeles and Long Beach. Union officials deny this, saying the congestion is due to a shortage of chassis, the increased cargo volume of super-sized ships, and rail delays.
Port officials have agreed that record import levels, rail service delays and the advent of super-sized container vessels contribute to the cargo backups.
This week the Long Beach Board of Harbor Commissioners are considering three measures that could help truckers, shippers and other supply chain stakeholders recover from bottlenecks at the Port of Long Beach.
First, the board will decide whether Chief Executive Jon Slangerup should team up with other stakeholders to form a chassis pool to be used during peak hours at the port when congestion is at its worst. This would augment rather than compete with the current chassis fleet.
According to the staff report, the proposed request for contract proposals for the chassis pool would include 3,000 chassis that would be located on port property. If approved, the RFP could go out next month. The Harbor Commission would then vote on a contract in March with the chassis pool going into effect in June.
The commission will also look at capping dockage fees for ships to four days from Dec. 1 to March 31.
Lastly, the commission will vote on a proposed agreement that would allow officials at ports of Los Angeles and Long Beach to discuss specific port matters, including congestion, without fear of violating antitrust issues.
Hong Kong losing business to other South China ports
A government-commissioned report on Hong Kong's port development found that it is dealing with more intense competition from other South China ports, including Nansha.
Hong Kong's share of the south China cargo base had fallen from more than 70 percent in 2010 to below 40 percent in 2011, the report showed.
"Current trends suggest a diminishing preference for using Hong Kong port for south China cargo, which is related to the significant increase in port capacity that occurred in South China in the last 10 years, giving shippers much more choices," it said.
The report expects transshipments to account for 75 percent of Hong Kong's throughput by 2030.
The report said ports in Shenzhen and Guangzhou, including Nansha, shared overlapping territory and competed for the same cargo in the region.
"The original Guangzhou port has older, more limited facilities, particularly for container handling," it said. "The new container terminal at Nansha is built to modern standards and has space for further expansion."
A statement posted on the central government website after a State Council meeting last Friday said the country would set up three more free-trade zones - in Guangdong, Fujian and Tianjin - on the heels of the pilot zone in Shanghai.
For more of the South China Morning Post story: www.scmp.com
Port of Oakland returns huge shipments to India after beetle found
The Port of Oakland sent 1.2 million pounds of soybeans and 88,000 pounds of rice back to India in November, according to U.S. Customs and Border Protection. Live and dead Khapra beetle larvae were discovered in the shipments.
The Khapra beetle is classified as a top threat by the U.S. Department of Agriculture, said USDA spokeswoman Abbey Powell of the Animal and Plant Health Inspection Service.
The beetle is a threat to stored grain products and seeds.
Federal mediators to intervene in West Coast port labor talks
West Coast container terminal operators are asking that federal mediators intervene in labor contract negotiations with the dockworker’s union because the parties are "far apart on many issues," according to the Pacific Maritime Association.
The U.S. Federal Mediation and Conciliation Service said Tuesday it would reach out promptly to both sides, according to an Associated Press report.
The PMA has said that contrary to rumors, it is not close to a deal with the International Longshore and Warehouse Association.
"It is clear the parties need outside assistance to bridge the substantial gap between us," said PMA spokesman Wade Gates in a statement.
Agricultural exporters say the labor conflict is disrupting the shipments of farm goods and don’t think the issues will be resolved this year.
"The impact has already been disastrous for ag," said Peter Friedmann, executive director of the Agriculture Transportation Coalition.
He said that meat exporters have shifted to airfreight to honor their contracts with customers. "That means you are going to lose money on every single shipment."
Friedmann said the union is ultimately weakening the future employment prospects of dockworkers by staging work slowdowns, because now shipping companies are trying to circumvent West Coast ports.
The ILWU says congestion at West Coast ports is due to other issues, like the mismanagement of truck chassis and new oversized ships that are overwhelming container yards with cargo volume.
Port of Oakland struggles with severe cargo delays
Truck drivers are waiting increasingly long times to access terminals at the Port of Oakland, emblematic of chronic cargo delays at ports up and down the U.S. West Coast.
"Usually it takes five or six hours. Yesterday, it took 16 hours. One load," said trucker Gabriel Suarez last week. He drives to the port daily for Rocha Transportation in Modesto.
At root is a system in which container carriers, terminal operators, logistics companies, trucking companies, drivers and the International Longshore and Warehouse Union operate separately, and often with conflicting interests.
"The problems we’re seeing now are greater than any we have seen in the past 20 years," said Cory Peters, vice president of drayage operations at Manteca’s Gardner Trucking, one of the dozens of trucking companies that haul containers in and out of the port daily. "It’s absolute madness. The current system as set up is not sustainable."
Drawn-out contract negotiations between the ILWU and the Pacific Maritime Association, representing the shippers at 29 West Coast ports, peppered with walkouts and slowdowns, haven’t helped the situation.
Some cargo from the Ports of Los Angeles and Long Beach, which have been hit the hardest with congestion this holiday season, has been diverted to the Port of Oakland.
"We’ve gotten more stacked up over the past couple of weeks, with schedules all over the place," said Beth Frisher, manager of business development and international marketing at the Oakland port. The "snowball effect" from Southern California, she said, has "had collateral impacts up the coast."
Peel Ports Group, the UK's second-largest ports company, has reported a 24 percent surge in annual revenues as the business works on an investment plan that will allow it to handle some of the world’s biggest cargo ships.
The company, which includes ports in Liverpool and Glasgow, said revenues rose by 24.3 percent to $962 million, with operating profit 6.9 percent higher at $164 million in the year to March 31.
Over the past year, Peel Ports handled 65.6 million tons, its capital investment near-doubled to $140 million and its losses after tax dropped to $9.7 million from $27.3 million last year.
Another major revenue driver was the group’s marine support services division that provides ship repairs.
A symbolic ceremony was held this week to mark the beginning of Grand Interoceanic Canal in Nicaragua, despite ongoing protests around the nation.
"Today marks the start of the construction projects that will later bring about the beginning of construction of this great, majestic work known as the Grand Canal," said Vice President Moisés Omar Halleslevens Acevedo.
Before construction can begin on the $50 billion, 173-mile shipping channel, Chinese billionaire Wang Jing’s HKND Group will construct access roads and supporting infrastructure.
The canal concession includes a free trade zone, an international airport, two ports, a tourism complex, concrete and steel plants, and an artificial lake.
It has been the subject of controversy and increasing protests in recent months. Nicaraguan environmental, indigenous and community development groups organized under the Cocibolca Group banner on Monday highlighted their concerns.
The project is moving forward even though no official environmental impact studies, feasibility studies or social impact assessments have been approved or made public.
Terminal operators at Port of Tacoma cancelling night shifts
Starting last weekend, container terminal operators have canceled night shifts at the Port of Tacoma as West Coast ports continue to be plagued by delayed shipments and congestion.
Dean McGrath, president of International Longshore Union Local 23, said the union was prepared to send hundreds of dockworkers to the docks to load and unload vessels, but terminal operators at Tacoma’s major container facilities canceled their calls for night shift workers.
The shift cancellations are the latest development in a productivity crisis that began in late October at West Coast ports.
"Terminal operators in the Ports of Seattle and Tacoma have begun to consolidate from two shifts of work to one effective immediately in order to better deal with significantly reduced capacity caused by the continued slowdowns by ILWU workers," said Wade Gates, a spokesman for the Pacific Maritime Association.
"By consolidating operations to a daytime shift only, the terminals seek to receive a full complement of workers from the union in order to process as many containers as possible, even as the ILWU slowdowns continue. The move also means containers are unloaded from ships into the yard, as unloaded containers are processed out of the yard to their final destinations, thereby reducing congestion," Gates said.
The founder and CEO of FedEx Corp. said last week that slowdowns triggered by West Coast labor contract negotiations are causing delays in deliveries to some retailers and stressing out logistics companies just before Christmas.
The members lines of the Transpacific Stabilization Agreement recommended raising Asia-U.S. freight rates by at least $600 per-FEU starting Jan. 15 — a 26.6 percent increase over the current level.
West Coast container terminal operators are asking that federal mediators intervene in labor contract negotiations with the dockworker’s union because the parties are "far apart on many issues," according to the Pacific Maritime Association.