Thursday, October 29, 2009

Vancouver USA Port Approves New Rail Construction Contract

Commissioners for the Washington State Port of Vancouver on Tuesday approved a $14.2 million contract for the construction of a new rail loop at the port's under-development Terminal 5.

Vancouver, Washington-based contracting firm Rotschy Inc. beat out four other bidders to win the contract which calls for the construction of the rail line as part of the $137 million West Vancouver Freight Access project.

The rail loop, when completed, will encircle 1.8 miles of the former Alcoa-Evergreen aluminum facility property at the port that is being redeveloped. Work is expected to start on the rail loop next month with a scheduled completion date of mid-June, 2009.

The West Vancouver Freight Access project envisions the creation of a state-of-the-art unit train facility at the port– expanding the port's dedicated rail facilities from 18 miles of track to more than 43 miles– providing significant unit train improvements and marked capacity improvements to Pacific Northwest mainline tracks. The port estimates that once the project is completed, port rail traffic could increase from 57,000 rail cars a day to 160,000 rail cars a day.

Class I rail carrier BNSF currently handles all rail services inside the port property, and delivers approximately 20 percent of port traffic for further handling by Union Pacific.

Estimates also predict that when the project is complete the new facility will result in the creation of 1,900 local jobs, $64 million in direct income annually and approximately $24 million in tax revenue annually for the community.

Honda Breaks Ground on New Richmond Import Facility

The American arm of Japan-based Honda Motor Co. broke ground Tuesday on a new hybrid-car import facility that will make the Port of Richmond, California one of only three West Coast ports of entry for the carmaker's Japan-manufactured vehicles.

The 80-acre facility promises to pump more than $85 million into the local economy over the 15-year deal with the city. The Honda Port of Entry Project and the completed facility will also create about 250 jobs, according to American Honda Motor Co., of which 30 percent must go--under terms of the deal--to people that live in Richmond.

As part of the deal, the city will spend about $37 million to build new rail tracks at the facility location and upgrade existing tracks. Currently, Honda ships autos destined for the Bay Area through the Port of San Diego and trucks the vehicles to Northern California. In addition to Honda hybrids going to customers in the Bay Area, the Richmond facility will, according to the developers, also be utilized to ship the Honda vehicles via rail to the entire southern half of the country.

When completed, Honda expects to ship about 145,000 cars a year through the facility.

Hanjin Shareholders Approve Restructure

Seoul, South Korea-based ocean carrier Hanjin Shipping said Wednesday that a board of directors plan to split the firm in two has been approved by its shareholders.

The shareholder-backed plan will see the creation of two firms– Hanjin Shipping, handling shipping operations; and Hanjin Shipping Holdings, handling the remaining business interests including governance, investments, and terminal operations and logistics.

Following the restructuring, Hanjin Shipping will exercise full control over the current shipping interests while Hanjin Shipping Holdings will manage the existing subsidiaries.

The plan, first announced Sept. 16 and awaiting shareholder approval, is envisioned to simplify governance and increase competitiveness.

Shareholders will receive 16 shares of the new shipping firm and 84 shares of the holding firm for each 100 shares of the existing Hanjin Shipping Co. held.

Under the restructuring plan, the current firm will be delisted from the Korean stock exchange on Dec. 1 and the two new firms are expected to be listed by Dec. 29 of this year.

COSCO Pacific 3Q Numbers Down

Hong Kong-based terminal operator COSCO Pacific reported a 49 percent drop in third-quarter profits, slipping to $40 million from $77.7 million in the same period last year.

Third-quarter revenues were reported at $83.4 million, off 8.5 percent from the year-ago period. Total container volume also slipped, dipping 4.2 percent over the third quarter of 2008.

In a report to the Hong Kong stock exchange this week, COSCO Pacific cited said that the declines were due to the continuing recession in the United States and Europe.

The firm, a subsidiary of the COSCO Group, is the third-largest terminal operator in Asia and owns or has stakes in 21 terminal operators, mainly along the Pacific Rim in China, Hong Kong and Singapore.

OOCL to Increase Cargo Rates

Shanghai, China-based ocean carrier OOCL on Wednesday, citing ocean freight rates that remain below basic operating and transportation costs, announced ocean freight rate increases effective Jan. 1, 2010.

In a statement, OOCL said that the current rates are "unsustainable for the long term." The increases, described by OOCL as the second phase of its "rate restoration program," will vary depending on the port of egress.

Cargo transiting ports on the United States West Coast will be increased by $480 per twenty-foot container and $600 per forty-foot container.

Cargo transiting US East Coast, US Gulf ports, and all ports in Mexico and Canada will increase by $320 per twenty-foot container and $400 per forty-foot container.

OOCL said that the new rates are required to maintain a viable service level and a comprehensive liner network.

Monday, October 26, 2009

Judge Dismisses ATA/Port of Long Beach Truck Suit

A federal court has given final approval to a settlement between the Port of Long Beach and the American Trucking Associations, bringing to an end more than a year of legal battles over the port's Clean Truck Program. The move formalizes the announcement last Monday by ATA and port officials of a settlement to their portion of the lawsuit over the truck program.

A request for dismissal by both parties were accepted by the court last week, with Judge Christina Snyder of the US District Court for the Central District of California dismissing the ATA's suit against the Long Beach port.

The ATA's case against the neighboring Los Angeles port, however, continues and is set to go to trial in December.

The ATA sued both the Long Beach and Los Angeles ports last year over portions of the Clean Truck Program that the ATA said violated federal primacy rules in regards to interstate trucking. During an injunction phase of the case, the US Ninth Circuit Court of Appeals agreed with the ATA, with Snyder's lower court eventually issuing an injunction against portions of the program.

As a part of the settlement, the port will do away with a concessionaire model it had developed for the truck plan. The concession model required truck firms to meet certain port-required criteria regarding financial health, emissions, safety and security. The concession model was one of the key complaints in the ATA legal battle over the truck program.

Under the terms of the settlement the port will replace the concession model with a registration system that essentially allows the port to collect the same information from trucking firms and drivers but reduces the ability of port officials to permanently ban scofflaws of the system from accessing the port indefinitely.

US Pac Rim Ports Plan To Fight Canadian Diversion Threat

Officials of six major United States ports from Southern California to Puget Sound are gearing up for a marketing battle to prevent a major Canadian effort to divert US containerized cargo to the ports of Vancouver and Prince Rupert.

The joint move by officials of the US West Coast ports of Long Beach, Los Angeles, Oakland, Portland, Seattle and Tacoma comes on the heels of a recently launched multi-million dollar campaign by the Canadian government to attract even more Asian container traffic away from the US Pacific Rim ports.

The six US ports have each suffered diversions of containerized cargo over the past several years to the two Canadian ports, most notably in discretionary cargo headed via rail to the US Midwest and East Coast states.

The Port of Prince Rupert, the most northern all-year ice-free deep-water port on the Pacific Coast and several days steaming time closer to Asian ports, was specifically designed around the idea of luring traffic from the American ports. In just over two years of operation, the single terminal at Prince Rupert has already maxed out at 500,000 TEUs per year, most at the expense of West Coast US ports. Expansion plans will increase Prince Rupert's maximum throughput to 2 million TEUs by the end of 2010 and 4 million TEUs by 2015.

Officials for the six US ports plan to aggressively lobby shipping customers at the World Shipping Summit in Qingdao, China, scheduled for Nov. 11-13.

Representatives from the six American ports have also been busy in Washington, D.C., recently lobbying Congressional lawmakers for the creation of a national goods movement policy as well as for goods movement infrastructure funds.

"Let me tell you, legislators were shocked to see all of us calling on them together," Los Angeles port executive director Geraldine Knatz recently told her board of commissioners. "That shock value really helped them understand the importance of federal leadership."

September Cargo Volumes Drop at Five of Six Major West Coast Ports

Monthly container volumes for the month of September show drops at five of six major West Coast ports, with the only glimmer of positive news coming from a small uptick in volumes at the Port of Seattle.

The six ports, which combined handle more than 90 percent of all containerized traffic on the West Coast, each remain down by double-digit percentages for the collective January to September period.

Container volume numbers are typically released two to three weeks after the end of the reporting month.

In Southern California, the Port of Long Beach reported a 20.6 percent drop in total monthly box volumes, falling to 554,837 TEUs in September compared to the year-ago period. The Long Beach port's total volumes for the year are off a cumulative 24.6 percent compared to the January to September period last year.

The adjacent Port of Los Angeles shed nearly 110,000 TEUs, or 15.78 percent, during September 2009 compared to the year-ago period to record a total monthly volume of 583,557 TEUs. The Los Angeles port's total container volumes have dropped 16.28 percent since January compared to the first nine months of 2008.

In Northern California, the Port of Oakland's total monthly container volumes fell 3.7 percent compared to September 2008, ending the month with a total of 182,000 TEUs handled. The Bay Area port is off 11.6 percent in total box volume for the year compared to the January to September period a year ago.

In Washington State, the Port of Seattle, the one positive note of the major West Coast ports, saw a 4.8 percent uptick in monthly container volumes. Seattle's total box volumes grew just over 6,000 TEUs compared to September last year. Despite the positive numbers for September, Seattle's year-to-date total container numbers are down 14.2 percent compared to the January to September period last year.

Across the Sound, the Port of Tacoma reported a 17.4 percent drop in total monthly container volumes, shedding nearly 31,000 TEUs compared to September 2008. The port ended the month with a total of 146,403 TEUs handled. Tacoma's total container volumes through September have slid 15.6 percent compared to the first nine months of 2008.

The Canadian Port of Vancouver saw total monthly container volumes during September drop 19.1 percent over September 2008, shedding 43,630 TEUs to end the month with a total of 184,559 TEUs handled. Vancouver's year-to-date volumes are down 15.2 percent compared to the same January to September period last year.

Containerized Home Builder Eyes Tacoma Port as Asian Gateway

A Fife, Washington-based manufacturer of 'containerized' homes is looking to the Port of Tacoma as an Asian export gateway for its products.

American Container Homes, which manufactures homes that are pre-assembled in sections that can fit into standard shipping containers, also hopes to develop a South American gateway through Beaumont, Texas and a Canadian export facility north of Spokane.

The firm announced last week that it is preparing to export its first order of the 1,200-square-foot 3-bedroom homes, which come with electric appliances and are pre-wired and pre-plumbed, to Israel.

The collapsible units may be configured as a single-family residence or when paired with additional units as a duplex, a two-section single-family residence or an apartment building. The entire building unit and garage can be fit into a single shipping container if applicable.

ACH's parent firm, Spokane, Washington-based All American Corp., has been developing the collapsible homes for some time and currently has five offices throughout Washington state offering various alternative housing options.

According to AAC officials, subsidiary American Container Homes is in talks with mobile home builder Clayton Homes– owned by Warren Buffett's Berkshire-Hathaway– to handle manufacturing of as many as 500 of the collapsible homes a day at Clayton facilities across the nation.

Opinion: Puget Sound Pilots Helping Ports Stay Competitive

By: Andy Coe - President, Puget Sound Pilots (As seen in Oct. 2009 Issue of Pacific Maritime Magazine)

The Ports of Seattle and Tacoma recently completed a joint survey of the factors their customers consider in choosing ports. Customers cited productivity, costs, size of local markets, ease of doing business, intermodal accessibility, available marine services and green initiatives.

Pilots applaud the ports for this effort. Amid increasing West Coast competition and especially during the current economic conditions, it is imperative ports take advantage of whatever tools are available to attract and hold business. Another tool our ports are using is full and effective use of the local pilot corps. No one cares more about having healthy port districts than the pilots whose livelihoods depend on a vibrant local shipping community.

Unlike the shipping companies and trade groups that do business in all West Coast ports, pilot groups are local and depend solely on the well-being of the ports they serve. Because pilotage is fully regulated at the state level, the local pilot group is a public resource available to all members of the maritime community. This resource should be applied to the fullest advantage because effective use of pilots assures smooth and predictable operations – a vital aspect of maintaining a competitive port.

State pilotage commissions typically are also charged with protecting local economic interests. While these commissions recognize that their primary function is to foster the safe movement of vessels in local waters and protect the marine environment, they are also sensitive to economic conditions. For example, the Washington pilotage commission recently declined to enact a rate increase for Puget Sound pilots despite significant increases in the cost of delivering pilot services. It took this action in direct response to the current economic crisis in the shipping industry. The commission is sensitive to the needs of the local economy and is specifically charged with keeping the local ports competitive.

Costs are always an important factor in any economic decision, of course. While all ports have pilotage costs, the absolute cost of pilotage is not significant and the difference in that cost from one port to another plays no real role in selecting a port. In Puget Sound in particular, pilotage costs are low in comparison to the other West Coast ports dependent on discretionary cargo. For example, one-way pilotage on a typical bulk ship costs $3,000 in Seattle, $4,700 (US) in Vancouver, $7,100 in Redwood City and $10,000 in Portland. An average size container ship (5,400 TEU) costs $6,000 in Seattle, $7,000 (US) in Vancouver, $8,600 in Oakland and $16,000 in Portland.

But while pilotage fees are simply not large enough to be a factor in port competitiveness, the effectiveness with which pilot expertise is integrated into smooth port operations most definitely can matter. Port operations relate directly to more crucial port selection factors found in the ports’ customer survey – productivity and ease of doing business.

Because they are grounded in local concerns, the pilot groups can be valuable allies in demonstrating to customers that a port is a good place to do business. The main requirement is that the port has an adequate number of pilots competent to move ships smoothly and efficiently. Nothing is more disruptive to shipping than marine accidents, especially those affecting the environment.

In Washington, competency is assured by state regulatory standards established for pilots that far exceed federal requirements. Pilots must have served as master of a ship for two years (sea time) on qualifying ships; pass a competitive written and simulator exam; and, successfully complete a training program of eight months to three years. Pilot commissions must attract sea captains who are well-established in their careers and convince them to undertake a lengthy period of reduced earnings while they learn a new skill. This, along with the responsibility, difficulty, and risk of the job, are primary reasons that pilots are well compensated. Once licensed, pilots are subject to license limitations relating to the size of ships and nature of the cargo for the first five years and to continuing education requirements that last throughout a pilot’s career.

In addition to competence, pilots play an important role in the day-to-day operations of a port that are so essential to making the port a good place to do business. Pilots are constantly in communication with operators, agents, port districts, ferry systems, terminal users and the Coast Guard to help make sure ships move on schedule with a minimum of delay. While this activity is often ‘below the radar,’ it is crucial to making ports efficient. Examples abound of how this can work to the advantage of the operators and the port districts.

Last November, for instance, the Coast Guard District 13 Commander looked out his window in the Federal Building in downtown Seattle and saw a ship dragging anchor in the Smith Cove anchorage of Elliott Bay. He immediately notified the Captain of the Port’s office, apparently with directions to get some rules in place to limit or close the anchorage.

The COTP’s office contacted the Puget Sound Pilots’ President that very night. This began a series of discussions between the pilots and the Coast Guard about the problem and the history of similar problems in Tacoma. These discussions eventually moved away from proposals to close or severely limit use of the anchorages to a discussion of the real problem: ships not following adequate bridge watch procedures in windy conditions.

As they had done in Tacoma, the pilots and the COPT developed a written advisory for foreign crews describing the watch standards to be maintained and elevated during deteriorating weather conditions. The Coast Guard eventually agreed that the anchorage was safe if the proper procedures were followed. The pilots now deliver a copy of the advisory to the master on all vessels going to anchor. As a result, this very popular and heavily used anchorage remains open and available to bulk ships calling in Seattle.

In a related event, it was decided that at certain times it would be prudent to move ships from this anchorage to another anchorage across Elliott Bay. One of the local ship agents expressed his concerns that discarded chains and anchors at the proposed location could entangle ships’ anchors. At the pilots’ request, NOAA agreed to use its side reading sonar to find the debris. There were no hazards identified in the anchorage and it is in use today.

In a similar but separate situation last fall, the pilot on a log ship proceeding down the Hylebos waterway in Tacoma saw some movement of an old, partially submerged (but quite large) derelict barge on the southern side of the waterway. Investigation determined the barge had slipped into the channel and the waterway was not passable above that point, cutting off access to three separate active terminals. The pilots initiated a series of discussions among the waterways users, terminal operators, Corps of Engineers and the Coast Guard. Ultimately, Washington’s US Senators were enlisted to expedite the funding needed by the Corps to complete the barge removal.

In a different kind of situation recently, one of our smaller ports was seeing an increase in traffic and had a problem with tug surcharges levied to get assist tugs to the port. They asked the pilots to work with a tug company on operating characteristics and tug requirements so that they could successfully contract with the tug provider to serve the port. With ongoing input from the pilots, these discussions were successful and the port is now operating with the tug provider.

Many more examples of pilots helping ports exist in Puget Sound and other ports as well. The pilots work with port users on a daily basis to make sure that ships are moving as efficiently as possible. Sometimes they are called upon in advance to avoid problems and anticipate issues, but more often they are reacting to the everyday events that will delay shipping if not properly handled. It might be talking to the Corps about where the shallow spot is in a waterway, explaining a problem to a US Senator’s staffer or negotiating with the Coast Guard over the conditions under which a ship with a mechanical issue can sail. Whatever the situation, state-licensed pilots have the same interest as the ports – keep ships moving smoothly and predictably and making local ports an efficient, hospitable place to do business.

Captain Coe first went to sea as a deckhand for Western Pioneer in the near coastal ocean trade in 1979, becoming a Master for Western Pioneer in 1985, and then a licensed Puget Sound Pilot in 1992. Captain Coe has also served as Vice President of the Pilots and previously served on Pilot committees concerned with Operating Rules, Safe Practices, and Pilot Licensing Qualifications.