Wednesday, November 25, 2009

California Major Ports Down in October, Exports Climb at LA and Oakland

Two of California's three major container ports reported sizable increases in export boxes during October, though all three ports posted declines for overall container traffic in October and remain in the negative for the year to date.

The ports of Los Angeles and Oakland saw exports increase while the Port of Long Beach reported exports down. All three were down in all other categories including exports, empties and total box moves for the month.

The Port of Long Beach reported a 24 percent drop in total box traffic for October compared to last year. The port, the nation's second busiest, shed more than 150,000 TEU compared to October 2008 to end the month at 452,418 TEU handled. Loaded inbounds at Long Beach fell 22.4 percent for the month, loaded outbounds dropped 10.1 percent and empties fell a precipitous 37.6 percent compared to the same period last year. For the first ten months of the year, total containers moving through Long Beach are down 24.5 percent to 4,152,209 TEUs.

At neighboring Los Angeles, the nation's busiest container port, total box traffic was down 8.3 percent in October, ending the month at 647,424 TEUs. While loaded inbound containers fell during the month by 8.7 percent and empties were off 21.2 percent, total loaded outbound boxes marked a sole bright spot, increasing 11.8 percent compared to October 2008. October was the tenth straight month in which the port reported a decline in total monthly traffic and for the first ten months of the year Los Angeles remains down 15.4 percent compared to the same period last year.

In the Bay Area, the Port of Oakland saw a 6.7 percent drop in total container numbers for the month, ending October with 181,066 TEUs handled. Imports moving through Oakland in October were off 8.4 percent and empties were down 11 percent, with export boxes climbing 17.2 percent. Like Los Angeles, total monthly container numbers at Oakland were down in every month since January and for the first ten months of the year Oakland's total container volume is off 11.1 percent compared to the same period a year ago.

Seattle Port Volumes Up, Tacoma Continues Downward Slide

The Port of Seattle recorded its third straight month of container volume increases in October, while Puget Sound rival the Port of Tacoma recorded its sixteenth straight month of box volume declines.

The Seattle port turned in a 6 percent increase in total monthly container volume, ending October at 161,742 TEUs– up nearly 9,000 TEUs compared to October 2008. While Seattle handled 5.6 percent more loaded inbound containers in October, the port handled a whopping 51.4 percent more outbound loaded container in October than it did during the same period a year ago. However, the port's year-to-date numbers remained 11.9 percent lower than the January to October period of 2008, dragged down by sizeable monthly volume declines in the first seven months of this year. During the four months between February and May of this year, the Seattle port experienced monthly volume declines between 22 percent and nearly 37 percent compared to the year-ago periods.

The Port of Tacoma saw monthly volume declines across the board, ending October with 117,880 TEUs handled– down 25.2 percent compared to October 2008. Tacoma reported that loaded inbound container volumes dropped 24.8 percent and loaded outbound boxes declined by 21.3 percent compared to numbers from the same period last year. The declines only added to Tacoma's gloomy year-to-date numbers, with the port reporting total container volume for the first ten months of the year down 16.5 percent compared to the year-ago period. Tacoma's has not seen a monthly volume increase since July 2008 and in eleven of the past twelve months has reported a double-digit percentage drop over the same month in the previous year.

Matson Raising Hawaii Rates, Terminal Charges

Joining a long list of shipping lines raising cargo rates in recent weeks, Matson Navigation Co. announced Tuesday that starting Jan. 3 it will cost an extra $120 per westbound container and an extra $60 per eastbound container to ship on its Hawaii service.

The Jones Act shipping line also said as of Jan. 3 it will be adding an extra $125 per westbound container and $60 per eastbound container to its terminal handling charge.

In a statement, Matson said the reasons for the hikes were the dual need to offset rising operating costs and to "support ongoing investments" in the line's Hawaii service.

Matson said specifically, of the terminal handling charge, that while the line continues to absorb many of costs associated with terminal operations, it needs "to pass some of the expense on to our customers."

Guam Port Warns Shipyard About Future Misuse

The Port Authority of Guam appears to have had what may be the last word in the case of the island shipyard illegally used as a cargo facility. Port General Manager Glenn A. Leon Guerrero has issued a "cease and desist" letter to Guam Shipyard president Mathews Pothen, making it clear that commercial cargo operations are the sole jurisdiction of the port authority under Guam law.

In July, a Thomas/Brusco tug/barge was loaded at the shipyard with commercial cargo from Watts Constructors. While PAG is looking into whether or not this was the first such use of the shipyard, Guerrero's letter makes it clear that PAG intends it to be the last.

"You are hereby notified that any and all commercial cargo operations and like activities shall cease and desist immediately," wrote Guerrero, "unless expressly permitted and authorized by the Port Authority. Non-compliance will prompt the Port Authority to pursue restitution at the highest degree permissible by law, its rules and regulations and port terminal tariff, furthered by legal ramifications."

PAG has already collected the lost revenue from the shipyard over the illegal loading and the Harbor Master slapped the agent that handled the shipment, Norton Lilly International, with a Notice of Violation and a $2,500 fine.

"Should there be additional violations discovered," Guerrero wrote in the letter to the shipyard, "this letter again serves as your notification that the Port will pursue allowances to enforce compliance to our mandate."

While Guam law only allows commercial cargo to be handled at the PAG-operated port, PAG officials have said that under "extenuating circumstances" commercial cargo could be moved at facilities outside the port, albeit with the caveat that such shipments be overseen by PAG and that the port authority collects all revenues for the shipment.

Tuesday, November 24, 2009

Long Beach City Attorney Rejects NRDC Appeal Over Truck Program

An environmental group's appeal to the Long Beach City Council seeking to overturn a negotiated settlement between the Port of Long Beach and the American Trucking Associations over trucking restrictions in the port was rejected out of hand Friday by the Long Beach City Attorney.

Filed early last week by the National Resources Defense Council, the appeal cited a statue of the City Municipal Code that allows the City Council to overrule decisions by the city's semi-autonomous Board of Harbor Commissioners. In the appeal, NRDC attorney David Pettit asked the City Council to overturn the settlement, which removed the port and city from an ongoing federal lawsuit by the ATA over the port's Clean Truck Program. The NRDC claimed that settlement so changed the truck program that the port commission should have conducted an additional California Environmental Quality Act analysis of program. The commission, in approving the settlement on Oct. 19, determined that the settlement did not require such an analysis.

City Attorney Robert Shannon did not address the CEQA issue in his rejection of the appeal, instead stating that the federal court which approved the settlement retains jurisdiction in the matter, and under the US Constitution federal primacy overrules state and local jurisdiction.

In addition, Shannon determined that the filing by the NRDC was not within the 10-day window required by the appeal process in the City Municipal Code.

Shannon also warned the NRDC that an additional appeal threatened by the group over a separate port commission ruling on the settlement would also be rejected out of hand for the same reasons.

The ATA lawsuit, scheduled to go before a judge in March, 2010, still seeks to block aspects of the neighboring Port of Los Angeles' version of the truck program.

Coalition Opposes Columbia River Pilotage Increases

A coalition of ports, steamship operators and shippers are opposing requests by two Oregon pilot groups to the Oregon Board of Maritime Pilots seeking substantial pay increases.

The Columbia River Bar Pilots, or CRBP, has asked the Oregon Board– which sets pay rates for pilots in Oregon– for a 34.5 percent increase in pay for pilots, $1.2 million to hire four new pilots, and $1.4 million in incentive income. The similarly named Columbia River Pilots, or COLRIP, have also asked the OBMP for a nearly 100 percent increase in the pay for it's pilots.

Pilots in Oregon currently earn a net income of about $215,000 a year, with another $70,000 in the form of benefits and pension. Top earners collect up to 20 percent more than the average annual salary. In 2008, shippers paid more than $30 million in pilot fees to less than 60 Columbia River system pilots.

Both pilot groups, CRBP and COLRIP, have stated that it is their goal is to obtain the same level of pay as pilots in the California Bay Area and Puget Sound, which can range from $350,000 to well over $400,000 a year.

As pilots are funded through pilotage charges on ship operators, these additional funds would have to be borne by increased pilotage rates and fees.

The Columbia River Steamship Operators Association, in addition to the ports of Portland and Vancouver USA, have asked the Oregon Board of Maritime Pilots to reject any wage increases for the two pilot groups.

In fact, the CRSOA and the ports are seeking a reduction in pilotage costs, and want to see the state board reduce the number of pilots necessary to serve the reduced ship traffic, which is down in some places along the river by 30 to 40 percent.

UP Opens Donner Pass Rail Route

Union Pacific Railroad's Donner Pass route, one of the key land bridge rail routes for cargo heading east from the California Bay Area ports, was reopened to double-tracked intermodal traffic on Friday following the completion of a 12-month upgrade project along the 98-mile route.

The estimate $90 million project, financed solely by the Omaha, Neb.-based UP, included nearly 18,000 feet of improved clearance at 15 tunnels to accommodate double-stacked trains and upgrades to more than 30 miles of system signals. The project also increased the length of trains able to operate on the route by 58 percent, from 5,700-foot trains to 9,000-foot trains.

Donner Pass, about 90 miles northeast of the state capitol in Sacramento, was the site of the first railroad track to cut through the Sierra Nevada Mountains. Known as one of the most formidable railroad mountain crossings, the Overland Route features an extremely long 96-mile eastbound grade rising from the nearly sea-level floor of the California Central Valley to the 7,085-foot-high Donner summit.

Opened in 1869 by the Central Pacific Railroad and later double-tracked in 1925, the original Overland Route– including miles of tunnels, snow sheds and several massive retaining walls– remained in use until 1993, when CPR-successor Southern Pacific, in a cost-saving move, pulled up nearly 7 miles of the first and oldest summit grade track.

By the early 1980s, Southern Pacific’s partner UP had shifted all but a handful of daily trains from the Donner Pass route over the Sierra Nevada to its Salt Lake City-Bay Area line through Feather River Canyon– a route adding 75 miles of additional travel time compared to the Donner route.

LA Port Director Blasts ATA

Port of Los Angeles executive director Geraldine Knatz blasted critics of the port's decision to continue defending its version of the Southern California ports trucking program in a federal lawsuit brought by the American Trucking Associations.

Knatz's attack came in an open letter on the port's website in which she mocks the trucking association as being shortsighted.

The port's trucking program, developed jointly with the neighboring Port of Long Beach, seeks to cut diesel truck emissions by up to 80 by 2012. The Los Angeles plan, details of which were dictated to Los Angeles Mayor Antonio Villaraigosa by International Brotherhood of Teamsters president James Hoffa, Jr., during a 2006 meeting, has been derided by the trucking industry as an attempt to unionize the port-servicing truckers.

The ATA filed sued in federal court to block certain non-environmental portions of the plan last year, eventually winning an injunction in the Ninth Circuit Court of Appeals. The ATA argued in court that the concession model adopted in the truck plan– where trucking firms would be required to meet ports-defined criteria to receive an access license to port property and in the case of Los Angeles be required to hire drivers only as employees– violated federal interstate commerce laws. Long Beach has since settled with the ATA and been removed from the litigation.

In her letter, Knatz defends the injuncted concession agreements, calling them "our enforceable agreements to hold trucking companies responsible for the trucks and drivers they dispatch to our port."

She slams the ATA for putting the port in a position as watchdog of the trucks.
"If problems arise with any of these thousands of contracted drivers or their trucks," she said, "the ATA wants the port to chase down those individual truckers– an enforcement measure that is neither practical nor realistic."

It is worth mentioning that the port already tracked down all of the drivers to give each of them encoded radio frequency identification devices, a task that neither overwhelmed or overburdened the port.

Knatz goes on to reiterate the position of former port commission president S. David Freeman who said during the development of the truck plan that the port only wanted to deal with trucking firms that had "deep pockets." In fact, the vast majority of trucking firms at the ports are the exact opposite– small firms with one to five drivers. To date at least 500 trucking firms that existed before the truck program began last October are no longer servicing the port.

Knatz also mentions slams the ATA for supporting the environmental goals of the truck program, a position the ATA has repeated numerous times, and then in the same breath slams the ATA members for taking ten's of millions in port offered incentives and grants to bring their fleets up to the ports environmental standards.

It is worth noting that by the port's own numbers there are approximately 4,000 new cleaner-burning trucks brought in to the drayage fleet since the truck program took effect.

With new trucks costing upwards of $100,000, this suggests that the industry has spent $400 million on the new trucks servicing the ports, while the port has contributed less than half of 1 percent of these funds.

Knatz concluded her letter by stating that the port would continue to defend against the ATA suit, which is scheduled to go before a federal judge in March.

"The Port of Los Angeles’ Clean Truck Program wasn’t designed to be a quick win and a one-shot deal," she said, "but rather a long-term solution for ensuring that our port trucking system will be environmentally clean, financially self-reliant and continually upgraded. And that’s a goal worth fighting for."

Special Feature: Trade with Alaska – The 49th State’s 50th Anniversary

By: Jim Shaw (As seen in the November issue of Pacific Maritime Magazine)

Alaska is celebrating the 50th anniversary of its statehood this year, but just like the Gold Rush era of the 1890s, it continues to depend upon shipping for much of its trade and tourism. Although the once formidable Alaska Steamship Company is long gone, a victim of containerization and the air age in the 1970s, its place has been ably taken by a number of tug and barge lines as well as two modern ship operators, Horizon Lines and Totem Ocean Trailer Express (TOTE), while passenger traffic is catered to by the state-owned Alaska Marine Highway System (AMHS).

Since 1977 the TAPS tankers, a fleet of US-flag crude carriers, has been moving crude petroleum south from the Valdez terminal to refineries in the “lower 48” while the cruise industry, launched in 1957 around the founding of Alaska Cruise Lines, has funneled more than 60 percent of the state’s visitors northward.

The next big step for Alaska is expected to be the construction of a natural gas pipeline that will run from Prudhoe Bay to Alberta, but that project, which has been in the planning stage for three decades, may cost more than $30 billion to build and take more than eight years to complete.

TAPS Tankers
Much of the shipping serving Alaska has been modernized over the past decade, with the TAPS tanker fleet now fully double-hulled, two new TOTE ro/ro vessels operational and several new ferries added to the growing AMHS fleet. Although the new TAPS tankers are somewhat smaller than what they might be because of navigational constraints at their loading and discharge terminals they are highly efficient and environmentally friendly carriers.

The newest of the vessels are a series of four 286.85-meter (941 feet) by 50-meter (164 feet) ships built by the NASSCO shipyard at San Diego, California for the Alaska Tanker Company. The 185,000-dwt sisters Alaska Frontier, Alaska Explorer, Alaska Navigator and Alaska Legend were delivered between 2004 and 2006 and are diesel-electric propelled.

Between 2001 and 2006 another series of ships measuring 272.7 meters (894.7 feet) by 46.2 meters (151.6 feet) was built by Northrop Grumman Ship Systems at Avondale, Louisiana for Polar Tankers. These latter vessels, all of just over one million barrel capacity, are easily identifiable by their bright blue hull colors and sail under the names Polar Endeavour, Polar Resolution, Polar Discovery, Polar Adventure and Polar Enterprise.

Last of the Single-Hulls Retired
Lagging somewhat behind in its modernization efforts to date has been SeaRiver Maritime, the privately-held subsidiary of ExxonMobil, which has just retired the Alaska run’s last single-hull tanker, the 1987-built SeaRiver Long Beach, ex-Exxon Long Beach, a sister ship to the infamous Exxon Valdez. In the past, rather than order new ships, ExxonMobil has brought in older double-hulled tonnage such as the 1978-built Kodiak (ex-Tonsina) and 1979-built Sierra (ex-Kenai). Several smaller but newer ships are also operating in the TAPS trade, including the 46,094-dwt twins Seabulk Arctic (ex-Cape Lookout Shoals) and Seabulk Pride, (ex-Nantucket Shoals) while the smallest member of the fleet is the 39,999 dwt Captain H. A. Downing, a 1996-built vessel operated by AHL Shipping Company. The later three ships have been moving petroleum for Tesoro Alaska while SeaRiver handles ExxonMobil’s transportation requirements. At the same time, Polar moves crude south for ConocoPhillips while the Alaska Tanker Company ships carry oil for British Petroleum.

Container Ships and Ro/Ro Carriers
As the TAPS tankers carry Alaskan oil south another fleet, made up of container vessels, ro/ro ships and barges, moves consumer goods north. Horizon Lines, spun off from Sea-Land in 1999 as CSX Lines, then renamed Horizon following its purchase by The Carlyle Group in 2003, operates three D7-class 1987-built container ships in the Alaska trade. The 21,292 dwt Horizon Anchorage, Horizon Kodiak and Horizon Tacoma measure 216.4 meters (710 feet) by 23.8 meters (78.2 feet) and formerly sailed as Sea-Land Anchorage, Sea-Land Kodiak and Sea-Land Tacoma. They have a speed of 20 knots and can carry up to 1,712 TEUs.

At the same time, a fleet of three ro/ro ships is operated in the Alaska trade by TOTE. Two of these ships, Midnight Sun and North Star, were completed by NASSCO at San Diego in 2003 while the third, Westward Venture, is one of the company’s original Ponce-class vessels and is currently held in reserve.

Midnight Sun and North Star, known as the Orca class, measure 255.7 meters (839 feet) by 35.9 meters (118 feet) and can carry up to 600 forty-foot trailers and 200 autos at a speed of 24 knots, while Westward Venture measures 241 meters (790.9 feet) by 32.1 meters (105 feet) and can carry up to 380 forty-foot trailers and 120 autos at a speed of 22 knots.

Tugs and Barges
Complementing the fast container and ro/ro services offered by Horizon and TOTE are a number of tug and barge firms, most based in Puget Sound. Although the barges are slow they are also cheap, as their towing tugs require a crew numbering only about a third of what a regular freighter handling the same amount of cargo would require.

While most tows are routine, and may take as long as two weeks to reach their destination, some are highly specialized and must be “engineered” to fit into a specific weather and time frame. Chief among the latter are the Sealifts to Prudhoe Bay, which must be sent through the Bering Strait and on into the Beaufort Sea. Although these tows are only run occasionally now, they were once vital during the early construction days of the North Slope oil field, when modules as high as a 10-story building and weighing more than 5,000 tons had to be moved north. Because of the extremely shallow waters off Alaska’s north coast, special wide-beam barges were built that could navigate in as little as 4 feet of water. The tows also had to enter and leave the Beaufort during an extremely narrow time frame, usually in late August and early September, when Arctic ice was at its thinnest.

The Alaska Marine Highway System
Catering to Alaska’s residents and tourists, plus some commercial traffic, is the Alaska Marine Highway System (AMHS) ferry fleet. The name is important as the ferry system is considered part of the US National Highway System, and because of this, receives federal highway funding. Its history can be traced back to the early post-war period when two Alaskan residents, Steve Homer and Ray Gelotte, began a ferry service on the Lynn Canal using a war-surplus landing craft called Chilkoot.

The business was deemed vital enough to the interests of Alaska that it was purchased by the territorial government in 1951 after which a new ferry, the 256-gt, 75-passenger Chilkat, was delivered in 1957. Two years later the ferry service came under state ownership and a series of three larger ferries were ordered from Puget Sound Bridge & Dry Dock Co. at Seattle. These vessels, Matanuska, Taku and Malaspina, were completed in 1963 and allowed ferry service to be extended to Prince Rupert, Canada. A year later the 4,600-gt Tustumena was delivered by the Christy Corporation on the Great Lakes, to be followed by the smaller 934-gt E.L. Bartlett in 1969.

In 1974 the 1,328-gt Le Conte and 3,946-gt Columbia joined the fleet, to be followed in 1977 by the 1,280-gt Aurora. Between 1968 and 1974 one foreign-built ferry, Wickersham, (ex-Stena Britannica) was operated until returned to Europe in mid-1974 to become Rederi A/B Sally’s Viking 6. This long-lived 1967-built vessel survived for another 27 years before going for scrap in 2001.

Old Ferries and New
Most of AMHS’s first generation ferries remain in service, with only Chilkoot, Chilkat and E.L. Bartlett having been retired. Matanuska was lengthened to 124 meters (408 feet) in 1968 while Malaspina received similar treatment in 1972. Taku, although not lengthened, was extensively modernized in 1981.

In the mid-1990s AMHS placed an order for its first new ferry since Aurora and in 1998 took delivery of the 12,635-gt Kennicott from the Halter Marine shipyard at Gulfport, Mississippi. This 116-meter (382 ft) by 26-meter (85 ft) vessel is unique among AMHS ferries in that it was built to ocean-going status, which allows it to operate across the Gulf of Alaska between Juneau and Kodiak, and was also designed to serve as a command center in the event of natural disaster or oil spill, a lesson learned from the Exxon Valdez incident of 1989.

In 2004 and 2005 two more ferries joined the AMHS fleet, the high-speed, vehicle-carrying catamarans Fairweather and Chenega, both built by the Derecktor Shipyard on the East Coast. These 72-meter (235 ft) by 18.2-meter (60 ft) cats are powered by a quadruple diesel/water jet propulsion system giving a service speed of 32 knots. However, they have proven to be somewhat temperamental in the Alaskan environment, with Fairweather out of service for three months earlier this year because of engine problems while Chenega experienced similar mechanical difficulties in June.

Cruising to Alaska
Cruising to Alaska can be said to have started with the vessels of Alaska Steamship and Canadian Pacific in the late 1800s, although the Canadian ships were prohibited from moving passengers between US ports in the 1920s. Nevertheless, CP continued to operate seasonal Alaska cruises from Canadian ports both before and after World War II, continuing on into the early 1980s with the venerable Princess Patricia. It was this same vessel that gave birth to Princess Cruises in 1966 when it was chartered by Stanley MacDonald for a series of winter cruises to Mexico.

When one examines the Alaska cruise business as it is today, particularly with the many land excursions offered, the name of Chuck West must come up. It was West who designed a series of land excursions for the passengers of Alaska Steamship in the late 1940s, and when that company left the passenger trade in the mid-1950s, West went on to establish his own cruise line. He first chartered a converted British castle-class corvette from Canada’s Union Steamship, which he re-christened Glacier Queen, and then launched Alaska Cruise Lines in 1957. A sister ship, Yukon Star, was added in the following year, after which both vessels were purchased outright.

Pioneer of the Modern Era
In the early 1960s, when passenger numbers continued to increase, West proposed having a new building completed for the Alaska trade in Canada but backed out when the price exceeded $4.7 million. Instead, the third sister to Glacier Queen and Yukon Star was located in Greece where it was being operated by Sun Line as Stella Maris. This 1,924-gt ship was examined and purchased in early 1966. Unfortunately, the well-appointed little vessel, renamed Westar for the voyage back to Canada, was lost to a bunkering fire at Sardinia and had to be scrapped. It was replaced in the following year by yet another Greek-owned ship, Delos (ex-Wappen Von Hamburg), which was purchased from Nomikos Line and entered service on the Alaska run in 1968 as Polar Star.

West followed this ship with the purchase of the Spanish vessel Cabo Izarra from Yabarra Line in 1970 which he renamed West Star. This proved to be the undoing of West’s venture because of the ship’s cost, its mechanical condition and the rejection of its Spanish crew by Canadian seafarers. When financing could not be arranged to pay the vessel off, and with his other ships held hostage by angry seafarers, West was forced to sell his entire operation, by then known as Westours, to Holland America Line.

Continued Growth?
It was during this same time frame that MacDonald’s Princess Cruises was moving in the Alaska trade using such chartered ships as Princess Italia and Island Princess. By 1974 the Princess organization had been acquired by Great Britain’s P&O group and in 1975 Holland America Line sent its first purpose-built cruise ship, Prinsendam, to Alaska, marking the beginning of the modern era. Nearly 35 years later some 28 large cruise ships have been operating seasonally in the Alaska trade, moving more than a million passengers to the state annually. However, at least three of these vessels will not be returning next year because of the poor economy and high operating costs, the latter heavily influenced by the state’s $46 tax on each arriving cruise passenger. Their loss will mean at least 142,000 fewer tourists for the state in 2010 and has sparked the Alaska Cruise Association, representing all the major cruise lines serving the state, to file a lawsuit against Alaska’s government seeking to have the tax overturned.