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Thursday, February 4, 2010

Truckers, Refiners Sue Over California Low-Carbon Fuel Regulation

The American Trucking Association, which represents more than 37,000 motor carriers nationwide, and a coalition of petroleum industry trade groups filed suit Tuesday in federal court to block California's recently enacted low-carbon fuel standard.

The regulation, implemented by the California Air Resource Board on Jan. 12, requires annual reductions over the next decade in the carbon intensity of gasoline and diesel produced for use in California. The goal of the regulation, according to CARB, is to reduce greenhouse gas emissions. Large-scale use of lower-carbon transportation fuels, said CARB in drafting the LCFS, is necessary to meet a state requirement that greenhouse gases generated in the state be reduced to 1990 levels by 2020.

During his 2007 State of the State address, California Gov. Arnold Schwarzenegger called for implementation of an LCFS. In April 2009, CARB formally adopted a regulation implementing such a standard, but the regulation did not become effective until it was approved in January of this year by the state’s administrative law office.

Supporters of the regulation have argued that in addition to reducing greenhouse gases by 16 million tons by 2020, the LCFS will diversify transportation fuels in the state and increase demand for alternative-fueled vehicles. 

“The drive to force the market toward greater use of alternative fuels will be a boon to the state’s economy and public health,” CARB Chairwoman Mary D. Nichols said early last year. “It reduces air pollution, creates new jobs, and continues California’s leadership against global warming.” 

The ATA suit alleges that the LCFS regulation will unduly burden fuel providers and add increased costs to fuel consumers without any net change in fuel's carbon-intensity on a global scale. The end result, claims the suit, is no reduction – and a likely increase – in greenhouse gas emissions.

“The LCFS would essentially ban imports to California of fuels derived from unconventional sources such as oil sands from Canada, oil shale from the Western US, or domestic coal supplies that can be converted into transportation fuels,” said ATA Vice President Rich Moskowitz. “Discouraging these fuels will simply increase costs while failing to prevent their export to and consumption by other nations.”

The suit relies in large part on the federal preemption argument used successfully in the past by the trucking industry when opposing local and state regulations– namely that federal law supersedes local or state regulations in dealing with interstate commerce.

“The California LCFS is unlawful for a number of reasons, including the fact that it violates the Commerce Clause of the US Constitution by imposing undue and unconstitutional mandates on interstate commerce,” explained NPRA Pres. Charles T. Drevna. 

The suit also asserts that the CARB regulations discriminate in favor of California-produced fuels by assigning them lower carbon-intensity ratings because of shorter transportation distances to users. 

Filed in United States District Court in California, the suit also includes the Center for North American Energy Security, Consumer Energy Alliance and the National Petrochemical and Refiners Association as plaintiffs with the ATA.

Long Beach Port Moves Forward on $9M Incentive Package

The policy-setting governing board for the Port of Long Beach gave preliminary approval Monday to a $9 million incentive program to further boost carrier participation in a speed reduction program aimed at cutting emissions from ocean-going vessels as they enter and exit the port.

Branded the "Green Flag" program by the port, the program incentivizes carriers that slow down to 12 knots or less within 40 nautical miles of the port entrance by offering reduced dockage fees. According to the port, more than 70 percent of the vessels eligible for the incentives participated in the program in 2009. To help boost this number to the port's minimum goal of 90 percent participation, the port board's incentive package includes an additional $3 million to cover reduced dockage fees.

The incentive package also included nearly $6 million for a program designed to attract more rail cargo to the port by offering fee discounts to terminal operators. The increased incentive funding will allow the port to extend the program, originally set to expire April 30, to run through the end of the year.

The port board is expected to give final approval to the incentive package before the end of the month.

Hanjin Box and Bulk Services Posts 2009 Losses

South Korean ocean carrier Hanjin Shipping said Thursday that its container shipping division reported a $652 million net loss for 2009, compared to a 2008 year-end profit of $100 million.

Hanjin official pointed to a major corporate reorganization late last year as a major reason for the negative turnaround. The reorganization saw the creation of separate subsidiary entities to control the formally centralized governance, logistics and investments, shipping line, and terminal activities of the carrier.

Hanjin officials also reported that its container line ended 2009 with a total box volume handled of 3.2 million TEUs, a 6 percent drop compared to 2008. Container revenue also slipped, falling a dramatic 32.4 percent to end 2009 at $4.4 billion.

The carrier's bulk division reported operating losses of $738 million for 2009, a nearly $1 billion drop over the $329 million profit made in 2008.

Hanjin officials said that despite the losses, the carrier expects to make a profit in 2010.

Wallenius Wilhelmsen Wins Jaguar/Land Rover Contract

Stockholm, Sweden-based Wallenius Wilhelmsen Logistics has been awarded a five-year contract from Jaguar Land Rover to ship the automaker's Jaguar and Land Rover vehicles from the United Kingdom to seven international port facilities including California's Port of Hueneme.

Under the terms of the deal, Wallenius Wilhelmsen will handle close to 45,000 vehicles for the automaker this year, providing terminal services at the British port of Southampton and shipment to the seven ports, which include: Baltimore, Md.; Brunswick, Ga.; Port Hueneme; Halifax and Fremantle in Canada; Melbourne and Port Kembla in Australia; and Auckland in New Zealand.

Financial terms of the deal were not released.

Wallenius Wilhelmsen, which has worked with the automaker since the 1980s, will also use space charted on ACL vessels to ship Land Rover Freelander models from Liverpool, close to Jaguar Land Rover's Halewood manufacturing plant, to the Port of Baltimore in the US.

Pre-delivery and inspection work of vehicles will be performed by Wallenius Wilhelmsen at its vehicle processing center in Brunswick for Jaguar and Land Rover models destined for the US East Coast and at Port Hueneme for vehicles headed for US West Coast markets.

Until roughly 15 years ago, most car imports on the southern US West Coast were handled through the ports of Long Beach and Los Angeles. However, as the two ports began refocusing the majority of their space on container terminals, niche ports like Hueneme and San Diego have moved in to capture a sizable portion of the automobile import market for the region.


Tuesday, February 2, 2010

Long Beach "State of the Port" Speech Looks Past a Grim 2009

The storm clouds are starting to recede and sunshine may be just around the corner.

This was the basic message from Port of Long Beach Executive Director Richard Steinke during his annual "State of the Port" speech on Friday.

Steinke pulled no punches in describing how bad 2009 was at the port:
- A 22 percent drop for 2009 total cargo containers moved compared to 2008.
- 5.1 million TEUs for 2009 compared to a peak of 7.3 million in 2007 (a 33 percent drop).
- A 50 percent drop in total vehicles handled in 2009.
- A 35 percent decline in steel shipments during 2009.
- And a 30 percent decrease in lumber shipments for the year.

Steinke added that these statistics do not include the thousands of jobs the port could not provide due to the economic downturn. He also did not mention that the port's truck plan, which began implementation on Oct. 1, 2008 by banning older model trucks and their drivers, also forced more than 2,000 drivers out of the port’s local drayage fleet. A second ban implemented on Jan. 1, 2010 forced out hundreds more.

Despite the harrowing year, Steinke pointed to some good news.

While port officials in the past have been hesitant to portray changes in container traffic for a single month as indicative of a trend, Steinke said that based on the monthly December traffic numbers, he believes "the rebound has started and the worst is behind us."

He pointed out that while December is typically one of the weakest months at the port for traffic, imports in December were up just over 13 percent and exports jumped more than 30 percent, compared to December 2008.

It is worth noting, however, that when compared to the peak December, in 2007, both imports and exports during December 2009 remain well down. December imports remain down 17.1 percent compared to December 2007, monthly exports were down 13.9 percent and total monthly traffic remained down 18.8 percent.

Even considering the good news in December, Steinke warned that any recovering is going to take time and not come quickly.

But helping this along will be increased development activity at the port totaling more than $3 billion over the next 10 years. According to port estimates, these projects (which include a new terminal and the redevelopment of several others) would generate 50,000 new jobs, or more than 1.6 times the total number of local jobs now supported directly by the port.

"For me, the sound of pile-driving equipment is the sound of progress," said Steinke.
Steinke also highlighted many of the port's environmental and sustainability projects, including terminal efficiency efforts, ship-to-shore electrification, on-dock rail development, a low-sulfur fuel program, and the use of low-emission locomotives.

In the past several years, port officials have taken the line that there was plenty of traffic to feed not just the ports of Long Beach and Los Angeles but also new ports in Canada, Mexico and expansions at East Coast ports and the Panama Canal.

Steinke broke with this perspective, saying that competition from these sources represents one of the major threats to the Long Beach port.

"We are certainly not afraid of competition," said Steinke. "But we need to take it very seriously. There is a real urgency here."

The bottom line, said Steinke, is that customers are shopping around.

"We need to be the best, most cost-effective port for meeting the needs of our customers," said Steinke. "We need to develop our infrastructure to move cargo more efficiently and reliably if we are to continue to support the economy and create new jobs."

To this end, Steinke announced two new projects that will be announced soon--the replacement of the Gerald Desmond Bridge and the completion of the Pier S terminal.
The five-year $1.1 billion bridge project will replace the current bridge, which opened in the late 1960s, with a wider and higher design that will adequately accommodate future levels of goods movement.

The Pier S terminal, long associated with ocean carrier Evergreen, has sat partially completed for nearly a decade. The new $650 million project would complete the roughly 160-acre terminal and feature on-dock rail and three modern berths with room for a dozen large gantry cranes.

Steinke stresses, though, that none of the port's efforts can be done without support from the public, the industry, the unions and elected officials.

"It will take a tremendous team effort to keep goods movement in this region competitive, and our Port of Long Beach as a major economic engine that helps us all to prosper," said Steinke.

Pasha, Chrysler and Grays Harbor Port Launch Auto Shipment Pact

The Pasha Group began shipping Chrysler cars through the Port of Grays Harbor Thursday as part of a three-year pact between the port, the logistics firm and the automaker that could ultimately see as many as 25,000 vehicles headed through the port on their way to Asia and Australia.

The first vessel load of Chrysler cars, aboard the 700-foot-long M/V Positive Passion, shipped out of the port last week, headed to ports in Japan, China, Korea, Australia and New Zealand.

The shipment also marks Pasha's return to the Pacific Northwest more than three decades after leaving its Port of Portland facility in the 1970s. The Huntington Beach, Calif.-based firm, which now has facilities in Baltimore, Md., Brunswick, Ga., and San Diego, recently decided it wanted to have facilities in all four corners of the country.

The Chrysler vehicles are being shipped by rail from production facilities in the eastern United States to both the Seattle and Portland-Vancouver area, before heading to Grays Harbor. Part of the deal will also see Pasha handling some large equipment shipments for the automaker.

Tacoma Port Kicks Off Wharf Extension Project

The Port of Tacoma has begun work on a $31 million expansion of the Washington United Terminals wharf located in the Blair Waterway.

On Friday, project contractor Manson Construction, of Seattle, began driving the first of 361 concrete pilings that will ultimately serve as the foundation for the 600-foot-long wharf extension. Manson hopes to have nearly 30 of the pilings driven in place before work is halted for the fish migration season that begins in mid-February and extends to mid-July. The project schedule calls for the extended berth to be completed by July 2011.

The extended wharf, in conjunction with two new super post-Panamax gantry cranes installed by terminal owner Hyundai Merchant marine early last year, will allow the terminal to service the largest of container vessels.

Long Beach Port Readies Push for New Bridge

The Port of Long Beach is set to announce this week a new push to replace the nearly 45-year-old Gerald Desmond Bridge, a major ingress/egress choke-point to many of the port's busiest container facilities.

The new proposal is expected to unveil a $1.1 billion cable-stayed replacement for the aging bridge, a design similar to one proposed nearly five years ago when the port last launched a serious replacement effort. That effort, with a then-estimated cost of about $850 million, failed to raise the necessary government funds to get the project out of the early design stages. 

Port of Long Beach officials now claim to have raised about half of the needed funds to complete the new $1.1 billion bridge and have said they will seek the remaining funds from local, state and federal sources.

The port's first major study to replace the bridge, conducted in the late 1990s, estimated that a replacement would have cost $350 million at that time. 

According to port officials, the current four-lane bridge, which handles on average more than 17,000 trucks and 50,000 automobiles each day, is too narrow to handle the projected future volume of truck traffic from the Long Beach port and east-bound traffic from the neighboring Los Angeles port.

The current bridge is also too low to allow the largest of container vessels to transit under the structure to back channel port facilities.

The new bridge design is expected to be 45 feet higher than the current bridge and feature six traffic lanes with an emergency lane in each direction.

An additional concern is that the steel and concrete bridge, originally designed for a 30 to 40 year life span, is not holding up well – consistently ranking in the bottom of the state's bridge inspection lists. In recent years the underside of the bridge's road deck began spalling such large pieces of concrete that the port was forced to place a giant net--known by many in the port as "the diaper"--to prevent damage and injury to people and vehicles underneath. 

Once completed, the new bridge is expected to be turned over to the California Department of Transportation and become part of the state highway system.

Los Angeles Port Hosts New Hydrogen Fuel Cell Locomotive

The Port of Los Angeles played host to a one-of-a-kind piece of rail equipment last week, as Class I railroad BNSF unveiled an experimental, hydrogen fuel cell switching locomotive.

Developed in a partnership with the United States Department of Defense, the locomotive does not rely on conventional fuels to operate, and instead operates using a fuel cell – akin to a chemical battery – that uses hydrogen as the fuel, oxygen as an oxidant, and generates almost zero pollution. The locomotive, which BNSF claims is the first of its kind in the world, actually runs on a set of more conventional batteries that are charged by the hydrogen fuel cell.

While BNSF and others touted the zero-emission aspect of the locomotive for civilian purposes, the DoD also envisions the locomotive being used as mobile power generator for military and civil disaster scenarios.

Haiti Relief

The two aluminum fast ro/pax ferries built for Hawaii Superferry, but prohibited from sailing on their intended routes in the Hawaiian Islands, have been sent by the US Maritime Administration (MarAd) to Haiti to assist with relief efforts. The two boats, Alakai and Huakai, were built by Austal for Hawaii interisland service, but a protracted legal challenge by environmental groups forced Hawaii Superferry into bankruptcy and the service was discontinued in December 2008. The vessels, now owned by MarAd, can transport people, vehicles and other cargo at speeds of up to 40 knots, and their shallow draft and large loading ramp make them ideally suited for the relief effort, as they can be loaded and unloaded without relying on shore-side facilities.

The ships are crewed by civilian mariners, and join four other MarAd vessels in the aid effort, including the Gopher State and Cornhusker State, based in Newport News, Virginia, the Cape May based in Norfolk, Virginia and the Petersburg, based in Alameda, California.

Like the rest of the country, the maritime community has responded with an outpouring of monetary, logistic and material support for the stricken country. Some of the companies active in relief efforts include:

• Crowley Marine Services, which sent nearly 70 containers of water and MREs (ready-to-eat meals) to the Dominican Republic for transport to Port Au Prince.

• The Canaveral Port Authority, Royal Caribbean Cruise Lines International (RCCI), Ambassador Services Inc. and American Cruise Aid Logistics, which are coordinating efforts to provide community-donated water and dry food products, such as beans and rice, as well as cooking oil. 30 pallets were shipped aboard Royal Caribbean’s Freedom of the Seas for arrival in Labadee, Haiti on January 26th. 

• Canadian National Railway Company made an initial donation of C$100,000 to the Red Cross in support of the agency’s relief efforts in Haiti, and the company launched a program for employee donations to the Red Cross, matching employee contributions dollar-for-dollar.

• The US Navy also responded to the crisis with manpower and materials, including the 1000-bed hospital ship USNS Comfort, and the US Coast Guard, the first Department of Homeland Security agency to provide assistance to Haiti following the earthquake, continued to provide support in the form of aircraft – Jayhawk 
helicopters performing medical evacuations and C-130s bringing aid as well as an airlift to Haiti from the US of two Urban Search and Rescue Teams – and cutters Forward, Mohawk, Tahoma and Valiant, providing Maritime Intelligence Support Teams and relief supplies.

“When the sun came up this morning in Port au Prince there was a Coast Guard cutter off-shore providing command and control, assessing the situation, providing situational awareness,” said Admiral Thad Allen, US Coast Guard Commandant. “So within 24 to 36 hours we had three cutters with the capacity to support hundreds if not thousands.”

For those without a fleet of 270-foot cutters, the American Red Cross is accepting contributions at www.redcross.org.

Asian Imports
A new study published in the scientific journal Nature finds that while local and federal governments have been cracking down on local sources of air pollution, a major ingredient of smog, ozone blowing over from Asia, is raising background levels in the skies over California and other Western states.

“This is the first time anyone has directly linked ozone in the atmosphere over the US to Asian pollution,” says Dan Jaffe, a University of Washington-Bothell professor of atmospheric and environmental chemistry who contributed data from his observatory on top of Mount Bachelor in Oregon to the study.

While the amounts are small, the study found that the levels have been steadily rising since 1995, and probably longer, and could complicate US efforts to lower ozone levels at home.

Jaffe said it was logical to conclude that the increasing ozone was the result of burning more coal and oil as part of the Asia’s booming economic growth. Fortunately, December’s Copenhagen Summit on Climate Change established firm deadlines for countries to reduce their emissions.

Or did it?

The Financial Times reported late last month that the UN had abandoned its self-imposed climate change deadlines, laid out at December’s Copenhagen summit. Nations had agreed at the time to declare their emissions reduction targets by the end of January 2010, but Yvo de Boer, the UN’s senior climate change official, admitted that the deadline had in effect been shelved.

According to the story by Fiona Harvey in London and Anna Fifield in Washington, de Boer announced that countries would have the opportunity to ”…indicate if they want to be associated with the accord,” by the deadline, “or they can also indicate later.”

“You could describe it as a soft deadline,” Mr. de Boer said. “There is nothing deadly about it. If [countries] fail to meet it, they can still associate with the Copenhagen accord after.”

One wonders what exactly this expensive and controversial summit achieved other than providing an excuse for bureaucrats to travel to Denmark on the taxpayer’s dime.