Thursday, February 11, 2010

Tacoma Port to Drop Blair Waterway Condemnation Suits

Now that the Port of Tacoma has canceled the redevelopment of the Blair-Hylebos Peninsula, including a major new terminal for NYK Line, the port is seeking to drop condemnation lawsuits against property owners still remaining on the peninsula.

When first announced in 2007, the Blair Waterway redevelopment project, including the NYK Terminal, was originally estimated by the port to cost about $800 million. By the time the project was canceled in late 2009, the cost of the development project had risen to $1.2 billion. In the end the port wound up spending $190 million into the deal– $146 million on the purchase of real estate along the peninsula and $38 million for design, planning and staff time.

As the development project got underway, the port aggressively tried to buy up just under 140 acres of property on the peninsula, eventually approving the use of eminent domain to obtain some of the needed parcels that were in private hands.

In all the port wound up filing condemnation suits against all of the 23 landowners on the peninsula. While it settled with 19 of the landowners, four holdouts remained including owners of the former CleanCare site, owners of Graymont Lime, owners of the former Occidental Chemical site and owners of Philips Environmental Services. These four properties cumulatively total 70 acres, or nearly 60 percent of the port's desired redevelopment project property.

The port commission voted last week to dismiss the four outstanding condemnation lawsuits, though the port's Real Estate Director, Jack Hedge pointed out that the port is in final negotiations with all four property owners to purchase their properties.

Bellingham Port Ready to Search for New Top Exec

File this under "the first step is the hardest."

Washington state Port of Bellingham commissioners have decided to move forward with finding a replacement for Jim Darling, who resigned from the $126,000 per year post more than eight months ago.

Port officials said that 12 executive search firms have bid on a contract to conduct a search for the new director. Commissioners are expected to trim the list of bidders down to three to five finalists during their regular public meeting on Feb. 16. Following interviews with the finalists, a winner will be named with the search beginning shortly thereafter.

At least one member of the port commission is hopeful that a executive director could be hired by May.

Others are hesitant to pick a new director when two of the three commissioners face elections in November.

LA/LB Ports Get New Security Tools

The Los Angeles County Sheriff's Department unveiled several new pieces of technology Wednesday that it claims will help protect the ports of Long Beach and Los Angeles.

The new tools, being paid for by the United States Department of Homeland Security, include a cargo-screening ship, a radiation-detecting helicopter module and a chemical/biological agent-sniffing dog.

The $3 million ship, thought to be the first of its kind, is outfitted with special sensors to inspect cargo through the hulls of cargo vessels being escorted into the harbor. Also equipped with sonar and an underwater robot to search the hulls of incoming vessels below the water line, the new Sheriff vessel is staffed with explosives experts and can transmit sensor data in real time to shore-based enforcement agents.

The new $220,000 helicopter module fits on existing Sheriff helicopters and can detect radiation material aboard cargo vessels before they enter the harbor.

The new tools will not replace the more advanced inspection techniques that already exist on-dock, such as radiation portal monitors at terminal gates.

The Sheriff is just one of the agencies responsible for homeland security in the port area. Others include the police forces of both ports, police forces from both port cities, the US Coast Guard, and the US Customs and Border Protection.

NOL Reports Record Loss In 2009, Likely Down Through Middle Of 2010

Singapore-based Neptune Orient Lines Ltd., parent to ocean carrier APL, Ltd., said that instability in rates, sluggish volumes and higher fuel costs may make the firm unprofitable in the first half of 2010. 

NOL Chief Executive Officer Ron Widdows told reporters Thursday that unless the market turns around dramatically it is likely the firm will see losses in the first six months of the year.

The prediction came as NOL reported a record annual loss for 2009 and a fifth straight quarterly loss. NOL reported a 30 percent drop in revenue for 2009, ending the year $741 million in the red. The firm reported an $83 million net profit for 2008.

During the fourth quarter of 2009, NOL saw revenue fall 12 percent to $2 billion, with a net loss of $211 million compared to a $149 million loss in the fourth quarter of 2008. This was just over $80 million more than Wall Street analysts had predicted.

Widdows noted that it was too early to tell if the firm's 28 percent fourth quarter jump in cargo volume will sustain.

“It is early days and we have had a dramatic development in the market,” said Widdows. “If you had bet your pay check a month ago, you would have had a hard time predicting that demand would be as strong as it has been.”

Widdows said that NOL's losses were mainly the result of a 25 percent drop in the revenue per container vessel as falling worldwide demand and a glut of capacity drove rates below operating costs.

During 2009, NOL traffic fell to 4.6 million TEUs.

The firm's core shipping business accounted for the vast majority of the annual losses and NOL reported that the firm's terminals and logistics businesses remained profitable.

Tuesday, February 9, 2010

Guam Port Writes Off $1.5M Spent on Scrapped Wharf Plan

An abandoned plan to construct an $83 million deep water wharf at the commercial port of Guam wound up costing the United States federal government $1.3 million and the Port Authority of Guam $200,000 in preliminary work, according to a 2009 audit released Monday by the federal government.

While port officials still remain open to the idea of building the wharf, the project became untenable as the port was forced to reevaluate and redirect available funds toward the impending US military buildup on the island.

The port is undergoing a rapid expansion as it prepares for US government’s transfer of all military operations and personnel from Okinawa, Japan to Guam set to start this year. In May 2009, Guam’s Governor Felix Camacho signed an estimated $195 million 2007 Master Plan outlining the PAG’s long-term modernization plans in light of the impending military buildup. The $13 billion relocation of 8,000 US Marines and 9,000 dependents from Okinawa is expected to increase traffic through the Guam port by more than 100 percent, an increase that many fear the current infrastructure at the port will not be able to handle without the modernization efforts.

While the deep water wharf project, first contemplated in 2002 and set to be located near the commercial Guam port, was envisioned to service large vessels like aircraft carriers, the US military now prefers such a wharf to be located in the inner harbor away from the commercial Guam port.

Once the decision to focus on the military buildup was made, the PAG was forced to write off the $200,000 in port revenue already spent on the deep-water wharf project. The $1.3 million in federal funds spent on the project were allocated in 2002 from a $1.5 million grant award from the Economic Development Administration of the US Department of Commerce.

The audit also found that the PAG is currently waiting for nearly $100 million in federal grants and loans required to begin the $200 million in upgrades called for in the commercial port modernization plan.

tags: Port Authority of Guam, Guam

DOT Chief Addresses First National Port Summit

The nation's top transportation official, speaking to a gathering of United States port officials on Friday, said that the agency believes the nation's maritime hubs can play a central role in the overall economic recovery.

US Department of Transportation Secretary Ray LaHood also announced a $600 million investment grant program aimed at helping port authorities and other local entities achieve the goal.

"I consider the ports to be the real economic engines all over America," said the Secretary.

LaHood's comments came at the first National Port Summit, a two-day event, organized by the federal government, which drew nearly 100 officials from more than 50 domestic port authorities.

The goal of the summit was to figure out ways to create and fund a national port system, much like the domestic system for ground freight movement.

"People have got to be willing to set aside their own agendas and own egos and work together," said LaHood.

Port of San Diego President/CEO Charlie Wurster told the attendees that while the 361 ports in the US compete with each other for market share, they have a collective interest in a national port system.

"We're talking about the infrastructure to make the goods flow better across the wharf and into our transportation networks of either rail or highway," said Wurster.

Attendees at the summit will submit recommendations developed at the event to the DOT for further consideration.

tags: DOT, Port of San Diego

NRF-Led Coalition Urges DOT to Block F4A Changes

A confederation of 31 retail, shipping and business industry groups has urged the United States Department of Transportation in writing to oppose moves by several port, labor and environmental groups to change federal trucking de-regulation laws.

"While we strongly support efforts to improve air quality and port security in and around America's ports, the effort to undermine federal preemption of interstate commerce is an attempt to overturn losses in the federal courts restricting local regulation of truck drayage services," the National Retail Federation, writing on behalf of the other industry groups, said in the letter. "If successful, these efforts will not improve air quality or port security in and around the nation's ports, but will re-impose a fragmented, local patchwork regulatory structure on foreign and interstate commerce, contrary to the US Constitution and acts of Congress."

The National Retail Federation, writing on behalf of the other groups, urged DOT Secretary Ray LaHood to resist Congressional lobbying efforts by several ports including Los Angeles and New Jersey/New York to change the Federal Aviation Administration Authorization Act (F4A) of 1994, which give the federal government sole authority when it comes to motor carrier routes, rates and services. As part of the federal government's de-regulation of the trucking industry that began in the late 1970s, the F4A language was passed to prevent the creation of a patchwork of local regulations much like that which existed prior to de-regulation.

The national lobbying effort to change F4A was started by the Port of Los Angeles last year after several federal court decisions prevented port officials from imposing employee-only labor regulations on local drayage truckers. The regulations were part of a truck program that began development in 2006 as an effort to upgrade the drayage fleet and cut diesel emissions. Political intervention soon morphed the truck program from a clean air program into a social engineering effort that sought to completely transform the labor component of the local trucking industry and in doing so make it easier for drivers to be unionized. Two federal courts later determined that the port could not mandate such regulations, citing federal preemption of interstate commerce.

"The Port of Los Angeles, the National Resources Defense Council, and the [International Brotherhood of] Teamsters seek to expand the exceptions to federal preemption legislatively in order to accomplish by statute an objective that the Courts found to be currently unlawful," said the NRF letter. "In fact, the Court of Appeals recognized that federal preemption of interstate trucking services was designed to prevent a patchwork of burdensome state and local trucking rules as would be created by the Port of Los Angeles’ concession plan."

Proponents of the lobbying effort, such as the NRDC, the Teamsters and the ports, believe that the sixteen-year-old F4A is "archaic" and "outdated" legislation and should be changed to allow local authorities to set environmental, labor, and safety/security regulation for locally-servicing trucks.

Analysts: Import Volumes to Rise 25% in First Half of 2010

Analysts are predicting import cargo volume at the nation’s major retail container ports, including those in Long Beach, Los Angeles, Oakland, Seattle and Tacoma, will increase 25 percent during the first half of 2010 compared with the same period a year ago.

The predictions, contained within the monthly Global Port Tracker report released Monday by the National Retail Federation and Hackett Associates, differed sharply from the view of some economists that are predicting a W-shaped economic recovery– with another dip in the economy following a slight uptick.

“This forecast assumes that we are not in a double-dip recession and that a recovery is underway,” said Hackett Associates founder Ben Hackett. “Although 2009 saw decreased import activity levels, the forecast for 2010 points towards growth.”

US ports covered in the report handled 1.09 million TEUs in December, the latest month for which actual numbers are available. In addition to the West Coast ports, the report also covers the East Coast ports of New York/New Jersey, Hampton Roads, Charleston and Savannah, as well as the Port of Houston on the Gulf Coast.

The December import numbers were unchanged from November but up 2.6 percent from December 2008, breaking a 28-month streak during which monthly totals at the ports covered were lower than the same month the year before. The ports ended 2009 with a total import volume of 12.7 million TEU, a 17 percent dip from the 15.2 million TEU handled in 2008 and the lowest import volume numbers since the 12.5 million TEUs reported in 2003.

Despite the year-end decline in total import volume, the Global Port Tracker predicted that January import numbers would increase to 1.19 million TEUs, a 17 percent increase over the year-ago period, and February import would climb 30 percent of the same period in 2008 to 1.1 million TEUs.

March import numbers are forecast at 1.18 million TEUs, up 23 percent, April is forecast at 1.25 million TEUs, up 27 percent, May at 1.3 million TEUs, up 26 percent, and June at 1.38 million TEUs, up 36 percent.

These estimates would put total import volumes for the first six months of 2010 at 7.4 million TEU, up 25 percent from the January to June period last year.

“This is a dramatic turnaround over what we’ve seen during the past two years,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “Increases in import volumes don’t correspond directly with dollar volumes in sales, so caution has to be exercised when looking at these numbers. But retailers are clearly expecting to move more merchandise this year.”

What a Difference a Year Makes: 
The Ports of LA/LB 
Put 2009 Behind Them

By Keith Higginbotham

In retrospect, 2009 may go down as the “year of pain” for the shipping industry. 

While some in January 2009 were looking wearily at the coming year, no one, especially officials at the Southern California ports of Long Beach and Los Angeles, anticipated the truly rough seas ahead.

As the year played out and the global economic crises that started in the third quarter of 2008 spread, the entire industry that the two ports serve contracted violently. Ocean carriers began laying up vessels while reporting loses in the hundreds of millions of dollars, rail traffic reached the lowest point in more than 20 years, and reports of terminals down 30 percent in container moves were not uncommon. Even the usually bulletproof longshoremen experienced such a shortage of work that veteran “A” card dockers were having trouble finding assignments.

But they say “that which does not kill you, makes you stronger.”

Judging by the attitude of officials at the Southern California ports, the saying might be right.
Still, after a year of such struggle, officials at the ports of Long Beach and Los Angeles, the two busiest container ports in the Western Hemisphere, are happy to see 2009 sinking out of sight and 2010 looming brightly ahead.

Mid-way through his first year as president of the Long Beach Harbor Commission, Nick Sramek set down four specific goals for the port in 2010.

“The first is jobs and the economy. The second is the environment. The third is our relationships and the fourth is looking at a future port,” said Sramek.

These are not the single-minded goals of a port fighting for survival, these are the goals of a port who is shouting “we have survived.”

At the Los Angeles port, officials took a more pragmatic view of the future.

“We are cautiously optimistic about 2010, hoping that consumer confidence will start improving inbound volumes and the market recovery overseas will continue to drive our export volumes.” said Los Angeles Port Executive Director Geraldine Knatz.

Despite the weariness that will fill the history books about the past year, the ports did manage some major accomplishments during 2009.

If nothing else, the two ports were consumed during the past year with their so-called Clean Truck Program. The CTP, which took effect in October 2008, was designed to reduce ports-generated diesel emissions from ports-servicing trucks that haul containers.

The original truck plan, developed and envisioned as a single plan for both ports, eventually morphed into two distinct versions, with each port seeking to approach the truck pollution problem in slightly different ways.

However, a federal lawsuit brought by the American Trucking Associations argued that a major component of the plan, an access license system that essentially allowed the ports to determine which trucking firms could and could not service port terminals, violated federal law which takes precedence in matters of interstate commerce.

Early last year the federal courts agreed and injuncted the concession portion of the truck plan, pending a full court hearing on the matter now set to take place in March 2010.

Despite this, the two ports managed to stick to other portions of the CTP not blocked by the court, namely progressive bans on older trucks. By the end of the year the bans had effectively barred close to 6,000 trucks older than the 2003 model year cutoff.

By year’s end, both ports had measured double-digit percentage drops in diesel emission pollutants in the port area, though there is still some doubt if this was due to the CTP or due to the reduction in truck traffic as cargo volumes slowed.

In late October, Long Beach officials determined that their version of the truck plan could move forward without the access license component and still achieve the stated pollution reduction goals, leading to a court-sanctioned agreement with the ATA.

The neighboring Port of Los Angeles, however, refused to disavow the access license component of their plan and maintain that it is critical to their version of the truck plan. And while Long Beach’s agreement removed them from the ATA litigation, official sfrom Los Angeles have promised to continue the fight in court.

Though the first break came in late 2008, last year will be remembered at the two ports as the year that a nearly five-year self-imposed construction moratorium on major projects at the two ports came to its real end.

The moratorium began in 2003 when the Port of Los Angeles settled a lawsuit with the Natural Resources Defense Council over preparatory but required environmental review for the development of the China Shipping terminal at the Los Angeles port.

The 2003 settlement, which wound up costing the Los Angeles port more than $100 million, sent paroxysms of legal fear through officials at both ports. Nearly all construction was halted until Los Angeles finally broke the logjam in late 2008 with the announcement it was moving forward with the TraPac terminal redevelopment, a project that had been held in limbo for nearly a decade.

Last year, both ports rushed through a flurry of new projects, moving to get environmental documents approved and construction under way.

Since the start of 2009, Long Beach currently has either finished or started work on more than half a dozen major projects throughout the port. These include: A new administration complex for Pier G terminal operator International Transportation Service; a $70 million soil cleanup at Pier A West; Ship-to-shore power development at Matson’s Pier C container terminal; port-wide storm-water runoff control improvements; a recently completed refrigerated shipping container project at Pier G; the $750 million Middle Harbor Redevelopment Project that will modernize two older shipping terminals into a single mega-terminal; a new maintenance/repair facility at Pier G; and renovations to improve Pier G’s on-dock rail capacity.

The port of Los Angeles moved forward on several major projects in 2009, including: the $64.3 million TraPac terminal expansion; a $17.5 million upgrade to the China Shipping terminal; a modernization and expansion project at the Intermodal Container Transfer Facility; a major repair project of the 15-acre New England fishing village located along the Port ’s Main Channel; a million square-foot, $9 million solar panel installation atop a port cruise terminal; and, a $105 million development of the port’s public waterfront area.

Federal dollars, often matched with port funds, continued to flow into both ports in 2009 for security upgrades and development.

In early 2009, Long Beach port officials dedicated a $21 million Security Command and Control Center, a 25,000-square-foot facility that serves as the communications hub and headquarters for the Port of Long Beach Security Division and Harbor Patrol.

The state-of-the-art facility also houses security units from the Long Beach Police Department and the Port of Los Angeles. In addition, offices and facilities in the three-story structure can also accommodate members of the US Coast Guard, US Customs and Border Protection, and Southern California Marine Exchange during an emergency.

The Center, paid for by the United States Department of Homeland Security and the Port of Long Beach, is designed to be a regional resource, housing emergency management facilities including a Department Operations Center for use in coordinating law enforcement response to emergencies anywhere in the Long Beach/Los Angeles port complex.

Across the bay at Los Angeles, port officials approved new security projects including a new $21.9 million Port Police Headquarters and various security-related transportation projects totaling $27.7 million.

Despite both ports postponing the collection of per-TEU infrastructure fees originally set to begin in 2009, Long Beach and Los Angeles officials both moved forward with infrastructure projects.

In Long Beach, plans moved forward on the $1.1 billion replacement for the Gerald Desmond Bridge, the major point of egress into the Terminal Island portion of the port complex. The 40-plus year old bridge was originally designed to have a lifespan through the 1990s, but funding and development problems have prevented the replacement project from leaving the conceptual stage until recently.

Another point of egress to Terminal Island, the 60-plus year old Commodore Heim Bridge, has apparently found adequate funding but was stopped by a lawsuit almost before it began.

In Los Angeles, port officials capitalized on a $21 million federal stimulus grant to begin work on a 1.3-mile segment of Harry Bridges Boulevard in Wilmington that circles the port.

Cargo Volumes
Despite some good news, 2009 was dominated by dramatic declines in cargo volumes handled by the ports and contracting business levels throughout the supply chain.

In 2009, the Port of Long Beach handled 5,067,597 TEUs, a decline of 21.9 percent compared to 2008. Total loaded inbound box volumes for 2009 dropped 20.5 percent and total loaded outbound box volumes fell 19.9 percent.

Next door, the Port of Los Angeles ended 2009 with 6,748,994 TEUs handled, a 14 percent decline over the previous year. Total loaded inbound box volume also dipped 14.9 percent during 2009 with loaded outbound box volumes falling 6.4 percent.
However, both ports reported marked improvement in December, with Long Beach up 8.7 percent for the month compared to December 2008 and Los Angeles up 3.5 percent over the year-ago monthly period.

While December did little for either port to erase the declines during the rest of the year, they were the first monthly total container volume increases for more than a year.

Despite the tumult and the pain for 2010, both ports, as mentioned earlier, have entered 2010 with smiles on their faces.

“These [December] numbers are far better than expected, and may very well be the first signs of an economic recovery,” said Port of Long Beach Executive Director Richard D. Steinke. “That’s great news for our region and the nation. We are cautiously optimistic that this marks the beginning of an ongoing, upward trend.”

So while the smiles are there, they are perhaps not a measure of some hope for the coming year’s high points, but instead for having already survived the past year’s low points.