Riverbend Marine Service Auction

Thursday, February 18, 2010

SoCal Port Volumes Mixed In January: Long Beach Up, LA Down

January turned out to be a mixed bag at the Southern California ports, with the Long Beach port reporting across the board container volume growth, while total monthly container volume at the neighboring Los Angeles fell once again into the negative.

Long Beach port officials reported that monthly box volumes handled in January increased by 7.4 percent to 428,805 TEUs compared to the same month in 2009. It was the second straight month of positive growth for Long Beach, after more than a year of negative volume numbers. Total loaded inbound volume increased to 217,925 TEUs, an 8.6 percent increase over January 2009. Total loaded outbound container volume also jumped up compared to the year-ago-period, ending the month up 27.9 percent at 113,183 TEUs.

Across the harbor at the adjacent Los Angeles port, total container volume handled for the month fell to 2.4 percent to 572,969 TEUs, a 2.4 percent decrease over January 2009. Total loaded inbound container volume for January also dipped 6.7 percent, ending the month with 296,305 TEUs handled. On the other hand, total loaded outbound container volume for January jumped a sizable 35.2 percent compared to the same period last year and ending the month with 141,244 TEUs handled.

NorCal Inland Container Barge Project Receives Fed Stimulus Funding

The US Department of Transportation has awarded $30 million to a partnership including the ports in West Sacramento, Oakland and Stockton to launch an inland marine highway service.

The funding, which comes from American Recovery and Reinvestment Act’s $1.5 billion Transportation Investment Generating Economic Recovery, or TIGER program, will be used to implement a barge service to shuttle containers between the three ports as an alternative to trucks or rail.

The barge service is expected to be up and running by the end of this year.
“Investing in infrastructure is one of the best ways to create and sustain good paying jobs,” said US Congressman Mike Thompson, whose 1st District covers the West Sacramento port.

“Every dollar we invest in infrastructure gives our economy a 59 percent return," said Thompson, adding that the TIGER program will "create both near term construction jobs, long term employment opportunities, and will deliver economic and environmental benefits to our region and state.”

In addition, the Port of West Sacramento will use a portion of the federal funding to construct a crane and other facilities needed for handling container cargo.

The ports of Stockton and West Sacramento, both located more than 75 miles inland from San Francisco Bay and accessible only by a man-made canal, have succeeded as bulk ports focusing mainly on agricultural products grown in California's Central Valley. Over the past decade both have tried to increase their ability to handle more containers as more bulk products have moved to box shipments.

According to the funding request submitted by the three ports, the marine highway project will "reduce greenhouse gas emissions, relieve congestion on Northern California and Central California highways, and help reduce round-trip and overall truck miles traveled between distribution centers and port facilities in the area, with corresponding savings in fuel costs."

DOT officials said that the TIGER program received the Recovery Act funds to "spur a national competition for innovative, multi-modal and multi-jurisdictional transportation projects that promise significant economic and environmental benefits to an entire metropolitan area, a region or the nation."

Bay Area Bar Pilots Christen New Pilot Boat

The newest addition to the San Francisco bar pilot fleet is the 104-foot-long pilot boat Drake.

The vessel was officially christened Wednesday by San Francisco port Director Monique Moyer during a ceremony at the San Francisco waterfront.

Named for famed English mariner Sir Francis Drake, the new vessel will soon join two other pilot boats shuttling local bar pilots to and from ocean-going vessels as they arrive and depart the harbor. The bar pilots, members of the Bar Pilots Association, climb aboard the ocean-going vessels at sea or ride with the vessels to sea – all the while providing local navigation assistance to the vessels' crews during the transits.

The Drake and her two sister pilot boats will rotate holding station about 11 miles outside of Golden Gate, each spending four days and nights on duty. Up to eight pilots at a time live aboard the vessels while at station, riding in with the ocean-going vessels entering San Francisco Bay and returning to the pilot boat aboard vessels departing. The Drake features accommodations for up to eight pilots and four crew members, is powered by two 1,100-horsepower engines and operates a fully equipped galley to service the crew 24 hours a day.

Last year, the Bay Area pilots made 4,500 pilot-to-vessel transfers, according to the Bar Pilot Association.

The California Legislature established the Bay Area bar pilots in 1850 and they are overseen by the quasi-governmental Board of Pilot Commissioners for the Bays of San Francisco, San Pablo and Suisun.

Tuesday, February 16, 2010

LA Port Shipyard Plan Faces Deadline

A private-venture plan to resurrect a shuttered Port of Los Angeles shipyard into a new shipbuilding and repair facility is once again facing an uphill battle.

The $50 million plan, by Long Beach-based Gambol Industries, calls for the expansion of the firm's current Port of Long Beach shipbuilding and repair facilities into the vacant Southwest Marine shipyard, which sits on Los Angeles port property.

Los Angeles port officials originally opposed the plan because the Southwest shipyard slips were to be used to dump sediment from a $96 million Army Corps of Engineers dredging project that would deepen the port's main channel to 53 feet. The dredging project is considered a critical component in the development of two long-delayed container terminal development projects at the port. The port eventually rejected Gambol's proposal, which the firm said would bring 1,000 jobs to the area.

However, after Gambol appealed to City Hall, the Los Angeles City Council's three-member Trade, Commerce and Tourism Committee, headed by port-area Councilmember and Gambol-supporter Janice Hahn, directed the port's governing board to work with Gambol on the shipyard proposal.

The following month, the port board and the City Council approved the dredging project with a provision that required the port to inspect Gambol's business plan before moving forward with the sediment dumping at Southwest.

The port eventually signed an agreement with Gambol that would allow Hahn to act as a mediator over the dispute.

However, Hahn recused herself last week from the mediator role after it was revealed by the Torrance Daily Breeze that Gambol officials had contributed more than $11,000 to Hahn's statewide campaign for Lieutenant Governor.

Now, the Army Corps have announced that they plan to begin dredging on the main channel project by the end of this month. With no mediator in place, it is now unclear if negotiations with the port will occur at all, and if so, who will serve as mediator.

For its part Gambol claims to have come up with a way to provide enough of the Southwest shipyard property for the dredging sediment while still retaining enough waterfront area to operate as a shipyard. The port on the other hand is concerned that any delay in the dredging project, either due to negotiations or a change in the plans, could hamper the development of the China Shipping and TraPac terminal now under way.

Feds Peg Growth at 3% For 2010, 4.3% for 2011, 2012

Federal government forecasters are predicting a gradual economic recovery with overall growth predicted to be about 3 percent this year and 4.3 percent in both 2011 and 2012.

The Council of Economic Advisors' report, released late last week, also predicts that United States exports will increase sharply as the global economy picks up speed, going so far as to predict that the export upswing may mirror the downswing leading into the recession.

The report authors also noted that it is critical for the US to strengthen trade ties with countries in Asia as these markets are likely to be a primary consumers of American goods in the future.

"Some nations with large current account surpluses took steps to increase domestic demand during the crisis, and these efforts must be maintained and expanded if world growth is to rebalance," said the report.

"It is not a given that such a transition will take place. Concerted policy action will be needed, but if saving falls in countries with current account surpluses and spending rises, that should stimulate U.S. exports as well as take pressure off the US consumer as an engine of world growth."

The report also noted that one positive during the global economic crisis has been that most nations have not resorted to protectionism, which has helped to moderate job losses in the US.

Despite this, the report predicts that domestic unemployment will remain at about 10 percent during 2010, falling to 9.2 percent in 2011 and to 8.2 percent in 2012.

One way identified by the White House, and highlighted by the President in his State of the Union address, to increase domestic employment is by doubling US exports within five years. However, the road toward that goal may be uphill, as the report noted that the nominal value of US exports fell by more than $400 billion between their peak in the third quarter of 2008 and the trough of the recession in the second quarter of 2009.

In addition, to the President's export targets, the report also repeated the administration's stated goal of pursuing further free trade agreements – particularly a regional transpac agreement – despite the current Congressional apathy to move forward on three pending bilateral trade agreements.

Buffett's Berkshire Closes Deal on BNSF Takeover

Warren Buffett's Berkshire Hathaway Inc. on Friday closed a takeover deal of Class I railroad Burlington Northern Santa Fe.

The takeover will see BNSF, one of the two major railroads servicing the Western United States, become part of a Berkshire subsidiary.

Buffett announced three months ago that Berkshire intended to purchase the 77.4 percent of BNSF that it did not already own. In the November 3 takeover bid, Berkshire offered $100 per outstanding share of BNSF stock, which at the time represented a more than 30 percent premium over the going per share price. Under the terms of the takeover bid, BNSF was valued at $44 billion, including $10 billion in debt.

According to the exchange agent for the merger, as of Friday there were just over 264.5 million outstanding shares of BNSF, not including the shares previously owned by Berkshire. Just under 150 million of the outstanding BNSF shares were paid out in cash with the remaining 114.6 million BNSF shares paid out in a 92.5/7.5 percent mix of Berkshire Class A Common Stock and cash.

In total, Berkshire will issue just under 81,000 shares of Berkshire Class A stock and pay out $15.87 billion in cash.

Berkshire CEO Buffett said on Thursday, "Tomorrow begins the first century of ownership of BNSF by Berkshire Hathaway. I'm looking forward to every day of it as our railroad does its part to ensure the future prosperity of the country."

BNSF operates more than 32,000 route miles of track in 28 U.S. states and two Canadian provinces.

Career Moves at Pacer, Bay Area Pilot Board

Asset-light based transportation and logistics services provider Pacer International Inc. has hired Mark T. Coleman as regional vice president, sales-west, for its Pacer Transportation Solutions Inc. unit.

In the new role, Coleman's responsibilities will include coordinating the marketing efforts and sales in Pacer's western region.

A 25-year veteran of the logistics industry, Coleman most recently served with Schneider National ending his tenure as Vice President - Intermodal Sales West.

The eight-member Board of Pilot Commissioners for the Bays of San Francisco, San Pablo and Suisun has named Capt. Allen Garfinkle as the new executive director of the state board.

In his new role, Capt. Garfinkle will oversee all Board personnel and Board administrative functions, including: licensing of San Francisco bar pilots and inland pilots, trainee training and continuing education programs for pilots, and the investigation of maritime incidents involving Board-licensed pilots.

A graduate of the California Maritime Academy who is also a member of the California bar, Capt. Garfinkle most recently completed 21 years of service with Matson Navigation Co.

Recession Takes Toll on European Yards

Germany’s TKMS Blohm + Voss Nordseewerke shipyard at Emden launched its final commercial newbuilding in late December, the small container carrier Frisia Cottbus. Photo courtesy of TKMS.

The recession has started to take hold among European shipyards where several “final deliveries” have been made and a number of facilities closed or converted to other purposes. In Germany, the Blohm + Voss Nordseewerke yard at Emden, part of ThyssenKrupp Marine Systems (TKMS), launched its final commercial vessel in late December. TKMS, which owns German shipyards Blohm + Voss, HDW and Nordseewerke, is selling part of the Nordseewerke facility to Siag Schaaf Industrie for the production of offshore wind turbines, while the remainder of the facility is to be limited to naval construction. At the same time TKMS has sold an 80 percent controlling interest in its Blohm + Voss yard to Abu Dhabi MAR, the upcoming Middle Eastern firm that recently purchased three PacifiCat ferries from Canada’s Seaspan (see Pacific Maritime Magazine, January 2010). TKMS is also said to be negotiating the sale of HDW’s commercial shipbuilding unit to a Bremerhaven-based steel fabrication group after a large number of HDW’s container ship orders were canceled.

In eastern Germany the now insolvent Waden yards in Wismar and Rostock are continuing to finish two ro/ro passenger ferries for Sweden’s Stena Line, but these are the only contracts the yard group now holds, with other orders having been canceled. The German government has agreed to provide a $278.8 million loan to Waden to make sure the twin 63,600-gt ro/ros can be completed, but only to preserve local employment.

At the same time, Germany’s Hegemann group has been offered a $29 million loan from the local state government to help protect jobs after the firm announced it would be forced to cut at least 400 positions at its Peene Werft and Volkswerft yards in eastern Germany. The firm has already put its Rolandwerft yard, near Bremen, up for sale because of lack of orders.

In Poland the Gdynia shipyard delivered its final vessel, the 2,732 TEU Sattha Bhum, late last year and has now ceased production. Some of the yard’s holdings have since been acquired by Polish construction company Energomontaz-Polnoc for steel fabrication.

Poland’s Szczecin shipyard has also closed but to date its property has drawn little investor interest.

The government of Croatia has announced a second privatization drive for its six largely bankrupt shipyards, with just one, the Uljanik yard, still considered solvent. Like Poland’s yards, however, the Croatia facilities have drawn little investor interest because of the current economic downturn. In Finland, STX Europe’s yard at Turku has only one cruise ship to complete for Royal Caribbean, which is due for delivery in September, while the Rauma facility has orders for just two ro/ro ferries and a single research ship.

In France, the STX yard at St Nazaire has not won a single commercial newbuilding contract since 2007 and workers have pleaded with the French government for assistance. This is expected to result in a contract to build a third Mistral-class Projection and Command vessel for the French Navy as three existing cruise ship contracts are completed.

In Norway the number of new orders won by Norwegian builders was down 90 percent last year, compared with 2008, and many yards are now surviving only on work “in hand.” With the North Sea petroleum sector still in decline, serious problems are expected to start later this year and in early 2011 as current contracts are completed, with very few of the country’s 25 shipbuilders having orderbooks extending beyond 2011.

The only bright spot in the European shipbuilding sector appears to be Russia, where yards in the Murmansk Oblast region are gearing up for major new orders expected to be placed in connection with development of the country’s massive Shtokman oil field in the Arctic.