Thursday, March 4, 2010

Horizon Re-Ups Tacoma Lease, Plans Asia-West Coast Service

Jones Act ocean carrier Horizon Lines, which in recent days had been looking at a possible move from the Port of Tacoma, has signed a lease with terminal operator APM Terminals North America that will see the carrier continue to call at the Tacoma port facility at least through 2015.

Horizon's lease with APMT– which covers five ports including Tacoma – was set to expire at the end of the year and rival Puget Sound ports were reportedly vying hard for the carrier's Tacoma business.

Last year, ocean carrier Maersk left the APMT facility at Tacoma to move to the nearby Port of Seattle, leaving Horizon as the lone customer calling at the Tacoma terminal. The carrier currently has three ships per week calling at Tacoma – one to Hawaii and two to Alaska – which according to Tacoma port officials translate into about 150 terminal and terminal-related jobs.

Financial terms of the lease, which included an optional two-year extension, were not released.

In related Horizon news, the carrier also announced plans to kick off a weekly trans-Pacific service between Asia and the US West Coast, set to commence in December.

The new service will utilize five of the carrier's 2,824-TEU US-flagged Hunter-class containerships that currently call on Guam and continue on to China as part of a space-charter agreement with Maersk Line. In preparation for these plans, Horizon Lines and Maersk Line have mutually agreed not to renew their current Asia space-charter agreement when it expires on December 10, 2010.

To support development of the new Asia service, Horizon has named Brian Taylor as Senior Vice President, International Services. In the new role, Taylor, formerly President and Chief Operating Officer of Horizon Logistics, LLC, will oversee the Asia expansion.

"After looking at the various alternatives for our Hunter-class vessels, our management team determined that an Asia service offers the best potential for long-term growth,” Taylor said.

"The trans-Pacific trade, consisting primarily of China-US commerce, continues to be the largest and most dynamic market in the world. We believe we are entering the market at an opportune time."

A.P. Moller-Maersk Posts First Yearly Loss in Six Decades

In yet another sign of the endemic contraction of the shipping industry, the owner of the world’s largest container-shipping line reported this week its first annual loss in nearly 60 years.

A.P. Moller-Maersk, the Danish parent of global ocean carrier Maersk, also said that while it expects overall rates and cargo volumes to tick slightly positive this year it does not expects these increases to boost the firm past more than a "modest" profit in 2010.

The firm reported a net loss of $1.29 billion in 2009 on sales of $48.5 billion, compared to a $3.46 billion profit on $58.7 billion in sales posted in 2008.

A.P. Moller-Maersk, founded in 1904, told Bloomberg that the firm has not suffered an annual loss since World War II.

Container shipping, which accounts for about 40 percent of the firm's revenue, experienced it worst industry-wide downturn last year with massive cargo volume declines and rates falling dramatically across the board. Despite posting a container volume drop of only 1 percent in 2009 – as opposed to the industry-wide 13 percent – Maersk saw per container revenue fall 28 percent.

A severe downturn in the bulk freight market, particularly the market for oil tankers, has also been hard on A.P. Moller-Maersk – the world's largest fleet of oil tankers. The Maersk tanker business posted a $275 million profit on $5.52 billion in sales for 2009, compared to a $1.15 billion profit on nearly identical sales in 2008.

Beyond the container and tanker business, the firm's remaining core business of oil and gas production saw profits fall by more than 50 percent in 2009. The oil and gas division posted $1.16 billion in profits on $9.02 billion in sales for 2009, compared to $2.35 billion in profits on just under $12 billion in sales for 2008.

New World Alliance Adds New Thailand-US West Coast Vessel to PSX Service

Member ocean carriers of The New World Alliance, or TNWA – APL, Hyundai Merchant Marine and Mitsui O.S.K. Lines – announced plans Thursday to revamp the group's Pacific Southwest Express, or PSX service.

The alliance said it would add an additional vessel to the PSX service for a direct service from Thailand to the US West Coast, effective March 15.

The new eastbound PSX port rotation will be as follows: Laem Chabang (Sun/Mon) – Cai Mep (Wed/Fri) – Hong Kong (Sun/Mon) – Yantian (Mon/Tue) – Los Angeles (Mon/Thu) – Oakland (Fri/Sat) – Tokyo (Thu/Thu) – Xiamen (Sun/Mon) – Hong Kong (Tue/Tue) – Da Chan Bay (Wed/Thu) – Laem Chabang (Sun).

The TNWA member lines serve more than 40 ports in the major East-West container trades with a fleet of more than 100 container vessels.

Evergreen Marine Promotes Three Key Execs

Taipei, Taiwan-based ocean carrier Evergreen Marine Corporation (Taiwan) Ltd. has reshuffled its upper management with the promotion of three top executives.

President Jack Yen has been promoted to Vice Chairman, Captain C.J. Wang, Chief Executive Vice President, has been promoted to the position of President, and Anchor Chang, Executive Vice President of International Business Division, was promoted to Chief Executive Vice President.

The promotions were formally announced following the Feb. 26 meeting of the firm's board of directors.

Jack Yen, a 32-year veteran of Evergreen, has served in numerous executive positions during his tenure including President of Evergreen Star Hong Kong Ltd and president of Evergreen Deutschland GMBH. He was promoted to President of Evergreen Marine Corporation (Taiwan) in 2007.

Captain C.J. Wang began his 34-year career with Evergreen serving as a third officer, moving up to captain in 1986. During his shore-side tenure with the carrier he has served in various management positions including stretches in the top management of Evergreen Container Terminal (Thailand) Limited and as Executive Vice President of Corporate Operation Division. He was promoted to Chief Executive Vice President in 2009.

Anchor Chang joined Evergreen Marine in 1986, serving over the years in New York, Dallas, London and Taipei in positions from deputy manager to Junior Vice President. He was promoted to Senior Vice President in 2003, Executive Vice President in 2006 and Executive Vice President of International Business Division in 2007.

CMA CGM to Increase US Export Box Rates

French ocean carrier CMA CGM said Wednesday that it would increase United States export cargo rates to Asia, the Indian Subcontinent and the Middle East starting March 15.

The carrier, which has been struggling with billions in debt, said the rate increases were part of a continuing effort to "provide its valued customers with a high quality of services."

The U.S. export increases are:
• From the US East, West and Gulf Coast ports to Asia:
  + 150 USD per TEU
  + 200 USD per FEU
• From the US East and Gulf Coast ports to the Middle East:
  + 75 USD per TEU
  + 150 USD per FEU
• From the US East Coast ports to the Indian Subcontinent:
  + 150 USD per TEU
  + 200 USD per TEU

Tuesday, March 2, 2010

LA Port, City Hall Officials Chime In on Ninth Circuit Truck Ruling

Port and City of Los Angeles officials offered their interpretations of last week's decision by the US Court of Appeals for the Ninth Circuit on the port's truck re-regulation program, focusing on the court's refusal to enjoin further portions of the truck program as requested by plaintiff American Trucking Associations.

"We are very pleased that the Ninth Circuit Court of Appeals has upheld our concessions by denying the ATA’s request to enjoin the concession model used to enforce the Port of Los Angeles Clean Truck program," said port Executive Director Geraldine Knatz.

Los Angeles Mayor Antonio Villaraigosa also praised the ruling. "The 9th Circuit Court of Appeals ruling to allow concession agreements to continue at the Port of Los Angeles is good news for all of us who live and work in Southern California."

The ATA, which represents more than 37,000 motor carriers nationwide, filed suit in federal court in July 2008 arguing that the access license system is preempted by federal laws that govern the routes, rates, and services of interstate commerce. The ports argued that they are exempt from federal preemption under a motor vehicle safety clause.

Last year, the Ninth Circuit court enjoined portions of the port's truck plan, essentially allowing the port to continue with a highly constrained version of the port's controversial access-licensing model, which the port calls "concession agreements." Under the truck plan as originally proposed, the port would issue access licenses to trucking firms in return for binding agreements from the trucking firms to port-defined labor, financial, security, and safety criteria.

The ATA returned to the Ninth Circuit asking the panel to expand the injunction to include all portions of the access-licensing model. Last week the panel refused to enjoin the entire access-licensing model, but did enjoin one further component, handing a small win to the ATA.

The truck program now heads to court on April 20 for a full trial.

Both Knatz and Villaraigosa said that City Hall and the port look forward to their day in court.

"We are hopeful that the trial court will uphold the full concession agreement to provide full accountability and sustainability of the Clean Truck Program in the future," said Villaraigosa.

The Ninth Circuit, in their ruling, clearly reiterated which components of the access-licensing model that could remain in effect at the port. These include: requiring that access license recipients be licensed motor carriers in good standing; requiring that access license recipients use only “permitted trucks;” mandating that motor carriers are solely responsible for their drivers and employees; requiring that motor carriers prepare a truck maintenance plan and holding motor carriers responsible for vehicle condition and safety; mandating that motor carriers keep records of driver enrollment in the Transportation Worker Identification Credential (“TWIC”) program; requiring that motor carriers ensure that each truck entering and leaving Port property is equipped with a means of Clean Trucks Program Compliance Verification; ensuring that motor carriers comply with federal, state, municipal, and port security laws; and requiring that motor carriers update and maintain accurate data in the port-operated drayage truck registry, access license registry, and driver registry and allowing Los Angeles port officials to inspect motor carriers’ property and records regarding compliance with the access license agreements. None of these items were previously injuncted and remain in effect at the Los Angeles port.

Los Angeles City Council member Janice Hahn, whose district covers the port, said that the Ninth Circuit decision was a good step, but did not go far enough.

"In order to succeed in reducing pollution and improving security at the port in the long term, we need to ensure that trucking companies, and not the drivers, are held accountable for operating and maintaining their trucks."

Hahn, along with port and City Hall officials, support a system that would require trucking firms to own all the trucks and drivers would work and be hired only as per-hour employees. Currently, more than 80 percent of the port's drivers work as per-load independent owner operators.

Port-sponsored studies have shown that port-generated diesel emissions are down double digits since the implementation of the truck plan in late 2008, though it has yet to be shown if the reductions are due to the truck plan or the reduction in overall truck traffic at the port due to the economic downturn.

Guam Port Web Portal Launches After 16 Month Delay

After more than a 16-month delay, the Port Authority of Guam last week launched a web portal to allow identified users to share information critical to the work being done as part of the island's commercial seaport modernization program.

The portal, access to which is available only to certain groups such as employees, consultants, federal officials and some representatives in local agencies, has been mired in controversy since a Guam Attorney Generals' Office report that found that the contract covering the web portal development was an illegal procurement by the Guam governor's Chief of Staff George Bamba and Guam government Chief Procurement Officer Claudia Acfalle. The web portal contract was part of a larger port outreach project. The report found that the outreach contract, funded through a $350,000 sole-source purchase order, was not put out to bid and instead illegally awarded to port contractor Parsons Brinkerhoff.

The web portal component of the contract was to be delivered by October 2008, but delays continued month after month for which the contractor was paid $35,000 per month.

The Attorney General's Office, in issuing the report last month, said it planned to take legal action against the contractor, seeking either $100,000 in repayment or the completed project.

After the contract was turned over to another division of Parsons Brinkerhoff, the port subsequently announced the completion of the web portal project.

Long Beach Port Approves Labor Agreement for Terminal Redevelopment

The governing board for the Port of Long Beach on Monday approved a project labor agreement for the first phase of a 10-year $750 million Middle Harbor container terminal redevelopment plan.

The project labor agreement, or PLA, provides that any contractor or subcontractor can bid on work for the Middle Harbor project if they agree to the PLA's basic tenets, which include: a 30 percent local hire goal; adherence to a prevailing wage scale; a promise of no labor actions such as pickets or strikes; an arbitration process to resolve labor disputes; and, substance screening for workers.

The PLA covers the roughly $150 million worth of Phase I work on the Middle Harbor project, which ultimately will redevelop and join three aging terminals into a single highly-efficient mega-terminal.

Proponents of the PLA, which includes nearly two dozen local labor unions, said the agreement would reduce potential costs on the terminal project and assure workforce security during construction.

Opponents of the PLA, including the Long Beach Chamber of Commerce, argue that the agreement will reduce competition and result in more costly wage payouts during the project life.

LA Port Nixes Battleship Museum Plan

The Port of Los Angeles has fired a full broadside salvo into a historical group's plans to bring the World War II battleship USS Iowa to the port as a museum piece.

Port officials said late last week that the USS Iowa plan by the Pacific Battleship Center was rejected because it would complicate and interfere with an ongoing development of the port's public waterfront area.

The PBC group is not the only group vying for the battleship, and according to the port, the Navy has only made the mothballed ship available to a group trying to bring the warship to Vallejo in Northern California. The Northern California effort has also faced funding problems in finding a permanent home for the USS Iowa.

The Navy continues to maintain the USS Iowa in an "on hold" status as part of a government program that donates vessels to museum groups.

The USS Iowa is the last remaining battleship in the world that has not been placed in a museum.

Port of Los Angeles officials said that all seven port sites proposed by the PBC group were inconsistent with the port's own plans for the waterfront area, which ironically includes the San Pedro Bay's only maritime museum.

Vivian Leon Named to Number Two Slot at Guam Port

The governing board of the Port Authority of Guam has named Vivian Castro Leon as the authority's interim deputy general manager.

Leon, a 33-year veteran of the PAG, will be the first woman to serve as the port authority's deputy general manager.

Her years of experience serving in various PAG positions, including her most recent stint as the PAG's corporate services manager, earned praise from the PAG Board of Directors and Guam Governor Michael Cruz.

Leon will fill the deputy general manager position vacated by Rick Agustin who recently took the helm of the PAG as general manager following the resignation of Glenn Leon Guerrero.

Fidley Watch: Show Us the Money

by Chris Philips, Managing Editor

The concept of divide and conquer has been around as long as man has been walking upright. Sun Tzu discussed it in the Art of War, 2,500 years ago. Julius Caesar used it to enlarge the Roman Empire, Machiavelli wrote about it in The Prince. Quoting the Bible’s book of Matthew, Abraham Lincoln said, “A house divided against itself cannot stand.” This year the concept is being used to pit two commercial maritime associations and former allies against each other.

On July 1st the commercial shipping industry in Washington State will be required to take over operation of the emergency rescue tug in Neah Bay. Under state law, companies that operate large vessels in the strait have to share in the costs of paying for a stand-by tug to help prevent an oil spill by a drift grounding. According to a recent story in the Bremerton, Washington Kitsap Sun, the issue of allocating the cost of the tug among carriers has not been resolved.

Frank Holmes, Northwest manager for the Western States Petroleum Association (WSPA), has been making the case that non-oil-carrying vessels are just as likely to need help from a tugboat as oil-carrying vessels, so the assessment should be based largely on the number of vessels passing through the Strait. “Clearly, the tug is being required to be there as an insurance policy for vessels that encounter a mechanical integrity problem, steering problem, engine problem or electrical problem,” he says.

Mike Moore, vice president of the Pacific Merchant Shipping Association (PMSA), says the tug is intended to prevent oil spills, which relates to the amount of oil or fuel on board a disabled vessel. Moore notes that cargo ships in Puget Sound have never spilled oil except during fuel transfers, which are subject to other requirements.

“The fairest way to allocate tug costs would seem to be on the basis of how much oil is carried on ships navigating the strait,” says Moore, in a recent opinion piece on the subject. “Vessel operators should pay on the basis of how much oil is moved through the strait on their ships,” he says. “Cargo ships carry about 20 percent of the oil (as fuel), tankers about 80% of the oil (as cargo and fuel). It seems that a fair share is pretty straight forward.”

A few years ago, WSPA and PMSA were united in their opposition to increasing the rescue tug at Neah Bay to year-round service. Now they find themselves on opposite sides of the issue of funding the tug. Now the house is divided, and the two associations are butting heads over who should fund a service forced upon them by the State of Washington.

In 1996, my father wrote an editorial about the rescue tug. He noted that then Governor Mike Lowry wanted President Clinton to tie lifting the export ban on Alaska North Slope Crude to the stationing of a dedicated rescue tug to protect the Coast, the Strait of Juan de Fuca and the marine sanctuary off the North coast of the State of Washington.

In his editorial, my father pointed out that most of the land being protected by the tug is either Indian Reservation, National Park, National Forest or National Marine Sanctuary, and not under the jurisdiction of the State of Washington. He noted, “Since all of this real estate is being administered by the Federal Government for the citizens of all the United States, it is only fair that the citizens of all the United States should pay for its protection.”

Shortly after my father wrote these words, Governor Mike Lowry was replaced by Governor Gary Locke, who served until 2005. It was under Gary Locke’s leadership that the Neah Bay tug was funded for part-time operation, and on his watch that the scheme was hatched for full-time operation. 

In 2009, President Obama appointed former Governor Locke to the position of US Secretary of Commerce, where he is responsible for fostering, promoting, and developing the foreign and domestic commerce of the United States. Secretary of Commerce Locke is well aware of the importance of shipping to the State of Washington and the country as a whole. As my father noted 14 years ago, most of the rescue tug’s beat is Federal land. It’s time for PMSA and WSPA to get back on the same page and, united, urge Secretary Locke’s office to foot the bill for the boat.


At press time this month Tom Bringloe, of the Glosten Associates, alerted us to the passing of the prominent naval architect and founder of the firm, Lawrence “Larry” Glosten. Tom remembers first working for Larry as an intern in 1965. Larry, Ben Jensen and our father, Richard all had office space on the second floor of the Poulson Building, across from the Seattle waterfront. Ben and Larry were architects, and our father was at the time editor of Pacific Fisherman, later bought by National Fisherman.

“Most days the three of them would get together for lunch at the old Colman Lunch,” says Bringloe. “Standard fare was the special: half of the daily special sandwich, a cup of the soup of the day and a cup of coffee, all for 95 cents! Even a starving college student could afford to join them.”

Mr. Glosten, who graduated from Webb Institute in 1940, served as Chairman of the Board of The Glosten Associates until his retirement in 2001. He is survived by his wife of 64 years, Lois Peterson “Pete” Glosten, his three children and the renowned naval architecture legacy he helped created.