Thursday, July 8, 2010

Puget Sound Truck Program Scraps 200th Pre-1994 Truck

The Southern California ports are not the only West Coast areas to report success in tackling air pollution from drayage trucks.

The Scrappage and Retrofits for Air in Puget Sound, funded in part by the Port of Seattle, is also claiming some success in the reducing drayage pollution. Officials running the nearly eight-month-old program said that as of July 1, the ScRAPS program had scrapped it 200th truck with a pre-1994 engine.

The program, which offers truckers willing to scrap their pre-1994 engined trucks either $5,000 cash or the blue book value of their truck--whichever is greater--is designed to support the maritime pollution reducing goals of the Northwest Ports Clean Air Strategy.

"Removing 200 of the dirtiest trucks from the road is a big milestone," said Tay Yoshitani, Port of Seattle CEO. "Truck drivers have been able to invest in newer, cleaner trucks — trucks that improve air quality for our neighbors while moving cargo through our gateway to markets across the globe."

In addition to offering incentives to drivers willing to scrap their old trucks, the ScRAPS program also offers drivers grant monies to retrofit 1994 and newer trucks with pollution control devices.

The program utilizes funding from the Port of Seattle, the Puget Sound Clean Air Agency and the Washington State Department of Ecology.

Drayage drivers who scrap their trucks also have the option of using their ScRAPS money to purchase a newer truck through loan assistance from Cascade Sierra Solutions, the contractor running the truck program; purchase their replacement truck from a third party; or, leave the drayage trucking industry altogether. To date, nearly 10 percent of the ScRAPS funding recipients have chose to leave the industry.

As of June--the ScRAPS program's most recent accounting period--the program has spent $1,040,000 to take pre-1994-engined trucks off the road.

“The exhaust from diesel engines overwhelmingly presents the highest health risk from airborne toxic pollution in the Puget Sound area, linked with heart problems, aggravated asthma, cancer and premature death,” said Jim Nolan, Interim Executive Director of the Puget Sound Clean Air Agency. “Every dirty truck scrapped through this program makes a difference for our air quality, and more importantly, to the health of those who live and work in areas adjacent to the port. The two hundred trucks scrapped to date will remove 2.8 tons of toxic particle pollution from the air each year, and no doubt save lives.”

The more stringent Southern California ports' Clean Trucks Program, implemented in October 2008, led to the trucking industry investing more than $650 million to upgrade the local drayage fleet to 2007 or newer models. Upwards of 90 percent of all cargo moved by truck through the ports of Long Beach and Los Angeles is now being handled by 2007 or newer model year trucks. Officials from the Southern California ports claim that, as of Jan. 1, 2010, ports-servicing truck emissions have been reduced about 80 percent from baseline pollution levels recorded in 2005. In all, more than 8,000 older trucks have been removed from the Southern California drayage industry due to the truck program, though these trucks were simply banned from servicing the ports and very few trucks were ever actually scrapped under the program.

OOCL Names New Execs

Hong Kong-based ocean carrier OOCL has named Stephen Ng as the firm's next Managing Director of Corporate Planning.

Ng, who currently serves as the carrier's Director of Trans-Pacific Trade, will succeed retiring 36-year OOCL veteran C.L. Ting in the position as of August 1.

OOCL, a wholly owned subsidiary of Orient Overseas Ltd., also announced several related management changes.

Michael Kwok, currently General Manager, Corporate Administration, will take over the position of Director of Trades on August 1.

Tony Tong was named to replace Ng as Director of Trans-Pacific Trade.

In related news, OOCL also said it has appointed a new agent in Kuwait--Kanoo Shipping (Kuwait) C/O Al Rashed International Shipping Co. The carrier currently offers two China-Middle East/Persian Gulf services and one Europe-Middle East/Persian Gulf service each week.

On the North American West Coast, OOCL currently has scheduled service at the ports of Long Beach, Los Angeles, Oakland, Seattle, and Vancouver B.C.

Arbitrator To Decide If ILWU SoCal Dockers Can Honor Clerical Worker Strike

Striking maritime clerical workers in Southern California and the association representing their maritime industry employers will sit down for a formal hearing before a waterfront arbitrator Thursday to determine if the union has been negotiating in good faith.

Members of the Office Clerical Unit of the International Longshore and Warehouse Union Local 63 have been on strike since their contract expired on July 1.

The outcome of Thursday's formal hearing could determine whether ILWU dockworkers at the ports of Long Beach and Los Angeles can refuse to cross the OCU picket lines--a move that, if allowed, could shutter the nation's busiest container port complex. Last week, an arbitrator determined that the OCU had not negotiated in good faith in the hours leading up to the contract expiration and therefore the ILWU dockers could not honor the strike.

The OCU represents about 950 clerical workers in Southern California that handle paperwork and customer service for 17 shipping companies and terminal operators at the LA/LB ports. The current contract talks, however, only covers members at 14 firms.

Since the July 1 contract expiration, negotiations have made little progress, according to reports from the bargaining table.

In addition to wage and benefit increases, the OCU is seeking job security guarantees as a counter to the employers' proposed use of computer programs that the union believes will lead to union job losses.

The employers, represented by the Harbor Employers Association, are seeking more flexibility in staffing. The HEA claims that OCU members experience 20 percent down time due to fluctuations in work load, but the employers are currently required to keep the workers on a full-time schedule.

According to the HEA, Southern California OCU members are the highest paid white collar workers in the nation, with average annual salaries of about $96,000 and annual benefit payouts of an additional $66,000 per worker.

tags: Port of Long Beach, Port of Los Angeles, ILWU

AP Moller-Maersk Predicts Even More Profitable 2010

Danish business conglomerate A.P. Moller-Maersk, the parent firm of the world's largest shipping line Maersk, is predicting a much better financial end to 2010, citing a much quicker rebound in cargo traffic than originally expected.

In March, the firm predicted a modest profit for the entire year, but upgraded this opinion slightly in May. The firm, which suffered its first ever loss in 2009, now expects to surpass its 2008 profit levels of $3.5 billion by the end of 2010.

"The outlook for 2010 is still subject to considerable uncertainty, not least due to the development in the global economy," said the firm in a statement. "Specific uncertainties relate to the container freight rates, transported volumes, United States dollar exchange rate and oil prices.

The upward profitability projection includes an accounting gain from the $520 million sale of shares in the Yantian terminal in China announced in April--a deal which has now been closed. In May, AP Moller-Maersk said it would sell its United Kingdom-based Netto Foodstores Limited for just under $1.2 billion. However, the deal signed with purchaser and Wal-Mart unit Asda Stores Limited is still subject to approval from the UK competition authorities and the possible gain from the sale has not been included in AP Moller-Maersk's upward projections.

AP Moller-Maersk's full half-year results are due out on Aug. 18.

Maritime Liens for Necessaries 101

A maritime lien is a non-possessory property right in a vessel. Maritime liens arise under various circumstances and have been characterized as “one of the most striking peculiarities of admiralty law.” A person who supplies certain goods or services to a vessel, otherwise known as “necessaries”, has a maritime lien against that vessel. Civil wrongs arising from the operation of vessels such as personal injuries or collisions give rise to a maritime lien against the offending vessel. The breach of certain contractual obligations of the vessel owner in connection with a specific vessel such as payment of wages, contracts of carriage, towage agreements, and charters also can give rise to a maritime lien against a vessel. This article focuses on maritime liens for necessaries.

Necessaries Defined
Federal statutory law at 46 U.S.C. § 31301(4) defines “necessaries” as “includ[ing] repairs, supplies, towage, and the use of a drydock or marine railway”. This definition has been interpreted broadly to include any item reasonably needed for the venture in which the vessel in engaged. For example, courts have held “necessaries” include the services of a marine surveyor in connection with vessel repairs, fees for vessel document preparation, taxi fare for crewmembers to get to the vessel, insurance premiums, and gambling equipment furnished to a cruise ship. Held not to be “necessaries” giving rise to a maritime lien have been a credit card contract and naval architecture services related to the reconstruction of two vessels. In Kodiak Fishing Company v. M/V Pacific Pride, 535 F.Supp 915 (W.D.Wa. 1982) the court expressed doubt that the delivery of crab to a crab processing vessel constituted delivery of “necessaries” which gave rise to a maritime lien.

History of Maritime Liens
Like many aspects of maritime law, maritime liens have an interesting history. Before technology allowed rapid communication and financial transactions, suppliers of goods and services were reluctant to do business with vessels whose owners were unknown to them or located far away. After receiving goods or services, the vessel could sail away leaving the provider unpaid. To keep a vessel trading, the master had to pledge the vessel as security for the needed goods or services. The maritime lien arose even if the vessel owner had not directly contracted for the goods or services.

Historically, maritime liens did not arise for goods provided in the vessel’s home port because the owners were local and presumably known to the supplier who could decide whether or not to extend credit. However, the Federal Maritime Lien Act, first enacted in 1910, gives a maritime lien to all suppliers of “necessaries” to a vessel on the order of the owner, master or charterer regardless of where they are, 46 U.S. C. § 31342. The United States is one of very few countries that recognize a maritime lien for “necessaries”.

Unlike a common law lien, a maritime lien is not simply a security device to be relied upon if the vessel owner defaults. Rather, it converts the vessel itself into the obligor and allows the injured party to litigate directly against the vessel. Also, unlike common law liens, maritime liens do not have to be recorded or filed to be valid.

Subjects of Maritime Liens
In addition to the vessel itself, other types of maritime property can be the subject of a maritime lien. The lien attaches to equipment that is used aboard the vessel as an essential part of the vessel’s navigation, operation or mission. Some courts have held the lien even attaches to a vessel’s equipment that is not physically aboard the vessel. For example, in Caterpillar Financial Services v. 1178 Crab Pots, 2001 AMC 1605 (D.Ak 1999), the court held crab pots left at sea were appurtenances of the vessel subject to a maritime lien. Other courts have held a maritime lien applies to equipment used aboard the vessel that is leased and not owned by the vessel owner.

Certain intangible property may also be subject to a maritime lien. Earned freight has been held “part of the vessel as much as the ship’s tackle” subject to a maritime lien. And, in Gowen v . F/V Quality One, et al., 2001 AMC 1478 (1st Cir. 2001) , the First Circuit affirmed the district court’s holding that fishing permits may be subject to a maritime lien along with the vessel to which they are registered.

If the vessel is destroyed, any lien against it is extinguished, as is the lien against its equipment and intangibles such as a fishing permit. The insurance proceeds payable for a lost vessel are not subject to a maritime lien in place of the vessel.

Enforcement of Maritime Liens
A maritime lien can be enforced in only one way. Enforcement requires filing a complaint in federal court, naming the vessel itself as a defendant and arresting the vessel pursuant to a warrant of arrest issued by the court. The US Marshal serves the warrant on the vessel’s master, posts the warrant of arrest on the vessel’s mast, and takes the vessel into custody, placing a keeper aboard. The US Marshal requires an advance deposit for the costs associated with arresting and keeping a vessel in custody. The amount of the deposit varies depending on the circumstances. In San Francisco, a deposit of $10,000 is usually required. While under arrest, the vessel cannot work.

After the vessel is arrested, its owner must file a claim of ownership. To secure release of the vessel, the vessel owner posts security in an acceptable form. It can be either a bond, cash, or letter of guarantee in an amount set by the court which is usually the amount of the lien plus interest and costs. If the vessel owner does not file a claim to the vessel, the vessel will be sold to satisfy the liens. The sale of a vessel by the vessel owner in the ordinary course does not extinguish the maritime liens against it. The sale of a vessel by the US Marshal pursuant to court order, extinguishes all liens that are not satisfied from the sale proceeds.

Maritime liens, whether incurred by US flag vessels or foreign flag vessels in the United States, may be enforced in US federal courts. However, maritime liens incurred in other countries are not necessarily enforceable in the United States. Before enforcing a lien incurred in a foreign country, a US court will determine whether a lien would exist in the foreign country for the goods and services provided. If a lien is not permitted in the foreign country, it will not be permitted in the United States.

In Vestoil, Ltd. v M/V M Pioneer, 2005 AMC 2404 (11th Cir. 2005), a Cyprus corporation with its principal place of business in Greece, provided fuel in Singapore to a vessel owned by a Maltese company. The Cyprus company arrested the vessel in Florida because the Maltese company did not pay for the fuel. The action was dismissed because Greek law does not recognize a maritime lien for provision of necessaries to a vessel. However, in Trans-Tec Asia v. M/V Harmony, 518 F.3d. 1120 (9th Cir. 2008), the Ninth Circuit recognized a maritime lien for bunkers supplied by a foreign company to a foreign vessel in South Korea because the bunker supply contract expressly provided for the application of United States law with respect to the existence of a maritime lien.

Priority of Maritime Liens
Many different parties can have a maritime lien against the same vessel. If that vessel is sold and, as is often the case, for less than the amount of all the liens, the court must determine how to distribute the sale proceeds among the lienholders.

Maritime law has rules for prioritizing maritime liens by type as well as by time incurred. Although not treated as a lien, the expenses incurred by the US Marshal for arresting and keeping the vessel get top priority. Thereafter, in descending order of priority are: 1) liens for seamen’s wages and maintenance and cure; 2) salvage and general average liens; 3) tort liens including personal injury and death, and property damage from collision; 4) pre-mortgage liens for necessaries; 5) preferred ship mortgage liens; 6) liens for necessaries; 7) state-created liens of a maritime nature; 8) liens for penalties and forfeitures under federal law; 9) preferred non-maritime liens including tax liens; 10) attachment liens and 11) maritime liens in bankruptcy. Unlike common law liens such as liens on real estate, a more recent maritime lien has priority over an earlier maritime lien. The theory behind the “last in time, first in right” rule is that a later provider of goods or services keeps the vessel in service for the benefit of earlier-in-time lienholders.

Persons who supply goods and services to vessels in the United States should be aware of their right to enforce a maritime lien against the vessel supplied. It is an important aspect of maritime law not to be overlooked.

Marilyn can be reached at

Tuesday, July 6, 2010

USCG/ASME Workshop on Marine Technology and Standards

The American Society of Mechanical Engineers (ASME), in coordination with the United States Coast Guard (USCG), is sponsoring a two-day public workshop on marine technology and standards on July 29 and 30, 2010, in Washington DC.

The USCG/ASME Workshop on Marine Technology and Standards scheduled for July 29 and 30, 2010, in Washington DC, is billed as an opportunity for classification societies, industry groups, standards development organizations, government organizations, and other interested members of the public to come together for a professional exchange of information on topics ranging from the impacts of technology on the marine industry, corresponding coverage in related codes and standards, and government regulations.

Topics for the 2010 workshop include application of marine technologies to promote green ships, such as safe and economical use of hydrogen (H2) fuel cells to power ships with zero carbon dioxide (CO2) emissions and compressed natural gas (CNG) powered ships with reduced CO2 emissions. The workshop is an opportunity for the public to provide expertise on technical matters affecting the marine industry and to improve future policymaking, standards development, and rulemaking, including discussion of possible regulatory changes to facilitate green ship technology.

For more information, and to register for the workshop, please
visit The deadline for advance registration is Friday, July 16, 2010. The advanced registration fee for this event is USD$300.

Little Movement in SoCal ILWU Clerical Strike Talks

Contract negotiations over the three-day July 4 weekend between maritime clerical workers and their shipping industry employers failed to end a five-day-old strike at the Southern California ports of Long Beach and Los Angeles.

Officials of the 900-members-strong Office Clerical Unit (OCU) of the International Longshore and Warehouse union said that virtually no progress was made during talks that ran through Monday. A new round of talks is scheduled for Tuesday afternoon.

The OCU union local, an entity unique to Southern California, is part of the area’s larger ILWU dockworker union. However, the unit directly negotiates its contract with 14 Los Angeles and Long Beach-area maritime employers and not with the Pacific Maritime Association, which represents the interests of West Coast maritime companies in negotiations with the parent ILWU union. The OCU represents mainly “white collar” office and clerical workers in the “off-port” offices of maritime firms. Local 63 represents more than 900 workers employed at 17 shipping companies and marine cargo terminal operators at the ports of Long Beach and Los Angeles. The current contract talks, however, only covers members at 14 area firms.

The OCU offered a final contract proposal to employers just hours before their current contract expired July 1. According to officials with the Harbor Employers Association, which represents employers at the bargaining table, the OCU offer represented a total wage and benefit cost increase of 32 percent over the three-year life of the proposed contract.

An arbitrator has ruled that the OCU did not negotiate in good faith prior to the contract expiration on July 1 and that ILWU dockworkers could not honor the OCU picket lines. The dockworkers continue to report to work at both ports. OCU members are currently picketing at only two of the Southern California port terminals.

Polaris Signs Lease for SoCal Aggregate Terminal

Financial terms of the lease were not released, however in 2008, a subsidiary of Polaris purchased a separate 12.4 acre site within the Port of Long Beach for just more than $15 million to use for importing sand and gravel.

The 8.3-acre D-44 facility is located on one of the port's deepwater channels and is currently permitted to receive and distribute up to 3 million tons of construction aggregates per year. Polaris has said it plans to use Panamax vessels to deliver sand and gravel to the Long Beach site from Polaris's Orca Quarry situated on Vancouver Island, British Columbia. Polaris also exports aggregate material from its Orca Quarry to port facilities in San Francisco, Vancouver and Hawaii.

Permitting and development of the D-44 terminal are expected to take about two years with first deliveries from the Orca Quarry expected to arrive by the end of 2012.

"We are delighted to have secured access to this permitted marine aggregate terminal within the Port of Long Beach. The terminal will serve the highly populated Los Angeles market area which has always been a key target in our strategic plans. Berth D-44 will require much lower capital investment for development than the [12.4-acre] Pier B site and offers lower operating costs. As a consequence, we commenced the marketing of the Pier B site during the second quarter of 2010 and are encouraged by the significant interest received to date," said Polaris President and CEO Herb Wilson.

The two Long Beach Polaris sites sit within the Port of Long Beach boundaries but are not controlled by the municipally governed port authority. The sites are two of only a handful of privately-owned plots within the jurisdiction of the City of Long Beach's Harbor Department. Like all commercial ports in California, the Long Beach port is owned by the state and operated by the city under trust.

US House Passes $50M for Guam Port Upgrades

The United States House of Representatives has approved $50 million in federal funding to kick off a major upgrade program for the commercial port on the island of Guam.

The funding was contained within an amended H.R. 4899, the $45 billion 2010 Supplemental Appropriations Act, and now moves to the U.S. Senate for a final vote. If approved by the Senate, the bill would head to the White House for the President's signature.

An original version of the bill passed the House in late March and the Senate later passed the same version before sending it back to the House for amendments.

"The $50 million in infrastructure funding for the Port of Guam reaffirms this Congress' commitment to ensuring that Guam is prepared for the realignment of forces in our region," said Guam House Delegate Madeleine Bordallo in a statement. "This funding is critical to beginning necessary improvement and modernization projects at the Port of Guam."

The Port Authority of Guam has cited the federal funding as critical to kick-starting a $200 million plan to upgrade the island's commercial port infrastructure deemed necessary to meet anticipated increases in cargo from a planned relocation of U.S. military operations from the Japanese island of Okinawa to Guam. The military buildup, set to begin later this year, will see more than 8,000 Marines, and more than 9,000 military dependents, shifted from Okinawa to Guam by 2014.

The island's port authority and government had failed in several previous attempts to secure initial funding for the port upgrades.

The PAG also plans to use the $50 million in federal funding to secure an additional $50 million loan for port upgrades from the U.S. Department of Agriculture.