Friday, November 12, 2010

California Exports Up for 11th Straight Month

Despite California's high unemployment, rising foreclosures and a massive projected state budget deficit for next year, the Golden State's exporters in September reported the eleventh straight month of year-over-year trade growth, according to a Beacon Economics analysis of international trade data released Wednesday by the U.S. Commerce Department.

Exporters shipped $12.32 billion in goods to foreign markets during September, a sizable 19 percent increase over the $10.352 billion sent abroad in September 2009.
“To be sure, September 2009 did not set a very high bar for comparison purposes, but the year-to-year increase was still remarkably robust,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.

California exporters also outpaced the nation as a whole in merchandise export growth in September, 19.0 percent to 17.9 percent.

In inflation-adjusted terms, said the Beacon analysis, California’s export trade in September almost exactly matched the value of its merchandise exports in September 2008, when international trade began to plummet as the global economic meltdown took hold.

In addition, California exporters reported manufactured goods sent abroad climbed 19 percent in September compared to the year-ago period, while exports of agriculture and non-manufactured goods climbed 10.7 percent compared to September 2009. Re-exports – goods sent out of the state that were previously imported – jumped 24.3 percent in September compared to the same period last year.

California accounted for 11.4 percent of the nation's total merchandise exports for September.

“All indications are that the sustained growth in September’s exports was led by airborne shipments of high-value items such as electronics components, medical and scientific instruments, and pharmaceuticals,” said Beacon's O’Connell. "Most Californians don't appreciate that, in terms of dollar value, about half of this state's export trade moves by air."

Exports moving through the state's airports in September climbed 26.5 percent from September 2009, while by comparison, the value of exports moving through the state's ports in September rose a more modest 13.7 percent.

Despite almost a solid year of export growth, O'Connell warned that the outlook for the winter is mixed.

“While the Federal Reserve Bank’s efforts at quantitative easing should push the dollar’s value down to the benefit of California exporters, the current level of acrimony among the G-20 nations is shocking,” he said. “As the G-20 leaders huddle in Korea this week, there appears little room for a consensus to emerge over how the global economy’s chief players will address some extremely vexing economic and trade policy issues.”

Oakland Port Commissioner Receives $100K Award For Green Activism

Environmental activist Margaret Gordon, who is also a Port of Oakland commissioner, has been awarded a $100,000 prize from a Bay Area non-profit for her work in fighting industrial pollution in the Oakland area.

The 63-year-old Gordon, who along with others helped spearhead the call for tougher regulations on port-servicing trucks before being appointed to the port commission in 2007, was selected by San Francisco-based Civic Ventures for the group's Purpose Prize from more than 1,400 other nominees. She was one of five nominees to be awarded the top $100,000 Purpose Prize.

The prize honors work done by people over 60 who have made a significant social impact on their communities.

An asthma sufferer, Gordon first got involved in activism when she helped organize a campaign against a local industrial plant. She helped pressure the Bay Area Air Quality District to enforce emission standards on the firm, which preceded the plant's eventual closure.

Gordon rose to prominence as the co-founder of the West Oakland Environmental Indicators Project in 2005. The group developed local routes for port servicing trucks that avoided residential neighborhoods surrounding the port. The group's efforts also led to air filtration systems being installed in local senior housing.

In 2007, Mayor Ron Dellums appointed Gordon to the Port of Oakland governing board.
Work by her group and others also helped focus a spotlight on the issue of curtailing port-generated truck emissions through port regulation, a move that was already underway in the Southern California ports. Community pressure from Gordon and others led to the adoption of various regulations under the port's Maritime Comprehensive Truck Management Program to quickly address truck emissions. The clean truck component of the program included a drayage truck ban that went into effect Jan. 1, 2010. The ban required all port-servicing trucks after the implementation date to meet California Air Resources Board emission requirements if they wished to keep servicing the port facilities.

SoCal Ports See Trio of Safety and Law Enforcement Incidents

Safety and law enforcement officials have been busy at the Southern California ports of Long Beach and Los Angeles, with three incidents requiring action occurring in the space of three days.

On Sunday night, a vessel refueling at the Port of Long Beach spilled between 500 and 3,000 gallons of bunker fuel into the port's back channel, according to the US Coast Guard. While the bulk carrier Da Tang 18 and the fueling barge were boomed, fuel did reach outside the boomed area. Federal and state officials placed a temporary fishing ban on the area, which was eventually lifted by Tuesday. The cause of the spill is under investigation.

A second incident took place Monday morning at the neighboring Port of Los Angeles when the arriving vessel Maersk Sophia reported three containers located below decks were leaking chemicals. Officials found that the containers were leaking hydrogen and cyanamid, both potential airborne threats to human health. Clean up of the three containers was completed by Monday afternoon and port officials said there were no injuries or delays to other vessels.

The third incident took place Tuesday when US Customs and Border Protection officers were called to the Los Angeles port to take six Chinese stowaways aboard an arriving Japanese auto carrier into custody. The stowaways were discovered aboard the vessel on Sunday and held aboard ship until the vessel arrived at the port. A search of the vessel by CBP officers turned up no other stowaways. A CBP spokesman said it was unclear if the six stowaways would be returned to China.

Vancouver USA Port Slashes Funding for Economic Development Group by 25%

The governing board for the Washington-state Port of Vancouver voted Tuesday to cut 25 percent of its annual financial support for the Columbia River Economic Development Council, citing disappointment with the non-profit's ability to create local jobs.

The port move comes after a similar shellacking of CREDC's efforts by the Clark County Board of Commissioners. The county board recently criticized the non-profit, which is funded by private and public monies, for a lack of communication with area partners and failing to support local companies.

CREDC describes its mission as promoting "job creation and investment while maintaining the county's exceptional environment and high quality of life." Clark County currently faces an unemployment rate over 12 percent.

Port commission President Jerry Oliver told The Columbian that a year ago CREDC had promised 12 leads to businesses that could benefit the port by expanding or relocating. Oliver said that not one lead that met the criteria materialized.

The port board split 2-1 in its vote to reduce funding to CREDC, however in casting his dissenting vote, Oliver stated that he actually wanted more drastic cuts to port funding for the group. The vote will see the port's contribution to CREDC fall from $40,000 in 2011 to $30,000. Oliver wanted the port's contribution cut to $10,000.

Following the vote, the commissioners signaled that further cuts could be expected if CREDC does not address the port's concerns by June.

Tuesday, November 9, 2010

Plan Advances to Bring Famed Battleship to Los Angeles

Efforts to bring the famed World War II battleship USS Iowa continued to gain steam last week.

Port of Los Angeles Harbor Commissioners heard additional details of the plan to make the warship a floating museum at the port and the results of an economic study on the viability of the ship as an attraction.

The economic feasibility study was conducted by outside consultant AECOM. Staff from the firm presented the port commission with its findings on Nov. 4.

The study compared six existing battleship attractions nationwide and noted an average yearly attendance of about 200,000 visitors at each. These five-year averages ranged from an average annual high of 393,000 visitors to the USS Missouri docked at Pearl Harbor to an annual average low of 98,000 visitors to the USS Massachusetts located at Fall River, Mass.

The AECOM analysis estimated that attendance to the USS Iowa at the Port of Los Angeles would range between a low of 137,000 visitors a year to a high of 236,000 visitors a year, with a median of roughly 190,000 visitors a year from 2014 on. The analysis estimated that Southern California residents would make up roughly two-thirds of all visitors and the remaining third would be outside visitors.

However, the AECOM analysis estimated that even with these attendance numbers, the USS Iowa as an attraction would run a projected deficit of about $2.7 million a year. AECOM staff said this deficit would have to be addressed by other outside revenue such as fund raising, government support or philanthropic donations.

AECOM staff pointed out that the USS Iowa, as an attraction at the port, would have an earned income of just under 50 percent of its annual budget – a figure AECOM staff called "in line with other cultural attractions."

The current plan calls for docking the battleship at Berth 87 near the port's main cruise terminal.

The Los Angeles City Council in September backed a plan by the non-profit Pacific Battleship Center to bring the World War II battleship USS Iowa to the Port of Los Angeles.

The battleship, which remains in the Navy inventory in "on hold" status as part of a government program that donates vessels to museum groups, saw service in World War II, Korea, and served again as part of the US Navy's "big stick" policy from 1984 to 1989. It is the last remaining battleship in the world that has not been permanently placed as a floating museum.

The US Navy, which determined earlier this year that another proposal by a group seeking to locate the warship in the Bay Area fell short, reopened bids for hopefuls wishing to acquire the USS Iowa.

In August, Los Angeles port officials began a study of the proposal and cost benefit analysis of the proposal seeking to bring the vessel to the port.

Approval of a 10-year lease from the Los Angeles port is needed before PBC can submit an application to the Navy to receive the USS Iowa. The Navy deadline for applications is November 24.

The port commission is expected to vote on approving the plan before the Nov. 24 US Navy deadline.

Seattle Port Approves Jobs Assistance for Threatened Truckers

The governing board for the Port of Seattle last week approved a contract with a jobs assistance organization aimed at finding employment and providing training for truckers who may lose their jobs due to the port's impending clean truck regulations.

The three-year $2.3 million contract calls for the non-profit Port Jobs organization to provide job training, placement programs, pre-apprenticeship training and educational programs to "truck drivers who might be unable to re-enter the market as truck drivers after the new port clean air standard becomes effective on January 1, 2011," according to the board agenda item.

The approved item also provides $1.4 million for an optional two-year extension, bringing the total approved contract to just over $4 million.

Port Jobs has provided similar assistance for Seattle-Tacoma International Airport workers and other seaport-related workers since 1993.

Under the terms of the initial three-year contract the port will provide Port Jobs with $1.9 million in direct contract payments and an additional $400,000 of in-kind support in the form of office space, standard office equipment including computers, fax and copier, telephones and Internet and Port network access, office cleaning, full office space maintenance service, employee parking and printing services similar to the access available to Port staff.

Court Slow-Tracks ATA Appeal in SoCal Port Trucking Case

Justice may be swift, but not as swift as some would like in California.

The United States Ninth Circuit Court of Appeals last week denied a request by the parties involved in litigation over the Port of Los Angeles clean truck program to fast track the latest appearance of the lawsuit before the appellate court.

The American Trucking Associations, with the agreement of the port, asked the Ninth Circuit court on Nov. 2 to expedite the group's appeal of a lower court ruling in favor of the port.

In a one-page denial, the Ninth Circuit pointed to the case's lack in presenting "irreparable harm or possibility of mootness."

The appeal will now take a regular track in the appellate court, a schedule that may not see the case heard for at least two months. This is the third time the case has come before the appellate court. The previous two appearances were during the preliminary injunction phase of the case.

In the meantime, at least one portion of the port's truck program, a mandate requiring port-serving trucking firms to hire only per-hour employees instead of per-load independent owner-operators, remains enjoined by the lower court.

The federal judge who in September shot down the ATA suit against the port, reinstated an injunction against the most contentious portion of the truck program until the appeals court can hear the case.

The ATA, which originally sued the port over non-environmental portions of the truck program in 2008, asked District Court Judge Snyder on Sept. 24 to reinstate the injunction that had been in place during the trial while the group appealed to the Ninth Circuit. The injunction, originally issued by Judge Snyder in 2009, blocked certain portion of the truck plan, including the employee-only mandate, from being implemented by the port.

The employee-only mandate and several other components of an access license plan contained in the Los Angeles port's truck program were cleared for full implementation when Judge Snyder ruled in favor of the port on Sept. 16. As part of the ruling, she also dissolved the original injunction.

However, Judge Snyder subsequently agreed with an ATA motion to reinstate the injunction while the ruling is under appeal. In her reinstatement ruling she said that while confident of her earlier ruling in favor of the truck program, she recognized that "the interpretation and the application of the market participant doctrine in this case presents substantial and novel legal questions."

She also determined that the trucking industry was likely to suffer "irreparable harm" if the employee-only mandate was allowed to be implemented by the port and was later overturned.

The original ATA suit centers around a Los Angeles port truck program that took effect in October 2008 requiring port-servicing drayage firms to sign so-called concession agreements to gain access to port terminals. Firms without such an access license are barred from entering port facilities. The truck plan was originally conceived by the port (at the time including the Port of Long Beach) as a means to bar older polluting trucks and force port-servicing trucking firms to use newer and cleaner burning vehicles, thereby cutting port-generated diesel emissions.

However, Los Angeles port officials included non-environmental criteria in the concession agreements, such as financial, maintenance, insurance, safety, parking and labor criteria. The ATA contends these local port rules are preempted by federal interstate commerce law.

The Port of Long Beach, which was also a defendant in the original lawsuit, reached a court-approved settlement with the ATA in 2009 that allowed the Long Beach port to implement all of the environmental aspects of the truck plan, as well as most of the non-environmental aspects. The Long Beach version of the truck plan never called for an employee-only mandate.

Voters Elect Incumbent and Two New Commissioners to Hueneme Port Board

Voters in the Oxnard Harbor District, just northwest of Los Angeles County, have elected three commissioners to the Port of Hueneme governing board including one veteran incumbent and two first time candidates.

Eight candidates were vying for three seats on the five-member commission, which sets policy and oversees operations for the niche port. Hueneme, unlike other California ports with commissions appointed by local government entities, is an independent political subdivision of the state with commissioners elected directly by district voters.

Jess Herrera, a 16-year veteran of the Hueneme commission, was the top vote getter on Nov. 2, winning re-election with 23 percent of the vote.

Commission newcomers Jason Hodges and Mary Anne Rooney also won seats by pulling the second and third most votes at 14.4 percent and 13.9 percent, respectively.
Hodges, who calls himself a "pro-jobs environmentalist," is a Ventura County firefighter.

Rooney, the first woman to serve on the commission, directs the Global Entrepreneur Training in Trade program offered by the Economic Development Collaborative of Ventura County.

Two commission seats on the ballot opened up after commissioners Ray Fosse and Mike Plisky decided not to seek re-election. The third seat on the ballot was Herrera's.
Hueneme commissioners serve four-year terms, earning $600 a month and health benefits for two commission meetings a month plus committee meetings.

The Port of Hueneme is the only deep-water commercial port between the Southern California ports and the Bay Area in Northern California. Hueneme is one of the nation's top automobile-importing port and the nation's leading banana-importing port.

Marine Insurance 101

By Marilyn Raia

Anyone who has a television knows how easy it is to buy the right car insurance. You can find a perky woman in a white apron named Flo or have a chat with a Cockney-speaking reptile. Finding the right marine insurance is not so easy. Marine insurance may be the oldest type of insurance, perhaps dating back to the twelfth century in Northern Italy. It is steeped in tradition not found in other lines of insurance. This article presents an overview of the three most common types of marine insurance.

Doctrine of Uberrimae Fidei
Unlike other types of insurance, marine insurance is subject to the longstanding doctrine of uberrimae fidei or the doctrine of utmost good faith. Under the doctrine, a person applying for marine insurance is obligated to disclose all information that may be material to the risk, whether or not the insurer asked for it.

Material information is information relevant to the insurer’s decision to underwrite the risk. The information solicited in the application is presumptively material. Under federal maritime law, the failure to disclosure material information or the misrepresentation of material facts, whether intentional or not, allows a marine insurer to rescind the policy. State law is not consistent on the effect of a misrepresentation or non-disclosure of information. Under California statutory law for example, an insurer may rescind a marine insurance policy if the insured has intentionally failed to disclose or has misrepresented facts, whether or not material to the risk.

Depending on the marine operation, several different types of marine insurance may be required. The three most common types of marine insurance are hull, cargo, and protection and indemnity (P&I). There is no such thing as a standard marine insurance policy and not all marine insurance companies insure against the same risks in the same type of policy. Marine insurers may use their own forms or may incorporate forms issued by industry groups such as the American Institute of Marine Underwriters.

Hull Insurance
Hull insurance generally covers physical loss of or damage to a vessel. There are various types of hull policies depending on the type of vessel being insured. Different policies exist for yachts (private pleasure craft), fishing vessels, tugs and barges, large commercial vessels such as containerships, and passenger carrying vessels. The coverage may apply for a specified period of time or a single voyage.

Coverage under a hull policy is either on an “all-risk” or “named perils” basis. An “all-risk” policy covers all risks of physical loss or damage to a vessel from an external cause unless otherwise excluded. Common exclusions include wear and tear, marine borers, ice, and improper/inadequate maintenance. A “named” perils policy covers physical loss of or damage to a vessel but only from the perils named in the policy. The traditional named perils include heavy weather, fire, piracy and similar sea perils. Additional perils are covered under the “Inchmaree” clause, named after a late nineteenth century British case in which the need for coverage for non sea-related perils was recognized. The Inchmaree clause provides coverage for, among other things, loss or damage due to the negligence of crew, charterers, and repairers, latent defects, and accidents in loading, handling, and discharging cargo.

Hull policies often contain navigational limits resulting in no coverage if the vessel is navigated outside of those limits. Some hull policies confine coverage to those times when the insured vessel is in port, otherwise known as “port risk”. Hull policies may also limit coverage to a certain time of the year and require the insured vessel to be “laid up” during the rest of the year.

Hull policies typically provide coverage for the cost to salvage the insured vessel and the expenses incurred to prevent further damage after a casualty, known as “sue and labor” expenses. A hull policy also covers the liability of a vessel owner arising from a collision between the insured vessel and another vessel.

Hull policies are “valued” policies in which the insurer and the vessel owner agree what the insured vessel is worth. The vessel’s value is stated in the policy and that value forms the limit of what the insurer will pay in the event the vessel becomes a total loss.

Cargo Insurance
Cargo insurance covers physical loss of or damage to goods while in transit. Generally cargo insurance applies from the time the insured goods leave the warehouse at the point of origin until they arrive at the destination warehouse and during different modes of transportation including vessels, trucks, and railroads. Like hull policies, cargo policies insure goods on two bases, “all-risk” and “named perils” and are as varied in their terms as the commodities they insure. Cargo policies may contain special conditions for specified commodities such as refrigerated cargo, automobiles, and used goods.

Cargo policies can be issued to cover a single shipment of goods or as an “open policy” that covers multiple shipments made by the insured over a period of time. If goods are sold on a CIF (cost, insurance & freight) basis, a certificate of insurance may be issued under the open cargo policy and endorsed to the buyer as part of the transaction. Open cargo policies may also be issued to freight forwarders who are allowed to provide insurance for their customers’ goods. Under those circumstances, the freight forwarder issues an insurance certificate on its own cargo insurer’s form, to its customer.

Cargo is typically insured for its invoice value, freight if paid, and other paid charges plus 10 percent. This valuation is thought to approximate the amount needed to place the cargo owner in the same position he would be in had the cargo arrived at destination in sound condition. Cargo policies also cover “sue and labor” expenses or the cost to minimize or avoid further damage to the cargo such as the cost to recondition or re-package the goods.

Like hull policies, cargo policies may have geographic restrictions. That is, they may not cover goods being shipped from or to certain countries. Commonly excluded countries are Libya, Iraq, Iran, Afghanistan, and Cuba. Or, cargo policies may cover goods shipped to or from certain countries such as Russia, Mexico or Brazil on restricted terms.

Protection and Indemnity Insurance
P&I insurance covers the liability of a vessel owner arising out of his ownership of the insured vessel. It covers the vessel owner’s liability for injury to or death of persons aboard the insured vessel such as crewmembers, passengers, or stevedores. It also covers liability for injuries or death suffered by persons on shore caused by the negligence of the vessel’s crew.

In addition to liability for bodily injury or death, P & I insurance covers the vessel owner’s liability for damage caused by the insured vessel to fixed structures such as bridges and docks. It also covers liability for damage to other vessels except when caused by a collision with the insured vessel, which liability is covered under the hull policy. In the case of a cargo-carrying vessel, P&I insurance covers liability for cargo loss or damage.

P&I insurance covers the expenses incurred for the removal of the wreck of the insured vessel when compulsory by law and under federal statutory law, a wreck must be removed even if its owner was not at fault in causing the wreck. Further, if the vessel owner is sued, the expenses incurred to defend the suit are covered.

Some P&I policies cover the liability of the vessel owner for pollution but many exclude such coverage. Vessel owners can buy separate pollution liability insurance to protect themselves if the P & I policy excludes such coverage.

P&I coverage is often part of the marine insurance policy issued for a vessel. However, some vessel owners may choose to become members of a P&I Club. A P&I Club is a mutual funded by its members to provide P&I coverage for each other. The P&I Clubs have rules dictating the scope of coverage provided to the members instead of a policy.

Because many marine businesses are multi-faceted, marine insurers commonly offer package policies that combine coverages for a variety of risks. A Marina Operator’s Package policy is an example of such a policy and usually covers the insured’s vessels, docks, and shoreside structures as well as the insured’s liability to others arising out the business’s operations. It may also cover loss of business income and pollution risks.

Persons engaged in marine-related businesses should make sure they have appropriate and adequate insurance for those businesses. Several different types of marine insurance may be needed. A marine business should always work with an experienced marine insurance broker to assess its needs and obtain the necessary coverages.

Marilyn Raia is of counsel in the San Francisco office of Bullivant Houser Bailey. She specializes in maritime and transportation matters and can be reached at