Riverbend Marine Service Auction

Friday, March 4, 2011

Think Big

Chris Philips, Managing Editor

At press time, we received a media release from Mærsk Line, announcing that the world’s largest shipping company had just signed a contract for ten, 18,000-TEU container ships for delivery between 2013 and 2015, with an option for 20 more.

The ‘Triple-E’ class (Economy-of-scale, Energy-efficient and Environmentally-improved) vessels are designed to surpass current industry records for fuel efficiency and CO2 emissions per container moved – a record currently held by the Emma Mærsk-class vessels.

The new vessels, to measure 400 meters (1,300 feet) by 59 meters (193 feet) will operate in the Asia to Europe trade. The economy of scale delivered by the new ships will produce a projected 50 percent fewer CO2 emissions per container moved than the industry average.

Although the ships will be capable of 25 knots at full speed, the hull and propulsion systems are designed to profit from slow steaming, rendering fuel consumption benefits of 20 percent at 22.5 knots, 37 percent at 20 knots and 50 percent at 17.5 knots.

In 1973, Mærsk Line christened its first purpose-built container ship, the 1,800-TEU Svendborg Mærsk. The company now operates more than 550 vessels and has a capacity of 2.1 million TEUs.

In other news, the Associated Press (AP) has revealed the shocking news that, “Executives for a company seeking to build a major port to ship US coal to Asia had internal discussions as recently as December on a project that could handle 80 million tons of the fuel annually – about 15 times the volume disclosed publicly.”

Late last year, this space reported on the efforts of a well-funded coalition of radical environmentalists, led by enviro-attorney group Earthjustice, to impede the permitting and development of a coal terminal in Washington’s Cowlitz County.

In December, the group objected to the terminal on the grounds that, “…it would export pollution from US coal to Asia, where environmental laws generally are more lax.”

In the latest installment, AP reports that executives for the company seeking to export the coal ”…discussed equipment needed for a port capable of handling far more coal than the roughly 5 million tons a year mentioned in their initial application for the project.”

AP bases its story on emails obtained by the aforementioned radical group. The executive reached by AP points out that, while the company conducted extensive design and engineering work on a larger port, it has since shelved those plans, at least temporarily.

Earthjustice hopes to stop the development, according to the AP story, because, “…meeting the rising demand for coal in China, India and other developing nations could exacerbate climate change, because of the large volumes of carbon dioxide released when the fuel is burned.” In other words, Earthjustice is willing to interfere with the economic prosperity of China, India and other developing nations based on the shaky premise that burning coal is causing climate change. In clear opposition to free trade, the State of Washington has intervened on the side of the radical environmentalists.

A successful business must plan ahead and anticipate success. This sometimes involves investigating expansion options. For example, Mærsk Line, based in Denmark, is cutting steel for a series of ships that will be ten times larger than the one they christened in 1973. Surely the company anticipated success when it launched the 1,800-TEU Svendborg Mærsk, and it’s safe to assume the company had plans for larger ships when they built the first one. Fortunately for Mærsk, they’re not based in Washington State.

OOCL to Raise General Rates and Fuel Charges on Asia/US Cargo

Hong Kong-based ocean carrier Orient Overseas Container Line will impose a general rate increase for all dry shipments from the United States to Hong Kong, Macau and South China (including Guangdong, Guangxi, Guizhou, Hainan & Yunnan Province) effective April 1.

A general rate increase of $240 per TEU and $300 per FEU will be imposed on all dry commodities including Exempt Commodities, but excluding agriculture products, wastepaper, clay, cotton, hides and skins, plastic scrap and resin.

A general rate increase of $80 per TEU and $100 per FEU will be imposed for shipment of clay and cotton, while a general rate increase of $200 will be imposed across the board on shipment of hides and skins.

In addition, a general rate increase of between $120 and $150 will be imposed for shipment of plastic scrap and resin (for US West Coast and US East Coast cargo), and a rate increase of between $240 to $300 for shipment of plastic scrap and resin (for IPI/RIPI/MLB cargo).

FEU general rate increases on dry shipments are per container increases and include 40-foot, 40-foot HQ and 45-foot containers.

In other OOCL rate news, the carrier has announced modified bunker charges and inland fuel surcharges for all dry and reefer shipments from Asia to the U.S.

Effective April 1, the modified bunker charges are: $374 per TEU, $468 per FEU, $527 per 40-foot HQ, and $562 per 45-foot container headed to the U.S. West Coast containers; and, $703 per TEU, $879 per FEU, $989 per 40-foot HQ, and $1,112 per 45-foot container for all other U.S. ports other than the West Coast.

THe modified inland fuel surcharges will be $85 per container for cargo destined to California, Oregon, Washington Local SDD; Group 4; Charleston/New York/Norfolk/Savannah local SDD cargo (including NY/ NJ Commercial Zone Points) via East Coast.
The fuel surcharge for surcharge will be $295 per container for MLB, IPI cargo (via West Coast) and $148 per container for RIPI cargo (excluding Charleston/New York/Norfolk/Savannah local SDD cargo; and, NY/ NJ Commercial Zone Points).

Crows Landing Developer to Seek Additional Time

The developer behind the Central Valley’s Crows Landing development has revealed sizable changes to the scope of the project just days before he is set to request a 15-month extension on the project from county officials.

Projected train traffic will be cut be more than 60 percent and the total size of the development has been shaved by more than 40 percent project developer Gerry Kamalos told the editors of the Sacramento Bee this week.

As the head of PCCP West Park LLC, Kamalos has been fighting for more than three years to get the Crows Landing project to the construction phase.

PCCP’s original plan sought to remake the Crows Landing Naval Air Station into a 4,800-acre modern rail and industrial complex. A major component of the project was $52 million short-haul rail plan seeking to upgrade existing trackage along an 80-mile-long route running from Crows Landing to the Port of Oakland and back.

The rail component remains part of the project's first phase of construction and would likely take several years to complete. The original rail plan forecast for the completed complex to handle several 50-car trains or more per day via the proposed route between the Oakland port and the project site in Northern San Joaquin Valley.

Once the containers reach the Crows Landing complex, the plan envisioned the containers being loaded onto trucks for distribution throughout the Central Valley.

According to PCCP, Central Valley agricultural products and other regional products could be returned via the same rail line to the port for export.

Parts of the project have received heavy criticism from the local residents who worry about potential noise, congestion and pollution due to the complex's operations.

Kamalos addressed some of those concerns with the announcement of the scaled back version of the total plan.

The revised plan to be presented by Kamalos to Stanislaus County Supervisors on Tuesday calls for two trains a day instead of six and a reduction of the total project size from 4,800 acres to 2,800 acres.

Kamalos also told the paper that an 850-acre solar power facility is planned on some of the 2,000 acres not now included in the plan.

In addition, Kamalos said he will present letters of recommendation from the Port of Oakland and Union Pacific Railroad, two groups which have had blunt words in the past about the efficacy of the project. Kamalos also said that an additional $7.5 million, $4 million from PCCP West Park and $3.5 million from outside investor Spinnaker Energy Group, has been acquired.

Kamalos said he needs the 15-month extension to complete environmental documents needed before construction can begin.

Seattle Port CEO Gets 9% Raise

The governing board for the Port of Seattle, the nation's sixth busiest container port, has approved a three-and-a-half year contract with port CEO Tay Yoshitani including a 9 percent pay raise that pushes him to more than double the salary of the state's governor.

The port commission voted 3-2 to approve Yoshitani's new contract, which in addition to a base salary of $366,825 also includes provisions for performance bonuses and a rider agreeing to pay Yoshitani $100,000 to stay on retainer with the port for a year if he quits.

Commissioners voting for the raise cited the port's strong performance last year, with the port setting a new record for container moves.

“The next few years will be extremely competitive as the expanded Panama Canal opens in 2014, and we believe both the Port and the communities we serve will benefit from his [Yoshitani's] continued leadership,” Commissioner Tom Albro said regarding his vote to approve the raise.

Commissioner John Creighton, who voted "no," said the raise flew in the face of the recently approved salary resolution limiting port staff to a maximum annual increase of 3.5 percent.

Commissioners Rob Holland and Bill Bryant also voted "yes" on the increase along with Albro. Commissioners Gael Tarleton and Creighton were the dissenting votes.

Yoshitani took the reigns at the port in 2007 at a salary of $325,000, including $15,000 in deferred compensation. Other benefits, including $17,000 in annual pension contributions and a $7,500 car allowance, push the total package to $356,009 a year. At the time he was the highest paid port director in the country.

Yoshitani received a raise to $334,300 a year plus additional compensation worth another $30,000. In August 2010, the port board appeared ready to approve a 4 percent raise for Yoshitani, but they pulled the item from consideration at Yoshitani's request.

Yoshitani already makes more than both the Washington state governor and Seattle's mayor – who earn roughly $167,000 a year and $164,000 a year, respectively.

By comparison, the executive directors of the nation's two busiest container ports of Los Angeles and Long Beach, each boasting more than triple the annual container volume of Seattle, each earn nearly identical annual salaries of about $300,000.

The Seattle port authority, which also oversees the operations of Sea-Tac International Airport, is partially funded by taxpayer property taxes.

Tuesday, March 1, 2011

Canadian Grain Exporters Slam CP Railway for Poor Service

The Western Grain Elevator Association on Monday slammed the publicly-owned Canadian Pacific Railway for not providing enough grain rail cars and offering "extremely poor service."

WGEA members handle more than 90 percent of Canada's bulk grain exports, a large percentage of which travels thorough the Canadian West Coast ports of Vancouver and Prince Rupert.

"We expected the upcoming release of the [Canadian federal government's] Rail Service Report to result in improved service by the railways in an attempt to counter the serious performance concerns uncovered by the Review Panel. However, this is not the case." WGEA executive director Wade Sobkowich said.

According to WGEA, since August 1, 2010, only 65 per cent of car orders have been accepted by CPR and the Canadian Class I railroad has only provided 30 per cent of the accepted cars on time. Sobkowich said this performance is the worst in the collective memory of the WGEA.

The WGEA is asking the Canadian Rail Service Review Panel to legislatively "create disciplines" to ensure "adequate service levels are established and sustained" by the railroad.

The legislative amendments sought by the WGEA would set a base expectation for rail service and meaningful penalties to be paid to shippers where those levels of service were not met.

"The only sustainable solution lies in creating a legislated disincentive for poor performance that is significant enough to ensure it doesn't happen in the first place, similar in nature to the various penalties that the railways impose on shippers to manage efficient behavior," Sobkowich said.

"If the railways are genuine in their intent to provide adequate service, then the legislative provisions we are proposing will never be used. They would only come into effect if the railway fails to perform."

CPR told the Winnipeg Free Press that "unusual circumstances," such as an inaccurately small forecast of grain production with a simultaneous spike in the demand for grain, led to the railroad's problems in delivering grain cars last fall and this winter.

Noone Named as NYK Logistics' New COO

The New Jersey-based NYK Logistics (Americas) Inc., a subsidiary of the Japan-based NYK Group, announced Monday that Michael Noone has joined the logistics firm as Chief Operations Officer.

Noone, a 25-year veteran of the logistics and transportation industries, most recently served as Vice President and Managing Director, Eastern Region for Neptune Orient Lines subsidiary APL. Prior to this he served in a number of senior positions in APL's Logistics and Liner businesses.

“I’m personally really excited about the challenges and opportunities ahead...NYK and Yusen are strong brands, so being here to launch Yusen Logistics and show our customers what we are capable of, and how we will differentiate ourselves in the market place is something we are all looking forward to,” Noone said.

Kazuo Ishizuka, President and CEO of NYK Logistics (Americas) Inc. said, "...this comes at the perfect time as we make the transition from NYK Logistics to Yusen Logistics. Michael is a very experienced executive in the transportation industry, and we know Michael will be a great asset to the leadership team.”

Los Angeles Port Now Providing Shore-Side Power to Three Cruise Lines

The Port of Los Angeles is now providing shore-side power to three separate cruise lines using its Alternative Maritime Power mobile power system.

Port officials report that in recent weeks vessels from Disney Cruise Line, Norwegian Cruises and Princess Cruise Line have all hooked up to the AMP system while berthed at the port's World Cruise Center.

Auxiliary engines providing maintenance power while docked generate more than half of all air pollutants emitted by a typical cargo vessel calling at the port. Cruise ships must generate even more maintenance power while docked and thus emission reductions from using the AMP system are even more significant.

Using AMP, just one variation of a shore-side power system, vessels plug into the landside power grid, enabling them to turn off their auxiliary engines.

The port claims to be the first port in the world to provide shore-side power to three cruise lines and the first port where two cruise ships can be connected simultaneously. The port also offers both 6.6 kV and 11 kV electrical power distribution systems – the two most commonly used aboard cruise ships.

According to the port, the typical power demand of the cruise ships calling at the port is anywhere between 8 to 13 megawatts of power – roughly enough to power from 1,000 to 2,000 homes. The port's AMP system can deliver a maximum of 40 megawatts of power, with 20 megawatts of power delivery capacity to each of the two different ships.
The port first installed the AMP system in 2004 and now features three major container terminals with the system. The neighboring Port of Long Beach also features shore-side power at several locations.

Oakland Port Trucking Trade Group Calling for Delay in CARB Rules

A trucking trade group representing short-haul drivers servicing the Port of Oakland claims that state emission regulations set to take effect in 2014 would likely cost the trucking industry a total of at least $300 million.

The West State Alliance, which represents the drayage drivers, is trying to build support to force a delay of the California Air Resources Board rules that require trucks to be retrofitted with nitrogen oxide, or NOx, reduction equipment by January 2014.

The group claims that the impending CARB rules would require the purchase of 2007 or newer model year trucks to replace the roughly 4,400 trucks servicing the ports that are currently 1996-2006 model year vehicles – about 75 percent of the Oakland drayage fleet. With the going rate for a new truck ranging from $65,000 to more than $120,000, this would require a total investment by the area trucking industry of between $290 million and $530 million. CARB has rejected previous requests to postpone the 2014 deadline to a later date.

The WSA has reportedly been in contact with Oakland city and port officials in an effort to drum up support to help push back the CARB deadline.

In addition to the 2014 deadline, Oakland drayage drivers also face two more immediate deadlines: as of January 2012, 2004 model year trucks would require a CARB Phase I retrofit; and, as of January 2013, 2005-2006 model year trucks servicing the port will be required to have the retrofits. Estimates suggest that there are 700 and 1,700 trucks of the two categories, respectively. CARB estimates that the retrofit filters will cost between $10,000 and $31,000 per installation, requiring another $24 million to $75 million near-term investment by the trucking industry.

However, according to WSA, currently no such filters exist or are under development that would make the trucks compliant with the 2014 NOX requirement, thus requiring the purchase of new trucks. WSA pointed to a letter from a filter manufacturer that stated the CARB 2014 NOx requirement is beyond the limits of current technology.