Friday, June 10, 2011

Columbia & Willamette River Vortex

By David Dent

Good Friday this year wasn’t really very good for the M/V Suzaki Wing. She reportedly lost power while steaming downstream, fully laden with logs, and managed to collide not only with the paper mill dock at Wauna, Oregon, but also with a Tidewater barge that happened to be alongside at the time. A regular trifecta of marine disasters.

Historically, vessels that suffer engine and/or steering mishaps while transiting the Columbia and Willamette Rivers will unerringly be drawn to targets of high value, or onto hard spots that result in the maximum damage to the vessel. To quote a friend, “They go for the shiny spots”.

In the early 80’s the M/V Ming Winter lost power while heading downstream above Rainier, Oregon, and while there were miles and miles of farmland and undeveloped river frontage on either side, she torpedoed the cooling water intake for the then-active Trojan Nuclear Plant.

Not long afterward, a regular caller, the tanker Mobiloil, lost steering while inbound with a full load of mixed petroleum products. Again, in spite of being in an area on the Columbia River that was mostly undeveloped and soft, she managed to hit the one good hard spot, Warrior Rock, at the downstream end of Sauvie Island. The result was thousands of tons of oil in the river, and the Mobiloil being declared a constructive total loss. Now we know why there is a lighthouse there.

In September 1999, the Turkish bulk carrier M/V Cenk Kaptanoglu, inbound with steel products, lost steering approaching the Kalama, Washington area and managed to miss all of the empty shoreline, but did manage to “t-bone” the relatively new North Kalama Cargo Dock. Another ship’s bridge with wide-eyed occupants, and one more disaster enhanced by some apparent targeting vortex that seems to vex our area.

Also in 1999, fully-loaded grain barge 61 veered off to port while inbound on the Willamette River, and, bypassing a lot of empty shoreline, she managed to crash through the downstream catwalk at the grain elevator at Terminal 5. This was a missed golden opportunity because the barge just barely scraped the stern of a ship at the berth.

Those of us who benefit from these disasters, including salvage companies, surveyors, ship repair yards, marine construction companies and the like, can only wonder at the bounty right here in our own backyard. Ship’s masters, pilots and ship owners probably have a different attitude. But, history makes it abundantly clear that one only has to wait awhile before the next contact is made. I wonder how the Port of Longview is coming along with their new grain terminal?

David Dent is a marine surveyor in Portland, Oregon.

California Exporters Buck Economic Trends

Bucking the recent slowing trends in the global economic recovery, California exporters posted an impressive 14.1 percent increase in April over the year-ago period with shipments totaling $12.9 billion, according to an analysis, by Beacon Economics, of foreign trade data released Thursday by the United States Commerce Department.

The April numbers are the most recent released by the Commerce Department.
California's manufactured exports rose by 10.7 percent in April, while non-manufactured exports such as raw materials and agricultural products were up by 21.3 percent over April 2010. Re-exports, those goods brought into the U.S. and then shipped out again such as through a Foreign Trade Zone, posted a 22.4 increase compared to April of last year.

“On an inflation-adjusted basis, California’s export trade in April nearly equaled the pre-recession high for that month achieved back in 2007,” Beacon Economics’ International Trade Adviser Jock O’Connell said.

O'Connell noted that April marked the 18th consecutive month of strong year-over-year gains in California’s merchandise export trade.

The gains, Beacon Economics' Founding Partner Christopher Thornberg said, could have implications for the broader economy.

"Exports are likely to play an important role in the economic boost we expect to see in the second half of this year," Thornberg said.

Imports, while still showing growth in April, did not grow at the strong pace of exports with the value of foreign goods entering the U.S. through California’s seaports, airports and border crossings increasing by just 9.9 percent compared to April 2010.

Beacon Economics predicts that California’s job-generating export trade will continue to expand, albeit at a somewhat more moderate pace through the remainder of the year.

“The economic growth rates of several of our principal trading partners have been decelerating, in some cases like China and India from speeds that were plainly unsustainable over the long-term.” O’Connell said. “That’s apt to shrink but certainly not stifle their appetite for imported goods.”

However, O'Connell added that California exporters should continue to enjoy the competitive benefits of a dollar that has been trading at some of the lowest levels in decades.

Ninth Circuit to Hear SoCal Truck Plan Appeal

The US Ninth Circuit Court of Appeals is set to hear oral arguments Friday in the nearly three-year-long case pitting the trucking industry against portions of the Port of Los Angeles' so-called Clean Trucks Program.

Both the American Trucking Association, representing more than 37,000 trucking firms nationwide, and the port will appear to present oral arguments and answer questions from a three-member appellate panel. Because much of the material on both sides has been submitted or covered in other stages of the litigation, the appeals hearing is not expected to last more than a few hours. No rules state how long the panel has to reach its final ruling, though a final determination is likely at any time within a few months following the hearing.

The case, regardless of who prevails, is expected to wind up before the US Supreme Court and set a precedent that could impact ports throughout the nation.

The ATA, which represents more than 37,000 trucking firms nationwide, first filed suit in federal District Court against the port in July 2008 arguing that some of the non-environmental portions of the port's Clean Truck Program, including a mandate that truckers must be employees of trucking firms and not independent owner operators, violate the Supremacy Clause of the US Constitution and federal laws governing interstate commerce.

District Court Judge Christina Snyder, after a nearly two year court battle, ultimately ruled in favor of the port on Sept. 15, 2010, finding that while the portions of the port truck program under argument did violate federal law, the port was exempt from the federal regulations.

Judge Snyder's ruled that the port, through its truck program, was operating as a participant in the local port drayage market and not simply as a regulatory agency. This role as a market participant, Judge Snyder said, exempted the port from the cited federal regulations.

In its appeal to the Ninth Circuit, the ATA reiterated its original arguments to the lower court that the port is not a market participant and the trade group asked the appellate panel to overturn Judge Snyder's ruling.

The port's January 31 response filing with the appeals court argued that due to pressure from environmental and community groups, the port was unable to move forward with infrastructure development without addressing the issue of truck pollution. The truck plan, according to the filing, was a necessary action to protect and further the port's business interests. Because the port was acting to the furtherance of its commercial interests, the port was acting as a commercial enterprise, and thus a market participant – not a regulatory agency.

The ATA's February 15 rebuttal response to the port filing argued that the port has built their case on two fallacious notions: first, that an overarching “market participant” doctrine overshadows both the federal preemption statute and interstate commerce laws; and, second, that the port was acting like a business when it attempted to regulate which drayage firms can and can not service the port.

The ATA maintains that District Judge Snyder erroneously relied on the market participation concept and that because the port does not contract any drayage service nor even own any trucks, the port is not a participant in the drayage industry and therefore not exempt from federal regulation.

The ATA filing also argues that simply by implementing the truck plan – which is regulatory in nature – the port is acting as a regulatory entity, invalidating its claim as a market participant as Judge Snyder ruled.

The litigation has drawn national attention as a potential precedent-setting case that could either reinforce federal supremacy over interstate trucking or set the stage for other ports to define their own local trucking regulations. Numerous ports across the nation are either in the process of implementing or developing trucking programs similar to the Los Angeles program.

The environmental portions of the trucking plan, which began in October 2008, have been tremendously successful. The port has spent more than $70 million to incentivize or purchase clean trucks and the neighboring Port of Long Beach – which is not involved in the litigation – has spent just over $33 million. The majority of the 10,000 clean trucks now servicing the two ports have been financed by a more than $650 million out-of-pocket investment by the trucking industry since 2008.

The two ports estimate that more than 90 percent of the Southern California drayage fleet trucks are now 2007 or newer model year vehicles. Air pollution generated by drayage trucks, according to the ports, has been slashed by more than 80 percent since the truck program started.

Stressful Week for LA Port Regarding Trucks

It has been a stressful week for the Port of Los Angeles when it comes to trucks.
On Friday, port attorneys plan to argue the case for portions of their clean truck program before the Ninth Circuit Court of Appeals in what is likely a final step before heading to the United States Supreme Court.

Earlier in the week, the Los Angeles Business Journal disclosed that the port's $5 million investment as part of the truck plan in new all-electric drayage trucks has come to naught.

And, the port released a report that found six of the 60 trucking firms that received truck program incentive funds owed the port more than $1.5 million in refunds due to low participation of their trucks.

In the Ninth Circuit case, the port will face off Friday against the American Trucking Associations over portions of the clean truck program that started in October 2008.

The ATA sued the port shortly before the clean truck program started and after nearly three years of legal wrangling, the appellate court will decide the case after hearing oral arguments from both sides Friday.

A lower court has already ruled that portions of the port plan, most notably a mandate that trucking firms servicing the port must hire drivers as per-hour employees and not as per-load independent owner operators, violate federal interstate commerce laws. However, the lower court judge ruled the port is excluded from the regulations because it is a market participant in port drayage, despite not owning, contracting or having any involvement in drayage other than setting truck program regulations.

Insiders all agree that no matter who wins in the Ninth Circuit, the case is headed for a showdown before the US Supreme Court.

Electric Trucks
On Monday, the Los Angeles Business Journal reported that a $5 million investment in all-electric drayage trucks had resulted in all but one of the 15 high-tech trucks sitting unused only two years after being purchased.

The problem: when under load in a real world situation, the batteries in the trucks only offered half the range they were supposed to. 

“They don’t work. While the driver is working, they run out of juice and the truck has to be towed back. It just ruined our daily operations,” California Cartage CEO Robert Curry told the LABJ. Cal Cartage was one of the firms the port allowed to use the electric trucks for free. The trucking firm was so dissatisfied they gave the trucks back to the port early.

Efforts are now being made to retrofit a half dozen of the trucks with hydrogen fuel cells and two other trucks are set to be retrofit with stronger batteries. The remaining trucks are likely to wind up at distribution centers, the LABJ reported, where they can carry lighter loads.

Incentive Refunds
In addition to the $12.5 million investment in new technologies like the electric trucks, Los Angeles port officials in the first year of the truck program also paid out $44 million in incentive checks to trucking firms willing to switch to clean trucks. Part of the deal to obtain the $20,000 per truck incentives was that the trucks had to turn a certain number of runs each year at the port – initially set at 300 per year, but then scaled back to 150 trips by the port last year.

An analysis of truck data released by the port this week found that six of the 60 truck firms that received incentive funds had trucks that didn’t meet the 150 trips a year minimum, and now the port is asking for the incentive money paid on those trucks to be refunded to the port.

Swift Transportation, the largest recipient of the incentive funds, owes just under $1.5 million according to the port. The remaining five companies owe between $80,000 and $14,000 each.

An initial port analysis presented in May 2010 when the port was considering lowering the trips per year threshold found that about 400 of the 2,200 trucks that qualified for the incentive funds never made a single trip. The analysis found that roughly seventy percent of the 2,200 trucks, around 1,600, would meet the lower 150 trips per year threshold for the year ending June 30, 2010.

Oakland Port Slips Into Negative Growth In May

The Port of Oakland, California's third busiest container port, saw total containers moved slip into negative territory in May, marking the first time this year the port has ended a month in the negative column. Despite the almost imperceptible drop of 0.1 percent over May 2010, the port remains in solid positive growth territory for the year to date.

Port officials reported handling a total of 194,039 TEUs in May, off 0.1 percent over last May.

On the import side, the port handled a total of 68,700 loaded inbound TEUs in May, a 2.4 percent increase over the year-ago period.

On the export side of the ledger, the port handled 62,973 loaded outbound TEUs, a 4.3 percent increase over May of last year.

The major downturn for the port, in fact the only negative column in May, was outbound empty containers, which dropped 33.8 percent over last May.

The slip into negative territory is not surprising when the month-over-month trend for the calendar year is considered. Although the total number of boxes moved in May was the second highest amount of any month this year, the port's monthly growth trend has been slowly dropping since the start of the year. In January, the port boasted a 15.8 percent increase over the year-ago period, only to follow with a 12.9 percent increase in February, a 5.9 percent increase in March, and a 2.8 percent increase in April.

For the calendar year, however, the port remains on positive ground, with a total of 314,709 TEUs handled, a 6.9 percent increase over the January to May period last year.

Tuesday, June 7, 2011

The Wages of Fear

On the only sunny day in Seattle last month, the 10th Annual Pacific Maritime Magazine Quick and Dirty Boatbuilding (QDB) competition attracted a throng of winter-weary Seattleites, cheerfully blinking at the sun and squinting, believing that spring had finally arrived.

Along the cruise pier overlooking the Bell Harbor Marina, ten teams of boatbuilders sawed and bent and stitched and hammered and glued, hoping to build the boat that would capture the coveted Marty Johnson Memorial Fastest Boat trophy, the equally coveted Pacific Maritime Magazine Dirtiest Boat trophy or the ever elusive Best Student Team trophy.

Student teams included Highline and Chief Sealth High Schools, the Bellevue College Engineering Club and Seattle Maritime Academy.

The commercial teams competing this year included a group of US Coast Guardsmen from Sector Seattle, teams from Art Anderson Associates Naval Architects, Pacific Aluminum, Vigor Shipyards (Formerly Todd Pacific Shipyards), a single builder from naval architecture firm Guido Perla and Associates and another single builder, Bill Forslund, Sales Manager of Fishermen’s News and FOGHORN Magazine and experienced kayaker. Forslund is experienced in two senses of the term. He has years of experience on the water in vessels as large as a container ship and as small as a one-man kayak. Forslund is also experienced in QDB, as he had competed in two previous races – his first with the editor of Pacific Maritime Magazine, which ended predictably with his team coming in last, and last year, rid of his former teammate and with a sleek PVC kayak that “could have won.” Forslund and his naval architect, Walt Forslund, redesigned the vessel for 2011 and Bill was confident that this was his year.

In the suspenseful 1953 film The Wages of Fear, a group of men is hired in a poor South American village to drive several rickety trucks loaded with nitroglycerin over a treacherous mountain route. A similar white-knuckle experience was to be had dockside, as teams embarked in their vessels. Some stayed bone dry, some took on water – not much, but enough to be a concern to the occupants, and one boat simply didn’t have the freeboard to remain afloat. The valiant Seattle Maritime Academy team swamped their boat at the dock, climbed out of the frigid marina and tried again, swamping the boat a second time, and earning cheers from the crowd.

While SMA didn’t win a trophy, their can-do attitude was inspiring.

After the first heat, Bill Forslund’s new PVC kayak, QDB Torpedo of Truth, seemed to be the boat to beat, but a rogue wave in the second heat capsized the vessel.

While bobbing in the water after his capsize, Forslund was visibly conflicted – torn between sabotaging the other racers or swimming to a beer proffered by well-wishers on shore. True to form, Forslund swam to shore.

The winner of the race was Courtney Bradbury, of naval architecture firm Guido Perla & Associates. Mr. Bradbury had been browbeaten into entering the race by Mr. Forslund during the Philips Publishing Group Bering Sea Fisheries Conference. We suspect Mr. Forslund regrets that decision, but we congratulate him on a race well run.

NOL Nails Down Loans for 14 New Vessels

Ocean carrier Neptune Orient Lines Ltd. has finalized $1.1 billion in loan agreements with financial institutions to cover the purchase of 14 on-order container vessels.

The Singapore-based parent of APL said in a statement Thursday to the Singapore Exchange that the recently secured financing covers the purchase of a dozen 8,400-TEU vessels which were ordered in December, as well as two 10,700-TEU vessels the carrier ordered in 2007.

The vessels are scheduled to be delivered in 2013 and 2014 for service with APL.
The most recent orders reflect the publicly-stated efforts of NOL, the seventh-largest shipping line in the world, to take advantage of vessel construction prices that have dropped significantly since the global economic meltdown that began in 2008.

Details of the loan terms, and the financial institutions involved, were not released.

California Bill Seeking to Ban Independent Truck Operators Shelved

A California Legislature bill seeking to make all drayage drivers in the state employees of the trucking firms they work for and which would effectively ban independent owner operators from working in the state's ports has been shelved--mostly likely for the rest of the year.

Assembly Bill 950, introduced by Speaker of the Assembly John Perez (D-Los Angeles) in February, would dictate that "for purposes of state employment law (including workers' compensation, occupational safety and health, and retaliation or discrimination) a drayage truck operator is an employee of the entity or person who arranges for or engages the services of the operator."

The bill, if passed, could affect the majority of the more than 15,000 drayage drivers in the state who currently work as independent owner operators.

Labeled the Truck Driver Employment and Public Safety Act, AB950 cleared the California State Assembly’s Labor and Employment Committee in early May, but was ordered to the Assembly inactive file on June 2 at the request of Assembly member Charles Calderon (D-City of Industry).

The move indicates that the bill is unlikely to be taken up during the current legislative session and is not likely to be revisited until at least early next year.

The decision to move the bill to the inactive rolls comes after discussions between the California Trucking Association and Perez.

The discussions allowed the CTA to express the industry belief that the bill, if passed, would be economically punitive to the state's transportation industry. The CTA also put forward a plan to have representatives of the trucking industry meet in the coming months with Perez to further discuss the alleged misclassification issues in the drayage industry.

CTA executive director of external affairs Michael Shaw pointed out that in addition to criteria at the federal level used to determine worker classification, most notably through the Internal Revenue Service, a slew of California agencies have varied criteria for determining worker classification--many of which do not correlate to each other. A proper test for determining classification, Shaw said, is one of the things that needs to be discussed with Perez.

Shaw was also able to point out to Perez that shortly before leaving his role as state Attorney General last year, Governor Jerry Brown conducted an investigation of alleged misclassification by trucking firms in the ports of Long beach and Los Angeles. The investigation found only five violators, most very small operations, among the several hundred trucking firms servicing the two ports.

The bill by Perez, a union organizer and cousin of Los Angeles Mayor Antonio Villaraigosa, mirrors an ongoing tactic being pushed by the International Brotherhood of Teamsters that attacks independent owner operators’ status as a "misclassification." Under current law, per-load independent owner operators cannot be unionized, only per-hour employees.

Teamsters president James Hoffa has repeatedly stated that a primary organizing goal of the Teamsters is to unionize the nation's drayage drivers. Hoffa worked closely with Villaraigosa to develop "employee-only" language in the Port of Los Angeles Clean Truck Program – language that remains in litigation.

More than 30 labor, environmental, and “social justice” groups, including the Teamsters, have signed onto the bill as supporters.

"The indisputable reality is that port drivers misclassified as "independent contractors" do exactly the same work as the much smaller group of port drivers who some trucking companies have hired as 'employees,'" the California Teamsters Public Affairs Council wrote in its statement to the bill.

Two-dozen industry groups, representing the vast majority of the intermodal industry in the state and including several groups representing drayage drivers such as the CTA, have tendered their opposition to the bill.

"Rather than address potential misclassification, this bill reaches too far in eliminating a class of drivers and small businesses that represent the dominant model for the drayage industry," the California Trucking Association said in its opposition statement to the bill.

Oakland Port Receives $18M in Maintenance Dredging Funds

The Port of Oakland’s self-titled 50-Foot Harbor Deepening Project, aimed at maintaining the depth of the port's waterways to accommodate the largest classes of container vessels, is set to receive $18 million in operations and maintenance from the US Army Corps of Engineers’ fiscal year 2011 work plan.

The funding for the project, which the port considers vital to maintain its competitiveness, will come from the federal Harbor Maintenance Fund. The fund is financed through a federal tax on imported containers.

The current port waterway depths of 50 feet were accomplished through a decade-long $433 million project that was completed in 2009. The new funds will be used to counter the natural silting of the port waterways and maintain the 50-foot depths.

Work on maintaining the 50-foot depths at the port will begin later this year.

"We greatly appreciate that Congresswoman Barbara Lee and the entire Bay Area Congressional Delegation stepped up and helped the Port achieve this critical funding to keep the Oakland harbor navigable and safe for the efficient flow of commerce,” Oakland Board of Port Commissioners President James Head said.

In a statement, port officials also pointed out that dredging offers environmental benefits via habitat and wetland restoration. As an example, port officials cited the Hamilton Wetland Restoration Project, which received dredged material from the Oakland harbor deepening project. The restoration project, according to the port, has helped with flood damage reduction and ecosystem restoration.

Port officials also said that deeper waterways allow for larger vessels.

"Larger ships carry more containers providing an important reduction in fuel use and air emissions per transported container," a port statement said.

Vancouver USA Port Sells Port Parcel to Steel Manufacturer

The Washington state Port of Vancouver announced Monday that it has completed the sale of 20 acres of surplus port land to Farwest Steel Corporation for construction of a steel fabrication plant.

The closing price for the parcel was just under $5.1 million.

Under the terms of an agreement with the port signed back in June 2010, Farwest agreed to close on the property by February 6 of this year. The agreement allowed for an additional 98-day window to complete the $5 million transaction, albeit at a added cost of $500 per day in non-refundable penalties. The added fees, however, will be applied to the sale price of the property. In February, the Eugene-Ore.-based Farwest asked port officials for more time to finalize the purchase of the property, which the port granted.

The sale of surplus port property to Farwest ran counter to the normal port policy which typical sees the port lease port parcels, but port commissioners have said that the economy outweighed such concerns. Farwest has said that the proposed plant would initially employ 100 workers with the potential to employ as many as 228 workers with an average salary of just over $40,000, plus benefits.

“This is a good day for the port and our community,” Port of Vancouver Commission President Brian Wolfe said. “Selling property is not something the port does often or without careful consideration, but we are confident that the sale to Farwest is the right thing to do and will result in good-paying jobs for Clark County residents both in the short-term and in the long-term.”

Farwest operates several facilities in Oregon, Washington, California, Idaho and Utah and plans to consolidate some of their distribution, processing and fabrication operations in Vancouver. Approximately 100 jobs at other Farwest locations will be relocated to the Vancouver port.

Farwest has said it plans to spend up to $40 million to develop the plant. Farwest officials said the firm plans to take advantage of the port's rail access and the new facility, when completed, is expected to receive 200 to 300 rail cars a year. The proposed 300,000 square foot facility, which in addition to manufacturing would also include distribution and office space, could be built and operational by early 2012. Construction is slated to begin next month.

Under the terms of the deal, the port can purchase back the 20-acre parcel if Farwest does not begin construction of the plant within 12 months, maintain 100 workers at the facility, keep the property in industrial use, or halts activity on the site.