Thursday, July 7, 2011

Fidley Watch: To Protect and Serve

Earlier this year Alaska State Representative Sharon Cissna, after submitting to the full body scan at Seattle’s SeaTac airport, declined a subsequent pat-down by Transportation Safety Administration officials. The lawmaker’s chief of staff says the Alaska legislator, who had been in Seattle for medical treatment, was ordered to submit to a “very intrusive pat-down or leave the airport.”

The legislator chose the latter, eventually making her way home via rented car, small plane and, ultimately, a ferry from Prince Rupert, BC.

In a general statement, a TSA representative said the TSA is “sensitive to the concerns of passengers who were not satisfied with their screening experience and we invite those individuals to provide feedback to TSA.”

We sympathize with Representative Cissna, but an “intrusive pat-down” seems like a walk in the park compared to the way Customs and Border Protection treats cruise passengers at the Port of Los Angeles.

On May 26th, the P&O Cruises Arcadia arrived at Los Angeles from Vancouver, BC on the 10th leg of a “five-star cruise” around America. The £10,000 (US$16,000), two-and-a-half month “Alaska Adventure” tour from the Arctic to the Caribbean had called at nine previous US ports, including San Francisco and Seattle, and the mostly elderly British passengers had already completed Electronic System for Travel Authorization forms, a standard visa waiver program for travel in the United States that’s designed to facilitate multiple-entry trips.

Nevertheless, all 2,000 passengers were made to go through full security checks in a process which took seven hours to complete and included fingerprinting of both hands, retina scans and a detailed check of the passports as well as questioning as to their background.

The US Coast Guard reported no known security threats at the Port of Los Angeles for the period, and confirmed that the MARSEC level remained at 1. Passengers claim that the extra checks were carried out in “revenge” for what had been a minor spat over allegedly overzealous security, and have complained they were “herded like animals” and made to stand for hours in temperatures up to 80F with no food or water or access to lavatories.

Some are said to have passed out in the heat while others were left confused and bewildered.

“A couple of people struggled to control their bladders and someone said they’d suffered a prolapsed disc,” said one passenger, who likened the experience to that of potential inmates arriving at Guantanamo Bay.

When reached for comment, Customs and Border Protection responded with their prepared statement, stating that the problem was caused by several factors.
  • The approximately 2,000 passengers were foreign nationals.
  • Customs and Border Protection (CBP) officers are required to collect biometric data such as fingerprints and photographs for admission into the United States.
  • CBP experienced a “nationwide system slowdown” which greatly increased processing times.
  • The exit of the cruise ship passengers overwhelmed the CBP processing area.
Customs and Border Protection has nonetheless “instituted significant corrective actions and will [be] meeting with cruise line executives to ensure similar processing delays do not occur in the future.”

The Port of Los Angeles is bleeding cruise revenue as travelers shy away from Mexican cruises because of continuing violence in that country. Meanwhile, more than 1,000 illegal immigrants cross the country’s southern border every day, most of those into California.

Next time a group of well-off elderly Britons wants to visit Los Angeles, it might be safer to sneak in from Tijuana.

Chris Philips, Managing Editor

DGX Expanding Guam Facility

Dependable Global Express, Inc., which operates under the DGX banner, has announced that it is expanding its Guam facility to meet the growing demands on the island's logistics facilities due to the transfer of US military forces from Okinawa to Guam.

Set for completion in October, the project will expand the size of the DGX terminal by 65 percent, adding an additional 10,000 square feet of warehouse, office and trucking space.

The project will also see the construction of a freestanding, fully equipped mechanic’s shop at the facility.

According to DGX, the multi-million dollar expansion program will allow the Rancho Dominguez, California-based freight forwarder to provide customers with an even greater range of services for their ocean and air shipments.

The Guam expansion project is being supervised by the Honolulu-based construction management company of Ventures West, Inc. Actual construction is being handled by the Isagani B. Baluyut Construction Company based in Guam's capital city of Agana.

"The Pentagon's decision to transfer 8,000 Marines and their dependents from Okinawa to Guam was the catalyst in our decision to enlarge our facility," DGX' Guam General Manager Paje Butler said.

"This substantial move by Marine Corps personnel will require massive logistics support. With our expansion program geared to meet the growing needs of the military here on Guam, DGX intends to play an important role in this effort," Butler said.

Butler added that anticipated cargo growth will not be confined simply to the military buildup.

"The entire economy of Guam is expected to show a meaningful increase. Civilian companies on the island will be revving up their operations to participate in this increased economic activity. They will require dependable delivery of goods to sustain their growth," Butler said.

One of the focal points of the Guam expansion program, according to DGX, is the freight forwarder's growing trucking operation on the island. Under the expansion project, the existing six truck bays at the DGX Guam facility will be doubled to twelve to take on new business with local trucking.

Enhancing this increased service will be increased service reliability due to the construction of the on-site mechanics shop, Butler said.

"With these additions, DGX can accept a higher volume of freight and offer more storage space for our customers," he said.

Dependable Global Express (DGX) is part of the "offshore" companies of the Dependable Company of Transportation Services, which also includes Dependable Hawaiian Express (DHX) and Dependable AirCargo Express (DAX).

DHX is the largest freight forwarder serving the Hawaiian Islands and also services Guam. DAX is an air freight forwarder serving both domestic and international shippers.

The "onshore" operating group of the Dependable Companies includes Dependable Highway Express (DHE), Dependable Distribution Centers (DDC) and Dependable Logistics Solutions (DLS).

DHX, DGX and DAX are based in Rancho Dominguez, Calif., while DHE, DDC and DLS are headquartered in Los Angeles.

CMA CGM Increases Investment In 'Eco-Containers'

French ocean carrier CMA CGM has boosted its pool of so-called 'eco-containers' to nearly 140,000 with the recent acquisition of another 18,000 new units.

These 'eco-containers' are produced using various techniques that work toward the goal of a minimized ecological footprint during both manufacturing and operations.

For many years, CMA CGM has been studying and implementing numerous innovative solutions to improve the eco-performance of a container.

A major focus of 'eco-container' manufacturing is the replacement of traditional container wood flooring – which has been linked to deforestation in parts of the world – with more sustainable wood products such as bamboo. CMA CGM has been offering containers with bamboo floors to its customers since 2005.

“The CMA CGM Group is still leading the way in the development of 'eco-containers.' We were the first to develop bamboo floors and are constantly on the look out for new technologies,” CMA CGM's Senior Vice-President Container Logistics and Environmental Committee member Alexis Michel said.

“The Group’s primary aim is to reduce the footprint of its activity on the environment while offering customers solutions that are adapted to their needs.”

The flooring efforts, a result of a collaboration between CMA CGM and one of its main customers, meet two objectives: to limit the use of wood from primary forest and to improve the technical qualities of the containers. Today, more than 10 percent of the carrier's box fleet is equipped with bamboo flooring. In addition, CMA CGM is currently evaluating new synthetic resin flooring.

The carrier has also invested in a series of containers made from a high tensile steel with reduced weight. CMA CGM owns 4,500 of these Light Steel containers, which saves more than 1,200 pounds on a high-cube’s tare weight without compromising its structural qualities. These require less fuel to transport and handle, thus cutting overall emissions.

Another investment has been in the high-efficiency reefers. CMA CGM has invested in 3,500 reefer containers fitted with low energy-use motors, which reduce electricity and fuel consumption by 300 percent. The carrier has also equipped 15,000 standard reefers, 20 percent of its entire reefer fleet, with software to optimize energy consumption.

The carrier also recently began testing a new water-based paint for on some 3,000 containers that will cut VOC (volatile organic compound) emissions during production by over 90 percent.

Long Beach City Hall Formally Requests $17M Transfer of Port Funds

The Long Beach City Council voted unanimously on Tuesday to formally request a nearly $17 million transfer of Port of Long Beach port revenue to support the city's Tidelands Fund.

The request, if approved by the port Board of Harbor Commissioners, would bring the total amount City Hall will receive from the port between November, 2010, and the end of fiscal year 2012 to more than $80 million – $41 million in direct port revenue transfers and $40 million in oil revenues generated from port oil wells.

A controversial ballot measure approved by voters in November, 2010 – Measure D – changed the formula for how the city's annual request for port revenue was calculated and also channeled all port oil revenue to City Hall.

These transferred and oil funds are controlled by City Hall but must be spent in the city tidelands areas on specific and well-defined maritime, maritime-related and maritime recreation uses. The transfer funds are maintained in a City Hall-controlled Tidelands Operating Fund (TOF) and the port oil revenues go into the city's Tidelands Oil Revenue Fund (TORF). Both funds, by law, cannot be co-mingled with the city's general revenue funds. A provision in the city charter, however, allows City Hall to move oil monies from the TORF into the TOF.

The Tidelands transfer of port revenue – set at the time as 10 percent of the port's net profits from the previous year – was devised as an emergency measure more than 15 years ago to help the financially strapped city. The city has requested the transfer, which has ranged from the low single-digit millions of dollars to more than $12 million, every year since and the port has never refused.

Under the new formula, the transfer is calculated as 5 percent of the port's gross operating revenue.

Last week, the port's five-member governing board approved an $822 million FY2012 budget. Under the gun to approve a budget by a July 3 deadline and with no formal request from City Hall for the annual transfer, the port board passed the port budget without including a line item to cover a potential Tidelands transfer.

Port officials at the time said they assumed, since no formal request for the transfer had been made, the influx of oil revenues to the TORF, and vis-a-vis the TOF, were sufficient for FY2012.

In a June 20 port board meeting agenda item bringing the FY2012 budget to a final commission vote, port staff said as much: "We have assumed that the city will continue to direct the port's oil revenue to the Tidelands Operating Fund and as a result the Tidelands Operating Fund will not need a Tidelands transfer."

This elicited angry communications from City Hall to the port, with Mayor Bob Foster later telling the local Grunion Gazette newspaper that it was not up to the port to determine if the city needed the transfer funds and that the only reason in the city charter for the port to not make the transfer is if the transfer would represent an economic burden to the port.

On July 7, port Executive Director Richard Steinke told the City Council's Budget Oversight Committee, that, "based on the action taken by the Council, we will be taking this [request for the transfer] to our board and I am sure that they will carefully consider the request by the City Council."

At the same hearing City Council and Budget Oversight Committee members Gary DeLong and Suja Lowenthal were told by city staff that major sources of revenue for the Tidelands Operating Fund "are insufficient to fully support the tidelands operations," and that, "without that transfer we would anticipate about a $12.1 million deficit [in the TOF].

DeLong and Lowenthal also were told that due to fiscal problems within the city, capital investment in the city's tidelands area has been minimal for many years. The city currently estimates that there is more than $300 million in backlogged maintenance and capital improvement projects in the city tidelands area.

Hanjin Raises $150M In Bond Sale

South Korea-based shipping and logistics giant Hanjin Shipping on Wednesday raised $150 million from a sale of five-year convertible bonds, as the firm eyes expanding its fleet of more than 200 vessels and the acquisition of additional terminals worldwide.

Hanjin officials said the firm is moving to position itself as a global logistics leader. The firm has also been expanding its third-party logistics and ship repair yard business as part of its business diversification efforts. Hanjin Shipping currently operates out of four regional headquarters (Paramus, NJ; Seoul, S. Korea; Hamburg, Germany; and, Singapore), 200 overseas branch offices, and 30 local corporations.

The US dollar-denominated bonds carry a coupon and yield of 4 percent.

The conversion price was set at $27.85, which represents a 20 percent premium over the stock’s closing price of $23.21 on July 6. The conversion premium was marketed in a range between 20 percent and 25 percent.

The transaction was launched with a base issue size of $150 million and an upsize option of $50 million, which can be exercised within the first 30 trading days.

The five-year offering will mature in 2016, but investors have the option to put the bonds back to the issuer on the third year. There is an issuer call after three years subject to 130 percent trigger. J.P. Morgan was the sole book-runner of the deal.

Hanjin announced in June that the firm planned to place an $845.9 million order for five new 13,000 TEU vessels, that will most likely end up in the Asia-Europe trade.

Tuesday, July 5, 2011

SoCal Ports Close Class 7 Truck Loophole

New drayage regulations aimed at countering scofflaws skirting clean truck rules in the two Southern California ports of Long Beach and Los Angeles took effect July 1, effectively banning about 500 older Class 7 trucks from servicing the two ports.

In January, the five-member Long Beach port commission approved closing a loophole in the port's clean truck program – a set of several regulatory bans which by the end of this year will all but eliminate pre-2007 model year trucks from servicing the port – that was being exploited by a growing number of drivers using Class 7 trucks. The original clean truck program only set model year regulations on Class 8 trucks – mainly because there were only a handful of the smaller Class 7 rigs in the port at the time and these smaller trucks cannot legally handle the weight of a fully loaded container.

However, the number of old Class 7 trucks calling at the port – some estimated to cost less than $5,000 each compared to a new compliant $120,000 Class 8 rig – exploded in the latter part of 2010. Estimates in early 2011 suggested that as many as 550 Class 7 trucks, representing 2 to 3 percent of all truck moves at both ports, were working in the Long Beach and neighboring Los Angeles ports' collective drayage fleet.

“Although the Class 7 rigs did not represent a big percentage of the drayage truck fleet there was still a matter of fairness to the trucking industry partners who got on board early and invested millions to buy cleaner, less polluting trucks,” Long Beach Port Executive Director Richard Steinke said.

Officials from the Port of Los Angeles, who approved similar restrictions on Class 7 trucks in late December, 2010, estimated that the average age of a Class 7 truck recently brought into port service is about 12 years old, or roughly the average age of a Class 8 truck in the port fleet prior to the implementation of the two ports' individual clean truck programs in October 2008.

The two ports' new regulations close the loophole by applying the truck program model year restrictions to Class 7 trucks as well. Owners of Class 7 rigs had until July 1, 2011 to either upgrade their engines to meet 2007 model year standards or purchase new compliant vehicles.

In January, some trucking firms testified to the port board that while the firms wanted to remain compliant with the truck program rules, they were forced to begin using some of the smaller trucks simply to compete with those that had first brought in the Class 7 rigs.

Record Scrap Metal Exports Recorded at Port of Redwood City

Port of Redwood City Executive Director Mike Giari announced last week that cargo tonnage for the fiscal year 2010-2011 at the Port of Redwood City was 871,940 metric tons, up 3.5 percent over the prior year, due to record exports of scrap metal.

Sims Metals exported nearly 445,000 metric tons from July 1, 2010, through June 30, 2011, mostly to the Far East. Giari credited Sims’ record to strong demand abroad for scrap metal, the company’s expanded staging area at the Port, and the fact that scrap now arrives by both truck and rail. This broadens the area from which the company can receive scrap metal from many sources, including old vehicles.

Sims Metal ahs been operating at the Port of Redwood City for 35 years, and the company’s recycling facility is one of the largest exporters of recycled materials in the Bay Area. Over the past four years the company has invested $14 million in its Redwood City operation by improving “downstream” recovery of non-ferrous metals, adding concrete paving, and installing advanced storm water controls, and modern processing equipment. The new equipment allows the Port facility to increase efficiency and capture additional metals that were not possible just a few years ago – particularly in the area of separation of non-ferrous metals such as copper and aluminum.

The Sims facility employs 60 workers who shred, shear, screen, sort, bale and ship metallic materials of all kinds, to serve as raw material for the production of steel and other recycled materials. State-of-the-art equipment shreds and separates hundreds of tons of steel per day.

“The Redwood City facility isn’t your grandfather’s recycling facility or just some junk yard,” says Steve Shinn, west regional president for Sims. “This is an advanced facility with multi-million dollar technology. Gone are the days of just crushing cars into blocks and shipping them to steel mills. Today, Sims is utilizing magnets, eddy currents, and optical sorting to reduce the need for landfilling as much as we can.”

The Port in Fiscal Year 2011 that ended June 30 also imported 49,628 metric tons of bauxite, a 19 percent increase; 31,755 tons of domestic sand, up 2 percent; 160,378 tons of building material aggregates, down 7 percent; and 185,566 tons of imported sand, down 7 percent. Thirty-six vessels called on the Port during the FY 2011.

-PMM Staff

Crowley Expands with Acquisition of Puerto Rico Freight Systems

Crowley Maritime Corporation has announced the acquisition of the business and assets of Puerto Rico Freight Systems (PRFS), a Guaynabo, Puerto Rico-based logistics company specializing in freight consolidation and less than container load (LCL) transportation throughout the Caribbean.

The PRFS business will become a part of Crowley Caribbean Logistics LLC, a wholly owned subsidiary of Crowley, and will continue to operate from its existing headquarters under the leadership of Ayesha Diaz, director of Crowley's Caribbean logistics group, who reports to Carlos Rice, Crowley's vice president of logistics operations. Michael Padilla, owner of PRFS, will remain in a consulting role.

"Adding the business and assets of Puerto Rico Freight Systems to the Crowley family strengthens our position as a total shipping and logistics provider on the island and in the Caribbean," says Tom Crowley Jr., chairman, president and CEO of Crowley. "The acquisition will allow us to offer customers more complete solutions targeted to their needs."

PRFS, which has 46 employees, including office personnel and warehouse workers, coordinates shipments from Europe, Central and South America, Asia and the United States to Puerto Rico, and more than 19 destinations throughout the Caribbean Basin. The company provides pick-up service throughout Puerto Rico for LCL and full container load (FCL) shipments and one-carrier responsibility for all Caribbean destinations.

Other PRFS services include risk insurance, documentation, bills of lading to the Caribbean from international origins, hazardous material (HAZMAT) handling and shipping, US Customs bonded cartman's licensing, container freight station services, and more. The company also operates a protected US Customs bonded container station warehouse comprised of 51,000 square feet in the San Juan Free Trade Zone, which gives the company the versatility of a domestic freight station within the security of a free trade zone. The facility is specially designed to handle oversized cargo and employees use a triple-check system to ensure shipment accuracy. All of these services will be continued under the Crowley Caribbean Logistics name.

"This strategic acquisition [of Puerto Rico Freight Systems] helps to solidify Crowley as a market leader in the region, a benefit that will translate into better solutions for customers," said Steve Collar, senior vice president and general manager of Crowley's logistics group.

The PRFS acquisition is the latest in a series by Crowley designed to provide customers with more transportation and logistics options.

In September 2010, Crowley acquired Islandwide Air and Ocean to offer customers ocean and air transportation, trucking, transportation management and warehouse services in Puerto Rico. With the addition of Islandwide, Crowley is able to offer less-than-container-load (LCL) freight transportation from the US mainland to Puerto Rico from the company's Miami and Jacksonville warehouses, as well as from a new consolidation center in the Northeast. In January of this year, Crowley acquired Jarvis Freight International, Inc., a Houston-based freight forwarding, export packing and logistics company primarily serving the energy, oilfield and mining industries. The addition expanded Crowley's logistics services to new industries and geographic areas.

-PMM Staff