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Thursday, August 11, 2011

City Auditor Slams Long Beach Port Dive Team

City of Long Beach Auditor Laura Doud on Tuesday issued a review slamming the Port of Long Beach dive team for "unjustified overtime" as well as rebuking port management for a lack of "effective oversight."

The review of the dive team, and the conclusion that the port security management has been lax in its oversight, comes at an auspicious time for city officials. For many months, City Hall has been discussing plans to absorb the port's security division, and the millions of dollars in federal and state security grants that flow to it, into the city police department.

The port dive team, a subset of the port's security division, is one of the nation's few port authority-run dive teams dedicated to underwater security in a major commercial port. The team, which has grown from two to ten members since being formed in 2007, is charged with conducting underwater inspections of port facilities, assisting in locating and removing navigational hazards, anti-terrorism work and coordination with other law-enforcement agencies.

The dive team is fully funded by the port, which does not use city or taxpayer money. The port, managed by the city's semi-autonomous Harbor Department, generates revenues mainly from the lease of port facilities and wharf/dock fees.

Doud, the city's chief accountant, said that the review was initially focused on the port's security division as a whole due to "a high level of overtime." However, when Doud's office found that the majority of the security division overtime was attributable to the division's landside patrol operations, "we focused our review on the Harbor Dive Team operations due to the identification of significant control issues surrounding the oversight of Dive Team personnel."

Despite the findings of the review, and the characterization of "unjustified overtime" by Doud, no wrong doing beyond inaccurate documentation was alleged in the review and no dive team member has been asked to reimburse any overtime pay.

For the review, Doud's office studied eight weeks of individual dive team member pay records from various weekly periods in March, April, September, October and November, 2010, as well as cumulative annual team wage and overtime expenses for 2007 through 2010. The review does not indicate why the specific eight weeks in 2010 were selected for analysis, if the eight weeks selected were representative of other weeks in the year, or list details of other dive team pay periods.

The review found that in 2010 the port paid out $104,591 in overtime to the dive team out of total wages for the team of $525,367, or 19.9 percent of the team's total wages for the year.

By comparison, the city police department overtime costs in 2010 represented 7.7 percent of the department's total wages and the city fire department's overtime costs in 2010 represented 20.9 percent of total wages paid.

The 19-page dive team review, which includes a seven-page response from port officials, further states that port security division supervisors were unable to account for how the ten port security officers on the dive team "spent a majority of their time--including overtime--due to inadequate documentation and oversight."

Doud identifies these supervisors as the port Director of Security (who retired in early May), the Chief Port Security Officer, and the Dive Team Supervisor.

Also leading to "substantially higher overtime pay," said the audit, were flawed scheduling techniques, particularly where dive team members were soley dedicated to dive work and removed from regular landside patrol service for which the dive team members were appropriately trained.

In addition, the audit said that port security division supervisors failed to create or implement "a formal training plan to account for" the dive team members' time spent in training and that security supervisors failed to "ensure that divers received the appropriate type of training."

In the port response, port executive director Richard Steinke said that due to the review, the port security division "has already commenced a process improvement program for the Dive Team in the areas of overtime, training, and procedures."

This program, according to Steinke, includes revision of the security division timekeeping and overtime approval process, requiring dive team members to submit daily activity logs to supervisors, reviews of dive team scheduling methods, and the increased use of dive team members for landside port patrol duties.

Steinke added that the port will deliver an updated version of this process improvement program to Doud's office within six months.

This is the second review conducted by Doud's office of port operations since last year. In July, 2010, Doud conducted a review of the port's processes regarding an annual transfer of port funds to the city. The review led to a city council-sponsored ballot initiative that voters approved in November, 2010. Known as Measure D, the initiative changed the city charter to give City Hall greater access to port funds.

The Measure D changes will result in more than $100 million in port funds being shifted to City Hall control by the end of fiscal year 2012.

Construction Starts on Second Pasha Con/Ro Vessel

Honolulu-based Pasha Hawaii announced Wednesday that construction had begun on the carrier's newest vessel, the MV Marjorie C.

Set to be delivered in the fall of 2013, the Majorie C will be Pasha Hawaii's second vessel. Once delivered, the Marjorie C, according to the carrier, will sail opposite Pasha Hawaii’s Pure Car Truck Carrier MV Jean Anne and enable Pasha to provide weekly service from the West Coast to Hawaii.

The Marjorie C, the second vessel built by VT Halter Marine for Pasha Hawaii based on a design by the Uljanik Shipyard in Croatia will be a combination container and roll-on/roll-off Car Truck Carrier (Con/Ro). The 692-foot-long vessel will be able to carry 1,500 TEUs above and under deck, as well as vehicles and over high and wide cargo on 10 workable decks. The vessel will have a vehicle shipping capacity of 2,750 units.

“We are very eager to take delivery of the Marjorie C, and cutting her steel ahead of schedule marks the first milestone in our construction journey,” Pasha Hawaii President and CEO George Pasha, IV said.

“The Marjorie C’s unique Con/Ro design represents a ‘first’ for the Jones Act trade, and I am very pleased to report that our design process is complete and we are now underway with construction.”

The ship’s base price, according to Pasha Hawaii, is $144 million. The carrier also has an option agreement for the construction of a third vessel with a base price of $137 million.

Log Exporter Set to Move 100-Millionth Board-Foot of Timber Through Tacoma Port

The United States subsidiary of New Zealand-based log exporter TPT predicts it will ship its 100-millionth board-foot of timber through the Port of Tacoma sometime this week.

The TPC Longview, carrying more than 35,000 Washington-state logs, is scheduled to depart for China Friday from the port’s West Hylebos Log Facility with the milestone 100-millionth board-foot log on board.

According to TPT US Limited, 100 million board-feet (one board foot equals one foot wide by one foot long by one inch thick) would stretch about three-quarters of the way around the globe.

TPT US Limited began shipping logs through Tacoma's West Hylebos facility in June 2010. Washington-harvested logs are sorted and debarked at the facility, before being loaded aboard ships for transport to Pacific Rim countries.

Despite many predictions in past years of the demise of the Washington-state log export business, a 2010 tariff imposed by Russia on wood exports saw major log importers like China look again at US West Coast suppliers. Additional demand for wood is being generated by rebuilding efforts in Japan following the earthquake and tsunami earlier this year.

Log exports through Tacoma are up 195 percent in the first seven months of this year, compared to the same period last year.

TPT represents Boston-based Hancock Timber Resource Group, which develops and manages globally diversified timberland portfolios for public and corporate pension plans, high net-worth individuals, and foundations and endowments.

Tuesday, August 9, 2011

Ferries Opinion: Federal Promotion of Ferries is Goal of Legislation

By Ed Welch

Legislation supporting ferry transportation in the United States was introduced in Congress on May 12, 2011. The bill is the United States Ferry Systems Investment Act of 2011 (S. 980 in the Senate, H.R. 1879 in the House).

Sponsors of S. 980 are the Senators from Washington (Patty Murray and Maria Cantwell) and Alaska (Lisa Murkowski and Mark Begich). Congressman Rick Larsen of Washington State is the lead sponsor of the House bill; he is joined by twelve cosponsors.

The US Ferry Systems Investment Act proposes a significant expansion of federal attention to ferry transportation. The legislation features a big increase in funding for the existing Federal Ferry Boat Discretionary Grant Program administered by the Federal Highway Administration. This program provides competitive federal grants for up to 80 percent of the capital expenditures for ferry vessels, terminals and other shoreside infrastructure, and maintenance facilities. To be eligible, a ferry must be publicly owned or publicly operated. Eligibility also exists if the ferry is majority-publicly-owned and is determined to provide substantial public benefits. For the current fiscal year 2011, the existing grant program was authorized at $67 million per year, with $20 million of that sum reserved for systems in the states of Washington, Alaska, and New Jersey.

The legislation contains eleven findings. Among them are:
  • Ferries are a vital part of the nation’s transportation system, carrying more than 100 million passengers annually in at least 38 states;
  • In many metropolitan areas, ferries are an option for significant expansion of transportation capacity;
  • Ferries connect many islands and isolated communities;
  • Ferries offer an emergency evacuation alternative (for example, the September 11, 2001, attacks in New York) and can also provide interim transportation solutions when other transportation infrastructure is disabled (for example, the San Francisco earthquake);
  • Ferries offer a relatively energy-efficient, environmentally friendly, and low-stress mode of travel; and
  • Existing ferry vessels and infrastructure are aging.

Under the proposed legislation, annual funding for the ferry grants program would be expanded to $200 million for each of fiscal years 2012 through 2018. In addition, the bill would change how the funds are to be distributed. The money would be divided into two “pots” of $100 million each.

The first “pot” would be distributed according to a weighted formula, whose factors would be: 50 percent based on total annual number of passengers carried by a ferry system; 25 percent based on total number of vehicles carried by a ferry system; and 25 percent based on total route miles serviced by a ferry system. This last factor is a bit ambiguous; does it mean the length of the route in miles, or does it mean the cumulative number of miles actually traveled by the ferry vessels over the year?

The second “pot” of $100 million will be distributed competitively by the US Secretary of Transportation. This replicates the competitive process by which $47 million of the existing program is to be awarded. In many years, however, a substantial portion of these grants are awarded by means of annual Congressional “earmarks,” a process that favors applicants that are politically well connected. In recent years, the amount of funds directed by “earmarks” has diminished and in the current fiscal year, Congress has eschewed any “earmarks” whatsoever.

Because the Congressional sponsors have concluded that “ferries do not fit neatly into other Federal mode-specific transportation programs,” the bill mandates the establishment of a Ferry Joint Program Office within the US Department of Transportation. Its missions would be to promote ferry transportation within the US and to coordinate federal programs affecting the construction, maintenance, operations, and security of ferry vessels and facilities.

The existing Clean Fuels Grant Program makes grants available for obtaining clean fuel buses for operation in certain areas with air quality problems. The US Ferry Systems Investment Act would amend the law so that these grants could be used for ferries as well.

The federal government has established special institutes at certain US colleges that do research on other modes of transportation. The legislation would direct that a similar National Ferry Institute be created for the purposes of research on ferry transportation, development of training programs for ferry employees, enhance ferry security models, and the preservation of historical information on ferry transportation.

The bill extends, through the year 2018, the requirement that the Bureau of Transportation Statistics maintain the National Ferry Database and directs that its data be presented in a format consistent with the national transit database maintained by the Federal Transit Administration. The information obtained in this biennial survey of ferry operators can be found at www.bts.gov; under the “Data and Statistics” category, click on the link entitled “Ferry – National Census of Ferry Operators.”

In announcing the legislation, Senator Murray said, “Many residents in my home state of Washington depend on ferries to bring them to work and back home safely to their families, so they know the importance of a strong ferry system.” Senator Murkowski noted, “This bill is an economic engine and improves our way of life, from Dutch Harbor to Metlakatla.” Senator Begich observed, “It’s not uncommon for an Alaskan in the Aleutians or Southeast to always have next week’s ferry schedule memorized as ferries help families stay connected and serve vital business purposes.” Congressman Larsen emphasized, “We must invest in our ferry system to create good jobs, promote long-term economic growth, and help ensure that the folks who rely on ferries to get to work are traveling safely and efficiently.”

The new legislation is nearly identical to a bill introduced in the prior Congress in 2009 but never acted upon.

The bill’s fate is likely dependent on whether or not Congress can enact a comprehensive highway and transit bill. If so, the ferry legislation might possibly be included as a part of the larger legislation. However, some leaders of the House Committee on Transportation and Infrastructure have suggested that one feature of a comprehensive highway and transit bill might be the consolidation of “categorical” grants such as ferry grants into large bloc grants, giving states the ability to apply them to whatever transportation priorities they deem desirable. This would likely be to the detriment of ferry systems, as proponents of highway construction usually have far more political clout in the various state capitals.

For a copy of the legislation, please send an email request to ewelch@passengervessel.com.

Ed Welch is the Legislative Director of the Passenger Vessel Association (PVA), the national trade association representing owners and operators of US-flagged commercial passenger vessels of all types. A previous version of this article appeared in the June 2011 issue of PVA’s Monthly magazine, FOGHORN.

Tacoma Port Fills Five Management Positions

The Port of Tacoma has filled five management positions in the past month, with three internal promotions, one hire from the Port of Seattle and one hire from the private sector.

Dakota Chamberlain has joined the port as the port's director of engineering. Prior to joining the port, Chamberlain served as director of seaport management at the Port of Seattle for the past 15 years. Before joining the Seattle port, he worked for the Federal Aviation Administration.

Sean Eagan has been promoted to the position of director of government affairs for the port. Before joining the port in 2006, Eagan worked for U.S. Rep. Adam Smith, most recently as deputy district director.

Scott Francis has joined the port as manager of real estate manager, bringing more than 20 years of experience in marine terminal facility management, maintenance and operations. Prior to joining the port, Francis served as a local real estate broker, an operations manager for Washington State Ferries, an operations manager for Crowley Marine Services and a vice president of North Star Terminals.

Jason Jordan has been promoted to the position of director of environmental programs for the port. In his new role, he will oversee such port environmental efforts as permitting, water and air quality, SEPA management, cleanup, construction support, stewardship and other environmental initiatives. Jordan served a land use planner and project manager for the Seattle port before joining the Port of Tacoma in 2008.

Tara Mattina has been promoted to the position of director communications for the port, where she will oversee the port authority's strategic communications, marketing and media relations. Prior to joining the port in 2007, Mattina served as head of the City of Tacoma's communications, media relations and public involvement programs.

Prince Rupert Has Booming July Cargo Volumes

Despite cargo volumes at most of the West Coast ports turning decidedly weak over the past several months, one port has numbers to boast about. Unfortunately for United States West Coast ports, it happens to be the Port of Prince Rupert in British Columbia, Canada.

The port, located about 500 miles north of Vancouver, Canada and which opened it first major container terminal just four years ago, handled a total of 46,433 TEUs In July, a 20.3 percent increase over July 2010.

On the import side, the Prince Rupert Port Authority reported handling a total of 26,044 loaded inbound TEUs in July, a sizable 18 percent increase over the year-ago period.

Even more significant were the port's export numbers for the month. The port handled a total of 10,543 loaded outbound TEUs in July, a massive 94.5 percent increase over the same month last year.

In May, the port added two new services – one by China Ocean Shipping Co. and one by Hanjin – to bring the total number of services calling at the port's Prince Rupert Container Terminal to four.

While the calendar year total of 198,217 TEUs handled only puts the port up 1 percent over the first seven months of 2010, the port's loaded TEU volumes for the January to July period are up a solid 16.5 percent over the same period last year.

Matson to Suspend CLX2 China Service

Ocean carrier Matson Navigation announced Monday that in August it will discontinue the expanded China–Long Beach Express service (CLX2) started last August, citing sustained high fuel prices, downward rate pressure and overcapacity in the transpacific trade.

Matson said that discontinuing the CLX2 service, which includes service to and from Hong Kong, Yantian, Shanghai and Long Beach, will have no impact on Matson’s original China–Long Beach Express service (CLX1), which will continue to operate. The CLX1 service was launched in 2006 and provides expedited service from Xiamen, Ningbo and Shanghai to Long Beach. The discontinuing of the CLX2 service will also not affect the carrier's Hawaii or Guam services.

According to Matson, a wholly owned subsidiary of Honolulu-based Alexander & Baldwin, Inc., the "cost model for the two services is considerably different, with the CLX1 service benefiting from round trip economics, generating revenue for both westbound and eastbound voyages."

The CLX2 service provided direct service from Long Beach to China, Matson said, resulting in a cost model entirely dependent on the market conditions of the transpacific trade, which is currently challenging for most carriers as a result of chronic high fuel costs and aggressive rate actions in the trade.

“Matson’s expanded service that was launched last year succeeded in achieving our service goals and building on our customer base,” Matson President Matt Cox said.

“Unfortunately, the economics of the transpacific trade have shifted dramatically in the relatively short time since we developed the model. Sustained high fuel prices, rate volatility and overcapacity in the Asia market have made this growth initiative unprofitable. Unlike Matson’s first China–Long Beach Express, which includes calls in Hawaii and Guam en route to China, resulting in revenue for both westbound and eastbound voyages, the second string sailed directly from Long Beach to China, making the economics of the service during this period exceptionally difficult."

Cox reiterated that since its inception, Matson’s original CLX1 service has weathered comparable negative operating environments in the transpacific trade.

"We are confident in the long term viability of that service and remain committed to delivering a premium service for our customers, distinguished by fast transit times, industry leading on time arrivals and next day cargo availability," Cox said.

The last eastbound sailing on the CLX2 service will depart Shanghai on August 21. Westbound service from Long Beach to China will continue until September 3.

“Matson appreciates the support our customers gave to this expansion of our China service,” Cox added. “The decision to discontinue the service was difficult but necessary, and was due entirely to the financial component of the expansion.”

Long Beach Port Holds Off Approval of $17M Transfer to City

The five-member governing board for the Port of Long Beach on Monday put off making a decision on a City Hall request for a transfer of nearly $17 million in port funds to city tidelands coffers for at least two weeks, citing the need for further information from city officials.

The annual transfer, which City Hall can ask for under the city charter, is based on 5 percent of the port's previous fiscal year operating revenue – referred to by some as "off the top."

The transfer was formally requested by City Hall on July 5 and requires the approval of the port commission. The transfer – which would be $16.92 million – is being opposed by six port industry trade associations.

The port board, after a lengthy discussion, decided to wait for additional information from the city and revisit the issue again at its next meeting in two weeks.

Originally conceived as an emergency financial boost for the revenue-strapped city more than 15 years ago, the annual port-to-city transfer has been requested by City Hall and approved by the port ever year since.

The transfer funds, under state law, must go into the city's Tidelands Operating Funds and can only be used within the tidelands (coastal) areas of the city for very specific maritime, maritime-related recreation, and environmental uses. The funds cannot be mixed with the city's general fund or used for general fund purposes.

While the port board in the past has questioned the transfer, this is the first time there has been a hint that the board may consider not approving the transfer.

City Hall claims that the tidelands accounts, which are managed by city officials, are in danger of going broke and that a backlog of more than $300 million in capital improvement projects in the tidelands areas currently exists.

During Monday's meeting, Commission President Nick Sramek pointed out to Assistant City Manager Suzanne Frick that in a City Hall briefing several years earlier this tidelands project list was in the $70 million to $80 million range, but today, totals more than $300 million.

"I am just wondering, where did these projects come from? That is quite a jump," Sramek told Frick.

Frick said that in anticipation of the additional revenue from Measure D, approved by voters in November and which dramatically increased the funds City Hall could take from the port, City Hall conducted an extensive review of the capital improvements needed in the tidelands.

"We did a wholesale assessment of the resources available out there to come up with the new list," Frick said.

Responding to another question by Sramek about which tidelands projects are a priority, Frick said that City Hall has a schedule of tidelands projects set for fiscal years 2011 and 2012, and is in the process of developing a schedule for fiscal years 2013 to 2015.

"Part of the reason I am asking is because this is money that will go to the city in one way or another, and we are trying to balance whether we need the money more or the city does, and how we make sure that we help the city," Sramek said, "So it would help us to have some kind of schedule of the prioritized projects, so we can make sure we are making the right decisions."

Commissioner Rich Dines, who had been sworn-in as a port commissioner at the start of Monday's meeting, asked Frick if the tidelands project list, which Sramek earlier pointed out had more than tripled in just a few years, would grow further.

"This is what we know today," Frick said. "But as with any resource that you have, the longer there is deferred maintenance the more expensive future improvements are going to be. There may be additional things coming up that we are not aware of at the present time."

Dines, in mentioning a $58 million replacement of a public pool center that is on the tidelands list, said that he hoped when the project list is prioritized, City Hall would look closely at the cost of each project on the list and weigh that against the number of jobs each project would create.

Frick said this was a good point.

Commissioner Doug Drummond, also newly sworn-in on Monday, suggested that the whole discussion by the port board was growing too far afield.

Drummond pointed out that the city has the statutory right to ask for the 5 percent transfer and the port board can approve the transfer if the money is not needed by the port.

"How they spend the money in the tidelands isn't our business," Drummond said. "That's their business. We would be very offended if [City Hall] came over here and started asking about our projects."

Drummond also made clear his opinion on the relationship between the port and City Hall.

"We really should be on an avenue of cooperation [with City Hall]," Drummond said. "We have had some misunderstandings, I'll call it that. And it is time to kind of repair that damage – do a lot more cooperatively with the city – and I think we will all benefit in the end."

Sramek pointed out that the reason he was asking about specific projects planned by the city in the tidelands was to make sure that the tidelands funds are being used in the best possible way to create the most jobs for the city.

"I'm trying to make sure that we are getting the right information so we are making the right decisions not just for the port, but for the city," Sramek said.

Elizabeth Warren, executive director of the local trade association FuturePorts, asked the commission to table the decision and eventually deny it. FuturePorts, along with five other local trade associations representing most aspects of the port industry, recently asked the port commission to reject the transfer outright.

"These organization and their members believe that the port has been a good partner with the city providing financial assistance throughout the years," Warren said. "We are concerned about this large amount of money leaving the port and being transferred to the city while the port is undergoing a major capital improvement program."

Michele Grubbs, vice president of the Pacific Merchant Shipping Association, another of the six trade groups who opposed the transfer earlier, said that the PMSA urged the port commission to take more time to study the fiscal impacts of such a transfer in the current economic environment.

Grubbs pointed out that the Port of Long Beach has some of the highest facility lease rates in all of North America and the PMSA members – West Coast-serving shipping lines and terminal operators – expect that the port and the city will administer the port finances carefully to be able to provide the infrastructure and facilities that warrant the high lease rates.

Frick said the port board needs to reach a decision on the transfer by Oct. 1.