Friday, November 11, 2011

Coast Guard Recommends Lane Reductions

The US Coast Guard is recommending narrowing shipping lanes used by the Los Angeles-Long Beach port complex in order to steer vessels away from areas used by endangered whales.

The recommendation is the result of a yearlong study released Nov. 1 regarding access routes for cargo ships in the Santa Barbara Channel using the Los Angeles and Long Beach ports.

The Coast Guard study declares that unbounded vessel traffic in the waters south of the Channel Islands is a safety concern and that due to vessel traffic increases, the risk of collision needed to be addressed.

The Coast Guard proposes narrowing the distance between the shipping lanes by moving the southern inbound lane one nautical mile toward the northern lane and leaving a one nautical mile separation between the lanes.

Shifting the southern lane a nautical mile to the north would move vessel traffic away from the Channel Islands National Marine Sanctuary and an underwater area near the Santa Cruz and Santa Rosa islands populated by endangered blue, fin and humpback whales.

About 50 whales have been struck by ships off the California coast in the last 10 years, according to Coast Guard data, four in 2007 alone.

The Coast Guard proposal also calls for establishing new shipping lanes south of the Channel Islands, where some freighters have been navigating to avoid California air pollution regulations.

The report’s recommendations would have to undergo a federal rulemaking process and review by the International Maritime Organization before they could be implemented.

LA/LB Dropping Clean Truck Fees

The ports of Long Beach and Los Angeles say they are discontinuing their respective $35/TEU clean truck fees beginning Jan. 1, 2012. The fees, which had been in place since 2009, are currently charged to drayage trucks that were built in 2006 or earlier and haven’t been retrofitted.

But as of the start of the New Year, trucks that don’t meet 2007 Federal Clean Truck Emissions Standards are banned from operating at both ports, thereby making the fee unnecessary.

As of 2011, 2006 model year engine and older trucks are only performing about two percent of total drayage moves, according to the ports.

Under the two ports’ clean trucks programs, late model rigs have been progressively banned from port service. When fully implemented in 2012, the ports say they expect truck emissions to be reduced by more than 80 percent from pre-program levels.

The PortCheck system, which administers the fees, is expected to remain open during January 2012 to refund Clean Truck Fees that were deposited in accounts but haven’t been spent. The ports are advising customers to request any refunds that may be due no later than Jan. 15, 2012, or else the funds could be forfeited as unclaimed deposits.

Port of Vancouver USA Budget Approved

The Port of Vancouver USA has approved a 2012 budget that includes a one percent property tax increase to help pay for an ongoing freight rail project.

Under the new budget, which was approved on a 2-1 vote Nov. 8, the port’s property tax collection would rise by about $99,000 in 2012 to roughly $10 million.

Starting next year, the owner of a property with an assessed value of $250,000 would pay about $2 more in property taxes than in 2011. There are about 300,000 property taxpayers within the port’s 111-square-mile district.

The additional money would go toward construction of the $150 million West Vancouver Freight Access project, a 27-mile rail expansion that the port hopes to finish by 2017. The rail project, on which construction began in 2007, is designed to improve the ability to move freight through the port and regional BNSF Railway and Union Pacific Railroad mainlines.

Port commissioners Nancy Baker and Brian Wolfe voted in favor of the budget, while commissioner Jerry Oliver voted against it, saying that the economic climate wasn’t right to impose a new tax.

Rail Traffic to Dip

Retail container traffic on the West Coast and at all major US ports is expected to collectively dip this month compared with the same period last year, according to the National Retail Federation.

The NRF’s monthly Global Port Tracker report, which was released Nov. 9, projects that import cargo volume at the nation’s major retail container ports is expected to fall about two percent this month compared with November 2010. This month is forecast at 1.21 million TEU, down 1.9 percent from last November.

Additionally, traffic is also expected to drop in each of the next three months. In December, traffic’s expected to fall to 1.11 million, a decline of 3.3 percent from December 2010. The January 2012 forecast calls for 1.1 million TEU, an 8.7 percent drop from January 2011; and 996,800 TEU next February, down 9.4 percent.

Jonathan Gold, the NRF’s vice president for supply chain and customs policy, said that retailers are being very strategic with their supply chains this time of year and keeping inventory levels extremely lean.

The Global Port Tracker report covers the ports of Long Angeles-Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York-New Jersey, Hampton Roads, Charleston and Savannah on the East Coast; and Houston on the Gulf Coast.

Tuesday, November 8, 2011

Alaska and Hawaii: Still Looking for the Upswing

By Jim Shaw

The 49th and 50th states are awaiting an economic recovery that may still be several years off. Hawaii in particular has been hit by an economic stagnation that has crippled its tourism industry. This has also affected its cruise business. But an upswing may be in the making because of Disney Cruise Line’s decision to sail its Disney Wonder out to the islands twice next year. Although not a large commitment, island businesses catering to tourism are hoping that the publicity from this move may help generate more interest in Hawaiian cruising, especially while NCL America struggles to keep its one remaining ship, the 80,439-gt Pride of America, fully booked.

On the cargo front the financial problems being experienced by Horizon Lines have shippers in both states worried. This year Horizon incurred a first quarter loss of $33.3 million followed by a second quarter loss of $5.4 million. On August 15th the company defaulted on $330 million in convertible notes and since midsummer its share price of common stock has fallen below one dollar.

Horizon’s loss through bankruptcy would mean that Matson Navigation would become the sole provider of liner container services between the United States West Coast, Hawaii and Guam while Totem Ocean Trailer Express (TOTE) would be in the same position in the Alaska Trade. Fortunately, Horizon was able to complete a $655 million refinancing package in early October that should place it on somewhat stronger financial legs but its long-term health still holds a question mark.

Cruise Recovery
This past summer Hawaii’s Department of Business, Economic Development & Tourism (DBED&T) was forced to lower its projections for growth over the next year because of the still troubled domestic economy as well as the problems being experienced in Japan following the March earthquake and tsunami. Japan has traditionally been a major provider of tourists to the islands, as well as business investors. According to the DBED&T, Hawaii’s economy is expected to continue positive but experience slower growth for the rest of this year and well into 2012.

Measured by real gross domestic product (GDP) the state’s economy is projected to show a 1.3 percent increase through the remainder of this year, down 0.3 of a percentage point from the 1.6 percent growth the department projected last quarter. That growth is expected to increase only 1.8 percent by the end of 2012.

At the same time, visitor arrivals to the islands are expected to increase 3.0 percent, 0.8 of a percentage point lower than the department’s previous forecast, while 2012 arrivals are expected to increase slightly less, at about 2.9 percent.

One bright spot is the recent decision by Hawaiian Airlines to open up a new direct flight between Honolulu and Fukuoka, Japan starting in April, which will hopefully bring an additional 100,000 visitors to the islands annually.

Can Disney Help?
In the cruise sector, Florida-based Disney Cruise Line will also be helping out as it has decided to operate two cruises to the islands next year using its 83,000-gt Disney Wonder. The ship, which operated its first Alaska season this past summer, will sail from Los Angeles to Kahului, Nawiliwili, Hilo and Honolulu via a call at Ensenada, Mexico to satisfy cabotage requirements. The first 15-night Hawaiian itinerary will depart Los Angeles on April 29, 2012 while the second, featuring a 14-night itinerary, will depart Los Angeles on October 14.

The 12-year-old Disney Wonder will not be the only foreign-flag cruise ship venturing out to the islands next year as similar voyages are to be operated by Princess Cruises’ Golden Princess, Ocean Princess, Star Princess and Sapphire Princess, as well as Holland American Line’s Oosterdam and Rotterdam. While these vessels will operate round-trip cruises from the mainland via either Mexican or Canadian cabotage stops, several overseas ships, such as the German-operated Europa and Aurora, will also be calling among the islands while on longer worldwide itineraries.

The Port of Honolulu, on Oahu Island, will host most of the cruise liners but the Port of Hilo, on the Big Island, will also gain traffic. In fact, Hilo expects to see a 30.5 percent jump in its cruise numbers next year, a major boost following a miniscule increase this year.

Inter-island cruises will continue to be operated by NCL America’s Pride of America, now the only US-flagged cruise ship serving the state, but bookings for this ship have also suffered because of the economy.

Hawaii’s Forgotten Ferries
On the ferry front Hawaii has proven to be an unhappy hunting ground for vessel operators trying to make a profit running point-to-point services. The two boats once operated by what was formerly the largest operator in the islands, Hawaii Superferry, are now in Virginia where their current owner, the US Maritime Administration (MarAd), is attempting to find new owners. MarAd put the two vessels – Alakai and Huakai – up for sale on an “as is, where is” basis in late June and received only four bids. It is now working expeditiously with these bidders, as well as other “interested parties,” in evaluating options for the boats, with the intention of maximizing the government’s return.

The government, through MarAd, took possession of the twin ferries in July 2009 after a bankruptcy judge ruled that Hawaii Superferry could abandon them to lenders which, at the time, were owed nearly $160 million. MarAd, which had guaranteed construction loans for both boats, took them over and moved them to Norfolk where they were examined but apparently passed over by other government agencies.

Ironically, another vessel that attempted to establish a working ferry service in the islands, the catamaran Melissa Ann, is having a much better go of it in Puget Sound where the King County Ferry District and the US Coast Guard recently gave it the green light to carry more passengers on the Vashon-Seattle run. The ferry has been traveling full and has had to leave riders on the dock more than 80 times this year because of a lack of capacity. In 2007/09 the small cat operated a pilot ferry program between Kalaeloa and Honolulu for $2 per passenger but operating costs and low ridership meant that the boat would have required a ticket price of more than $200 per person just to break even on the government-sponsored experimental run.

Alaska’s Ailing Ferries
The State of Alaska has also been suffering ferry problems. Last year the state’s attorney general’s office, acting on behalf of the Alaska Department of Transportation and Public Facilities (Alaska Marine Highway System), filed a lawsuit concerning the engines fitted into the two fast ferries Fairweather and Chenega, both built by Connecticut’s Derecktor Shipyards during 2004/05.

The defendants – Robert E. Derecktor Inc., MTU Friedrichshafen and MTU Detroit Diesel Inc. – have already accomplished substantial repairs on the engines, all MTU diesels, but the state believes these repairs have not properly remedied the problem and that the boats are still prone to breakdowns. Because of this it has filed a motion with Alaska’s superior court seeking a preliminary injunction in the ongoing dispute that would require the builder to provide new engines for both vessels.

Although the original engines were warranted to last 25 years and 100,000 operating hours the state feels the engines are wearing out far faster than their warranties promised and that replacing all eight diesels could cost the state in the range of $20 million. Through legal action it hopes to gain new engines for both vessels before they suffer mechanical failures that could take each ferry out of service for a prolonged period of time.

The 2004-built Fairweather, based at Juneau, has been operating between Sitka and Petersburg while the 2005-built Chenega, based in Cordova, has been running between Valdez and Whittier.

The Alaska Class
While it awaits a legal ruling on the Fairweather and Chenega case the Alaska Marine Highway System is moving forward with its plans to build a new class of ferry, the “Alaska” class, to operate intermediate runs as well as eventually replace some of its older mainline ships that are now approaching a half-century of service. Wanting to keep as much of this project in-state as possible the Alaska Department of Transportation & Public Facilities (ADOT&PF) has taken over the project from the Federal Highway Administration (FHA) and selected Alaska Ship & Drydock (AS&D), which operates the Ketchikan Shipyard at Ketchikan, as construction manager and general contractor.

Seattle-based Elliott Bay Design Group has been selected as the state’s naval architect and engineering contractor for the project, taking over from the FHA, which had already spent about $1.7 million on preliminary design work but is now to be refunded. The ferries envisioned would be “day boats” measuring approximately 350 feet in length and having a capacity of 500 passengers and 60 vehicles. They would make use of a yet-to-be chosen propulsion system and be environmentally friendly. When the final design is ready AS&D will have the first opportunity to negotiate a contract with the state for construction of the lead vessel. “By participating in the design, ASD will have thorough knowledge of the vessel and what it will take to construct it,” said ADOT&PF Commissioner Marc Luiken.

“AS&D can then submit a bid to build the vessel. This puts AS&D in a partnership with the state, an arrangement that should limit costly change orders and cost overruns. Luiken added that the new selection process “fulfills our responsibility to maximize the value of public funds while providing an opportunity for economic development and jobs in Alaska.” ADOT&PF officials hope to eventually have three of the Alaska Class built, with the first ship slated for the Lynn Canal route between Skagway, Haines and Juneau while the second would sail between Ketchikan and Prince Rupert. The third vessel would serve ports in the Prince William Sound area.

Anchorage Expansion
A project taking even longer than the state’s new Alaska class is the expansion of the Port of Anchorage. The estimated costs of this project, meant to double the number of berths at the port, have tripled since 2005, to more than $1 billion. Nearly $280 million has been spent so far, with much of the funding coming from the federal government. Federal auditors are now looking into the project to determine why there have been significant cost overruns.

Although the port is a city entity the Anchorage Assembly agreed in 2003 to give the federal Maritime Administration (MarAd) a lead role in the project, even though that agency had never managed such a project before. Since then, changes have been made to give the city a bigger role in overseeing the effort while MarAd is stationing one of its officials at the site on a full-time basis. Under port director Bill Sheffield, a former Alaska governor, the project design went from a dock-on-piling structure, similar to the port’s existing piers, to one in which U-shaped cells of steel are installed, then backfilled to create new land. This was eventually to see a wall of steel created that would stretch for 1.5 miles and create 130 acres of new land. Unfortunately, the placement of the steel sheet has not gone to plan and many of the interlocking panels have been bent or shifted out of position during installation, requiring their removal and reinstallation.

This past summer a bulldozer operator was killed when dirt collapsed beneath him during this operation. It is now estimated that the originally proposed project, to have been completed this year, may have to be scaled back to contain construction costs while the project’s overall completion will have to be moved to 2021.

ExxonMobil’s Order
In the Trans Alaska Pipeline System (TAPS) trade, ExxonMobil is hoping for a much shorter construction period and much more attention to budget after confirming orders for two 115,000-dwt crude carriers at the Aker Philadelphia shipyard in October. Construction of the first 730,000-barrel capacity ship is scheduled to begin next year for delivery in 2014 with the second ship following shortly after. When completed both tankers will be deployed by ExxonMobil affiliate SeaRiver Maritime on the Alaska-West Coast run, replacing the aging Kodiak and Sierra.

These vessels, built as the single-hull Kenai and Tosina in the late 1970s, were converted to double-hull for operation by BP/Alaska Tanker Company before moving into the SeaRiver fleet in 2005/06. Prior to reentering service they each received extensive refits in Singapore but Kodiak suffered a well-publicized breakdown at sea in 2010 after it lost power when an aft steam generator overheated.

For the new tankers, South Korea’s Samsung Heavy Industries is being brought in to provide technical support, with the twin ships expected to cost roughly $200 million each to build. This will be approximately three times more than what Samsung would charge if the ships were built at its home yards in Asia.

The new tankers will be the first TAPS ships built by a US shipyard in more than a half decade, the last being the four-ship order completed for BP by San Diego’s NASSCO in 2004-2006.

New Pacific Maritime Magazine Online Editor

Today we are pleased to welcome new PMM Online editor Mark Edward Nero. Mark has been a professional journalist since 1995 and has covered the maritime shipping industry since 2002. Based in Long Beach, California, Mark was previously a reporter with the Long Beach Press-Telegram where he covered the ports of Los Angeles and Long Beach. His work has also appeared in numerous other publications, including Pacific Maritime Magazine, The Cunningham Report, Fairplay magazine, the San Diego Union-Tribune, Boston Globe and the Los Angeles Daily News.

Ship Owner, Operator Fined After Port of Portland Oil Spill

Weeks after an oil spill at the Port of Portland, the owner and operator of a Cyprus-flagged ship involved in the incident have pleaded guilty to federal charges of environmental pollution.

On Nov. 2, Greece-based A.E. Nomikos Shipping Inv. and Lounia Shipping Co. of Cyprus, the owner and operator of the 620-foot Arion SB, were jointly fined $750,000 by a US federal judge.

The companies admitted to violating the Act to Prevent Pollution from Ships, failing to maintain proper records of oil residue disposals and doctoring records of its onboard waste-oil incinerator.

The US Attorney’s office has said the case isn’t specifically tied to the oil spill, but to the findings of an Oct. 16 safety exam by the US Coast Guard and Environmental Protection Agency. The spill occurred Oct. 18 at a Port of Portland export terminal.

About 300 fish were found dead in the water after the spill, state wildlife officials say. Although a clear link between the incident and the deaths of the fish still has not been established, half of money from the fine has been designated for the Oregon Governor’s Fund for the Environment, which is administered by the National Fish & Wildlife Foundation.

Port of Long Beach Picks New Executive Director

The Long Beach Board of Harbor Commissioners has chosen Chris Lytle to succeed Dick Steinke as the port’s executive director. The board confirmed Nov. 7 that it would vote to approve Lytle during its next business meeting, currently scheduled for Nov. 14.

Lytle, who’s held the position of deputy executive director since 2008, joined the port as a managing director in 2006. He holds a master’s degree in business administration from the University of Puget Sound and a bachelor’s degree in business administration from Central Washington University.

He’s a former vice president with the French shipping line CMA CGM and also previously held executive-level positions with P&O Ports North America, Sea-Land Service Inc. and APM Terminals.

Harbor Commission President Susan E. Anderson Wise said that Lytle was chosen after an extensive, nationwide search and that his extensive public and private experience make him the ideal choice.

“On the private side, he’s operated shipping terminals around the world and fully understands the unique issues facing public ports in California,” she said. “And while he understands the industry, he’s also very open to new ideas and innovations.”

Steinke, who announced his retirement in April, joined the port in 1990 and had been executive director since 1997.

New HQ for Long Beach Port Still Uncertain After Vote

For the second time in as many votes, the Long Beach harbor board has reached a stalemate on the issue of buying the Long Beach World Trade Center to use as the new headquarters for the Port of Long Beach.

During the board’s Nov. 7 business meeting, the board considered whether to extend the purchase contract period for the WTC beyond the Nov. 14 deadline, but the outcome was the same as when the board first considered the purchase on Oct. 10: a 2-2 tie.

Vice President Thomas Fields and commissioner Nick Sramek voted for the extension and commissioners Rich Dines and Doug Drummond against. The fifth member, President Susan Wise has recused herself from the issue because she and her husband both have office space in the building.

Fields and Sramek have said that the purchase is needed to expedite the exodus of the port’s 450-person staff from the current building, which was built in the 1950s and has been declared seismically deficient.

But Dines and Drummond have argued that the purchase price – $130 million – is too steep for the 27-story downtown building.

With the stalemate, the possibility of a purchase is essentially dead in the water.
The port had originally planned to internally fund and build a $220 million state-of-the-art headquarters within the harbor; however the idea was eventually shot down by Long Beach Mayor Bob Foster as too expensive. Since then, the port’s been looking to lease or purchase a nearby office building to house port staff.

Wharf Extension Complete at Port of Tacoma

A new, $32 million wharf extension has opened at the Washington United Terminals wharf on the Blair Waterway at the Port of Tacoma. As part of the project, 600 feet was added to the terminal’s existing 2,000-foot berth in order to support two 273-foot high container cranes with 24-container-wide reaches that were brought to the terminal in January 2009.

The cranes joined four others with an 18-container-wide reach already at the location.
Work on the extension began after Port of Tacoma commissioners approved a build contract with Manson Construction in December 2009.

Port of Tacoma CEO John Wolfe called the project a great example of how the port works with shipping lines and terminal operators to make investments that create additional capacity for future growth.

A ribbon-cutting was held Nov. 1 to mark the official opening.