Friday, June 8, 2012

Port of Oakland Declares an Impasse with Union

The Port of Oakland, which has failed to negotiate a new contract with Service Employees International Local 1021 after almost a year of talks, has decided to proceed with impasse resolution proceedings.

The impasse action has several stages, including mediation, and could take several months to advance toward a new contract. Steps in the impasse proceedings can include presentation of the port’s final offer; meeting to attempt to resolve outstanding bargaining issues; selection of a neutral third-party mediator; and mediation sessions to help the parties reach a resolution.

If all of other measures fail, then the final step would be implementation of the port’s last, best and final offer.

“We are resolved to seek fair and reasonable amendments to the compensation and benefits packages of our employees and, most importantly, put the port on a track to not only survive, but thrive in the years to come,” Port of Oakland Executive Director Omar Benjamin said. “We ask that all employees, from top management to line workers, share in the costs of the adjustments that are necessary for us to succeed as a whole.”

Local 1021 represents 250 employees in the areas of janitorial, maintenance and security. The contract between the port and SEIU expired June 30, 2011. Although Oakland and the union reached and signed a tentative agreement for a new contract in late March of this year, it was rejected when the rank and file voted in April.

When negotiations began a year ago, the port said, it had advanced 42 proposals. Today, 29 of those issues have been resolved, according to the port, but the two sides remain far apart in resolving a new contract.

“While the port continues to face significant financial challenges, we remain committed to recruiting and paying for the best talent in the industry,” port board President Pamela Calloway said in explaining the board’s vote to authorize the impasse proceedings.

“We simply cannot maintain or grow the workforce unless SEIU leaders join us in adapting to the changing realities facing the port,” she said.

Terminal Island Placed on Endangered Places List

A conservation group has named a site at the Port of Los Angeles as one of the 11 most endangered historic places in the US.

In recent years, the Port of Los Angeles has neglected historic buildings at Terminal Island, according to the National Trust for Historic Preservation.

“A (port) plan introduced in 2011 calls for the demolition of more structures and fails to endorse the idea of adaptive reuse,” the NTHP wrote in an announcement of the site’s designation. “Local preservationists fear this plan could be the model for an even larger plan that would permit more needless destruction.”

The remarks are in reference to a port road realignment plan that could require the demolition of three fish canneries, three boat repair buildings and a cannery steam plant, all of which date back from 60 to more than 100 years.

Terminal Island, which is located between the LA and Long Beach harbors, was a major shipbuilding center during both world wars, and was previously known as the center for the US tuna canning industry.

The NTHP says among its goals for Terminal Island are to “change the port plan that restricts use of historic buildings to port functions only” and to “save buildings facing demolition by promoting new uses, ensuring public access and attracting new tenants.”

Port of Los Angeles officials, however, have said the designation is uncalled for and distanced the port from the map of the realignment drawn up by a contractor. Seattle-based Cargo Velocity issued a summary report on the Terminal Island land use plan in January.

“The consultants didn’t accurately portray the realignment. They didn’t nail it down completely,” port planning commissioner David Mathewson told the Los Angeles Times in an article published June 7.

Terminal Island is one of two specific West Coast locations making the NTHP’s annual list, with the other being a portion of Yosemite National Park, also in California.

Lead-Tainted Shoes Seized at Tacoma

US Customs and Border Protection has seized hundreds of pairs of children's shoes brought in through the Port of Tacoma that were tainted with three times the allowable amount of lead, the federal agency revealed June 6.

After the shipment was targeted by Customs officials at Tacoma for examination, samples were taken and tested by the Consumer Product Safety Commission. Laboratory analysis found the shoes contained 300 parts per million of lead; the acceptable level is 100 ppm.

The shipment, according to Customs, originated in China, and had been designated for a Seattle-area distributor. If not intercepted, the shoes, which are valued at more than $23,000, according to Customs, would likely have wound up on store shelves.

“One of CBP’s missions is keeping a wide variety of harmful products from reaching the American marketplace,” US CBP Area Port Director Mark Wilkerson said. “Lead-contaminated children’s footwear is one such product.”

In fiscal year 2011, over 9,100 shipments of lead-contaminated products with an estimated domestic value of more than $24 million were seized by CBP in coordination with CPSC at ports of entry across the country, according to Customs.

The shipment of contaminated footwear will eventually be destroyed, CBP says. The agency did not identify the shipper or the distributor the shoes had been designated for.

Port of Seattle Approves Business Park Lease

The Port of Seattle Commission on June 5 approved the lease of about 42 acres within the new Des Moines Creek Business Park to Puget Sound Energy.

PSE plans to work with developer Benaroya Capital to create a new operations center on the site in order to consolidate facilities that are currently spread out between the cities of Kent, Renton and SeaTac.

“We thank the Port of Seattle Commission and staff for working to ensure we reached an agreement that will allow Puget Sound Energy to be the first tenant at the Des Moines Creek Business Park,” Puget Sound Energy senior vice president and chief customer officer Phil Bussey said. “By developing this site, we will be able to consolidate facilities to provide greater operational efficiency and better service to our customers.”

The lease term is for 20 years with 10-year options to extend the initial term to as long as 50 years. PSE, which is the state’s oldest local energy utility, will pay initial base rent of about $920,000 annually, with the City of Des Moines receiving about $676,000 in ongoing revenue annually, according to the port.

Under the terms of the contract, the base rent is to be adjusted every five years, based on the Consumer Price Index. The present value of the annual lease payments over the 20-year term equals about $11.4 million.

The business park was originally a combination of residential lots acquired in the City of Des Moines as part of the airport’s noise mitigation program and abandoned streets bought from the city, King County and the Washington State Department of Transportation.

The 89-acre site, which has been vacant since 1993, is expected to have the balance of its land made available for long-term lease as the real estate market improves, according to the port.

Tuesday, June 5, 2012

Columbia River Gateways Ponder New Cargoes

The Columbia River has long been a conduit for bulk cargoes in the Pacific Northwest, principally grain, but it is now being targeted once again for coal. The first coal boom took place three decades ago when nearly every port on the river drew up plans for a deepwater coal export terminal. The Port of Portland was the only port to go through with a project but ended up seeing most of its equipment sold off and the terminal site converted to another commodity when the boom when bust.

The driver of the 1980s boom was “the Asian market,” principally Japan. The driver of the most recent market is China, now the world’s manufacturing giant. As might be expected, regional ports are leery of this second “boom” and three – Vancouver, Portland and Kalama – have already said “no” to coal terminal development but that hasn’t put off potential investors. Sites at Boardman, Oregon and Longview, Washington are still in the running, with St. Helens, Oregon selected to serve as a barge-to-ship transshipment site for movements out of Boardman. And although coal is currently the hot topic along the river other commodities are making an impact, with the nation’s newest grain export terminal now operating at Longview and logs once more moving out of several river gateways.

Even containers have been on the increase, with the Port of Portland reporting a 9 percent jump in box traffic last year while German giants Hamburg Süd and Hapag-Lloyd have recently launched a new joint service connecting the Oregon port to the Mediterranean.

Will Coal be King?
The concern over potential future coal exports was highlighted in April when Oregon Governor John Kitzhaber sent a letter to federal officials asking them to study the environmental impacts of exporting Rocky Mountain coal via West Coast gateways and burning it in Asia. To date three export locations have been targeted by developers along the lower and upper Columbia. Australia’s Ambre Energy has created its Morrow Pacific project around the potential construction of a rail-to-barge transloading facility at Boardman, Oregon, which would load barges for direct discharge to ocean-going ships at St. Helens, Oregon using a floating transloader. It has already approached two Portland-based barge builders, Gunderson and Vigor Industrial, concerning the construction of the 20 covered barges needed for the project.

The barges, expected to cost about $70 million to build, would load at Boardman’s Port of Morrow and off-load at St. Helens’ Port Westward using a Siwertell transloader. In detailing the project, Ambre said it envisions shipping about 3.5 million tons of coal per  year through Boardman, with capacity eventually building to 8.8 million tons. This would mean the arrival of 11 unit trains per week and 12 weekly barge trips down the Columbia where up to three Panamax bulk carriers would be loaded every seven to ten days.

St. Helens - Longview 
Ambre Energy is also the lead partner in the Millennium Bulk Terminals - Longview LLC (MBTL) project at Longview. Washington, in which St. Louis-based Arch Coal Inc holds a 38 percent stake. Last year MBTL acquired the assets of Chinook Ventures Inc (CVI) at Longview, including buildings and equipment, and simultaneously entered into a long-term ground lease agreement covering the required property with Alcoa. The latter, now joined by Millennium, is responsible for cleaning up industrial contamination left in the ground at the site from decades of aluminum smelting by former owner Reynolds. The 416-acre property includes 1.5 miles of river frontage and a deepwater dock capable of handling Panamax-size ships.

Although Millennium originally applied for permits to build a 5.7 million-tons-per-annum coal export facility at the site in 2010 it later withdrew those plans and applied for permits to export a much larger volume of coal per annum last year. Its most recent plan encompasses the construction of a $643 million facility that would be capable of exporting 44 million tons of coal annually at full build-out in 2018. The terminal would be completed in two phases over a five-year period with enough capacity to accept as many as 16 coal unit trains per day and load two ships simultaneously.

Texas-based Kinder Morgan Terminals (KMT), which operates a soda ash exporting facility at Portland, has also shown interest in developing a $150- to $200 million coal terminal at Port Westward but has disclosed few details.

LNG – Import to Export
Sparking the sudden interest in coal exports to some degree is the new domestic wealth in natural gas spawned by hydraulic fracturing (fracking) technologies. This has seen a decline take place in the use of coal for domestic power production as more utilities switch to gas. The shift has been dramatic, with the Union Pacific railroad, a primary coal hauler, suffering an 8 percent drop in its energy related carloads in just the first quarter of this year. The company’s CFO, Rob Knight, has since stated that the energy volume percentage will likely drop “in the low-to-mid-teens” through the second quarter. The shift has also seen a reversal take place in proposed liquid natural gas (LNG) facilities that were once designed for importing but are now being redesigned for exporting.

At the mouth of the Columbia River, near Warrenton, Oregon, two companies are collaborating on plans to export Canadian natural gas to Asia through a terminal originally proposed for imports. Oregon LNG and Oregon Pipeline are applying for permits to ship up to 9 million tons of LNG per year through an export terminal that will essentially fit on the same footprint as the originally proposed importing facility. The $6 billion project, which includes the construction of an 86-mile gas pipeline that would cross the Columbia River near Woodland, Washington, is projected to be completed by 2018 but faces the same environmental and resident opposition as the proposed coal terminals face.

Vancouver Expansion
While coal and LNG exports are still in the future – if the projects now on the table are allowed to jell – other commodities are seeing more near-term action. At the Port of Vancouver USA an $80 million expansion and modernization of grain exporting facilities is being completed by United Grain Corporation (UGC). The construction of new storage silos and the addition of modern machinery is increasing capacity at the UGC complex, owned by Japan’s Mitsui, by another 2 million tons, principally for corn and soybeans going to Asia. Port management is also continuing its negotiations with Australia’s BHP Billiton concerning a long-term lease agreement that would see an export complex for potash established on a portion of the port’s 218-acre Terminal 5, the site of a former Alcoa aluminum smelter. The property has already been equipped with a new loop track and BHP Billiton has indicated it would like to have its export operation up and running by 2015.

Although Vancouver has been one of the key gateways on the Columbia for the handling of wind energy components, which grew to 106,000 metric tons last year, outgoing port director Larry Paulson noted in April that a decline can be expected after this year as federal tax credits end for developers of renewable energy projects. Paulson, who has been executive director at the Washington port since 1999, has since turned the reins over to Todd Coleman, the port’s former deputy executive director, who will now lead the port as it continues with its involvement in the $150 million West Vancouver Freight Access project, due to be completed in 2017.

Longview’s Long Look
Another Columbia River port losing a long-time port director this year is the Port of Longview, Washington where Executive Director Ken O’Hollaren will be stepping down in December after 25 years of service. Like Vancouver USA, Longview has seen a significant investment in grain handling capacity recently, with the $200 million EGT export elevator loading its first ship in February after the settlement of a long-running dispute with the International Longshore and Warehouse Union (see Pacific Maritime Magazine, March 2012). However, the new terminal has suffered some teething problems, with a fire taking place in the facility’s conveyor system tower on April 7 while the 68,636-dwt bulker Navios Gemini S was loading. During the three-hour fight to control the fire some burning debris fell on the Panama-registered vessel, but there was no damage to the ship or injuries reported in the incident. EGT says it expects to load 150 to 200 ships annually with wheat, corn and soybeans now that its labor problems have been settled.

Looking farther ahead, Port of Longview commissioners hope to have a new 20-year master plan ready for the port by this summer after hiring HDR Engineering of Portland to design the plan’s first phase last year. That firm’s recommendations included the dismantlement of the port’s obsolete and unused grain elevator at Berth 4 and the building of a new multi-purpose dock with expanded rail capacity. The port has since hired the Beckett Group of Gig Harbor, Washington to finalize the plan.

More Capacity at Kalama
Another Washington port that is looking at an increase in grain handling capacity is the Port of Kalama where CHS Inc, the largest US grain-marketing cooperative, is planning to expand its elevator capacity as part of its Temco joint venture with Cargill Inc. Temco was originally formed around a single export elevator at Tacoma, Washington but now includes the CHS elevator at Kalama, formerly operated by United Harvest, a joint venture between CHS and Japan’s Mitsui that was dissolved last year, as well as a Cargill facility in Portland.

The Kalama elevator, built in the 1960s, is expected to receive major work to both modernize grain handling and expand storage capacity, with completion of the project slated for early 2014. Kalama’s other grain elevator, operated by Kalama Export LLC, has already undergone a $36 million modernization that added a new grain cleaning building, loading belt and eight shipping silos which boosted terminal capacity by 21,000 tons. The two Kalama elevators combined ship about 11 million metric tons of grain a year, with about 2.75 million tons moving out of the Temco elevator.

Kalama Export LLC is owned by the Gavilon Group, which has recently become an acquisition target of several large commodity trading companies, including Bunge, Wilmar, Mitsui, Mitsubishi, Marubeni and Glencore. The latter company has already agreed to buy Canada’s Viterra for C$6.1 billion.

Portland Eyes Autos
On the Oregon side of the river the Port of Portland, which handled 13.4 million tons of cargo in 2011, a 2 percent increase over the previous year, has entered the auto export business. Over the past several months ships have been loading Ford vehicles at Portland for carriage to South Korea. Although only 10,000 units are expected to be exported this year port officials feel there is good potential for growth in the trade with Asian companies, such as Toyota, planning to export more American-assembled vehicles to Asia as a way to counteract the rising value of the yen against the dollar. “We’re starting to see more demand for American-made products: vehicles, machinery, higher-value cargo,” said Port of Portland spokesman Josh Thomas, who noted that the ships arriving with inbound vehicles from Asia usually have the space to accept exports as backhaul.

Portland is currently the West Coast leader in vehicle imports, handling about 250,000 units annually, but imports have been declining since 2007 when nearly 450,000 vehicles were imported. Last year the port suffered a major 11.5 percent decline in its auto import business, the result of Japan’s devastating tsunami plus several months of flooding in Thailand.

While auto imports at Portland have been on the decline containers have been moving up, a trend that is expected to be accelerated following a decision by German carriers Hamburg Süd and Hapag-Lloyd to partner in an expanded weekly service between Portland and the Mediterranean. Last year, the first full year of operation of the port’s container terminal by ICTSI Oregon, Inc, a subsidiary of Manila’s International Container Terminal Services Inc (ICTSI), box volumes grew by 9 percent to nearly 200,000 TEUs.

Canadian Pacific Rail Resumes Operations

About 4,800 striking Canadian Pacific Rail workers have returned to work following the passage of the Restoring Rail Service Act, legislation that forces members of the Teamsters Canada Rail Conference union to return to their jobs.

According to CP Rail, operations resumed without incident at about 7 am June 1 across the company’s Canadian freight network in response to passage of the legislation, which became law May 31. It was passed last Thursday by the Canadian Senate.

Earlier in the week, the House of Commons also approved the bill, which mandates that the union and railway submit to binding arbitration, and that the government-appointed arbitrator has 90 days to construct a deal.

The Restoring Rail Service Act had been drafted in response to the nationwide strike, which began May 23 and suspended freight service across the country by CP, Canada’s second-largest railway. The strike was launched by the Teamsters Canada Rail Conference in response to an impasse with railway management during contract talks.

Among the issues the union and management had struggled with during contract talks were pensions and fatigue management, according to negotiators.

The Teamsters Canada Rail Conference represents bargaining units of nearly 5,000 workers – 4,200 locomotive engineers, conductors, trainspersons and yardmen, as well as 220 rail traffic controllers. The collective agreements for both units expired at the end of 2011.

The labor unrest came at a very inopportune time for Canadian Pacific, which just appointed an interim CEO about a week before the strike was launched, and also elected a new 16-member board of directors.
Former CEO Fred Green resigned from CP Rail May 17 after a four-month battle over control of the direction of the company with activist investor Bill Ackman.

In other Canadian Pacific news, the railway elected a new chairman of its board of directors, Paul Haggis, on June 4. Haggis has extensive financial markets and public board experience and is currently Chairman of the Alberta Enterprise Corp. and CA Bancorp. He also is a corporate director of other public and crown corporations, according to CP Rail, including Advantage Oil & Gas.

POLB Approves Bigger Budget

The Port of Long Beach Harbor Commission has approved a new fiscal year budget that’s 12 percent bigger than its current budget, something port staff says is mainly the result of increased capital spending.
The $942 million budget, which would go into effect Oct. 1, includes no salary increases for management, but does add 25 additional jobs, which according to the port, is for the support of a multi-billion capital program and to reduce the reliance on contractors.

“Our net spending over the next 10 years is expected to be about $4.4 billion,” port Chief Financial Officer Sam Joumblat said in a June 4 presentation to the harbor board. “In fiscal 2013, we have budgeted $720 million in capital expenditure. This is a $90 million increase over (the current) budget.”

Also, Joumblat said, due to lower-than-expected container traffic during the present fiscal year, the port was revising its estimates of current operating revenue downward by four percent, and operating revenue for the 2013 budget is expected to be flat compared with the fiscal year 2012 estimate.

The port budget is a portion of the City of Long Beach’s overall budget, which by law has to be approved by mid-September, about two weeks before the new fiscal year begins. City Council budget workshops and hearings are scheduled to begin in August.

Ex-Port of Pasco Commissioner Dies

Longtime Port of Pasco commissioner Ernie Boston, who announced May 17 that he was stepping down to deal with health issues, has died. He was 86.

Boston, who passed away May 30 due to complications from surgery, first gained a seat on the three-member commission in 1995. He had a business background and was a co-owner of Boston Real Estate Associates with his wife, Betty.

In a resolution presented to Boston after stepping down, his fellow port commissioners said that his “constructive, independent thought and strong sense of responsibility and service to his fellow residents of Franklin County and Washington state as a whole made for a better place to live and work.”

According to port Executive Director Jim Toomey, the commission has 90 days from Boston’s resignation or Aug. 14, to appoint a new commissioner, or a replacement would then be left in the hands of Franklin County commissioners.

The Port of Pasco, located in the Tri-Cities region of Washington State, manages a 28-acre marine terminal, 15-acre multi-modal rail/barge terminal, 600-acre industrial center, the Tri-Cities Airport and numerous other properties.

POLA Director Receives Ocean Conservation Award

Port of Los Angeles Executive Director Geraldine Knatz has been named the 2012 recipient of the Blue Frontier Campaign’s Peter Benchley Ocean Award for “excellence in solutions” for her environmental efforts as executive director of the Port of Los Angeles and her role as president of the International Association of Ports and Harbors.

She received the award during a June 1 ceremony in San Francisco.

The Blue Frontier Campaign is a national marine conservation activist organization working to improve ocean policies in coastal states. The Peter Benchley Award is named after marine wildlife conservationist Peter Benchley, who’s best known for writing the bestselling novel “Jaws,” which was first published in 1974.

Additionally during the ceremony, a posthumous award was given to Peter Douglas, the creator and longtime executive director of the California Coastal Commission. Douglas, who died in April, will be honored with the “Hero of the Seas” award for assuring public access to and protection of California’s 1,100 miles of coastline.

Others receiving awards during Blue Frontier’s 2012 ceremonies include U.S. Sen. Sheldon Whitehouse (D-RI) for advocating for ocean protection in the United States Senate; Internet company Google for making ocean exploration possible via its Google Earth virtual globe program; and Nancy Rabalais, executive director of the Louisiana Universities Marine Consortium, who was honored for working to reduce the upstream causes of the Gulf of Mexico “dead zone,” a large region that has oxygen concentrations too low to support aquatic life.