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Friday, December 14, 2012

Shipping Line Buys Stake in POLB Terminal

The world’s third-largest container shipping line has bought a stake in the Port of Long Beach’s Pier J. Marseille, France-based ocean carrier CMA CGM has become a partner in the lease and operations of the 256-acre terminal. It marks CMA CGM’s first investment in a port on the North American West Coast.

“Of the large carriers, CMA was the only one that did not have a home locally, POLB Executive Director Chris Lytle said. “We are glad they’ve decided to call Long Beach home.”

Pier J is the site of Pacific Container Terminal, which has a water depth of about 50 feet and is home to 17 post-Panamax gantry cranes, making it one of the few terminals globally capable of servicing the new generation of giant container ships.

Pacific Container has been operated as a joint venture between global maritime services company SSA Marine and COSCO, a China-based ocean carrier. CMA CGM, which officially announced the agreement Dec. 11, actually became a partner in the venture in November.

The port says the move should bring an additional 2.6 million container units to Long Beach and increase port revenues by about $70 million over the next five years. CMA CGM vessels have been calling at Long Beach for years, but the new arrangement gives the shipping line a West Coast homeport.

“This first new investment for our Group on the U.S. West Coast will reinforce our position in North America,” CMA CGM Group Executive Officer Farid Salem explained. “By investing in Pier J, the Group ensures that the largest vessels deployed in the trans-Pacific trade will be efficiently managed.”

CMA CGM, which operates a fleet of 395 vessels calling at 400 ports on every continent and in 150 countries, also calls at Long Beach’s Pier A.

State Audit Says Port Emission Program Illegal

An incentive program that pays ocean-going ships to use low-sulfur fuel while docked at the Port Seattle is bound for an overhaul after a state audit said it constitutes an illegal gift of public funds.

According to the audit, the port exceeded its authority when it funded the program. In mid- 2009, the port entered into an agreement with the Puget Sound Clean Air Agency to administer the program, which was designed to reduce diesel emissions from maritime industry activity in the Puget Sound Region.

The agreement provided $2.2 million through June 2012 for the At-Berth Clean Fuels (ABC Fuels) Incentive Program, which reimbursed shipping lines to use low-sulfur fuel while at berth. Reimbursements ranged from $1,200 to $2,850, depending on the amount of low-sulfur fuel used; the port says the program has reduced the soot emitted by ocean-going ships on the Seattle waterfront by a third.

In audit results that were released Dec. 4, however, it’s stated that the port knew prior to funding the ABC Fuels program that it wasn’t legally able to participate in it.

“Prior to the July 2009 agreement with the (Clean Air) Agency, the port performed a legal analysis to determine whether it had the authority to administer air-pollution reduction programs,” the audit states. “The port concluded that certain aspects of air-pollution reduction programs were outside of its authority and entered into an agreement with the Agency to operate the ABC Fuels program. The port may not pay another party to perform the activities it is not authorized to do.”

The audit also faulted the port’s agreement with the Clean Air Agency for not providing the port with a right to refuse payment or other remedy should the Agency spend the money for purposes beyond the port’s authority and for the port not being able to pre-approve Agency expenditures of port funds to ensure they were for allowable purposes.

The audit goes on to recommend that the port create internal controls to ensure that in the future public funds are only spent on allowable activities and contracts with third parties “sufficiently describe the work to be performed and monitoring is performed to ensure the work is completed before payment is made.”

The port has responded to the findings by saying that the ABC Fuels program “has been lauded by the maritime business community” has resulted in a 34 percent reduction of diesel emissions of ocean-going vessels while at berth.

Seattle also disputed the audit’s determination that agreement did not allow the port to refuse payment or provide a remedy if the Puget Sound Clean Air Agency spent the money for purposes beyond the port’s authority.

“If the PSCAA had spent money beyond the specified scope, the port could have brought a legal action for damages and specific performance,” Seattle said in a written response. “The port also had the ability to terminate the contract for any reason after giving proper notice to PSCAA.”

But the port also conceded that the program would be reviewed and that it would work with the Washington State Auditor’s Office to reconfigure the program so that the concerns expressed in the audit are met.

Logistics Company Opening POLB
Storage Facility

Warehousing and logistics company Lineage Logistics says it plans to open and operate a new 196,000 square foot cold storage facility at the Port of Long Beach by mid-2014.

Baker Cold Storage has acquired the property and will own the new facility and business, while Lineage, which is the third largest temperature-controlled warehousing and logistics company in the U.S., will manage the facility’s operations.

Lineage is based in the inland Southern California city of Colton; Baker Cold Storage is headquartered in the LA-area city of Vernon.

“The on-port facility in Long Beach enables Lineage to gain access to one of the world’s busiest seaports and facilitate temperature-controlled logistics for international trade,” Lineage CEO Bill Hendricksen said in announcing the plan.

The facility, which would be at Pier B, is designed to have multi-temperature and convertible freezer and cooler rooms with 27,000 pallet positions and a 60 foot refrigerated dock, according to Lineage.

“By expanding Lineage’s operations to the port,” Hendricksen said, “we are able to offer our customers strategic, direct access to international markets, while creating 100 additional domestic jobs and contributing to the growth of the port to boost the local economy.”

The facility is also designed to provide various ancillary services, including blast freezing and pre-cooling capabilities, to support a diverse range of food commodities and products. Also included would be an enclosed, refrigerated 50,000 square foot cross-dock facility to enable rapid movement of products for international shipping and distribution to the market.

Lineage says the property will also provide access to transportation with truck, trailer and container parking, featuring plug-in capabilities as well as rail access served by Union Pacific and Burlington Northern Santa Fe.

California’s Southernmost Port,
San Diego Turns 50

By Mark Edward Nero

A sometimes overlooked aspect of the Port of San Diego is also one of the reasons it has been able to sustain itself: the San Diego Bay is somewhat more diverse in usage and operation than that of the two mega ports to the north. The Port of San Diego doesn’t just have two container terminals; its jurisdiction also encompasses a three-berth cruise ship terminal and 18 public parks. The port also plays a role in military logistics and works with the US military on occasion.

The San Diego Port Authority is also relatively unique in that the port is governed by representatives from five different cities. Its seven-member Board of Port Commissioners is made up of three commissioners that are appointed by the San Diego City Council and one appointed by the city councils of the neighboring cities of Chula Vista, Coronado, Imperial Beach and National City.

And with the Port of San Diego on the verge of launching its 50th anniversary celebration this month, the facility’s CEO boasts that the facility will not only survive but thrive in the coming year and well beyond.

“The Port of San Diego has been on an aggressive campaign to grow our maritime business,” port president and CEO Wayne Darbeau told Pacific Maritime Magazine. “We’ve been doing that nationally by looking for business throughout the United States and abroad. You should look for more and more of that to occur as we continue to grow our business.”

In preparation for that growth, the port’s Board of Port Commissioners in June approved $6.2 million in capital improvement projects throughout the five Port of San Diego member cities, including pier modernization, redesign of a cruise ship terminal baggage area, aesthetic improvements and a new boat-cleaning station.

The port already has additional major development efforts underway, Darbeau said, particularly the Chula Vista Bayfront Master Plan, which would create a 556-acre waterfront development; and the and North Embarcadero Visionary Plan, which consists primarily of a set of public infrastructure improvements that would join San Diego’s downtown and bay as part of a waterfront beautification project.

The port’s stated goal with the Chula Vista project is to transform the currently underused industrial waterfront property in the city into a world-class resort and conference destination, complemented by a mix of residential and retail, as well as more than 240 acres of parks and nature preserve.

The plan received California Coastal Commission approval in August, and port officials have been conducting outreach to potential developers and investors.

“That will be an almost $1.2 billion project,” Darbeau said. “That’s a great project for the port, a great project for the city of Chula Vista.”The first phase of the North Embarcadero Visionary Plan includes a 105-foot wide esplanade, plazas, shade pavilions and seating areas. A groundbreaking for the $28.6 million, 1.2-mile project was held in January.

“Phase one is being constructed right now,” Darbeau said.

The Unified Port of San Diego was founded Dec. 18, 1962 by the California State Legislature and since then, it has grown to become California’s fourth busiest seaport, after those in Los Angeles, Long Beach and Oakland, and rests in the top third of all US ports, according to the US Bureau of Container Statistics. Its two cargo terminals – the Tenth Avenue Marine Terminal in San Diego and National City Marine Terminal – import more than three million metric tons of cargo annually.

The National City Marine Terminal (NCMT) is a 125-acre, seven-berth facility operated by Pasha Automotive, which processes several hundred thousand cars annually, including Honda, Acura, Isuzu, Volkswagen, Nissan and Mitsubishi vehicles. NCMT, which has a maximum channel depth of 35 feet, is capable of handling over half a million vehicles annually, according to the port. Lumber and other large project cargo is also handled through the terminal.

The Tenth Avenue Marine Terminal is a 96-acre multi-purpose eight-berth facility with a maximum channel depth of 43 feet. Inbound cargo includes refrigerated commodities, fertilizer, cement, break-bulk commodities and forest products. The terminal features a million square-feet of warehouse and transit sheds as well as a 300,000 square foot cold storage facility.

Its principal inbound cargoes are perishables and refrigerated commodities, fertilizer, cement, break-bulk commodities and forest products, like newsprint. Primary export cargoes include refrigerated cargo, breakbulk and bulk commodities. Terminal tenant Dole Fresh Fruit imports about 185 million bananas through the terminal monthly; the port receives about 95,000 TEUs of Dole fruit annually.

As one example of the Port of San Diego's preparation for the future, the Tenth Avenue terminal is being prepared for the use of shoreside power at its terminals. Terminal electrification is a project the port has become invested in over the past two years.

“We first implemented it on our cruise ship terminal back in November 2010,” Joel Valenzuela, the port’s maritime operations director said of shoreside power, explaining that the port launched the effort in order to stay in front of upcoming California Air Resources Board emissions regulations that take effect in January 2014. Under the new regulations, three types of vessels will be required to use shoreside power when docked: cruise ships, container ships and refrigerated cargo ships – either refrigerated containers or refrigerated break bulk.

“They use a lot of power when they’re docked, either because the cruise passengers need electricity or to keep the perishable products fresh,” Valenzuela explained.

The regulations will apply to fleets that visit California ports and meet or exceed a minimum visit threshold: 25 annual visits to a port for container-ship and refrigerated-cargo ship fleets and five annual visits to a port for passenger-ship fleets. By Jan. 1, 2014, ships that fall under the regulations must plug into shoreside power at least 50 percent of the time while at California ports. The percentage gradually increases under the Air Resources Board rules to the point where by 2020, fleet operators will be required to reduce at-berth emissions from their vessels’ auxiliary engines at California ports at least 80 percent of the time.

A study conducted less than six months after shoreside power was installed at the port’s cruise terminal found that 22 tons of pollutants and 448 tons of greenhouse gases were reduced between when the shore power system went online in November 2010 and April 16, 2011.

The results showed the approximate emission reductions from 22 cruise ship connections for the Holland America ship Oosterdam while using the shore power system. Since then, more vessels have begun plugging in while at dock. In January 2012, port tenant Flagship Cruises & Events began transitioning its 11-vessel fleet to shore power, a $2.5 million project.

“Not all the cruise ships that come have been retrofitted, but those that have been retrofitted are able to access to shore power system,” Valenzuela said. Slated next for electrification is the Tenth Avenue Marine Terminal, whose primary tenant, Dole Fresh Fruit, signed an unprecedented 24.5-year lease in August. Under the terms of the agreement, the port and Dole have agreed to work together on infrastructure improvements. The port has committed to spending about $7 million to upgrade the land-side shore power infrastructure; Dole has agreed to pay for the vessel-side improvements.

One of the challenges facing the port during its 50th anniversary is sustaining business at its cruise terminal at the B Street Pier. The facility, which is home to three cruise ship berths, peaked at 255 vessel calls with more than 921,300 passengers in 2008 before gradually falling each year since, mainly due to decreasing interest in travel to Mexico because of the country’s drug cartel wars and resulting violence.

By 2013, the number of vessel calls is expected to drop under 100, according to port data, which would be the fewest since the late 1990s.

But Darbeau said he’s confident that all areas of port operations can thrive in the coming year and eventually become more competitive with the much larger competing ports to the north, thus essentially becoming the little economic engine that could.

“We’re going to build a Pacific gateway on this side of California, south of Los Angeles and Long Beach,” he predicted. “We’re going to build a Pacific gateway from San Diego and our region and be very, very important to global trade and the region’s economic vitality and job creation and a good standard of living.”

“The future is very good for the port as we go forward,” Darbeau said, adding that the next 50 yeras would be even better than the first 50.

Crowley, Jensen Maritime Receive Boat Awards

Crowley Maritime Corp. and subsidiary Jensen Maritime, the company’s Seattle-based naval architecture and marine engineering firm, were honored with two of the top 10 boat awards during the seventh annual International Workboat Show, which took place Dec. 5-7 in New Orleans.

The first award was for the design of two Crowley-owned ocean class tugboats, the Ocean Wind and Ocean Wave. The second was for Jensen-designed Murden, a hopper dredge vessel developed for the US Army Corps of Engineers.

“This nomination is especially poignant because it validates the fact that our ocean class vessels are being recognized for the contributions they are making in terms of design and support to the industry,” Crowley Vice President of Solutions John Ara said. “They were developed to be the workhorses of our tugboat fleet.”

The Ocean Wave and Ocean Wind are Dynamic Positioning 1 (DP1) tugboats and are twin-screw vessels equipped with controllable pitch propellers (CPP) in nozzles, high lift rudders and more than 149 MT bollard pull. They have an overall length of 146 feet, beam of 46 feet, hull depth of 25 feet and design draft of 21 feet.

The ocean class tugs were designed by Jensen and are the first of four to be constructed by Bollinger Shipyards, in Amelia, Louisiana. The second two tugs of the class, the Ocean Sky and Ocean Sun, will be classed as DP2 and are designed to be 10 feet longer.

Tuesday, December 11, 2012

Port of Long Beach, Panama Canal Renew Pact

The Port of Long Beach and the Panama Canal Authority have renewed an agreement that promotes more trade between the United States and Latin America.

With the renewal of the agreement, which first signed in December 2010, the two authorities agree to continue to share marketing ideas aimed at boosting trade between Long Beach and countries along South America’s east coast and in the Caribbean via the Panama Canal.

“This is an excellent example of how two institutions, each with more than 100 years of innovation, can share ideas to improve commerce, engineering and environmental sustainability,” Panama Canal Administrator Jorge L. Quijano said.

The memorandum of understanding also facilitates the exchange of ideas for seaport engineering, dredging and environmental practices. The accord also covers marketing activities and the exchange of technical expertise in training and other areas. “We continue to work together to increase our trade with the nations of Latin America,” Port of Long Beach Executive Director Chris Lytle said. “We see this pact as a long-term, mutually beneficial agreement.”

Trade with Latin America accounts for a small percentage of Long Beach’s annual trade volume, but port officials say they hope to expand service to emerging markets to boost future trade. The Canal is undergoing an expansion project expected to be completed by 2015, which would allow larger ships to transit.

The Port of Long Beach has similar agreements in place with ports in China, Europe and Mexico.

Oakland Port Exec Resigns Amid Scandal

Port of Oakland’s maritime director is stepping down in the wake of an investigation showing that he and another executive falsified a report regarding usage of a port credit card at a strip club.

The port announced Dec. 11 that maritime director James Kwon is retiring effective Dec. 28. He and former Executive Director Omar Benjamin were the two figures in the middle of the scandal, during which spending policies were violated.

An investigation conducted on the port’s behalf found that a $4,500 tab in Houston from 2008 was not actually a drink and dinner reception, as had been identified on an expense report, but a trip to a strip club. The investigation also found that in September 2009, Benjamin and Kwon expensed $925 to the port for a “business retention meeting” in Minneapolis that was actually another strip club visit.

Benjamin announced in mid-November that he was retiring as executive director after having held the position since 2007. He had been on paid leave since Oct. 18 as part of the investigation and was replaced on an interim basis by port Director of Aviation Deborah Ale Flint. Flint in turn placed Kwon on administrative leave Oct. 19.

The port says it has received repayment of the public funds that were spent during the two identified instances.

The investigation was conducted over the course of about a month by international law firm Arnold & Porter.

“While the vast majority of what was uncovered was an organization of people doing their jobs ethically and responsibly, we also found outdated policies, a few irresponsible actions, and a few isolated cases of improper expenditures,” Board President Gilda Gonzales said of the investigation.

As a result of the scandal, the port has developed what it calls its “Matrix for Responsible Expense Practices,” which sets new rules and regulations for port staff to follow. They include guidelines for spending on flights, hotels and meals and new rules establishing permissible spending levels for hotels and meals.

Also, the number of persons holding port charge cards is being reduced, and the port intends to step up enforcement of the existing purchasing card policies to hold both card holders and approving officials fully accountable.

“I am very pleased that the board has helped us turn a page toward transparency and accountability, which were goals when I was appointed,” Ale Flint said.

Foss Maritime to Begin Shipyard Expansion Project

Foss Maritime is expected to begin building a $1.7 million bulkhead expansion project in Rainier, Oregon within the next few weeks after the settlement of issues with the local government.

The expansion had been on standby for months because Rainier City Council members had been reluctant to surrender a piece of property that was needed for Foss to create a wildlife habitat area to compensate for the lost space due to the project.

An agreement was reached in early December however, that allows the city to have a portion of an acre for use as a pedestrian walking trail.

Foss’ bulkhead expansion project is designed to extend the company’s shipbuilding facilities 65 feet farther into the Columbia River and give crews another 10,000 square feet to build vessels. The company says it needs the extra space to handle its growing business.

The 2.2-acre Foss Rainier Shipyard is located on the Columbia River, across from Longview, Washington.

Foss Vice President of Technical Services Mike Magill told the Longview Daily News in a story for its Dec. 9 edition that the in-water construction needs to be completed before March to avoid disturbing fish runs.

Ship building crews should be able to use the addition while the fill settles for six to 10 months before the project is finally completed in November, according to Foss.

SEIU Ratifies Port of Oakland Contract

Service Employees International Union Local 21, which represents more than 200 port employees in the janitorial, custodial and maintenance fields, has ratified a new contract with the Port of Oakland, weeks after launching a strike.

A no concessions, four-year contract with the port was agreed to by union members during a Dec. 8 vote, according to the union.

The tentative agreement includes a 2.5 percent cost of living increase in 2013 and 2014, a signing bonus of $3,500 for each employee and all economic takeaways withdrawn, among others. It still needs to be approved by Oakland’s Board of Port Commissioners to become binding.

An estimated 500 Local 21 members and union supporters picketed the Port of Oakland Nov. 19, unhappy over the status of contract negotiations, which had dragged on for over a year.

The port has said the labor action caused disruptions at port terminals and negatively impacting truckers and longshore workers trying to move cargo.

But after less than a full day of picketing, Oakland Mayor Jean Quan managed to get both sides back to the bargaining table on Nov. 20 and 10 days later the tentative agreement was reached. The previous 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 2012, it was rejected when the rank and file voted in April.