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Friday, April 11, 2014

Survey: LNG Usage Developing Fast in Coming Years

By Mark Edward Nero

Liquefied natural gas could account for 13 percent of the bunker fuel market supply by 2020 and 24 percent by 2025, according to a newly released study by Lloyd’s Register.

The results of the 2014 Lloyd's Register’s LNG Bunkering Infrastructural Survey were released April 7. The report surveyed 22 major ports around the globe, including those in Los Angeles, Long Beach and Vancouver, British Columbia.

Shipowner demand for LNG was found to be the biggest driver from the ports’ perspective, with the availability of LNG infrastructure being the second most important driver.

Among the report’s other key findings:
  • Fifty-nine percent of the ports surveyed have specific plans for LNG bunkering infrastructure. Lack of in-port infrastructure will not hamper LNG bunker delivery plans.
  • Seventy-six percent of the ports believe that LNG bunkering operations will commence at their port within five years.
  • Seventy-three percent of ports say that LNG will be supplied by existing onshore LNG terminals. In the short term, ports will rely on third party specialist suppliers to supply gas from terminals to ship – mainly by either truck or bunker barge.
  • In the longer term, 47 percent of ports said they will have dedicated LNG storage capability for bunkering.
  • Eighty-six percent of the ports surveyed indicate that it is either likely (54 percent) or very likely (32 percent) that demand for LNG will be from deep-sea ships within a three to 10-year time horizon.

The study also found that no significant change in bunker delivery methods is anticipated – for example, if HFO bunkers are being supplied by barge today it is expected that LNG will be delivered by barge in future.

The complete survey can be seen at http://go.lrenergy.org/lngsurvey2014.

MARAD Schedules Maritime Symposium

By Mark Edward Nero

The US Maritime Administration (MARAD) says it is seeking leaders in all segments of the US maritime industry to participate in a National Maritime Strategy Symposium scheduled for Tues., May 6 at MARAD headquarters in Washington, DC.

The agency says its seeking participants to help it identify concerns, opportunities and issues facing the US maritime industry.

The symposium’s focus is on domestic US maritime issues. Principal focus areas are planned to include: US ports, domestic shipping, US shipyards, environmental compliance & maritime energy use, and labor/workforce.

In January, MARAD conducted the first of two National Maritime Strategy Symposiums, where over 200 maritime stakeholders came together to discuss and respond to the issues facing US-flag vessels. The purpose of initial meeting was to solicit input from individuals that will be used to generate ideas to improve, strengthen, and sustain the cargo opportunities and sealift capacity of the US-flagged fleet engaged in international commercial trade.

The second symposium is planned for MARAD Headquarters, 1200 New Jersey Avenue SE, Washington, DC, 20590. It’s open to the public, but seating is limited and advance registration is required. Registration is on a first come, first served basis.

Following this initiative, MARAD says it will develop new policies to: “keep America’s sealift capability robust; protect our long-term economic interests; and maintain the strategic assets of the US Merchant Marine.”

West Coast Ports Awarded EPA Grants

By Mark Edward Nero

Four West Coast ports as well as two on the East Coast will share a total award of $4.2 million in grant funding for clean diesel projects, the US Environmental Protection Agency announced April 8.

The ports of Hueneme, Los Angeles, Seattle and Tacoma, as well as the Maryland Port Administration and the Virginia Port Authority, will share the funding. The grants, part of the Diesel Emissions Reduction Act, will fund projects such as replacing older heavy-duty drayage trucks with trucks powered by 2010 or newer certified engines, retrofitting cargo handling equipment with diesel particulate filters and supplying shoreside power to ocean going vessels.

“Ports are the main gateway for US trade and are critical to our country’s economic growth, yet the communities surrounding ports face serious environmental challenges,” EPA Administrator Gina McCarthy said in a statement. “Through collaboration and innovation, we can achieve the goals of economic growth and environmental stewardship.”

The Port of Seattle is set to receive the most funding, $1.2 million, which is to go toward a drayage truck replacement project. The project provides incentives to replace 40 older heavy-duty drayage trucks with trucks powered by 2010 or newer certified engines.

The Port of Tacoma has been awarded about $602,000 for a project to repower a Tier 0 switcher locomotive with a Tier 3-Plus engine equipped with an automatic start-stop system to reduce idling.
The Port of Hueneme was awarded $500,000 for a project to complete the electrification of a major wharf and allow the port to supply shoreside power to ocean going vessels at all three berths simultaneously, thereby reducing emissions from ship idling.

The Port of Los Angeles is to receive $469,000 for a project to retrofit 14 pieces of cargo handling equipment at the port with diesel particulate filters.

The Maryland Port Administration and Virginia Port Authority were awarded $750,000 each for emission reductions projects at their ports.

Port of Kalama Approves Methanol Production Agreement

By Mark Edward Nero

The Port of Kalama Commission on April 10 voted to approve a lease agreement with NW Innovation Works to build and operate a $1.8 billion manufacturing plant on port property that would produce methanol from natural gas.

The lease calls for a two-year contingency period allowing the port and NW Innovation Works to conduct in depth analysis of environmental, safety and feasibility issues. After all contingencies have been satisfied, a 30-year lease for construction and operations would begin.

“I’m very happy that the port and NW Innovation Works have reached this milestone,” Gov. Jay Inslee said in a statement released by the port. “I have instructed my Department of Commerce to continue working with the Port of Kalama and the company on this opportunity.”

The facility would create 1,000 jobs during construction and 200 permanent family wage jobs during operations, Port of Kalama Commission President Alan Basso said. The methanol produced would be exported to Asia.

“NW Innovation Works still has more work to do evaluating the site and we’ll be talking with lots of people – city, county, school and fire district officials – and with citizens,” Basso said.

According to the port, the upcoming environmental and regulatory approval processes includes numerous opportunities for community input, particularly through Commission meetings. The port says it will publicize points in the process when issues related to the proposal are under consideration.

“Our partnership with the Port of Kalama demonstrates that we don’t have to choose between a healthy environment and a thriving economy,” NW Innovation Works CEO Simon Zhang said. “This project has the potential to transform the local economy while working to reduce China’s dependence on coal.”

Additional information about the NW Innovation Works proposal can be found at http://nwinnovationworks.com/#kalama.

Tuesday, April 8, 2014

Port of LB Interim CFO Quits

By Mark Edward Nero

Thomas Franklin, who was named interim Chief Financial Officer at the Port of Long Beach just last month, is resigning to join the port’s former CFO at Los Angeles-based commuter rail system Metrolink. His exit continues what has been a yearlong exodus of upper managers at the port.

Franklin said April 7 that he’s accepted a position as Metrolink’s comptroller and will depart his current role later this month. In his new job, he’ll report to former POLB CFO Sam Joumblat, who was named Metrolink’s CFO in February after six years with the port.

Franklin had been Joumblat’s assistant at the port since 2009. His departure is just the latest in a string of exits by Long Beach managers over the past year, the most significant of which was the resignation of then-Executive Director Chris Lytle in May 2013 to take the same role – but with higher pay – at the smaller Port of Oakland.

In addition, the positions of Deputy Executive Director/Chief Operating Officer, Managing Director of Trade Development & Port Operations, Director of Construction Management, Managing Director of Environmental Affairs and Chief Finance Officer have all come open over the past year, some of which, but not all, have been filled.

Last month, Doug Albrecht, the port’s director of information management, announced his retirement, and port maintenance director Randy Rich announced he was also leaving.

Additionally, two seats on the port’s Board of Harbor Commissioners came open last November after the Long Beach City Council fired then-board President Thomas Fields and Vice President Nick Sramek resigned. One seat was filled in early December by Lori Ann Farrell, a former Chief Financial Officer for the City of Long Beach, but the seat formerly occupied by Fields currently remains vacant.

Judge Throws Out ILWU Suit Against Port

By Mark Edward Nero

US District Court Judge Michael Simon on March 28 dismissed a federal lawsuit by the International Longshore & Warehouse Union that aimed to stop hundreds of thousands of dollars in aid authorized by the port for a terminal operator and several ocean carriers as reimbursement for costs incurred during labor unrest.

The ILWU filed its legal complaint in August 2012, alleging the subsidies violated the Oregon state constitution, which prohibits using tax dollars to benefit private firms.

In August 2012, the Port of Portland Commission authorized the payment of about $700,000 to ICTSI to offset operating costs and lost revenue associated with labor unrest associated with Terminal 6. On July 11 of the same year, the commission authorized payments totaling tens of thousands of dollars to shipping lines to compensate them for losses incurred during the unrest.

The ILWU had cried foul, saying that the expenditures were against both federal labor law and the Oregon state constitution. The crux of the union’s argument was that public entities like the port are prohibited from helping one side or the other in a private sector labor dispute and that the port’s “gifting” of funds doesn’t fall within the permissible exception of certain business activities that the Oregon Constitution grants the port.

The port, however, said that rather than direct payments, the reimbursements would come in the form of rent payment credits and that no tax revenues would be used. In his ruling, Simon said the port was right. “The undisputed facts show that no tax revenues were used for the 2012 or 2013 rent or carrier programs by the port,” Simon said during the March 28 hearing in Portland.

The port had authorized the aid during the midst of a labor battle between the ILWU and the International Brotherhood and Longshore Union over work at Terminal 6. An ILWU work slowdown led to some shippers temporarily opting to bypass the Port of Portland for other West Coast ports, prompting Portland’s port commission to take the step of offering reimbursements to the shippers and ICTSI.

A Corporate Struggle for Russia's Largest Port

By Eugene Gerden

Novorossiysk Commercial Sea Port (NCSP), Russia's largest sea port and one of the largest in Europe may be in the center of a corporate fight between its major shareholders, which may negatively affect its activities and result in the decline of revenue.

So far, the port has been controlled equally by Transneft, a Russian state-controlled business responsible for the national oil pipelines and Summa Group, a diversified private holding, specializing in investment activities in port logistics, engineering, construction, telecommunications and the oil and gas sectors, however both companies have recently announced their plans to split up the business.

Nikolay Tokarev, President of Transneft, said yesterday that Transneft plans to become a sole owner of the port's oil terminals, while Summa Group will focus on the transshipment of dry cargo.

According to Tokarev, in addition to the split, the companies are discussing the division of the spheres of influence, where each company will nominate its deputy general director to oversee each of the directions.

The conflict between the owners of the port began earlier this year. In February Mr. Tokarev, in an interview with Russian business paper Kommersant, sharply criticized its partner for the ways of the port's management. After that, Transneft initiated a change of the port's CEO and its board.

The controlling stake in the port (50.1 percent) is currently owned by Novoport Holding Ltd, which is a joint venture of Transneft and Summa. At the same time Transneft itself holds another 10 percent stake in the port, while the remaining 20 percent is held by the Russian government via the Federal Property Agency.

In the meantime, there is a possibility that the current uncertainty in the port's management could play into the hands of Rosneft and ExxonMobil, as the partners have repeatedly expressed an interest in the acquisition of the state's 20-percent stake in the port and, if possible, to increase it in due course.

According to Igor Sechin, head of state-owned Rosneft, the Russian company and ExxonMobil are interested in the acquisition of the port, as the companies are looking for a base for the development of the Black sea shelf.

Several weeks ago Sechin sent an official letter to Russia's President Vladimir Putin, asking to approve the potential deal.

Formally, state-owned companies are barred from participating in the privatization of assets, but there is a mechanism to avoid such a restriction, in the case of a sale of such assets in favor of a particular investor without an auction. In the case of the Novorossiysk Port, which has a strategic status, the decision must be taken by presidential decree.

At the same time the current owners of the Novorossiysk Port have already opposed the possible arrival of the oil companies in the list of its major shareholders, believing that this may result in the revision of the strategy of development of the port until 2018, which was recently approved by its management. There is also a possibility that the current corporate conflict may also result in the revision of the strategy.

The strategy involves a significant expansion of the current capacities of the port, through the building of new terminals and the expansion of existing facilities.

At present the annual cargo turnover of the port is estimated at about 90 million tons, however there is a possibility that it can be increased up to 200 million tons by 2020, in the case of a successful implementation of the strategy.

Total volume of investments is estimated at RUB 30.9 billion (USD$1.1 billion), of which 4.8 billion rubles will be invested already in 2014. Particular attention will be paid to increasing the transshipment of high paying freight, taking into account that currently up to 60 percent of the port's space is occupied by cargo, which generates only 20 percent of EBITDA.

Meanwhile, in the Russian port industry overall, last year total volume of cargo transshipment increased by 3.9 percent, compared to 2012, and reached 589 million tons, according to the official data of the Russian Association of Sea Trade Ports.

The biggest growth was observed in the segment of coal, whose transshipment volume increased by 13.3 percent over 2012 and reached 101.1 million tons. The growth was also observed in the segment of fertilizers (up 24 percent to 12.9 million tons) and containerized cargo (up 4.1 percent to 44.4 million tons). The transshipment of crude oil increased by 4.6 percent to 207.5 million tons, while ore was down by 2.8 percent to 7.4 million tons.

In the case of geography, the biggest growth rates observed were at the seaports of the Arctic basin, where the transshipment increased by 20 percent. At the same time, according to analysts' predictions, the volume of transshipment through the Russian Arctic seaports will continue to grow, due to the planned construction of a new port at Sabetta and associated with the increase of cargo through the Northern Sea Route.

Eugene Gerden is a free-lance writer based in Moscow, Russia who has covered the European maritime industry for 10 years. He can be reached at gerden.eug@gmail.com.

Crowley Buys Ship Management Company

By Mark Edward Nero

Crowley Maritime Corp. said April 7 that it has acquired majority ownership of Accord Ship Management Ltd. and Accord Marine Management Pvt. Ltd.

Accord, which has offices in Hong Kong, India and the Netherlands, manages 23 vessels and has 55 employees. The acquisition is expected to result in a combined fleet of over 60 vessels managed. The deal also increases the size and scope of Crowley’s technical ship management group while supporting the company’s expansion into the international ship management market. It also makes Crowley one of the rare US companies that provide third-party international crewing and technical ship management.

“After several visits to observe their culture and operations, we are convinced that Accord is the right fit to complement Crowley’s existing operations,” Mike Golonka, Crowley’s vice president of ship management said in a statement announcing the acquisition. “Accord has built a team that allows access to trained, qualified mariners without the additional expense of third-party crewing companies, something potential customers are demanding.”

The Accord acquisition will be managed by Crowley’s ship management group, which provides all phases of commercial ship management along with full technical management and government contracting.

The Accord acquisition provides Crowley with an immediate international book of business and an established entry into the international ship management market. Accord also offers Crowley the opportunity to provide additional and more regionalized support to its worldwide operations, including its solutions, liner, logistics, petroleum services and salvage.

San Diego Shore Power Project Wins Award

By Mark Edward Nero

The shoreside power system at the Port of San Diego’s Tenth Avenue Marine Terminal was selected in March as a public works 2014 Project of the Year by the American Public Works Association, a not-for-profit, professional association of public works agencies, private companies and individuals.

The shore power system, which was dedicated Feb. 24, aims to improve air quality and reduce greenhouse gas emissions by allowing cargo vessels to plug-in and use electrical power from San Diego Gas & Electric instead of relying on diesel fuel engines while in port.

Construction on the $4.25 million project began in mid-2013 and was funded by the port’s Capital Improvement Program. The contractor was San Diego-based NEWest Construction.

The project was undertaken as part of a mandate set forth by the California Air Resources Board requiring California ports and terminals to provide shore power to container, passenger and refrigerated-cargo ships.

The Port of San Diego is already equipped to provide shore power to cruise ships that berth at both its B Street Pier Cruise Ship Terminal and Broadway Pier.

“The port is proud to be honored for a project that contributes to our environmental stewardship around San Diego Bay,” Board of Port Commissioners Chair Bob Nelson said in a statement.

Puget Sound Maritime Achievement Award

By Mark Edward Nero

The 2014 Puget Sound Maritime Achievement Award Selection Committee is accepting nominations for this year’s award to be announced at the Seattle Propeller Club’s May Seattle Maritime luncheon. The Puget Sound Maritime Man of the Year award began in 1951 when the newly formed Puget Sound Maritime Press Association decided to honor maritime leaders deserving special recognition. The association started the Maritime luncheon as a venue for presenting the award, which was renamed the Puget Sound Maritime Achievement Award in 1993, in recognition of the increasingly important role of women throughout the maritime industry.

Nominations must be received by April 14, 2014 and may be e-mailed to Rich Berkowitz at rberkowitz@trans-inst.org. Nominations should include specific achievements of the candidate, particularly those impacting the Puget Sound maritime community, and a brief biography of the nominee. Industry segments represented by past recipients include steamship lines and agents, tug and barge operators, marine architects, passenger and fishing vessel operators, port authorities, stevedores, and labor. Several paragraphs about the nominee are sufficient.

You may also send your nominations for the recipient of the Public Official of the Year Award recipient. Each year the Seattle Propeller Club recognizes a local elected or public official whose outstanding work or service has made a significant contribution to maritime commerce in the Pacific Northwest. A brief summary of the nominee’s qualifications for the award is welcome.

Contact Rich Berkowitz at (206) 443-1738 with any questions about either award nomination.