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Friday, May 23, 2014

Seattle Container Volumes Continue Negative Trend

By Mark Edward Nero

Despite an increase in monthly container volumes at the other major West Coast ports in April, the Port of Seattle has continued to see volumes shrink in comparison with the same period last year.

Seattle terminals saw a total of 123,980 TEUs in April 2014, a 5.3 percent drop from the same month last year, according to port data. Volumes rose at most other major ports in April, including the ports of Los Angeles, Long Beach and Tacoma, which all saw double digit increases.

The Port of Seattle has not had a month so far this year where container volumes exceeded those of the corresponding month in 2013.

Of the nearly 124,000 containers that moved through Seattle last month, the majority were full containers being imported from overseas, 38,223 TEUs, followed by full containers being exported to foreign countries, 36,993 TEUs.

During the same month in 2013, about 131,000 TEUs moved through the Port of Seattle, including 45,547 full imports from overseas and 38,767 full exports.

For the year to date, Seattle terminals have seen 463,580 TEUs, which is a 10.8 percent drop from the 519,672 containers that were seen during the same four-month period last year.

The port first saw its numbers dip on a consistent basis when the Grand Alliance consortium of shippers began calling at the Port of Tacoma in July of 2012.

Even with the addition of two new customers – United Arab Shipping Co. and Pacific International Line came to the port in 2013 – volumes still have yet to grow back to mid-2012 levels.

Tacoma Container Volumes Continue Growth

By Mark Edward Nero

The Port of Tacoma said May 19 that it experienced double digit growth in year-over-year container volumes last month, thanks in part to larger vessels and an early jump on the traditional peak shipping season.

Volumes improved 10.4 percent in April compared to the same month last year, according to newly released port data.

The larger vessels calling Tacoma terminals brought additional cargo across the docks last month, according to the port, plus some shippers began moving cargo ahead of the peak season in an effort to avoid possible supply chain disruptions due to contract negotiations with West Coast dockworkers in the US Negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association began May 12; the current six year contract expires June 30.

For the calendar year to date, the port’s container volumes have improved three percent to 633,225 TEUs, according to data. Full containerized imports grew five percent on the year to 238,672 TEUs, while exports posted a four percent gain to 184,823 TEUs. Domestic volumes, however, were down one percent from the same four months in 2013.

Grain exports improved 31 percent year to date to 1.8 million short tons. Volumes appear to be returning to normal, the port said, following last year’s severe drought in the US Midwest and increased competition from South America.

Auto imports and break bulk cargo continued to post year-to-date increases, up 14 percent and 28 percent respectively. Log exports fell 32 percent as the housing market slowed in China and intermodal lifts continued to be down 11 percent.

New LB Harbor Commissioner Approved

By Mark Edward Nero

For the first time in its history, the Port of Long Beach’s Board of Harbor Commissioners will soon have a female majority. On May 21, the Long Beach City Council approved the appointment of longtime Long Beach City College executive Lou Anne Bynum to the harbor board.

“I’ve long worked with representatives of the Port of Long Beach to develop educational and job opportunities in support of economic and workforce development in the region, and I look forward to continuing those strong ties between the port and the educational community,” Bynum said in a prepared statement.

Bynum, who is expected to attend her first meeting as a Commissioner on Tues., May 27, becomes the third female member of the five-person panel, following Susan Anderson Wise, who was appointed to a six-year term by Mayor Bob Foster in December 2008 and Lori Ann Farrell, who was appointed to her first term by Foster in December 2013.

Bynum becomes only the sixth woman to have served on the board in its 103-year history. She fills the seat left vacant by the Nov. 19, 2013, departure of then-Board President Thomas Fields, who was removed from his seat in November 2013 after conflicting with the mayor. The unexpired term that Bynum now assumes expires in June 2015.

Bynum is the Executive Vice President of College Advancement and Economic Development for Long Beach City College, where she has previously served as Vice President and Administrative Dean.

She is also currently a board member for the Pacific Gateway Workforce Investment Network, Downtown Long Beach Associates and the Advisory Board for the Los Angeles County BizFed Institute. In the past, she has served as chair of the Long Beach Area Chamber of Commerce, vice chair of the Long Beach Economic Development Commission and president of the Southern California International Business Association.

P3 Alliance Launch Delayed Until Fall

By Mark Edward Nero

The launch of an alliance between the world’s three largest container companies has been delayed from mid-year to sometime in the fall, the companies said May 21.

The P3 Alliance, made up of shipping giants CMA CGM, Maersk Line and Mediterranean Shipping Co., was announced in June 2013 as a long-term operational vessel sharing agreement on routes covering Asia to Europe as well as transpacific and transatlantic routes to the United States, with an overall aim of making container liner shipping more efficient and improving service quality for the shippers.

Indications are that the P3 network will be operated from new management offices in London and Singapore with a staff of about 200. The proposed Alliance has already named Maersk Line’s Lars Mikel Jensen as its Chief Executive Officer.

Maersk Line has estimated that after the alliance is put into place, market control would be at about 42 percent on the Asia to Europe route, 24 percent on the transpacific routes, and 40 to 42 percent on the transatlantic route.

The US Federal Maritime Commission, after holding a summit last December with its European and Chinese counterparts, approved allowing the agreement to become effective in the US However, the coalition still faces questions from maritime authorities in Asia and Europe, which is being cited as a partial cause for the delay of the alliance’s launch.

Among the various concerns the Federal Maritime Commission and other regulatory bodies have expressed about the proposed alliance are a reported vessel reduction if alliance is consummated.

Tuesday, May 20, 2014

West Coast Ports Prepare for the Future


West Coast US ports from California to Alaska find themselves confronting a perfect storm of challenges coming from different directions – challenges that can become opportunities or disasters, depending on how they are addressed.

The root of many of the challenges for container ports from Seattle to San Diego is the shifting dynamic of the container market and the ships that serve it.

"There is a major paradigm shift going on," said Mike Moore, vice president, Pacific Merchant Shipping Association. "The newer, bigger container ships have gotten a lot cheaper to build. A 19,000 TEU vessel will be launched in May. That is 72 miles of containers – in the mid-90's 5,200 TEU was considered a mega-ship.

"The cost for size has gotten less, capacity is high and there is not enough cargo," he said. "The result we are seeing is suppressed rates and mega-alliances. The larger ships combined with the mega-alliances like P3 will impact gateway choices."

The 19,000-TEU mega-vessels will ply the Asia to Europe trade. West Coast ports will see vessels in the 10,000 to 14,000 TEU range. Los Angeles and Long Beach can handle the 14,000 TEU vessels in weekly streams of five or six, while Seattle and Tacoma are more comfortable with the 10,000 TEU ships.

"The question for Seattle is whether larger ships will find their way here – and when?" said Moore. "Seattle currently has low utilization rates, which makes the cost per container higher."

One solution to Seattle's conundrum may be in working more closely with neighboring Tacoma to make the Puget Sound gateway more competitive. The two cities have received approval from the Federal Maritime Commission to enter into discussions on the subject.

One area where Seattle and Tacoma have already started cooperating is their collaborative efforts with the Port of Vancouver on the Northwest Ports Clean Air Strategy to reduce emissions from shipping and port operations in the Georgia Basin–Puget Sound airshed.

"Phase One of the North American Emission Control Plan went into effect in 2102," said Moore. "The ability to meet or exceed the standards – .1 means you are down to distillates – will lead to gateway choices.

"Collectively, we have more big changes hanging over our heads in 2014 than at any time in the last 25 years," said Moore. "You have the environmental uncertainty and cost, and container ships are moving away from a model where they own their terminals, which reduce utilization and impacts feasibility," he said. "The Port Authority can only do so much, there are only so many tools in the tool kit."

While Seattle and Tacoma huddle to chart a path into their joint future as a gateway, Long Beach and Los Angeles have been busy investing billions to meet the challenges of ever-larger TEU vessels head on.

More than one billion dollars in capital upgrades are underway at the Port of Los Angeles, including new terminals, wharf extensions, new on-dock rail facilities, deeper water at berths, crane installations, upgrading 50 acres of backlands and doubling the size of China Shipping's terminal to 142 acres. Another $370 million is being spent on the Main Channel Deepening Project, which will guarantee 53-foot-deep access to the port's containership berths.

Los Angeles has moved more containers than any other port in the nation over the last decade, more than doubling its volumes in the 10-year period. In 2010, the port's cargo terminals handled 7.8 million TEUs. Home to the nation's largest on-dock rail assets, Los Angeles provides the highest frequency of intermodal access to 14 major freight hubs across the United States.

The Port of Long Beach has even more ambitious plans for capital improvements, $4.4 billion dollars' worth of capital upgrades intended to prepare the port for larger ships and more traffic.

The Gerald Desmond Bridge replacement is the most dramatically visible of those upgrades. The bridge is a vital link in the nation's trade system that handles 15 percent of the nation's cargo and is a major commuter corridor. The original bridge was completed in 1968 and is deteriorating. The $1.2 billion replacement project will ensure the safety of commuters and truck drivers, and improve navigation safety for the ships passing beneath. Construction began in 2013 and will take at least three years. The old bridge will be dismantled when the new one is opened.

Another $1.3 billion is being invested in the Middle Harbor Redevelopment project – upgrading two aging shipping terminals into a single, 305-acre state-of-the-art terminal designed for higher productivity and better environmental performance. The program will add on-dock rail capacity, shore power hookups and the latest in advanced crane technology to move twice the cargo with half the air pollution. Features include electric rail-mounted gantry cranes and LEED-certified buildings. Construction began in 2011 with wharf improvements and new electrical infrastructure. The nine-year project will rehabilitate and modernize facilities across Piers D, E and F.

Other improvements at Long Beach include the $500 million Pier G modernization project, $65 million yet to be invested to dredge and widen the Cerritos Channel in the Port of Long Beach, which will improve safety and navigation, and between $300 million and $650 million to redevelop an existing rail yard on Pier B and remove rail bottlenecks in the port. A recently completed $100 million program equipped Piers A, G, J and T with the infrastructure for vessels at berth to plug into shore power.

One of the elephants in the Pacific for West Coast ports is the potential impact from the expansion of the Panama Canal. Speculation is rampant regarding the shifting of container traffic to Gulf and East Coast ports.

A recent report issued by a commission formed to promote prosperity and stability to the Californian city of Los Angeles is betting that the Canal expansion will bring more, not less, traffic to West Coast ports.

The Blue Ribbon Commission 2020 has suggested a possible merger between the ports of Los Angeles and Long Beach. The commission stated that the two ports should work together to carry the influx of new vessels from the Panama Canal expansion – that the ports "should be competing with ports in other regions, not with each other."

The commission also said that a merger makes sense because of a drop in market share at the ports of LA and Long Beach, the busiest seaports in the US. The ports' combined market share fell more than 5 percentage points in the last ten years. "That drop in market share alone is the size of the fifth-biggest port in the country, Seattle-Tacoma, which accounts for more than 60,000 jobs and has in excess of $100 million in revenue," the commission said. "We should fight to bring those jobs and tax revenues back to Los Angeles."

The commission's suggestion does not have the support of Long Beach port officials. "Simply put, this is a bad idea," said Doug Drummond, president of the Long Beach Board of Harbor Commissioners. "The Port of Long Beach is not interested in a merger with our neighbor.... I can assure you that the Port of Long Beach is better run by the citizens of Long Beach."

Then there is the point of view that the Panama Canal expansion may not be such a game changer after all.

"From our perspective, the real game is not Panama Canal expansion," said Noel Hacegaba, Acting Deputy Executive Director for the Port of Long Beach. "Our perspective is that it is the growing size of vessels that will have the greatest impact on our port facilities and traffic.

"Here at Long Beach, we already receive 14,000-TEU container ships, whereas the Canal will only handle ships up to 12,500 TEU. The real competition to the Panama Canal is the railroad."

And the real competition to West Coast US ports is from the Canadian and Mexican ports of Prince Rupert and Lazaro Cardenas, respectively, said Hacegaba. "A couple of years ago the Mexican government offered the Lazaro Cardenas concession to APM Terminals, which belongs to the Maersk Group."

Lazaro Cardenas, under APM management, could offer the same kind of competitive threat to Los Angeles/Long Beach that Prince Rupert, BC offered to the ports of Seattle and Tacoma. "Prince Rupert's growth was driven by taking container traffic from Seattle and Tacoma," said Hacegaba.
Meanwhile, almost all the other West Coast US ports are growing, especially in breakbulk and ro/ro traffic, as well as bulk and agricultural commodities.

The Port of San Diego is focusing on the specialty cargo business. In August 2013, the Port completed a $3 million Capital Improvement Project at the Tenth Avenue Marine Terminal to provide more flexible berthing and to improve its ability to handle specialty cargo that requires large space for storage and staging. The project included the demolition of transit sheds and warehouses. The demolition provided an additional 58,000 square feet of open space at Tenth Avenue Marine Terminal.

San Diego has also switched on its new shore-power system at the Tenth Avenue Marine Terminal, which will improve air quality and reduce greenhouse gas emissions by allowing cargo vessels to "plug in" rather than run their diesel engines while in port.

North of Los Angeles, Port Hueneme is positioning itself to be ready when, and if, a federal short sea shipping initiative to divert cargo from the nation's highways to its waterways begins making substantial inroads. Short sea shipping involves all-water routes where barges and smaller vessels transport cargo between larger ports to reduce wear and tear on roads, cut traffic congestion and reduce air emissions.

"We don't want to sit back and watch what's going on," said Kristin Decas, the port's executive director. "We want to engage. If the public policy emerges, and short sea shipping starts evolving, we want to make sure we're on the map."

In the San Francisco Bay area, the Port of Oakland is moving forward on a $500 million Phase 1 redevelopment of the former Oakland Army Base (OAB) into a modern intermodal logistics cluster. The development includes new utilities across the entire site, a new bulk terminal, modern warehousing and cold storage facilities, and a recycling facility on the City side, as well as a new rail yard on the Port side of the property.

Last July, the Oakland Board of Port Commissioners unanimously approved a litigation settlement agreement with SSA Terminals, LLC and SSA Terminals (Oakland), LLC (collectively, "SSAT"), one of the Port's major long-term seaport tenants.

The settlement involves four of the Port's seven marine terminals, and will create operationally the 3rd largest terminal on the US West Coast. In terms of size and operational efficiencies, this new "mega-terminal" will be more in line with competing terminals, allowing the Port to sustain and attract more maritime cargo, which currently supports approximately 40% of the 73,000 jobs the Port generates annually in the region.

There is also a Marine Highway Initiative to establish a "container on barge" service stretching from West Sacramento to Oakland with stops in Stockton. The goals are to provide a viable marine highway service between regional ports, improve goods movement in Northern California and reduce truck traffic congestion and emissions on major roadways. Additionally, the service aids shippers by reducing the costs to ship heavy containers.

The story is the same all the way up the West Coast. The California ports of Redwood City, Stockton, Sacramento, and Humboldt Bay are all beginning or in the middle of expansion and improvement projects, as are ports in Oregon and Washington. Alaska ports are also expanding and improving their facilities, preparing for more traffic from the opening of the Arctic sea routes and increased petroleum exploration and development activity. It seems the Panama Canal expansion could be the least important factor in the planning matrix of US West Coast port leaders.


Port of Seattle to Renovate Terminal 5

By Mark Edward Nero

The Port of Seattle and Eagle Marine Services, which operates Terminal 5 at the port, announced a proposal on May 16 to relocate EMS’ cargo and breakbulk activities to another terminal so that Terminal 5 can be modernized in order to handle larger vessels.

Under the proposal, EMS would shift its operations to Terminal 18, allowing it to preserve container volume and ship calls. Cargo destined to T5 would begin transitioning to T18 in mid-June. The proposal is still tentative, pending final approval by the Port of Seattle Commission, however some commissioners have already indicated they’re in favor of the plan.

“If we’re going to keep jobs in Washington state, we need investments that make us globally competitive,” Port of Seattle Commissioner Bill Bryant said. “That’s why we’re rebuilding T5.”
While three of the port’s container terminals are already home to Super Post-Panamax cranes that service 10,000 TEU vessels and above, the existing cranes at Terminal 5 are not able to handle these bigger ships.

“T5 needs to be modernized for the bigger ships that are already here, we applaud the port in working with us to preserve our customers’ cargo through this gateway,” Eagle Marine Services COO Nathaniel Seeds said in a statement.

In addition to the potential Terminal 5 rebuild, the port has also received approval from the federal government to let the U.S. Army Corps of Engineers begin studying the potential for a project that may result in the deepening of the West Waterway channel near the terminal.

“As we are working to preserve maritime jobs in Seattle, the Commission is moving forward to strengthen cooperation with the Port of Tacoma to increase trade in Puget Sound,” Port of Seattle Commissioner John Creighton said.  “We’re having productive talks on how we can make the Puget Sound gateway more competitive and create new jobs.”

POLB Monthly Cargo Volumes Surge

By Mark Edward Nero

Overall cargo numbers for containers at the Port of Long Beach were up 9.7 percent in April 2014 compared to the same month last year, according to newly-released data.

Following a slow March, which the port attributes in part to the harsh winter in other parts of the country, April container volumes rebounded as weather and shopping patterns returned to normal.

A total of 569,843 TEUs moved through Port of Long Beach container terminals in April. The total number of TEU imports was 295,712, an increase of 11.9 percent from April 2013, while exports jumped 6.3 percent to 146,498 TEUs over the same period. Also, empty containers were up 8.8 percent to 127,633 TEUs.

Following a weak first quarter at the POLB, overall volume for the first four months of 2014 is up just one percent compared to the same period last year. For the fiscal year, which began in October, total volumes are up 2.8 percent compared to the same seven months in FY 2013.

Last year, against which 2014 is being compared, was the third-busiest year in port history with a total of 6.73 million TEUs.

Additional details on Long Beach’s latest monthly cargo numbers can be found at http://www.polb.com/economics/stats/latest_teus.asp. More details on all cargo numbers are available at www.polb.com/stats.

POLA Monthly Container Volumes Up 10 Percent

By Mark Edward Nero

The Port of Los Angeles has released its latest monthly containerized cargo volumes, and in April 2014, overall volumes rose 10.26 percent compared to April 2013, according to the data.

The total cargo moved during the month was 706,036 TEUs, making it the port’s busiest month since September 2013.

Container imports rose 11.43 percent, from 486,910 TEUs in April 2013 to 537,071 TEUs last month. Exports rose eight percent, from 160,129 TEUs in April 2013 to 172,945 TEUs in April 2014.

Combined, total loaded imports and exports were up 10.30 percent, from April 2013’s 486,910 TEUs to April 2014’s 537,071 TEUs. Factoring in empties, which increased 10.13 percent year over year, the overall April 2014 volume of 706,036 TEUs was an increase of 10.26 percent compared to April 2013’s 640,300 TEUs.

For the first four months of calendar year 2014, the overall volume of 2.62 million TEUs represented an 8.21 percent increase compared to the same period in 2013. For the fiscal year to date, TEU volumes are up 4.4 percent, rising to 6.78 million TEUs from 6.49 million.
The POLA’s current fiscal year began July 1.

Current and past data container counts for the Port of Los Angeles may be found at:

Seattle Maritime Environmental Business Awards Presented

By Mark Edward Nero

Holland America Line was among the recipients of environmental and community leadership awards given out recently during the 63rd Annual Maritime Festival Luncheon May 15 at the 2014 Seattle Maritime Festival.

The Annual Maritime Festival Luncheon, sponsored by Vigor Industrial, Port of Seattle and the Seattle Propeller Club, is used by the maritime community to showcase individuals and businesses in Puget Sound.

The Marine Environmental Business Awards component of the luncheon spotlights the Pacific Northwest maritime industry’s environmental leadership and commitment to the Port of Seattle’s environmental initiatives.

“We’re pleased to salute Holland America Line for their environmental leadership,” Seattle Port Commission Co-President Courtney Gregoire said during the awards ceremony. “From reducing air pollution and increasing recycling to serving 100 percent sustainable seafood, Holland America Line continues to serve as a tremendous community partner.”