Monday, December 22, 2014

Oakland Port Implements Anti-Congestion Measures

By Mark Edward Nero

The Port of Oakland said Dec. 22 that it has taken additional steps in an ongoing effort to manage container ships that have been arriving with unprecedented frequency the past few months within the San Francisco Bay.

The measures include a gate that was opened Dec. 21 at one of the port’s largest marine terminals to discharge additional import cargo; and an operational status update sent daily to hundreds of harbor truckers, ocean carriers and shippers to improve supply chain planning.

The port says the added features are expected to improve cargo flow, which has been slowed by increased container volume and a multitude of delayed vessels arriving simultaneously. From Dec. 20 to 22 alone, 13 ships called in Oakland; most well behind schedule, according to the port. Maritime officials say the number of ships in the SF Bay outstrips anything seen in the past decade.

“We welcome increased cargo volume at Oakland and we’ve got to do a better job of managing the flow,” port Maritime Director John Driscoll said. “We’re working every day with the marine terminals, truck drivers and shippers to pick up the pace.”

Import cargo volume has increased at Oakland in each of the last three months compared to 2013 totals. The port attributes the gains to aggressive marketing as well as congestion at other ports which caused cargo diversions to Oakland.

The port has said it has capacity to accept additional containers, but that operations have been hampered by off-schedule ships and recent labor-management disputes on the docks. The result has been a slowdown in cargo movement and long lines of trucks waiting to enter terminals.

Oakland has responded with extended hours, night gates and dedicated lanes in terminals to expedite simple transactions. The daily status update launched Dec. 22 is expected to provide the latest information on vessel arrivals, terminal operations and truck queues outside terminal gates.

Also, the Port of Oakland says, terminal operators plan to continue occasional night and weekend gates until cargo flows normalize. The port expects cargo volumes to moderate soon now that the peak holiday shipping season has passed.

Horizon Selling Assets to Matson, Pasha

By Jim Shaw

Matson Inc. and Horizon Lines announced Nov. 11 that they've entered into a merger agreement under which Matson will acquire the stock of Horizon, including its Alaska operations and the assumption of all non-Hawaii business liabilities.

Horizon also announced separately Nov. 11 that it has agreed to sell its Hawaii operations to the Pasha Group for $141.5 million and intends to shut down its Puerto Rico liner operations by the end of 2014.

Under the terms of the merger agreement, Matson is to acquire Horizon for 72 cents per share, or $69.2 million, plus the repayment of debt outstanding at closing. The total value for the Transaction is $456.1 million before transaction costs, based on Horizon's outstanding debt as of Sept. 21, 2014, minus the anticipated proceeds from the Hawaii business sale.

Horizon has a long operating history in Alaska. The company deploys three diesel-powered Jones Act qualified containerships and operates port terminals in Anchorage, Kodiak and Dutch Harbor. Its Alaska service consists of two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor. Horizon also has a reserve steam-powered Jones Act containership for drydock relief.

"The acquisition of Horizon's Alaska operations is a rare opportunity to substantially grow our Jones Act business," Matson President & CEO Matt Cox said. "Horizon's Alaska business represents a natural geographic extension of our platform as a leader serving our customers in the Pacific. We are also encouraged by the long-term prospects of the Alaska market, which mirrors Hawaii in many operational ways."

The Boards of Directors of both companies have already approved the transaction and it is expected to close in 2015.

"We wish the Matson team continued success in their new Alaska trade, and we look forward to working with them to close this transaction and provide a seamless transition for our customers," Horizon President & CEO Steve Rubin said.

Horizon says the ceasing of operations and shutting down its Puerto Rico domestic liner service is independent of the Matson deal and that it intends to cease operations between the US and Puerto Rico whether or not the Matson deal is consummated.

Under the terms of the Pasha Group agreement, Pasha will acquire certain subsidiaries of Horizon constituting substantially all of Horizon's Hawaii trade-lane business, including four Jones Act container ships.

"Since Pasha entered the Hawaii transportation circuit nearly 10 years ago, we have elevated the quality of customer service," the company's president and CEO, George Pasha IV, said. "With this acquisition, we will supplement that service and provide an improved, more competitive offering on the Hawaii trade lane."

Horizon Lines was started in 1956 as Sea-Land Service by containerized shipping pioneer Malcolm McLean. A converted World War II T-2 oil tanker, named the Ideal-X, carried the first containers from Newark, New Jersey to Houston, Texas. Two years later, Sea-Land introduced container shipping to the Puerto Rico market and pioneered container shipping to Alaska with the first year-round scheduled vessel service.

AAPA Urges West Coast Labor Talks Mediation

By Mark Edward Nero

The American Association of Port Authorities is urging President Barack Obama to assign federal mediators to help resolve the ongoing contract negotiations between the International Longshore and Warehouse Union and Pacific Maritime Association.

On Dec. 17, the AAPA, which represents 160 of the leading seaport authorities in North, South and Central America, sent a letter to President Obama, who previously said his administration would not step in to the middle of the negotiating process.

“At this tender stage of the economic recovery, our nation simply cannot afford disruptions, let alone a shutdown, of any part of the ports system,” AAPA president and CEO Kurt Nagle wrote. “After seven months of labor negotiations without an agreement being reached, we believe that federal mediation is now necessary to prevent the significant economic repercussions that can occur whenever there is uncertainty and unpredictability in the movement of international commerce through our ports.”

The PMA and ILWU have been in negotiations, off and on, since mid-May. The previous six-year labor pact between the two sides, which covered almost 20,000 longshore workers at 29 ports up and down the West Coast, expired at 5 pm on July 1.

The AAPA may be among the largest organizations so far to call for federal mediation, but it’s not the first. In November, the CEOs of the ports of Seattle and Tacoma sent a letter to President Obama urging that his administration become involved.

Coincidentally, on the same day the AAPA wrote the President, the PMA released a statement saying that it and the ILWU “remain far apart on several issues,” giving the impression that a deal is nowhere close to being completed.

San Diego Port Begins Exec. Director Search

By Mark Edward Nero

The Port of San Diego, which fired its CEO in July, has just launched a global search for a replacement, it announced Dec. 15. Executive recruitment firm Boyden has been retained to recruit and screen prospective qualified candidates, according to the San Diego Port Commission.

“We have begun a national outreach campaign managed by one of America’s top executive recruitment experts,” Commission Chair Bob Nelson said in a prepared statement.

Harbor Police Chief and Vice President of Public Safety John Bolduc has served as Acting Chief Executive Officer since July 25, 2014, the date that former CEO Wayne Darbeau, who had been the Port of San Diego’s CEO for almost four years, was fired following a months-long investigation into allegations that he abused his power by asking for port tenants’ help in securing a job for his son.

Darbeau was placed on paid administrative leave through the end of 2014, after which, he’ll no longer be employed by the port.

As acting CEO, Bolduc leads more than 500 budgeted employees and oversees an annual budget of $145 million. The port, an independent public agency, manages the public trust Tidelands along 34 miles of San Diego Bay. It serves as landlord, principal land use authority and public steward pursuant to the California Public Trust Doctrine. It also regulates and supports maritime industry and commercial real estate development; and provides police, fire, park and environmental services.

The port’s hotels, marinas, restaurants and tourist attractions operate side-by-side with a working waterfront of shipbuilding and repair yards, boatyards, sportfishing landings, cargo and cruise terminals.

The executive search is being conducted on an expedited basis. Interested parties should submit in electronic format a resume with compensation history and a cover letter outlining reasons for their interest in the position, including detail on the aforementioned responsibilities, attributes, and qualifications to

Boyden may also be contacted via its toll-free phone number, 877.2.BOYDEN (226-9336) for additional information. A full description of the position and qualifications is available on the port’s website.

Panama Canal Expansion Now 83 Percent Finished

By Mark Edward Nero

One of the most important phases of the Panama Canal expansion project, the electro-mechanical installation stage, has begun with the installation of the first steel rolling gate at the Atlantic Ocean side, the Panama Canal Authority revealed Dec 19.

Unlike the current Canal, which uses miter gates, the expanded Canal will have steel rolling gates, with the rolling system facilitating gate maintenance.

The arrival of the last four of the 16 rolling gates for the new locks in November and the transfer of the eight gates for the Pacific-side locks through the waterway means all electro-mechanical components are ready to be installed by mid-2015, according to the Canal Authority, which is in charge of operating, managing and maintaining the Panama Canal.

Construction of the new locks is a major component of the Canal’s expansion. Already, much of the 4.4 million cubic meters of concrete needed has been poured, giving form to the structure and making the locks visible.

The massive steel rolling gates weigh on average 3,400 tons and vary in sizes depending on their location (Pacific Ocean or Atlantic) and their position on the locks chambers. The tallest of the gates is 108 feet high, the equivalent of an 11-story building.

To date, the overall program is 83 percent complete, according to the Canal Authority, with several major components already finished, such as the dredging of the canal entrances on the Pacific and Atlantic sides.