Port of Hueneme Back in the Black

After years of losses, the Port of Hueneme reached a milestone during its most recent fiscal year by recording over $12 million in revenues, according to new documents recently presented by the port’s finance director.

During the Oct. 8 meeting of the port’s Board of Directors, chief administrative and finance officer Andrew Palomares revealed that revenue was $12.2 million for the 2011-2012 fiscal year, which ended June 30.

The port, which operated in the red the past three years, saw a significant recovery in fiscal year 2012, having its fourth best year in volume and highest year in revenue since its 1937 inception, according to a draft financial audit report presented during the meeting. According to the audit report, the growth stems from economic rebound as the country climbs out of the recession coupled with diversification of cargo.

“Many port customers via innovative and creative strategies increased their cargo activity,” the report states in part.” Auto carriers realized increases in project cargo and high and heavy equipment activity. Chiquita’s shift to containers brought increased export trade to the Port. Del Monte’s recent deployment of dual use ships with ro/ro capabilities allowed for cargo diversification.”

Revenues from auto cargo rose nearly 18 percent to $6.6 million, while revenues for fresh produce were up 7.4 percent to $2.9 million and property management activities rose about 17 percent, with revenues of $1.4 million, according to the data.

The port’s net income was $221,300 during the fiscal year, reflecting a turnaround from an almost $2 million net loss in fiscal year 2011.

The three years of losses have been due to various factors at the port, including a decline in vehicle imports as well as a drop in income from interest on port investments.

But regarding the 2012-2013 fiscal year budget adopted June 26, Palomares has said that a combination of reduced spending and improved cargo numbers have helped the Oxnard Harbor District, which runs the port, arrive at the determination that the port is back on solid footing.

In its 2012-2013 budget, the port anticipates a net income loss, but only of $99,000.

Seattle Cruise Season Sets Passenger Record

The Port of Seattle on Oct. 8 announced that a record 933,900 revenue passengers moved through the port’s two cruise terminals during the 2012 cruise season, mostly on trips to Alaska.

The port estimates that the record number of passengers generated over $416 million in annual business revenue, plus $18 million in state and local taxes. Each time a homeport ship docks in Seattle, it contributes $2.1 million to the local economy, according to the port.

Seattle ranks seventh in the nation for ports for passengers, while Washington ranks sixth in the nation for cruise industry expenditures, according to 2011 data compiled by the Cruise Lines International Association.

Cruise Terminals of America operates the port’s cruise facilities, which are located at Piers 66 and 91.

The port recently added the Celebrity Solstice and Oceania Regatta to its 2013 vessel schedule. The Celebrity Solstice, one of Celebrity’s newest ships, will offer seven-day Alaska cruises in 2013 and the Oceania Regatta will offer a variety of itineraries to Alaska including seven-day and 10-day round trip to Seattle. The two ships join a long list of cruising options sailing from Seattle next year, which include Holland America Line, Princess Cruises, Carnival, Royal Caribbean and Norwegian Cruise Line.

“The cruise business is good not only for King County, but for the entire state,” Port of Seattle Commission President Gael Tarleton said. “Our goal is to have cruise passengers extend their stay a few more days to discover what else Washington has to offer and to increase tourism spending statewide.”

Port, City of Bellingham Could Swap Land

The Port of Bellingham and City of Bellingham have the parameters of a deal in place for a swap of waterfront acreage.

The transaction, which still requires approval by both the port commission and Bellingham City Council, would result in the port receiving city-owned industrial land in the Marine Trades Area of the Waterfront District.

In return, the city would gain full ownership in the Cornwall Beach area, an old landfill site that’s undergoing environmental remediation. The port currently owns 51 percent of the land.

The agreement is proposed as a land swap, with no money being exchanged.

“It simplifies a jigsaw puzzle of land ownership, allowing each government to focus on its areas of strength and interest,” according to an Oct. 3 statement by the city. “While this land exchange is separate from the joint Waterfront District master planning effort, if approved it will resolve land use and ownership issues that were unnecessarily complicating planning efforts.”

The proposed property exchange also calls for the port granting the city access to the breakwater surrounding the former Georgia Pacific treatment lagoon, as well as access to adjacent property for public parking.

Bellingham Mayor Kelli Linville and port Interim Executive Director Rob Fix said the property exchange meets multiple community goals, particularly strengthening the area’s potential to attract additional maritime economic development on the waterfront and meet commitments to public access.

“Having a single owner for this section of shoreline will allow the port to manage the property so that multiple businesses can make use of the public investment in the shoreline improvements,” Fix said. “We anticipate this land swap will result in a more efficient use of public lands and will create new jobs within the next year.”

Linville said the Cornwall Beach area has long been envisioned as an area for waterfront public access with parks, trails and mixed-use development, and consolidating city properties simplifies planning for development of that area.

Public hearings on the land swap are scheduled for Oct. 16 at the port’s Harbor Center Conference Room and Oct. 22 at Bellingham City Council Chambers.

Port of San Diego Steals LA Port Attorney

After a nationwide search, the Port of San Diego has hired away Port of Los Angeles general counsel Thomas A. Russell to be its chief attorney, replacing the retired Duane Bennett.

Russell currently heads the Harbor Division of the Los Angeles Office of the City Attorney, where he oversees all litigation involving the Port of L.A. He’s been with the office since November 2002, when he was appointed by then-City Attorney Rocky Delgadillo.

He said he hadn’t planned on changing jobs, but was recruited for the position during the port’s national search.

Russell’s a member of the American Association of Port Authorities Law Review Committee and chaired the American Bar Association’s Subcommittee on Maritime Financing from 1994-2002. A California native, he is a graduate of University of Southern California’s Law School and earned his undergraduate degree from the University of California, Berkeley.

Board of Port Commissioners Chair said Lou Smith said the port was “delighted to welcome an attorney of Tom’s caliber and breadth of relevant experience to the Port of San Diego.”

He starts his new job in San Diego in early December.

Bennett, the man Russell replaces, retired in November 2011 after eight and a half years on the job. Another port attorney, Celia Brewer, has been serving as interim general counsel.

Fidley Watch: Failure to Communicate

Ambrose Bierce was, among other things, a writer for the San Francisco Examiner, and was considered one of the most prominent and influential among the writers and journalists of the West Coast. Writing to his friend in 1911 about government civil servants who complained that their salaries were too low, Bierce famously said, “What this country needs – what every country needs occasionally – is a good hard bloody war to revive the vice of patriotism on which its existence as a nation depends.”

We hold that diplomacy is far preferable to war. Despite our recent diplomatic failures, the US is still better served by addressing our national economic and security needs through diplomacy rather than military action.

While the diplomatic attentions of the country are largely focused on the Middle East, events unfolding in Asian waters should be garnering more attention.

Late last month, in the Yellow Sea, South Korea’s navy fired warning shots toward North Korean fishing boats that crossed a disputed maritime boundary. The shots didn’t hit the fishing boats, which retreated, but North Korea has long refused to recognize the western sea boundary established by the UN at the end of the Korean War.

The disputed boundary was also the genesis of hostilities in 2010 when a North Korean artillery barrage killed four South Koreans, including two civilians. Also in 2010, an explosion ripped apart a South Korean warship in the area, killing 46 sailors.

A similar conflict in the South China Sea between China and the Philippines began in mid-April, when a Filipino frigate attempted to stop several boats of Chinese fishermen harvesting seafood from waters claimed by the Philippines around the Scarborough Shoal. China sent several larger, more modern boats from one of its civilian maritime agencies, which intercepted the frigate and allowed the fisherman to escape with their catch.

A dispute over a small island chain in the East China Sea known as Senkaku in Japanese and Diaoyu in Chinese heated up recently after the Japanese government announced it would buy the islands from their private Japanese owners for around $30 million. China, which claims the islands as its own, responded by sending two ships to the area and, according to state media, drawing up an “action plan” for the defense of the islands.

The dispute has caused protest within China, where hundreds of Chinese demonstrators have been protesting outside of the Japanese embassy in Beijing since Sept. 15, expressing anger over Japan’s claims to the islands. Demonstrations against Japan have also taken place in cities across China, including Shanghai, Tianjin and Chengdu.

US Defense Secretary Leon Panetta was greeted by a small protest outside the Beijing Embassy when he visited last month, and demonstrators in Beijing caused minor damage to the official vehicle of US Ambassador Gary Locke on September 18th after they surrounded his vehicle outside of the embassy. Ambassador Locke was in the car at the time, and the official Cadillac limousine was flying the US flag.

China claims most of the area off its coast as either territorial water or Exclusive Economic Zone, but other states in the South China Sea area have conflicting claims. For example, China takes the position that all maritime data collection activities, including military intelligence and hydrographic collection activities, fall within the United Nations Convention on the Law of the Sea [UNCLOS] provisions for marine scientific research and therefore require coastal-state consent before they could be carried out in the two-hundred-nautical-mile EEZ.

Late last month, China’s first aircraft carrier entered service, underscoring the country’s desire to be a leading Asian naval power. The ship is the former Soviet navy’s unfinished Varyag, and is considered to be a kind of test platform for the future development of up to five domestically built Chinese carriers.
Writing about the new carrier in China Daily newspaper, retired Chinese Rear Adm. Yang Yi said, “When China has a more balanced and powerful navy, the regional situation will be more stable as various forces that threaten regional peace will no longer dare to act rashly.”

In light of China’s naval buildup, many of her neighbors, including Japan, India and Australia, have embarked on significant defense force modernization programs of their own, increasing their budgets for major air and naval platforms, including submarines. Meanwhile, the United States Navy has shrunk by half since 1990.

China is our second largest trading partner after Canada, and 60 percent of the world’s trade passes through the South China Sea. China’s rapid maritime rise and strategy for dominating large swaths of the Pacific need to be recognized and addressed. It’s time for the US to step up its political game. Ambrose Bierce also said, “In our civilization, and under our republican form of government, intelligence is so highly honored that it is rewarded by exemption from the cares of office.”
The time has come for our officeholders to pay less attention to politics and more attention to diplomacy.

Chris Philips,
Managing Editor

POLA, APM Receive Lloyd’s List Awards

The Port of Los Angeles’ adoption and promotion of programs that reduce emissions from maritime sources has been recognized by London-based global shipping publication Lloyd’s List. The port recently received the Lloyd’s List Global Award in the Environment category, recognizing the port’s environmental leadership.

The award highlighted several of the port’s green initiatives and leadership efforts at both the regional and international level, including the San Pedro Bay Ports Clean Air Action Plan, which in 2006 established control measures for port-related ships, trains, trucks, terminal equipment and harbor craft and ties these measures to specific emissions reduction goals.

Two notable CAAP programs are the Clean Truck Program and the Vessel Speed Reduction Incentive Program, which have significantly contributed to emission reductions in and around the port.

“The fact that the Port of Los Angeles has supporting evidence of up to a 75 percent reduction in emissions since 2005 caught the attention of our judges,” Lloyd’s List Editor Richard Meade said. “The Port of Los Angeles is rightly recognized as an environmental leader and role model for other ports.”

Lloyd’s List, the leading international daily newspaper for the maritime industry, also cited the port’s record for promoting environmental innovation, citing the port’s annual funding of the Technology Advancement Program to encourage development of technologies to reduce maritime-related emissions. Over the past 12 months, TAP demonstrations have included an electric drayage truck, a Tier IV retrofit for locomotives and sea scrubbers on ships.

“This award is really the culmination of efforts by the port and its stakeholders,” Chris Cannon, the port’s director of environmental management said. “We could not have achieved these environmental milestones without the vision of our City of Los Angeles and port leadership, and the commitment of our industry and community partners.”

Others honored during last month’s ceremony included APM Terminals, which received the Port Operator Award. APM, which is based in the Netherlands, has numerous terminals in the U.S, including at the ports in Los Angeles and Tacoma.

“Our judges were impressed by the $3bn infrastructure investments made across the APM Terminals global network during the judging period, which now encompasses interests in 63 port and terminal operations in 37 countries and 155 Inland Services operations in 47 countries,” Lloyd’s List wrote in its award announcement. “But this was not simply an award of scale. The company's entry cited its commitment to sound growth based upon the highest standards of ethical and sustainable business practices, and our judges praised the company's tangible results when it came to lowering both accident rates and CO2 emissions.”

Panama Canal Expansion About Halfway Finished

Expansion of the Panama Canal, which began five years ago, is now about halfway finished, according to the government agency overseeing the project.

The Panama Canal Authority revealed Sept. 25 that the project, which is expected to double the canal’s capacity by 2014, was almost 45 percent complete as of Aug. 31, 2012. The project, which was officially kicked off in September 2007, creates a new lane of traffic along the canal by constructing a new set of locks.

The expansion “is moving forward at a good pace,” according to Panama Canal Administrator/CEO Jorge Quijano.

Among the project’s components are the excavations of new access channels, the widening of existing channels and the deepening of navigation channels. The expansion is expected to allow post-Panamax ships to travel through the canal en route to East Coast terminals, something that could negatively affect West Coast vessel traffic.

A key component of the expansion is construction of two new ship lock system complexes -- one each on the Atlantic and Pacific sides. The current lock system lifts ships of up to 85 feet to the main elevation of the Panama Canal and down again. According to the Authority, design and construction of the expanded locks, which could accommodate larger ships, has reached 31 percent.

The locks gates are being fabricated in Italy and the first four gates should be shipped to Panama during the first quarter of 2013, according to the Canal Authority. The contractor’s expected to complete the main lock structure and begin pre-commissioning tests in the dry during the first quarter of 2014, with flooding of the locks and final commissioning then planned to start in September 2014.