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December 21, 2014

Posts in "Intermodal"

December 17, 2014

For FedEx, Fuel Price Drop Is Not All Good News

460564358 445x296 For FedEx, Fuel Price Drop Is Not All Good News

Workers prepare to offload a FedEx plane at Newark, N.J. (Photo by Andrew Burton/Getty Images)

FedEx chief financial officer Alan Graf said Wednesday the company had “a spectacular second quarter” in fiscal year with a 36 percent increase in earnings per share.

But Graf said on a conference call for investors that performance wasn’t largely due to the dramatic drop in oil prices.

The jet fuel price decline provided “only a slight benefit to operating income” due to the way FedEx passes along costs to its customers through its fuel surcharge and the way it buys fuel.

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FedEx See Big Port Congestion Spillover Effects

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FedEx chairman and CEO Fred Smith (Photo: Chip Somodevilla/Getty Images)

FedEx chairman and CEO Fred Smith said Wednesday, “The slow-down in the West Coast ports has been a much bigger deal than people think and a tremendous amount of inventory was simply not put through the ports in the time frame that the retailers had expected.”

Smith spoke on his company’s earnings conference call for the second quarter of its 2015 fiscal year.

The International Longshore and Warehouse Union has been in contract talks for months with port operators represented by the Pacific Maritime Association. In addition, there have been severe problems with the distribution of truck chassis and other factors slowing down traffic.

Smith said “because of these delays at the West Coast ports and the East Coast ports, because a lot of people saw this coming and diverted traffic into the East Coast ports, we [FedEx] received a lot of traffic on the two coasts which normally we would have anticipate being from distribution centers in the middle of the country.”

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December 12, 2014

Friday Q & A: World Shipping Council’s Christopher Koch, Part Two

457699558 445x295 Friday Q & A: World Shipping Councils Christopher Koch, Part Two

A cargo ship is loaded with containers for export at Jakarta, Indonesia (Photo: Romeo Gacad/AFP/Getty Images)

Here’s the second part of our interview with Christopher Koch, president of the World Shipping Council.

Regarding port congestion, especially at Los Angeles and Long Beach, how much of that is due to the shipping companies using bigger and bigger ships so that when they arrive, there’s more stuff to unload?

The terminals are still going to have to handle the same volume of cargo. It’s coming in bigger blocks.

There are many parents to the congestion on the West Coast….  These same ships are not causing congestion problems in the Asian ports where the cargo is being loaded so I think you can’t really lay it off all on big ships.

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Friday Q & A: World Shipping Council’s Christopher Koch, Part One

459737176 445x286 Friday Q & A: World Shipping Councils Christopher Koch, Part One

Cargo ships unload goods in the Tunisian port city of Rades. (Photo: Fethi Belaid/AFP/Getty Images)

The big-screen televisions and cotton shirts that Americans buy come across the ocean on container ships which make today’s global economy possible. We spoke this week with Christopher Koch, president of the World Shipping Council which represents Maersk, Hanjin, APL, and other major shipping companies.

Is there legislation likely to emerge from Congress next year that would be of concern to the shipping industry?

There’s nothing that the shipping industry is particularly looking to Congress to do next year. There’s always the ongoing question of the ports working with the Army Corps of Engineers on getting dredging money for particular deepening projects or maintenance projects.

Are U.S. ports at a disadvantage because not enough is spent on dredging, maintaining, etc?

In terms of the deep-water container ports, the major container ports are being maintained at the [required] depths – so Baltimore is at 50 feet, Norfolk is at 50 feet, New York, I believe, is finished going to 50 feet, Charleston is in the process of getting there, Savannah is in the process of getting to 48, Miami is at 50.

And on the West Coast you don’t have any draft problems at Seattle-Tacoma, Oakland or L.A.-Long Beach.

I think the ports, from a dredging perspective, are doing OK. They would like to have more money to get it done faster.

How has the decline in the price of oil affected the industry?

There’s always a lag. The shipping lines always try to recover their fuel costs from customers and their success is always questionable, so it’s always a cost pressure on them.

Clearly the dropping of fuel prices has been helpful to take some of the cost pressure off.

But at the same time, many of those fuel costs are recovered through something called a “BAF” or a bunker adjustment factor. For the contracts that use those kind of mechanisms, the price automatically drops to the customer when the fuel price drops.

I’ve seen reports that bunker [fuel] prices have been coming down since this price reduction started a couple of months ago.

At the same time, what the industry is facing, as of Jan. 1, is a very steep increase in the cost of fuel because of the implementation of the requirements in the emission control areas.

Emission control areas are areas set up by governments under the international marine pollution convention that provide particularly strict sulfur standards in marine fuel.

The U.S. and Canada have an emission control area jointly within 200 miles of the U.S. shores; there’s also one in the Baltic, one in the North Sea, and one in the Caribbean.

In those areas you have to use low-sulfur fuel and that’s considerably more expensive.

December 4, 2014

Despite Price Drop, Crude-By-Rail Remains Big Issue

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Sen. Claire McCaskill, D-Mo. (Photo By Bill Clark/CQ Roll Call)

The drop in the price of oil since OPEC failed in its meeting last week to agree on production cuts has sparked speculation about whether production in North Dakota’s Bakken shale region will decline as some marginal drilling operations become financially less viable.

Some market observers see the drop in the price of railroad stocks since last week’s OPEC meeting as a harbinger of less Bakken crude being produced and less being moved by rail.

(The price of tank car manufacturer Greenbrier is down 20 percent since last Thursday’s market close.)

But whatever the price movements may indicate, crude-by-rail remains an urgent political issue.

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November 18, 2014

Freight Coalition Looks For Dedicated Revenue Stream

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Container terminal in the Port of Los Angeles (Photo by Kevork Djansezian/Getty Images)

A coalition of shippers, port authorities, retailers and other business groups is calling for a new revenue source to go solely to paying for large-scale infrastructure projects that would ease the movement of goods.

The Freight Stakeholders Coalition doesn’t have a unified position on what this new revenue source should be. But the Coalition will focus on the revenue issue as Congress begins to work on next year’s surface transportation bill.

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Amtrak Files Complaint Against Two Of Its Hosts

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A section of CSX rail line in Kentucky ((Photo by Luke Sharrett/Getty Images)

Brisk business for the nation’s freight railroads and a rail infrastructure that can’t accommodate all who want to use it — combine those two factors and you get passengers on one Amtrak line late in arriving 97 percent of the time.

The on-time performance of Amtrak’s daily Capitol Limited service between Chicago and Washington, D.C. was 2.7 percent for the quarter which ended on Sept. 30, down from 33.6 percent the previous quarter.

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November 17, 2014

Coming Up This Week: Airbags, California’s Electric Vehicle Future, Freight Wish List

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Sen. Bill Nelson, D-Fla., will preside at a hearing Thursday on the Takata airbag recalls. (Photo By Bill Clark/Roll Call)

As the lame duck session of Congress ponders how to pay for government operations after Dec. 11 when the continuing resolution expires, some members are looking ahead to the transportation policy choices they’ll have make in the new Congress.


The House Transportation and Infrastructure Committee hears from Nicholas Calio, president of Airlines for America, Capt. Lee Moak, president of the Air Line Pilots Association, and other witnesses as it looks to its complex task of reauthorization of the Federal Aviation Administration. The current FAA authorization expires in September.

Also on Capitol Hill Tuesday, the Freight Stakeholders Coalition will present its ideas on how next year’s surface transportation bill could help American manufacturing and U.S. workers’ productivity by financing freight rail projects.

The speakers include Robyn Boerstling, the director of transportation and infrastructure policy at the National Association of Manufacturers, and Kurt Nagle, president of the American Association of Port Authorities.


The R Street Institute, a Washington think tank whose mission is to “promote free markets and limited, effective government,” hosts a panel on how cities, including the nation’s capital, are regulating driver-for-hire services such as Lyft and Uber.

Chris Massey, director of government relations at Lyft and Marc Scribner of the Competitive Enterprise Institute will be among the speakers.

Last week the R Street Institute issued a report grading 50 of the largest U.S. cities on their friendliness to for-hire vehicle services.


The Senate Committee on Commerce, Science, and Transportation will hold a hearing on the Takata airbag defects and the vehicle recall process.

Senator Bill Nelson, D-Fla., who’ll become ranking Democrat on the committee next year, will chair the hearing. Nelson has been one of several senators to voice his unhappiness with the performance of the National Highway Traffic Safety Administration, an agency which after 10 months still lacks a permanent head since President Obama hasn’t nominated one.

Two weeks ago. two members of the committee, Sen. Richard Blumenthal, D-Conn. and Sen. Ed Markey, D-Mass., urged the Justice Department to launch a criminal investigation of Takata.

The New York Times has reported that ex-employees of Takata said the company knew as far back as 2004 that some of its airbags were defective, but executives didn’t alert regulators.

Also on Thursday, from the land of Tesla, the California Institute for Federal Policy Research holds a briefing on Capitol Hill on the progress of electric vehicles in California and efforts by utilities to invest in infrastructure and support electric fleets.

Executives from PG&E, Southern California Edison, and San Diego Gas and Electric will brief and field questions.

November 12, 2014

Foes Sue To Block Capitol Rail Tunnel Project

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Transportation Secretary Anthony Foxx is one of the defendants in a suit filed in federal court against a Washington, D.C. rail tunnel project. (Photo by Win McNamee/Getty Images)

Building infrastructure takes a long time, sometimes even longer than long, due to the environmental impact statements required and the legal battles that opponents wage to block projects.

Case in point: on Wednesday a Washington, D.C. civic advocacy group called The Committee of 100 on The Federal City filed a lawsuit against Transportation Secretary Anthony Foxx and other officials seeking to stop CSX Transportation from expanding a 110-year old rail tunnel four blocks away from the Capitol building.

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November 11, 2014

Crumbling Infrastructure Creates Opening For Railroads

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A Union Pacific freight train in California. (Photo by David McNew/Getty Images)

In one sense, the deteriorating highway infrastructure that road builders and members of Congress complain about is good news for freight railroads.

In a presentation at the Stephens Fall Investment Conference in New York Tuesday, Rob Knight, the chief financial officer of Union Pacific, said the trucking industry “faces continued challenges from regulations, highway congestion, and a deteriorating infrastructure.”

One reason that highway infrastructure is deteriorating, of course, is that Congress and most states haven’t been willing or able to raise new revenue to fix and expand it.

By contrast, Knight said, rail traffic moves “over a right of way privately owned and maintained.”

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October 22, 2014

Infrastructure Loan Fears Misguided, Reader Says

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A Staten Island ferry heads across New York harbor. New ferry terminals were built in 2005 with TIFIA loan backing (Photo by Spencer Platt/Getty Images)

TIFIA is the federal loan program, which uses Treasury funds to help finance state and local governments’ infrastructure projects: bridges, ferry terminals, toll roads, etc.

Last week I mentioned that the new bridge across the Hudson River in New York is financed partly by a $1.6 billion TIFIA loan. TIFIA, which is run by the Department of Transportation, stands for Transportation Infrastructure Finance and Innovation Act.

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October 2, 2014

Panama Canal Expansion A Big Deal for U.S. Engineers

The project to expand the Panama Canal — officially launched in 2007 and set to be finished early in 2016 — is having ripple effects on the U.S. economy from railroads to ports.

The canal’s expanded capacity will likely reduce shipping rates between East Asian ports such as Shenzhen and ports on the Gulf Coast and East Coast of the United States.

With port expansion projects such as the one in Miami, the new Panama Canal means more work for the people who design big infrastructure — civil engineers.

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September 15, 2014

Traffic Safety Administration, FedEx Earnings & Privacy During Airport Screening On Week’s Agenda

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Sen. Claire McCaskill, D- Mo., will chair a hearing Tuesday examining the performance of the National Highway Traffic Safety Administration (Photo by Bill Clark/CQ Roll Call)

A busy week for transportation policy in Washington starts Tuesday with a hearing by the Senate Committee on Commerce, Science, and Transportation Subcommittee on Consumer Protection, headed by Sen. Claire McCaskill, D- Mo., (Twitter: @clairecmc) on the National Highway Traffic Safety Administration, which has been accused of slow reaction to the GM recalls of 27.5 million cars this summer.

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July 30, 2014

In Fight for Urban Street and Curbside Space, Can Pricing Create Peace?

175796612 445x292 In Fight for Urban Street and Curbside Space, Can Pricing Create Peace?

People order food from the BBQ Bus food truck during lunch at Farragut Square in Washington, D.C., in August 2013. (Saul Loeb/AFP/Getty Images)

A thriving city with new restaurants and other businesses has a healthy surge of revenue, but there’s one constraint the transportation manager or mayor can do little about: space on the roads and at curbsides.

“Our biggest challenge would certainly be use of right of way or space,” said Larry Marcus, the Transportation and Engineering Bureau Chief for Arlington County, Va., at a transportation data panel this week sponsored by the U.S. Chamber of Commerce Foundation.

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July 14, 2014

A Crowded Week Ahead for Transportation Advocates and Policymakers

The nation’s capital will be busy with transportation events this week:

On Monday, the Energy Department’s Energy Information Agency starts its annual conference. Among the speakers will be the head of a company controversially involved in rail shipments of Bakken crude oil from North Dakota, Global Partners president and CEO Eric Slifka.

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