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Posts in "Intermodal"
February 23, 2015
Will that shipment arrive in time? That’s a big question in the aftermath of Friday’s announcement from the Pacific Maritime Association and the International Longshore and Warehouse Union that they’d come to a tentative agreement on a five-year contract.
How soon can U.S. exporters, and the dockyard workers, terminal operators, railroads, and truckers upon whom they rely, convince customers in Korea, China, and elsewhere that U.S. products will get there as promised?
All sides need to “help restore confidence that the West Coast and the United States are open for business,” said National Association of Manufacturers president Jay Timmons.
February 18, 2015
Monday’s derailment in West Virginia of a CSX train carrying crude oil occurred at a politically sensitive point as the Obama administration is working on a long-awaited proposed regulation on tank cars that carry oil and ethanol.
Just two weeks ago, at a House Transportation and Infrastructure Committee hearing on the pending tank car rule, members voiced frustration about the uncertainty that the administration has created by its slowness in issuing the rule.
The derailment “is just another example of why the federal government must act,” House Transportation and Infrastructure Committee ranking Democrat Peter A. DeFazio of Oregon said Wednesday. “The federal government should not delay further — it must issue the new rules for safer rail tank cars as soon as possible.”
February 10, 2015
An increasing number of disenchanted Korean, Japanese, and Chinese buyers of U.S. pork are now looking elsewhere, Cargill vice president for international sales Norman Bessac told a Senate Commerce subcommittee Tuesday.
Cargill is a Wayzata, Minn.-based agricultural processor with $135 billion in sales last year.
Asian buyers are cancelling U.S. orders and shifting to suppliers in Chile, Australia and the European Union, Bessac said.
“Any time you disappoint a customer, it takes time to build trust back,” Bessac told subcommittee chairwoman Sen. Deb Fischer, R- Neb. “There is no doubt that we’ve disappointed our customer base, primarily in Japan, Korea and China over the last couple of months and that will take some time to rebuild trust.”
California’ senators are warning that their state’s economy may already have suffered long-term damage from the nine-month contract dispute between port terminal operators and the union which represents 20,000 dock workers.
Democratic Sens. Dianne Feinstein and Barbara Boxer of California wrote in a joint letter to Robert McEllrath, president of the International Longshore and Warehouse Union (ILWU), and James McKenna, the president of the Pacific Maritime Association, both based in San Francisco, that ships “have been diverted from California ports in search of more efficient offloading sites. Long term damage to the competitiveness of California ports may have already occurred. These are terrible circumstances.”
Feinstein and Boxer cited anecdotes illustrating the effects on their state:
- the citrus industry is entering its peak February-March exporting season, but deliveries have been delayed for three to four weeks;
- “a large shipment of California rice destined for Asia is likely to be cancelled, costing farmers in our state tens of millions of dollars in income;”
- the supply chains of California-based retailers have been disrupted, forcing them “to rely more on expensive air freight services to ensure their products reach American consumers.”
Feinstein and Boxer urged the two sides to come to terms immediately.
February 9, 2015
With the labor-management struggle at the Pacific Coast ports reaching a critical point in the next week or so, it’s good timing for Congress to focus on the efficiency of U.S. ports.
There’s a Senate hearing on the U.S. supply chain, particularly the importance of ports. Holding the hearing is the Commerce Committee’s Surface Transportation and Merchant Marine Infrastructure, Safety, and Security subcommittee.
Also Tuesday, the free-market oriented Cato Institute will convene a panel discussion on the regulatory framework that should govern on-demand car services such as Uber and Lyft.
(For some reason these have been labeled as “car-sharing services” which doesn’t really describe what they are or what they do.)
On the Cato program are the Competitive Enterprise Institute’s Marc Scribner and Dean Baker of the Center for Economic and Policy Research.
With the Washington, D.C. forecast for Tuesday being snow showers and temperatures falling into the 20s, perhaps you’d rather be in sunny Florida. If so, you could head to the Stifel Nicolaus Transportation and Logistics Conference in Key Biscayne.
Among the speakers are Rob Knight, chief financial officer of the Union Pacific railroad, Donald Seale, executive vice president of Norfolk Southern, and YRC Worldwide chief executive officer James Welch. YRC is a holding company for a portfolio of less-than-truckload companies.
Another sunny day in Florida, another transportation conference as Union Pacific’s Rob Knight and other industry leaders speak at the BB&T Capital Markets 30th Annual Transportation Services Conference in Miami.
Back in Washington, Transportation Secretary Anthony Foxx testifies on the FY 20167 budget request before the House Transportation and Infrastructure Committee.
Also, two hearings focus on the Army Corps of Engineers and its work in dredging harbors and improving the nation’s waterways.
Some members of Congress are voicing their unhappiness that President Obama’s Fiscal Year 2016 budget proposal would cut planned spending from the Harbor Maintenance Trust Fund.
Wednesday morning, the House Appropriations subcommittee on Energy and Water Development, and Related Agencies hears from Jo-Ellen Darcy, the Assistant Secretary of the Army for Civil Works, and Gen. Thomas Bostick, the commanding general and chief of the Army Corps of Engineers.
Those same witnesses are back in the afternoon before the Senate Appropriations Energy and Water Development Subcommittee.
The House Oversight and Government Reform Committee will hold a hearing on the safety of the Washington, D.C. Metro subway system.
On Jan. 12, a Metro passenger died after two trains were engulfed in heavy smoke at the L’Enfant Plaza stop. The NTSB is investigating the incident.
February 6, 2015
Running through our stories this week was the theme of struggle, the competitive fray, the battle between contending forces.
Since we’re in Washington, D.C., of course there’s the inevitable struggle between the executive and legislative branches over political power and the interpretation of law.
Rep. Janice Hahn, D-Calif., told us that in the Water Resources Reform and Development Act (WRRDA), enacted just last year, “We laid out a very reasonable, common-sense goal of increasing what we’re spending every year” on harbor dredging and port maintenance.
But Hahn said President Obama’s proposed Fiscal Year 2016 budget “decreases what we’re spending every year and in fact in 2025 is only proposing that 30 percent of all the money we collect would be returned to the ports.”
And we described another legislative vs. executive struggle over a new tank car standard which the Pipeline and Hazardous Materials Safety Administration has yet to deliver, creating regulatory uncertainty among railroads, shippers, and car manufacturers.
A sardonic Rep. Peter DeFazio, D- Ore., said at a House hearing Tuesday the rule is “lost somewhere in the bowels of the administration between the agency and the trolls over at the Office of Management and Budget who will further delay the ruling.”
Then there’s the struggle between major U.S. airlines and Persian Gulf competitors such as Emirates over the terms of Open Skies agreements were intended to allow fairly free and open competition.
The U.S. air carriers are asking the Obama administration to consider re-negotiating those deals, alleging that Gulf air carriers are government subsidized.
Another form of struggle is the eternal one of labor versus management. We saw it this week in the West Coast port managers’ standoff with the International Longshore & Warehouse Union over a new contract.
Pacific Maritime Association President Jim McKenna as he warned that ports from Los Angeles to Seattle were at “the brink of collapse” due to union work slowdowns.
February 5, 2015
The nine-month labor negotiations between the Pacific Maritime Association and the union representing 20,000 dockworkers at West Coast ports entered a new phase Wednesday when the port managers went public with their pay and benefit offers to the union.
The move was an apparent attempt to spur the International Longshore & Warehouse Union to agree to a new contract, or face a closing of the ports through a lockout.
Pacific Maritime Association President Jim McKenna gave reporters details of the negotiations and warned that the West Coast ports were at “the brink of collapse” due to union work slowdowns.
The pace of containers moved per hour has fallen by up to 60 percent at some West Coast ports, he told reporters on a conference call. When the labor slowdown reaches 40 or 50 percent of normal productivity “we are really paying them to strike us,” he said.
January 26, 2015
Freight rail efficiency and the resilience of the nation’s infrastructure will be getting attention this week as will the continuing saga of falling oil prices.
Norfolk Southern, which serves 22 states mostly east of the Mississippi, announces its quarterly earnings. The railroad is a big carrier of coal and serves 24 automobile assembly plants, 14 of which belong to Ford, Chrysler and General Motors, according to Standard & Poor’s.
January is far away on the calendar from hurricane season but catastrophic storms like Super Storm Sandy in 2012 do have a lasting cost for federal and state governments by wrecking expensive infrastructure.
Case in point: the South Ferry subway station in Lower Manhattan was underwater for a week and was severely damaged by Sandy, which arrived just three years after a $500 million project to modernize that station had been completed.
A House Transportation and Infrastructure Committee panel holds a hearing on how to reduce the impact of catastrophe storms and accelerate recovery from them. On the witness list: current Federal Emergency Management Agency chief Craig Fugate and former FEMA head David Paulison.
Aircraft maker Boeing announces its earnings for the fourth quarter of its fiscal year.
Boeing CEO Jim McNerney said last October that oil prices would need to fall “a long way from where we are now” before “you begin to see even [an] incremental impact” on airlines’ demand for more fuel-efficient aircraft.
But the price of crude has fallen from about $85 a barrel in October to less than $50 a barrel today.
Boeing delivered a record 723 commercial aircraft to airlines in 2014. One Boeing executive recently said annual deliveries “will grow easily to over 900 over the next few years.”
One reason Boeing can meet the booming demand is its non-union plant in North Charleston, S.C.
South Carolina Gov. Nikki Haley is trying to dissuade Boeing workers in her state from joining the union which represents Boeing workers in Washington state.
Also Wednesday morning, the Senate Commerce, Science, and Transportation Committee holds a hearing on safety and efficiency on freight railroads.
Among the witnesses are Frank Lonero of CSX Transportation and Chris Jahn, president of The Fertilizer Institute.
January 16, 2015
Congestion. Transportation planners spend their lives analyzing it and trying to devise ways to relieve it.
Especially with lots of transportation wonks in Washington this week for the 94th annual meeting of the Transportation Research Board, we heard much expert discussion about congestion on the highways, in our cities, and at our seaports.
On the highways, HNTB’s congestion pricing guru Matthew Click gave us his thoughts on why the San Francisco Bay area is the most interesting place in country in 2015 to watch for development of toll lanes.
Once you exit the highway and arrive in the big city, you may face the question: where can I find a place to park?
We heard from urban planners at the TRB meeting who find that, in fact, parking is much over-supplied in many cities. Maybe not in midtown Manhattan at high noon on a weekday, but in small and mid-sized cities.
January 15, 2015
Drayage, the business of carrying cargo containers by truck from a port terminal to a distribution center, warehouse, or rail ramp, is in a god-awful mess right now at ports from California to New Jersey.
- Shortages of chassis and dislocations of chassis, meaning that chassis are in the wrong places at a port when truckers need to put a container on a chassis and move it to a distribution center. The chassis problems mean delays for truckers.
- Growing frustration among drayage drivers and shortages of drivers.
- Bigger ships bringing more containers when they arrive at a port.
- A labor dispute between the International Longshore & Warehouse Union and the Pacific Maritime Association, which represents terminal operators and shipping companies.
“The current congestion issues that we’re facing now are unprecedented, both nationally and in the San Pedro Bay port complex [the ports of Long Beach and Los Angeles],” said Alex Cherin, a former executive at the Port of Long Beach who is now senior vice president at Englander Knabe & Allen, a Los Angeles lobbying and public policy firm.
January 12, 2015
The week’s marquee event in Washington is the 94th annual meeting of the Transportation Research Board, a five-day extravaganza of panel discussions, research presentations, and speeches by government officials, corporate leaders, and academic and think tank experts.
On the are nearly 750 workshops and sessions, on topics ranging from “Self-heating Electrically Conducting Concrete for Pavement De-Icing” to “Understanding the Gender Gap in Urban Biking.”
At the TRB meeting, Transportation Secretary Anthony Foxx will forecast the year ahead for transportation and also discuss opportunities and challenges facing America’s transportation network over the next thirty years.
Also on Monday’s TRB agenda is a presentation from Timothy Butters, acting head the Pipeline and Hazardous Materials Safety Administration, Scott Darling, acting head of the Federal Motor Carrier Safety Administration, and other transportation officials who will explain how they go about the federal rule-making process for various modes of transportation.
At the TRB annual meeting, National Transportation Safety Board Acting Chairman Christopher Hart and his colleagues unveil the NTSB’s Most Wanted List of transportation safety improvements for 2015.
Last year’s NTSB list included banning the use of cell phones and other portable electronic devices by anyone while driving a car or a truck, or while piloting a plane, a ship, or a train.
Tuesday’s TRB meeting features a session with state transportation department chiefs on steps they are taking to fund major capital projects in light of the continued uncertainty of federal funding. Featured speakers include Anthony Tata of North Carolina, Charles Zelle of Minnesota, and Joan McDonald of New York.
Thursday and Friday
As the TRB meeting continues, the World Bank is staging its own transportation event, Transforming Transportation: Smart Cities for Shared Prosperity. It features policy makers and experts from several countries including a panel discussion on The Role of Technology in Fostering Sustainable Mobility and Inclusive Growth, with Robin Chase, Founder of Zipcar, and others.
December 17, 2014
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.
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.”
December 12, 2014
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.
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.