Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
December 23, 2014

Posts in "Shipping"

December 17, 2014

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.”

Full story

December 12, 2014

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

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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 11, 2014

Corker, Coons Prevail In Battle Over Cargo Preference

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Sen. Bob Corker, R-Tenn., soon to be chairman of the Foreign Relations Committee (Photo By Douglas Graham/CQ Roll Call)

Sen. Bob Corker, R-Tenn., Sen. Chris Coons, D-Del., and food aid groups such as Oxfam America have prevailed in their effort to block a provision in the Coast Guard bill that they said would have unnecessarily added to the cost of shipping food aid to countries in need.

As we reported last week, Corker and Coons had pledged to block the bill if the provision remained in it.

The cargo preference, which dates back to 1954, requires that a certain percentage of commodities purchased by the government be shipped in U.S.-flagged vessels. Under current law, 50 percent of food aid must be shipped on U.S. flag-ships.

Full story

December 9, 2014

Korean Air Executive Resigns In Nut Incident

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Korean Air plane sits on the tarmac at Gimpo airport in Seoul on Dec. 9, 2014.(Photo: Jung Yeon-Je/AFP/Getty Images)

Korean Air Lines executive vice president Cho Hyun-ah resigned Tuesday amid a furor over delaying the departure of a flight from Kennedy Airport in New York after ordering the plane back to the gate and telling a senior crew member to get off.

Cho, the eldest daughter of company chairman Cho Yang-ho, was seated in first class and was angered that a flight attendant and a senior crew member did not know the correct procedure for serving macadamia nuts, according to the Associated Press and other news reports.

Korean Air apologized to its customers for the inconvenience of the plane returning to the gate which delayed the departure by about 20 minutes.

The Financial Times reported that some South Koreans viewed the incident as a case study in the “undue influence” that the founding family members of Korean chaebols often wield over the management of the business conglomerates.

Cho Hyun-ah is the granddaughter of Korean Air Lines founder Choong Hoon Cho, who was the head of the Hanjin Group, which includes Hanjin Shipping, the world’s eighth largest shipping company.

December 4, 2014

Food Aid Shipping Issue Could Block House Bill

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Sen. Bob Corker, R-Tenn. (Photo By Bill Clark/CQ Roll Call)

The House overwhelmingly passed the Coast Guard reauthorization bill Wednesday. But it faces opposition from two senators due to a provision that they say it would make it more expensive to ship U.S. food aid to countries in need.

At issue is the cargo preference, which dates back to 1954 and which requires that a certain percentage of commodities purchased by the government be shipped in U.S.-flagged vessels.

In 2012 Congress reduced the volume of food aid that must be shipped on U.S. flag-ships from 75 percent to 50 percent, but some members of Congress want to push that cargo preference back up to 75 percent.

Full story

By Tom Curry Posted at 8:38 a.m.
Shipping, Uncategorized

December 2, 2014

Coast Guard Bill Looks To Arctic Shipping Future

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Vladimir Putin, center, with Prince Albert II of Monaco and Russian minister Sergei Shoigu at the 2011 International Forum on the Artic in Arkhangelsk. Putin pledged to turn the Arctic into a key shipping route. (Photo: Alexey Druzhinin/AFP/Getty Images)

The Coast Guard authorization bill, which committee chairmen unveiled on Monday is a nod to the reality that climate change could make Arctic commercial shipping viable.

Even with climate change, trans-Arctic shippers would need icebreakers and the bill requires the Coast Guard to make a final decision about reactivating an icebreaker, called the Polar Sea, now mothballed in Seattle.

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December 1, 2014

An OPEC Windfall For Express Shippers?

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A FedEx jet at O’Hare International Airport (Photo by Scott Olson/Getty Images)

While you were eating turkey and cranberry sauce, the OPEC oil cartel was holding what may be recorded as a historic Thanksgiving Day meeting in Vienna. OPEC members did not reach an agreement to cut their production.

Oil prices, already falling since June, have dropped even further since OPEC’s decision to not cut output.

A price decline is bad news for oil-dependent countries such as Nigeria and Russia. It may crimp demand for electric vehicles, one explanation offered for a decline in Tesla’s stock price Monday morning. But for most American consumers and non-oil businesses, declining oil prices seem a case of “What’s not to like?”

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The Week Ahead: Transit Tax Break, Takata, And Sustainable Investment

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Rep. Earl Blumenauer, D-Ore., is working to restore tax break parity for mass transit users. (Photo By Tom Williams/Roll Call)

Members of Congress try to complete their lame-duck spending bill and decide on the fate of a package of tax breaks – including reviving one that expired at the end of 2013 that gave the same tax benefit to employer-provided mass transit commuting as to employed-provided parking.

Tuesday

The OneRail Coalition, which includes the American Public Transportation Association, the Association of American Railroads, and railroad workers’ unions, holds a Capitol Hill briefing to promote federal and private sector investment in rail projects.

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November 24, 2014

No Holiday Cheer In Ports Dispute

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The Port of Los Angeles (Photo: Robyn Beck/AFP/Getty Images)

It’s Christmas shopping season; do you know where your gift is in the supply chain?

For some people, gifts may be delayed by the congestion and long-running contract negotiations at West Coast ports.

Full story

The Week Ahead: OPEC, Oil, Shipping, Shopping

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Workers place boxes on a conveyor belt at the FedEx facility at the Oakland International Airport. (Photo by Justin Sullivan/Getty Images)

This week’s most significant transportation event won’t take place in Washington, or in the United States at all, but in Vienna where representatives of the OPEC oil cartel will be meeting on Thanksgiving Day.

The 12-member cartel is under stress from lower oil prices, with the price of benchmark Brent crude having fallen by 30 percent since June.

The U.S. Energy Information Administration predicts that U.S. crude production, driven in large part by advances in hydraulic fracturing, will increase from an average of 7.5 million barrels a day last year to 9.4 million barrels a day in 2015.

Full story

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.

Full story

October 23, 2014

Energy Boom – And Sand – Benefit Union Pacific

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A Union Pacific train in Illinois (Photo by Tim Boyle/Getty Images)

Now is a great time to own a piece of a railroad, judging by the profits announced Thursday by the nation’s largest, Union Pacific.

The railroad, which serves West Coast and Gulf Coast ports and is a major shipper of grain, as well as of coal from Wyoming to power plants, set an all-time record for quarterly profits and for freight revenue, up 11 percent from the third quarter last year.

Full story

October 10, 2014

A Look Back: Ebola Economics, Jihadists With European Passports & Biden On LaGuardia

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Travelers at Kennedy Airport in New York (Photo by Eric Thayer/Getty Images)

The risk of Ebola infection and the economic damage Ebola fears could wreak on aviation and tourism were big themes of our week.

As the Obama administration revised its plans to screen air passengers for signs of the deadly infection and as one Ebola-infected patient died in Dallas, some wondered about the efficacy of airport screening. Full story

October 8, 2014

Shipbuilders, Oil Refiners Spar Over Cost of U.S. Ships

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The Alaskan Navigator oil tanker at the Port of Long Beach, Calif. (Photo by David McNew/Getty Images)

The Jones Act, which requires that ships carrying cargo between U.S. ports be built in the United States and crewed by American citizens, has been on the books for nearly 100 years. It seems to have good “genes” for survival.

But taking nothing for granted, American shipbuilders, who are enjoying a surge of growth due to the boom in domestic crude oil, vigorously oppose any move to repeal or weaken the 1920 law. Full story

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