South East Shipping News

With Panama Canal open CMA CGM will advance Kingston hub

A statement from CMA CGM said: “Reflecting on new possibilities, maritime companies can rethink their routes, including that from Asia to the US east coast. For example, on the journey between New York and Hong Kong, the choice to sail by Panama or Suez canal is subtle: there is just one day difference. “Until now, the canal dimensions limited the size of ships and impacted the region’s technological and commercial strategies. With the lifting of such constraints the evolution of vessels is probable, initially from 5,000 to 9,000 or to 10,000 teu or even larger. The traffic is not likely to rise, but volumes in transit will probably increase.” The line added it would now look to develop the Jamaican port of Kingston as its central hub in the region. Last year it signed a $509m deal worth with Port Authority of Jamaica that transferred ownership of its container terminals to CMA CGM on a 30-year build-operate-transfer model. This will see the terminal expanded in two phases, with capacity taken successively up to 3.2m teu and 3.6m teu, and the port’s draught deepened to 14.2 metres by the end of 2016, and then to 15.5 metres. CMA CGM has formed a special purpose vehicle to bid for the project – Kingston Freeport Terminal – comprising its remaining port business, CMA Terminals, and Terminal Link, its container terminal operating company in which China Merchants has a 49% stake. Luc Portier, CMA CGM’s director of studies, projects and development, said: “A widened canal will bring new opportunities for world trade. CMA CGM has foreseen these changes and made Kingston a strategic base: modernisation works will allow the group to operate all larger vessels sailing in the area, and make Jamaica a transhipment hub for the whole sub region.”

Crowley focuses LCL shipments to Caribbean at Houston

HOUSTON, Texas - Crowley Maritime Corporation announced today that it will begin offering weekly, fixed-day, less-than-container-load (LCL) shipping services from Houston to 33 port destinations throughout the Caribbean Basin on July 1. The new logistics service will be the only one of its kind available from the Houston gateway. This new offering is designed to further enhance supply chain options for those shipping directly into the Caribbean Basin from the West and Gulf Coasts of the U.S. “Customers will be able to drop their cargo in Houston, and with our weekly, fixed-day service, have their cargo landed virtually anywhere within the eastern and western Caribbean, and Central America,” said Mike Griglione, Crowley’s general manager of logistics in Houston. “This is just another way we are adding value to our customers’ supply chains by both increasing the velocity of those supply chains with our integrated services and reducing their total landed cost.” “No other logistics company is providing a weekly, fixed-day, LCL service like this to the Caribbean Basin from Houston,” said Ken Black, Crowley’s general manager of logistics in Miami, adding that it is just one facet to a comprehensive suite of logistics services being provided by Crowley in Houston. In addition to LCL transportation, Crowley also offers custom packing options, cargo consolidation and deconsolidation, warehousing, distribution, cross-docking, freight forwarding, import/export documentation, last-mile delivery, cargo insurance and customs brokerage services for cargo of all types and sizes. LCL cargo shipments from Houston should be booked by calling 1-800-CROWLEY, and the cargo should be consigned to Crowley Logistics, Inc. c/o Customer Name, Destination Country; 15894 Diplomatic Plaza Dr., Houston, Texas 77032. Weekly cargo cutoff is noon every Thursday to ensure prompt departure and delivery to destination.

Bye bye fax machine

When Ports Finally Ditch Fax Machines, Cargotec Plans to Profit By: Niclas Rolander | Jun 23 2016 at 03:10 AM | Ports & Terminals Finland’s Cargotec Oyj is vying for new contracts later this year to modernize ports as the equipment supplier to maritime hubs from London to Los Angeles promotes technologies rendering fax machines and even workers redundant. Cargotec is aiming to ride a wave of investment in digital communication and automation set to transform maritime trade and boost its own profits, Chief Executive Officer Mika Vehvilainen said in an interview. After joining the company from flag carrier Finnair Oyj in 2013, he said he was shocked by the rudimentary state of technology for exchanges between ports and giant cargo ships. “It’s surprisingly old-fashioned,” he said at the company’s headquarters in Helsinki. “In many cases these people are actually sending faxes to each other, or making phone calls, and they only share the information a few hours before docking.” Battered Confidence The Finnish company, which had sales last year of 3.7 billion euros ($4.2 billion), is seeking to expand further in services and software from its traditional businesses of making cargo handling equipment like cranes and forklifts. Carved out of elevator manufacturer Kone Oyj in 2005 and built up through acquisitions, Cargotec is also trying to win back investor confidence battered by past profit warnings. With just a tiny proportion of global ports now equipped with some form of automation, it expects that market to be worth almost 1.5 billion euros annually in the coming years. “We are talking to about 70 ports about automation capabilities,” Vehvilainen said. “Ultimately, all container ports in the world will be automated.” Cargotec’s port-equipment unit, Kalmar, has already taken part in about half of these types of projects in the world, and Vehvilainen expects to sign “a few” more deals in the second half of this year. For an industry that hasn’t always greeted change with open arms, the switch is slow-moving, he said. Globally, around 5 percent of the estimated 680 container terminals in operation are at least semi-automated, with around 10 new automated ones in the pipeline, according to consultancy Drewry Maritime Research. Tipping Point “The tipping point has been reached,” Daniel Schäfer, a market analyst at DS Research, said in a phone interview. The biggest container terminal operators like APM Terminals, DP World and PSA have now automated some installations, which are working reliably, so a “second wave” is expected, he said. For its part, Cargotec’s Kalmar supplied software-controlled machinery for container terminals like London Gateway port on the north bank of the River Thames and TraPac LLC’s facility in the port of Los Angeles. It raised research and development spending by almost 25 percent last year in a bid to stay ahead of competitors like China’s ZPMC, Austria’s Palfinger AG and U.S.-based Terex Corp., the world’s largest provider of unmanned container transport vehicles. Still, automation faces opposition from labor organizations seeking to protect workers from being replaced by equipment, harking back to the container revolution in the 1960s when hundreds of thousands of jobs were lost at ports around the world because the goods-packed metal boxes could be loaded onto ships by crane. Demands for automation are rising along with global trade volumes and larger ships, like Mediterranean Shipping Company’s MSC Oscar vessel which can carry up to 19,224 twenty-foot containers. Four of 10 analysts surveyed by Bloomberg have a sell rating on Cargotec, and shares are trading at about 13 times estimated earnings this year, lower than most Finnish industry peers, in part due to a series of earnings misses and profit warnings that had analysts questioning the previous management’s strategy. In October 2012, Cargotec cut profit guidance for the second time in four months due to cost overruns in terminal projects. The stock has risen 5 percent since the start of the year, giving it a market capitalization of 2.4 billion euros. “There were too many negative surprises,” Vehvilainen said. “People have long memories.” Cargotec’s three business areas including Kalmar get slightly more than 20 percent of revenues from services, far below the levels at other Nordic manufacturers like Konecranes Oyj, Metso Oyj, Atlas Copco AB and Wartsila Oyj. By 2020, Cargotec wants to get 40 percent of revenue from service and software businesses, which Vehvilainen said could provide hundreds of millions of euros in additional sales. “We have done a very poor job in the past in terms of developing our services,” he said. “That’s a sad story.”

Amendment to Puerto Rico bill threatens Jones Act

JUNE 8, 2016 — The U.S. marine industry is condemning a measure proposed by Rep. Gary Palmer (R-AL) that would exempt Puerto Rico from the Jones Act – which requires waterborne cargo between two points in the United States to be transported on vessels that are American built, owned, and crewed. The Palmer amendment to H.R. 5278, the Puerto Rico Oversight Management, and Economic Stability Act ("PROMESA"), if adopted,would allow foreign vessels to replace American ships and crews in the operation between the island and U.S. mainland. "Given that the Jones Act and U.S. shipyard industry support more than 12,800 jobs and contributes over $953 million in GDP to the U.S. economy from Alabama alone, we are disappointed that Rep. Palmer seems to be more focused on political maneuvering than on protecting our nation's domestic and economic security," said Matthew Paxton, President of the Shipbuilders Council of America (SCA). "Exempting Puerto Rico from the Jones Act would do nothing to address island's debt crisis and would actually jeopardize the more than $1 billion the U.S. maritime industry has invested in the Puerto Rican shipping trade, as well as the thousands of good-paying jobs on the island." The American Maritime Partnership said the amendment, if adopted, would undercut both American shipbuilders and operators that support the Puerto Rico trade, and the ability for the United States to have shipbuilding and transport capacity during times of war. The amendment also would expose American waterways and ports to foreign vessels traveling from Puerto Rico, where previously they were barred. "The Jones Act is not a cause for the island's financial woes. While other industries have fled the island, the domestic maritime industry has made significant capital investments to service the economy and support thousands of family-wage jobs for Puerto Ricans," said Tom Allegretti, AMP Chairman. "Weakening the Jones Act would harm, not help, the Puerto Rican people and the Commonwealth's economy. In fact, a vote against the Jones Act is a vote to outsource American jobs, undermine national security, and degrade homeland security." AMP says that sponsorship of the amendment by Rep. Palmer is surprising given that Jones Act shipping and shipbuilding is a major industry in Alabama, a "top ten" shipyard state, with 12,800 jobs, according to a study by the U.S. Maritime Administration. Shipbuilding provides $953 million in economic impact in Alabama each year with shipyard jobs paying well above national average wages. Rep. Duncan Hunter, Chairman of the House Coast Guard and Maritime Transportation Subcommittee, recently stressed the importance of the Jones Act and its vital role in protecting the security of U.S. borders in the Washington Times, saying: "It's imperative not to conflate the unrelated issues of Puerto Rico's debt and the Jones Act, and to fully grasp the importance of ensuring the safe transport of goods between American ports. There must also be acknowledgment of the dire consequences of exposing ports and waterways to foreign seafarers." The AMP has released a blow-by-blow refutation of claims put out by Jones Act opponents. CLAIM: The Jones Act does not contribute to national security. FACT: The Department of Defense ("DOD"), Navy, and Coast Guard are among the strongest supporters of the Jones Act because the military relies on the commercial maritime industry for its sealift capacity. Within the last year, senior military leaders, including the Commandant of the Coast Guard, have emphasized the critical need for the Jones Act for national security. Also, in a preeminent study of the Jones Act in Puerto Rico, the independent U.S. Government Accountability Office ("GAO") discussed the harm to national security if the Jones Act was changed there. Finally, DOD itself has estimated that it would incur annual costs of tens of billions a year if it were forced to replicate the benefits of the commercial maritime industry. CLAIM: Changing the Jones Act in Puerto Rico will help the island, especially considering its current economic crisis. FACT: Changes to the Jones Act in Puerto Rico would undermine national security, reduce border protection, and outsource American jobs. The GAO study on the Jones Act in Puerto Rico listed a number of potential harms to Puerto Rico itself if the Jones Act were changed, including the possible loss of the stable service the island currently enjoys under the Jones Act and the loss of jobs on the island. Moreover, American domestic carriers are making some of the largest private sector investments currently underway in Puerto Rico, spending nearly $1 billion in new vessels, equipment, and infrastructure. They employ hundreds of Puerto Rican American citizens on the island, on the mainland, and on vessels serving the market, providing highly reliable, low-cost maritime and logistics services. These private sector jobs and reliable services are important to the long-term recovery of the Puerto Rican economy and would be jeopardized by changes to the Jones Act.As recently as a week ago at the 2016 Navy League Sea-Air-Space Exposition, the U.S. Maritime Administrator was clear that attacks claiming that the Jones Act punishes the residents of Puerto Rico are "unfounded" and that "there is no supporting information and every time the government has taken a look at it they have found it to be the contrary of that." CLAIM: The Jones Act increases the cost of goods in Puerto Rico. FACT: Over the last decade, a parade of politicians and "experts" has attempted to estimate the so-called "cost" of the Jones Act in Puerto Rico. Because the estimates have been wildly contradictory, in 2012, Puerto Rico Delegate Pierluisi asked the GAO to determine the true "cost." The GAO studied the issue for more than a year and debunked the previous estimates. First, the GAO said there are far too many factors that impact the price of a consumer good to determine the supposed cost related to shipping, much less the Jones Act. Second, the GAO said, one could not truly estimate the cost unless one knew which American laws would be applied to foreign ships if they were allowed to enter the domestic trades, which would certainly increase the cost of shipping on foreign vessels. CLAIM: Changing the Jones Act in Puerto Rico is a narrow fix that does not impact the rest of the country. FACT: Not true. Changes to the Jones Act in Puerto Rico would undermine hundreds of millions of dollars of recent investments in modern, state-of-the-art American vessels operating between the U.S. mainland and Puerto Rico. More broadly, altering the fundamental regulatory structure in Puerto Rico — literally changing the rules in the middle of the game after massive investments were made in new vessels for that trade — would undermine future investment in every segment of the Jones Act industry nationwide. Even the GAO discussed the potential ripple effects of a Jones Act change in Puerto Rico throughout other American regions. Changing the Jones Act for Puerto Rico would not affect only Puerto Rico; instead, the implications would quickly affect the entire domestic maritime industry. CLAIM: The Krueger report from Puerto Rico said, "Import costs [are] at least twice as high [in Puerto Rico] as in neighboring islands on account of the Jones Act." FACT: There is no study that supports this statement in any way, and the Krueger report cited none. In fact, anecdotal evidence about rates indicates that the opposite is true. For example, one analysis shows it is 40% more expensive to ship goods from the U.S. mainland on foreign vessels to the U.S. Virgin Islands (not subject to the Jones Act) than on Jones Act vessels to Puerto Rico. CLAIM: The U.S. Virgin Islands are not subject to the Jones Act, so why should the Jones Act apply to Puerto Rico? FACT: The two areas are treated very differently under U.S. law. Since 1917, Puerto Rico has operated under a legal structure that generally makes U.S. federal law automatically applicable in Puerto Rico, just as it would be in any American state. That is not true in the Virgin Islands. Also, importantly, the U.S. Virgin Islands are outside the U.S. customs territory while Puerto Rico and the United States are inside the U.S. customs territory. Historically, the Jones Act has applied to U.S. territories inside the U.S. customs territory and not applied to those outside of it. CLAIM: The Jones Act has undermined Puerto Rico's efforts to import liquefied natural gas (LNG). FACT: Flatly false. American carriers pioneered the use of LNG in Puerto Rican markets, deploying the world's first LNG-powered containerships and developing small-scale LNG supply and logistics services to help manufacturing and other industrial facilities on the island reduce the cost and improve the reliability of their energy supply. Puerto Rico's real impediment is limited mainland U.S. export facilities and import facilities on the island, infrastructure to utilize LNG on the island, and demand for bulk LNG. Qualified American vessels are fully prepared to provide bulk LNG transportation services to the island. They could begin service promptly using any of the dozens of LNG vessels already authorized to operate in the trade. Or they could design and build new LNG vessels in full compliance with American safety and regulatory standards, including the Jones Act. Blaming the lack of LNG on the Jones Act is a red herring. CLAIM: All cargo shipped in or out of Puerto Rico must be transported on Jones Act vessels. FACT: This is a common misconception. Cargo from anywhere in the world can be imported into or exported directly from Puerto Rico. In fact, nearly two-thirds of the vessels calling on Puerto Rico are foreign.