[hkskyline]

North America West Coast Port Congestion

Delays at U.S. Ports May Push Nippon, Maersk to Canada, Mexico

Jan. 13 (Bloomberg) -- Shipping companies such as Nippon Yusen K.K. are searching from Alaska to Mexico for ports able to handle goods from Asia because bottlenecks in Southern California are delaying cargo by as much as a week.

Nippon Yusen, Japan's biggest shipping line, is considering sending goods through Prince Rupert, on the Canada-Alaska border, and Manzanillo, on Mexico's Pacific Coast. The harbors are being sought as alternatives to Los Angeles and Long Beach, the biggest U.S. port complex, where a record of almost 13 million standard- sized containers crossed the docks in 2004.

Trade with Asia surged 15 percent last year amid a boom in Chinese goods, delaying merchandise to retailers such as Sharper Image Inc. Drewry Shipping Consultants in London forecasts a 14 percent increase in 2005. Idling a ship in the harbor costs as much as $300,000 a week, for expenses such as salaries and fuel.

"With the lack of significant capacity expansion anywhere on the West Coast, everyone is looking to any alternative," said Peter Keller, chief operating officer of Tokyo-based Nippon Yusen's North American unit, who toured Prince Rupert in December. "Prince Rupert has some viability. They have deep water, which is good. They have a very viable railroad."

Neptune Orient Lines Ltd., the sixth-biggest cargo company, also is considering alternatives to Southern California, said Scott Dailey.

MaerskSeaLand, the world's biggest cargo line, is reviewing routing choices and might consider Prince Rupert, Anne Kappel, a spokeswoman for the Copenhagen-based company, said in an e-mail.

Mexican Ports

More than 5,000 ships passed through Los Angeles last year, including a record 94 on Oct. 12. The harbor is designed to handle 30 to 50 vessels daily. A total of 118 ships were diverted, including 11 to Manzanillo, said the Southern California Marine Exchange, which tracks ship arrivals.

The ports aren't experiencing delays right now. Demand slows in January, after peaking in October and November ahead of the holiday season.

The Los Angeles and Long Beach ports are hiring 1,300 workers to handle rising Asian imports this year. The addition of 3,700 dock workers last year was inadequate to process the extra loads, port director Jim McKenna said. The ports will also extend working hours and handled cargo on weekends.

The delays forced retailers to carry more inventory to keep products on store shelves, said Robin Lanier, director of the Waterfront Coalition, a Washington-based trade group whose members include the 10 biggest importers.

San Francisco-based Sharper Image said Jan. 6 that shortages of "key holiday items" and higher shipping costs linked to the delays will reduce profit for its year ended Jan. 31 to as little as 90 cents a share, down from $1.65 a year earlier.

Manzanillo

Last year, shares of shipping lines surged amid the increased demand. Evergreen Marine Corp. rose 15 percent, while Neptune Orient climbed 39 percent and Nippon Yusen gained 14 percent.

Manzanillo, Mexico's biggest port, may handle 1 million standard-sized containers this year, a 20 percent increase. The port is negotiating with Wal-Mart Stores Inc. and Target Corp., the two biggest U.S. discount retailers, said Alfonso Perez Martinez, the port's marketing vice president. Nissan Motor Co. ships auto parts from Japan to a Tennessee plant using Manzanillo.

"The smart companies are looking at Canada and Mexico for the longer term," said Lanier. "The big issue in Mexico is infrastructure. There are serious questions about the capacity of Mexico's rail network.''

Deep Water

Prince Rupert, aiming to handle 400,000 standard-sized containers by 2006, has a C$195 million plan to attract shipping companies, with C$75 million pledged by Canadian National Railway Co., to build tracks at the port, and Maher Terminals Inc. of Berkley Heights, New Jersey, to build the terminal. Persuading a cargo company such as Nippon Yusen might help win additional support from the government.

"A year ago I would have said they were nuts in Prince Rupert," said Theodore Prince, senior vice president of Optimization Alternatives, which sells transportation software. "Now it looks like they can make it. Canadian National and Maher are very serious about this."

Based on Neptune Orient's average revenue per load of $2,677 in the first nine months of last year, shipments through Prince Rupert would total about $535 million in annual revenue by 2006 if the planned capacity is reached. Nippon Yusen doesn't disclose revenue per load.

Prince Rupert has other advantages, including a 118-foot channel that's more than twice as deep as New York's, as well as some drawbacks.

Asia Proximity

"It's nowhere," said Prince, former North American chief operating officer of Kawasaki Kisen K.K., Japan's third-biggest shipping line. The community's small population of 15,300 might discourage investors and cargo lines that prefer ports with larger local markets such as Los Angeles or Vancouver, he said.

Travel time also is a factor, because of delays on the typical three-week trip between Hong Kong and inland points such as Chicago. The trip through Manzanillo to the U.S. interior takes about two days more by sea, Perez said.

Prince Rupert also is promoting its proximity to Asia. The port is 1,259 miles, or about two days sailing, closer to Hong Kong than Los Angeles.

Ensenada, just south of the U.S. border, is building up a cargo business that handled fewer than 50,000 containers last year. The port's distance, about 200 miles, from Los Angeles is an advantage, though Ensenada lacks a railroad to move cargo inland. The lack of trains is a drawback, Keller said.

Prince Rupert has attracted interest from five of the 10 biggest cargo lines, Port Director Don Krusel said. He declined to identify any of the companies.

 

[hkskyline]

American ports eye Asian trade
As Californian terminals struggle to cope, west coast rivals are boosting capacity to grab a share
20 January 2005
South China Morning Post

As the rising tide of container traffic from Asia swamps California's twin ports of Los Angeles and Long Beach, rival terminals from Alaska to Mexico - and even some as far afield as the United States east coast - have begun expanding to grab a piece of the action.

The ports of Seattle and Tacoma in Washington state are boosting their combined capacity in separate expansion programmes - from 3.8 million containers last year to 5.5 million by next year.

Down south, Mexican officials have hired Hutchison Port Holdings to conduct a feasibility study on transforming the small port of Ensenada into a deep-water facility.

In Alaska, managers at Anchorage's port are spending US$350 million to more than double its berthing space.

Meanwhile, Panama is building a US$1 billion mega-port on a man-made peninsula at the Pacific entrance to the Panama Canal.

The port expansions could give much-needed relief to shippers and exporters caught in the logjam at the Los Angeles and Long Beach ports, the main US entry points for cargo containers from across the Pacific.

Peter Powell, chairman of the National Customs Brokers and Forwarders Association of America, says 43 per cent of all 20-foot containers from East Asia enter the US through these two ports.

In the fourth quarter of last year, cargo volume at west coast ports rose 10 to 13 per cent from the previous year, when congestion was already a headache, Mr Powell said.

Since October, there have been numerous media reports about stranded merchandise as cargo ships are forced to wait up to 14 days to be unloaded.

The Vancouver Port Authority, itself beleaguered by the ever-growing flood of cargo from Asia, recently announced a US$1.4 billion expansion to triple its capacity by 2020.

"We now have an opportunity to serve as a transportation hub for all of North America," said its chief executive Gordon Houston.

Vancouver's port handled 56 per cent of the total volume of Canada's trade with China last year, Mr Houston said. "The shock waves from China's economic expansion have definitely reached our shores," he said.

Neighbouring Seattle also aims to cash in on the explosion of trade with China. The port's general manager for containers, Kent Christopher, said the facility had seen a "tremendous amount of direct importers" shifting from Los Angeles and Long Beach. Officials at the nearby Port of Portland are also eager to tap the rising trade.

Portland launched a marketing blitz and hired a shipping executive to manage liner development with a focus on Asia. As a result of these efforts and the congestion in California, South Korean shipping company Hanjin introduced a new rotation that included its first call at Portland on November 19. "We've had more interest from carriers in the last six months than we've had in the past two years," said Eileen Murche, the port's import marketing manager.

Places inland are also vying for a share of the flow of containers from Asia. Missouri is lobbying Mexico for a major trade route from the Mexican coast to the US heartland. The state plans to transform Kansas City and St Louis into inland ports that connect North America to Asia through Mexican sea ports and rail.

"This corridor is a viable alternative to Los Angeles," said David Eaton, the head of Missouri's office for commerce and agriculture in Mexico.

Even Houston's port, which handles about 65 per cent of all containers entering the Gulf of Mexico, wants to grab more Asian trade. Over the past two years, Houston has increased trade with Asia by 28 per cent.

One of the main drivers behind Houston's ambitions is the world's biggest retailer. Wal-Mart Stores will open a massive distribution centre near the port this year.

The retailer, regarded by many in the industry as a pace-setter in distribution, picked Hampton Roads in Virginia as its east coast port of entry, after logjams started to cause delays on the Pacific coast in 1998.

 

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Ottawa backs away from Prince Rupert terminal
Marine Act blocks funds: B.C. government may increase its contribution
John Greenwood
29 January 2005
National Post

VANCOUVER - Ottawa is backing away from a $40-million funding request for a proposed container terminal at Prince Rupert, casting in doubt the future of a project that was supposed to reduce congestion at West Coast ports including Vancouver.

Don Krusel, chief executive of the Prince Rupert Port Authority, said the federal government may be unable to support his project because of legislation preventing Ottawa from making financial contributions to ports.

"The Canada Marine Act has created an impediment," he said in an interview. "If that impediment wasn't there we would be announcing funding."

A federal official close to the discussions who asked not to be named confirmed Ottawa may not be able to help out. Prince Rupert, on British Columbia's remote northern coast, wants to build a $530-million facility with a capacity of about 1.5 million containers a year when the second phase is completed in 2009.

The first phase is expected to cost about $180-million and most of the financing is in place, including $60-million from Maher Terminals Inc., the terminal operator, and $15-million from Canadian National Railway Co., which owns the rail link to the port.

But without additional government funding, the project can't go ahead, Mr. Krusel said.

Prince Rupert, which has seen its fortunes decline amid troubles in the resource sector in recent years, has been aggressively pushing its case for building the terminal, arguing that recent growth in West Coast container traffic will ensure the operation is profitable.

Driven by China's economic expansion, trade volumes have soared over the past few years, straining capacity at major ports such as Vancouver.

Prince Rupert and its supporters argue it is ideally positioned to take up some of the extra load, since its already a major deep-water port with significant bulk cargo handling facilities.

And in the event of an earthquake or other disaster in Vancouver, it would provide Canada with another way to keep its western trade links open.

Critics, such as Gordon Houston, chief executive of the port of Vancouver, maintain that if there was a real need for a new container terminal, Prince Rupert would not have to go asking for government grants -- the private sector would come in.

Mr. Krusel responds that many ports, especially in the United States, benefit from strong government funding. In order to compete, he said, Prince Rupert needs public funding too.

Fortunately for Prince Rupert, the provincial government seems to agree. It has already signed up to contribute $17-million to the project. With the possibility of a contribution from Ottawa looking increasingly remote, Mr. Krusel has asked the province to come to the rescue.

He wants British Columbia to hike its commitment to $30-million. That would give him $105-million in total commitments, enough to go to the bank for a loan for the remaining $75-million. Despite the heavy debt load, he believes the arrangement could work.

Dave Crebo, a spokesman for the provincial Transportation Ministry, confirmed the province is in discussions about increasing its commitment. He said the province is still considering the request.

 

[hkskyline]

Traffic jam on the high seas to America
11 February 2005
South China Morning Post

Congestion at shipping ports on the west coast of the United States is causing a chronic problem for Chinese exporters and other shippers from East Asia.

The authority that runs the Panama Canal, which provides a short cut for ships between the Pacific and Atlantic oceans, is gleeful. So are ports on the US east coast, where Asian business has boomed in the past few years.

The cargo delays that have occurred in southern California, especially in the twin ports of Los Angeles and Long Beach - which together handle 43 per cent of US containerised imports by sea from Asia - are changing transpacific trade patterns. At present, about two-thirds of US imports from Asia are shipped to California. Goods destined for the US east coast then travel overland by rail or truck. Until the congestion started to build, this was the cheapest form of delivery to America's retail and manufacturing industries.

But now, more shipping lines are bypassing the US west coast and, instead, going via the Panama Canal to east coast ports. The canal carries 4 per cent of world trade, and the authority has a long-term plan to enlarge the capacity of the waterway to enhance its strategic role in the global economy. Sea routes from Asia to the US east coast are as much as 50 per cent longer than to the west coast. But 70 per cent of the population in the world's biggest market live in the eastern half of America.

From Asia, the Panama Canal provides the critical short cut. Ships from northern China or Japan bound for US east coast ports save about 4,800km by going through the canal instead of round South America.

China is watching these developments carefully because it is by far the largest trader with the US using container ships. Asia-US container commerce grew by more than 14 per cent in the first nine months of last year. Nearly 57 per cent of that volume was shipped from China alone.

The elimination of global textile quotas from January 1 is expected to further increase clothing shipments from China to the US. The congestion on the US west coast in the third-quarter of last year, during the pre-Christmas rush of shipments, was the result of labour shortages, poor efficiency and overstretched port and inland infrastructure. Some fully laden container ships were delayed for up to a week, adding US$300,000 in expenses for fuel and crew salaries.

A number of shipping lines diverted vessels to ports on the west coasts of Canada and Mexico, despite longer overland transport times to the US east coast. Although extra workers have been hired in California's ports, many of the problems contributing to the chronic congestion and delays will take time and large amounts of money to solve.

Since a labour dispute closed all US west coast ports for 10 days in October 2002, there has been a surge in Asian shipping direct to major ports on the US east coast via the Panama Canal. Big US retailers have also built regional distribution centres near many of these ports. In Savannah, Georgia, for example, throughput has nearly doubled in five years, making it the second-busiest container port on the east coast, after the New York-New Jersey harbour complex.

But container ships are getting bigger, and many of the newest cannot fit through the Panama Canal. The canal authority is considering a plan for a new lane of locks that would be built alongside the existing six pairs. But this will take several years to build at an estimated cost of US$8 billion.

Meanwhile, the authority says that it can still arrange for more ships to pass through the canal, although it is working at around 93 per cent of capacity. More than 13,000 vessels currently transit the waterway each year.

 

[Bond James Bond]

Read the articles in my "Ports of Seattle and Tacoma" thread. A lot of the overflow from LA is now heading to Seattle and Tacoma.

 

[hkskyline]

Vancouver in Deltaport 3 green petition
By Keith Wallis
21 February 2005
Lloyd's List

PLANS to develop a C$272m (US$221m) third berth at Vancouver’s Deltaport container terminal have taken a step forward after the Vancouver Port Authority applied for environmental approval for the project last week.

The cost of building the third berth will be shared between the authority and Terminal System Inc, a wholly- owned subsidiary of Hong Kong’s Orient Overseas (International), parent company of leading liner, Orient Overseas Container Line.

TSI already operates the existing terminals at Deltaport and Vanterm, which together handled 1.24m teu in 2003.

The complex is part of a C$1.02bn expansion of container terminal facilities at Roberts Bank, about 35 km south of Vancouver, and is close to the Canadian-US border. Vancouver Port Authority is hoping construction of the third berth will start by the end of this year for completion in about July 2008.

Work includes the reclamation of about 20 hectares to create the single third berth plus an expanded container storage area.

Vancouver Port Authority president and chief executive Captain Gordon Houston said the public will be able to comment on the third berth project until April 25. The scheme will then be considered by the British Columbia environmental assessment office.

The third berth and the development of the three berth container terminal 2 will boost box volumes at Deltaport from 900,000 teu to 3.2m teu.

The port authority is expected to invite bids from potential operators for the operation of Terminal 2, but no date for the implementation of the C$750m Terminal 2 project has yet been agreed.

Plans call for the reclamation of 81 hectares plus the construction of a wharf for three berths which will be served by up to 10 gantry cranes and have container storage and intermodal facilities

The port authority said Terminal 2 is “completely independent of the Deltaport third berth expansion in all aspects including site location, terminal configuration, environmental study and impact assessment, construction, operation and development schedule”.

Vancouver Port Authority chairman David Stowe said: “The Roberts Bank container expansion programme is part of a broader Vancouver Port Authority initiative to expand container terminal capacity at the Port of Vancouver, and capture the increases in container volumes predicted over the next 20 years.“

The expansion of the terminal facilities will also require significant investment in the construction of the additional rail links.

This includes an extra 7.7km of track and other improvements to help boost rail traffic from the current 18 trains a day to 21 trains per day by 2012.

The cost of the work will be shared between BC Rail, Canadian National and CP Rail. The Vancouver Port Authority is advocating for private and public partnerships to plan and finance other related improvements such as road/rail crossings.

 

[hkskyline]

Import container curbs to ease Vancouver backlogs
Carriers cut shipments from Asia in a radical measure to eliminate persistent port congestion
28 February 2005
Lloyd's List

FROM today most transpacific container lines calling at Deltaport in the Port of Vancouver will be rationing the amount of import cargo they bring into Canada’s largest port amidst the continued, North American west coast boom trade with Asia.

The carriers have agreed to cut import cargo from Asia by 25% a week for four weeks starting today February 28 under a radical new measure to eliminate a persistent, large backlog at heavily-congested Deltaport.

Container traffic flows are working more smoothly at Vancouver’s two other box terminals in the inner harbour.

“The shipping lines were given the option of either dropping one call or reducing what they bring in by 25%, and most chose the latter,” indicated Morley Strachan, VP of business development and strategic planning at TSI Terminals Inc, which operates Vancouver’s Deltaport and Vanterm facilities.

“Not much dent has been made in a backlog of about 5,000 containers since we declared force majeure last month.”

He added that talks were continuing with Canadian National Railway on the shortage of railcars. CN recently promised to increase daily supplies of railcars from around 550 to 750. However, this has not been possible due to events outside of the railroad’s control, including bad winter weather and a recent collision between a passenger train and a truck that disrupted freight traffic. Thus the backlog will not be cleared by the end of February, as originally anticipated. “We hope the new measures will bring the backlog to something tolerable in three or four weeks,” Mr Strachan said.

In an interview with Lloyd’s List, Capt Gordon Houston, president and chief executive of the Vancouver Port Authority, reiterated the urgency of expanding infrastructures, including rail and road networks, to accommodate an anticipated tripling of container business by 2020.

Vancouver handled a record 1.66m teu in 2004 and container cargo growth over the next 15 years could average 7% annually, Capt Houston said.

“It could even reach 10% annually over the next two years as trade with Asia, China in particular, continues to soar,” he added.

The current corporate plan calls for capital expenditures of C$1.4bn (US$1.1bn) between now and 2020. The big ticket item is a planned fourth container terminal that would be situated at Roberts Bank, adjacent to Deltaport, and would go on stream in 2112 if all proceeds as scheduled.

In this regard, port officials welcomed the recent doubling by the federal government of the VPA’s borrowing limit to half a billion dollars.

Also welcomed was the provincial government’s launching of the formal environmental review proceedings for the new container terminal project.

 

[hkskyline]

Ottawa to offer ports funding for expansion: To ease bottlenecks
Peter O'Neil
4 March 2005
National Post

OTTAWA - The federal government will table legislation this spring that will help Canada's West Coast ports, facing surging traffic from China, gain access to about $2-billion in tax dollars and private capital for major expansions, Transport Minister Jean Lapierre said yesterday.

While the Canada Marine Act amendments will apply to all 19 national ports across Canada, the demand is being driven by the need to reduce bottlenecks at the Port of Vancouver and fund construction of a container port in Prince Rupert, B.C., he said.

"The real pressure is coming from the West Coast, because of the level of traffic, because of what's coming from China and Asia," Mr. Lapierre said.

"The pressure is there not only on the ports but also on the railways -- the whole infrastructure system is under pressure and we know that the level of trade is going to increase. So we've got to get moving."

The Canada Marine Act, passed in the mid-1990s to let independent authorities run federal ports, includes a provision limiting access to federal business subsidy programs.

Proposed amendments to be considered by Paul Martin's Cabinet would remove that obstacle, as well as make it easier for ports to borrow money in capital markets, Mr. Lapierre said.

"We want action and we don't want the legislation to prevent us from doing the right things, especially on the Pacific gateway."

Mr. Lapierre said he hopes the bill will reflect the thrust of a resolution to be debated at the weekend Liberal policy convention here.

The proposal, initiated by B.C. Liberal members, calls on Ottawa to remove legislated restrictions on access to public and private funding sources. It also proposes an amendment to the Income Tax Act to let port authorities offer tax-exempt bonds.

The Port of Vancouver, Canada's busiest port, wants federal help to fund part of a $1.4-billion expansion of a facility that already handles $29-billion in goods coming and going each year.

The Prince Rupert Port Authority, meanwhile, is lobbying heavily for $40-million from Ottawa to cover part of a $530-million plan to construct a container facility.

Vancouver Port Authority president Gordon Houston has called on the federal and B.C. governments to make major investments in ports, highways and rail facilities to facilitate China's thirst for Canadian resources and growing Canadian imports of manufactured Asian goods.

"The consequences of not addressing the growing capacity deficit across Canada's transportation network are dire," Mr. Houston said in a speech last month.

"Not only do we risk losing out on the tremendous economic opportunities associated with facilitating trade between North America and Asia, we also run the risk of undermining the competitiveness of the Canadian industries we serve."

The Port of Vancouver's initiatives include enhanced container-handling facilities, a third berth at one of its container terminals, the construction of a new three-berth container terminal at Roberts Bank, and possibly the conversion of an existing terminal to handle containers, he said.

The Prince Rupert Port Authority is lobbying for federal help to construct a container port, arguing the West Coast needs a second facility to deal with bottlenecks in Vancouver and offer an alternative in the event of major disruptions in the earthquake-prone Lower Mainland.

Both port authorities have hired lobbyists pushing their cause in Ottawa. One of Prince Rupert's lobbyists is Mark Marissen, campaign chairman for Mr. Martin's Liberals on the West Coast.

 

[hkskyline]

Lloyd's List
December 8, 2004
Hutchison mulls Mexico box port as alternative to west coast jams
Ensenada may threaten Long Beach/Los Angeles port status
Sam Chambers

HUTCHISON Port Holdings may have the solution to one of container shipping's great agonies.

Local government officials in Baja California, Mexico, are in discussions with the world's largest container terminal operator, as well as Union Pacific, about a $ 1.2bn Greenfield project at Ensenada on the Mexican west coast, where HPH already has a one berth facility.

HPH officials, while stressing they do not talk about future projects, did confirm "a feasibility study on a major intermodal development project" is under way.

The port will be a threat to California's Long Beach/Los Angeles dual port gateway status, which handles $ 200bn worth of cargoes annually.

HPH has four terminals in Mexico, three on the Pacific coast. As well as Ensenada, there is also Manzanillo and Lazara Cardenas on the west coast (which has been mooted as another US alternative with a rail linking to the American underbelly through Laredo, Texas), and Veracruz on Mexico's east coast.

Authorities are looking to boost Ensenada's throughput to between 1m and 1.5m teu, up from its current 60,000.

"It would be a world-class commercial port that could take away some of the pressure that now exists," said Sergio Tagliaprieta Nassri, Baja California's secretary for economic development.

The plan is to link the port to the US by rail through Mexicali to Yuma in Arizona, while an Ensenada airport has been floated for good measure.

Dredging has just commenced to take existing depths from 12 m to 14 m at Ensenada port and raise capacity at the former International Container Terminals Inc owned terminal to 250,000 teu.

There are three sites, all south of the city, that are being considered for the new complex, namely Santo Tomas, Punta China and Punta Colonet, the latter tipped as the favourite.

HPH, with 206 berths in 35 ports, is the world's leading port developer and operator, and Union Pacific is North America's largest rail operator.

John Meredith, group managing director at HPH has avoided investing in the US, as in Japan, Taiwan and northern China, because he is unable to gain full operational control of terminals in these places - a key concession HPH demands from any deal.

"Obviously, a billion dollar investment is a long-term investment, we're not going to change things straight away," said an HPH source.

Retail giants such as Wal-Mart and Costco Wholesale, chastened by West Coast delays and lockouts, have reportedly done test runs for distribution from Mexico and are likely to rejig their supply chain in response to HPH's Mexican manoeuvre. The slew of boxes heading over the Pacific from Asia this year has caught many North American ports unawares and substantial expansion plans have been announced up and down the coast.

 

[hkskyline]

OOIL to raise terminal capacity in Vancouver
Nicholas Zamiska
12 March 2005
The Standard

Orient Overseas International, a Hong Kong-based shipping firm controlled by Tung Chee-hwa's family, said it will expand capacity by nearly a third at two of its terminals near Vancouver to ease congestion that has plagued ports along the western coast of North America.

TSI Terminal Systems, a wholly-owned subsidiary of OOIL based in Vancouver, said that it will invest C$60 million (HK$389.5 million) to increase the capacity of its Vanterm and Deltaportterminals by 30 percent over the next three years.

"There is huge opportunity for containergrowth in Vancouver and this announcementfrom TSI shows that terminaloperators are ready and willing to do their part to ensure the supply chain can be as efficient and effective as possible," said Chris Badger, a vice president for the Vancouver Port Authority.As China's manufacturing industryhas grown, transportation links across the Pacific have struggled to keep pace, creating traffic jams at the major ports along the coast. The snarl of ships has caused ripple effects throughout manufacturers' supply chains, which have grown increasingly reliant on time-sensitive deliveries.

"In visits with several carriers this week we found that the congestion fears were generally less than advertised," said Citigroup analyst Charles de Trenck in a note.

"Many operators have increased effectivecapacity by various means [ie, longer operating hours], although we agree that the supply chain will remain congested further inland if shippers are not able to win certain requested changes from their inland transport providers," he added.

But as shipping lines move to expand capacity, by purchasing more vessels and expanding terminals, some industry analysts worry that shippers will be saddled with excess capacity once US ports successfully implement reforms aimed at easing congestion.

OOIL reported on Thursday that its earnings more than doubled to US$670 million in 2004, beating forecasts.

 

[hkskyline]

Vancouver operator plans container boost
By Keith Wallis in Hong Kong
14 March 2005
Lloyd's List

Terminal Systems, the Vancouver terminal operator owned by Orient Overseas (International) Ltd, will spend C$90m (US$74.6m) to expand container handling operations at the port.

The cash includes C$60m that will be invested in new port equipment to improve handling efficiency and increase the capacity of Deltaport and Vanterm by 30% in three years.

TSI vice-president of business development and strategic planning executive Morley Strachan said: “We will do everything in our power to maximise terminal efficiency and restore berthing predictability.”

The company has been badly hit by congestion in the past few months, caused largely by a shortage of rail cars to move boxes from the port to the Canadian hinterland.

Shipments have been delayed by at least two weeks since January. Mr Strachan believes the backlog of boxes could be cleared by the end of this month after Canadian National Railway deployed extra rolling stock.

TSI is also cutting the free storage of boxes from 14 to five days starting from April 11.

Container volumes at Deltaport and Vanterm grew to nearly 1.35m teu last year from 1.27m teu in 2003.

TSI will also develop a C$272m third berth at the Deltaport complex, 35 km south of central Vancouver, in association with the Vancouver port authority.

The port of Vancouver is responsible for obtaining all regulatory approvals, but will share the cost of building the complex with TSI, which will also operate the facility. Construction of the third berth could start by the end of this year for completion in about July 2008.

Work includes the reclamation of about 20 ha of land for a single berth and an expanded container storage area.

Plans to expand capacity at Deltaport and Vanterm coincides with comments made by OOIL chief financial officer Nicholas Sims, who suggested his company would invest in additional ports worldwide to combat port congestion.

Speaking during OOIL’s record results announcement last Thursday, Mr Sims said: “With the infrastructural problems there are in North America, Europe and Asia, as a container line it becomes ever more important to secure dedicated berths.”

 

[hkskyline]

Canada Trains Want To Move More China Exports To The US
18 March 2005

BEIJING (Dow Jones)--North America's West Coast ports and railways are choked by the exponential growth in China imports, but Canadian railways want to move more of these arrivals to the U.S. Midwest and East Coast.

West Coast ports are struggling to deliver the deluge of goods during what is usually the low season, with cargo from Asia expected to double by 2020.

China accounted for 37% of U.S. imports by weight in 2004, up from only 5% in 1989, with shipments for Wal-Mart Stores Inc. (WMT) accounting for 10% of the U.S. trade deficit with China, a report by Swiss investment bank UBS AG found.

The growing trade has prompted Canadian National Railway Co. (CNI) and Canadian Pacific Railway Ltd. (CP) to open offices in China to market their alternative routes to shippers.

"Exports going to the U.S. have another option that is shorter and cheaper," Canadian Pacific chief China representative Willy Wang told Dow Jones Newswires.

Northern ports in North America are a shorter distance from Asia and U.S.-destined imports arriving through Canada are not subject to additional duties at the U.S. border.

Canadian Rail Services U.S. Midwest, East Coast

Unable to service the western U.S. - whose rail tracks are owned by American rivals Union Pacific Corp. (UNP), the largest U.S. railroad, and Burlington Northern Santa Fe Corp. (BNI) - the Canadian companies want to move more Chinese exports to the U.S. Midwest and East Coast, Wang said.

They own tracks heading from Canada to Minneapolis and Chicago that connect onward to New York, Philadelphia and Baltimore and stretching as far south as Texas and New Orleans.

Their shipping gateway through the Vancouver Port Authority (VCV.YY) has the lowest fees on the West Coast, as U.S. operators have raised their own fees to try to stem the overload of goods.

Canada has lower port fees, union salaries and storage fees compared to the U.S., Port of Vancouver China Representative Jenny Yan said.

In addition, although security standards are the same at all ports, U.S. ports have greater concerns with stowaways and weapons smuggling and need more investments for technology. These concerns can result in goods being held up longer by customs.

UNP announced rate increases earlier this year after floods and mudslides in southern California forced it to cut its services by one-third.

It said increases are here to stay due to rising oil prices and a lack of investment in new rail cars, and with railroads moving away from signing multiyear agreements with set prices in favor of short-term contracts or spot-market tariffs.

The Los Angeles County Economic Development Corp. has even asked for financial help from the Chinese, South Korean and Japanese governments for infrastructure improvements at the Port of Los Angeles, calculating that delays caused by infrastructure constraints are costing Asian exporters $1.3 billion annually.

Foreign Competition For U.S. Ports

The Port of Los Angeles, the largest in the U.S., is aware of the competition it faces from ports beyond the West Coast and outside the U.S.

"It is a concern that other ports are growing, but there was a significant increase in volume last year and growth has been seen at all ports," Port of Los Angeles Director of Planning Mike DiBernardo told Dow Jones Newswires.

He added that L.A.'s problems last year were largely due to labor shortages from inaccurate projections given by shipping lines which have been rectified this year.

Other ports are moving in. Cargo traffic at the Port of Vancouver grew 11% year-on-year to 73.9 million metric tons in 2004, the largest gain in more than a decade.

Canada's largest port handled $C29 billion ($23.4 billion) in trade in 2004, with 56% of the total volume of Canada's trade with China passing through, Vancouver Port Authority Chairman David Stowe said.

Inland ports are also jockeying for a share of the growing Asian trade. Houston, which handles 65% of containers entering the Gulf of Mexico, saw incoming containers from Asia increase by 28% in two years and will be further boosted by the opening of a Wal-Mart distribution center near the port later this year.

Some shippers are already bypassing the West Coast entirely and heading straight to the East Coast by way of the Panama Canal to ports such as Halifax and Montreal, despite twice the travel time and a 35% increase in costs.

Congestion In Vancouver

But Canada's ports have their own problems. Despite a recent announcement that the Port of Vancouver will invest C$1.4 billion to triple its container terminal capacity by 2020, there are fears these improvements are not being made quickly enough.

"We get a bum rap for being congested, but the investments needed for infrastructure aren't being made," Stowe said.

TSI Terminal Systems Inc., the largest container terminal at the Port of Vancouver, asked shipping companies to reduce their containers by 25% for one month at the end of February in an effort to clear the backlog at the port.

CP's Wang warned that this sort of request is likely to happen again.

The port blames rail companies for not sending enough rail cars, but rail companies say terminals fail to load their cars fast enough.

"More business means more delays too. Business is too good right now," Wang told Dow Jones Newswires.

The two Canadian rail rivals combined their operations in Vancouver in October in an effort to alleviate congestion.

- By Vivian Tse, Dow Jones Newswires

 

[Bond James Bond]

Here's an interesting angle to this topic . . .

http://www.thestate.com/mld/thestate/business/11203637.htm

Posted on Tue, Mar. 22, 2005
Kansas City looking to become destination for Asian cargo
DAVID TWIDDY
Associated Press

KANSAS CITY, Mo. - Despite sitting more than 1,300 miles from the Pacific Ocean, Kansas City is looking to become a new U.S. gateway for Asian imports.

Representatives of the Mexican port city of Lazaro Cardenas on Tuesday pledged their support for the plan to develop an "inland port" in Kansas City, which would process cargo containers unloaded in Mexico and transported to Kansas City by rail.

The idea is to help shippers avoid the bottlenecks at the leading Pacific ports of Los Angeles and Long Beach, Calif., which are struggling to keep up with Americans' growing taste for goods made in China and elsewhere.

"If you look at the big picture, you have capacity issues, congestion issues, time delays - all these things are facing us," said Chris Gutierrez, president of Kansas City SmartPort Inc., a nonprofit organization pushing to establish the inland port. "What Kansas City offers is great infrastructure that is not at capacity and is directly connected to Lazaro Cardenas."

Lazaro Cardenas handles about 180,000 cargo containers a year, making it one of the smaller ports in Mexico. But experts say current expansion efforts could increase that capacity to 2 million containers annually within the next five years. By comparison, 9 million containers move through Los Angeles/Long Beach and that amount is expected to grow at least 10 percent this year.

Cargo now takes more than a week to move from Lazaro Cardenas to Kansas City by rail, but the company that plans to own those lines says it can speed that up as more freight moves through the system.

"Fortunately for us, (capacity) has not been a major problem," said Warren Erdman, vice president of corporate affairs for Kansas City Southern, which is in the process of buying the formerly state-owned Mexican rail line Transportacion Ferroviaria Mexicana.

The quest for an inland port began in the late 1990s as Kansas City leaders looked to take advantage of the city's historic role as a major transportation hub. It is the second-largest rail center in the country, and U.S. Customs agents already clear more than $9 billion in imports a year moving through the city.

Officials plan to build a processing center for breaking the containers into smaller loads to be taken to their final destinations by truck, plane or rail. Mexican officials also plan to build their own customs office to check shipments headed from the United States into Mexico, a move that could come this fall, Gutierrez said.

He added that the first pilot shipments for the inland port system could begin next month, although local leaders are working with the U.S. Department of Homeland Security to complete procedures to make sure containers can't be tampered with between the port and Kansas City.

Marc Hershman of the University of Washington School of Marine Affairs said shippers are increasingly interested in alternative shipping locations as a hedge against cost increases, labor shortages and delays.

"It's not just the congestion in the Los Angeles/Long Beach area," he said. "It's also to have as many options as possible."

Some are not yet sold on the idea, however. Ezra Finkin, a spokesman for The Waterfront Coalition, a Washington, D.C.-based group that represents retailers and manufacturers, said the system sounds slow. Mexican ports are farther from Asia than California, the Mexican transportation infrastructure is spotty in places and processing in Kansas City would take time, he said.

"You'll have a very hard time convincing the big cargo owners that they'll save any money doing this," he said.

Chris Kuehl of Kansas City-based international trade consultant Armada Corporate Intelligence said predictability of shipments is valuable too. He said resistance to the longer route will diminish as long as California ports continue to see delays of up to two weeks.

"Even though it may take a week to get to Kansas City, you know it's going to take seven days, not 10, not 15," he said. "You can plan on it."

 

[hkskyline]

West Coast import traffic soars
BY BILL MONGELLUZZO - THE JOURNAL OF COMMERCE ONLINE
17 March 2005
Journal of Commerce Online

LOS ANGELES -- Containerized imports were exceptionally strong in February, as volumes soared 40 percent to 60 percent at most West Coast ports compared to the same month a year ago.

The startling growth can be explained in part by the fact that exports dropped sharply on an early Chinese New Year, making February 2004 the weakest month of the year for most West Coast ports.

Chinese New Year fell on Feb. 9 this year, so allowing for the 10 to 15-day transit times across the Pacific, there was a rush of cargo in mid to late February. West Coast ports did not experience a drop in containerized imports until the end of the month.

Still, February's soaring imports for most ports equaled the volumes that moved in early summer of 2004, the beginning of last year's peak shipping season. This development indicates that the ports, railroads and trucking companies this year may once again have to contend with congestion and capacity constraints that hampered shipments.

Containerized imports increased 62.5 percent at Long Beach, the nation's second busiest container port. Long Beach is expected to have an especially strong year as there will be four or more strings of new-generation 8,000-TEU vessels calling each week.

Even Los Angeles, the largest U.S. container port, had a strong month in February with a 19.1 percent increase in containerized imports. Los Angeles had been experiencing month-on-month declines since mid-2004 because the port could not accommodate the mega-ships, which called instead in neighboring Long Beach.

Imports through Oakland increased 62.3 percent in February compared to a year ago. Last year, at least five vessel strings that had been serving Southern California as the first call inbound were re-routed to call in Oakland first so the intermodal shipments would avoid the congestion in LA -Long Beach. Most of those services remained in Oakland as the first-call inbound.

Seattle has been recording impressive gains since last summer due to diversions from Southern California, and more recently, from the congested Port of Vancouver, Canada. Imports increased 56 percent in February and are up 56.7 percent year-to-date. Strong growth is anticipated all year as carriers could start as many as five new services to the Pacific Northwest in 2005.

Imports also surged in Tacoma, up 41 percent, and the port is expected to have a big year in 2005 with the opening in January of a new terminal for Evergreen Marine Corp. "K" Line, which is moving into the former Evergreen facility, should also increase its volume. Yangming Line is moving into the former "K" Line terminal and will soon start its first-ever service to the Pacific Northwest with its own vessels.

Containerized imports from China show no sign of letting up. In fact, the lifting of U.S. quotas on textiles and wearing apparel on Jan. 1 should give an extra boost to imports, unless the domestic industry succeeds in securing safeguards. Chinese authorities reported that in January apparel exports to the U.S. increased 80 percent.

The increases in container volumes in March are expected to be less impressive than the February increases as West Coast ports feel the full impact of the post-Chinese New Year lull. However, industry analysts project that imports in the eastbound Pacific, the busiest U.S. trade lane, will increase at least 12 percent this year.

 

[hkskyline]

Traffic World
March 21, 2005
Vancouver Cuts Container Backlog

The backlog of containers at Vancouver's Deltaport terminal has been cut in half, and operator TSI Terminal Systems expects the jam to be cleared entirely by the end of this month.

The cleanup has only taken place in the past two weeks, when ocean carriers began reducing their import cargoes into the West Coast Canadian port by 25 percent a week for the four weeks beginning Feb. 28. The backlog of 5,000 TEUs has fallen to 2,500 TEUs since TSI in mid-January declared force majeure, citing a shortage of railcars to handle surging imports.

"We have cleared approximately 50 percent of the backlog to date and now are at around ... 2,500 containers," said Morley Strachan, TSI vice president, in an interview. "We expect to have the backlog cleared by the end of the month."

To keep the port cleared, TSI at its Deltaport and Vanterm terminals is reducing free container storage to five working days from 14 following complete unloading of a vessel, for both import and export cargo. TSI had not assessed storage fees at all for import cargo, although they were chargeable.

 

[Bond James Bond]

I'll also put this in the Seattle-Tacoma ports thread, but I think this is germaine to this topic as well. And some of the stuff in here is just unreal!

http://seattle.bizjournals.com/seattle/stories/2005/03/28/story1.html

Puget Sound Business Journal
From the March 25, 2005 print edition
Cargo surge: Jumbo ships will test region
Steve Wilhelm
Staff Writer

Puget Sound cargo ports are bracing for a surge in container traffic and ever-larger container ships, as evidenced by the recent arrival of the largest cargo ship ever to stop at the Port of Seattle.

Container projections are so robust that some officials are concerned about the ability of Puget Sound ports and railroads to keep up.

Port and railroad officials don't want a deluge of containers to overwhelm the region's docks and rails, leading to massive cargo bottlenecks on the scale of those experienced last fall in Southern California.

"We're strategizing to make sure we don't drop the ball like Southern California, that it is sustainable," said Mic Dinsmore, executive director of the Port of Seattle.

Port watchers may have gotten a good look at the future of container ships earlier this month, when the COSCO Vancouver arrived at the Port of Seattle.

The ship, the largest container ship to visit the port, stopped in Seattle only to drop off some empty containers. But the COSCO Vancouver is big, capable of carrying 8,000 20-foot-long container equivalents, or TEUs.

Not so long ago, a "big" container ship was one capable of carrying 6,000 TEUs.

Similar mammoth ships are expected to become increasingly common at the ports of Seattle and Tacoma, as ocean carriers switch to larger ships so they can manage the growing volumes of trans-Pacific trade.

The ships are getting special attention at the Port of Seattle, which is launching a project to expand the port's capacity to 3 million TEUs annually in five years or less. Much of that traffic will probably arrive on ships that are much larger than those used today.

Container ships are also being closely watched by officials of the two major railroads that serve Puget Sound container ports -- the Burlington Northern Santa Fe and the Union Pacific.

The two railroads have been spending money to increase their capacity on routes over the Cascades. Because of their investments, Puget Sound ports were able to handle the surge of cargo that was diverted to the Northwest when Southern California ports backed up.

But the railroads have a challenge ahead of them. They have to keep up with the Port of Seattle, which expects its cargo volume to increase 50 percent in the coming years. The Port of Tacoma expects a similar increase.

Currently, about 70 percent of the containers that arrive at the two ports move to eastern markets by rail. And container trains take one of two routes: through the Stevens Pass tunnel or along the Columbia River.

But Stevens Pass is already at capacity with about 25 trains daily. The Columbia River route has been expanded to about 40 trains daily, with capacity for 15 percent to 20 percent growth, said BNSF spokesperson Gus Melonas.

"We're confident we can meet the projected demands," Melonas said.

Meanwhile, the Port of Seattle has its own challenges. It is trying to handle more containers with an array of logistical and technological changes.

The only way the port can increase its cargo volume is to boost productivity, because it has no more land to expand its cargo terminals.

"We're seeing rapid growth here, and we can easily eat up our current capacity. That's why we're looking ahead," said Michael Burke, director of cargo and cruise services for the Port of Seattle.

Right now the port's three big terminals -- 5, 18 and 46 -- are handling about 4,000 to 5,000 TEUs per acre per year, which is below their current capacity. It is also below the West Coast standard of about 6,500 to 7,500 TEUs per acre, Burke said.

By comparison, some Asian ports achieve volumes of 10,000 TEUs per acre and beyond, partly by building garage-like container storage areas and by feeding the terminals from barges.

The port wants to increase volume with new, container-moving machinery that will allow containers to be stacked five high, as well as new staging areas at terminals 30 and 106, where containers can be held for later loading.

The port also wants to install new technologies, such as scanners, that can read information on the sides of containers as they're driven into the terminals, Burke said.

"If you can get the cargo moving more quickly through the terminal, you can increase the capacity of the terminal and get beyond that 7,500 TEU level," he said.

The bigger ships present their own challenges.

Their growing size, which creates certain economies of scale, is also generating a fierce debate in the industry about how big is too big.

The new ships are so large, with containers stacked 18 wide across their decks, that fully loading and unloading one can take up to three days, even with the fastest available cranes.

They're far too large to fit through the Panama Canal, and they ride so deep in the water they can't be handled at certain West Coast ports, notably the Port of Portland.

The cargo from just one ship, if it were unloaded all at once and 70 percent of that were destined for points inland, would fill up 16 standard, 350-container trains, or about two thirds of the daily capacity at Stevens Pass.

The Port of Seattle's Dinsmore believes the optimal ship size for many carriers will balance out at about 5,000 TEUs. He believes the large ships will be put to use mostly on major routes between the largest pairs of ports, which will lessen the effects of long loading and unloading times.

"You had better have the infrastructure on both ends of that to rapidly move that commerce," Dinsmore said.

But Mark Kadar, an analyst for Mercer Management Consultants in Boston, said he believes 8,000-TEU ships will become an industry standard, pointing out that many of the world's largest carriers have them on order.

"For those major arterial trades, there's pretty clear consensus that the 8,000-TEU ship will be the workhorse for next 10-plus years," he said, adding that anything larger may overwhelm other links in the routes and create "terrible bottlenecks inland."

The ports of Seattle and Tacoma have spent millions of dollars preparing their facilities for larger ships, which is partly why the COSCO Vancouver was able to show up on relatively short notice.

Observers don't expect regular appearances by 8,000-TEU vessels in Puget Sound soon, although some may be redeployed here if import cargo gets jammed up in Southern California during the fall holiday rush, as it did last year.

More likely: Carriers in the next year or so may start moving the next generation smaller container ships to Puget Sound. Most of those ships carry about 6,000 TEUs.

 

[hkskyline]

Ports take pressure off choked San Pedro duo
Pacific and Atlantic ports are stepping in to grab cargoes as Los Angeles and Long Beach fight gridlock, writes Janet Porter
30 March 2005
Lloyd's List

PORTS around the Pacific Rim experienced unprecedented growth last year as exports from China and other parts of Asia to the US increased beyond all expectations.

Never before had so many containers been shipped across the Pacific.

But while ports moving the outbound cargo seemed to handle the vast amount of freight with relative ease, their counterparts in North America struggled.

Los Angeles and Long Beach bore the brunt of the onslaught, with labour shortages and congestion on both the roads and railways adding to gridlock.

Both ports have put a number of initiatives in place to ensure, hopefully, that the 2005 peak season will be less of a nightmare than last year.

But ports right along the Pacific seaboard and beyond are gearing up to take some of pressure off the San Pedro duo and capture a larger share of the business bonanza for themselves.

All face competition from US Gulf and east coast ports that are working hard to persuade both importers and shipping lines to operate more all-water services from Asia via both the Panama and Suez canals.

And looking further ahead, shippers are even eyeing brand new options such as Prince Rupert on the Canada-Alaska border which has a Canadian National rail link and development plans in place, and Lazaro Cardenas in Mexico, as “last resort” alternatives. Pacific northwest ports expect to gain more business this coming year as importers do all they can to lessen dependence on the southern California gateways.

Vancouver, which had its share of congestion in 2004 as both container and breakbulk import volumes exceeded all expectations, is preparing for a further 10% growth this year and hopes its better productivity per acre compared with US competitors will attract new customers. In the longer term, the Canadian port plans to expand annual capacity to 5m teu by 2020.

In 2004, Vancouver handled nearly 1.7m teu against 1.5m teu in 2003.

Just across the border in Seattle where traffic volumes climbed 20% last year to 1.8m teu, the port has just completed a $72m enlargement of one of its terminals and reached an agreement to re-open another that was closed to 2002.

At nearby Tacoma which handled 1.8m teu in 2004 and expects throughput to reach 2m teu this year, extra space has been gained following the recent opening of Evergreen’s 171 acre 1.2m teu facility. Yang Ming and K Line are moving into the area vacated and freeing up land for further expansion.

Portland, on the Columbia River and already served by some deepsea container lines, is another muscling in on the bonanza, with three post-panamax cranes due to be ready next year.

Oakland is also taking delivery of more large cranes, with a pair of super post-panamaxes delivered at the beginning of March. The Californian port handled just over 2m teu last year, an increase of 6.2%, while January recorded a year-on-year rise of 22%.

Some lines have reconfigured sailing schedules to make Oakland rather than Los Angeles or Long Beach the first port of call on a number of services arriving from Asia.

Also after a share of the container overflow is Hueneme, a niche port handling mostly cars and fruit 60 miles north of Los Angeles.

The port is now pressing Washington for a return of land on the adjacent naval base that could be converted into terminals handling container, shortsea and ro-ro services.

Long Beach, which experienced slow growth in 2002 and 2003 after its biggest customer, Maersk Sealand, moved to its own terminal in Los Angeles, saw volumes leap ahead in 2004.

The port handled almost 5.8m teu in last year compared with 4.6m teu in 2003 and then topped that with 32% in January.

That partly reflected the arrival of some new services mid-year rather than genuine year-on-year organic growth, but nevertheless sets a marker for the coming year.

The switch of services left the port of Los Angeles with much slower growth last year of just 2%, but it still handled a record 7.3m teu.

Together, the two ports would rank number three in the world behind Hong Kong and Singapore, and both are now pinning their hopes on the hiring of several thousand more longshoremen, longer gate opening hours and new technology to improve productivity and avoid another summer of gridlock.

Meanwhile, more than 30 inland ports in the western US also hope to benefit from the focus of the coastal hubs on containers by picking up more bulk, breakbulk and ro-ro trade that finds itself squeezed out of the big boxports.

Typical is the port of Stockton, eight hours up river from Oakland, which sees plenty of new business opportunities in the non-containerised sector, as shippers of lower value commodities such as cement look for alternatives to the expensive coastal ports.

Just how fast events are moving is clear from the fact that the first 6,000 teu ship was only seen on the US west coast for the first time six years ago. None of the ports had big enough cranes or depth of water to handle, fully laden, what were then the biggest containers in the world.

Today, ships of 7,500 teu or more are becoming commonplace on the Pacific.

Yet the biggest challenge is to close the huge gap in productivity between the major US gateways and ports in Asia and Europe. For despite all their efforts, North American ports are still far from world class.

 

[hkskyline]

Shipping lines look to build Mexican port because of LA backlogs

AP - LOS ANGELES
April 09, 2005

A group of shipping companies says because Southern California ports have become too congested, they want to build a one (b) billion dollar port complex about 150 miles south of Tijuana, Mexico.

Plans were announced yesterday by Marine Terminals Corporation. The proposals include a complex of berths, warehouses and cranes that could handle nearly one-seventh the current volume at the Los Angeles port by 2012.

Company officials hope to connect the proposed Punta Colonet harbor, located on undeveloped farmland, to California with a new rail line. Construction would take at least five years.

The companies have begun lobbying the Mexican government. If approved, the facility would be one of Mexico's largest public works projects, requiring the construction of roads, housing, public buildings and other infrastructure where none now exists.

 

[ASPAN2]

Major seaport proposed



BY CHRIS KRAUL AND DEBORAH SCHOCH/Los Angeles Times
April 12, 2005






A coalition of shipping and freight concerns announced plans last week for a US1 billion port on deserted seaside farmland about 150 miles south of Tijuana on the Baja peninsula. The coalition hopes to link the Mexican port to California with a new rail line connecting to Imperial Valley and compete with the Los Angeles and Long Beach ports for a share of the multibillion-dollar West Coast shipping business.

If it materializes, the Punta Colonet project would be one of the largest public works projects undertaken in Mexico, requiring the construction of roads, housing, public buildings and other infrastructure where none now exists.

The firms have begun lobbying the government, telling officials there would be enough cargo traffic and investment dollars to underwrite a major portion of the cost to build the port and a new city to serve it.

At stake is a share of the estimated US200 billion in revenue generated annually by shipping through California.

"We have to get Colonet developed," said Walter J. Romanowski, an executive with Los Angeles-based Marine Terminals Corp., a holding company owned by Evergreen and Yang Ming shipping lines of Taiwan, Hanjin of South Korea and China Shipping of Shanghai, all among the world's largest shipping firms. "There are no other viable West Coast options."

Punta Colonet as well as the nearby town, bay and cape are reputedly named after Captain James Colnett, a British sea captain who explored this section of the Pacific coast in the late 18th century.

Romanowski said he wanted the right to build a complex of berths, warehouses and cranes that by 2012 could be running 1 million standard container units a year, about one-seventh the current volume at the Los Angeles port. Construction of the proposed Mexican port would take at least five years, the shipping companies say.

Port officials in Long Beach and Los Angeles said Friday that the project was news to them, although rumors have circulated for months about potential new port developments in Mexico.

Traffic at the two ports is so backed up that as many as 50 ships are kept waiting offshore as long as a week at a time. Environmental and other restrictions limit the ports' expansion, and other West Coast shipping terminals are becoming just as crammed.

Shipboard container traffic out of China is growing at an explosive rate 15 percent or more per year overwhelming the Long Beach and Los Angeles port complex, the world's third-largest.

Tie-ups at the L.A.-Long Beach ports last year sparked international concerns when a flood of Asian cargo clogged docks, rail lines and highways, forcing giant container ships to idle offshore.

The logjam was blamed for delaying the delivery of holiday goods nationwide. Now, with January container traffic up 35 percent in Long Beach over last year, the shippers fear that such jams could become an annual problem, forcing freighters to less congested ports in Seattle and British Columbia.

Southern California port officials worry about losses in jobs and revenue if shipping traffic shifts to competing regions.

But there is little room for the ports to grow. Expansion of the Los Angeles-Long Beach complex also is complicated by mounting community opposition. The twin ports are the region's largest source of air pollution.

The shipping industry soon will have no choice but to expand out of the Los Angeles basin, and Mexico is the best alternative, said Al Fierstine, former Los Angeles port business development director who is now an adviser to Marine Terminals Corp.

Baja California Sen. Hector Osuna Jaime said the project would promote much needed growth in jobs and industry in Baja California. A new port, he said, would spur investors to build factories, possibly reversing a trend in recent years that has seen manufacturing jobs leave Mexico for China.

One political hurdle facing approval of the proposed port is the 150-mile rail link to connect with the United States. Mexican laws bar foreign ownership of such a line.

Also, officials traditionally authorize public works projects that they can see completed before their terms expire. President Vicente Fox leaves office at the end of 2006, long before the Punta Colonet project would receive its first ship.

The row over the California ports' environmental impacts spawned a proposal in Sacramento to limit emissions, as well as an ongoing initiative, launched by Los Angeles Mayor James K. Hahn, to slash Port of Los Angeles pollution to 2001 levels.

Last year's logjam of ships came just two years after the autumn 2002 lockout of dockworkers by the Pacific Maritime Assn., representing West Coast shipping lines.

At its worst, the 10-day lockout created a lineup of 129 ships waiting to deliver cargo at the Los Angeles-Long Beach complex.

Dockworkers' fears of losing jobs to automation helped spark the lockout, and some predicted a contract ratified by their union a few months later would mean a major drop-off in high-paying longshore jobs.

Instead, the number of jobs increased, with 3,000 added at the complex.

Kraul reported from Mexico City and Schoch from Los Angeles.

 

[hkskyline]

CP Rail sees profits triple: Company bullish on western expansion plans as Asia-Pacific demand soars
Scott Simpson
Vancouver Sun
29 April 2005

Canadian Pacific Railway expects an immediate payoff from its $160-million western expansion project because of soaring demand for commodities on both sides of the Pacific, CPR president and CEO Rob Ritchie said Thursday.

Ritchie said the project to expand the railway's carrying capacity in Western Canada will be completed "safely, on time, and on budget" later this year as CPR responds to a global trade market in the throes of unprecedented growth.

"We are pretty bullish on our western corridor," he said, adding that demand for the expansion was primarily, but not exclusively, driven by exports of bulk goods.

"It looks very strong, obviously into 2006, in bulks. I was just at a conference in Vancouver for the China trade. The whole West Coast of North America is seeing demand growing by 1.5 million [TEUs, or twenty-foot equivalent unit containers] a year. That is a lot of containers looking for a home."

CPR's expansion comprises a mix of track improvements calculated to boost capacity by 12 per cent, or the equivalent of 400 cars per day.

The railway has a longer-term plan for improvements that will total $500 million.

CPR chief operating officer Fred Green said this year's initiative should protect the interests of CPR and its customers through 2006.

"Trust me, it's not going to take many calls to fill that first train," Green said. "There is big demand right now."

The comments came during a teleconference as the railway announced net income of $81 million in the first quarter of 2005, more than triple the $24 million reported in the first quarter of last year.

Operating income was up 54 per cent to $179 million, and revenue was up 14 per cent to $1 billion, a first-quarter record.

"Revenue growth was strong across CPR's entire bulk commodity sector in the first quarter of 2005, led by coal and grain, which increased 44 per cent and 23 per cent, respectively," the company announced.

CPR said it expects revenue growth of between 12 and 14 per cent in 2005.

"April is just a busy, busy month for us, and across the board," Green said. "The export business on all of our commodities is strong, strong, strong. Merchandise for is a less major component of what we do, but even in that we are not seeing any softening of demand."

Vancouver Port Authority operations vice president Chris Badger noted that the VPA expects demand to grow by 10 per cent per year -- and the CPR initiative is right on target.

In fact, Badger said, the capacity created in CPR's longer-term $500-million expansion plan will be absorbed by year-over-year demand growth within three years.

The Port of Vancouver's largest terminal operator said the industry is in an unprecedented growth phase and that railways, terminals and ocean carriers have worked hard over the last year to respond.

TSI, for its part, has added new gantry cranes at its Deltaport and Vanterm operations and expects the new units to be operational in about eight weeks.

Morley Strachan, director of marketing and strategic planning for TSI Terminal Systems Inc., said those measures, and the ones being undertaken by CPR, will only allow them to keep pace with growth -- not exceed it.

"We won't get ahead of the curve. That's our dilemma," Strachan said. "What we are trying to do with the cranes and the improvements we are making at the terminal are intended to keep up, to try to match the rate of growth.

"The full $500 million CPR are looking at will help them get to the edge of the curve. But I think if you look at the long term curve, I don't even know that $500 million will be enough."

RUNAWAY TRAIN PROFITS:

Canadian Pacific Railway Ltd., the country's No. 2 railway, said profit in the first quarter tripled, bolstered by record traffic and rising freight rates:
Q1 2005 net income: $80.7 million
Q1 2004 net income: $23.5 million
Q1 2005 revenue: $1.01 billion
Q1 2004 revenue: $887 million