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“How much do we really want to play in this game? How much do we want to use this land for container shipping versus other uses?”

Puget Sound ports facing challenges

The U.S. economic slowdown has cut the demand for Asian imports, reducing container traffic, and competition from other West Coast ports is heating up.

By Drew DeSilver
Seattle Times business reporter

Like one grazing brontosaur after another, the giant cranes lined up at the ports of Seattle and Tacoma to pluck multicolored shipping containers from massive cargo ships. The steel containers, filled with everything from electronic gadgets to running shoes, are as likely to travel to Chicago as Chehalis; once they’re gone, hundreds more sitting in nearby yards will be loaded and shipped the other way, to Asia.

By year’s end, nearly 4 million TEUs of cargo will have moved through the ports of Seattle and Tacoma. (TEU stands for 20-foot-equivalent unit, a standard measurement of containerized cargo; one TEU can hold 43,500 apples, 8,928 frozen chickens or 616 Christmas trees.)

Together — which is how people in the shipping business often think of them — the two Puget Sound ports are the third-largest container center in North America, and the second-largest on the West Coast.

But the activity is deceiving. The two ports face both immediate and longer-term threats to their plum positions in West Coast shipping — and to the thousands of well-paying jobs each port directly and indirectly supports.

 

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Grinding Out A New Trail
Re-sizing railroad track ballast saved money and natural resources.
By Richard Parrish — Construction Bulletin, 10/6/2008

It was difficult not to notice them. Monstrous pieces of equipment grinding up granite ballast made an incredible racket this past spring and summer as they moved slowly over an obsolete railroad bed between curtains of trees, brush, homes, businesses, and other buildings in the city of Wayzata, MN, a Lake Minnetonka community 20 miles west of Minneapolis. 

Residents and passersby knew a big change was afoot, literally and figuratively. With the opening of this project, the Three Rivers Park District (TRPD) has a brand-new 13-mile, hard-surface trail that’s expected to draw upwards of 70,000 walkers, runners, bikers, and inline skaters annually.

 

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October 6, 2008
BRUCE BARNARD / Shipping Digest

 

Orders for new container ships have dried up as vessel charter rates and ocean freight rates tumble and volume growth slows on key liner trade routes.

Enquiries to shipbuilders about new tonnage have “hit the floor,” according to London-based Clarkson, the world’s biggest ship broker “With volumes and earnings stalling, owners’ taste for newbuilds has slowed right down.”

The collapse in orders, which has affected all ship sizes, follows five straight years of historically high deliveries. Only 179 container ships were contracted in the first eight months of this year, down 49 percent year-on-year, Clarkson reports. This compares with a record 566 contracts in 2005, 479 in 2006 and 530 in 2007.

 

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“While the present downturn and the recession that might follow will hurt everybody, the ports of the U.S. West Coast will not recover so easily because their decline is part of a deeper malaise”

West Coast port volume drop likely to worsen in next decade, study says

Cargo volumes at West Coast ports will continue to decline because of higher intermodal transportation costs. That’s the latest forecast in a study conducted by Drewry Shipping Consultants, a United Kingdom-based maritime advisory firm.

The U.S. Pacific Coast will lose its leadership position in the import cargo market because it’s cheaper to transport goods via Gulf Coast and East Coast ports, according to the study.

The “complacency of inland transport providers,” especially U.S. railroads, is driving the shift, the study claims. Although railroads continue to invest in infrastructure, the nation’s rail system is faced with a tightening market and rising demand.

“Railroads have chosen to up their prices rather than invest in significantly more capacity, in the mistaken belief that they had a captive market,” said Drewry Supply Chain Advisors’ Philip Damas in a statement.

The West Coast cargo decline likely will intensify during the next decade, with intermodal costs continuing to rise and all-water costs continuing to fall, the study predicts.

 

And: Changes threaten US intermodal route: Report

Updated October 28, 2008 3:36:28 PM
Peter T. Leach / The JOURNAL of COMMERCE ONLINE

 

After years of dominating the United States maritime trade, the intermodal route connecting the major West Coast ports with interior regions is coming under threat, according to a logistics white paper published by Drewry Supply Chain Advisors.

While the recent decline of containerized imports through West Coast ports looks like the natural result of the U.S. economic slowdown, the white paper argues that these changes are structural and long-term.

The white paper, “U.S. Intermodal Today and Tomorrow,” says that several factors have combined to undermine the position of America’s Pacific Coast ports, not least of which is the complacency of the U.S. railroads.

For many destinations in the eastern U.S., the route via the West Coast ports is now much more expensive than the route via East Coast and Gulf Coast ports.

 

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“Our primary purpose is to attract business from Prince Rupert and Savannah”

L.A. Considers $10 Incentive Plan; Long Beach Not Happy
10/26/2008

The Port of Los Angeles is contemplating a short-term incentive program to pay tenants $10 for every new TEU they bring to the port by either adding a new service or luring an existing service from another West Coast port. Needless to say, Port of Long Beach reaction to the proposal was not positive.

Port of Los Angeles staff say the program would run through Dec. 31, 2009 and could capture an estimated 350,000 more TEUs for the Port of L.A. If successful, the cost would be $3.5 million; the net gain would be about $9.5 million.

The program likely would divert discretionary cargo from West Coast competitors, including the Port of Long Beach – the neighbor with whom the L.A. port has worked so closely to advance sweeping clean air environmental measures. A cornerstone of those measures – included in their joint Clean Air Action Plan – has been for the ports to act in a manner that gives neither an economic edge.

That goodwill – at times strained due to varying approaches and key differences in the two clean truck programs – could be jeopardized by L.A.’s proposed marketing incentive program. Viewed by L.A. as a smart way to attract business during tough economic times, the proposal has been likened by others to poaching by the port that already has the nation’s highest cargo volumes.

At the very least, the proposal is a reminder that the L.A. and Long Beach ports are fierce competitors, along with every other West Coast port.

“Our primary purpose is to attract business from Prince Rupert and Savannah,” said Los Angeles Harbor Commission President S. David Freeman. “The thrust of this story is not the impact on other ports, but L.A. wants your business.” Read the rest of this entry »

 

Consultant: Rails will aid port’s success

By Alexander Rich, Staff Writer
Friday, October 17, 2008 | 3 comment(s)

COOS BAY — Oregon International Port of Coos Bay officials don’t think the idled Coos Bay rail line is worth much, but they know it’s valuable for their future.

At a port commission meeting Thursday, consultants from Don Breazeale and Associates suggested Coos Bay could become the most competitive port on the West Coast — as long as it has rail service.

“We have to have a railroad to make that work,” said Jack Finholm, senior associate. “Access and egress is pretty difficult without the railroad.”

At the port’s request, Finholm and company president Don Breazeale met with 14 companies who deal with transpacific trade. Of those companies — such as Cosco, Evergreen and “K” Line — Breazeale said 85 percent felt the port should take over the railroad.

The consultants said there are many advantages to Coos Bay, including low-cost land, less congestion than Los Angeles and a shorter transit from Asian markets compared to Southern Californian ports.

That said, there are no guarantees businesses would come to the area, especially considering the aggressive sales and marketing organizations in California and Washington ports, Breazeale said. He recommended the port undertake a professional sales and marketing effort of its own to attract commodity, auto and, eventually, container ships.

But first, the port needs to resolve the rail line issue.

“The rail has got to be the answer,” Breazeale said. Read the rest of this entry »

“In the past year, imports through Long Beach and Los Angeles are down nearly 10 percent as the national economy slows and consumers buy less.”

Rising global wages may cut imports, add U.S jobs
TRADE: Economist thinks trend will end double-digit growth at West Coast ports as manufacturers return.
By Kristopher Hanson, Staff Writer
Article Launched: 10/06/2008 12:00:00 AM PDT

Has Southern California experienced its last major surge in international trade?

With energy costs rising, the global economy losing steam and U.S. exports forecast to begin a long, slow decline in coming months, the days of regular double-digit growth in volume through West Coast ports may be history.

Under a scenario advanced by noted economist Paul Bingham, international trade is poised to undergo a paradigm shift in coming years, shaped by rising energy prices and growing wage rates in Asia.

According to Bingham, these factors may eventually offset much of the savings importers now enjoy by moving manufacturing and production overseas.

And if the trend holds, manufacturers could move production closer to end markets to save on higher shipping and production costs, leading to a long-term softening in the volume of imports through trade gateways like Long Beach and Los Angeles.

 

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Evergreen Pulp wants reduction of workforce and wages!

Kind of shocking news for most, but not for the workforce. We have seen the company cut back on small items like linen service to the purchasing of essential materials such as wood chips. Evergreen seems to have a cash flow problem. 

Our parent company Lee & Man Paper has went from a 52 week high of $37.00 a share to as low as $3.58 a share on the Hong Kong stock exchange. They had plant closures due to theBejing Olympics, and now the pulp market has went soft as well.

Locally, our union workers have been asked to take a 15% reduction in wages and to be prepared for temporary closures with layoffs of production workers. Along with this, the company has announced a reduction in hourly staff from 165 to 145. Read the rest of this entry »

 

CN sweetens pot for rail merger
Canadian railway raises Chicago-area bid, but critics remain
By Richard Wronski | Chicago Tribune reporter
October 2, 2008

Canadian National Railway pledged at least $60 million Wednesday to make improvements in its bid to reroute freight traffic through unsympathetic suburbs, but the money won’t begin to cover the cost of 15 overpasses and underpasses that critics say might be needed.

In its bid to buy the Elgin, Joliet & Eastern Railway, CN previously had offered $40 million to help communities along the line cope with traffic delays, noise and other problems caused by increased trains.

But even CN’s sweetened offer won’t go far when it comes to constructing overpasses and underpasses in a dozen communities that a federal report warns would face significant traffic delays if the purchase is approved. Read the rest of this entry »

U.S. Railroads Index Falls Most Since 1989 on Economy (Update3) 
By Angela Greiling Keane

Oct. 2 (Bloomberg) — Norfolk Southern Corp. paced declines among U.S. railroads, dragging a benchmark index to the biggest intraday drop in 19 years on concern that falling factory orders and commodity prices herald a drop in freight volume.

The Standard & Poor’s 500 Railroads Index, consisting of the four largest U.S. carriers, plunged 10 percent, the most ever based on Bloomberg data going back to Sept. 11, 1989. Read the rest of this entry »

“Novato argued that freight trains would bring traffic problems, safety hazards and noise in the city.”

Novato council delays decision on train noise deal
Mark Prado
Article Launched: 10/01/2008 10:55:08 PM PDT

The Novato City Council delayed a decision on a settlement with the North Coast Railroad Authority addressing “quiet zones” at railroad crossings and the need for an environmental impact report.

The City Council held a special meeting on the issue Wednesday night at the police station.

Last year Novato filed a lawsuit saying the rail authority – which wants to revive freight service – should halt work repairing and upgrading its tracks until it completes an environmental review of its 316-mile rail plan, which would bring train traffic to the city.

Novato believed that review would lead to a limit on the number of trains and hours of operation as well as requirements that so-called quiet zones be installed at crossings. Quiet zones involve extensive safety measures that permit trains to roll through crossings without sounding their horns.

Novato argued that freight trains would bring traffic problems, safety hazards and noise in the city. Read the rest of this entry »

“If you are someone who is sitting down with a spreadsheet, and looking at how many containers will come this year, that’s going to push this back a bit,”

Transport The U.S. financial crisis could spell trouble for the Atlantic Gateway project
Ben Shingler
Telegraph-Journal

FREDERICTON – The deepening financial crisis and looming recession in the United States may hold up plans for the Maritimes to become a transatlantic shipping gateway, economists say.

Workers at Ceres watch a container being loaded aboard the Hong Kong Express in Halifax Thursday. Halifax handles about half a million containers a year, but the city’s two terminals have the potential to handle 1.4 million containers, nearly three times that amount.

Experts have long predicted an increase in global trade could lead to a doubling of shipments to North America over the next 15 years, from approximately 50 million containers annually to 100 million.

The log-jam of container traffic at popular west coast ports presented Halifax with an opportunity to grab a slice of the growing shipping market.

Many hoped the Port of Halifax, and the Maritime region as a whole, could become a premier destination for Asian goods travelling through the Suez Canal towards markets in eastern and central North America.

But David Chaundy, senior economist with the Halifax-based Atlantic Provinces Economic Council, said much of the bottlenecking at Pacific Coast ports has already been remedied by upgrading infrastructure. Read the rest of this entry »

 

Cold Storage: Interest In Port Facility Rises As Temperature Drops

Published: October 1, 2008

By Scott Graves
Pilot staff writer

 

The cold storage facility at the Port of Brookings Harbor on Monday was at minus 10 degrees and filling up fast as word of its renewed operation spread up and down the West Coast.

“We’re getting a much better response than I thought we would,” said Ted Fitzgerald, interim port manager.

That’s good news for a port struggling to raise revenue to pay off its massive debt. The port commission voted in September to turn its cold storage facility back on in an effort to make money. The $1.3 million facility was closed in 2004 after drawing nary a customer.

That changed this year when the closest cold storage facility, in Eureka, Calif., was closed down. A similar facility at the Crescent City Port closed years ago. Brookings port officials saw the closing of the Eureka facility as an opportunity to reclaim business it had lost to the other ports. Read the rest of this entry »