The Cargo Letter

Top Story: U.S. West Coast Crisis |
Section A: Section: Trade, Financial & Inland News |
Section B: FF World Air News |
Section C: FF World Ocean News | Section D: FF in Cyberspace |
Section E: The Forwarder Broker World

OUR "C" Section: FF World Ocean News

FF World Ocean Briefs

• Other End of The Pipe ........ as the Port Authority of Shanghai is just one of many Asia ports reeling from the accumulated backlog of U.S. West Coast-bound containers. Some 30 U.S.-bound vessels were held up at China's busiest port while the ILWU lockout took place for the 1st 11 days. These vessels accounted for some 60,000 TEU. The problem is two-sided, with backlogs on the U.S. side of the Pacific causing delays in the return leg of the journey to Asia. China's largest shipping company, COSCO, said that it recently had up to 12 of its vessels awaiting quay time off the West Coast and China Shipping had been reported as having 6 vessels awaiting access to the port facilities. Meanwhile, in Hong Kong shippers continued to be worried about the situation at U.S. West Coast ports as reports from there suggest service is running 25% slower than normal. Asia also has lost.
• Port Pit Bull Declares War ........ as the California Trucking Assn. plans to introduce legislation next year to force California marine terminal operators to pay triple damages for any trucker fees they levied around the time of the port closure, says the Port of LA's "Cunningham Report". "The bottom line is these 3rd-world countries are raking & pillaging the bottom of the food chain," said CTA VP Stephanie Williams. "We are declaring war. Evergreen, look out; COSCO, look out. We are coming after you, and we are going to get you." Williams said the "evil 3rd-world shipping lines" had awakened a sleeping dog, and that dog turned out to be a pit bull. There's no question that the trucking companies & drivers that service the ports have been hit hard by the current contract dispute between the ILWU & the PMA. Many of the companies were already operating on thin margins, and the drivers -- who get paid by the load -- were living at the subsistence level. Trucking company folks were complaining before the lockout that demurrage fees for leaving a container on the docks too long & detention charges for returning equipment too late were killing them. The terminals were so congested & drivers had to wait so long in line, that the whole industry was running 2-to-5 days behind. It became impossible to pick up containers before the free-time expired," the truckers said. The CTA is known for clarity of position.
• Pirate Attacks Up ........ as more ships have been hijacked in the 1st 9 months of this year than in the same period in 2001 while there has also been a marked increase in pirate attacks of all types. Against the trend, however, the death toll fell, from 9 to 6. The latest ICC Int'l Maritime Bureau (IMB) report Piracy & Armed Robbery against ships notes 271 incidents so far reported for the 1st three quarters, up from last year's corresponding figure of 253. So far there have been 20 hijackings, up from 2001's comparable figure of 15. Figures also show an increased use of weapons during attacks. The clearest risks come from Somalia, where militia gangs locked in a power struggle in the Horn of Africa nation were desperate to raise funds through the kidnap & ransom of vessels. Indonesia, where pirates hide in isolated inlets along the nation's sprawling coastlines, accounted for 72 attacks, or 27% of the global total. The IMB has appealed to governments & port authorities to declare tanker approach lanes 'no go' zones for unauthorized craft & to enforce the ban by offering armed escorts in the form of heightened naval & police patrols.
• BIMCO Terror Warning ........ as the ship owners organization has warned its members to consider how vulnerable they could be to terrorist attacks following the M/T Limburg incident. Independent tanker owners' group Intertanko has been more guarded in its comments. In a statement Bimco says that it is "deeply concerned by the recent revelations indicating that the explosion on board the 2-year-old double hull supertanker Limburg was caused by an act of terrorism, the 1st attack on an innocent merchant vessel since the M/V Achille Lauro incident in 1985." It notes that the French-flag VLCC, owned by BIMCO member CMB, was en route to Yemen when she was apparently rammed by a motorboat packed with explosives in a way similar to the Oct. 2000 attack on the USS Cole. www.cargolaw.com/presentations_casualties.html
• UK P&I Club Up ........ as it has ordered a general increase in premium rating of 25% plus a charge to cover the increased cost of the Int'l Group's reinsurance program for 2003. The club says it aims "to reduce the underlying deficit of premium versus claims." However the club does not expect to make supplementary calls for any of the open policy years - 2000, 2001 or 2002.
• Risky Archipelago ........ as Lloyd's of London has effectively declared Indonesia a war risk zone, following the Oct. 13 bombings in Bali which killed about 200 people. Lloyd's Underwriters Assn. has added Indonesia to its War Risks Trading Warranties, which means that vessels calling at Indonesian ports will have to request a specific coverage from underwriters, at higher premiums. Advice to owners now is that they should consult with their underwriters for their war coverage. So far the liner conferences have announced extra risk surcharges for Indonesian cargo but that can only be a matter of time.
• Dog Day Year ........ as ocean carriers have little hope of seeing any meaningful improvement in freight rates for the foreseeable future, according to Drewry Shipping Consultants. The London-based firm estimates the average weighted freight rate for the main east/west trades this year will be about US$1,165 per TEU, down 8% from the average for 2001. Drewry predicts average weighted freight rate will drop again next year, to about US$1,140 per TEU. "Thereafter, a general improvement is expected in 2004 & 2005," it said. Drewry believes that freight rates will also be more volatile over the next 2 years.
• Size of The "Fleet" ........ as a recent survey on behalf of the Marine Engineers' Beneficial Assn. found:
  * 70% of Americans said they were "shocked" to learn that only 3% of U.S. foreign trade is carried on U.S.-flag ships.
  * 89% agreed that it's important for a majority of U.S. seaborne trade to be carried on American-crewed ships.
  * 89% expressed concern that the U.S. government contracted foreign-flagged ships to carry the country's military equipment abroad.
  * 92% of Americans agreed it was important to take immediate steps to significantly increase the size of the U.S. merchant marine.
  * 79% said it was a "good idea" to increase the size of the Maritime Security Program from the current 47 ships to 100 ships, even at a cost of US$320M annually.
  * 71% of Americans said they would be less inclined to support a candidate for Congress if that candidate opposed a measure increasing U.S.-flag sealift capacity.
• Sign of The Times For Intermarine ........ as of Nov. 1, its Industrial Maritime Carriers (U.S. & Bahamas), and West Coast Industrial Express vessels will all be implementing a Port Security Surcharge (PSS) & a Panama Canal Surcharge. These carriers will also be increasing their B/L documentation fee. Intermarine said the PSS has been necessitated by new homeland security requirements imposed by the U.S. Coast Guard on vessels calling at U.S. ports. All breakbulk & LCL cargo will be assessed US$1.75 W/M (1,000 kgs or 1 CBM), container cargo will be charged US$15 per TEU & US$30 per FEU. This surcharge will be applied to all cargo loaded or discharged at a U.S. port. The Panama Canal Surcharge (PCS) has been necessitated by toll increases imposed by the Panama Canal Authority for transiting the canal. All breakbulk & LCL cargo will be assessed US$5 W/M (1,000 kgs or 1 CBM), container cargo will be charged US$100 per container (regardless of size). Finally, as a result of increased documentation requirements, both types of carrier will be increasing their B/L Documentation Fee from US$45 to US$55.
• Torture Charge ........ as the 7 members of the Trans Atlantic Conference Agreement (TACA) decided that in light of the severe congestion in moving containers to and from & via U.S. West Coast ports it would impose a "congestion surcharge." TACA said it had published in its relevant EB & WB tariffs, a temporary U.S. West Coast congestion surcharge (TWCS), which became effective Oct. 10 at US$500 per TEU. The group said the surcharge amount could change & would continue to monitor the situation. TACA members are: Atlantic Container Line AB, "K" Line, Hapag- Lloyd Container Line, OOCL, MSC, P&O Nedlloyd Limited, AP Moller Maersk Sealand.
• Higher Canada ........ as member lines of the Canada Transpacific Stabilization Agreement said they plan to raise base freight rates across the board, effective May 1, for the Asia to Canada trade. The 12 member carriers of the CTSA will raise rates by US$600 per 20-foot container, US$800 per 40-foot container, US$900 per 40-foot high-cube box & US$1,010 per 45-footer. Members of the CTSA are APL, COSCO Container Lines, Evergreen, Hanjin, Hapag-Lloyd Container Line, Hyundai, "K" Line, Maersk Sealand, Mitsui O.S.K. Lines, P&O Nedlloyd, N.Y.K. Line & OOCL.
• Higher Hawaii ........ as Matson Navigation Co. has increased its Hawaii fuel surcharge from 4.75% to 6% for its Hawaii service due to ongoing & rapid increases in fuel prices. For every dollar increase per barrel of bunker fuel, Matson experiences an approximate US$1.6M increase in annual operating costs. In 2002, fuel costs have jumped from approximately US$17 per barrel of bunker fuel to the current price of about US$30 per barrel.
• EEA Gloom ........ as the latest annual report from the European Community Shipowners' Assn. says shipping is going through a difficult period, with a decline in trade exchanges & lower freight rates. Despite the gloom ECSA notes the share of the world fleet controlled by European interests has grown slightly, as the EEA registered fleet (EU plus Norway & Iceland) as at April 1 amounted to 6,975 vessels with a total of 95 million gross tons. This is an increase in tonnage of 3.25% compared to last year. The EEA registered fleet amounts to 17.4% of the world fleet. ECSA says: "However, the importance of European shipping is better reflected by the EEA controlled fleet [both under EEA & 3rd country flags], representing 41% of the world merchant fleet in gt. This means a 1% increase compared to last year."
• Investor Glee ........ as Interpool, Inc. has announced that it has commenced a tender offer for any & all of its outstanding 6-5/8% Notes due 2003. Approximately US$ 41M principal amount of Notes are currently outstanding. The source of the consideration for the tender offer is cash on hand due to smart management in these bleak times. Expiration date of the tender offer is Nov. 15, 2002, unless extended. The total consideration offered in the tender offer is US$1,000 per US$1,000 principal amount of the Notes, plus accrued & unpaid interest. Interpool, Inc. is one of the world's leading suppliers of equipment & services to the transportation industry -- and largest lessor of intermodal container chassis in the world & a world-leading lessor of cargo containers used in Int'l trade. Interpool operates from over 90 locations throughout the world & is corporate sponsor of The Cargo Letter library & archives.
           Interpool, Inc. has just been named to Forbes Magazine's list of "200 Best Small Companies in America" for the 2nd consecutive year. The list appears in its Oct. 28, 2002 issue. In order to be eligible for ranking in this elite group, the companies are weighed according to a combination of return on equity, sales, and earnings-per-share growth, with each measured during the past 5 years and the most recent 4 quarters.
• "Take Two" For Amer Reefer ........ as it has emerged from Chapter 11 bankruptcy protection following the completion of restructuring. The operator of 7 modern reefer vessels announced that it had completed the restructuring of its US$100M, 10.25% issue of preferred ship mortgage notes due in 2008 that had been placed in March, 1998. Amer Reefer sought protection under the Chapter 11 of the Bankruptcy Code in March last year. The New York Bankruptcy Court confirmed that all proceedings against the company had been withdrawn & all obligations discharged.
• NOL Out ........ as Neptune Orient Lines will conclude a deal to divest its APL Direct Logistics unit before the end of the month. NOL needs the money on the sale of the direct-to-customer e-fulfillment business which delivers goods purchased online.
• No Handcuffs For The Alligator ........ as in the wave of corporate corruption scandals, Mitsui OSK has announced the establishment of an Internal Audit Office effective Oct. 1.
• FMC Ticket Pull ........ as it has revoked the licenses of 3 ocean transportation intermediaries for failure to maintain a valid bond Cargo Inc., based in Bensenville, Il.; Gulf Eagle USA Inc., aka Gulf Eagle Ocean Line, from Glen Burnie, Md.; & Venture Transport Inc., of Houston.
• This Month in U.S. Navy History ........ 1891 - A brawl between American Sailors & Chilean nationals outside the True Blue Saloon in Valparaiso, Chile, resulted in 2 American Sailors killed, 17 wounded (5 seriously), & many arrested. Incident sparked a diplomatic crisis that lasted for months, occasionally threatening war between the countries, until a settlement was reached.
  1943 - Navy accepts its first helicopter, a Sikorsky YR-4B (HNS-1) at Bridgeport, Conn.
• Throughput ........ Charleston's surge of imports helped container volume jump 11% in the 3rd quarter, up 10% in Sept. to about 131,000 TEUs.. Georgia Ports Authority’s terminals in Savannah & Brunswick saw a 17% increase in tonnage to 2.49 million tons through the 1st 2 months of fiscal year 2003, which started July 1. Port of Long Beach said container volumes rose 4.5% in its fiscal year 2002, as the West coast port handled a record 4.7 million TEUs in the period ending Sept. 30 -- total topped the ports previous high of 4.6 million TEUs, set in the Oct. 1999-Sept. 2000 fiscal year -- but that volume is sure gone now!! Georgia Ports Authority's Port of Savannah moved a record 117,357 TEUs through its terminals in August, a 24% increase over Aug. 2001.