ILA Contract Negotiations

Is it in the best interest of Steam Ship Lines to go forward with the current ILA contract extension talks? In my opinion, it is absolutely not.
What is the reason for the extension in the first place? Most say it is to remove an idea from customers and shipper's minds that there could be a strike on the East/Gulf Coast. Other's say it is remove the initial wage increase set to go in effect on Oct 1st of $1.50 an hour. This equals out to be about a 5% increase in cargo through-put rates. This 5% gets paid by the Terminals passed on to the SSL and then onto the shipper in some form. Is this short term money really worth what the SSL's are giving up?
The SSL's are giving up the Container Royalty Cap and raising the minimum hourly rate to $20. The removal of the cap equates to an extra roughly $40million in 2010/11. The increase in the minimum rage is another almost 20% increase in wage pay out. This is a lot of money being given up for just a %5 increase in wages.

Maybe the USMX should rethink this stance instead of moving forward with more talks this week.

Bayonne Bridge

From the Journal of Commerce, 9/17/09
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Bayonne Bridge Too Low, Corps Study Says

Peter T. Leach | Sep 17, 2009 9:28PM GMT

The Port Authority of New York and New Jersey on Thursday released the results of a study by the U.S. Army Corps of Engineers saying the Bayonne Bridge’s low air draft will pose an increasing obstacle for the newest and largest commercial ships in coming decades.

The study, commissioned by the Port Authority, looked at potential solutions, such as establishing a new height of 215 feet either by jacking up the existing 78-year-old span or building a new bridge. Another potential alternative would be building tunnel linking Bayonne and Staten Island.

The port authority re-emphasized its willingness to determine how best to address the navigational limitations posed by the current clearance of 151 to 156 feet between the bridge deck and the Kill van Kull waterway, depending on tides.

It expects increasing numbers of big ships to use its port facilities following an expansion of the Panama Canal, which is slated for completion in 2015.

Port Authority officials already have implemented the Corps’ recommendation that “further planning and environmental analyses by the PANYNJ are warranted for the identification of a preferred project alternative.’’ Last month, the agency authorized a $10 million planning and engineering analysis to determine the best solution for rectifying the Bayonne Bridge problem.

The Port Authority’s planning efforts to identify a preferred alternative will take approximately one-and-a-half years. The initiative also will provide a conceptual engineering study and a preliminary environmental analysis of alternatives.

The Bayonne Bridge Air Draft Analysis completed by the United States Army Corps of Engineers is available on The Port Authority of NY & NJ’s Web site at: http://www.panynj.gov/CommutingTravel/bridges/pdfs/Bayonne-bridge-Air-Draft-Analysis-paper.pdf.

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After reading this and waiting, I could not help myself from posting again. This is absolutely ridiculous. The NYNJ Port Authority spent 10 million dollars to put what everybody already knew on paper, The Bridge is TOO LOW. No kidding it is. But the PA wants to continually drag out actually making a move to do something about this impedance. Well in my opinion, it is all ready to late. The new bigger Panama Canal is going to open in 2013, and the Steam Ship Lines are going to want to use their new Super Post Panamax size vessels starting in 2014, and the NYNJPA want to continue to study the bridge, HOW SAD. Just do something already, or the New York / New Jersey economy is going to suffer severely. These larger vessels are going to have only 1 terminal that they can steam in and out of and perform operations at, GCT. This will give them a monopoly over all the other container terminals, and make it impossible for them to survive. The cargo isnt going to barge to these other terminals, it is going to be detoured to the NE's deep harbor, NORFOLK, VA.

Wake up NY/NJ and start doing something, or there will be 250,000 people out of jobs, and all your daily goods you buy are going to skyrocket in price.

Bunker Surcharges ReVisited, and the economic Future

Oh the Woes with these Carrier Bunker Surcharges. As Carrier's were just starting to make progress in the battle to recover some of their costs for the Bunker Fuel, the fuel prices drop. This should be a good thing, because if the surcharges are written into the contracts, that means the Carriers should be recovering a higher percentage of their costs. This is true, but too many Carriers are backing off and lowering their surcharge for the purpose of lowering their shipping price. The lower the shipping price the more customers will want to ship with that Carrier. As soon as a couple Carriers lower their surcharge amount, then every Carrier must, or they will suffer from a loss of customers. This is one battle that the Carriers must fight together and not go Volume chasing. If this continues then the cost recovery the Carriers just started to break ground in will be for nothing. The Carriers need the volume to stay afloat in this hard economic time.

When is the Shipping and Transportation industry going to learn what a good customer is and that it is rarely worth it to chase the bad customers. A good customer is a high profit and high volume shipper. A bad customer is a low profit and any volume shipper. Some customers are such poor customers that Carriers lose money on shipping the cargo just to fill space on a ship. SAD SAD SAD. As an industry, we must come together and work together to help each and every customer, terminal, and carrier through this tough economic time. That means, not lowering bunker charges and rates, but cutting costs. Cut the costs, the pork barrel if you must in the middle. Find ways to cut the amount of moves a container makes before loading and discharging. Streamline your processes, don't just take each and every customer possible. Look into each one and make sure it is cost effective.
Just please, don't throw away the progress that has been made.

Another New Customs procedures - ITN numbers

The following new booking regulation procedure has been released by Customs:
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Export Regulations As of July 2,2008 in accordance with Title 15, Part 30, Foreign Trade Regulations (FTR), Shippers Export Declarations (SED) must he filed electronically via the Automated Export System (AES). Prior to crossing the border, you must have an Internal Transaction Number (ITN) generated from the ABS as proof of filing the required export information. You will have until September 30, 2008 to comply. In accordance with the FTR section 30.71 (a)( I). Any person or entity including U. S. Principal Party in Interests (USPPIs), authorized agents, or transportation carriers (truck, rail, vessel, or air), who knowingly fails to File or knowingly submits, directly or indirectly, to the United States Government false or misleading export information through the AES, shall he subject to a fine not to exceed $10,000 or imprisonment for not more than five years. or both for each violation.
File Shipper Export Declaration information free. Register at www.aesdirect.gov.
For questions, please call 1-800- 549-0595.
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This new process is scaring a lot of exporters, but is really nothing special. What this ITN number does is make it easier for Customs to monitor cargo from each shipper and track each shipment. Customs will now be more up to date with the rest of the world and finally not a pencil driven environment.
Most exporters dont want to be monitored more, who does? But it is not a difficult process. The ITN number will also apply for the entire booking and not just one container.
From what i can gather talking to Customs is the 10,000 USD fine wont be imposed right away either. The process will be monitored per shipper and per carrier by Customs and they will then reprimand each for the first month or two. The process wont be perfect and they know that, and the last thing Customs or this economy is a reason not to trade goods. The 10k fine will be imposed on the shipper and the carrier as Customs deems fit. At no time is the terminal operator liable for an exported container that does not have an ITN number.

How is the going to affect the industry? In my opinion it will not have an impact. This is just another regulation that the industry must get used to and impliment into their daily Standard Practices. The shippers will have to atain the ITN's and submitt them to their chosen carrier. The only real affect this may have in the begining is, many containers missing their intended vessel voyages.

Please let me know how this Regulation is going to affect you.

Was it a mistake when many Financial companies bought shipping terminals?

I am very interested in the buying and selling of container terminals and terminal operators by large financial organizations. Companies such as AIG, Deutsche Bank and others have been investing in the Transportation industry by buying Terminals. The thought process being that the industry and container shipping is only going to grow and fast. Some thought of it as a quick flig (5 year) investment oportunity. This has not shown to be the case. Many people do not recognize that the transportation industry also fluctuates with the World economy and high-profit volumes can shrink in a poor market. The world market will always dictate the rise and fall of container shipping, both import and exports.
That being said, the industry is not doing poorly when comapred to the investment and mortgage firms out there. With many terminals not making the large sums as money as expected (but still being profitable) and now being a part of large investment conglomorats; Are they going to be sold? If an investment firm is losing money as a whole, what do they sell to make up for that? I would think they would sell a sector that is semi-profitable with growth potential, such as their shipping terminals. For example; AIG's High Start Capital is the parent company to Ports America. What are they going to do after being baled out by the US government. Are they going to sell to a Carrier company, another investment firm, or hold onto this infrastructure investment in hopes to make money.

The Global economy is so interesting to watch and learn about. Please add your comments and knowledge.