1. No Solace for MOL Comfort Shippers
When the bow of the MOL Comfort sank in the Arabian Sea on July 10, it ended a
three-week saga for the 8,000-TEU ship that had snapped in two en route from
Singapore to Jeddah, Saudi Arabia. For shippers who had cargo in any of the nearly
4,000 containers lost, the saga will continue. MOL subsequently pulled six sister
vessels from operation. In a strange twist, Asia-Europe rates have rallied in recent
weeks, a phenomenon SeaIntel Maritime Analysis’s Lars Jensen attributes in part to
“the involuntary scrapping of the MOL Comfort.” Photo courtesy gCaptain.
2. Mega-Carriers Form Mega-Alliance
While it won’t come together until the second quarter of next year, the gigantic
vessel-sharing agreement called the P3 Network among Maersk Line, Mediterranean
Shipping Co. and CMA CGM already is forcing other carriers to form similar mega-
alliances to compete with it. The P3 Network won’t curtail the glut of vessel capacity
that is depressing rates on the east-west trades where the three carriers will
collaborate, but it will enable them to cut costs by deploying their largest, most fuel-
efficient ships.
3. China Takes Out the Trash
President Xi Jinping’s crackdown on adulterated products entering China, part of a
larger environmental push by the manufacturing giant, struck a blow to U.S. and
other global scrap exporters and the carriers moving their goods. The so-called
Green Fence policy has been a big factor in curtailing growth of U.S. exports of scrap
paper, plastics and metal, which make up the lion’s share of containerized shipments
leaving the U.S., “to almost flat,” JOC Economist Mario Moreno said.
4. Court Declines to Block Hours of Service Rules
The U.S. Court of Appeals in Washington listened to trucking's arguments against the
latest changes to truck driver hours of service rules in March but didn't move to stop
those changes from being implemented July 1. The Federal Motor Carrier Safety
Administration refused to stretch its compliance deadline any further, which meant
the mandatory break and a revised 34-hour restart provision took effect as
scheduled. Shippers are bracing for potential capacity shortages and higher pricing.
5. Maersk’s First Triple E Sets Sail
Maersk Line took delivery of the Maersk Mc-Kinney Moller, the first of the carrier’s 20
Triple E mega-ships, at the end of June. The 18,000-TEU vessel set sail on its
maiden Asia-Europe voyage carrying only 14,000 containers, because many of the
16 ports certified to handle the Triple E ships don’t have cranes tall enough to handle
it when fully loaded.
6. China Shipping Trumps the Triple E
China Shipping Container Lines took the mega-ship up a notch, ordering five 18,400-
TEU giants that will surpass Maersk’s Triple Es as the largest container ships afloat.
CSCL will deploy the new ships on a 10-year joint Asia-Europe service with United
Arab Shipping Co., which also reportedly is considering an order for ships of that
size. Mediterranean Shipping Co. also may join the mega-ship ranks, as it is reported
to be chartering three 18,400-TEU ships recently ordered by Hong Kong Asset
Management.
7. YRC, Arkansas Best’s Brief Flirtation
YRC Worldwide and Arkansas Best roiled trucking and Wall Street when word leaked
in June that the two companies had discussed — ever so briefly — a potential
acquisition. YRC Worldwide CEO James Welch later called it “a one-hour
conversation that never went anywhere,” but the prospect of a merger raised
questions about the health of the less-than-truckload market and whether further
consolidation would be beneficial, and to whom. The debate didn’t hurt YRC
Worldwide’s stock, which surged in the quarter.
8. Long Beach Port Loses Its Leader
Chris Lytle was making quite a name for himself as executive director of the Port of
Long Beach when he announced in May that he would head north in August to
assume the same role in Oakland. The popular Lytle, who was executive director in
Long Beach for only 18 months, was implementing a $4.5 billion construction
program there when Oakland lured him away to take charge of its seaport and
airport.
9. Delays Hit NY-NJ Port
It’s been a long, hot summer at the Port of New York and New Jersey already.
Problems began in early June when Maher Terminals’ deployment of a new
operating system caused miles-long truck lines. Delays spread as 15 ship calls were
rerouted to other terminals. Truckers are complaining of lower productivity by drivers
and increased costs for chassis rental and container use. The delays also have been
costly to shippers, carriers and terminals. And the annual peak season is just starting.
10. UPS, Teamsters Win Half the Battle
Teamsters employees at UPS approved a new five-year labor pact but rejected
several regional supplements key to implementing the agreement in a vote that
ended in late June. That sent the union and the United States’ largest Teamsters
employer back to the bargaining table. The current contract covering 235,000 UPS
package workers, which expires July 31, was extended to give both sides time to
negotiate. Teamsters at less-than-truckload carrier UPS Freight also rejected a
contract proposal.
11. ABF Obtains Labor Concessions
At ABF Freight System, Teamsters employees approved a five-year master contract
in June but also rejected a number of regional supplements, ensuring negotiations
with the sixth-largest less-than-truckload carrier would continue into the summer. The
supplements must be approved before the contract can take effect. The contract
includes a 7 percent cut in wages that would gradually be returned to employees over
the life of the contract. ABF sought deep wage cuts and improved productivity to
reduce costs.
12. CEVA Gets a Lifeline
CEVA Logistics, the world’s fifth-largest logistics provider, completed a debt-for-
equity swap in May. The deal eliminated $1.7 billion in consolidated net debt for
CEVA, which some analysts had said faced possible bankruptcy. With the refinancing
complete, CEO Marvin Schlanger says he wants to move CEVA beyond its roots as
an amalgam of Netherlands-based TNT and U.S. logistics provider EGL. Although
CEVA posted record revenue of $9.4 billion in 2012, it has been hurt by a shift from
air freight to ocean shipment, which provides forwarders with lower margins.
13. Congress Pushes Freight Forward
The U.S. House of Representatives took a rare step in creating a special panel
dedicated to hearing from major shippers, logistics providers and transportation
companies about how to make the nation’s freight network more efficient. Hearings
held by the Panel on 21st Century Freight Transportation aim to help members pass
port and inland authorization legislation and the next surface transportation bill.
Considering the number of new House members, the panel is providing a valuable
education on why freight movement is essential to a healthy economy.
14. Halfway There for WRDA
The U.S. Senate in May passed by a strong margin major legislation aimed at
reforming the Harbor Maintenance Trust Fund and authorizing major port and inland
waterway projects. The chamber’s version of the Water Resources Development Act,
last passed in 2007, also would speed up construction of maritime projects. The U.S.
House of Representatives now must craft its own version, so that ports and inland
waterways can better deal with mounting infrastructure challenges.
15. Hong Kong Takes a HIT
March went out like a lion at the Port of Hong Kong, as dockworkers struck five
facilities operated by Hutchison International Terminals. When the walkout ended six
weeks later, dockworkers had received what they said was their first pay increase in
10 years, but the port was left with a backlog of containers that took seven days to
clear. More than 100 ships were rerouted away from Hong Kong during the strike.
The world’s third-largest container port, whose traffic already had been ebbing, is in
danger of falling further behind global leaders Shanghai and Singapore.
