Piper's Pipeline: July 25 - July 29, 2011

Piper's Pipeline: July 25 - July 29, 2011

by Don Piper
29. July 2011 15:27

US West Coast shipping

eagles

  • The Federal Maritime Commission, at the request of members of Congress, has sent a representative to the Prince Rupert Port to mitigate why traffic that once came in through California ports is being diverted to the port at Prince Rupert, British Columbia.
    • Use of ports on the US West Coast has declined 19% since 1961 and is down 4.2% in 2010. The FMC will probably find that environmental restrictions, higher fees and higher costs of labor are factors.
  • The International Longshoremen's Association is still upset over the decision made by Del Monte to move its imports from Philadelphia to a port that uses employees from a different union. Del Monte has a suit against the ILA for $6 million for damages suffered in the illegal 2-day work stoppage. The suit was filed by carriers in the New York Shipping Association. ILA members handle Del Monte's imports at Galveston, Texas and Port Manatee, Florida.
  • ILA members were cautioned by the top negotiation for the West Coast that some cargo (discretionary) is being diverted to Canada, the Gulf of Mexico and Atlantic coast ports and that this would probably increase. West Coast port traffic is down from 200 million tons in 2008 to 106 million tons in 2010. Man hours at the ports decreased from 30.3 million to 26.8 million in 2010.
      Negotiations for the West Coast are underway for the expiration of the present contact upon September 30, 2012. It was suggested that the contact negotiations could be challenging.

Rail industry

  • In the 30 years since the Staggers Act deregulated the railroad industry, rail rates have decreased 55%. Some shippers have the perception that they are captive and subject to market power. In all fairness, rates are up nearly 5% each year as railroads maintain double-digit profits.
  • The floods earlier this year are blamed for the decrease of profit by the Canadian Pacific Railroad. The decrease was 23%, leaving 2.5% profit, which is far less than other Class I railroads.

Parcel and trucking numbers

trucks

  • June truck tonnage increased 6.8% year-over-year, the largest since the 8% surge in January. According to the ATA, not seasonally adjusted figures are up 5.3% from May. These adjustments are based on figures reported by the ATA and are based on reports from member carriers.
  • UPS announced that its 2Q income increased to $1.06 billion or $1.07 per share. Revenues for the second quarter were the highest on record at $13.2 billion, an 8.1% increase. The supply chain and freight unit's operating profit increased 41%.

Sundry

  • At its present rate of spending, health care in the US is on pace to total $4.6 trillion in 2020, about $1 out of every $5 in the US economy, according to a government report. Associated Press reports that 2011's health care spending is expected to be over $2.7 trillion, about $1 out of every $6 in the US economy.
  • Siemens Energy has received an order from China to deliver eight 500-megawatt coal gasifiers for a plant in China. Each gasifier weights over 200 tons, is 18 meters long and has an inside diameter of 3 meters. When operational, which is scheduled for the end of 2014, the plant will produce approximately 2 billion cubic meters of synthetic natural gas per year.
  • The drop in housing sales in the US is blamed for a 1.7% reduction in container imports for the month of June. Imports overall are up 6.3% for the year through June, though furniture imports were down.
  • International shipping: Sweden has become the 24th and latest signor of the Rotterdam Rules and is the 2nd country to ratify, after Spain. The Rotterdam Rules will replace COGSA, which is out of date, and will become effective the first day of the month following the expiration one year after date of deposit of the 20th instrument of ratification of the occasion.

Images by glockkid and ClatieK

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