Piper's Pipeline: October 22 - October 28, 2011

Piper's Pipeline: October 22 - October 28, 2011

by Don Piper
2. November 2011 09:44

Ports and ocean shipping

Port of Los Angeles Sunrise

  • The trans-Pacific container spot rates fell to their 22-month low last week, reported Drewry Shipping Consultants. These rates are from Hong Kong to Los Angeles.
  • There is concern that too much capacity will be removed from the trans-Pacific segment, causing a shortage of space in the coming months. This, of course, would lead to carriers' choosing the higher-paying shipments, and as in 2010, ignoring their contracted commitments for the lesser-paying shippers.
  • The Harbor Maintenance Tax (HMT) that has been the subject of disagreement between the West Coast ports in the US and Canada – mainly Port of Prince Rupert – has recently been addressed by the Canadian government. The tax, assessed by US ports, does not have a companion tax at Canadian ports. It was established in the 1980s for the maintenance of the depths of ports, and in fact, only 1/3 of US ports are maintained at the authorized depths. A Congressional Research Service pointed out in a report that the HMT accomplishes none of the objectives that it was created for. Without being dredged the ports are limited as to cargo vessels being able to enter.
    • Numerous ports are dredged that have no cargo traffic. Others that have traffic are not dredged to the required depths and so are limited as to which cargo ships can enter. Smaller vessels, or ones that are not loaded to capacity, are the only ones that can enter, at a higher cost per container.
    • Costs that amount to over $60 million a year are incurred at ports that do not have cargo facilities. Commercial fishermen, pleasure boaters and charter boats use these harbors. Ports on the Gulf and East Coasts receive most of the benefits, as very little dredging is necessary at West Coast ports.
  • Imports at the Port of Seattle have decreased by 22.6% in September. However, exports have increased 17.7% for the same period.
  • The Rotterdam Rules, though not ratified, are "still alive," said The Journal of Commerce. So far, Spain has been the only country to ratify. Failure to sign by the US seems to be holding some nations to sign.

Development and jobs

  • Unilever is investing $40 million in an expansion to its Jonesboro, Arkansas, plant, creating 125 new jobs in the area. The plant, bought from Alberto Culver, was built in 2008 at a cost of $64 million. Currently, 400 employees are located in Jonesboro.
  • Shoe manufacturers operating in China have seen costs increase in recent months and are now considering Western China, Vietnam and India and relocating back to the US. Presently, more than 90% of US footwear is produced in China.
  • San Antonio, the nation's 7th largest city, is a leading job growth area. San Antonio reported the addition of thousands of jobs from industries in the green energy and cybersecurity industries. Healthcare and manufacturing also contribute to the growth.
  • ElectriCities, a not-for-profit government services organization, represents 70 North Carolina cities and universities that own electric distribution systems. ElectriCities is a provider of economic development and other services to the NC cities and universities.

Profit and loss

  • Carrier profits and losses
    • Lufthansa cargo states that its profits have declined 57%.
    • Norfolk Southern reports profits to be up 24%.
    • Heartland Express reports profits down 15.8% because of fuel costs and driver supply down.
    • CNRR reports profits up 19%.
    • CPRR falls by 5.3%.
  • Caterpillar expects total sales to grow 10-20% in 2012. Growth in China sales is expected to slow from 15-20% in 2011 to 8-10% in 2012.
    • Profits at Caterpillar increased 44% year-over-year in the 3rd quarter.


  • Overfishing in the Mediterranean is threatening the global supply of Bluefin tuna. Illegal overharvesting is a cause of worry for operators that operate legally. Fraud in tuna fishing is common behavior in overcatches.
    • Depletion of tuna in the Mediterranean Bluefin population will divert the fishermen to Canadian waters, mostly in Prince Edward Island and Nova Scotia.
    • The market for Bluefin tuna is lucrative. A single fish can bring more than $450,000.
    • Depletion of the tuna is feared at its present rate of catch.
  • The GDP increased 2.5% in the 3rd quarter, the Commerce Department reported.
  • Truck tonnage increased 5.9% in September, following an increase of 4.9% in August.

Image by CharlotWest

What do you think about Pacific shipping, the Harbor Maintenance Tax and the rest of this week's news and views? Please comment below.

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