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400 New Dockworkers Hired to Handle Oakland Cargo Backlog

Archives, Global Trade Daily, News, U.S. Ports

400 New Dockworkers Hired to Handle Oakland Cargo Backlog

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The first of 400 new dockworkers arrived at Port of Oakland terminals last week to meet the port’s need for more labor.

Additional personnel will be phased into the workforce through September, the port said, to handle a backlog of ships and cargo. The port’s aim is to accelerate cargo operations and clear out the backup of vessels anchored in San Francisco Bay.

“We’re not operating with the speed and efficiency our customers deserve right now,” said Port of Oakland maritime director John Driscoll. “Additional longshore labor is an important first step in getting back on track.”

The port’s waterfront employers and the longshore union agreed last month to beef up Oakland’s labor pool. In addition to adding new workers, they agreed to train and promote 100 current workers.

Meanwhile, the G6 Alliance—comprising APL, HMM, MOL, Hapag-Lloyd, NYK and OOCL—canceled four upcoming vessel calls to the port this month citing the delays. The four vessels are operated by Mitsui O.S.K. Lines Ltd. and APL, a subsidiary of Neptune Orient Lines.

As Driscoll explains it, the port’s problems have come about because containerized cargo volume in the has increased for three straight months. “The number of vessels arriving in Oakland has grown, too, with the port often berthing 10 ships a day,” he said. “Some ships are anchored in the bay two days waiting for terminals to clear vessels from berths. More auto carrier vessels and cruise ships are calling at Bay Area ports putting further strain on the longshore labor pool.”

The labor shortage has lengthened the time ships spend loading and unloading by as much as a day, according to Driscoll. He added that cargo and vessel delays should ease by the end of July and that the port is in discussions with waterfront labor and management on measures to accelerate cargo operations.

Detractors note that the 400 new hires are being phased in over a period of months and that they will take months before they are fully trained.

The port is caught in the middle of the problem as it doesn’t hire longshore labor. Hiring is managed by marine terminal operators who lease their facilities from the port.

Archives, Commentary, EU Trade, Global Trade Daily, International Trade

Brazil Summit Could Push Mercosur-EU FTA

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Talks beginning tomorrow in the Brazilian capital of Brasilia will tell whether the South American trading bloc Mercosur will be proceeding in earnest with free-trade talks with the European Union.

Talks between the two entities—two of the three largest trading blocs in the world—have been ongoing since 2010.

The major impediment to progress in the talks has been dissension within the Mercosur ranks. Mercosur—comprising Argentina, Brazil, Venezuela, Uruguay, and Paraguay as full members and Colombia, Bolivia, Chile, Ecuador, and Peru as associate members—was formed in 1991. Mercosur’s legacy has been a commitment to regional integration more so than free trade. Some Mercosur members, most notably Venezuela and Argentina, have articulated protectionist trade policies.

Venezuela and Argentina are on record resisting an influx of EU imports, fearing for their domestic industries. Uruguay, by constrast, has been commited to free trade and has pushed to revise Mercosur law which requires free trade agreements to be neotiated as a bloc.

Brazil, the largest economy in Mercosur, with a GDP of $2.35 trillion, has resisted Uruguay’s proposals. But an economic slowdown—zero growth in 2014 and an expected one-percent contraction in 2015— has led Brazil to reconsider. The government’s new economic program has set an expansion of exports as a major priority for regaining economic health. Brazil’s president Dilma Rousseff announced last month that the speedy conclusion of an EU deal was a priority for Brazil.

The Mercosur summit being held July 16 and 17 in Brazil could give the green light to final negotiations on an agreement.

The first step would be for Mercosur members to develop a tarif-reduction list agreeable to all parties and exchange that with the EU’s list. If talks go forward, that could happen later this year. In the interim, presidential elections will be held in Argentina, and, depending on who wins, Argentinian relectance to join the agreement may have dissipated by that time.

An exchange of offers on tariffs would jump-start negotiations between Mercosur and the European Union. But closing the deal could not come until it was approved by the parliaments of the individual countries invovled. If everything else goes well, that may take as long as a year.

 

Peter Buxbaum is web editor of Global Trade.

3pls, Archives, Banking, Global Logistics, Global Trade Daily, News

U.S. Titans Investing in Chinese Logistics Company

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Carlyle Group LP and Goldman Sachs Group Inc. are among the U.S. concerns investing in a Chinese logistics company, Shanghai ANE Logistics Ltd. The investors are betting on increased demand for delivery services to support China’s fast-growing e-commerce industry.

Carlyle, a private-equity firm, and Goldman, an investment back, are being joined China Renaissance in putting money into the logistics company, which delivers small orders through a network of 5,000 franchisees all over China. Carlyle announced its investment amounted to $120 million.

“China’s economic restructuring and e-commerce development bring about significant growth and consolidation opportunities in the country’s logistics industry,” said Carlyle Group Managing Director Eric Zhang.

This is especially the case since China’s retailers, unlike their U.S. counterparts such as Wal-Mart and Costco, don’t have expertise in logistics systems and don’t have strong delivery networks. That created the opportunity for Chinese e-commerce companies like Alibaba and JD.com to grow rapidly. Last April, former Wal-Mart Chief Executive Mike Duke joined Carlyle Group to advise on investments.

The U.S. investments in Shanghai ANE Logistics continues a stream of private equity into logistics companies and warehousing in China. RRJ Capital recently invested $250 million in Shanghai-based China Logistics Property Holding Co.

Air Cargo, Archives, Global Logistics, Global Trade Daily, Imports/Exports, News

Inbound Australian Air Cargo to be Subject to Stricter Inspections

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Air cargo bound for the United States from Australia is not currently subject to the U.S. Transportation Security Administration’s requirement that all shipments be examined at the piece level.

However, that situation will soon be changing, after the TSA audited Australia’s National Cargo Security Program (NCSP) and demanded that 100 percent of U.S.-bound air cargo be examined at the piece level. Australia’s Office of Transport Security (OTS) is currently negotiating with the TSA to resolve the issue and the TSA agreed to extend the status quo until July 31.

The OTS recently revealed the outline of its proposal to meet TSA requirements for piece-level examination. It would require a party to either become a known consignor (KC) or to ensure that its goods were subject to an off-airport examination of its cargo. In the absence of one or the other, cargo would not be able to be loaded.

The new program will apply to air cargo touching the U.S., whether or not it is unloaded there. The measures will also be aligned EU and other internaitonal standards. The aim will be for KC freight to be accepted without further screening by airlines.

Piece-level examination for those who are not KCs will be addressed in further regulations to be issued by the OTS which will set out the standards and methods of examination. Businesses providing the examination will be accredited.

The proposal is apparently acceptable to the TSA and the OTS has secured approval from the government of Australia to design and implement the policy. But the Australian government, at least at this point, is not inclined to provide financial assistance to companies affected by the changes.

international trade deal, global trade, exports, DHL Global Forwarding, freight forwarding, air cargo.
Archives, EU Trade, Global Logistics, Global Trade Daily, News, Rail

DHL and KTZE to Enhance China-Kazakhstan Rail Freight Links

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DHL Global Forwarding signed a memorandum of understanding with Kazakhstan Temir Zholy Express (KTZE) late last month to develop greater rail connectivity and trade between China, Kazakhstan, the Commonwealth of Independent States, and Europe.

DHL says the MOU will provide the company with additional block train services, increasing the overland rail routes available to DHL and its customers as an alternative to sea and air freight. The primary focus of the MOU is the delivery of Chinese goods overland to the European Union. According to the European Commission, China-EU trade amounts to over $1 billion daily, making the trade route the second-largest cooperative economic relationship in the world.

Under the MOU, KTZE will be responsible for operating rail activities from point to point as well as across the China-Kazakhstan borders and will add several logistics service locations to its existing network and increase their capabilities. KTZE is a holding company based in Kazakhstan which functions as the national multimodal operator.

“KTZE is looking to establish the most advanced central Asia logistics hub in Kazakhstan by enhancing various facilities across the country and improving our freight forwarding capabilities,” said Sanzhar Yelyubayev, president of KTZE. “KTZE will work hand in hand with DHL to further develop end-to-end logistics solutions via rail and multimodal solutions in this part of the world.”

DHL will focus on developing its forwarding capabilities along the trading routes linking China, Kazakhstan and CIS countries. DHL will also provide value-added offerings such as temperature-controlled containers. DHL Global Forwarding introduced the first temperature controlled China-Europe rail service last year.

“We have witnessed tremendous growth in rail freight between Asia and Europe over the last few years,” said Steve Huang, CEO of DHL Global Forwarding China. “We see a lot of growth potential in many intermediate trade hubs such as Kazakhstan. Kazakhstan’s own economic development stands to benefit significantly from strong links to China and the EU, its two largest trading partners. Transportation makes up over 10 percent of the country’s services exports.”

The partnership will develop additional rail offerings along the South Silk Road trade route to Europe via Kazakhstan. The partnership will also offer new logistics solutions within the Khorgos Special Economic Zone in Khazakstan, enhancing the trans-Kazakh route connecting China, Kazakhstan, the CIS, and the EU.

global trade, africa, U.S. exports, international business.
Archives, Global Trade Daily, Imports/Exports, International Trade, News

U.S. Company Inks Deal During Africa Trade Trip

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Teras Cargo Transport of Houston signed a partnership with the South African firm Grinrod Limited during a U.S. government-sponsored trade mission to sub-Saharan Africa last month. Under the deal, Teras will expand its shipping services to southern and eastern Africa and Grinrod will provide stevedoring services at regional ports.

In all, representatives from 14 American companies, including General Electric and Honeywell International, met with counterparts from Mozambique, South Africa and Kenya in an effort to form trade partnerships. The trade mission which was led by Secretary of Transportation Anthony Foxx and Assistant Secretary of Commerce Arun Kumar.

The government’s campaign called Doing Business in Africa offers U.S. companies opportunities to expand their reach with African partners. In 2014, U.S. exports to sub-Saharan Africa reached a record $25.4 billion, an increase of over five percent.

“This is one of the missions of the Commerce Department,” said Kumar, “to promote a sense of global awareness to create the capability of global fluency, to get more and more U.S. companies to export beyond their borders.”

Kumar noted that many jobs rely on the ability to plug into global supply chains. “It is very difficult to build an entire product in one country and be competitive,” he said. “It is very possible to build a component of a product and supply that globally and be competitive. So we encourage the integration of supply chains, and in particular with interest in integrating integral supply chains in small and medium enterprises.”

In late July, President Obama will attend the sixth Global Entrepreneurial Summit in Nairobi, Kenya, in an effort to show the U.S. Government’s support for innovation and economic development around the world. In September, a U.S. government program called Trade Winds will sponsor a business development conference in Johannesburg and a trade mission that will bring 70 U.S. companies to eight countries in Africa.

global trade, ocean ports, port of los angeles, port of long beach, west coast ports, labor slowdown
Archives, Global Logistics, Global Trade Daily, News, Ocean Ports, U.S. Ports

Terminal Operator Wants Labor Laws Changed

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Last year’s backlogs at West Coast ports have cleared up but the anger lingers among those who were hurt by the labor slowdown.

International Container Terminal Services, Inc. (ICTSI) recently issued a white paper calling for the U.S. Congress to amend the nation’s labor laws to prevent the recurrence of the labor slowdowns that caused cargo bottlenecks a few months ago.

“The current labor system at West Coast ports remains broken and must be fixed,” the paper declared.

At the root of the problem, according to ICTSI, is that the International Longshore and Warehouse Union (ILWU) holds a monopoly on labor at all 29 West Coast ports. “As the sole union representing employees responsible for loading and unloading cargo vessels on the West Coast, the ILWU holds tremendous power over our nation’s port system and can effectively bring the economy to a standstill,” the ICTSI paper said. “With every contract negotiation, the U.S. economy is effectively held hostage.”

Labor slowdowns, rather than general strikes, are the ILWU’s preferred tactic, according to ICTSI, because workers continue receiving full pay and benefits. “Slowdowns are effectively a way for the union to strike at little or no cost to itself,” said the paper.

In addtition, slowdowns are not considered unfair labor practices under federal labor law, thus providing no legal recourse for employers. “As a result,” thE white paper concluded, “the period between contracts has become especially contentious with ILWU slowdowns reducing labor productivity by 50 percent or more. West Coast ports are brought to a near halt, and the health of the economy is severely compromised.”

ICTSI’s solution to amend the National Labor Relations Act making it an unfair labor practice for labor organizations representing employees in the maritime industry to engage in slowdowns at any time. To ensure compliance, the National Labor Relations Board would be authorized to seek an order in federal court. In addition, parties injured by slowdowns would be permitted to file lawsuits in federal court for economic damages resulting from slowdowns.

Labor organizations found in violation could have their representational rights terminated, under the ICTSI proposal.

“These legislative changes will deter the future use of intentional production slowdowns and provide prompt and effective remedies to businesses that are harmed by related activities,” the ICTSI white paper argued.

The activity at the 29 West Coast ports accounts for 10 to 15 percent of the U.S. annual GDP, and 25 percent of the nation’s international trade. When operating at normal capacity, West Coast ports handle around 65 percent of all U.S. container imports.

3pls, Archives, Global Logistics, Global Trade Daily, News

Kuehne + Nagel to Acquire ReTrans

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The Kuehne + Nagel Group has entered into an agreement to acquire ReTrans Inc., a U.S. transportation broker.

TheMemphis-based ReTrans was founded in 2002 and brokerage services for intermodal transportation, as well as full and less-than-truckload services in the United States and Canada. The company employees over 300 workers, operates in 68 locations, and generates annual revenues exceeding $500 million.

The acquisition builds on Kuehne + Nagel’s strategy to strengthen its position as an end-to-end logistics provider in North America.

“The transaction with ReTrans underlines our strategy to grow organically and through complementary acquisitions,” said Detlef Trefzger, CEO of the Kuehne + Nagel Group. “Our customers will benefit from comprehensive end-to-end supply chain solutions in North America. Combined with our strong seafreight, airfreight and contract logistics operations, this transaction will accelerate our growth.”

“By acquiring ReTrans we obtain expertise in intermodal transportation,” added Stefan Paul, executive vice president, “with direct access to the most important North American railroad companies, an innovative LTL brokerage business, and a platform to provide managed transportation services.”

David Wedaman, President of ReTrans, who will take over responsibility Kuehne + Nagel overland business in the U.S., said Retrans customers will benefit from the takeover. “Our customers will be pleased with the access to Kuehne + Nagel’s global network and to take advantage of the expanded range of services,” he said.

The transaction is subject to approval by the U.S. regulatory authorities. Both companies agreed not to disclose the purchase price.

Air Cargo, Archives, Global Logistics, Global Trade Daily, News

Canada Strengthens Air Cargo Security

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The Canadian government recently announced changes to make air cargo screening more efficient in Canada.

The changes to the Canadian Aviation Security Regulations will become effective on October 17, 2016.

According to a statement from the Ministry of Transport, the changes will bring Canada in line with international shipping standards and will also help advance a Canada-U.S. action plan on security and economic competitiveness known as Beyond the Border.

“These new regulations will allow for the secure, timely, and efficient flow of goods by air,” said Transport Minister Lisa Raitt, “while aligning Canada’s air cargo security program with those of its U.S. and international trading partners.”

Under the changes, approved shippers will be allowed to screen cargo at any point in the supply chain from the location where it is packed to where it is loaded on an aircraft. These changes will provide shippers with more flexibility and help reduce bottlenecks, move goods efficiently, and meet security standards, according to Raitt.

To benefit from these changes, shippers must apply to Transport Canada. Approved shippers will be subject to ongoing oversight and enforcement by the ministry. Under the program, approved shippers can include manufacturers, retailers, agents, freight forwarders, couriers, and air carriers.

Archives, Banking, Global Trade Daily, Imports/Exports, International Banking, International Trade, News

Liquidity Squeezes in Greece, China Prompt Private Funding Program

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In reaction to the Greek financial crisis and other liquidity events around the globe, Paragon Financial Group of Fort Lauderdale, Fla., has created a program to assist international sellers of goods into the U.S. hampered by the constraints of their local banks. The program will help sellers based in the European Union, South America, and Asia fund and credit-protect their sales into the U.S.

Experts note that a Greek bankruptcy would be the largest in history, and would test the policies put in place by the European Central Bank and other institutions.

China also faces a liquidity crisis this year that could have a serious ripple effects across the global economy according to Zhiwei Zhang, from Deutsche Bank. He said China faces a “fiscal cliff” in 2015 as Beijing deals with excessive spending. “This year, China will likely face the worst fiscal challenge since 1981,” he added. “This is not well recognized in the market.”

“With the liquidity crisis happening around the world and our expertise in funding U.S. importers,” said Chris Curtin, Paragon’s Director of Sales states, “we thought it was a natural progression to help smaller and middle market companies in other countries with their cash flow and credit protection needs.”

With its new international trade funding program, Paragon Financial will typically fund all the landed costs of goods brought into the U.S. Credit protection is offered as long as the company’s U.S. customer is creditworthy and confirm that quality, quantity and timeliness parameters of the goods have been met. A company will need to form a U.S. subsidiary to participate in this program.