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American Journal of Transportation

ajot.com JULY 16 - 29, 2012 ISSUE #535NO. AMERICA’S TRANSPORTATION & LOGISTICS NEWSPAPER

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Freight prevails in Transportation Bill Conference Report

Following months of bicameral and bipartisan negotiations, members of the Surface Transporta-tion Conference Committee have filed a Confer-ence Report. The proposed two-year bill contains a number of provisions that place unprecedented emphasis on freight movement and its importance to the United States economy. Among the prescribed freight provisions, the bill contains two long-standing priorities of the Coalition for America’s Gateways and Trade Corridors (Coalition): the con-tinuation of SAFETEA-LU’s Projects of National and Regional Significance program (PNRS) and the establishment of a national freight policy.

“This compromise legislation shows that Con-gress has been listening when we’ve made our case for supporting the systems that move our nation’s goods,” said Coalition Chairman Mort Downey. “We see this as a good platform upon which future steps can be taken to further improve this critical network and its infrastructure.”

Other important features of the legislation include establishment of a national freight network,

a national freight strategic plan, a biennial freight conditions and performance report, and prioritiza-tion of projects to move freight. Although most of the bill’s language is aimed at improvements for road freight, railway-highway grade separations and intermodal connectors are listed as eligible projects for prioritized federal funding (Section 1116).

“We applaud the Conferees for their dedica-tion to ensuring our nation has a comprehensive surface transportation program going forward,” said Coalition Vice Chairwoman and Chief Deputy Executive Director of the Southern California Association of Governments, Sharon Neely. “This bill represents a milestone in freight planning and we look forward to working with Congress and the Administration to increase the efficiency and capacity of our nation’s multimodal goods move-ment network.”

Continuation of the PNRS program is criti-cal to funding large, multimodal, and often times multi-jurisdictional projects that optimize freight

NORTH ASIA TRADE

Quebec rail plan stirs hope, concern in Canada’s iron belt

Canada’s biggest railroad wants to build a C$5 billion ($4.8 billion) rail line to ship iron ore from isolated northern Quebec to port, a crucial link that could transform Canada into the world’s third-largest producer of steel’s main component.

Canadian National Railway Co’s 800-kilometer (500 mile) project, backed by Quebec’s public pension fund, is still years away from becoming a reality. Indeed, the 2017 projected start-up date looks ambitious, given the complexity of negotiations that lie ahead.

The junior miners needed to fill the rail cars want to keep a lid on transport costs, and some have even floated the idea of building their own rail line rather than signing on to CN’s plan.

The proposed railway also faces an intensive consultation process with governments and local native groups before work can begin. Assuming those talks are successful, construction over the rugged terrain would take three years to complete.

Stretching from the Port of Sept-Iles on the St. Lawrence River to north of Schefferville, on the border between Quebec and the province of Newfound-land and Labrador, the line will pass numerous mining projects in the Labrador Trough - a geologi-cal formation rich in iron ore.

There are already two rail lines in the region but their capac-ity is insufficient to meet demand from planned new mines in north-ern Quebec and Labrador.

The Quebec government says the region represents poten-tial private investments of more

than C$20 billion.The privately funded rail

project is just one piece of Que-bec’s far-reaching Plan Nord, a 25-year plan that targets C$80 bil-lion in public and private invest-ments to develop a resource-rich area of 1.2 million square km, roughly the size of South Africa, with mining, renewable energy and infrastructure.

The whole plan is conten-tious for Quebec’s aboriginal Innu people, who last week blocked access to mines and development-stage projects in the Trough in protest against Plan Nord, which they say will damage the environment and their traditional way of life.

Big Potential

For CN, the railroad could bring a huge boost to its annual revenue, said RBC Capital Mar-kets analyst Walter Spracklin.

“If the contemplated mines do come through, this could be upwards of C$2 billion in annual revenue for Canadian National,” the transportation analyst said.

CN needs to ship at least 75 million to 80 million tons a year for the project to be feasible. But Spracklin said his conservative estimate of 125 million tonnes translates into rail revenue of C$2.2 billion. In 2011, CN recorded C$9 billion in revenue.

“It’s not a slam dunk,” Spracklin said, pointing to heavy capital requirements, uncertainty around the planned mining projects and the sheer remoteness of the location. “It’s not like there was this gem of an opportunity out there for anyone (STIRS – continued on page 5)

Zepol reports June vessel imports drop 3.7%Zepol Corporation reports that U.S. import

shipment volume for June, measured in TEUs, was down 3.7% from May, but is up 4.4% from June of 2011. Similarly, Q2 of 2012 has topped last year at this time by 4.7%. Although there was a drop from last month, June had the second highest TEU imports so far this year, outdoing January by a slight 1%. Last year saw a comparable trend in the summer months with a moderate dip in June, but spikes in July and August.

US imPortS for JUne

• Exporting Countries- The majority of Asian coun-tries saw a minor drop in shipments to the United States; China decreased by 0.03% from May and similar percentages were seen from South Korea and Japan. Germany, on the other hand, had a fairly large drop of 12.9% from May. On a different note, Brazil and Chile both rose in exports to the United States in June by 14.3% and 7.2%, respectively.

• US Ports- Seven of the top ten ports dropped in TEU imports in June. The ports of Los Angeles and Long Beach decreased in imports from May by 5% and 3.7%, respectively. The Port of Seattle had the highest import increase of the top ten by 2.2%. Another notable increase was seen from the Port of Miami, which rose 4.8% last month. For Q2 of 2012, the Port of Tacoma had a giant import spike of 23.3% from Q2 of 2011.• Carriers- Similar to countries and ports, most VOCCs (vessel operating common carriers) were down in TEU imports in June. Maersk Line saw a 6.6% decrease in imports and Mediterranean Shipping Company also dropped 8.6%. Con-versely, China Ocean Shipping Company and Orient Overseas Container Line both rose over 8% from May. For total Q2 numbers, Maersk Line and CMA CGM take the cake for the largest import increases; Maersk rose 16.9% from Q2 of 2011 and CMA CGM was up 18.5%.

(PREVAILS – continued on page 19)

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Canadian lumber: from zero to a billion in 10 years

By Leo Quigley, AJOT

In 2001 there was a long and nasty softwood lumber dis-pute between Canada and the U.S., and the resulting counter-vailing duties imposed by the U.S. on softwood lumber closed many of the mills in British Columbia and forced the Province of B.C. and Ottawa, in 2002, to explore other markets for lumber, particu-larly China.

Since that time the Asian markets, especially the Chinese market has grown gradually, encouraged by trade missions and delega-tions that were intent not only on establishing improved trade rela-tionships with the Chinese, but to demonstrate the advantages of wood as compared to cement as a construction material.

Now, a decade later, those learning initiatives and demon-stration projects are beginning to bear fruit and, last year, ship-ments of lumber to China; which were zero in 2001; climbed to over Cdn$1.0 billion or nearly a third of British Columbia’s lumber exports.

Reaching this milestone prompted the B.C. Government to issue a statement pointing out that: “the value of British Columbia’s softwood lumber exports to China jumped 60 per cent in 2011, surpassing the $1-billion mark for the first time. Since 2003, lumber exports to China have risen by more than 1,500%.

“Total softwood lumber exports increased by seven per cent last year to $3.8 billion. The United States remains the largest market for B.C lumber, accounting for almost $1.6 bil-lion of exports.

“Japan, the recipient of $648 million worth of B.C. lumber in 2011, is the third-larg-est market followed by South Korea. Exports to South Korea rose by 30% to $55.6 million, while those to India climbed 327% to $10.6 million.”

The statement said that since 2003, at the start of the joint provincial-federal-industry market development program in China, exports to that country have risen from $69 million to almost $1.1 billion in 2011.

“In spite of the global eco-nomic slowdown, it is expected that B.C. exports of softwood lumber to China will continue to grow in 2012 as the Chinese gov-ernment pursues its aggressive housing strategy,” the release said.

Much of this increase in lumber exports was due to con-tainerized lumber exports through the Port of Prince Rupert. Speak-ing at a Transportation Summit sponsored by the B.C. Chamber of Commerce in Vancouver June 5, 2012, Don Krusel, President and CEO of the Prince Rupert Port Authority told an audience of transportation executives that annual container exports at the Port of Prince Rupert jumped all the way to 233,000 TEUs in 2011; an increase of over 500% in two years.

Interestingly, the products that were exported in those con-

tainers were primarily lumber and wood products.

Krusel said: “73% of the containers exported through

Fairview last year were lumber, pulp, logs, and other wood products.

“This was at a time when economic condi-tions in the traditional U.S.

market would have dictated a disastrous employment story in BC’s interior,” he said.

“Would that have been the case without the develop-ment of new port container capac-ity on the North coast? I would suggest not.

“Although the U.S. will always be a critical market for Canada, the spotlight now is clearly on China and the emerg-ing Asian markets, which are now driving global economic growth.

“This is good news for British Columbia and Western Canada.

“But this good news depends on our ability to get our products to China and to other emerging Asian markets in a timely and cost effective way. To this end, the key objective of the Port of Prince Rupert is to facilitate this trade and unlock the economic opportunities it affords,” he said.

Yearly statistics at Port Metro Vancouver also showed increases in shipments of wood products (50%) and woodchips (57%) last year.

Speaking at the same Trans-portation Summit, Robin Syl-vester, President and CEO, Port Metro Vancouver, said container traffic through Canada’s West Coast is expected to double within the next 10 to 15 years and nearly triple by 2030.

“We expect an additional 4 million TEU’s of container capacity in both the Lower Mainland and Prince Rupert will be required to meet this demand.” “We have heard local government and communities say they want us to look at doing more with our existing terminals before looking at building a new terminal, which is exactly what we are doing with the Delta-port Terminal, Road and Rail Improvement Project.”

The Deltaport Terminal, Road and Rail Improvement Proj-ect are a series of improvements to the existing Deltaport Termi-nal at Roberts Banks to increase the terminal’s container capacity by 600,000 TEUs. The improve-ments will occur within the exist-ing terminal, road and rail

footPrint, with no marine workS

“However, even with improvements to existing termi-nals, Port Metro Vancouver will still need additional container capacity by the early 2020s.

“That is why we are plan-ning now for the proposed Rob-erts Bank Terminal 2 project - a multiberth terminal that could deliver more than 2 million TEUs a year, meeting anticipated traffic volumes into the early 2020s and beyond,” he said.

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JULY 16 - JULY 29, 2012 FOREST PRODUCTS 3

Log exports to China resume Virginia, South Carolina deal involves six-month pilot program

By Peter A. Buxbaum, AJOT

Last month, a shipping con-tainer left the port of Portsmouth, Virginia destined for the port of Shanghai, China, an event which ended a 14-month ban on the export of logs from Virginia and South Carolina to China. The Chinese put the ban in place for hardwood and softwood logs from the two states in April 2011 after finding a worm, the pinewood nematode, that infects pine trees in a number of American log shipments and which kills trees in some parts of the world. The lifting of the ban resulted from a cooperative effort by agencies in both state governments as well as the United States Department of Agriculture.

Late in May 2012, China, the world’s largest importer of logs and the second largest market for U.S. timber, set up a six-month pilot program for Virginia and South Carolina that will allow log shipments from the two states to resume under certain restrictions. The original ban applied only to logs, and not to lumber or other manufactured wood products, because the pro-cessing of those products kills any pests that may be present.

The export of forest prod-ucts is important to the econo-mies of Virginia and South Carolina, a well as to the U.S. as a whole. In 2011 the value of Virginia’s log exports was esti-mated at $57 million, down $10 million from 2010, thanks to the ban. Prior to the ban, Virginia was a major East Coast supplier of logs to China.

South Carolina’s interna-tional forest product exports amount to $1.3 billion each year, although raw logs account for less than $10 million of that total. Still, industry officials in South Carolina expressed concern that the ban by China could put a cloud over South Carolina forest products exports and all of its exports generally. Forest prod-ucts are the number one export by volume from the Port of Charleston and one-third of the total port movements. Forestry represents the top manufacturing segment of the state economy as measured by jobs and wages.

The United States as a whole exported over $7.7 billion in forestry products last year, of which around 25 percent landed in China. Seaports in Virginia and South Carolina handled over $500 million in U.S. for-estry exports last year.

Curtis Struyk, president of Carolina Ocean Lines and a co-founder of the U.S. Lumber Shippers Association, said he thinks his company will be able to export around 25 percent of the number of containers through the Port of Virginia that it did before the ban. Struyk estimated that he had shipped at least 200 contain-ers of logs a week to China using Virginia ports.

“I never thought the ban would have lasted this long,” Struyk said. “I am just glad it is over and am looking forward to

getting back to business as usual.” The pilot program was

initiated on May 24, follow-ing a fact-finding trip to Vir-

ginia by officials from China’s Inspection and Quarantine Bureau. The three inspectors sent by the Chinese govern-

ment spent 10 days in the U.S. at the end of April.

Their tour wrapped up in South Carolina where it included guided trips through

forests, manufacturing plants, paper mills and a visit at the Port of Charleston.

Under the program insti-tuted by by the Chinese govern-ment, export logs from Virginia and South Carolina were allowed to re-enter China beginning on

June 1 provided they under-went enhanced pest treatment and testing protocols under the terms of the pilot program. Logs exported to China during the pilot program must meet all existing export requirements, as well as certain additional requirements regarding fumi-gations, a quarantine enhanced for pinewood nematode testing, phytosanitary certifications, as well as restricted ports of entry. At the end of the pilot program, if all logs exported to China have met quarantine requirements, China has agreed to formally reopen the market for exports of logs from Virginia and South Carolina.

The pilot program restricts (RESUME – continued on

page 7)

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China: tree of lifeChina’s unquenchable demand for forest prod-ucts has buoyed the market, even during this economic downturn. While the Chinese econ-omy has slowed, the medium term prospects remain positive for increased imports of wood products by China.

By George Lauriat, AJOT

During the last twenty years China has become the world’s largest importer of forest products and even with dampened demand is the prime market mover, the bringer of life to an other-wise moribund sector.

China’s State Forestry Administra-tion said that forest products’ import and export trade value hit US$116 billion in 2011 up 24% from 2010.

But it’s no secret that despite the country’s enormous size, China is poor in forests,

and Beijing’s system of logging quota limits the supply of

domestic timber. Equally, China is the

world’s largest processor of wood products, some-times referred to as the

world’s “woodshop” principally designed for the export market. However, until the recent economic slowdown, domes-tic demand – fueled

by the housing boom in coastal China – has also contributed to the rise of imported forest

(TREE – continued on page 8)

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Forest products show positive volumes; legislation holds snags

By Karen E. Thuermer, AJOT

(SNAGS – continued on page 6)

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In utilizing specialized gear, handling equipment and the latest technology to provide efficient and damage free cargo services we remain leaders in today’s marketplace.

Together with the ports it services, Delaware River Stevedores plans each operation and anticipates potential problems to avoid any cargo damage or delays.

Forest products are a criti-cal commodity for both the U.S. economy and seaports across the country. The South Caro-lina Forestry Commission reports that forest prod-ucts are the No. 1 export item moving through the Port of Charles-ton, where they account for over 30 percent of the goods moved through the port in 2010.

Baltimore continues to expe-rience double-digit increases in forest products, and the Port of Philadelphia experienced a 11 percent gain in forest products

in 2011 with 432,270 metric tons handled.

In this continuing reces-sion, it’s a business that is

doing well, although the business can be spotty.

By the nUmBerS

First Quarter 2012 statistics released by the

U.S. Department of Agriculture Foreign Ag Service (USDA FAS) shows a 5 per-

cent increase in overall forest products imports compared to the same period last year (Janu-ary-March). These were valued at $2.647 billion for that time

period, compared to $2.528 bil-lion for first quarter 2011.

Hardwood lumber increased 8 percent, softwood lumber decreased only 3 percent, hard-wood flooring increased 2 per-cent while assembled flooring panels increases 11 percent, softwood flooring decreased 6 percent, hardwood plywood up 8 percent, softwood plywood down 6 percent.

Figures released by the U.S. Bureau of Census Trade Data, analyzed by USDA/FAS indi-cate that U.S. exports of forest products have also been increas-ing over recent years. It states that while recession and its lin-gering affects on the housing market have depressed the U.S. market for many species. the growing middle class in China, India and Middle East is filling that gap.

Specifically, from October 2011 to April 2012, the value of U.S. exports of forest products going to South Asia increased 57.42 percent; to South Amer-ica, 40.83 percent; and to Sub-Saharan Africa, a whopping 147.36 percent.

Meanwhile, the Ameri-can Hardwood Export Coun-cil (AHEC) sees little prospect of significant improvement in exports of American hardwoods to Europe during 2012.

“This gloomy forecast is implied by slow or declining eco-nomic growth, recent strengthen-ing in the dollar-euro exchange rate, continuing weak construc-tion sector activity across much of Europe, and relatively high stocks of domestic hardwood products,” AHEC writes.

AHEC reports that there may be incre mental increases in exports to some markets, notably in north-ern countries. It contends that this is “dependent on the success of continuing efforts to improve the competitiveness of American

West Coast lumber exports up in first quarter

West Coast lumber exports increased slightly in the first quarter of 2012—just under 2 percent for a total of 234 million board feet worth $156 million, according to the U.S. Forest Service’s Pacific Northwest Research Station. Meanwhile, U.S. log exports to Canada jumped by 43 percent to 255 million board feet during the first quarter, while exports to China dropped by 9.5 percent to 233 million board feet.

“About 85 percent of the West Coast’s log exports and 89 percent of its lumber exports came through ports in Oregon and Washington,” said Xiaop-ing Zhou, a research economist with the station who compiled the data. “Softwood comprised 99 percent of the total log export and 85 percent of the total lumber export.”

Zhou compiled the statistics from the U.S. International Trade

Commission and from Produc-tion, Prices, Employment, and Trade in Northwest Forest Indus-tries, a station publication that provides current information on the region’s lumber and plywood production as well as employ-ment in forest industries.

other highlightS:Although log and lumber

exports from Washington, Oregon, northern California, and Alaska slowed in the first quarter of this year, U.S. log and lumber exports actually increased by 5 percent and 3 percent, respectively, to 715 and 731 million board feet.

U.S. lumber exports to Canada and Mexico increased about 10 percent.

West Coast log exports decreased by about 16 percent to 361 million board feet, worth

(EXPORTS – continued on page 20)

JULY 16 - JULY 29, 2012 FOREST PRODUCTS 5

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who wanted to pick it.”CN’s partner in the plan is

Caisse de depot et placement du Quebec, which manages the Quebec pension fund and will own a third of the railway.

“We’re a long-term investor and infrastructure are the type of projects where we like to invest,” said spokesman Maxime Cha-gnon. “We always want to have a partnership with businesses that are leaders in their sector.”

Big fearS

The revenue numbers are big enough to stoke fear among junior miners, who need a rail-way to get ore to market but cannot operate mines profitably if transport costs run too high.

“Rail is definitely a service that the industry badly needs,” said Sandy Chim, chief execu-tive of Century Iron Mines Corp, which is developing the Attikamagen Lake iron-mine project near Schefferville with partner Champion Minerals Inc.

Chim worries that CN’s plan, which asks miners to make minimum volume commitments and pay rates tied to the final project cost, is too profit focused and could hurt development.

He wants assurances that the railway is there to support the miners, rather than squeeze profits from them, with a long-term set rate system that ensures fair returns.

“To make Canada the third-

largest producer, Canada has got to have some long-term com-petitiveness on a very major cost component - which is the infra-structure,” he said.

Current Canadian output of the metal, which is too heavy to be transported by truck, is around 40 million tonnes a year, while top global producers Aus-tralia and Brazil have a com-bined output of more than 850 million tons a year.

Assuming the Labrador Trough projects go ahead, as well as the huge Mary River mine on Baffin Island in the Canadian Arctic, Canada could produce as much as 250 million tonnes a year by 2020, overtaking India as the world’s No. 3 producer.

China is a big producer, but the government does not release detailed production figures.

Profit focUS

The iron-rich Labrador Trough stretches some 1,500 km along the border between Quebec and Labrador.

Mines were first developed there in the 1950s, but many closed or were sold during the 1980s and 1990s as demand fell. With the recent rise in iron ore prices, driven by rapid urban-ization in China and India, the Trough is booming again.

Companies such as Cen-tury, Alderon Iron Ore Corp, and New Millenium Iron Corp are all developing projects there. Add expansions from current produc-ers like ArcelorMittal and Cliffs

Natural Resources Inc, and all eyes are on the region’s limited infrastructure - especially rail.

The new production will easily surpass capacity on the region’s two existing railways, one of which is privately owned by Arcelor and unlikely to be contracted out to other miners.

The second rail line, owned by Rio Tinto’s Iron Ore Co of Canada, has extra capacity. But it is expected to fill up over the next three to five years as new mines start producing.

“At the end of the day, it is only one line with 80 mil-lion tonnes of capacity,” said Tayfun Eldem, chief executive of Alderon. “Once you get to 80 million tons, that’s it.”

Alderon is in talks with Rio’s common carrier line to ship mate-rial from its Kami project to port, but some other junior miners have held preliminary talks on building their own railway. Without a third railway, many of the new mines will simply not be built.

Century’s Chim floated a plan earlier this year for a shared rail line with Adriana Resources Inc and Champion. China’s deep-pocketed Wuhan Iron and Steel Co Ltd is a strategic inves-tor in both Century and Adriana.

Chim has stepped back from that plan since then, saying he hopes talks can bring Cana-dian National, the miners and government together. The rail-way said it has been talking with customers and feels its project is robust. (Reuters)

(STIRS – continued from page 1)

Aditya Birla to buy Canadian paper pulp maker

Indian conglomerate Aditya Birla Group has agreed to buy Canada’s Terrace Bay Pulp Mill for about $110 million to feed its fibre plants globally.

Aditya Birla will buy the mill through a holding com-pany, AV Terrace Bay Inc. Two of the group’s textile companies, Grasim Industries Ltd and Thai Rayon Pcl, will own stakes of 40 percent and 60 percent in AV Terrace Bay.

Grasim will invest $44 mil-lion of the total equity contribu-tion over the next three years, the group said in a statement.

The group plans to invest more than $250 million to con-

vert the paper grade pulp mill to produce dissolving grade pulp with a capacity of 280,000 tons per annum.

Situated in the north shore of Lake Superior, Ontario, the mill, which came under protec-tion from creditors in January, will re-open in October and will make paper grade pulp until fiscal year 2016, when the con-version will be complete.

Aditya Birla Group, whose companies include aluminium producer Hindalco Industries, cement producer UltraTech Cement and mobile operator Idea Cellular, expects to close the deal by July 31. (Reuters)

INTERSTATE

US recovered fiber up 3% in MayThe American Forest &

Paper Association released its May 2012 U.S. Recovered Fiber Monthly Report. According to the report, total U.S. indus-try consumption of recovered paper in May was 2.54 million tons, 3% higher than April 2012. Year-to-date consumption in 2012 is 3% lower than during the same period last year.

U.S. exports of recovered paper dropped 11% in April com-pared to March, with decreases mainly seen in Other Mechani-

cal and Corrugated. Year-to-date exports of recovered paper in 2012 are 2% lower than during the same period in 2011.

AF&PA also reported that US containerboard production rose 1.3% over the same month last year and 7.2% compared to April 2012. The month over month average daily produc-tion also reflect an increase of 3.7%. The containerboard oper-ating rate for May 2012 gained 3.7 points over April 2012, from 91% to 94.7%.

6 American Journal of Transportation ajot.com

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(SNAGS – continued from page 4)

(SNAGS – continued on page 7)

hardwoods relative to other wood and non-wood products, for example through innovation to expand use in external environments and con struction applica-tions, and through concerted efforts to ensure recognition of the cradle-to-grave environmental benefits of American hardwood.”

A closer look at economic data reflects the economic challenges facing certain mar-kets in the world. For example, the value of U.S. forest products exports to China, South Korea, Italy, Russia, the Philippines, and Peru decreased between October 2011 and April 2012 by a respective 10.06; 21.58; 42.75; 38.86; 44.58; and 45.80 percentage points. By comparison, the value of exports to Vietnam, Belgium/Luxembourg, the United Arab Emirates, and India increased a respective 38.77, 99.40, 48.26, 50.11, and 81.86 percentage points.

Figures show that in 2010, worldwide U.S. forest products exports totaled approx-imately $6.555 billion in 2010; $7.688 bil-lion in 2011. For the period October 2010 to April 2011, the amount totaled $4.316 billion; $4.371 billion for October 2011 to April 2012, up 1.29 percent.

Canada remains the leading coun-try to U.S. exports of forest products. In 2010, about $2.119 billion was exported to Canada; $2.217 billion in 2011. For the period October 2010 to April 2011, that amount totaled $1.266 billion; over $1.328 billion for the same period one year later, up 4.92 percent.

China ranks second for U.S. forest products exports with 2011 figures total-ing around $1.868 billion compared to $1.004 billion in 2010. For October 2010 to April 2011, that amount totaled $977 million; $879 million for the same period one year later, down 10.05 percent.

After China comes Mexico then South Korea as the top third and fourth export markets for U.S. forest products.

lacey act comPlicationS

Organizations promoting the inter-national trade of forest products point

out that in this global economy there are fewer and fewer straight lines to trade. The supply chain has become very compli-cated. For example, U.S. furniture makers may import exotic wood, then export it for further finishing, then re-import it as a finished product. Consequently, business leaders must be nimble and flexible with the supply chain following the customer.

Ashley Amidon, manager of gov-ernment and public affairs at Alexandria, VA-based International Wood Products Association (IWPA), observes that while the industry was hit hard by the downturn in the housing industry that began in 2008, today it’s experiencing a healthier outlook.

“While we primarily represent import-ers, some of our members have certainly started to look at exporting,” she says.

A number of issues impact these U.S. importers and exporters. One is the Lacey Act, which deals with the importation of wood and wood products, and plant mate-rials.

“The law was originally passed in the early 1900s to deal with bird feath-ers,” Amidon remarks. “It was amended in 2008 when plants and plant products were added 2008.”

She explains that the point of amend-ing the Act is to prohibit the importation of illegally logged products.

While IWPA members support the principals of the Lacey Act, Amidon explains that when going through its cur-sory drafting, the Act didn’t get the atten-tion it should have in Congress because it was attached to the Farm Bill. As a result, IWPA members have faced huge conse-quences, particularly those who are small businesses, says Amidon.

One big problem is the Act places no limits on the scope of what is illegal. For example, some countries may have obscure laws, including labor laws, of which U.S. importers may not be aware. Some laws may be specific to only a small town or region and not available in English. However, under the Lacey Act, breaking any law makes the importation

US Imports of Forest Products2007 2008 2009 2010 2011 Jan-Mar

2012Jan-Mar

2012

Forest Products 18,717,304 14,157,850 9,820,415 11,406,347 10,779,846 2,528,216 2,647,520

Softwood Lumber 5,831,497 3,847,634 2,344,111 3,025,441 2,974,800 746,728 724,702

Other Wood Products 2,705,271 2,493,320 2,006,226 2,154,720 1,710,056 385,726 397,376

Builders Carpentry 2,317,627 1,801,509 1,180,418 1,260,111 1,223,516 273,887 315,245

Hardwood Plywood 1,752,558 1,373,157 959,030 1,211,269 1,163,325 281,475 303,776

Medium Fiberboard 447,790 450,431 475,781 527,647 552,517 121,591 132,611

Waferboard 1,025,961 578,441 417,543 595,547 514,670 127,368 144,809

Softwood Molding 628,883 473,812 364,518 464,217 455,653 106,169 115,678

Hardwood Lumber 647,289 534,550 272,136 344,878 373,480 88,674 95,665

Other Panel Products 349,379 290,674 205,728 219,584 231,351 53,086 60,396

Hardwood Molding 379,191 267,969 177,270 191,044 202,097 50,447 50,057

Cooperage Products 215,599 230,833 164,279 148,240 178,634 8,208 7,994

Softwood Plywood 304,491 235,449 167,221 148,862 171,237 42,134 39,706

Hardwood Veneers 345,155 287,036 176,582 180,745 169,593 42,877 42,470

Particleboard 205,714 181,673 144,922 166,589 159,888 34,639 42,695

Packing Material 154,789 140,436 103,387 126,304 122,953 32,354 30,424

Flooring Panels 65,247 132,779 107,794 109,258 108,429 24,051 26,806

Hardboard 577,689 341,762 240,355 177,829 102,771 29,793 19,475

Softwood Veneers 130,650 90,114 60,874 82,317 96,131 24,194 27,566

Poles 67,181 71,912 52,502 59,463 65,543 12,480 19,201

Prefabricated Buildings 98,650 64,241 56,296 50,291 55,607 7,598 11,072

Softwood Siding 54,987 67,008 34,658 36,165 36,226 6,457 9,532

Softwood Logs 165,505 74,110 33,323 33,910 33,284 9,475 11,842

Hardwood Flooring 136,651 46,898 23,684 17,341 24,841 5,466 5,574

Hardwood Logs 23,995 20,364 14,436 21,520 21,763 4,976 6,657

Treated Lumber 13,921 10,694 14,088 17,023 13,445 4,646 1,759

Railroad Ties 9,931 8,484 5,957 3,655 4,265 1,099 727

Pulpwood 8,949 8,263 4,415 4,129 4,033 856 1,906

Hardwood Chips 9,586 3,554 1,504 21,813 3,251 339 388

Pencil Slats 10,001 9,508 4,101 2,116 2,186 329 666

Hardwood Siding 3,031 1,312 866 1,324 1,559 433 189

Softwood Chips 1,681 1,834 2,452 506 1,466 161 87

Softwood Flooring 28,456 18,092 3,958 2,489 1,279 500 469

Total 18,717,304 14,157,850 9,820,415 11,406,347 10,779,846 2,528,216 2,647,520

JULY 16 - JULY 29, 2012 FOREST PRODUCTS 7

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the Virginia and South Carolina log exports to two designated ports: Shanghai and Jiangsu. “There were a lot of ports in China left off,” said Struyk, “but luckily Shanghai’s one of the ports.”

Of the extra inspection and fumiga-tion processes, Struyk said, “It will be a little more cumbersome, but, it is a step in the right direction.”

The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) was one of the hosts of the Chinese delegation and was instrumental in getting the ban listed.

“This pilot program signals renewed confidence in Virginia and South Carolina forestry exports from a key trading part-ner,” said Rebecca Blue, deputy under secretary for marketing and regulatory programs at the Department of Agricul-ture. “We are optimistic that the enhanced sampling and treatment procedures will lead to a successful pilot program. We are committed to working with our stake-holders in Virginia and South Carolina to make this a reality.”

When pest detections led China to suspend exports of logs from Virginia and South Carolina last spring, USDA began work to minimize the impact of this trade disruption. “We began by nego-tiating with China to establish science-based standards to allow log exports to resume,” said Blue. “Our work culmi-nated in a visit by Chinese officials to South Carolina and Virginia. The delega-tion’s visit took them to facilities where state and federal officials carry out agri-cultural inspections and treatments, tours of port facilities, and demonstrations of land management practices at forests, nurseries, and logging operations across Virginia and South Carolina.”

In late April, Blue met with the Chi-nese delegation while they visited the Portsmouth Marine Terminal in Ports-mouth, Virginia. “We met with represen-tatives from the Virginia Port Authority, Virginia Department of Agriculture and Consumer Services, and the Virginia for-estry and logging industries,” said Blue. “Together, we saw countless examples of how our sampling, treating and safeguard-ing procedures work, ensuring high-qual-ity, pest-free log exports. After the visit, Chinese officials commended USDA, the Departments of Agriculture in Virginia and South Carolina, wood trade industries, port authorities, and fumigation companies for the work they have done to improve safeguarding measures against pinewood nematodes and other pests.”

Blue is confident that log exporters and other involved parties will be able to determine ways to meet these addi-tional requirements of the pilot program. “We know the importance of regaining the Chinese market for our Virginia and South Carolina forestry industries,” she said. “We are committed to assisting our industry partners to meet the conditions of the pilot program and continuing to fight for unrestricted exports of logs from these two states.”

Jerry Bridges, executive director of the Virginia Port Authority, said the port was preparing for a resumption of the export log business. “Normally the harvesting of logs slows in the summer because of the heat,” he said, “but we’re having some customers tell us they are going to work through the summer to help make up for lost time. This is really good news for us and all of those people and businesses that are associated with this industry. This is a good first step in get-ting back to normal.”

(RESUME – continued from page 3)

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(SNAGS – continued from page 6)of those forest products illegal.

It’s extremely problematic, she points out, for a small business already suffer-ing from the economic recession to know every law from every country in the world.

A second problem is the Lacey Act does not grandfather in old materials, meaning that companies that imported wood before 2008 may not know its coun-try of origin.

“This is particularly a problem for someone who is a small artisan making guitars or furniture and whose stockpile may go back 10 years,” Amidon explains. “There’s no way to trace from where that wood came.”

Another issue with the Lacey Act is interpretation. Currently, the Department of Justice maintains that the govern-ment may conduct a raid on a company it claims has an illegal shipment.

“You would think the company would have the right to petition to get the goods back,” she says. “But the DOJ says the company has no right to petition and cannot appeal – even if company execu-tives say they went over and inspected the saw mill, and performed due diligence regarding paperwork and price. The DOJ views illegal wood as the same as cocaine.”

The last problem is shippers are required to file a declaration when importing any plant or plant product. In other words, shippers must fill out forms regarding from where each item is har-vested and shipped. This can be chal-lenging since forest products are often processed in a host of different countries.

“It’s not a difficult issue when deal-ing with the law, but when you break that down to composite materials – you are dealing with tens of thousands of pieces of data entry,” Amidon says. “They have to list everything it could possibly be. And

if you are bringing in sawdust, it is very difficult to know everything that could be in that sawdust.”

other imPort iSSUeS

In addition, importers must pay $30 for each declaration filed. Some companies must file thousands of declarations a week.

“It is frustrating to pay out all of this money at a time when business is already shaky,” she says.

Add to this the fact that while the ship-ment goes through U.S. Customs, the paper-work is sent to the Animal and Plant Health Inspection Service (USDA-APHIS).

“From there, the shipment is pro-cessed,” she explains. “But if the paper-work does not get processed for a week or two, the shipment may have already been sold to, say, a furniture manufacturer. If APHIS tags the shipment as illegal -- for whatever reason, and a declaration throws up a flag, that means the goods can be seized but not necessarily from the com-pany that imported it.”

A case example is Gibson Guitars, which has been raided twice on Lacey Act violations. Here the woods used in constructing Gibson’s fretboards, derived from India and Madagascar, were the subjects of federal scrutiny. Namely, they wanted to find out if the rosewood wood used came from protected forests.

Both raids cost the company around $2 million in materials. Worse, the charges from the first raid in November 2009 have not yet been filed.

“And the judge says they have no standing,” she adds.

Musicians traveling abroad with old guitars are also warned to be careful since they can be asked to account for every wooden part of their guitars when re-entering the United States. The law includes the trade in vintage instruments.

8 American Journal of Transportation ajot.com

(TREE – continued from page 3)products. China’s need for wood products is right across the board: recycled newsprint, pulp, chips, lumber and logs are all in high demand. The recycled print is used for Chi-na’s manufacture of paper. China’s reputed to be the largest manufacturer and consumer of paper in the world, and recycled paper is the largest US box export to China.

logging inLogs are in particularly

high demand in China, as they provide the raw material for the flooring and furniture manufac-turing, the nation’s key wood product related exports. China accounts for around 30% of the world’s total log exports and more significantly, around half of the tropical wood exports. In fact China’s log imports exceed the logs imports of the next four countries combined (India, Japan, Austria and South Korea) at roughly 30 million cu/m.

The sources of the raw log imports have varied over the years. In 2011 Canada became China’s largest source of lumber, eclipsing Russia. Canada shipped 6.8 mil-lion cu/m of both hardwoods and softwoods to China (according to International Wood Markets). This is a massive increase in exports, as Canada shipped only 331,000 cu/m of lumber to China in 2006. The main reason that Canada vaulted into the top spot in the China trade was the collapse of the US housing market in 2005. Tra-ditionally, Canadian lumber has been exported to the US for the building and construction indus-try. However, with the collapse of housing starts in the US, lumber prices plummeted. When the US housing market recovers is a mil-lion board feet question. Even with the huge increase in China exports, the US still accounts for 63% of Canada’s lumber exports.

Canada’s export of logs doesn’t come free of debate. The export of raw logs is a concern, as processing in China is tan-tamount to the exporting of the jobs themselves. The NDP (New Democratic Party) would like to see an export tariff put on log exports to encourage processing in Canada. However, the Chinese importers are for the moment paying considerably more than the local mills for raw logs, so the benefit of an export tariff might well go to Russian produc-ers rather than local mills.

For now, China is the key market – Canada exported 1.45 cu/m of softwood in the first quarter, representing about 47% of the softwood market in China, with Russia a distant second at a 35% share. (The US has been around 8% but with the lifting of bans in Virginia and South Carolina this could increase.)

In the case of tropical woods, Malaysia accounts for around 48% of China’s imports (coming from the states of Sabah and Sar-awak, located on the island of Borneo/Kalimantan). A majority of the remainder of tropical wood is imported from Africa, New Zealand, Papua New Guinea and Indonesia. Indonesia lumber exports are especially problem-atical. Officials in Indonesia have long alleged that much of the country’s timber is exported illegally to Malaysia and China and then re-exported to other

countries (EU nations were cited), sometimes as product and others as simply unprocessed logs. Indonesia has a ban on log exports as it has been trying to build up its own processing facilities. Senior Indonesian for-estry officials believe the illegal

exports may amount to double the legally

harvested exports. For this reason, there is a big

push for a verifica-tion certificate, which would

give details about the woods origin and make it

harder to export the illegal timber. In May of 2011, Indonesia and the European Union signed the “Forest Law Enforcement, Gov-ernance and Trade-Voluntary Partnership Agreement (Flegt-VPA) to provide the framework for policing illegal timber sales. The Indonesian issues dovetail into some of the problems asso-ciated with the Lacey Act in the US which is designed to prevent illegally sourced woany groups want the Lacey Act amended to de-criminalize od products from being sold in the US. In 2008 the Congress expanded the act to include all plants and plant products and to include foreign regulations pertaining to these issues. In the US, mthe unknow-ing purchase of illegal wood and wood products. What the indus-try would like to see is “Due Care Requirements” codified to outline the responsibilities throughout the supply chain to the Lacey Act of which Forest Certification is part.

mr. chiPS Although much of the atten-

tion has been paid to China’s imports of raw logs, Chinese purchases of wood products is across every sector. According to the International Pulpwood Trade Review, by RISI, Chi-nese hardwood chip imports will double from 6.3 million BDMT (Bone Dry Metric Tons) in 2011 to 12.7 million BDMT in 2016. RISI expects China to overtake Japan as the world’s largest hardwood chip importer by 2014. The RISI review fore-casts that Japan’s imports of hardwood chips will drop from 9.9 million BMDT to 8.6 mil-lion BDMT in the same period. This is Japan’s lowest volume of chip imports since 1993.

China’s imports of hard-wood chips have exploded over last four years (2008 to 2011) from 1 to 6.2 million BDMT. This increase in the import volume of wood chips is the result of large new pulp mills being built in China near port facilities in the South and East. The expected construction of a series of new pulp mills over the next several years will drive China’s demand for hardwood chips even higher.

China’s wood industry is likely to heat up over the next few years. There is an effort to go up market with their wood prod-ucts, especially in the furniture and flooring sectors. This fits in to domestic growth as well. Chi-na’s 12th Five-Year plan (2011-2016) calls for the construction of 36 million affordable hous-ing units, which should push the demand for more furniture, floor-ing and panels. In virtually every sector, the need for wood will increase and the gap between domestic production and imports will increase.

JULY 16 - JULY 29, 2012 NORTH AMERICA’S TRANSPORTATION & LOGISTICS NEWSPAPER 9

Airlines have urged West-ern governments to do more to improve safety in Africa, and accused the European Union of failing to grasp the continent’s needs by banning dozens of carriers.

The head of the Interna-tional Air Transport Associa-tion (IATA), which represents most major airlines, said a list of operators banned from the EU included several that are safe, that and the EU failed to aid others needing practical help.

Plane crashes in Nigeria and Ghana have killed over 160 people in the past week, increasing con-cerns over Africa’s safety record.

“The airlines on the EU blacklist are on it because the EU hasn’t adequate confidence in the safety oversight provided by regulatory authorities, so the airline can be perfectly safe but the EU decides the regulator isn’t doing its job,” said IATA’s Tony Tyler, director general of the Geneva-based airline lobby.

IATA says its members must pass a tough check-up called the IATA Operational Safety Audit (IOSA). Airlines in the scheme, which also contains many non-IATA members, had a 53 percent better safety record last year than ones outside it, Tyler said.

“This is why we think the EU banned list is a misguided approach. It is not helping any-body and it is not improving safety.”

The latest EU blacklist includes 279 carriers from 21 states, 14 of which countries are African.

The list includes a handful of IATA members including Sudan Airways and part of the fleet operated by Air Madagascar.

IATA says African aviation safety improved from 2010 to

2011, but the continent’s accident rate is still the worst in the world.

DoUBle StanDarD

A Boeing McDonnell Doug-las MD-83, operated by privately owned Dana Air, hit an apart-ment block as it was coming in to land in Lagos recently, killing 153 people in Nigeria’s worst air disaster for decades.

The crash came soon after a Boeing 727 cargo jet oper-ated by Nigerian carrier Allied Air overshot the runway at an airport in the Ghanaian capital Accra and veered onto a street, killing at least 10.

It was the first crash in decades in Ghana, whose air-space has a fairly strong safety record compared with other West African countries.

A spokesman for the Euro-pean Commission defended the system of banning airlines in coun-tries with poor safety regimes.

“The safety performance of an airline depends on several factors, not only on the airwor-thiness of aircraft: for instance pilot and crew training and fit-ness and airline safety proce-dures,” he said.

IATA’s Tyler said the EU let European airlines serve coun-tries whose own carriers were banned not necessarily as a result of the failings of non-EU carriers, but because of concerns over regulation of airspace.

“It smacks of double stan-dards and is the wrong approach,” he said.

“The right one is to get in there and help resolve the defi-ciency in regulatory oversight. Let’s go and assist the regulators to remedy that deficiency - put-ting their airlines on a blacklist isn’t the right approach,” he added. (Reuters)

AIR CARGONEWSAIR CARGO

newSTIACA urges more governments to pursue mutual recognition agreements for air cargo security

More countries should follow the lead of the United States, the European Union, Switzerland and Canada in pursuing mutual recognition agree-ments for air cargo security, says The International Air Cargo Association (TIACA).

The Association called the agreements between the European Union, Switzerland and the United States and between the U.S. and Canada to recognize each other’s security regimes as ‘wel-comed and sensible progress’ towards the shared goals of maintaining the highest levels of air cargo security without impeding international air cargo supply chains.

Michael Steen, Chairman of TIACA, said: “We strongly support efforts to enhance security of the air cargo supply chain without unduly dis-rupting vital commercial flows. Mutual recognition of robust security regimes is an important way to further this goal, so we commend the U.S., EU, Swiss and Canadian authorities for their recent announcements in this regard. TIACA will con-tinue to support additional efforts to mutually rec-ognize security regimes and to implement global, harmonized standards.”

TIACA says the progress made by governments to recognize each other’s national air cargo security

regimes will eliminate duplication of security con-trols and the costs and time delays associated with this whilst ensuring strict air cargo safety and secu-rity requirements continue to be met consistently.

Speaking to delegates at TIACA’s Executive Summit in Moscow, Doug Brittin, Director, Air Cargo at the Transportation Security Administra-tion, said the security threat ‘remains high for all of us’. “Our goal, which we know is shared by the industry, is to not lose a plane,” he added.

He outlined the work TSA has been doing on advanced air cargo data alongside bodies such as ICAO, the World Customs’ Organization and the Universal Postal Union.

Outlining the status of the Advanced Air Cargo Screening (ACAS) program, he confirmed the pilot was still ongoing, having started with express carriers a year ago and subsequently expanded to include passenger and cargo carriers as well as freight forwarders. The objective, he said, was to prove data flows and timelines, adding: “Can DHS (U.S. Department of Homeland Security) looking at this data quickly analyze, determine risk and get information on which screening method to use to the proper place at the proper time?

ABC arranges a trip to the dentist for famous Atlantic walrus

When the star attraction at Russia’s Udmurtskiy Zoo needed some urgent dental work, AirBridge-Cargo Airlines (ABC) was the only way to fly.

Sgata-Neseyka, a rare subspecies of Atlan-tic walrus which is included into Red Book, has been hand-reared by animal specialists at the zoo in Udmurtia since losing its mother. The 520 kilos walrus has prospered under the expert care and attention of keepers at the zoo and has also proved to be multi-talented, entertaining crowds by sing-ing, dancing, clapping, playing the tambourine and kissing the hands of fans.

When Sgata-Neseyka needed treatment to extract an ingrowing tusk, keepers at the zoo iden-tified Tierpark Hagenbeck TPG Hamburg as the best place for the walrus’s treatment and rehabilita-

tion and contacted the livestock experts at ABC to arrange the safe carriage of their precious cargo.

A special transportation cage was manufac-tured for Sgata-Neseyka’s flight to Germany in accordance with IATA’s live animal’s regulations. For the comfort of the walrus, the cargo cabin tem-perature was maintained at +5-10°C for the entire duration of the flight.

Throughout the journey, the walrus was moni-tored by keeper Evgeniy Thashkin and Svetlana Malysheva, director of the zoo.

ABC ensured Sgata-Neseyka arrived in Frank-furt-am-Main safely, on time and in good health. The walrus will spend the next few weeks in Germany to recover from its operation before returning to Udmurtskiy Zoo.

A special transportation cage was manufactured for Sgata-Neseyka’s flight to Germany in accordance with IATA’s live animal’s regulations.

IATA says EU’s airline safety bans hinder Africa

(SECURITY – continued on page 19)

Frankfurt curfew grounds Lufthansa Cape Town flights

A ban on night flights at Frankfurt has caused Lufthansa to withdraw its service to Cape Town this winter, the German national airline said.

Imposed eight months ago, a strict ban on flights after 11 pm leaves no leeway when it comes to weather or medical delays and has resulted in over 10,000 passengers being stranded overnight in Frank-furt since the ban took effect, Luf-thansa manager Kay Kratky said.

The night flight ban is an extra headache for Lufthansa, which is currently cutting costs to battle low-cost competition and rising fuel prices.

“Cape Town will no longer be served from Frankfurt this winter because we can’t leave our passengers stranded,” said Kratky, in charge of flight oper-ations at Lufthansa’s passenger

airlines division.He cited the example of a

plane due to fly to Johannesburg being forced to turn round on the Frankfurt tarmac after a problem loading a container.

Instead, the Cape Town flight will be shifted to Munich, which itself has been dealt a blow to expansion plans after a proposed third runway was voted down by residents.

“Munich will start hitting bottlenecks in three, four or five years’ time,” Kratky, a former pilot, said. “But we have those problems in Frankfurt now.”

Lufthansa has previously warned the restrictions at Frank-furt could lead it to shift invest-ment elsewhere to seek growth. “Our ability to compete depends on being able to scale up,” Kratky said. (Reuters)

10 American Journal of Transportation ajot.com

he said, noting the largest number of Bei-jing’s trade disputes last year were with the United States.

Trade tensions between the two biggest economies have risen recently, with the U.S. last week filing a complaint with the WTO in a row over Chinese import duties on $3 billion worth of U.S.-made autos.

A first half rise in exports to the U.S. of 13.6 percent to $165.3 billion - making it China’s biggest customer - is likely to inflame some Washington legislators who believe Beijing manipulates its currency to give exporters an unfair advantage.

Besides the latest trade spat with Washington, Beijing also faces criticism from the European Union - its largest overall trading partner - on the investment climate for foreign firms.

The European Union Chamber of Commerce in China published a survey in May that showed a growing number of foreign firms complaining about regula-tion bias towards foreign investment, rais-ing the risk that some move operations to other countries.

But Vice Commerce Minister Wang Chao said his ministry would continue to open the fledging service sector more widely to foreign firms and encour-age international companies to invest in emerging and new energy industries.

“The Chinese government has done a lot of work in creating a fair investment environment in the country and we use the same rules when dealing with for-eign firms and domestic ones,” Chao told reporters. (Reuters)

NORTH ASIA TRADE 2012

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China and Mongolia inland infrastructure development expanding with trade

By Robert L. Wallack, AJOT

A number of factors are contribut-ing to the People’s Republic of China’s inland infrastructure construction of highways, roads, railways, airports and container depots. Industrial and govern-ment investments are shifting from east-ern coastal provinces to inland regions because of increasing costs of labor and land, and more demand for logistics ser-vices are from a growing retail sector to satisfy consumer demand and not just for overseas exports. Infrastructure develop-ment is evident in the cities of Nanjing and Suzhou of the Yangzte River Delta outside of Shanghai as well as in central and western cities, provinces and autono-mous regions such as Chengdu and Inner Mongolia Autonomous Region (IMAR) bordering Mongolia to North Asia.

China’s Western Development Strat-egy toward inland investment for logistics infrastructure is always evolving. Since 1997, the government with World Bank assistance began and constructed by 2005 eight inland container depots (ICD) to improve the flow and storage of goods through the Port of Tianjin near Beijing and reduce economic disparities between coastal and inland areas. Baotou Transpor-tation International Container Terminal, IMAR is one of these ICDs and an impor-tant link with Tianjin Port for shipments for Mongolia’s fast growing economy. “We look forward to further improvements by the Chinese government to investing in more efficient transportation infrastructure and intermodal networks to accommodate for the expansion in the retail market over the next five years (PRC’s 12th Five Year Plan),” said a spokesperson for Orient Overseas Container Line (OOCL) in a recent interview with the American Jour-nal of Transportation.

The World Bank is continuing to assist China’s transport infrastructure

effort to increase their rail network to 120,000 kilometers by 2020 as proposed in China’s Mid-and Long-term Railway Network Plan. The IMAR Huhehaote-

Zhangjiakou $4.5 billion railway project along the

Beijing corridor is in the works to improve containerized rail freight traf-fic to and from Mongolia. The Asian Develop-ment Bank (ADB) is also completing the final highway segment in Mon-golia on Asian Highway 3 to link Ulaanbaatar capital city to border port Zamyn-Uud, then across to IMAR to increase container and project cargo through Tianjin Port.

Foreign Investors are recognizing the inland shift as proven by foreign direct investment (FDI) flows. China Daily reported recently, that the west accounted for only $12 billion of total 2011 FDI of $116 billion in China, but the west saw a growth rate of 28% or more than four times the rate in the east. Also, since 2007, the government policy selected 44 cities in the country’s central and west-ern regions as destinations for export-processing businesses for moving inland (EXPANDING – continued on page 12)

China says exporters face rising protectionism

China’s exporters face rising risks of trade protectionism abroad even as Beijing makes fresh efforts to treat foreign and domestic investors equally, officials said.

The comments were made as data showed China’s trade surplus swelled to its biggest since January 2009 - hitting $31.7 billion in June and up 56.4 per-cent in the first half of the year at $68.9 billion - a week after the United States filed a trade dispute against

B e i j i n g at the WTO. “ C u r -

rently the world econ-

omy is still grim and there are rising uncer-tainties and unstable fac-tors,” Zheng Y u e s h e n g , spokesman of China’s Gen-eral Admin-i s t r a t i o n

of Customs, told a news conference to release the June data.

“Chinese exporters face trade protec-tionism and the situation is very grim,”

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12 American Journal of Transportation ajot.com

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from coastal cities. This industrial shift is evident in the value of the processing trade inland, which increased by 78.4% to reach $82.3 billion in 2011 and from 2006-2011 accounted for 6.3% of the country’s total value of processing trade from 2.5%.

Inland logistics services are receiv-ing more attention from the government in order to make new transport infrastruc-ture operational and up to international standards. In 2010, the National Develop-ment and Reform Commission (NDRC), the national central planning body, pub-lished policies to improve logistics for the inland market and set up a lead team to coordinate. The NDRC and the National Bureau of Statistics will issue data on logistics and keep the data updated. In addition, the NDRC will make policies for training, business standards and weed out low competitive logistics firms and improve the strong. “We think that all the above measures are needed, especially the weeding out system to help our logis-tics business be optimum,” according to Cai Yu, founder and managing director of Transluck Logistics, a Shanghai based supply chain service provider.

Road transport is the dominant mode to serve the growing demands on the retail sector by logistics service providers and accounts for 71% of the transporta-tion in China followed by rail of 17%, vessel 11.5% and air .5 percent. Trans-luck serves the retail industry inland to Chengdu, Beijing and Shenyang cities for department stores, hypermarkets, and shopping mall destinations. OOCL uses a combination of truck and barge options to move cargo through strategic inland destinations to meet customer needs and invested in a new world-class warehouse facility in Shanghai earlier this year.

Transluck saw the need for refriger-ated logistics to serve fast moving con-sumer goods (FMCG) to its customers. “We find many FMCGs and supermarkets opened their e-shop on Taobao Internet net-work and on their websites, but lack meat, fruits and seafood because of underdevel-oped refrigerated logistics services. Since 2008, we started refrigerated business

and built a refrigerated warehouse with a team of 60 people. We use this facility and a refrigerated truck for a famous interna-tional chemical group with tracking and tracing of shipments for the whole journey which is useful experience to develop fur-ther in FMCG,” said Mr. Cai Yu.

There is still much room for improve-ment for inland infrastructure and logis-tics services, especially for temperature sensitive goods. OOCL commented that the investment costs for cold chain storage and truck transport can be as high as three to five times more than normal warehous-ing and trucking which hinder national and integrated cold chain logistics ser-vices by small to medium size firms. Transluck Logistics cited the government monopoly in rail, air transport and cold chain infrastructure as state owned and therefore, logistics companies “cannot make competitive.” There is also lack of understanding of concepts in China as to supply chain and cold chain management and that “we still have a long way to walk, learn from foreign concept, technology and standards to combine with the actual in the local market,” said Cai Yu.

Cross-border infrastructure construc-tion to China’s neighboring countries is also in the works. The National Port Management Office released a plan to build 39 new ports or border crossings and expand 56 existing ones through 2015. Of China’s 284 open ports, 146 are in coastal areas, 111 along borders and 27 inland, according to China Daily on May 4th. Mongolia to the north is benefit-ing from more border construction based on vast mineral resource exports such as coal, copper, iron ore and gold.

Mongolia’s inland infrastructure investments and construction are lack-ing and China aims to assist in financing since bilateral trade was $6.3 billion in 2011 or an increase of 84.3% over 2010. Last year, the two countries agreed to a ‘strategic partnership” based on $4.37 billion in exports to China or 91.3% of Mongolia’s total export volume as well as China already accounting for a large por-tion of Mongolia’s $5.3 billion in FDI in an $8.2 billion economy in 2011.

“We need a modern container yard

(EXPANDING – continued from page 10)

APM Terminals takes stake in Ningbo port expansion

Shanghai Port container throughput up 5.7% in June

Shanghai Port, the world’s busiest container port, saw its container volume in June rise 5.7 percent from the previous year, with the growth rate picking up for the second straight month, data issued by the port’s operator showed.

Container throughput reached 2.77 million twenty-foot equivalent units (TEUs), down from 2.84 million in May.

The annual growth rate nearly dou-bled from May’s 2.8 percent.

According to economists polled by

Reuters, trade data is expected to show annual export growth of 9.9 percent in June and import growth at 12.7 percent.

Shanghai Port became the world’s first port to exceed the 30 million TEU threshold in 2011 with a total container throughput of 31.7 million, 9.2 percent more from a year earlier.

Zhuge Yujie, president of Shanghai International Port (Group) Co Ltd, the port’s operator, warned in May that growth would slow this year to 2-3 percent. (Reuters)

APM Terminals will take a one-fourth stake in a project to expand Chi-na’s Ningbo Port with total investments of 4.29 billion yuan ($673.4 million), the companies said.

“We believe in China and will con-tinue to invest in its development,” APM Terminals Chief Executive Kim Fejfer said on Danish commercial broadcaster TV2 News.

Ningbo is the sixth-largest container port in the world and the third-biggest in China with throughput of 14.5 million 20-foot equivalent units (TEU) in 2011 and strong growth in recent years, APM Terminals said in a statement.

“This agreement creates important

new port capacity needed for our custom-ers in one of the fastest-growing container markets in the world,” Henrik Pedersen, chief executive of APM Terminals Asia-Pacific region, said in a statement.

The companies will jointly invest and operate berths 3, 4 and 5, comprising a one kilometer quay in Ningbo’s Meishan Container Terminal, APM Terminals said. “Once constructed, the new facility will become operational by Dec. 31, 2014.”

At its current growth rate, Ningbo’s capacity utilisation will exceed 80 per-cent by the end of 2012 and the Meishan project for berths 3 to 5 represents the future source of capacity, APM Termi-nals said.(Reuters)

Hong Kong customs smash record South American cocaine syndicate

with equipment in Ulaanbaatar for well functioning distribution of inbound and outbound shipments,” said Ekhtuvshin, co-founder of Landbridge International Freight Forwarders in a recent interview with the American Journal of Transpor-tation. The new highway between Ulaan-baatar and Zamyn-Uud border port will help, but the railway is still a single-track line, slow and there are problems with the availability of rail wagons, he continued. Mongolia’s transport and logistics infra-structure is also hindered by the fact that key assets are controlled by a national and Russian joint venture monopoly, which impacts competition and profitability.

These infrastructure deficiencies

undermine logistics service provid-ers’ capacity to handle not just natural resource exports, but to support the rap-idly expanding service sectors in retail and transport. In 2011, the World Bank reported 17.3% gross domestic product (GDP) growth and in the first quarter of 2012, a 16.7% GDP increase year over year of which service sectors grew 51% (wholesale and retail trade) and transport 11.7% year over year. Building materi-als, perishables and other consumables are filling more import shipments due to the mining, construction at mining sites and of new apartments and urban popula-tion growth at present and forecasted for decades in Mongolia.

A joint operation by Hong Kong and U.S. authorities, nicknamed ‘Surfing Coke’, has helped net the city’s largest cocaine haul, worth around HK$760 mil-lion ($98 million).

The Hong Kong government said its customs department had discovered 649 kg (1,425 pounds) of cocaine in a con-tainer shipped from Ecuador.

Disguised as blocks of laurel wood, officers found 22 nylon bags containing a total of 541 slabs of cocaine, with each slab weighing about 1.2 kg.

Three local men have been arrested and were to appear in court on Saturday. If convicted, they could face life impris-onment and a fine of HK$5 million for trafficking in a dangerous drug.

Lee Cheung-wing, head of Hong Kong’s Customs Drug Investigation Bureau, said the city had been working

with the U.S. Drug Enforcement Admin-istration (DEA) and U.S. Customs and Border Protection this year to combat the rising frequency of narcotics being trans-ported to Hong Kong.

“Between April and June this year, the DEA has referred a batch of Hong Kong-bound containers exported from South American countries to Hong Kong Customs for follow-up action,” he said in the statement.

Hong Kong police smashed a multi-national drug syndicate, seizing cocaine worth HK$600 million and arresting eight people, in September 2011.

Drugs shipped to Hong Kong are believed to be bound for larger markets such as the mainland. Lee said the latest cocaine haul was likely to have been heading to a Southeast Asian country or the mainland, according to local media. (Reuters)

JULY 16 - JULY 29, 2012 NORTH AMERICA’S TRANSPORTATION & LOGISTICS NEWSPAPER 13

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CN to construct five long sidings on B.C. North Line as part of C$155-million expenditure

CN announced that it plans to con-struct five extended sidings on its B.C. North Line in 2012 as part of a multi-year capital program to expand freight train capacity to handle growing freight volumes along its important Edmonton, Alta.-Prince Rupert, B.C., corridor.

In 2011, more than half a million car-loads/intermodal units moved over CN’s B.C. North corridor. By 2015, CN traffic on this line could nearly double.

CN has extended or constructed 21 sidings to handle 12,000-foot trains between Edmonton and Prince Rupert since 2004. This is in addition to new signaling and train control, several tunnel and bridge clearances, yard expansions at Smithers and Terrace, B.C., and the installation of a longer siding at Swan Landing, Alta.

CN’s investments since 2004 in capacity expansion along the Edmonton-Prince Rupert corridor will total more than C$150 million by the end of this year, with further extended sidings expected to be built in future years.

Keith Creel, CN executive vice-pres-ident and chief operating officer, said: “CN’s sizable investments in rail infra-structure in northern B.C. and western Alberta are helping us accommodate grow-ing import-export traffic moving between the Port of Prince Rupert, the B.C. interior and major centres across CN’s network in Canada and the United States. The invest-ments will also help us better move rising export coal volumes from existing and new

mines in the region to Ridley Terminals at Prince Rupert, whose handling capacity is expected to double by the end of 2014 to 24 million tonnes.

“The longer sidings increase the fluidity of operations in this major CN freight corridor and allow us to haul increased volumes in safer, more efficient trains equipped with distributed power (DP) technology.”

DP permits remote control of a locomotive or locomotives throughout a train from the lead control locomo-tive. DP provides faster, smoother train starts, improved braking and lower pull-ing forces at the head-end of a train, and improved safety. With more optimum matching of motive power to train weight, DP locomotives allow CN to reduce fuel consumption and reduce environmental emissions.

Creel said: “Our infrastructure investments are critical parts of our B.C. North Gateway strategy to handle increased volumes of containers, coal and other commodities to and from the Port of Prince Rupert. This strategy aims to help CN tap new opportunities efficiently and productively while helping our customers to expand their businesses and compete more effectively in their end markets.”

CN plans to invest a total of C$1.8 billion in 2012 to maintain and upgrade its overall North American railway net-work, support growth and productivity initiatives, and continue to provide its customers quality service.

Southern Pacific Resource Corp. makes arrangements to transport and market bitumen via CN to Gulf Coast

Southern Pacific Resource Corp. (“Southern Pacific” or the “Company”) announced completion of a long-term arrangement to transport its bitumen to the U.S. Gulf Coast via the rail network of CN. Under this arrangement, Southern Pacific expects to significantly increase its plant gate bitumen netback using rail transportation that reduces diluent costs, and offers access to Brent-based pricing as opposed to selling its bitumen into a pipeline that offers access to West Texas Intermediate (WTI) based pricing.

This agreement is expected to allow Southern Pacific to generate attractive returns from Phase 1 of its STP-McKay Thermal Project, the only new steam assisted gravity drainage (“SAGD”) oil sands project anticipated to start up in 2012. STP-McKay is located about 45 km (28 miles) northwest of Fort McMur-ray, Alta. Phase 1 is designed to recover 12,000 bbl/d of bitumen.

The completed rail marketing solu-tion includes agreements with CN, Rick’s

(BITUMEN – continued on page 16)

UP CEO sees slow, steady economyUnion Pacific Corp’s chief executive

said the steep slump in coal shipments has likely bottomed out and overall peak-season shipping volumes this year should be a little higher than in 2011.

Economic activity in the United States is slow but seems to be holding in a steady pattern, Jack Koraleski, chief exec-utive of Union Pacific, the largest publicly traded U.S. railroad, said in an interview at the New York Stock Exchange.

“Right now, there’s really not any-thing that we could put our finger on to tell you that the economy is getting softer,” he said. “We see a slow, continual growth pattern.”

Declining coal volumes, the result of an unusually mild winter and decade-low natural gas prices, have been a top con-cern for railroads including Union Pacific, Kansas City Southern, Norfolk Southern Corp and CSX Corp and as coal represents a significant portion of their revenue.

Coal represents about one-fifth of Omaha, Nebraska-based Union Pacific’s business.

Union Pacific, which also hauls freight from autos and lumber to crude oil and food products, recorded second-quarter gains in most other segments that offset slumping demand for coal, Koraleski said.

A series of economic indicators - the

latest being the first drop in U.S. manu-facturing in nearly three years - is adding to the evidence of uneven global eco-nomic growth.

About 40 percent of the railroad company’s business begins or ends out-side of the United States, the chief execu-tive said.

“We haven’t seen a lot of impact from the European discussions and disruptions that have been going on,” he said.

Increases in other segments, led by autos and intermodal shipments, have offset the drop in coal at Union Pacific. And now coal volume is beginning to turn upward.

“Coal looks like it has hit the bottom and is starting to come back up,” Koraleski said.

“We’re certainly encouraged by the temperatures outside,” as hot weather and greater air-conditioning usage could lead utilities to burn off coal stockpiles.

Intermodal refers to the shipment of goods in containers that can be moved from one form of transportation to another, such as from ship to train.

Lumber shipments are also building, reinforcing some U.S. housing indicators pointing to a turnaround from a long and deep slump.

Union Pacific’s lumber carloads (ECONOMY – continued on page 19)

Two bodies buried by coal from derailed Illinois train

The bodies of two people trapped in a car under giant mounds of coal, which spilled from a derailed train near Chicago, were recently unearthed and removed from the scene, authorities said.

Wayne Globerger, the fire chief of Glenview, Illinois - the Chicago suburb where the accident occurred - declined to identify either victim.

Globerger told reporters that crews were searching the site north of Chicago for any other vehicles that may have been buried.

31 of 138 cars of a Union Pacific

train derailed on an 86-foot-long bridge, spilling large amounts of coal, railroad spokesman Tom Lange said. The derailed cars piled up on the bridge, putting more weight on the structure than if the train had kept moving, and likely caused the bridge to collapse, Lange said.

The derailment may have been caused by steel rails expanding in extremely hot weather.

Initially, no injuries were reported. But authorities cleaning up the debris dis-covered a car bumper, and then the vehi-cle with the two victims inside. (Reuters)

14 American Journal of Transportation ajot.com

Zim adds new Halifax call to Atlantic service

Zim is adding a new call at Halifax from July on the Zim Container Service Atlantic, known as the ZCA service.

The first Halifax call is scheduled for July 19th by the 4,250 teu Zim Texas, which starts the new westbound port rota-tion from Haifa on July 3rd.

Transit times from Tarragona to Halifax with 7 days, 8 days from Genoa, and 14 days from Haifa.

The service is operated with 6 x 4,250 teu vessels and the service will use the Halterm Terminal in Halifax.

Port rotation of the ZCA will then be: Haifa, Piraeus, Genoa, Tarragona, Hali-fax, New York, Savannah, Kingston, Tar-ragona and back to Haifa.

Zim also calls at the Halterm Termi-nal on the ZCP service covering the Asia/USWC/USEC/Canada trade.

Hamburg Süd moves to Los AngelesHamburg Süd will move its terminal

operation from Long Beach to Los Ange-les beginning in late July.

The last ships handled in Long Beach at ITS will be:• Pacific South West /Australia-New Zea-land Service: “JPO Scorpius“ voyage 291 eta Long Beach July 27, 2012• Pacific North West/Australia-New Zea-land Service: “Cap Egmont“ voyage 859 eta Long Beach August 1, 2012• Pacific Coast / North Europe Service and Pacific Coast / South America Ser-vice: “ Cap Palliser” voyage 235 eta Long Beach August 25, 2012 • Pacific Coast / South Seas Service: “Polynesia” voyage 432 eta Long Beach August 11, 2012

In Los Angeles Hamburg Süd ships will be handled at TraPac, Inc. located at: 920 West Harry Bridges Way Berth 136-141

Wilmington, CA 90744Main Number: 310-830-2000Voice Response Unit: 310-518-7008 or 800-688-4665Customer Service: 877-3TRAPAC or 512-794-1400Website: http://www.trapac.com/

First ships calling Los Angeles will be:• Pacific South West /Australia-New Zea-land Service: “CMA CGM Rose“ voyage 292 eta Los Angeles August 3, 2012• Pacific North West/Australia-New Zea-land Service: “Cap Vilano“ voyage 860 eta Los Angeles August 15, 2012• Pacific Coast / North Europe Service and Pacific Coast / South America Service: “Cap Palmerston” voyage 236 eta Los Angeles September 1, 2012 • Pacific Coast / South Seas Service: “Cap Tapaga” voyage 046 eta Los Ange-les August 26, 2012

Maersk wins US cargo deal worth up to $2.1 billion

Maersk Line has won a contract worth up to $2.1 billion for shipping U.S. military cargo, signaling defense officials have put a dispute about overcharging behind them.

The U.S. Defense Department said it had chosen Maersk Line for the contract out of 22 proposals received.

The Maersk group has for decades been a supplier of shipping to the U.S. mili-tary, but the relationship was chipped when Maersk Line was accused of overbilling.

Maersk Line in January agreed to pay $31.9 million to settle claims it overcharged the U.S. military for carry-ing cargo to support American troops in Afghanistan and Iraq.

“It is positive that the U.S. military has put this dispute behind them and not only places the order, but awards Maersk Line the biggest of the orders,” Alm. Brand analyst Jesper Christensen said.

Nonetheless, Christensen said he would not change his estimates for Maersk Line’s 2012 or 2013 results as a result of the order.

Analysts at ABG Sundal Collier also

said the order would not affect their esti-mates.

American President Lines Ltd, part of Neptune Orient Lines Group, won the next-biggest such deal from the U.S. Transportation Command, valued at up to $1.7 billion, the Pentagon’s daily contract digest said.

Farrell Lines Inc was awarded a similar potential $565 million deal, as was American Roll-on Roll-Off Carrier, a unit of closely held American Shipping & Logistics Group Inc, worth up to $553 million, the announcement said.

Smaller military cargo transport con-tracts were announced by the Pentagon for eight other U.S. flag shippers. All of the deals are expected to be wrapped up by the end of August next year, the Defense Department said.

The so-called universal service con-tracts, the seventh series of its kind, cover surface transport, chiefly by sea, though some may include onward ground ship-ping, said Cynthia Bauer, a spokeswoman for the Transportation Command at Scott Air Force Base, Illinois. (Reuters)

Asia-US container lines stay focused on freight rates as market improves

Transpacific shipping lines have stepped up efforts to raise freight rates, seeking stronger earnings moving into the summer. The aim is to stabilize recent volatility, boost rates to better accommodate growing demand, and establish a more compensatory baseline for subsequent negotiation of 2013 lon-ger-term contracts.

Individual carriers serving the Asia-U.S. trade have announced during the past week, various dry cargo increases averaging US$500 per 40-foot container (FEU) to the U.S. West Coast and $700 per FEU for all other shipments. The effective dates vary by carrier, but for the most part, will be during the first week of August. Member lines in the Trans-pacific Stabilization Agreement (TSA), meanwhile, are recommending increases to refrigerated cargo rates of $1,000 per

FEU to the U.S. West Coast and $1,250 per FEU for all other destinations with effect from August 15 2012.

While refrigerated cargoes such as seafood represent a relatively small share of total cargo eastbound, they make an important contribution to the round-trip cost of managing expensive equipment that is in high demand on the U.S.-Asia return.

“Carriers across the entire trade are determined to maximize yield from ships they expect to approach full utilization throughout the summer months,” said TSA executive administrator Brian M. Conrad. “Too much is at stake in 2012 for the lines, their investors, their creditors and their suppliers and vendors to leave money on the table after sustaining heavy losses in two of the last three years, and amid strengthening demand.”

Hamburg Süd announces terminal change from Savannah to Charleston

Hamburg Süd will move its terminal operation from Savannah to Charleston beginning in mid September.

The last ship handled in Savannah will be: “Maersk Bratan“ voyage 237 eta Savannah September 14, 2012.

In Charleston the terminal will be at Wando Welch Container Terminal: Address: 400 Long Point Rd, Mt. Pleas-ant, SC 29464

Driver Assistance: 843-856-7006

or 843-856-7009Website: http://www.port-of charles-

ton.com/Cargo/Facilities/charleston/ter-minals/wandoterminal.asp

The first ship calling Charleston will be: “Bahia Grande” voyage 238 eta Charleston September 21, 2012

Hamburg Süd wishes to thank the Georgia Ports Authority for its support and cooperation in Savannah over the past years.

JULY 16 - JULY 29, 2012 MARITIME Section 15

7th Annual Breakbulk Europe attracts record attendanceThe 7th Annual Breakbulk Europe, held in Antwerp, Belgium at the Antwerp Convention Centre, May 22-24, attracted a record crowd of over 4,800 attendees and 200 exhibitors.

The conference & exhibition drew representatives from nearly two hundred countries with strong attendance from the Middle East, Africa, the Americas and Asia to supplement the European contingent.

(L-R) Gerald Hess, Norbert Tiemann, Wolfgang Splinner (all Abacor Shipping)

(L to R) Pat Roche, Dave Steinbach (both from Expeditors)

(L to R) Ed Long, Viviane Roels,Van De Wiel (all from Maersk Line)

(L to R) Nicolas Cucidis – Cargo Live, Torge Runge – Rock-It Cargo USA

(L to R)Lars Juhl, Christian Monsted (both from Scan Trans Shipping)

(L to R) Gene Carty – Ceres, Bill Parker – Ceres,  Cary Hagen – VIT,  Bill Franks – CrossGlobe, Roger Giesinger – HRSA,  Art Moye – HRSA, 

George Brown – CP&O,  Jim Wade – VIT

(L to R) Eddy Gorris – Fednav, Candice Clark – Fednav Direct, Koen Ruts – Fednav

(L to R) Rayburn Doucett – Port of Belledune, Linda Ristani – Transport Canada, Wim Van Erck – European Representative Port of Halifax

(L to R) Abbas Shoubaky – Seven Seas Shipping, Wolfgang Karau – Director WWPC, Emad Shahrouri – Seven Seas Shipping, Stuart Murdoch – Director WWPC

Gary Dale Cearly – Global Project Logistics Network

16 American Journal of Transportation ajot.com

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Trucking, Altex Energy Ltd., Genesis Energy, L.P. , CIT Group Inc. and Tauber Co. Under this arrangement, Southern Pacific’s bitumen volumes will be trucked approximately 60 km (38 miles) from the STP-McKay plant gate to Lynton, Alta., a CN rail terminal located immediately south of Fort McMurray. From Lynton, vol-umes will be transferred into rail cars and shipped approximately 4,500 km (2,800 miles) over CN’s network and a short-line rail part-ner to a terminal in Natchez, Miss. The bitumen will then be trans-ferred to barges that will deliver the product as feedstock to refiner-ies on the Gulf Coast.

CN expects to commence shipment of Southern Pacific’s bitumen from Fort McMurray to Natchez, located on the Mis-sissippi River 135 km (85 miles) north of Baton Rouge, La., start-ing in the fourth quarter of 2012, with volumes ramping up to more than 12,000 carloads per year as production increases.

Rick’s Trucking will trans-port the bitumen from the STP-McKay plant gate to the CN Lynton terminal. Altex will operate the Lynton terminal and will install new loading facili-ties with dedicated capacity for the exclusive use of Southern Pacific. Altex will also manage the day-to-day rail car logistics. Genesis, owner of the terminal in Natchez, will upgrade the terminal to provide Southern Pacific with dedicated capac-ity. Genesis can also provide barge service from Natchez to the various refineries in the Gulf Coast. Tauber will provide the marketing services for the prod-uct into the Gulf Coast refineries and assist with the transition as Southern Pacific assumes this role directly. Southern Pacific has leased approximately 500 rail cars from CIT, which should accommodate most of the STP-McKay Phase 1 volumes.

There are a number of sig-nificant benefits to this rail-based solution for Southern Pacific. Diluent cost savings are a key driver for this arrangement. Dilu-ent savings are achieved on two fronts. The amount of process diluent required at the plant site will be significantly lower than what is required to meet pipeline specifications. By transport-ing bitumen via CN, Southern

Pacific will only require process diluent to blend with its bitumen, thus lowering the total diluent requirements by approximately 33 per cent. Secondly, South-ern Pacific has the opportunity to backhaul lower priced diluent from the Gulf Coast utilizing its empty return rail cars.

Another important driver for securing this marketing arrange-ment is the security of access to the world’s largest market for heavy crude. Given recent regulatory delays around additional pipeline capacity to accommodate growing bitumen volumes from Alberta, the Company has now secured direct and immediate access into the Gulf Coast market. Because of these access issues, the Gulf Coast market for heavy crude cur-rently trades at a premium to WTI, whereas Alberta-based blended bitumen and diluent (“dilbit”) products arriving by pipeline into the Cushing, Okla., region of the U.S. are experiencing significant pricing discounts due to capacity constraints.

The rail and terminal arrangements described above have an average term of five years, with options for extension and expansion related to South-ern Pacific’s STP-McKay Phase 1 Expansion and Phase 2 plans. Expansion opportunities being discussed include the construc-tion of a pipeline system to the CN Lynton terminal or building a rail spur to the STP-McKay plant site. Either option would remove the trucking component and further reduce diluent costs. While the Gulf Coast is the initial target market, the details within the arrangement provide South-ern Pacific with the flexibility to deliver its bitumen to other North American markets or to export terminals along the west coast.

“This arrangement is signifi-cant to Southern Pacific because it demonstrates that alternatives to conventional pipelines are avail-able to market bitumen from the Athabasca oil sands,” said South-ern Pacific’s CEO, Byron Lutes.

James Cairns, CN vice-pres-ident, Petroleum and Chemicals, said the agreement with South-ern Pacific represents an impor-tant milestone in CN’s growing business of shipping crude oil by rail. In 2012, CN expects to move a total of approximately 25,000 carloads of crude oil, up significantly from approxi-mately 5,000 last year.

(BITUMEN – continued from page 13)

JAXPORT now offers direct Central American container service via MSC

The Jacksonville Port Authority (JAXPORT) has announced that the Mediterranean Shipping Company (MSC) has begun a new direct weekly service between Jacksonville’s Talleyrand Marine Terminal and the Central American ports of Santo Tomas de Castilla, Guatemala and Puerto Cortez, Honduras. The revised route allows JAXPORT to offer improved transit times for customers looking to reach these important markets more efficiently.

Guatemala and Honduras are part of the Domin-ican Republic-Central America Free Trade Agree-ment (CAFTA-DR) with the United States. Among the principal commodities these nations trade with the U.S. are agricultural products such as bananas, vegetables, coffee and shrimp, and textiles, garments and minerals. Guatemala and Honduras are also sig-nificant export markets for U.S. products such as

agricultural machinery, chemicals, building materi-als and general consumer merchandise.

“MSC’s move emphasizes JAXPORT’s growing role in the efficient movement of goods between the U.S. and Central America,” said JAXPORT CEO Paul Anderson. “The change underscores the shift that’s taking place as shippers and cargo owners recognize the efficiencies that JAXPORT offers and respond to the opportunities they find here.”

The new service will also allow JAXPORT customers to reach global markets via MSC’s transshipment hub in Freeport, Bahamas.

The vision of the Jacksonville Port Author-ity is to be a major economic engine for Northeast Florida by continuing to be a premier diversified port in the Southeastern United States with con-nections to major trade lanes throughout the world.

SC Legislature commits $300 million to Charleston Harbor deepening

In a strong show of support for the deepening of Charleston Harbor, the South Carolina Legislature now has committed $300 million to fund the con-struction of a post-45-foot harbor project for the Port of Charleston. This allocation would cover the entire estimated cost to deepen the harbor to 50 feet, once the project receives authorization from Congress.

A conference committee comprised of leaders from both legislative houses announced the amended state budget, which increased the cash contribution in the Harbor Deepening Reserve Fund to $300 mil-lion from $180 million previously approved by both the House of Representatives and Senate.

“We are tremendously grateful for the for-ward-thinking leadership in our legislature for recognizing how vital this project is to the entire state,” said Bill Stern, chairman of the South Caro-lina Ports Authority (SCPA). “The Members of the House Ways & Means and Senate Finance Com-mittees, joined by the Members of the Review and Oversight Commission on the South Carolina Ports Authority, have guided this appropriation across the finish line. This deep commitment is proof positive that South Carolina is serious about competing in a truly global business in order to boost jobs and opportunity for its citizens.”

Following the completion of the Post 45 Proj-ect’s feasibility study and authorization by Congress, the Harbor Deepening Reserve Fund would be used to pay for the actual construction of the deepening project, which is estimated at $300 million.

The cost-sharing structure for a Post 45 depth is 60 percent funded by the state, or $180 million. The additional $120 million in the fund would cover the federal share of the project’s construction if federal

funding is not available. The funds also could be used to keep the project moving forward, thereby losing no time due to funding constraints. Expen-ditures from the fund would require approval by the Joint Bond Review Committee comprised of both House and Senate Members.

“This level of commitment instills a great deal of confidence in our customers and shows that the Port of Charleston is ready and able to meet their long-term growth needs,” said Jim Newsome, president and CEO of the SCPA. “We have a good partner in the Corps of Engineers, and we will continue our productive collaboration to deliver a true post-Panamax harbor in the South Atlantic as quickly as possible.”

“I believe the entire legislature views the Port of Charleston’s deepening project as our state’s number one economic priority,” said Sen. Hugh Leatherman, who chairs the Senate Finance Com-mittee. “Last budget year, we committed that our state would find the money for this project. South Carolina has now fulfilled our end of the bargain, and we look forward to the Corps of Engineers delivering a timely study so that the work can get underway as expeditiously as possible.”

“We recognize that our state’s future is tied very much to the vitality and growth of our port,” said Rep. Brian White, chairman of the House of Representatives Ways and Means Committee. “A large number of the companies that located in the Upstate and call South Carolina home chose our state because of our world-class port. By invest-ing in the Port of Charleston, we are charting the course for a bright future.”

(COMMITS – continued on page 18)

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Long Beach Board approves incentives to attract more cargo Larger ships and rail-bound containers will get financial breaks

The Long Beach Board of Harbor Commissioners approved two incentive programs on July 2, one designed to encourage larger, cleaner ships to dock at the Port, and the other aimed at attracting more containers to come via rail through Long Beach.

“We are committed to pro-tecting our market share and the tens of thousands of jobs that depend on our Port,” said Port of Long Beach Executive Director J. Christopher Lytle. “Shippers have options on how to route their cargo, and we want to make sure we give them the right reasons to move through Long Beach.”

Under the programs, which launch on August 1, the larg-est ships calling at the Port will have their daily dockage fees capped, and ocean carriers who

move additional containers via rail through Long Beach will get incentives. The programs will help protect the Port’s share of business in an increasingly com-petitive maritime market, keep jobs in the region and encourage more environmentally friendly and efficient practices.

The Port of Long Beach is one of the few in North America with berths and channels capable of receiving the largest container ships in the world. Earlier this year, the Port began welcoming container ships with capacities of 13,000 twenty-foot-equiv-alent container units or larger. That’s 50 percent bigger than the largest container ships that had called at the Port in the past.

“We are not only big-ship ready; they are calling at our Port now,” Harbor Commis-

sioner Rich Dines said before the board unanimously approved both measures. “This is about going after additional business.”

Larger ships are more cost-effective for ocean carriers to operate and have a smaller impact on the environment on a per-container basis because they can carry more cargo and tend to have newer, less-pollut-ing engines.

Under the program, the Port will cap daily dockage fees at $8,641 a day for ships longer than 345 meters (or 1,132 feet). Ships are charged dockage fees based on their lengths, and without the change, the largest vessels would pay more than $11,000 a day in dockage fees. Ships that qualify under the Port’s Green Ship Award Pro-gram, another new incentive that also won final approval, may earn up to $6,000 more in incentives. That program aims to attract the newest, least pol-luting vessels to Long Beach.

Ocean carriers also will save on rail cargo costs under a pro-gram that will give them a $10 incentive for every additional container they move via rail through Long Beach between August 1, 2012, and July 31, 2013, compared to the previous one-year period. Rail bound con-tainers are typically headed to consumer markets outside South-ern California, or are export con-tainers taking raw materials or agriculture products to Asia.

These containers account for more than two-thirds of all containerized cargo moving through the Port of Long Beach and reach consumers as far away as Chicago, New York and Asia.

Ocean carriers have the option to move such cargo via other seaports in the U.S., Canada and Mexico. The incentive is designed to encourage them to ferry more cargo through Long Beach and increase the use of rail, which is less polluting than trucks on a per-container basis.

Hapag Lloyd owner sees rival as ideal partner

Hamburg Sud would be an “ideal” merger partner to help vault rival Hapag-Lloyd into the top tier of shipping com-panies, a big shareholder in Hapag-Lloyd told Wirtschafts-woche magazine.

“Only a merger can hoist Hapag Lloyd back into the lead group alongside Maersk and MSC,” Klaus-Michael Kuehne told the magazine.

Kuehne is a leader of the Albert-Ballin consortium of investors, which holds nearly 78 percent of Hapag-Lloyd.

Hapag’s other main share-holder is TUI AG, with a stake of just over 22 percent.

Hamburg Sud is Germa-ny’s largest privately owned shipping company and part of the family owned conglomerate Oetker group.

Kuehne, who is also major-ity owner of Swiss logistics group Kuehne & Nagel, said he aimed to remain a long-term shareholder in Hapag after the

shipper’s initial public offering, planned for 2013.

If Hapag were to require a capital increase that would lead to a dilution of his stakeholding, Kuehne would increase his invest-ment in the company to ensure he maintained a blocking minority stake of 25 percent, he said.

Kuehne said he had already reached an understanding to that effect with politicians in the city state of Hamburg, which is also part of the Albert-Ballin consortium.

“It is important to me to secure the long-term indepen-dence of the shipping company in Hamburg,” Kuehne is quoted by the magazine.

TUI tried to float a stake in Hapag-Lloyd last year but the effort failed due to market tur-bulence in the wake of the Fuku-shima nuclear disaster.

In April, a source close to Hapag’s owners told Reuters that Hapag was in no hurry to float. (Reuters)

FONASBA supports container weight verification initiative

FONASBA, the interna-tional ship brokers and ship agents federation, gave its full backing to international government and industry efforts aimed at ensuring that shipping containers for export are accu-rately weighed.

The initiative, which is being led by the World Shipping Council in concert with ship-owners’ association BIMCO, the International Association of Ports and Harbours, the Inter-national Chamber of Shipping and the International Transport Workers Federation, as well as the maritime administrations of Denmark, the Netherlands and the United States, will be launched at the 17th session of IMO’s Sub-Committee on Dan-gerous Goods, Solid Cargoes

and Containers (DSC 17) in September.

The problem of under-declared and unverified con-tainers is a serious one for ports and ships. A paper to be put forward at the IMO meeting revealed that in recent container-ship accidents, some boxes had been up to ten tons heavier than the manifest weight, leading to stack collapse, capsizes and even contributing to the break up of the vessel.

With the ship agent being central to the movement of cargo to and from the vessel and port, issues arising from the han-dling of containers of unverified weight, especially those which are under-declared, can affect the agent anywhere along the transport chain.

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USDOT Secretary LaHood presents $11.4 million for intermodal rail yard adjacent to Global Container Terminal

The former Greenville rail yard, being developed adjacent to the Global Container Terminal expansion project, will benefit from a U.S. Department of Transportation TIGER grant of $11.4 million to be used for rebuilding and modernizing the facil-ity. The check was presented by USDOT Secretary Ray LaHood and U.S. Senator Robert Menendez, D-NJ, as they stood on the Global facility and looked toward the historic rail yard, which will become SHIF. Also attending was U.S. Senator Frank Lautenberg, U.S. Representative Albio Sires and Bayonne Mayor Mark Smith.

The enhancement of the rail facil-ity will be a significant offering to cus-tomers of the expanded Global facility, scheduled to open in 2014. The terminal will feature new container handling tech-nology that will achieve higher efficiency while improving safety and security for the International Longshoremen’s Association (ILA), AFL-CIO workforce. The techno-logically advanced marine terminal will also improve the competitiveness of the Port of New York and New Jersey with its ability to handle the largest container ves-sels at greater throughput density per acre.

The intermodal facility when com-pleted will allow an additional 250,000 containers annually to be moved to and from ocean-going vessels and double-stack freight trains traveling longer dis-tances between the port and the heartland. The South Hudson Intermodal Facility will enhance the Port of New York & New Jersey’s three existing rail facilities while promoting future growth of inter-modal cargo through the City of Bayonne while reducing the amount of over the road trucks congesting both the Hudson County and regional roadway network.

Reduced use of trucks will also reduce pollution to communities where people live and work. TIGER funds will be used to procure two double-cantilever rail mounted gantry cranes, which will load and unload double-stack rail cars in the 32-car rail car working intermodal yard.

“The DOT TIGER funds places us a giant step closer to the total Global expansion, the total development of Port Jersey peninsula and a superb example of how public and private funding can work together to help such projects evolve,” said James Devine, President and CEO,

Global Container Terminals USA. “It is also a testament to the long-term com-mitment from the Port Authority of New York and New Jersey to protect the port’s continuing role as a leading U.S. gateway for global commerce,” he added.

The Port Authority acquired the land for the project adjoining Global’s exist-ing facility in 2007, ensuring that remain-ing waterfront property would be used for waterfront business. The Global project and the adjacent rail yard will create sig-nificant employment opportunity through both the construction phase and operation of the facility. Richard Larrabee, director of port commerce for the PANYNJ, noted the significant investment made by the bi-state agency in the facility, including dredging, real estate purchase, equipment and involve-ment in the total development. “It will bring this area into the 21st century,” he said.

Integration with the rail facilities creates alternatives and opportunities for containerized goods to access the expand-ing Norfolk Southern Heartland Corri-dor and the CSX National Gateway rail lines. Creation of the SHIF allows direct transfer of rail export and import contain-ers to ocean going vessels without truck drayage through the regions roadways. The project has positive environmental benefits by reducing diesel emissions by reduced truck drayage and implementa-tion of electric stacking cranes. The proj-ect stimulates employment in the local and regional area when unemployment is higher than the national average.

Secretary LaHood made reference to the number of jobs that will be brought to the areas with longshoremen, construc-tion workers, rail yard personnel “and the hundreds of support employees that will come with the anticipated growth in cargo volume.” Mr. LaHood and Sena-tor Menendez spoke also about moving containers off the highways and onto the rails. “The highways are already over-congested,” said the DOT secretary. “This will improve the environment and the situation for cars on the roads.”

At Global, the existing 100-acre marine container terminal is being expanded an additional 70 acres along with the modern-ization of the existing vessel berth along with the expansion of two additional berths. Global Terminal, the expansion area and the

intermodal yard are situated on New York Bay. Ships calling at Global do not transit under the Bayonne Bridge, eliminating air draft limitations. With 50 feet of water depth at its new berths, Global Terminal will be able to handle the largest container vessels in the world. The terminal will have total capacity to move 1.7 million twenty-foot equivalent units (TEU) per year, making it one of the most efficient port terminals in the country based on throughput den-

“The port is South Carolina’s gate-way to global commerce,” said Sen. Larry Grooms, chairman of the Senate Trans-portation Committee and the Review and Oversight Commission on the SCPA. “It would be hard to overstate how much our economic well-being depends on this proj-ect. If we want our state to grow, if we want to welcome new jobs, if we want to succeed on the world stage, our port must stay competitive. This is a major win.”

“The future of South Carolina really is contingent upon the growth of our port, and the Charleston Harbor Deepening Project is an essential part of that,” said Rep. Jim Merrill, vice chairman of the Review and Oversight Commission on the SCPA. “By funding the construction costs of the deepening now, we are show-ing that we as a state are serious about our competitive position relative to other ports in this region and the Port of Charleston’s role as a major player in global shipping.”

Charleston’s Harbor Deepening Project has built considerable momentum since the project’s feasibility study began last summer. Earlier this year, $3.5 million toward the project’s feasibility study was included in the President’s Budget for fiscal year 2013. That allocation, along with the funds already included in the Corps’ Work Plan, means that the federal share of the feasibility study is more than halfway funded.

Already the deepest harbor in the region, Charleston’s deepening project would open the port to the biggest vessels 24 hours a day, under any tidal condition. The Corps stated in its Reconnaissance Study in 2010 that Charleston is likely “the cheapest South Atlantic harbor to deepen to 50 feet.”

sity per acre. Devine said: “We expect to see you all here on April 14, 2014, for the grand opening.”

(COMMITS – continued from page 16)

JULY 16 - JULY 29, 2012 NORTH AMERICA’S TRANSPORTATION & LOGISTICS NEWSPAPER 19

CALENDAR OF EVENTSFor more in-depth calendar & event listings go to www.ajot.com.

To add to the calendar listings go to: cal@ajot.com.

08/25, 08/26 The Freightbook Summit will be held at the Hilton Metropole in London. For more information go to www.freightbooksummit.com or email Rachel Humphrey at rachel@freightbook.net.

09/05 - 09/07 LabelMaster will host its 7th Annual Dangerous Goods Instructors Symposium at the Doubletree Chicago Magnificent Mile. For more information go to www.labelmaster.com/events/dgsymposium or call 800-621-5808 ext. 2201.

09/19, 09/20 The Port of Halifax will host Port Days 2012. For more information go to www.portofhalifax.ca.

09/24 - 09/26 The 4th Cool Logistics Global will be held at the Crowne Plaza in Antwerp. For more information contact Anne Williams at +44 (0) 1932 225632.

10/02 - 10/04 The International Air Cargo Association will host its 26th Interna-tional Air Cargo Forum & Exposition 2012 at the Georgia World Congress Center in Atlanta, GA. For more information go to www.tiaca.org.

10/04 CONECT will host a Boston Cargo Facilities Tour starting at 8:30AM. The cost is $149.00 for members; $200.00 for non-mem-bers. For more information contact Carol Turner at (508) 481-0424 or email: carol@conect.org.

10/06 - 10/12 The Transportation Intermediaries Association will host the FIATA Congress in Los Angeles. For more information contact Wally Weart at (303) 953-9295 or go to www.tianet.org.

10/16 The Port of New York/New Jersey will host Port Industry Day at the New Jersey Performing Arts Center in Newark, NJ. For more infor-mation email PortIndustryDay@yahoo.com or call (201) 437-1891.

Over 100 CONECT members met at the Henderson House in Weston, MA for CONECT’s Annual Meeting. CONECT Counsel Peter Friedmann held a “Town Meet-ing” forum after which attendees enjoyed an outdoor cocktail reception, dinner, and a raffle that raised over $1000 for the Chafee Memorial Scholarship Fund.

CONECT meets for Annual Meeting

(L to R) Herb & Elaine Rothstein – H. Rothstein & Associates

(L to R) Karen Parkin, Bette Little (both from Adidas Group)

(L to R) Rick Bridges – Roanoke Trade Services, Linda Wood – Bennett & Co., Luiz da Costa – Haemonetics, Roland Shrull – Esq., Middleton & Shrull

(L to R) James Greco – Columbia Coastal Transport, Kristen Whelan – Liberty International, Kevin McDonough – Rhody Transportation &

Wharehousing, Rich Burkett – Columbia Coastal Transportation

(L to R) David Solomon – Boston Freight Terminals, Carter Glass & Alison Leavitt –

Albatrans, Inc.

(L to R) Leticia Vieira – TJX, Gail Kedrus – Apex Logistics,

Rachel Rowells – BJ’s Wholesale Club

(L to R) Andy Rosener, Jen Bailey, Mike Fazio (all from Christmas Tree Shops)

peaked at 226,000 in 2005 before sink-ing 65 percent to 79,000 in 2009 and then rising to 89,000 in 2011.

“We’re not ready yet to declare vic-tory, but by the time we get to the end of the year we’ll probably still be some-where in the neighborhood of 50 percent below our best year ever with lumber,” or 113,000 carloads, Koraleski said. “That’s better than it has been and headed in the right direction.”

Union Pacific is pulling equipment out of storage for the first time since 2008 to move the increased volume of lumber.

Analysts on average expect Union Pacific to report second-quarter earnings

of $1.93, up from $1.59 a year earlier, according to Thomson Reuters I/B/E/S.

They see revenue rising to $5.2 bil-lion from $4.86 billion.

Union Pacific’s peak shipping season, which starts Aug. 1, is also seen registering steady growth this year.

“We’re not really expecting it to be gangbusters, but we’re expecting it to be a little better than last year,” said Koraleski.

Separately, Koraleski said the com-pany awaits word on the results of a National Transportation Safety Board investigation into the June 24 head-on collision of two of Union Pacific’s freight trains in the Oklahoma panhandle that killed three crew members. (Reuters)

The message channels and protocols are critical to this, he said. “The key part of this is moving that trusted shipper con-cept to a data driven analysis. We want to be able to make a determination based on historical data about the shippers plus incorporate the trusted shipper rule sets into ACAS.” He urged forwarders to be part of this process, stating: “The sooner the data is transmitted the better … we sug-gest freight forwarders and carriers con-duct active discussions with all parties in the supply chain as soon as possible to help determine the outcome and help design the process overall.”

Brittin also recognized the impor-tant support industry is giving to further

enhancing air cargo security. He said: “Together we have made significant prog-ress in enhancing air cargo security in the past few years and industry has risen to the challenge, both in the all-cargo and the passenger carrier segments. We are moving steadily toward closing all gaps. What we have put in place—a risk-based, intelligence-driven approach applying tiered screening protocols—could not have been accomplished without working through the numerous details with industry partnership. TIACA and GACAG (Global Air Cargo Advisory Group) have played a key role in this partnership approach, and I am confident that by continuing to work together, we can resolve any outstanding and future security challenges.”

(SECURITY – continued from page 9)

(ECONOMY – continued from page 13)

mobility, especially at locations of national significance. Despite the con-servative amount of money authorized by the program in this bill, maintaining this program in law will allow for future increases in funding.

In addition to the establishment of a national freight policy and continuation of the PNRS program, the bill also calls for an increased federal share of funding for road freight projects and encourages the

establishment of state freight plans and state-level freight advisory committees.

“Through this bill, Congress has rec-ognized freight as a priority at both the national and state levels,” said Coalition Board Member and President and CEO of the Intermodal Association of North Amer-ica, Joni Casey. “Our Coalition looks for-ward to working with state governments on the various initiatives and serving as a resource that bridges the local perspective to regional and national programs.”

(PREVAILS – continued from page 1)

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First WTSA/USDA container availability report published

U.S. agriculture exporters now have a new tool to track container equipment availabil-ity at key locations nationwide, to assist them in planning their shipments to Asia.

The U.S. Department of Agriculture (USDA) released its first Ocean Shipping Container Availability Report (OSCAR), utilizing data provided by 10 major global container lines in the Westbound Transpacific Sta-bilization Agreement (WTSA). Going forward, OSCAR will provide freight shippers with a weekly snapshot of current equipment availability at 18 inland intermodal load points, in the form of aggregate net surplus or deficit totals for the participating carriers. It will also forecast likely availability at each location two weeks out, based on advance carrier book-ings. The report is now available on USDA’s website, at http://www.ams.usda.gov/oscar.

“OSCAR represents a model industry-government collabora-tion, bringing added transparency to the export supply chain,” said WTSA executive administrator Brian M. Conrad. “Putting the right data collection and report-ing processes in place has required persistence and hard work by both ocean carriers and USDA, and WTSA lines appreciate the critical leadership role USDA has played in launching this valuable pilot project.” Tracking and managing container equipment has been an ongoing operational challenge in heavily imbalanced trade lanes such as the transpacific, Conrad noted. U.S. agricultural exporters, with their specialized geographic and commodity characteris-tics, have been among the most severely impacted.

The joint USDA/WTSA pilot project is an outgrowth of discussions begun in 2010, amid severe space equipment short-ages in the transpacific trade as Asia-U.S. import demand sud-denly spiked, and ships idled in the global downturn returned to service. Most Asian container production capacity had closed down by that point, leaving car-riers scrambling to locate and deploy scarce container equip-ment, and to quickly reposition empty containers back to Asia once they had been unloaded. This often left U.S. exporters short of vessel space and equip-ment to get their products to market, even as export demand in Asia was strengthening.

Agriculture exporters face particular equipment challenges in the U.S.-Asia freight market, where they account for about 20% of total waterborne ship-ments. Many products are per-ishable, with short lead times to market; shippers need equip-ment in rural areas far from where import containers are unloaded and stored; heavier agricultural cargoes generate demand for more equipment because containers reach their weight limits before they are fully loaded; a historic 2-to-1 ratio of higher-value import traf-fic versus return export loads forces export shippers to com-pete for vessel space with empty containers being repositioned to

Asia. Finally, shippers of farm products are dependent on spe-cialized refrigerated and temper-ature-controlled equipment that are not widely used from Asia to the U.S.

Conrad emphasized that OSCAR is not intended to create an exchange where specific, named carriers advertise sur-plus containers in a particular location and are put in touch with customers. Individual car-rier data is collected by WTSA and submitted in aggregate to USDA, anonymously, for post-ing in weekly reports. “The main purpose behind OSCAR is to provide visibility into how equipment flows tradewide on a week-to-week and seasonal basis, so that exporters are able to work with their carriers to access containers in the most efficient way possible.”

In its current form the report

strikes an important balance, identifying areas in the U.S. where potentially surplus equip-ment accumulates throughout the year but also retaining an accu-rate, real-world understanding of what the container surplus and deficit data actually represent.

“Surplus or deficit data attributed to a specific carrier can easily be misinterpreted,” Conrad explained. “Surplus containers on a given day might be pre-allocated to other cus-tomers or trades; a deficit in the same location might simply reflect priorities based on a car-rier’s cargo mix, customer base or inland terminal arrangements. There are many underlying fac-tors affecting a carrier’s equip-ment situation from week to week, and we wanted to ensure that these would not compro-mise the report’s value as a plan-ning and reference tool.”

Turkey considers increasing imports of Malaysian plywood

Turkey’s wood importers are considering increasing their sourcing of plywood, veneered panels and similar laminated wood from Malaysia.

The Malaysia External Trade Development Corporation (MATRADE) said Turkey›s For-estry Products Importers Associ-ation (TORID) saw Malaysia as a relatively new source.

If Malaysia could offer competitive prices and good quality plywood and veneered panels, Malaysia could enhance its presence and market share on the Turkish market, it said.

Malaysia is the sixth larg-est supplier of plywood and veneered panels to Turkey, with a value of US$10.9 million in 2011 compared to US$2.4 mil-lion in 2010.

Turkish importers currently source the bulk of their require-ments from Russia, Brazil, India, Bulgaria and Ukraine.

MATRADE advises Malay-sian exporters of plywood and veneered panels to consider Turkey as one of the potential markets for wood and wooden goods as well as a gateway to neighbouring countries.

approximately $232 million.Between 1970 and 2011,

softwood log and lumber exports from the West Coast varied sig-nificantly; both reached their peak in 1989 and their lowest

point in 2005.During this same time

period, the average West Coast softwood log export totaled about 2,234 million board feet, while the average annual soft-wood lumber export totaled about 940 million board feet.

(EXPORTS – continued from page 4)