Universal Cargo Management

Operations Summary Report - Week Ending July 13th, 2007

National Liner Weekly Operations Summary Report

Week Ending July 13th, 2007

Vessel Operations Update

USWC

- NOWCO 2 : COSCO Dalian – (CSDL 0022W) departed Vancouver July 10^th, three days delayed due to congestion berth and port congestion in Vancouver on her previous voyage.

-  CALCO M: YM Prosperity – (YPST 034W) presently in Los Angeles and will sail July 14^th, three and a half days delayed due to bad weather and malfunctioning engine on her previous far east rotation.

 

OCU negotiations are on-going for the

Southern California

clerical union.  KAM LAX is closely monitoring the situation and will provide immediate updates to breaking news.  No reports of terminal production delays have been reported.

USEC

-  NATCO vessels are within two days of schedule.

- TASCO 1: Vessels are within two days of published schedule.   

- TASCO 3: Cristina “A” – (CHRA 725E) arrived in

New York

July 13^th, eight days delayed due to a severe engine failure.  The vessel underwent repair for seven days in

Naples

and lost a further day due to a storm system in the

North Atlantic

.

- SAMCO vessels are within two days of published schedule.

- SINA vessels are within two days of published schedule.

Terminals

Nothing significant to report.

Rail Network Update

pecial Bulletins/General Network Overview

UP – UP train KG3LB 07 derailed in

Galesburg

,

IL

and involved some “K” Line traffic. Non “K” Line derailments occurred in

Odessa

,

TX

and

Malta

, IL.  UP reported track work between

Tucson

,

AZ

and

El Paso

,

TX

.

NS – Track work repairs will begin July 15 over the Beaver River at

New Brighton

,

PA.

 

New Brighton

,

PA

is northwest of

Pittsburgh

,

PA.

Delays are anticipated through August 26^th. Interchange delays continue in

Chicago

due to NS interlocking project.

CP – CP reported that heavy volumes in

Vancouver

have created severe congestion at their Coquitlam facility.

Pacific Southwest

Track Work – UP track work between

Tucson

,

AZ

and

El Paso

,

TX

delayed some east and westbound traffic up to 24 hours.

Train Derailment- A Non “K” Line derailment at

Odessa

,

TX

between

Spofford

,

TX

and

Del Rio

,

TX

delayed some eastbound traffic en route to

San Antonio

up to 23 hours.

Midwest

UP Engine Shortages – Engine shortages in

Chicago

delayed some westbound traffic up to 10 hours.

UP Ramp congestion- Congestion at the UP Global 2 ramp in

Chicago

delayed some westbound traffic up to 10 hours and eastbound interchange traffic up to 12 hours.

UP Derailments – UP train KG3LB 07 derailed in

Galesburg

,

IL

, Saturday 7/7 (150 miles southwest of

Chicago

). Several “K” Line containers were involved in the derailment. Several eastbound trains have been delayed up to 12 hours as a result.

A Non “K” Line derailment that occurred Thursday 7/12 in Malta, IL (70 miles west of Chicago) and has delayed some east and westbound traffic up to 12 hours.

NS

Chicago

delays- Interchange delays continue due to the NS Brighton Park Interlock project. Several westbound units were delayed up to 96 hours and will miss their intended vessel. 

Gulf

Storms in TX – Scattered thunderstorms and heavy rain continued in TX slow tracks reported as a result. Delays of up to 8 hours reported for east and westbound traffic.

Train Derailment- A non “K” line derailment occurred in

Odessa

,

TX

. Saturday 7/7 that delayed several eastbound trains up to 24 hours.

Odessa

,

TX

is between

El Paso

,

TX

and

Dallas

,

TX

.

Northeast

No major operational issues to report for the Northeast this week

Southeast

Port Delays in

Savannah

- The Georgia Port Authority has advised that, due to large inbound volumes, ocean terminals in

Savannah

,

GA

are experiencing delays with rail container throughput.  An average current container dwell time of 6 days has been reported.

Canada

Congestion at Coquitlam – The CP reports that the

Vancouver

area is extremely congested due to heavy volumes of traffic. Delays of up to 96 hours have been reported delivering exports from Coquitlam to Ocean Terminals in

Vancouver

. It is anticipated that some Nowco-A exports may miss the vessel.

Vietnam to Become 150th WTO Member Jan. 11

The WTO has announced that Vietnam sent notification Dec. 12 that its legislature has ratified the country’s entry into the WTO. As a result, Vietnam will officially become a WTO member on Jan. 11, 2007.

DHS to Test Secure Freight Initiative at Six Ports in 2007

The Department of Homeland Security and the Department of Energy announced Dec. 8 that the first phase of the Secure Freight Initiative, an effort to build upon existing port security measures by enhancing the government’s ability to scan containers for nuclear and radiological materials overseas, will begin in 2007. This first phase will provide lessons and evidence on how new, integrated technology can meld smoothly into the logistics, operations and flow of commerce at each port.

According to the DHS, this initial phase will involve the deployment of a combination of existing technology and nuclear detection devices at six foreign ports: Port Qasim in Pakistan, Puerto Cortes in Honduras, Southampton in the United Kingdom, Port Salalah in Oman, the Port of Singapore, and the Gamman Terminal at Port Busan in Korea. In Port Qasim, Puerto Cortes and Southampton, the deployed scanning equipment will capture data on all containers bound to the U.S. The DHS states that this will fulfill the pilot program requirements set out by Congress in the SAFE Ports Act. The department will go a step further by partnering with the three additional ports, which represent some of the largest container ports in the world, but their size and complexity will require the initial deployment to be limited in scope. Hong Kong, where the U.S. is currently undertaking a project with a port operator to develop and refine its integrated container security architecture pilot test, is also considering participation in the Secure Freight Initiative.

Beginning in early 2007, containers from these six ports will be scanned for radiation and information risk factors before they are allowed to depart for the U.S. Data will be transmitted to U.S. Customs and Border Protection officers working in overseas ports and to the DHS National Targeting Center. This data will be combined with other available risk assessment information, such as currently required manifest submissions, to improve risk analysis, targeting and scrutiny of high-risk containers. In the event of a detection alarm, both DHS personnel and host country officials will simultaneously receive an alert. All alarms from the radiation detection equipment for any container will be resolved locally, as is currently the case under the DOE’s Megaports Initiative. For containers bound for the U.S., the two agencies will work with host governments to establish protocols that ensure a swift resolution for any alarm, which could include instructing carriers not to load the container until the risk is fully resolved.

The DHS states that it will allocate nearly $30 million to fund the radiography equipment and that the DOE’s National Nuclear Security Administration will contribute $30 million to fund the installation of radiation portal monitors. The NNSA will also lead the effort to integrate the data from equipment for use in-country. The DHS will be responsible for installing the necessary communications infrastructure to transmit the data to the U.S.

In other news regarding the security of inbound ocean cargo containers, Colombia signed Dec. 8 a Declaration of Principles to participate in CBP’s Container Security Initiative and the NNSA’s Megaports Initiative. As a result, all maritime cargo destined for the U.S. through the Port of Cartegena will be pre-screened to prevent smuggling of nuclear and other radioactive material.

China Issues New Wood Packing Fumigation Requirements

According to a Department of Agriculture report, China’s General Administration of Quality Supervision, Inspection and Quarantine published revised methyl bromide fumigation requirements for entry/exit wood packing on July 31. The new regulation, which is scheduled to enter into force Oct. 1, mandates a longer fumigation period and a higher dosage. These changes have been made in accordance with the “Guidelines for Regulating Wood Packing Material in International Trade,” which were revised by the International Plant Protection Convention in April 2006. The USDA encourages U.S. exporters to follow the new requirements to avoid entry delays.

USTR MOVES TOWARD REMOVING COUNTRIES, PRODUCTS FROM GSP ELIGIBILITY

The U.S. government signaled this week that it is seriously considering the withdrawal of Generalized System of Preferences eligibility for more than a dozen countries and nearly 100 products. The Office of the U.S. Trade Representative announced Monday that, based on information obtained since it launched a wholesale review of the GSP program last October, it is seeking public input by Sept. 5 to determine whether to suspend or withdraw GSP benefits for certain countries and goods.

The USTR is reviewing GSP in connection with the possible congressional reauthorization and modification of the program, which is scheduled to expire Dec. 31. Congress has expressed concern that GSP benefits have been focused on trade from a handful of countries and that developing countries who have traditionally not been major traders have received few program benefits. While this debate is a typical feature of efforts to renew GSP, it has taken on particular significance this year because the program has become a key weapon in the U.S. effort to conclude a Doha Round agreement. Key lawmakers have threatened to kill the program altogether because they believe its largest beneficiaries have been antagonistic to U.S. interests in the WTO negotiations.

Countries at Risk. The USTR notice represents a step back from such a drastic move but is still only the second time in 20 years that the removal of major economies from GSP is a possibility. The specific countries under consideration are Argentina, Brazil, Croatia, India, Indonesia, Kazakhstan, Philippines, Romania, Russia, South Africa, Thailand, Turkey and Venezuela. According to the USTR, these are the countries that, in 2005, exceeded $100 million in exports to the U.S. under GSP and were either classified as an upper-middle-income economy by the World Bank or accounted for more than 0.25% of world goods exports according to the WTO.

Goods at Risk. The USTR is also investigating whether any of the 83 existing competitive need limitation waivers are no longer warranted due to changed circumstances. CNL waivers allow certain products from specific countries to enter the U.S. duty-free without being subject to GSP caps on market share and annual import levels. Currently, the following 19 GSP beneficiaries have CNL waivers: Argentina, Bosnia-Herzegovina, Brazil, Colombia, Croatia, India, Indonesia, Ivory Coast, Kazakhstan, Macedonia, Peru, the Philippines, Romania, Russia, South Africa, Thailand, Turkey, Venezuela and Zimbabwe.

China Announces Plans to Cut Import Taxes on Certain Autos and Auto Parts

According to Xinhua news agency, China’s Ministry of Finance recently announced that it will cut import taxes on certain cars and auto parts as of July 1 to comply with commitments made as part of its WTO accession agreement. The Chinese government plans to cut tariffs on passenger cars, SUVs and minivans from 28% to 25%. The government will also cut tariffs on certain auto parts, such as auto bodies and medium- and low-emission engines, will be reduced to 10% from between 13.8% to 16.4%.

It is still unclear whether this latest move will have any effect on a U.S. request for consultations with China over tariffs on its auto parts. The USTR announced March 30 that the U.S., the European Union and Canada requested WTO dispute settlement consultations with China over its treatment of imported auto parts. According to the USTR, China’s taxes on imported auto parts discourage automobile manufacturers in China from using imported auto parts in the assembly of vehicles. China’s WTO commitments limit its tariffs on imported auto parts to rates that are significantly below China’s tariffs on finished vehicles.

PTO Program in China on Protecting GIs and Trademarks

The U.S. Patent and Trademark Office and the China Trademark Office recently completed a weeklong program in China on the protection of geographical indications. GIs identify a good as originating in the territory of a WTO member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographic origin. Examples of GIs from the U.S. include Florida oranges, Idaho potatoes and Vidalia onions.

Similar to the U.S., China protects GIs through a trademark system, which is administered by the CTMO. However, China also has a second system for protecting GIs, administered through a separate government agency, which has led to confusion over the protection of GIs and trademarks. “The USPTO-CTMO geographical indications program represents a significant effort on behalf of each office to understand our respective systems for the protection of trademarks and geographical indications,” noted PTO Director Jon Dudas. “Better mutual understanding will lead to certainty and confidence in the protection afforded to trademarks and geographical indications.”

BIS Official Outlines New China Export Control Policy

In recent remarks to the Center for Strategic and International Studies, Under Secretary of Commerce for Industry and Security David McCormick gave an overview of an upcoming regulation on exports of dual-use items to China. McCormick said the rule, which he said is not properly characterized as a “catch-all,” is aimed at increasing civilian high-tech trade with China while ensuring that such exports do not benefit the Chinese military.

McCormick said the proposed changes aim to free trade in certain dual use items with certified importers in China for civilian purposes. Specifically, U.S. exporters seeking to increase their market share in sectors such as semiconductor equipment and electronics will not have to apply for licenses for sales to these certified companies. To become certified, Chinese companies will have to demonstrate an established record of nonproliferation and responsible civilian use of U.S. imports. McCormick said this certification process will require “unprecedented openness and cooperation on the part of Chinese companies … [and] create incentives for them to demonstrate good faith and sound practices.”

In addition, McCormick said, the new rule will prevent exports of 47 categories of high-tech products for incorporation into Chinese weapons systems. “It is not a wide-ranging ‘catch-all regulation’ that subjects everything from fountain pens to office furniture to government scrutiny,” he stressed. “Rather, these changes carefully target certain technologies that, while unrestricted until now, have the potential to materially enhance China’s military capabilities. The Administration will also urge others, particularly in Europe and Japan, to take similar steps. And we will continue to conduct on-the-ground spot checks in China to reduce the risk that civilian exports are diverted to third parties or to China’s own military purposes.”

Treasury Report Says China Not a Currency Manipulator

The Treasury Department delivered to Congress May 10 its semiannual report on foreign currency practices. The report once again expresses particular concern about the international economic and exchange rate policies of China and says that far too little progress has been made in introducing exchange rate flexibility in that country. However, Treasury again declined to name China as a currency manipulator, saying it was unable to determine that China’s foreign exchange system was operated during the last half of 2005 for the purpose of preventing adjustments in China’s balance of payments or gaining an unfair competitive advantage in international trade. The report said that, given the importance of China to the world economy, Treasury will continue to closely monitor China’s progress in implementing its economic rebalancing strategy, remain fully engaged at every opportunity with China, and continue actively and frankly to press China to quicken the pace of currency flexibility.

The report took into account the following factors in reaching its conclusion.

• On July 21, 2005, China abandoned the yuan’s eight-year peg to the dollar and moved to a managed floating exchange rate regime. Since that time, the yuan has further appreciated, though slightly, against the dollar. The report notes that the examination period for this report is the first that includes the exchange rate policy change.

• China’s commitment to move to a flexible exchange rate has been repeated at the highest levels of the Chinese leadership. During his visit to the U.S. in April, President Hu Jintao said that China will continue to develop the foreign exchange market and increase the flexibility of the exchange rate. Premier Wen Jiabao, in his policy speech to the National People’s Congress on March 14, stated that China will expand the foreign exchange market and allow more flexibility and fluctuation of the Chinese currency.

• The report says that China’s leaders have begun a fundamental realignment of the Chinese economy to reduce its balance of payments surplus, boost domestic consumption and reduce domestic inequality. China’s most recent five-year plan places strong emphasis on consumption and rural development to spur domestic demand.

• The governor of China’s central bank, Zhou Xiaochuan, announced a five-point plan on March 20 to reduce China’s current account surplus and raise domestic consumption. This plan involves actions to boost domestic demand, reduce savings, accelerate the removal of trade barriers, grant greater market access for foreign firms and achieve greater exchange rate flexibility.

• China's leadership has made a clear commitment to rebalance the sources of growth in the Chinese economy. President Hu, in his April 20 meeting with President Bush, stated that China does not want a large current account surplus and would take steps to reduce it, relying on domestic demand to boost growth.

• China’s ongoing efforts to modernize its financial sector are also part of a commitment to spur consumption and achieve long-term reversals in recent trade and current account trends. Progress on this front increased during the reporting period, but massive challenges remain.

The Bush administration has been under increasing congressional pressure to act on China’s currency policies. It is not yet clear what the response will be to Treasury’s most recent decision not to label China a currency manipulator; however, it appears increasingly likely that some type of China legislation could pass before year’s end. In a press release, Sen. Charles Grassley, R-Iowa, said the report shows that “our current law isn’t working.” Grassley for passage of legislation that he and Sen. Max Baucus, D-Mont., have introduced that would overhaul U.S. currency oversight laws and bolster U.S. trade enforcement capabilities.

Port Tracker: Container volume up as summer shipping season approaches

WASHINGTON—A sampling of United States’ ports handled a cumulative 1.27 million Twenty-foot Equivalent Units (TEUs) of container traffic in March, according to the May edition of the Port Tracker report, which was released last week by the National Retail Federation, a national retail trade association, and Global Insight, a provider of economic and financial information.

The 1.27 million TEUs handled in March represent a 17.4 percent increase in February and is up 20 percent from March 2005. The reports authors portend that volume will rise to a peak level of 1.45 million TEUs in August, which would be a 9.4 percent gain from August 2005. In September, volume is expected to decline to 1.4 million TEUs, but that would still be 4.5 percent over the output from September 2005.

Ports surveyed in the report include: Los Angeles/Long Beach, Oakland, Tacoma, Seattle, New York/New Jersey, Hampton Roads, Charleston, and Savannah.

With volumes up on a monthly and yearly basis, port congestion can be viewed as one less thing shippers may have to worry about, Global Insight economist Paul Bingham told Logistics Management.

“From today’s perspective, the situation at the ports is positive with respect to congestion,” said Bingham. “There is no significant congestion or delay at any of the surveyed ports now or projected during the next six months.  Shippers have plenty to worry about these days, but congestion delays at these U.S. ports are not among them.”

Chief among the things shippers are concerned about are port trucking and congestion at the Panama Canal, but Bingham said they should not result in serious terminal or network congestion as shippers prep for the summer shipping season.

Bingham added that shippers should be confident that the conditions that led to congestion in 2004 are not being repeated in 2006, and the risk of port congestion over the next six months is low.

“Several participants in the port industry have taken steps to avoid repeating the conditions that led to the congestion in 2004,” said Bingham. “Terminals have reduced ‘free time,’ and they and others have been more strict about enforcing demurrage charges for containers left sitting around, which has helped increase throughput velocity at terminals, effectively adding capacity.”

Other factors include how the ports of Long Beach and Los Angeles have benefited from the adoption of the PierPASS OffPeak program of daytime terminal gate surcharges and the introduction of night and Saturday gate hours for trucks, among others. 

Bingham said that the volume growth in March reflects the rebound from the traditional depth of the slow season in March as well as the earlier Chinese New Year this year, which slows cargo shipments from Asia while Asian factories are on holiday.   

As for the future, month-to-month volume will continue but not likely at the rapid rate from February to March, according to Bingham. One reason for this, he cited, is that container trade volume is not expected to grow that fast for the year as a whole, because the U.S. consumer is not expected to accelerate containerized goods import purchases over the remainder of 2006 compared with last year, due to rising interest rates, lower home-equity appreciation, lower new home sales and higher energy prices.