Industry Updates
Palin Opposes WC Fee, Mexico Opens New Port Bidding, Peak Season Affected By Slow Economy, ILWU-PMA Contract Close to Full Agreement, New Seals Will Be Mandatory
Alaska Governor Sarah Palin has urged California Governor Arnold Schwarzenegger not to sign a bill that would impose a $30 per TEU fee on containers moving through the ports of Los Angles, Long Beach and Oakland. Palin feels that the enactment of California Senate Bill 974, introduced by Senator Alan Lowenthal, will have negative impacts on both Alaska and California. "Shipping costs have increased significantly with the rising price of fuel and these higher costs are quickly passed onto Alaskans. This tax makes the situation worse", said Palin. "The fees could also harm California by driving business away from its ports."
Mexico's Department of Communications and Transportation has opened bidding for construction of a large port in Punta Colonet which will directly compete with Los Angeles and Long Beach as an alternative port for U.S. importers and retailers. Punta Colonet is about 80 miles south of Ensenada in Baja California. Officials envision a port capacity of 2 million containers annually when it opens in 2014, but expect a $4 billion, 18-berth port with a capacity of 15 million TEU's/year at full build-out. The developers would also construct a 200-mile rail line with 1 or 2 border crossings and connectors to railroads in the U.S.
The usually strong peak season is expected to be relatively weak this year as major retailers react to slow economic growth and cut back on imports. These cutbacks, in turn, reduce the volume of goods typically moving by truck and rail in the third and fourth quarters. Forecasters for the National Retail Federation expect cargo volume at 10 major retail container ports in the U.S. will fall 4% this year, the first such decline since 2001. They further expect that it may be well into 2009 before we hit the bottom of the cycle.
Last week ILWU caucus members voted unanimously in favor of sending the tentative six-year contract negotiated in July to the general membership. A vote by the general membership is scheduled for this week and the results will be announced before the end of September. The PMA membership is also expected to approve the contract which will be in effect until July 1, 2014. Details of the contract have not been disclosed.
Effective October 15, all U.S.-bound maritime containers must have seals that meet the ISO/PAS 17712 standards (for unique numbering, strength, durability and resistance to tampering). Requirements for the special seals were established by the SAFE Port Act. Industry officials expect the requirement to complicate life for shippers and carriers. They question whether enough of the required container seals will be available to meet demand.