Category: Jones Act

December 17, 2020 General Ag News and Notes, Hawaii Maritime Shipping, Jones Act Post a Comment

Video: Drone Survey of ONE Apus Container Collapse

Maritime Executive –

The video and images can be viewed on Webster’s website. –

The cargo claims consultancy WK Webster released the first images of its initial damage survey of the container ship ONE Apus. The company’s inspectors were in Kobe, Japan for the arrival of the vessel and they also conducted a remote drone survey as it transited Osaka Bay towards Kobe Port.

The images are being used by Webster and its clients to understand the scope of the incident while excerpts have been posted on the company’s website for the public to view. The images were taken by two drones using ultra-high definition camera technology as part of the company’s new drone survey product. The images very clearly show the scale and detail of the devastation on board and are being analyzed in conjunction with experts appointed by Webster.

The process of removing containers from the ONE Apus began on December 11 after permission was granted by the Japanese Coast Guard. The ship’s owners, Chidori Ship Holding, and managers, NYK Shipmanagement, which had operated the vessel as part of the ONE Express Network estimated that it would take “over a month” to remove the dislodged containers using a schedule formulated by stowage planners. “Once unloaded, each will be assessed, and when the discharge of cargo is complete, there will be a full assessment of damage to the vessel and subsequent repairs,” they said in a prepared statement.

Webster’s team of surveyors in Japan, however, reports that the process started slowly. Only five containers were removed from the vessel last week and work did not proceed over the weekend. Webster also termed the owner’s assessment of the timeline for the process as “optimistic.”

From its team’s initial visual assessment and the analysis of the video and still images, Webster reports that it can be seen that there are 22 bays on deck of which 16 have collapsed to both port and starboard, leaving only six intact or partially intact. “With 20 rows of containers per bay and with stack heights of between six and eight containers, we anticipate that approximately 2,250 containers have been lost or damaged,” they reported. They also noted that the vast majority appear to be 40 foot units and therefore equivalent to approximately 4,500 TEU.

“The vessel owners/operators are not currently prepared to release the vessel’s stowage/bay plans,” they said in their update making it more challenging for customers to determine the status of their shipments. Webster said it was seeking further information regarding the fate of individual containers on a case-by-case basis, but noted that “It is likely that some of the upper stowed containers were either empty or holding lighter weight goods.”

While the images clearly show the extent of the toppled stacks, thousands of containers remain on deck and will have to be examined individually to determine the full extent of any internal damage. The vessel had a capacity of 14,000 TEUs with the managers saying that a total of 1,816 containers were lost over the side when the vessel encountered heavy weather on November 30 in the Pacific at a position about 1,600 nautical miles northwest of Hawaii.

Webster and its experts are continuing to analyze the evidence with the company preliminarily saying the total loss could exceed $200 million, and it could be greater than the value of the vessel which was built in 2019.

Among the issues Webster will be considering in determining the cause of the incident are the weather conditions encountered and what was done by the vessel to mitigate the impact of the weather. They will also be looking at the lashing and securing equipment used and its adequacy, the stowage condition of the vessel on departure from Yantian, China, and the voyage planning, as well as other issues.

The owners and managers of the ONE Apus have also said that a thorough investigation is being conducted into the incident and, of course, Japan as the vessel’s flag state, and other maritime authorities are also investigating. Due to the size and complexity of the loss, it will likely take some time before a report will be available and what steps will be taken to reduce future risks.

December 2, 2020 General Ag News and Notes, Hawaii Maritime Shipping, Jones Act Post a Comment

Congestion, Slowdown at Ports Cause Growing Concern

Transport Topics –
by Dan Ronan –

Many of the nation’s ports, especially on the West Coast, are reporting long delays to unload cargo ships, and warehouses near those facilities are filled as the supply chains are overloaded with goods.

That is the result of retailers seeing a surge in e-commerce purchases and significant changes to spending patterns of U.S. consumers and businesses.

“It’s really the perfect storm,” supply chain and logistics expert Mirko Woitzik with Resilience360 said from Cologne, Germany, in an interview with Transport Topics.

“There are so many factors that are contributing to this. There are so many different interests between the truckers, the carriers, the port operators and then put the COVID situation into this, the huge demand, and the previous huge drop in demand six months ago. It’s not probably going to be solved until the Chinese New Year, in the middle of February 2021.”

Typically, then there’s a lull in shipping as factories in Southeast Asia shut down for several weeks.

The ongoing situation is a departure from the spring, when container volumes at ports dropped dramatically as the world economy plunged into a recession because of the coronavirus.

In the most recent monthly report from the major cargo ports, most facilities reported record or near-record container volumes. The Port of Los Angeles processed 980,729 20-foot-equivalent units in October, an 18% year-over-year increase from 770,289 TEUs. It also marked the port’s best month in its history.

Some in government and the trucking industry believe the ports’ delays go deeper than just an imbalance in the supply chain and the impact of the COVID-19 pandemic.

Federal Maritime Commissioner Carl Bentzel said he supports opening a fact-finding investigation into the two Southern California ports’ ongoing congestion issues. He also said there is a growing problem at the Port Authority of New York and New Jersey.

“I believe that we have deep-seated problems that could continue for the foreseeable future, and I strongly believe we must pay immediate attention to these issues,” Bentzel wrote. “The volume surges currently overtaking the ports of Los Angeles and Long Beach, and now New York and New Jersey, shine a light on the operational vulnerabilities and reveal our supply chain weaknesses.”

Weston LaBar, CEO of Long Beach-based Harbor Trucking Association, told Transport Topics his group has asked the international ocean carriers that move millions of tons of cargo into the ports to temporarily suspend detention and demurrage fees at the ports of Los Angeles and Long Beach until the congestion issues ease.

Demurrage fees are charged when a container is still full and under the shipping line’s control and has not been cleared through customs or picked up by the consignee. Detention costs incur for using equipment, such as a chassis, beyond the given free time and typically outside of the terminal.

LaBar said the major shipping companies and shipping alliances have the ability to slow down traffic at the ports to impact the amount of fees charged to trucking companies.

“We’re just asking for a fair playing field, that when a trucker cannot pick up a container, or drop off an empty or their export booking has been canceled,” LaBar said. “They should not be the ones on the hook, paying the penalty, because the ocean carrier made a decision that benefits paying the penalty, without any remorse on how it affects the other members of the supply chain.”

Meanwhile, so-called dwell time delays are worsening.

The Pacific Merchant Shipping Association said that in October containers remained at terminals at the two Southern California ports for nearly five days, the most prolonged average period since the group began tracking data in 2016.

An official with the Port of Los Angeles told TT the delays extend to the Pacific Ocean as well. On Dec. 1, 18 ships were anchored off the Southern California coast, with nine waiting for slots at the Port of Los Angeles and nine waiting for entry into the Port of Long Beach.

Phillip Sanfield, Port of Los Angeles director of communications, told TT that usually there might be one or two ships waiting to be routed into those facilities.

“There is a several-day waiting to unload cargo, at least,” he said. “We have a little more of a backlog now because of the Thanksgiving Day holiday, and we had less staff to unload cargo.”

However, there are ways for shippers to get cargo into the West Coast facilities, but it’s costly. Many ports operate express berths, so smaller cargo ships — those carrying less than 6,000 TEUs — can reserve spots for those ships that sail direct routes.

For example, the Port of Long Beach operates what’s called the C60 terminal, where ships using direct service from Guam, Hawaii and three locations from China (Shanghai, Ningbo and Xiamen) get priority service.

November 23, 2020 General Ag News and Notes, Jones Act Post a Comment

Lifting crude oil export ban dealt blow to Jones Act tankers

Hellenic Shipping News

The 2015 repeal of a 40-year ban on the export of crude oil from the U.S. has left a sizable dent in the U.S. tanker industry, according to a U.S. watchdog agency.

A report released Friday by the Government Accountability Office (GAO) detailed how U.S. refineries – particularly those on the East Coast that had no access to cheaper transportation options such as pipelines – were left having to pay more to receive domestic crude oil on more expensive U.S.-flagged tankers and barges before the ban was repealed, when U.S. crude oil was selling at depressed prices relative to foreign crude.

Ships moving cargo between U.S. ports – known as Jones Act ships, named after a law requiring that such domestic cargo be carried on vessels that are not only U.S. flagged but U.S. built, U.S. owned and U.S. crewed as well – can cost almost five times as much to operate than foreign-flagged ships, due mainly to the cost of employing U.S. crews.

After the repeal of the ban, the price of domestic crude oil increased relative to the price of foreign crude oil for U.S refineries, which meant their demand for Jones Act tankers and barges decreased. U.S. crude shipped by Jones Act tankers and barges from the Gulf Coast to the East Coast fell by 57% in 2016, according to data from the U.S. Energy Information Administration. At the same time, imports of foreign crude oil to the East Coast rose by 35% in 2016, likely to replace the decline in shipments of domestic crude oil from the Gulf Coast, according to the GAO.

“Taken together, these two factors led to a decline in the demand for Jones Act tankers to transport U.S. crude oil from points within the United States in the years after the repeal of the ban,” the report noted.

Shipping companies that continue to operate Jones Act tankers to transport crude oil have been forced to significantly cut their shipping rates, according to those interviewed by GAO.

The effect of lifting the ban hit the U.S. shipbuilding sector as well, due to the Jones Act’s domestic build requirement. After the repeal, one of the two remaining U.S. shipyards capable of building Jones Act crude tankers saw a 90% drop in employment, according to one shipping industry representative.

In addition, “the boom in the construction of tankers to transport stranded domestic crude oil prior to the repeal of the export ban left shipping companies with excess shipping capacity, which has since been used to transport other products (such as refined products), salvaged for parts or idled,” according to the report.

One shipping representative interviewed said approximately 80% of the Jones Act fleet was built between 2007 and 2016. Because they have 30-year lifespans, “it is unlikely that there will be a need to build new tankers in this decade given the decrease in demand,” he said.

None of those interviewed said repealing the ban directly affected movement of refined petroleum products by Jones Act tankers and barges, according to GAO, because the repeal had limited effects on the production, export and import of domestic refined petroleum products.

“Refined products are still shipped by Jones Act tankers and barges between some points in the United States, such as refineries in Texas and Louisiana to consumers in Florida, due to a lack of pipelines connecting these states.”

November 13, 2020 Jones Act, Shipping Post a Comment

Biden Focus on Infrastructure, Environmental Improvements Could Lift Jones Act

SEAPOWER –
by John M. Doyle –

ARLINGTON, Va. — President-elect Joseph R. Biden’s Jr. twin goals of rebuilding America’s infrastructure, while protecting the environment, could bolster support for maintaining the 100-year-old law that protects the U.S. maritime industry, according to a Washington think tank analyst.

The Biden campaign “had expressed interest in new infrastructure, in new green initiatives, and the maritime industry is actually a pretty good confluence of the two,” Tim Walton, a fellow at the Hudson Institute’s Center for Defense Concepts and Technology, told a Navy League webinar marking the 100th anniversary of the Jones Act.

Also known as the Merchant Marine Act of 1920, the Jones Act bars foreign-built, foreign-owned or foreign-flagged vessels from conducting coastal and inland waterway trade within the United States and between the United States and its non-contiguous states and territories such as Alaska and Puerto Rico.

The long-standing legislation could figure in plans “where we’re talking about building maritime infrastructure, building low carbon emitting transportation mechanisms, green industries that support our economy in the oceans as we build a blue economy,” Walton added. A “Blue Economy,” according to the World Bank, is built on sustainable use of ocean resources for economic growth, improved livelihoods and jobs and ocean ecosystem health.

Critics say the aged Jones Act has led to higher shipping costs, which are passed along as higher prices to vendors, retailers and consumers. They also maintain higher costs have driven the commercial shipbuilding industry overseas, leading to a smaller pool of qualified U.S. merchant mariners.

Without the law, U.S. Navy and Coast Guard officials have argued there would be no pool of U.S. noncombat ships — or trained American seafarers to man them — in a war or other national emergency. During the Nov. 12 webinar, former Coast Guard Commandant Adm. Paul Zukunft (retired) called for “a coherent maritime national strategy that connects with a national security strategy. That’s where the Jones Act needs to be woven into our national security strategies.”

Former U.S. Rep. Ernest Istook, an Oklahoma Republican, said the need for such a strategy is evident, in a world where 90% of trade is moved by ship, and Great Power competitor China is the world’s biggest shipbuilder, by some measures has the world’s largest navy, and is expanding its commercial ports and naval bases around the world.

Walton’s comment about Biden came after a webinar viewer asked where the Democrat stood on the Jones Act. Both Biden and President Donald Trump support the law, although Trump considered, but later rejected, an extended waiver for foreign carriers to deliver liquid natural gas to hurricane wracked-Puerto Rico and LNG-dependent New England States. Biden incorporated Jones Act support in his campaign’s Buy American/Ship American strategy.

“Historically, the U.S. maritime industry has been a leader in technology,” Walton said, “but now in the 21st century, the Biden administration, as it appears it’s going to be, will have an opportunity, I think, to take some leadership and, as Adm. Zukunft said, actually craft an integrated national strategy for the maritime industry, and then implement it.”

To read the new Navy League special report on the Jones Act and its impact, go here.

November 12, 2020 General Ag News and Notes, Jones Act, Shipping Post a Comment

Biden and the maritime industry: On course with a few detours

WorkBoat
By Pamela Glass

The maritime industry will find a friendly environment in Congress and at the White House as a result of last week’s elections, but it should brace for some major policy shifts as a Biden administration pushes ahead with its promised climate change agenda.

Maritime stakeholders can expect strong support in the White House for the Jones Act, which the industry considers crucial to its future as the law reserves coastwise trade for U.S. built, owned and crewed vessels. Biden included the Jones Act as part of his economic platform, and personally assured maritime unions of his support during the campaign.

“We know President-elect Biden is a very strong supporter of the Jones Act and the U.S.-flag fleet,” Michael Sacco, president of the Marine Trades Department at the AFL-CIO, said in a statement after the election. “Vice President-elect Harris also has demonstrated her total support for the U.S. merchant marine while representing California in the U.S. Senate.”

In Congress, the number of pro-maritime lawmakers did not change significantly. Voters returned to office the majority of the industry’s strongest supporters who serve on committees that oversee maritime issues and funding, and who often speak publicly favoring the Jones Act.

“We’re looking at a 97% retention rate for all lawmakers we supported in the 2020 election cycle,” said Craig Montesano, vice president, legislative affairs at the American Waterways Operators, which represents the tug, towboat and barge industry.

Topping the list in the House, where Democrats will retain power, are Reps. Peter DeFazio, chairman of the House Transportation and Infrastructure Committee and Sean Patrick Maloney, D-NY, chair of that panel’s Coast Guard and Maritime Transportation subcommittee, as well as key members of the House appropriations committee.

DeFazio and his committee are trying to secure additional funding for the maritime industry, which was largely left out of the first Covid-19 relief bill. Work is underway on the Maritime Transportation System Emergency Relief Act, which is included in the National Defense Authorization Act. That bill has been passed by the House and Senate and a final agreement could come during the lame duck session.

In the Senate, where the majority party won’t be determined until after two run-off elections in Georgia, maritime stakeholders are also pleased with election results. They cite the re-election of Sens. Roger Wicker, R-MS, chair of the Senate Commerce Committee, which oversees maritime matters, Dan Sullivan, R-AK, and Susan Collins, R-Maine, who had a tough re-election challenge and has used her seat on the Senate Appropriations Committee to boost the industry, most notably training at the Maine Maritime Academy and shipbuilding at Bath Iron Works.

The industry will likely continue to have the bipartisan support that it has enjoyed over the years in Washington, since action on maritime policy and fiscal priorities do not generally fall along party lines.

As Biden begins to consider his cabinet positions, his selections for the Transportation, Agriculture and Energy departments and the Environmental Protection Agency will be important to the maritime industry. Although no firm decisions have been announced, under consideration for DOT are Los Angeles Mayor Eric Garcetti, a Biden loyalist, Rep. Earl Blumenauer, D-OR, who has been active on transit policy, and Beth Osborne, director of a transportation advisory group who was a deputy assistant secretary for transportation during the Obama administration. Biden has signaled that improving infrastructure is a priority for him, and that transportation initiatives will include measures to decrease carbon emissions.

The current DOT Secretary is Elaine Chao, who is also the wife of Senate Majority Leader Mitch McConnell. Chao’s family is in the shipping business and she has been a strong advocate of the Jones Act as well as marine highway and ports funding. It’s not yet clear if any of her possible successors have direct ties or deep knowledge of the maritime community.

On shipbuilding, the Biden administration will inherit the National Security Multi-Mission Vessel program, which began under President Trump and would build the next generation of training vessels for state maritime academies that would also be used during national emergencies like hurricanes. Philly Shipyard has been awarded the contract to construct up to five ships.

Under a Biden administration, the maritime industry might see its star rise as it takes on an important role in the president-elect’s plan to reduce carbon emissions across all sectors of transportation. It’s very likely that the people he appoints to key positions — such as a new administrator at the Maritime Administration — will be charged with developing strategies to create “green shipping” as part of the Biden climate change agenda.

This could mean a bolder move toward more climate-friendly shipping fuels like LNG, methanol, ammonia and biofuels, as well as a more activist role for the U.S. in influencing global shipping policies through international organizations that had been pulled back during the Trump administration.

The offshore oil and gas industry should expect fewer opportunities for exploration and development as energy policy shifts to developing alternative fuels.

This would affect the offshore vessel sector but provide opportunities for workboats in the emerging offshore wind business. It would also boost arguments favoring barging as an environmentally friendly transportation mode and developing marine highway networks that use waterways to relieve land-side traffic congestion.

The robustness and success of these policies will likely depend on which party wins the majority of the Senate. A split government with Democrats controlling the White House and House of Representatives and Republicans controlling the Senate will make it more difficult for Biden to get his policies approved. Under this scenario, Biden would likely present a less ambitious agenda, but he will still be able to make many changes through regulation and executive orders, analysts say.

November 9, 2020 General Ag News and Notes, Jones Act, Shipping Post a Comment

How will US President-elect Biden impact shipping?

Seatrade Maritime News
by Barry Parker

Despite expectations of a massive win by Joe Biden, a Democrat, in the Presidential race, and a big “Blue Wave”, the US elections were remarkably close. Mainstream media waited four days, on the Saturday following the elections, before making their call that Joe Biden had won in the voting for President.

The President’s ability to influence policy depends on his ability to achieve desired outcomes with Congress- the legislative branch of the US government. The Democratic party will continue to hold a majority in the other legislative chamber- the House of Representatives.

Still unclear, in the ongoing morass of recounting (some mandated by existing rules, some potentially the result of possible legal actions from the Republican side), is whether the Republicans will retain control of the US Senate. In the weekend following the election, the Senate tally saw 48 Democrats and 48 Republicans holding seats, with four seats still uncertain – though many media pundits were looking for the Republicans to keep a slim majority- at 51 seats to 49, when all the dust settles. The fine print in legislation of all types is influenced by which party is controlling the respective chambers.

On the vessel side, there was not much difference between the candidates, though shipping topics never really came up in a meaningful way. Biden, like Trump, will be a continued supporter of the Jones Act, which – reserves coastwise trade for vessels built, and owned in the States, crewed by US mariners.

Biden’s ties to Pennsylvania, his “rust belt” birthplace, and the importance of Philadelphia in the election, will not be unnoticed by observers of the shipbuilding scene. Biden has stressed his ties to organised labour, and had gained the support of a number of maritime unions in the election.

On the cargo side, one obvious likely improvement will be the US trades with Cuba, set back by Trump after an opening by Trump’s predecessor Barack Obama, where Biden served as Vice President, 2009- 2019 – easing decades of sanctions. Increased movements of general cargo, both breakbulk and unitized, and vehicles would benefit both US and other carriers already serving the Caribbean islands.

The US heartland , steel-making states like Michigan and Pennsylvania (won by Biden) and , Ohio (went Republican) were frequent campaign stops for both Donald Trump and Joe Biden. Agricultural stalwarts such as Iowa, Missouri and Kansas were solid “red” states (going for Trump) but fit into the Biden mantra of supporting working Americans. Macro trade flows will see limited impact from a change in Administrations; farmers have noted Biden’s support for biofuels.

The shipping industry will be impacted in a major way, albeit over a timeframe lengthier than a US election cycle, by regulations and initiatives related to climate change. The oil business will likely be under much more pressure to ramp up its non-fossil fuel initiatives, generally, under a Biden regime.

However, macro tanker market influencers, related to fleet supply, OPEC+ actions, and by overall oil demand, not red versus blue, will drive tanker markets. The US saw exports increase during the Trump years, following an Obama late 2015 initiative, due to bigger picture fundamentals, rather than by explicit Presidential actions.

The offshore wind energy, which has seen projects pushed back several years by Trump administration inertia, will be loudly applauding the Biden victory. Under a Biden administration- with cooperation from the Legislative branch, US shipbuilders, and long-suffering owners of oil service vessels, would welcome efforts to facilitate offshore wind projects, driving US energy consumption away from fossil fuels, in a more timely manner.