The Port of Oakland Board of Commissioners in June announced the appointment of maritime shipping industry veteran Chris Lytle as the port’s new executive director. He begins his new job later this month.
By Patrick Burnson
Published: July, 2013
The Port of Oakland Board of Commissioners in June announced the appointment of maritime shipping industry veteran Chris Lytle as the port’s new executive director. He begins his new job later this month.
Lytle currently serves as the executive director of the Port of Long Beach, the second-busiest container seaport in North America, a position he has held since November 2011, after having served as the Port of Long Beach’s deputy executive director and COO from 2008 to 2011.
Spokesmen said that the Port of Oakland anticipates planning for the future as it ends its four-month search for someone to replace Omar Benjamin, who resigned amid a spending scandal last year. The Port of Oakland’s immediate goals include transforming the maritime business.
Transpacific Carriers Recommend Rate Increase
Ocean cargo carriers comprising the Transpacific Stabilization Agreement (TSA) announced their intention to raise rates this summer. TSA Executive Administrator Brian M. Conrad said transpacific freight rates are still not keeping pace with rising costs, and "a meaningful increase" from current levels is essential to achieve profitability for the benefit of the trade.
"The revenue issue is not going away," Conrad said. "We have to make the case repeatedly that short-term, off-season rates cannot be extended for 12 months or longer in contracts, and that new capacity entering the Asia-U.S. market reflects global trends and an investment in productivity to meet future long-term demand. It does not somehow diminish service value and it does not justify moving cargo at unsustainable levels."
TSA members are recommending a further guideline general rate increase for all commodities in the amount of $400 per 40-foot container to the U.S. West Coast and $600 to all other destinations, subject to contract terms, effective July 1.
The news comes at a time when many industry analysts have criticized liner companies for introducing too many vessels despite a lull in demand. TSA spokesman Niels Erich countered that liner shipping by its nature is subject to periods of overcapacity.
"Ships are ordered based on market forecasts out 15 to 20 years and orders are rarely in full alignment with shorter-term seasonal and cyclical demand," he said. "Larger ships now being delivered represent an investment in future global trade growth, while achieving efficiencies that lower cost per sailing and help reduce fuel consumption and vessel emissions."
The supply-demand relationship will always influence pricing, said Erich, but he argued that it should not be allowed to drive rates to the exclusion of fundamental considerations about cost or intrinsic value of the service provided.
"So far we see some increased traffic on Suez routes to the East Coast versus Panama because Suez can handle larger ships cascaded from Asia-Europe into the Pacific," he said. "But utilization on all transpacific segments has improved since March and we expect continued incremental growth from Asia to the U.S. in 2013."
Transpacific container lines say they intend to pursue further revenue improvement that is essential if they are to achieve financial viability and maintain service levels customers expect in the service-intensive Asia-U.S. market.
Despite modest revenue gains in 2013-14 service contracts and subsequent increases taken by individual carriers in May, rates remain well below target levels needed to maintain profitability and invest for future growth. Conrad said increases to date are partly offset by rising port charges, labor and inland transportation costs in both the U.S. and in Asia, including recent wage increases for East Coast and Hong Kong longshore workers, higher Suez Canal costs and higher rail and truck rates for inland equipment repositioning.
Ocean Carrier Survey Results Released
The results of the AgTC’s 2013 Ocean Carrier Performance Survey were announced late last month at the 25th Annual Meeting of the Agriculture Transportation Coalition in San Francisco, with APL winning top ranking. All annual survey responses are aggregated, and the individual responses discarded, to assure confidentiality of each shipper’s response. This year’s survey was expanded to gain more insight into agriculture and forest products shippers who completed the survey.
The Survey collected the following types of data on shippers:
• Cargo origins in the US and Canada
• Global cargo destinations
• Volume of cargo/containers shipped each year
• Special equipment and handling requirements
• Mode of transport (truck, rail, barge) used to access the departure ports
The AgTC members were then asked to rate ocean carriers in 11 categories of service. For a complete listing, visit www.agtrans.org.
