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Apr.20, 2015

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INVENTORY LEVELS RETURNING TO NORMAL, WEST COAST SHIPPERS SAY SHIPMENT DELAYS THROUGH U.S. West Coast por ts, compounded by severe late-winter weather, cost some retailers sales in recent months, but they believe the worst is over and say inventory levels are returning to normal. Retailer warnings of lost spring sales dur - ing recent earnings calls with investors are a reminder that the pain shippers endured from months of congestion, exacerbated by a show- down between longshoremen and employers, has eased but still stings. That shippers are still hurting despite efforts to mitigate the impact by accelerating shipments through the West Coast before the July 1 expiration of the con- tract between the International Longshore and Warehouse Union and the Pacific Maritime Association, and by diverting freight to other ports lends credence to the belief that a cargo shift away from the West Coast is regaining steam. East Coast ports gained market share from the West Coast after a 10-day port employer lockout in 2002 spurred importers to diversify their routing options. It appears a similar shift is happening again. HAPAG-LLOYD'S EXIT GUTS PORTLAND'S CONTAINER BUSINESS HAPAG-LLOYD HAS FOLLOWED Hanjin Ship- ping in terminating service to Portland, Oregon, because of what it called "schedule integrity" problems. With the two carrier departures the Pacific Northwest port has lost 99 percent of its container business at Terminal 6 since the end of March. The International Longshore and Ware- house Union since June 2012 has had a running feud with ICTSI, which operates Terminal 6. Crane productivity has never returned to normal since a jurisdictional issue surfaced almost three years ago. ICTSI said dozens of ILWU "work stoppages, slowdowns and safety gimmicks" have made it difficult to keep liner services on schedule. Hapag-Lloyd had never been publicly vocal about service issues in Portland, but Hanjin was. Hanjin warned the port authority, ICTSI and the ILWU on several occasions the past three years that if productivity did not return to historical levels, it would cease its Portland operations. The port was able to keep Hanjin and Hapag-Lloyd calling in Portland through a financial incentive program the past two years, but Local 8 ramped up its job actions last Novem- ber, ICTSI said. The ILWU for the ensuing four months maintained a program of job actions at all West Coast ports when coastwide contract negotiations with the Pacific Maritime Associa- tion reached an impasse. With the departure of Hanjin and Hapag-Lloyd, Portland's only liner business is a monthly service provided by West- wood Shipping that had accounted for about 1 percent of the port's container volume. FEDEX TO PAY $4.8 BILLION FOR TNT EXPRESS TWO YEARS AFTER European regulators shot down United Parcel Service's bid to acquire TNT Express, FedEx unveiled its own $4.8 billion takeover of the Dutch company. The deal, which also requires regulatory approval, would significantly boost FedEx's footprint in the European express market, particularly land transportation, where it trails Deutsche Post DHL, TNT and UPS. The TNT deal "allows us to quickly broaden our portfolio of international transpor- tation solutions to take advantage of market trends — especially the continuing growth of global e-commerce," FedEx CEO Fred Smith said. FedEx has been expanding in Europe through organic growth coupled with acquisitions of small and medium-sized companies. "This offer comes at a time of important transformations within TNT Express," TNT Express CEO Tex Gunning said. "But while we did not solicit an acquisition, we truly believe that FedEx's proposal, both from a financial and non-financial view is good news for all stakeholders." TNT expressed confidence the FedEx bid will not encounter the regulatory difficulties that sank the UPS deal in early 2013. TNT Express said it would begin talks soon with potential buyers of its cargo airlines in the wake of the agreement. The Dutch group must sell its two air- lines, TNT Airways, which operates out of Liege, Belgium, and Madrid-based Pan Air Lineas Aereas, to comply with European Union rules that prevent a non-EU company from owning more than 49 percent of a European-registered carrier. Spotlight 6 THE JOURNAL OF COMMERCE www.joc.com APRIL 20.2015 6 THE JOURNAL OF COMMERCE www.joc.com Retailer warnings of lost spring sales are a reminder of the pain shippers endured from months of congestion.

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