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Feb.22, 2016

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MAERSK SEES BRIGHTER DAYS AHEAD AFTER $182 MILLION LOSS THERE WAS A faint silver lining to Maersk Line's report that it lost $182 million in the last three months of 2015. Nils Smedegaard Andersen, Maersk Group CEO, said container shipping demand and capacity are match- ing up better so far this year, but he said it's too soon to tell if the good news will hold. "The capacity situation is improving, with 7 percent of the fleet inactive and a pickup in trade," he said in a conference call with industry analysts. With demand increasing ahead of this month's Chinese New Year cel- ebration, when many Asian factories close for two weeks, Smedegard said a clearer picture of volume for the year would emerge by the end of March. He forecast demand would grow between 1 to 3 percent this year after 0 to 1 percent growth in 2015. Container ship fleet capacity grew by about 8 percent last year. The devastating effect of low rates was reflected in the average freight rate per con- tainer declining 16 percent over the year and by 25 percent in the last quarter, to $2,209 per 40-foot container. This wasn't enough to cover the unit costs of carrying a container that averaged $2,288 despite a 52 percent reduction in bunker fuel prices during the year. With global demand for ocean freight expected to grow by just 1 to 3 percent and a surplus of shipping capacity, Maersk warned that its 2016 result would be "significantly below" that of last year. At least things are looking up for U.S. inbound trades. Containerized imports at U.S. ports are projected to increase by double digits in January and February compared to the same months last year, when dozens of vessels were stranded outside of West Coast ports because of labor problems. Although container volumes will drop noticeably in March compared to March 2015, Global Port Tracker projects overall gains of 4.5 percent in containerized imports during the first half of the year. ILA WALKOUT INCREASES CONTRACT EXTENSION JITTERS THE WILDCAT STRIKE by International Long- shoremen's Association members at the Port of New York and New Jersey on Jan. 29 occurred without warning or clear explanation. The ILA said the portwide strike was unsanctioned and was a spontaneous protest aimed mainly at the Waterfront Commission of New York Harbor. The strike came as the ILA and USMX have been exploring an early start to negotiations for a new or extended coastwide contract to replace the one that expires in 2018. Momentum for those talks has been slowed by issues led by chassis repair jurisdiction and medical costs. "I was furious that these guys walked out," ILA President Harold Daggett told The Journal of Commerce. He angrily disputed reports that the strike originated within the ILA's mechanics Local 1804-1, which he headed for years and now is led by his son Dennis, the international union's executive vice president. "Everybody walked out together," Daggett said. "It wasn't just one local that did this." CONGRESS SEEKS TO SMOOTH FUNDING PROCESS FOR PORTS U.S. LAWMAKERS ARE looking into a new way to streamline how the government appropriates funds for port development projects, yoking together authorization and appropriation. Under the Water Resources Reform Development Act of 2014, U.S. ports for the first time were allowed to begin major harbor development projects without waiting for congressional authoriza- tion. But even that landmark legislation has left ports in a lurch — waiting on appropria- tions even after receiving the go-ahead from engineers and legislators. That system, some lawmakers say, simply doesn't work. "If you were to build a house, to build a business, to build a store, this is the last process in the world you would ever use," Rep. Garret Graves, R-La., said at a Water Resources and Environment Subcommittee hearing this month. The hear- ing itself is a sign that Congress appears poised to pass a second WRRDA this year, placing the nation's water resources legislation back on a two-year track. When President Obama signed the 2014 WRRDA into law in 2014, it was the first water projects reauthorization in seven years. It was no small victory for the nation's marine gateways, but with many port project timetables left ambiguous and approximately a third of Harbor Maintenance Tax revenue still going toward line items not related to harbor maintenance, there is more to be done, com- mittee members said. Before WRRDA, ports had to wait for congressional authorization to begin major projects, leaving work stalled until Spotlight 6 THE JOURNAL OF COMMERCE FEBRUARY 22.2016 6 THE JOURNAL OF COMMERCE

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