The Ports Of Los Angeles, Long Beach -- Megaships Arriving -- December 29, 2015

From The Los Angeles Times:

The largest container ship ever to arrive at a North American port is now docked at the southern tip of Los Angeles, a sign of the rapid changes underway in the global shipping industry.

The CMA CGM Benjamin Franklin, which arrived Saturday at the Port of Los Angeles on a maiden voyage from China and South Korea, can carry nearly a third more cargo than the largest ships that currently call at the San Pedro Bay ports. 

In an effort to move more cargo on less fuel, ocean freight carriers are in a race to build megaships with much larger capacities than the typical ships calling at U.S. ports. The average container ship being built now is nearly three times the size of the average a decade ago.

The rapid increase in vessel size has posed challenges for ports around the world, which now must contend with enormous volumes of cargo arriving at once. The ports of Los Angeles and Long Beach, the nation's two busiest seaports, have been among the first in the United States to deal with the advent of larger ships.

Both ports are in the midst of hundreds of millions of dollars' worth of projects to deepen channels and expand terminals to adapt to the changing world of shipping. 

Despite the slow start to the year, cargo volume at both ports has picked up significantly. Through November, the Port of Long Beach increased container volume by 5.5% this year compared with the same period last year. The Port of Los Angeles is down just slightly -- 1.9% -- through the same period last year.

The ports are right next to each other in San Pedro Harbor.

CMA-CGM is an oceanic shipping company, founded in Marseille, France, in 1978. In 1978 it started with one ship; today it is the third-largest container company in the world.

Keystone Or No Keystone: Canadian Heavy Oil Reaches Gulf Coast -- RBN Energy -- March 3, 2015

President Obama given two pinocchios by Washington Post for his statements on Keystone XL. Fox News is reporting:

President Obama earned a double-barreled rebuke Monday from The Washington Post's fact-checker, for repeating a faulty claim that the Keystone XL pipeline "bypasses" the U.S. -- and for saying it would only carry "Canadian oil." 

The president made the claims in an interview last week with WDAY of Fargo, ND. Obama continued to downplay the impact of the Canada-to-Texas oil pipeline, just days after vetoing a bipartisan-backed bill that would approve the construction project. Senate Majority Leader Mitch McConnell, R-KY, has teed up a vote to override that veto later this week. 

In the local interview, Obama said: 

"I've already said I'm happy to look at how we can increase pipeline production for U.S. oil, but Keystone is for Canadian oil to send that down to the Gulf. It bypasses the United States and is estimated to create a little over 250, maybe 300 permanent jobs. We should be focusing more broadly on American infrastructure for American jobs and American producers, and that's something that we very much support." 

The president has been called out before for claiming the oil would bypass the U.S.

Active rigs:

	3/3/2015	03/03/2014	03/03/2013	03/03/2012	03/03/2011
Active Rigs	119	189	184	207	170

RBN Energy: Canadian heavy oil starts to compete at Gulf Coast refineries.

Last week (February 19, 2015) Enterprise Product Partners announced the start of line fill on their 780 Mb/d ECHO to Beaumont/Port Arthur pipeline. The new route will open access for Canadian heavy crude shippers on the recently completed Seaway Twin pipeline from Cushing to Houston to 1.5 MMb/d of refining capacity in Beaumont/Port Arthur including 0.3 MMb/d of heavy crude coker processing. These refineries were a key target of the Keystone-XL pipeline from Canada to the Gulf Coast that still awaits approval. Today we look at demand and competition for Canadian heavy crude on the Texas Gulf Coast.

In Episode 1 of this two part series we looked at the rather painful progress developing pipeline infrastructure to deliver heavy Canadian oil sands crude to Gulf Coast refineries. Midstream developers have been beset by difficulties including headline grabbing delays to the Keystone XL pipeline and less dramatic but no less damaging setbacks to expansion of the Enbridge system. Since December about 240 Mb/d of heavy Canadian crude has flowed into the Houston Enbridge ECHO terminal on the Seaway Twin pipeline where it must now duke it out with incumbent suppliers to the Gulf Coast’s 1.5 MMb/d of heavy crude “coking” capacity. The largest of the incumbents is Mexican national oil company PEMEX that has already begun discounting it’s flagship Maya crude to do battle with Canadian producers.  In this episode we look at heavy crude refining capacity on the Texas Gulf Coast that Canadian barrels will be competing to supply. We also ponder how the volumes of crude flowing on Seaway Twin today will impact the incumbent suppliers.

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Update on West Coast ports job action. BunkerPortNews is reporting:

West Coast port terminals were inundated with inquiries from businesses across the U.S. that rely on the swift movement of their products, as port delays reached near gridlock. Mr. Molinaro said many of his customers, frustrated with their supply chain’s snail’s pace, insisted on coming to see and ask for themselves, “What is going on?”

All the pressure has management at the Southern California ports, which combined handle 40% of all containerized freight for the U.S., thinking about ways they can speed things up. Port terminals are developing new ways to organize cargo at the docks and systems for getting that cargo moving off the docks as quickly as possible. Software developed by a local technology startup called Cargomatic, a sort of Uber for moving cargo around the Los Angeles region, serves as one creative solution.

As contract talks between the Pacific Maritime Association and the International Longshore and Warehouse Union crept along, the line of massive ships in San Pedro Bay became longer and container stacks in the terminal yards rose higher. Even now, since a tentative contract was reached Feb. 20, experts estimate it could be as long as six months before shipping returns to normal, and the delays could cost retailers billions of dollars this year.

Some novel ideas:

So some terminals have been trying a novel idea: When a truck driver shows up, put the first container off the top of the stack on the truck and send it on its way. No more moving other containers around to dig out specific cargo—just get it all off the dock as fast as possible.

The concept isn’t entirely new. Many megaretailers use what is known as free-flow or peel-off operations at the ports. If there are enough containers destined for the same cargo owner, all arriving on the same ship, longshore crane operators can stack them together and load them on to the retailer’s trucks as they arrive.

Running operations on an app from Silicon Valley:

Other port terminals and trucking companies also are augmenting their free-flow programs. Last week, the Port of Los Angeles launched a similar system—minus the smartphone app—at four marine terminals. Under that program, as many as 600 containers a day could be moved off the docks as soon as they are unloaded from ships, Mr. Seroka said.

“Most shippers don’t have the volume to do this,” Cargomatic co-founder Brett Parker said. The software “allows multiple shippers and multiple carriers to participate in free flow,” he added.

Mr. Parker and co-founder Jonathan Kessler run Cargomatic out of an office in Venice, Calif., part of Southern California’s so-called Silicon Beach region. The app is also running in beta mode in New York City. In January, Cargomatic closed $8 million in venture-capital investment.

Though small in scale, the Cargomatic test proved to be a rare instance where the port’s productivity actually increased amid the labor strife. The average so-called turn time for Cargomatic truck drivers was 35 minutes, roughly half the time it usually takes under the standard dig-out process.

LA Port Sets Record -- Yes, Some Issues With Long Beach Port -- But Still -- Absolutely Nothing To Do With the Bakken

Link here to Carpe Diem.

The Port of San Pedro (aka the Port of Los Angeles) hit export container record for 2011.

There are some issues affecting the Port of Long Beach (right next to PoLA) but still.

"The Port of Los Angeles set a new standard for exports in 2011, becoming the first harbor in the nation to ship more than 2 million containers carrying U.S. goods to customers overseas, according to year-end statistics released by port officials.

The nation's busiest seaport moved 176,531 export containers in December, enough to kick up its 2011 total to 2.11 million containers. That broke the port's former record of 1.84 million export containers set in 2010.

Speaks volumes.

San Pedro Harbor -- LA Port -- Los Angeles Port Sets Export Records

Back in July, 2010, more than a year ago, I posted a story about the record activity at the largest US port, the Los Angeles-Long Beach (California) Port.

Today Carpe Diem is reporting again, a record month at the port. I believe my earlier story included all activity, imports and exports.

Carpe Diem as done me better (as usual). This time he shows the graph depicting the activity for just exports. Incredible.

A record breaking month for exports at the largest US port.

Two additional comments:

• the port is on the west coast -- one can guess where these exports are going; and,
• this was not an anomaly or a blip; look at the impressive rise in exports since the depths of the recession; exports are well past pre-recession levels.

For investors, anyone not accumulating shares in US companies is missing the boat.

This is not an investment site; see disclaimer on the right.

Update: LA Port Strike Ended -- But There's More: Record Port Traffic

The folks at the Los Angeles port who went on strike because their $96,000 salary and benefits package was not enough -- remember, these were "clerks" who simply wrote down what was coming into the port -- have ended their strike. The arbitrator said the clerks were not acting in good faith, calling the strike illegal, and thus other unions did not join in.

There's probably more to the story, but that's a nice myth.

Anyway, today the LA Times is reporting outstanding news for the port:

The port traffic at Los Angeles and Long Beach (neighbors) had its busiest June ever for cargo, surpassing the number of containers moved during the height of the global economic boom in 2006, and the neighboring Port of Long Beach also showed a strong increase in imports.

At the Port of Los Angeles in June, imports increased by 32% from a year earlier.  Exports were up 13%.

At the Port of Long Beach, imports jumped 27% and exports rose a meager 2% in June

For the first time since the worldwide recession, jobs were so plentiful on the docks last month that veteran union members had to be supplemented by hundreds of part-time workers.

The economic indicators continue to perplex but I think these are the tectonic shifts:

• American buying habits and interests have changed (houses are out/tech is in)
• China is on a roll

And clerks being paid $96,000 -- well over twice that of the average soldier in Afghanistan/Iraq -- are learning that maybe that's quite enough.