Following a Canada Border Service Agency inspection at the Port of Montreal, a container destined for Toronto was founds to contain 72.8 kg of Ketamine and 23.5 kg of Norephedrine concealed in a number of rice sacks. Three Greater Toronto Area residents were arrested for illegal and charged under the Controlled Drugs and Substance Act and the Criminal Code.
Ketamine is often mixed with other illicit drugs such as MDMA or methamphetamine and over the several years, increased seizures and trafficking of Ketamine in Canada indicate a renewed organized crime interest in the drug. Norephedrine (also known as PPA) is often used as a precursor chemical to produce amphetamines, 4-methylaminorex and other illicit drugs.
BC’s container terminals are continuing to struggle with a second month of much higher than usual volumes of US destined cargo. It appears that this diversion of US cargo is likely to continue so long as uncertainty over the PMA/ILWU coastal contract remains after the previous contract expired on June 30. The major issue believed to be separating the two sides is that of who will pay for Affordable Health Care Act (Obamacare) tax on generous health care plans. Employers pay 100% of the premiums in the ILWU health care plan, and union members pay just a $1 co-pay per prescription for medication. The PMA estimates that the new tax will cost the industry $150 million a year. Employers have indicated that a cost-sharing formula can be worked out but the ILWU is resisting to contribute anything.
The situation has been compounded by more ocean carriers making Vancouver a first port of call, congestion on the BNSF Northern Line out of Washington State to the mid-west and problems within the TTX rail pool whereby Union Pacific and BNSF are denying the supply of additional rail cars to the Canadian railways. US economic growth of 4% in Q2 is in itself generating more consumer demand – hence more cargo compounded by peak season including “back to school” goods. The railways also remain under pressure with the passage of the Fair Rail for Grain Farmers Act which requires each Canadian railroad to deliver a minimum of 500,000 tons of grain per week for export. The US has imposed similar measures.
Today DP World has stopped accepting US-bound containers for direct rail transfer at its Centerm terminal because of the lack of railcars. TSI has indicated that it will continue receiving US cargo at their two facilities and has no intention to adopt a similar policy.
Westshore Terminals has managed to adjust its throughput agreements to enable Cloud Peak Energy to increase its exports to South Korea, Japan and Taiwain from 4.5M tonnes up to 6.5M tonnes from 2015 to 2024. Coal Valley Resources has agreed to transfer its throughput capacity to Cloud Peak and terminate its existing agreement at the end of 2014. The net effect is expected to result in greater operating efficiencies for Westshore with no changes to total number of trains arriving or departing Westshore, but BNSF will pick up the capacity diverted from CN trains. Westshore is expected to operate at its rated 33M tonne rated capacity through to 2016.
A Washington State Senator has sent a letter to the state’s Executive Ethics Board alleging that the State Governor broke the law when he cancelled the state troopers’ escort of grain inspectors into the Port of Vancouver WA. By doing so, the Senator argues that the State is effectively “forcing terminal operator United Grain Corp. to negotiate with the union." The escort of grain inspectors, who are state employees, began in September 2013 when United Grain locked out the ILWU following failure to negotiate a contract and allegations of deliberate damage to machinery. Despite the dispute having no direct relationship to the coastal PMA/ILWU negotiations, there is a concern that it could spill over into the bigger picture.
A group of six ocean carriers announced this week an agreement to reduce speed along California's Santa Barbara coastline to help reduce air pollution and protect endangered whales. Members of the pilot program are COSCO, Hapag-Lloyd, K Line, Maersk Line, Matson, and the United Arab Shipping Co. All will reduce their speed when transiting through the Channel as part of a trial program and each will receive compensation of $2,500 per slowed-down transit.
Not to be out done by expansion of the Panama Canal and the proposed Nicaragua Canal, Egypt this week has announced plans for a new $4.0 billion 72km Suez Canal running alongside the existing French built canal which opened for business in 1869. One objective of the new Canal would be to eliminate single direction convoys which add to overall transit time. The existing canal handles around 8,500 transits in each direction per year and generates around $5bn for the country in revenues.
One of the world’s most technically advanced ship yards for construction of cruise ships has been sold to a partnership of the Finnish Government and German shipbuilder Meyer Werft – already a highly successful builder of cruise ships. Meyer Werft will take a 70% stake of the new company which is to be renamed Meyer Turku Shipyard Oy. with the Finnish Government holding 30%. The acquisition is still subject to clearance by anti-trust authorities and banks. Having previously built Oasis of the Seas and Allure of the Seas, the world’s largest cruise ships, STX Finland lost out in a bid to build the third and fourth Oasis-class cruise ships for Royal Caribbean to STX France. Amazingly the Papenburg, Germany, based Meyer Werft Group is a seventh generation family-owned shipyard with roots dating back to 1795.
A senior European executive for DP World has broken ranks and stated what many believe is inevitable, namely that container terminals will need to provide the ability to weigh export containers when mandatory weighing takes effect in 2016. The compromise agreement worked out by the IMO would alternatively allows a calculated weight to be submitted but not everyone believes that option to be reliable. It seems likely that if terminals have to weigh each container, there would be an incremental cost attached because of the need to install weighbridges, but that could be done, whereas the alternative of certified container weights provided by shippers could pose operating problems for highly automated facilities.
In another triumph for salvors, disaster has been averted off the coast of Ecuador in a UNESCO world heritage site. The coastal tanker Galapaface 1 which ran aground while departing the island of San Cristobal a few months ago when carrying carrying 19,000 gallons of fuel and petroleum products has been successfully refloated. Salvage companies Mammoet Salvage and its partner CPT Remolcadores SA of Chile were contracted to conduct the operation using expertise from the US, Ecuador, Chile, The Netherlands and Singapore. Before salvage could begin, the vessel was stripped of all pollutants including oil, paints, fuel, barrels of oil, acid based batteries, cement, plastics and even some furnishings before being successfully refloated on July 15.
The BBC unusually ran a detailed feature on Panamanian flag shipping this week. The objective was to explain how a small nation of just three million offers its flag to the largest shipping fleet in the world (8,600 ships). Unfortunately not all in the article is accurate but it’s good to see the interest. See: http://www.bbc.com/news/world-latin-america-28558480
Whilst we are on the subject of Panama, the Canal Authority and the consortium Groups Unidos por el Canal (GUPC) which is contracted to build the new locks have reached an agreement to sign a variation to the original contract that incorporates objectives laid out in an MOU signed in March 2014 that established the framework for the completion of the Third Set of Locks. The MoU included a co-financing concept that would ensure cash flow and support a deadline for the project’s completion by the end of 2015.
New Zealand has edged out Canada in a United Nations assessment of the world's most developed countries. The ranking is based on life expectancy, access to education and per capita gross national income. On this year's list New Zealand came seventh and Canada eighth. New Zealand slipped ahead of Canada largely because of significantly higher average expected years of education: 19.4 against Canada's 15.9. Canada won on life expectancy – 81.5 years against 81.1 years – and on per capita income – $41,887 against $32,569. Norway topped the assessment, followed by Australia, Switzerland, Netherlands and the United States.
The Order in Council (OIC) relating to the implementation of the Fair Rail for Grain Farmers Act (Bill C-30) is now in force. The measurs, which take immediate effect include:
The Province of British Columbia has just invested $6.8 million to create 1,424 new training seats at various post-secondary institutions throughout BC. This investments falls under the BC Skills for Jobs Blueprint initiative to increase training spaces and reduce wait times in trades critical to the LNG sector. These additional seats are expected to reduce wait times by 37%.
China is seek to take a bigger investment stake in Canadian LNG projects both in BC and Nova Scotia where a 3rd export project has just been announced bringing the total number of projects across the country to 23 namely:
West Vancouver Council has now joined Lions Bay Council in passing a motion in opposition to the future movement of LNG carriers on Howe Sound.
Yesterday Apache Corp. announced its decision to withdraw from the LNG business following pressure from investors. This leaves the Kitimat LNG, where Apache was an equal partner with Chevron Corp, and Australia's Wheatstone LNG projects up in the air. Chevron Corp. has since confirmed that they actively looking for a new partner and will move ahead with early-stage development work in Kitimat.
Also in the news on the LNG front is that FortisBC is to partner with the Canadian division of US construction group Bechtel to expand its LNG plant on Tilbury Island on the Fraser River. Bechtel is expected to break ground on the $400 million project in September and complete construction in 2016. The expanded facility will add 1.1 million gigajoules of LNG storage and 34,000 gigajoules of liquefaction capacity per day. The plant currently has the capacity to liquefy 5,000 gigajoules of LNG per day.
Meanwhile the BC energy regulator, the Oil and Gas Commission, has updated its LNG rule book for the future engineering and construction of some of the 16 export projects and two domestic plants currently planned for theprovince.The revised regulations cover engineering and liquefaction plant construction using such methods as modular design whereby pieces of plant equipment units will be fabricated at Asian yards then shipped to BC for installation.The rule book covers the main engineering issues and the responsibilities of permit holders in respecting the regulations.
At this year’s BCIT convocation ceremony for graduating marine cadets, Stephen presented awards on behalf of the Chamber of Shipping to Engineering officer David Mehain (above left) and Deck Officer Philip Sutherland (above right). The Chamber awards are intended for students who have demonstrated particular resilience in making it through four years of study and onboard ship learning to reach their goal. (At least David Mehain didn’t make Stephen look so small).
Also this week, the Western Marine Community Coalition scholarship committee (Kevin Obermeyer, Phillip Nelson and Stephen Brown) met to consider applications for scholarships. Five worthy candidates were selected to receive cheques of $2,000 each. Eligible applicants are required to be following a marine related course of education and must demonstrate a high level of extracurricular involvement.
It was revealed last week that the RCMP is still in dispute with the charterer of three cruise ships hired in to accomodate the Integrated Security Unit during the 2010 Winter Olympics. In a dispute related to taxation, currency fluctuations and costs, a US judge has awarded US$19 million plus interest to the charter company Cruise Connections Charter Management (CCCM) of Winston-Salem, N.C, the RCMP’s contractor. The judge ruled that the RCMP breached the contract in September 2008 and then formally terminated it in November 2008 by declaring default.
By way of background, the RCMP hired CCCM on a CAD$55.35 million contract in June 2008 to source three cruise ships for Vancouver 2010. However, the value of the US dollar slumped during the subsequent financial crisis reducing the contract to US$53.48 million meaning CCCM saw its profit margin disappear. CCCM had agreed to pay Holland America US$12.5 million for the MS Statendam for hotel service charges and guaranteed net onboard revenue (including food and beverage). CCCM also agreed to pay Royal Caribbean Cruise Lines US$25.74 million for the Jewel of the Seas and Radiance of the Seas. The total cost of US$38.237 million was not in dispute, however the level of administrative and operational costs to support the ships’ extended stay at Ballantyne Pier and disputes over taxation became major issues between CCCM and the RCMP caused the relationship to fracture. Additionally, CCCM’s contract with Holland America anticipated a four-day repositioning cruise from San Diego to Vancouver before the Olympics and a four-day repositioning cruise from Vancouver to San Diego afterward, but the judge ruled that the RCMP breached the contract before CCCM could reach an agreement on the repositioning cruises. In 2009, the RCMP eventually went direct to Holland America to contract the Statendam and Oosterdam and the Elation from Carnival, for lump sum CAD$76 million -- more than $20 million higher than the originally announced deal with CCCM.
The Pacific Maritime Association (PMA) and International Longshore and Warehouse Union (ILWU) “recessed” contract negotiations this week and until August 4 to allow the ILWU officers to participate in what is being described as unrelated contract talks with locked out grain handlers on the Columbia River. Despite the obvious uncertainty and while there is no contract extension in place, both parties have pledged to keep cargo moving. The grain terminals are not PMA members and their contract is therefore independent of the coastwide contract.