Pacific Maritime Magazine - Marine Business for the Operations Sector

By Jim Shaw 

Bulk & Breakbulk: Smaller ports look at cargo diversification

 

Photo courtesy of WLH.

Log exports have shrunk at most West Coast ports because of problems in China, with exports down 45 percent at the Port of Longview, Washington in the first quarter alone.

West Coast ports are awaiting the fallout of China’s financial crisis, which saw the Asian country’s imports fall by 14.3 percent in August compared to a year ago while exports fell by 6.1 percent. This has already affected a number of West Coast ports, with the import of raw materials by the Asian country becoming a major concern.

A noticeable drop in the export of grain and logs has also taken place, and potential investors in coal export facilities are probably thanking environmental groups for slowing the development of projects that are now highly questionable in terms of long-term profitability.

Drought-like weather is also posing a problem, particularly in California, where farmers are having to fallow acreage due to lack of water, a move that has depressed fertilizer imports and may eventually have an impact on agricultural exports. In addition, US exports of all types have been hit by a strengthening dollar, which is making American commodities and products more expensive overseas. At the same time a “currency adjustment” by China has helped decrease the price of that country’s exports.

Nevertheless, many West Coast ports are continuing to invest in bulk and breakbulk cargo infrastructure and several are reconfiguring or modernizing their facilities to better handle cargo mixes that include bulk, breakbulk, unitized and neo-bulks as well as heavylift and project cargoes.

Port of San Diego

Near the Mexican border the Port of San Diego is considering the demolition of two large dockside warehouses at its Tenth Avenue Marine Terminal to open up a lay-down area for more bulk, over-sized and military-related cargoes, a move that could possibly quadruple the facility’s shipping business over the next two decades. To this end an Environmental Impact Report (EIR) has been commissioned to study the potential effects of the proposal.

The 96-acre terminal currently has eight berths, with the northern sector used largely by Dole to handle containerized bananas and other tropical produce while the southern sector is set up for dry bulks such as fertilizers and cement. Mitsubishi Cement Corporation, a major cement handler, has indicated that it would like to expand its importing operations to San Diego and has signed a conditional agreement with the port for a new facility at Tenth Avenue.

Also looking at expansion at San Diego is the Pasha Group, which has extensive operations at the port’s 160-acre National City Marine Terminal. Auto handling there is approaching 400,000 vehicle units per year and Pasha is looking for more space. With the prospect of moving as many as 800,000 units annually by 2040 Pasha has been negotiating with the port for more land as well as reconfigured rail tracks. However, National City residents are countering these requests with requests of their own for more public access to the City’s waterfront.

Port of Hueneme

North of the ports of Los Angeles and Long Beach the Port of Hueneme reported its highest cargo year in its 78-year history when it handled 1.57 million metric tons of freight during fiscal year 2014/15 which ended June 30. This was a 9.5 percent improvement over year-earlier figures, with much of the boost attributed to freight diverted from other West Coast ports during the long labor slowdown. Produce traffic, largely bananas moving in refrigerated containers, was up 5 percent, with all of Chiquita Brands International’s business now containerized while about one-third of Del Monte Fresh Produce’s traffic is boxed. This amounted to about 655,650 metric tons of bananas during the year, with some of the fruit diverted from Hueneme’s larger neighbors.

Auto traffic, the port’s main trade by tonnage as well as business revenue, was also up, with more than 321,000 vehicles handled, a 10.6 percent jump over the previous year. However, while vehicle imports were up 14.6 percent, vehicle exports fell by more than 16.5 percent, the large drop being attributed to the stronger US dollar.

Last year Hueneme gained increased borrowing authority under new state legislation that will help it modernize its equipment and facilities while a federal award of nearly $1.5 million will go towards wharf improvements related to the port’s Latin American trade.

San Francisco Bay

Ports within San Francisco Bay have traditionally been bulk and breakbulk handlers except for the Port of Oakland, which is the Bay’s principal container handler. The Port of San Francisco will, on occasion, handle a small number of containers but its main cargo today is bulk aggregate for the regional construction trade. The Port of Redwood City is also moving a considerable amount of aggregate, and this may expand if a channel-dredging project moves ahead (see Pacific Maritime Magazine, August 2015). Redwood City also handles scrap metal exports, as does the Port of Richmond, both recycling operations being controlled by Sims Metals.

In addition, the privately-owned Levin-Richmond Terminal in Richmond has been handling coal exports for Bowie Resource Partners, which is drawing product from Colorado and Utah for export to Mexico and Asia. More recently other mining interests in Utah, along with the California Capital Group and Terminal Logistics Solutions, have proposed shipping coal out of the Port of Oakland using the port’s former Army Base terminal. Most of this product would come from the Sufco mine in Sevier County, Utah. However, like most coal export projects along the coast, the plan is being bitterly opposed by environmental and community groups. Adding to the uncertain viability of the proposal is the fact that several large US coal companies, including Walter Energy, Alpha Natural Resources, Patriot Coal and James River Coal, have filed for bankruptcy lately because of the softening coal market.

Port of Stockton

Inland, the Port of Stockton, also a coal handler, has been diversifying its cargo mix as demand for coal slackens. Although nearly 1.7 million metric tons of coal were moved through the port over the past fiscal year, projections for the next 12 months are less than 400,000 tons. Fertilizer imports have also taken a hit, largely because of California’s water crisis, which has been most acutely felt by farmers in the central valley area. Nevertheless, the port is planning a number of capital improvements over the coming year. One of the largest will be the addition of more than 22,000 feet of new railroad track within the port’s Rough and Ready Island complex.

The $7.4 million investment will allow the facility to handle up to 12 unit trains weekly, doubling present capacity, with the improvements to be paid for through a loan from the Federal Railroad Administration’s Railroad Rehabilitation & Improvement Financing (RRIF) program. However, the Sierra Club has already filed a lawsuit in San Joaquin County Superior Court requesting the project be stopped until a full environmental review can be carried out. Port commissioners, who have awarded a contract for the work (see Pacific Maritime Magazine, July 2015), contend that the project does not require a full environmental review because it involves replacing existing rail line rather than new construction.

Stockton has been seeing a steady expansion in trade, with 172 ships calling since the start of the year, 32 more than the same period last year – and last year was an all-time record for the port.

Columbia River

On the Columbia River, a number of proposed liquid and dry bulk terminal projects remain up in the air, with several proposed coal terminals now largely dormant while oil and gas developments have picked up steam. In recent weeks Houston-based Waterside Energy has disclosed that it wants to build a $450 million liquid propane and butane export facility at Longview, Washington where it is already targeting an $800 million oil refinery. Both facilities would be built on 75 acres of privately controlled land near the Port of Longview.

Lou Soumas, Waterside Energy CEO, said the total investment would be $1.25 billion and would create around 700 construction jobs and 180 permanent jobs once the two plants are operational. The property parcels earmarked for the projects are owned by Fern America and N.A.P. Steel. However, an underground pipeline and rail line would be on port property and a port-owned loading wharf would be used.

Soumas said the liquid petroleum gas operation, which would see propane and butane carried by rail from Canada and North Dakota for export by ship, would be a joint venture with a yet-to-be-named partner while the oil refinery would process about 30,000 barrels of crude and 15,000 barrels of vegetable oil per day, with most of the resulting product distributed in the Portland area.

Longview had earlier decided not to sign a lease with Houston-based Haven Energy Terminals, which had proposed building a $300 million propane and butane export facility, largely on port property, because of safety and economic concerns

Port of Vancouver

Upriver from Longview the Port of Vancouver is celebrating the opening of a new rail entrance following the completion of a $30 million project to “trench” the port’s branch line under existing mainline tracks. The trench, part of the West Vancouver Freight Access (WVFA) project, was completed $8 million under budget and ahead of schedule, with the entire WVFA expected to be complete in 2017, roughly a year ahead of schedule and about $50 million under original estimates.

Like Longview, Vancouver is the target of several large petroleum related developments, one by Vancouver Energy, a joint venture of Tesoro and Savage Companies, and the other by NuStar Energy (see Pacific Maritime Magazine, June 2015), but it has also been developing its heavylift and project cargo businesses. Earlier this year the port handled its largest heavylift cargo to date when five Swedish-built transformers, each weighting approximately 400 metric tons, were moved between heavylift vessels and barges in an operation overseen by TransGroup Worldwide Logistics.

In addition, the port’s two Liebherr mobile harbor cranes have been put to work off-loading imported steel slabs, with multiple slabs of up to 70 metric tons being handled at one time. This has helped put the Washington port on track for another record year, although a slowdown in the export of copper concentrates and grain is expected to take place towards the end of the year, largely because of the weakening Chinese economy.

Port of Grays Harbor

On the Washington coast the Port of Grays Harbor has been one of the more successful Pacific Coast ports in diversifying its cargo mix over the years and, like several other ports, is being examined as a site for crude-by-rail projects.

Imperium Renewables, which has been operating a facility handling biodiesel, petroleum diesel, vegetable oil and methanol at the port, has been seeking to expand its operations by building up to nine 80,000-barrel storage tanks and extending its rail capacity to handle crude oil, ethanol, naphtha, gasoline, jet fuel and other liquids. However, the company’s assets at Grays Harbor were acquired by Ames, Iowa-based Renewable Energy Group in August, with the operation now known as REG Grays Harbor, LLC. It is not yet known if REG will press forward with the expansion and diversification plans envisioned by Seattle-based Imperium.

Also at Grays Harbor, Westway Terminal wants to add crude oil handling to its methanol distribution terminal at the port and plans to build five 200,000-barrel capacity storage tanks and lay additional rail line to support the transshipment of oil between rail cars and vessels. Both projects, initially expected to start up in 2013, have faced significant delays as environmental opposition has grown. Last month the Washington State Department of Ecology and the city of Hoquiam released draft environmental impact statements on both projects and have scheduled two days of public hearings later this month.

Port of Olympia

Within Puget Sound the Port of Olympia, like other ports, has been suffering from the downturn in the Chinese economy as well as the strengthening US dollar, with only 13 ships calling at the port during the first half of this year compared to 21 during the same period last year. Eleven of this year’s arrivals came in to load logs compared to 14 in 2014 while two arrived with general cargo, largely wind energy components. This compares to seven general cargo ships handled last year. Plummeting world crude oil prices have also taken their toll on Olympia because the port had become a gateway for the importation of ceramic proppants used in North Dakota’s Bakken oil fields. However, because of cheaper overseas oil only one ship carrying proppants has been handled at the port this year.

In a bid to diversify its cargo mix, as well as increase cargo handling productivity, the port acquired a used Gottwald mobile harbor crane from Belgium earlier this year at a cost of $3.2 million (see Pacific Maritime Magazine, March 2015). The 2005-built machine has a 173-foot boom and can lift 140 metric tons at a 36-foot outreach, giving it substantial cargo handling flexibility.

Port of Everett

In northern Puget Sound the Port of Everett expects to handle more than 500,000 tons of bulk and breakbulk cargo this year, as well as about 10,000 TEUs of loaded containers, the latter holding aerospace subassemblies for The Boeing Company coming in from Asia. Cement, wood fiber products and logs make up the bulk of the port’s non-containerized traffic but heavylift and project cargoes have been growing, the result of recent investments in lifting equipment and the availability of lay-down space.

Photo courtesy of Port of Kalama.

Grain export facilities along the West Coast, such as this complex at Kalama, Washington, have seen a substantial drop in business over the past few months because of the economic slowdown in China.

Earlier this year three Tier-4 RS46-36 ReachStackers were acquired from the Hyster Company through local dealer Papé Material Handling. These units will be used to handle breakbulk and containerized freight, with the machines having been modified to accommodate non-standard sized cargoes. In addition two 40-ton capacity gantry cranes are available at the port’s Pacific Terminal while a Terex Gottwald GHMK7608 mobile harbor crane has been acquired to operate alongside the port’s existing Terex Gottwald HMK280 crane.

Besides equipment, Everett’s geographical location has played a part in recent project cargo moves. These have included 60 pieces of structural steel, some weighing as much as 80 metric tons, coming from China and destined for a bridge replacement project in Alberta, Canada, and components for a rock crushing plant, also moving to Alberta but sourced in South Korea, with the heaviest piece weighing 94 metric tons.

“The Port of Everett is strategically positioned to take on these unique, oversized project cargo shipments,” observed the port’s Marine Terminal Director, Walter Seidl. “Over-dimensional is our niche. It’s what we do best.”

 
 

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