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BULLETIN
0807
SEPTEMBER, 2007
NCLTL FALL MEETING UPDATE
The NCLTL Fall Meeting in Charleston continues to improve. Room Reservations. If you have not made your room reservation please do it now by calling the Hampton Inn 843.856.3900. Registration Forms: We need your Registration form and your Security Form, as soon as is convenient, deadline is October 1.
All attendees must have the security form submitted in advance to be allowed on the SC State Ports
facilities. If you have questions please call the League office. Attention Account Executives, Freight Forwarders and Carriers: Please let us know any persons that you want us to invite, especially in the Charleston area and we will get something out to them. Please send a brief email to ncltl@clickcom.com and we will take care of the rest. Important correction: we gave out wrong information as to directions to the Hampton Inn in our last bulletin. Please note enclosed corrected directions to the Inn. Mike Westerfield, longtime Cargo Sales Manager, SC State Ports Authority will be a guest speaker at the meeting. Many of you know Mike and we are proud to have him on the agenda.
SENATE PASSES SPENDING BILL
The US Senate has passed a $106.4 billion measure funding transportation and housing programs for the year beginning October 1. Highway obligations are expected to be 5% higher than this year’s level. The bill includes a $1 billion bridge rehabilitation program but would barely make a dent in the $65 billion needed for bridge repairs identified by the Department of Transportation. Sen. Patty Murray, D-Wash stated that 27 percent of the nation’s 600,000 bridges are structurally inadequate. The bridge repair funds will come from the battered highway trust fund, as gasoline tax revenues will not be able to fund highway programs at the levels set forth by the 2005 highway bill. Congress also approved an amendment from Sen. Amy Kloboucher D-Minn to appropriate $195 million to build a replacement for the I-35W Bridge that collapsed on August 1. Only $55 million has been appropriated so far. With the passage of the DOT-HUD bill, the Senate has cleared four of the 12 annual appropriations for 2008. The House has approved all 12. It will be necessary to get funding before October 1 for fiscal 2008 to keep federal agencies operating.
HOURS OF SERVICE DECISION DELAYED
The current 11-hour rule and 34-hour restart will remain in effect due to challenges filed with the US Court of Appeals for the DC circuit, delaying the Sept. 14 deadline for the court’s decision to go into affect. The ATA filed a motion seeking to stay the court’s decision for eight months because the FMCSA is likely to be able to justify its adoption of the 11 and 34-hour provisions and because law enforcement agencies will not be able to adapt the new requirements immediately. The court was also asked to rehear portions of its July opinion on sleeper-berth provisions and the prohibition on drivers stopping the 14-hour clock to take short rest breaks on two legal grounds. “nothing is going to happen on the 14th because the court has to make a determination regarding the rehearing and the stay. Until the court sorts out those two requests, nothing is going to happen. Everything is on hold”, said Charles Miller, a spokesman for the Department of Justice.
CHINESE IMPOSE RATE HIKE
China has raised interest rates for the fifth time this year amid signs that repeated attempts to slow the sizzling economy have had little effect. The interest rate on a one-year loan is now 7.29 percent. Rates paid on bank deposits are 3.87 percent. Inflation in China rose to an 11-year high of 6.5 per cent in August. Jing Ulrich, Chairwoman of China equities for JP Morgan, said “they can expect one more rate increase in the next six months. Inflation risks are on the rise in China, sparked by structural changes in the demand-supply situation for foodstuffs, as well as excess liquidity on the back of the widening trade surplus.” Chinese leaders want to maintain high growth to reduce poverty but worry that the current boom, fueled by exports and investment, could push inflation to dangerous levels or ignite financial crisis. The economy has pushed ahead despite repeated rate hikes, investment curbs and measures to shrink credit, as well as global worries about the US economy.
US COTTON IN DEMAND BY CHINA, INDIA
Cotton, the least profitable crop for US farmer is in high demand for T-shirts and blue jeans made in China and India. Speculators expect the prices will rise and the $1 billion Schroders Agriculture Fund expects cotton may more than double during the rally. The US is the world’s biggest export of cotton. However the cotton crop may be the smallest in a decade as farmers produce more higher-priced wheat, corn and soybeans. Cotton may gain 66 percent to $1 a pound in 2008, up from 60.25 cents on September 1. If cotton prices rise fast, US manufacturers could see profits suffer such as Hanesbrands and Levi Strauss. For instance a $1 million purchase of cotton today might return $660,000 or 66%. Cotton is still 50% below its all-time high according to Jim Rogers, Barclays Plc. Cotton has appreciated only 13 percent in the last year and is the cheapest ever relative to wheat. Demand for jeans is growing faster that the US in Asia, where the average Chinese citizen has four pairs and Indians have 2 pairs. Donald Shurley, an economist at the University of Georgia said that cotton will earn $40 an acre, compared to $124 for corn, $72 for soybeans and $94 for a dual crop of wheat and soybeans.
US TRADE DEFICIT DROPS SLIGHTLY IN JULY
The US trade deficit decline slightly in July down 0.3 percent in July to $59.2 billion compared with $59.4 billion the month before. So far this year, the deficit is running at an annual rate of $711 billion, down from $758.5 billion in 2006. Economist believe the trade balance will finally shrink this year after setting five consecutive records as American exporters benefit from strong economic growth in many countries overseas and a weaker dollar against many currencies.
YRC BEGINS EARLY LABOR TALKS
YRC Worldwide announced that its TMI member subsidiaries will commence contract discussions with the Teamsters Union in September. The current contract expires April 1, 2008. “Initiating negotiations in an expedited time frame is a good move for all parties,” according to Mike Smid, President and CEO of YRC National Transportation.
US FINES 2 AIRLINES $300 MILLION EACH
British Airways and Korean Air Lines were each fined $300 million after admitting they reached secret agreements with competitors in setting fuel surcharges. Both companies cooperated with investigators and escaped penalties that could have been two to three times higher. Both airlines pleaded guilty to two criminal counts of conspiracy in setting extra charges on passenger and cargo flights to help offset rising fuel costs. British Airways fuel surcharge on a round-trip between the US and UK rose to $100 per ticket in 2006, from $10 in 2004. British Airways could have been fined as much as $894 million.
EDWARDS ENDORSED
The Transport Workers Union of American endorsed John Edwards saying the former NC Senator was the most electable of the Democratic presidential candidates.
US SENATE OKS BILL FOR $6 MILLION FOR NC
The US Senate has approved a $6 million down payment on a cash settlement for Swain County IN NC over an unfinished road through the Great Smoky Mountains National Park. The money is part of an expected $52 million settlement for the federal government’s failure to build the road along the north shore of the Fontana Lake, was included in the transportation bill approved by the Senate. It could take years for Swain County to get the entire settlement, said Andrew Whatlen, a spokesman for Congressman Heath Shuler. The highway is know and the “road to nowhere” and had been planned to replace a road that was flooded with the building of the Fontana dam in 1940. Finishing the road could have cost $600 million and would have upset conservationists who have fought vigorously for years against building the highway. Both Sen. Elizabeth Dole, R-NC and Lamar Alexander R-Tenn have fought for Swain County to receive the initial payment in the settlement.
REPORTS SAYS OVERWEIGHT TRUCKS DAMAGE ROADS AND BRIDGES
Some experts have warned that the practice of issuing state overweight permits can weaken steel and concrete and put dangerous wear and tear on the already fragile infrastructure. Investigators say that such overweight trucks may have contributed to the collapse of the Minneapolis bridge on Aug.1. In 2000 Milwaukee’s Hoan Bridge collapsed when steel girders cracked, leading to comments that a significant number of overweight trucks crossed the bridge. Most of the states have an 80,000 gross weight limit. According to a study one 40-ton truck does as much damage as 9,600 cars. Many transportation officials dismiss the fears of overweight trucks as being overblown. Permits are frequent issued to allow vehicles to exceed 40 tons by two tons in Texas and 85 tons in Nevada. Some states grant one-time permits that allow trucks to be considerably heavier. Many states charge fees of $12 to $1,000 for overweight load permits, depending on the weight. Darrin Roth, director of highway operations for the American Trucking Association said it is not fair to put all the blame on trucks because permit loads are a tiny percent of total traffic. States allowed more than 500,000 overweight trucks to travel the nation’s bridges and highways at will in the past year, according to an AP review of figures in all 50 states. In the year before the collapse of the Minneapolis bridge, the state Transportation Department granted permits for 48 overweight loads, including construction cranes and supplies weighing as much as 72 ½ tons. Generally trucks are not allowed to exceed the 80,000-pound limit on interstate highways; however some states have a higher weight restriction on some stretches of the highway as these provisions were grandfathered in when the federal interstate system was created during the Eisenhower administration. For 2006, the state of NC issued some 14,000 annual overweight permits and 186,000 short-term permits.
FIXING ROADS AND BRIDGES WITHOUT HIGHER TAXES
Max Borders of the Civitas Institute recently reported that NC roads and bridges could be fixed without higher taxes. He stated that roads could be fixed without cutting welfare programs or legislating higher taxes. NC already has nearly the highest excise gas tax in the nation at 30.15 cents per gallon. The 3 percent highway use tax on title transfers brings in an additional $580 million per year. None of this includes federal highway subsidies. Borders states that the problem of funding is the misallocation of funds, not under funding. The Highway Trust Fund has been raided by $170 each year. First he says, scrap the Equitable Distribution Formula. Areas of the state losing population are still getting new roads. Resources that should be going to fast-growing urban centers or to road maintenance statewide are instead going to unnecessary projects. Areas that generate the most transportation revenues also have the greatest infrastructure needs. Transportation expert David Hartgen found that had the 50 least cost-effective transportation projects built between 1990 and 2003 been eliminated, about $2.5 billion would have been saved. The state also needs to increase the use of creative financing. HOV lanes should be converted to HOT lanes. Toll roads and other public-private partnerships will allow new roadways to become self-financing. NC controls more state highways than any state except Texas so counties should become more responsible for funding along with the taxing authority.
BAN ON MEXICAN TRUCKS STILL IN EFFECT
Foes of the ban on Mexican trucks on US roads say this is violation of NAFTA. However the US Senate has voted to ban Mexican trucks on US roadways, Supporters of an amendment by Sen. Bryon Dorgan D-ND claim that Mexican trucks are not yet proven safe. Opponents say that the US is applying tougher standards to Mexican trucks than to Canadian trucks and filing to live up to its NAFTA obligations. Mexican trucks may come inside the US border for 20 miles except for the 75-mile limit in Arizona. Under NAFTA, Mexico can seek retaliation against the US for railing to adhere to the treaty’s requirements, including retaining tariffs on goods the treaty eliminates, said Sidney Weintraub, a professor at the University of Texas LBJ School of Public Affairs. The pilot program would allow 100 Mexican carriers to send their trucks on US highways for deliver and pickup of cargo. None may carry hazardous materials or haul Intra-US traffic. One Mexican carrier, Transportes Olympic has been granted access to US roads by the Department of Transportation after a more than decade-long dispute over the NAFTA provision opening up the roadways.
EU ISSUES DRAFT RULES FOR LINER SHIPPING
The European Union published its long-awaited decision to apply its long awaited guidelines for how the ocean liner industry should be structured in Europe when exemption from antitrust for liner conferences ends in October 2008. The abolition of liner conferences is the key feature of the EU’s decision to apply its competition regime to the maritime sector, including tramp and cabotage shipping in the 27-nation bloc. The European Commission is seeking feedback from shippers and other industry groups on the draft guidelines over the next two months before it finalizes details of the new competition regime. The guidelines will be in force for five years and indicate to ship owners and shippers how the commission plans to apply the EU competition rules to the maritime industry. The draft guidelines state that there is not litmus test to show whether tramp shipping pools conform to EU competition rules because of their variety. The European Liner Affairs Association said that it is pleased with the guidelines.
APM TERMINALS OPEN PORTSMOUTH CONTAINER HUB
The AP Moller-Maersk terminals officially opened a $450 million container terminal in Portsmouth VA that is say will be the most automated box hub in the US. The 291-acre terminal is the nation’s largest privately owned container terminal and features unmanned rail-mounted yard cranes that operated remotely from a control center in the terminal’s main building. The terminal has a draft channel of 55 feet and has the capacity to handle 1 million TEUs a year. It is the third-largest container terminal in the US. It has 12 inbound and 12 outbound truck gates that are equipped with optical scanners and radio frequency identification readers. The terminal has six super-post-Panamax cranes, 30 remote-control rail-mounted gantry yard cranes, and two rubber-tire gantry cranes. Twenty shuttle trucks transport cargo from the dock to the container stack area. APM officials also said the terminal is designed to minimize the environmental impact of cargo handling, by powering cranes with electricity instead of diesel and replacing hydraulic spreader bars with electric-powered devices that eliminate hydraulic spills. The company also set aside more than 150 acres of undeveloped forest and wetlands and recreated 27 acres of wetlands by planning nearly 200,000 plants.
JUDGE TOSSES OUT CONVERSATION LEAGUE CHALLENGES
Judge John D. Geathers, a state administrative law judge has dismissed the SC Coastal Conversation League’s challenges of state permits for the new port access road and marine terminal at the former Navy Base in Charleston. Bernard Groseclose, President and CEO of the SC State Ports Authority said “every state and federal permitting agency that has signed off on the plan, recognizing that this project benefits our neighbors, the environment and the economy.” The favorable ruling removes an automatic stay of construction and allows the SCSPA to move ahead with the three-berth, 280-acre container terminal. The project includes nearly $10 million in environmental and community mitigation, along with a voluntary air quality program to minimize emission from both new and existing terminals. Work that does not require state or federal permits is under way. In his orders, Judge Geathers ruled in favor of the SCSPA’s motion to dismiss based on the fact that the SCCCL did not timely file their requests with the DHEC Board. In other words, the SCCCL waited too long.
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