Wednesday, March 23, 2011

Scan all containers, not just the suspicious ones

From The Economist:

In January, the port of Los Angeles received more than 330,000 TEUs (twenty-foot equivalent units, the standard measuring unit for shipping containers). The possibility that one of those 330,000 containers could have contained a dirty bomb, or worse, keeps security experts up at night. Legislation passed in 2007 requires that every single container entering the United States must be scanned for a potential weapon.
Currently the Customs Bureau receives information on containers’ shipping manifests, which must be transmitted at least 24 hours before departure. If the manifest looks suspicious, the container in question must be taken out of the queue, inspected, and returned to its place. This process can be cumbersome. Stephen Flynn, a Coast Guard veteran and president of the Centre for National Policy, a security-focused Washington think tank, points out that the largest ships begin loading containers 18 hours before departure, making it difficult to find finding the potential offender. Try to handle more than the small fraction of containers which currently get scanned and the whole inspection line becomes, in Mr Flynn’s words, “constipated.”
Just how constipated becomes apparent in modelling done by Nitin Bakshi of London Business School and Noah Gans of Pennsylvania’s Wharton School of Business, who co-authored a recent Management Science paper with Mr Flynn on the question of port security. Using two months’ data from two large international container terminals, Mr Bakshi and Mr Gans created a simulation to gauge what delays would result if the Customs Bureau began requiring that all inbound containers be evaluated. Inspecting only 7% of containers, they found, would mean delays for nearly every single container.
How, then, can the Customs Bureau meet the legal mandate of scanning every container without perpetually snarling ports? Messrs Bakshi, Gans, and Flynn propose an alternative approach. Instead of singling out only those containers whose documentation raises questions, terminal operators would X-ray every container, regardless of its eventual destination. Only those containers flagged during the low-level scan would be subjected to a more thorough search. Think of it as everyone who will be boarding a plane having to go through security, as opposed to a select few being asked to leave their seats and answer questions as the plane was about to depart.
The authors call their approach “industry-centric,” since the terminal operators would play a greater role in the scanning (and bear the corresponding cost). It has several advantages: the entire “dwell time” of a container at the port, not just the last 24 hours, can be used to evaluate its safety. More to the point, subjected to the same simulations as the current inspection process, the industry-centric approach handled all the modelled container traffic with far fewer problems.
The authors intended their paper for two audiences. One are the general shipping and logistics firms. The other is policymakers, who might have given up hope of the possibility of achieving full port scanning. But for them the paper leaves important questions unanswered. How would other countries react to their inbound containers being scanned in an American initiative? For that matter, how would the prospect of scanners in Hong Kong being responsible for scanning goods bound for Los Angeles play politically? Who would control the data resulting from millions of container scans?
This may be why, as Mr Flynn suggests, some political courage would be necessary to change current container security procedures. At least the courageous policymaker will have some research to wave at opponents.
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Wednesday, January 26, 2011

CP profit climbs 27%

The Calgary-based company, Canadian Pacific Railway Ltd. has surpassed analyst profit estimates by a 13% revenue increase in the fourth quarter from the same time last year. With gains across all of its business lines, the company states that its profits for the three months ended Dec 31 was $186-million, up 27% from $146.2-million since the previous year.

Despite the increased volume in the trucking industry, there is still a demand for transportation modes such as rail. The CEO of CP Fred Green is quoted saying “We continue to see strong demand for rail service across all lines of business.” contains more details on the post.

Thursday, January 20, 2011

Hamburg Port may lose business because of inadequate depth

Germany’s Asian Gate Threatened by River Elbe: Freight Markets

Jan. 20 (Bloomberg) -- Germany’s largest container port may lose the world’s biggest freight ships to Belgium and Holland unless it can push through plans to deepen the River Elbe.

Environmental groups and a neighboring state opposed to the 385 million-euro ($516 million) project have delayed it for three years, preventing the biggest container ships from entering the northern port of Hamburg at full capacity. Shares of Hamburger Hafen und Logistik AG, which handles two thirds of the containers that go through the shipping hub, have dropped 42 percent since 2007.

“It’s extremely important for the investment case that this gets done,” said Igor de Maack, who helps manage 5 billion euros at DNCA Finance and Leonardo Invest Fund in Paris, including Hamburger Hafen stock. “I hope the Germans will make a wise decision as this port matters a great deal for trade and for Germany as an export-dependent nation.”

Europe’s largest economy is increasingly reliant on exports to Asia, 71 billion euros of which went by ship in 2009. Hamburg handles 25 percent of the country’s sea-bound exports, and Asia accounts for almost 60 percent of its cargo volumes. Shipping companies have increased orders for big vessels that are used mainly on Asian routes and which often sit too deep for the Elbe when fully loaded.

Market Share

“Hamburg will continue to lose market share to competing north-range ports unless they improve access,” said Peter Meany, head of an infrastructure fund at Colonial First State Global Asset Management in Sydney that holds Hamburger Hafen shares. “The situation not only impacts volumes but also dilutes the pricing advantage of Hamburg’s geographic location.”

Ports around the world are preparing for bigger ships. A.P. Moeller-Maersk A/S, owner of the world’s biggest container liner, has readied facilities in New York and Houston, and the ports around Charleston, South Carolina, are dredging to accommodate larger vessels.

The waterway connecting Belgium’s Antwerp port with the North Sea was deepened last year, and Germany’s Wilhelmshaven is also being prepared to handle the world’s biggest ships by 2012. Holland’s Rotterdam, Europe’s largest port, can already handle them and is investing to expand that capacity further.

“The adjustment of the navigation channel in the inner and outer Elbe is of fundamental national importance,” said Claudia Sye, an infrastructure expert at the Hamburg Chamber of Commerce. “Further delays in the process of implementing the adjustments may involve significant losses of cargo traffic and deteriorating future prospects.”

Flooding Fears

The project to deepen the Elbe, now scheduled to proceed toward the end of 2011, has pitted Hamburg against the neighboring state of Lower Saxony, which shares the river and must agree to the plan. Lower Saxony officials are concerned that a deepening would increase the impact of the tide and waves on the levees that protect its citizens against floods.

“Economic development is very important to us, but the safety of people is our highest priority,” said Jutta Kremer- Heye, a spokeswoman for Lower Saxony’s environment ministry. The state has yet to receive an amended proposal and will probably make a decision on it in March or April, she said.

Environmental groups such as Friends of the Earth Germany say dredging the Elbe is unnecessary and would threaten its ecosystem. The river, which was just three to four meters deep in Hamburg at the start of the 19th century, has been deepened seven times since 1850 to cater for bigger and bigger boats, according to the port authority.


High Tide

Today, vessels with a maximum draft, or water depth, of 12.8 meters can use the port with ease. During high tide, ships sitting 15.1 meters deep in the water can navigate to Hamburg from the North Sea, according to Bengt van Beuningen, a spokesman for Port of Hamburg Marketing.

The Maersk Emden, which visited Hamburg last week, is 366 meters long, 48 meters wide and has a maximum draft of 15.5 meters, according to the Port of Hamburg website, meaning it couldn’t carry its maximum load of 13,100 containers.

“These particularly large ships are used primarily in trade with China and Asia, markets in which the Port of Hamburg is the leading transshipment port in Europe,” said van Beuningen. “Any loss of services or a decline in foreign trade would not be positive for the port business.”

Asian Trade

It wouldn’t be good for Germany either. Its exports to Asia are growing more than twice as fast as sales to other euro-area countries. Sales to Asia jumped 32.1 percent in the first 10 months of last year from the same period in 2009, Federal Statistics Office data show. That compares with a 13.4 percent gain in exports to the euro area.

Hamburg businesses and politicians say deepening the Elbe is crucial to the city’s competitiveness and retaining jobs in the region. Some 165,000 people in Hamburg and 275,000 people in Germany rely on the port for employment.

Those jobs could be compromised if the port is unable to service the growing number of large vessels.

In 2009, a fifth of the 10,871 ships that visited Hamburg required assistance from the tide. Of those, 712 were more than 330 meters long. That number rose to 827 last year and is likely to increase to more than 900 this year, according to the port authority.

Vessels able to carry more than 8,000 containers made up a record 80 percent of orders by volume for the first 10 months of 2010, surpassing the previous peak of 66 percent in 2007, according to Clarkson Plc, the world’s largest shipbroker.


For now, shipping companies are giving Hamburg the benefit of the doubt.

“We believe the port of Hamburg is taking all the necessary measures to cope on time with new requirements made by the world’s largest shipping lines,” said Marie Lopez, a spokeswoman for Marseille-based CMA CGM SA, the world’s third- biggest container shipping company. “The dispatch of very large vessels should be facilitated in the coming months and years thanks to the deepening of the channel in the River Elbe.”

Hamburg Mayor Christoph Ahlhaus is confident that work on deepening the river will start on schedule later this year.

“I am convinced that we can start work on the expansion this year as planned,” Ahlhaus said on Jan. 10 after a meeting with German Transport Minister Peter Ramsauer. “After adapting the project several times to meet environmental concerns, I believe that Hamburg can expect full support for the expansion, also from neighboring states.”

To contact the reporters responsible for this story: Niklas Magnusson in Hamburg at Cornelius Rahn in Frankfurt at

Wednesday, January 19, 2011

A small Indian airline orders 180 Airbus A320s worth $15.6 billion

Private low-cost domestic carrier IndiGo has placed a firm order for purchasing 180 single-aisle Airbus A320 passenger jetliners, making it the largest single order for such a large number of jets in commercial aviation history.

IndiGo has signed a memorandum of understanding (MoU) for 180 eco-efficient Airbus A320 aircraft of which 150 will be A320neo's and 30 will be A320s. It will also make IndiGo a launch customer for the A320neo. Engine selection will be announced by the airline at a later date.

The Hindu : Business / Industry : IndiGo orders 180 Airbus A320s worth $15.6 billion

Tuesday, January 18, 2011

IMF Survey: Emerging Africa Expected To See Rise in Investment

  • Africa's new trading partners seeking direct investment opportunities
  • Asset managers looking for countries that inspire investor confidence
  • Coherent macroeconomic policy, foreign exchange regimes vital

IMF Survey: Emerging Africa Expected To See Rise in Investment

The biggest bang for the education bucks is not from Harvard

Princeton, Dartmouth, Harvard, step aside. Usually these instituions are synonymous with the financial success of their alumni. However, Harvey Mudd College, a relatively unknown amongst the big-banner academic brands, returned the highest returns on education investment. According to a survey, the starting median salary of its graduates at US$68,900 far exceeded those earned by the graduates of the big named universities.

More on this is reported below.

collges-that-bring-the-highest-paycheck: Personal Finance News from Yahoo! Finance

Introducing the blog

The Ted Rogers School of Management of Ryerson...Image via WikipediaThis blog is maintained by students attending the course Principles of Transportation (GMS803) at Ryerson University's School of Management. The blog offers a running commentary on the interface between transportation and trade.
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