Ocean Transport: Among the anoraks

   I’ve been told train spotters and
ship enthusiasts are sometimes called “anoraks” in the United
Kingdom, after the coats they wear while waiting to snap photos. I
could have used a warmer jacket myself on Dec. 31, the day I went
over to the Port of Oakland to see the CMA CGM Benjamin Franklin
dock at the Ports America terminal.

   There was a mix of port workers and
the just plain curious, including several families with little
children in tow, who lined up to see the big ship. Even Mike Zampa,
the port’s communications director, admitted to being a little
awed. “I don’t think I’m alone—there were three helicopters
chasing the ship in from the Golden Gate Bridge, there were news
photographers on the Marin Headlands and Treasure Island at the
entrance to the Port of Oakland.”

   The port has spent many millions of
dollars, readying for big ships, he noted, deepening berths, raising
cranes and making other infrastructure improvement.

   One of those who braved the cold was
Jock O’Connell, an international trade advisor at Beacon Economics.
He noted the Port of Los Angeles prepared for the arrival of the CMA
CGM Benjamin Franklin like it was the Super Bowl. In Los Angeles,
11,200 containers of all sizes were discharged and loaded at APM
Terminal’s Pier 400 facility and in Oakland about 2,550 were
handled. “For several weeks, railcars have been pre-staged to the
Port of Los Angeles to ensure fastest turnarounds. Truckers were also
notified of this highest level of activity,” CMA CGM said.

   Of course, if such ships call
regularly, railroads and terminals will have to be ready for a Super
Bowl every week.

   Already 18,000-TEU ships are
deployed in the trade between Europe and Asia, but “if the volumes
on those routes start falling off or don’t increase at a desirable
rate, the carriers have all this surplus capacity that they’re
going to have to deploy elsewhere,” O’Connell noted.

   Alphaliner estimates 105 ships with
plus-13,300 TEUs of capacity and 58 ships with capacities of 10,000
to 13,299 TEUs will be delivered in the next three years.

   By virtue of their sheer size they
can displace the use of a larger number of smaller vessels, and help
California and its powerful California Air Resources Board reach its
ambitious environmental goals, O’Connell said.

   And, if West Coast ports prove they
can handle them efficiently, “it’s really going to take the wind
out of the Panama Canal,” he added.

   There was a big deal in December
between two companies revolving around a commodity whose transport
I’ve never given much thought about: asphalt.

   Vitol Group, with operations in
Geneva, Houston, London and Singapore, acquired a 50 percent interest
in Boca Raton, Fla.-based Sargeant Marine.

   (Sargeant notes that while the terms
asphalt and bitumen are often used interchangeably, bitumen is the
liquid product that is used as a binder—it becomes asphalt when
mixed with sand and aggregate stone. “Liquid asphalt” is another
synonym for bitumen.)

   Sargeant distributes asphalt to
customers worldwide and has terminals in Rotterdam and Costanza,
Romania, as well as a fleet of a dozen specialized tankers with
capacities ranging from 5,000 to more than 40,000 metric tons. In
late December, Sargeant took delivery of a 37,000-deadweight-ton
tanker, Asphalt Splendor.

   Sargeant also said it has the
world’s second largest fleet of ISO asphalt containers. The company
explained that those 20-foot containers are “often a more cost
effective alternative to delivery in 55 gallon drums” and used “to
service customers who require bulk deliveries where bulk terminals do
not exist or where customers wish to avoid the logistical problems of
handling and disposing of large quantities of drums.”

   A byproduct of oil refining, asphalt
is stored and transported at high temperatures—300 degrees
Fahrenheit.

   The combined asphalt businesses is
expected to trade 1 million metric tons of asphalt annually.
Daniel
Sargeant, chief executive officer of Sargeant, said the partnership
with Vitol “will enable our customers to continue to benefit from
our specialist expertise, with the additional backing of the world’s
leading energy trader.”

   Attorney Lawrence Rutkowski of
Seward and Kissel said the deal is “a fairly unusual marriage
between an asset-owning company with a much larger trading company
and does present some unique opportunities to the asset owner.”

   We asked Rutkowski if we should
expect a flurry of mergers given the depressed freight rates for both
container and bulk shipping.

   While consolidation can benefit
certain types of shipping companies, such as container carriers, he
said in the bulk trades, dry bulk in particular, there is less to be
gained from consolidation.

   Most bulk shipping companies have
lean staffs and outsource a lot of work. General and administrative
costs are “not a huge component of their expenses, so consolidation
is not going to save you a lot in my view. I think that’s one of
the reasons we haven’t seen more mergers,” he said.

   The Sargeant-Vitol deal is
different. “This is not a transaction that is driven by anybody’s
effort to reduce cost, rather it’s an attempt to truly exploit
synergies,” Rutkowski said.