Market Matters Blog
Katie Micik DTN Markets Editor

Monday 03/02/15

Great Lakes Nearly 88% Covered in Ice

OMAHA (DTN) -- Queen Elsa, the star of the Disney movie "Frozen," apparently paid a visit to the Great Lakes in February and left them nearly covered in ice.

Great Lakes ice coverage as of March 1, 2015. (Graphic courtesy of NOAA)

As of Feb. 28, the combined Great Lakes were nearing last year's March 6 total of 92%. Three of the Great Lakes were up to 95% covered. According to the Great Lakes Environmental Research Laboratory (GLERL), Lake Erie measured 96% coverage, Lake Superior measured 95.3%, Lake Erie was 95.9%, and Lake Huron is at 95.82%. Lake Ontario, one of the deepest lakes compared to its surface area, has seen ice coverage ranging from 80% last week, to 69.3% on the March 1. Lake Michigan is currently at 72.2% ice coverage. The combined total of all the Great lakes makes this the second winter in a row that ice coverage exceeded 80%.

George Leshkevich, a physical scientist with the Great Lakes Environmental Research Laboratory in Ann Arbor, Mich., was quoted in the Great Lakes and Seaway Shipping News saying that, "It's been pretty cold the last few weeks, so the lakes have more ice now than at this time last year." He said it was unusual to have two years in a row of extensive ice cover compared to previous years. He told the Duluth News Tribune that "We're seeing some real difficult shipping conditions on Lake Erie, with a lot of ridging in the central and south parts of the lake."

The severity of ice last year called for convoys of ice breakers to work through the ice, and many times the wind would close up the fresh path, causing ridges which had to "rammed" by the icebreaker. Overnight, the icebreaker would get caught in the ice and end up in the same position it was at 24 hours earlier. Leshkevich said that he traveled with the ice breakers in March 2014. "It was brutal. I had never seen it like that," he said. "A five-to-seven-day trip turned into 16 days."

According to the USDA GTR, United States and Canadian authorities have scheduled the beginning of 2015 navigation season for the Great Lakes-St. Lawrence Seaway shipping system for March 27, a day earlier than last year. Last year, the first ship didn't pass through there until April 4 because of the severe ice coverage. A seaway spokesman said, "Last year when we opened, we saw limited activity given how expansive the ice cover was." He added it could adjust the opening date if necessary. "We will not open the season until it is safe to do so."

The GLS Shipping News reported that Robert Lewis-Manning, president of the Canadian Shipowners Association, which represents ships that move through the Great Lakes and St. Lawrence River, said he expects this year's situation to be "as bad or worse than it was last year." There is concern that the lack of ice breakers may be a problem this year if the ice becomes worse. While the U.S. Coast Guard has seven, it relied on help from Canada's two icebreakers that were sent from the Artic and may not be readily available this season.

As for the Port of Duluth, the ice breakers usually begin working on the port in early March. Last year, U.S. Coast Guard icebreaker Alder began operations March 4. The port's first oceangoing ship (saltie) of the 2014 commercial shipping season did not arrive until early May 2014. The first saltie of the season was escorted in a convoy of ice breakers in order to make it to the port safely. Thunder Bay's first saltie arrived in port on April 28. The arrival of the salties is the "official" start to the grain-shipping season.

WEST COAST PORTS RETURNING TO NORMAL?

Most of the 29 ports affected by the nine-month labor dispute between the Pacific Maritime Association (PMA) and the International Longshore and Workers Union (ILWU) are almost at full production levels, but still face backlogs as they continue to catch up. Work resumed in full on Feb. 21 when both parties reached a tentative settlement, which is scheduled to be ratified sometime in March, but many believe that the backlogs could take up to three months to clear.

"The challenge is going to be re-earning the trust of the shippers," Mark Hirzel, president of the Los Angeles Customs Brokers and Freight Forwarders Association, told the Long Beach Press-Telegram. "I know of a very large shipper that has moved all their cargo from Los Angeles and Long Beach and have sworn they're not coming back again," Hirzel said Friday. On Feb. 6, the Port of Long Beach sent DTN a statement by email in which Chief Executive Jon Slangerup stated that, "Business has already moved to other ports due to the congestion."

The Journal of Commerce reported that in a survey of 138 shippers, "65% plan to ship less cargo through U.S. West Coast ports this year and in 2016 after suffering from congestion delays. The percentage of shippers planning to permanently reroute some cargo away from the coast is nearly identical to the 66% of shippers who said the same thing when they were surveyed by JOC.com in mid-December."

A Midwest container broker told DTN via email, "We don't have a lot of options to bypass the West Coast for most of our Asia-bound exports. If I was a cotton shipper in Texas or a soybean or other shipper from Ohio or Missouri, I sure would be working hard on an East Coast option. Importers have better options as they have higher margins on finished goods, and the market for over 65% of consumer goods is east of the Mississippi."

He added that in his opinion, "This GOP congress should pass legislation making ocean ports equivalent with railroads and airports in terms of strategic importance and allowing federal intervention sooner than later." The law currently says they can only involve a federal mediator if both sides agree or wait for a strike/lockout and then invoke federal rules.

Fred Klose, executive director of the California Agricultural Export Council, told the Press-Telegram, "The trade group hasn't calculated the economic hit to farmers caused by the port troubles, but some exporters switched to air freight, which caused prices of exported produce to rise in Japan. Prices rocketed through the roof; Japan couldn't get the products that they needed, so there's a lot of air freight going on."

Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow Mary on Twitter @MaryCKenn

(AG/CZ/SK)

Posted at 12:09PM CST 03/02/15 by Mary Kennedy
Comments (16)
Must be that global warming problem. Water must be freezing at a higher temperature these days.
Posted by Bonnie Dukowitz at 4:37AM CST 03/03/15
Bonnie, Take a deep breath. Nobody is going to force science upon you.
Posted by Don Thompson at 10:34AM CST 03/03/15
Only 20 some degrees below normal here this A.M. No fictional science book, just plain reality.
Posted by Bonnie Dukowitz at 8:15AM CST 03/04/15
I don't know if you noticed Don but the world for climate deniers is very small, they don't understand that every year the worlds temperature is rising because where they live its cold. If you deny science you also seem to deny geography.
Posted by Jay Mcginnis at 9:39AM CST 03/04/15
I was curious how the temps in Europe and Asia were, relative to the average this winter.
Posted by TOM DRAPER at 12:40PM CST 03/04/15
Europe--particularly northern Europe--was very warm in February. The NOAA February Global Climate Report notes that "...many areas of Finland observed February temperatures six to eight degrees Celsius (11-14 Fahrenheit) above average, with some regions in the north more than nine deg C or 16 F above average. For central and northern Finland, it was the second warmest February in the 115-year period of record, behind only 1990. The February temperature for Norway was six degrees C (11 F) higher than the 1981-2010 average, the second warmest February on record, also behind 1990. The nationally-averaged temperature for Germany was 3.4 deg C (6.1 F) above the 1981-2010 average, marking the sixth warmest February since national records began in 1881."
Posted by Bryce Anderson at 3:22PM CST 03/04/15
The NOAA report also depicts western and central Asia as below normal on temperatures for February. For Arctic sea ice, the volume was six percent below the 1981-2010 average and is the fourth-smallest volume area logged since satellite records began in 1979.
Posted by Bryce Anderson at 3:28PM CST 03/04/15
Was the difference in temps in Asia near the difference in temps from Europe? Thanks again for your info.
Posted by TOM DRAPER at 5:25PM CST 03/04/15
-26 degrees here this A.M. Most people, I think, living in reality, are knowledgeable of and accept their duty to live within limits. This does not make them a denier. This makes them a realist. Why is it, with all of the records I read about, do the statistics seldom indicate the warmest, or coldest, or driest, or wettest? Bryce's contribution pertaining to Germany indicates only the sixth warmest Feb. since 1881. While 6.1 degrees F. is quite a bit, it is still not the warmest.
Posted by Bonnie Dukowitz at 8:26AM CST 03/05/15
was it fossil fuel causing warming way back when or what? some records before cars.
Posted by MONTE ARCHER at 8:48AM CST 03/05/15
Responding to Tom Draper---USDA's Weekly Weather and Crop Bulletin issued March 3 has a summary of February 2015 temperatures for international stations--and it appears that western and central Asia joined northern Europe in the above-normal temperature trend. Every Russia station tracked was above normal--including St. Petersburg in the west with 5.1 deg C above normal and Yekaterinburg in the middle of the Eurasian continent with 5.8 deg C above normal. To put those into perspective on an everyday basis in the U.S.--the St. Petersburg departure from normal is 9.18 degrees Fahrenheit for the entire month and the Yekaterinburg temperature is 10.44 degrees Fahrenheit above normal. That is a huge leap to the warm side.
Posted by Bryce Anderson at 9:31AM CST 03/05/15
If you deny climate change, you are an idiot. It always has, always will. Pollution is an inefficiency. Human innovation in economic terms abhors inefficiency. Those that use climate change to push an agenda in any other manner then to make change for the human condition better are inherently flawed, and I myself want to see everyone of them out in the open.
Posted by Brandon Butler at 9:45AM CST 03/05/15
If one runs the numbers, would it not be 49 1/2 per cent of the time the averages are above normal and 49 1/2 percent below normal, except for the one out of a hundred? Then, of course, is the debate on statistics, written about in another blog.
Posted by Bonnie Dukowitz at 2:38PM CST 03/05/15
Thank you Bryce, that bulletin was helpful and interesting. While most of the country is much below normal, Alaska is much warmer than normal. It would be helpful if that type of info (the actual numbers) on global temps were as easy for us farmers to monitor as the markets are.
Posted by TOM DRAPER at 9:00PM CST 03/05/15
Im Thankful for global climate change.If we didnt have it there would be no Great Lakes.
Posted by PAT KENNY at 6:51AM CST 03/06/15
You must be talking about the global warming that melted the glaciers.I too am thankful for that glacier melting! Speaking of ice, what is happening to the ice sheet in the ANTARCTIC?Is it still growing ever LARGER,just the opposite of the Arctic ice?
Posted by JEFF HANSON at 8:34AM CST 03/06/15
 

Monday 02/23/15

Canadian National Railroad Reaches Last Minute Deal With Unifor

OMAHA (DTN) -- West Coast dockworkers and their employers reached a tentative agreement Friday, according to representatives of both sides.

Unifor, a union which represents approximately 4,800 Canadian National Railway Company employees in mechanical, intermodal, clerical and other areas of the company's business in Canada has been battling with the CN for 6 months over a new contract. (DTN file photo by Elaine Shein)

Late afternoon on Friday, Feb. 20, the Pacific Maritime Association (PMA) released a joint statement by PMA President James McKenna and International Longshore and Warehouse Union (ILWU) President Bob McEllrath, saying: "After more than nine months of negotiations, we are pleased to have reached an agreement that is good for workers and for the industry. We are also pleased that our ports can now resume full operations."

The tentative agreement on a new five-year contract covering workers at all 29 West Coast ports was reached with assistance from U.S. Secretary of Labor Tom Perez and Federal Mediation and Conciliation Service Deputy Director Scot Beckenbaugh. The PMA said the parties will not be releasing details of the agreement at this time. The agreement is subject to ratification by both parties.

While all the ports resumed operations immediately, the Port of Oakland experienced some labor issues with the day shift on Feb. 22, resulting in the suspension of those workers. The port's website said while work resumed at the Port of Oakland the evening of Saturday, Feb. 21, it continued Sunday morning but then was suspended for the remainder of the day shift. "The issue is a labor-management dispute over break time. Labor has been requested for the Sunday night shift Feb. 22. It remains to be seen if the labor request will be filled or if operations will resume. Vessel operations -- with one or two exceptions -- will be suspended again Monday, Feb. 23."

The PMA issued a statement on the port's website saying: "An area arbitrator ruled that longshoremen affiliated with Local 10 of the ILWU conducted illegal work stoppages at the Port of Oakland, resulting in port operations being shut down during today's day shift. We will continue to address any future work stoppages by Local 10 through the grievance and arbitration process, and, if necessary, in court. It's hoped that the dispute will be settled in arbitration Monday."

Late Sunday evening, the port issued another statement saying "vessel operations have resumed this evening at the Port of Oakland. Five vessels are being loaded and unloaded. Another three are scheduled for operations. Some requested jobs have gone unfilled."

The Journal of Commerce said, "The tentative coast-wide contract agreement that was reached Friday evening by the International Longshore and Warehouse Union and the Pacific Maritime Association is just the beginning of a long process West Coast ports must endure to recover from the backlog of containers and vessels, and to restore trust among shippers." A Midwest container shipper told DTN via email it will "take months to sort this mess out."

CANADIAN NATIONAL RAILWAY, UNIFOR AT IMPASSE IN NEGOTIATIONS

On Feb. 18, the Canadian National Railway Company (CN) announced on their website "locomotive engineers and conductors working on the company's Northern Quebec Internal Short line ratified a new collective agreement. The employees are represented by the Teamsters Canada Rail Conference (TCRC) union." The four-year agreement provides wage increases and benefit improvements to 93 employees.

However, another union, Unifor, which represents approximately 4,800 CN employees in mechanical, intermodal, clerical and other areas of the company's business in Canada has rejected the latest offer by the CN. Labor negotiations with Unifor have been going on for almost six months, and on Friday, the talks came to an impasse. Late Friday afternoon, the CN issued a press release urging the union to accept binding arbitration as "the best way to settle their outstanding contractual differences. Barring such an agreement over the weekend, CN will exercise its right under the Canada Labour Code to lockout Unifor's 4,800 members at CN at 2,300 hours, Monday, Feb. 23."

As social media began to "throw stones" over the issue late Friday, @CN_Comm released a statement on Twitter saying, "To be clear, CN is not locking out @UniforTheUnion members yet. We are urging union leadership to sit down and negotiate a deal this weekend."

On Feb. 21, the CN issued another press release saying it was "disappointed with Unifor's recent claims that the company is not bargaining in good faith and is trying to force its agenda on the union through a lockout of the union's 4,800 members."

"If Unifor believes it is advocating the right deal pattern, then the proper forum to get a fair hearing for such a deal pattern is binding arbitration. An independent arbitrator can consider all the facts impartially and decide in fairness what terms are most in line with the interests of CN employees represented by Unifor." Here is a link to the entire Feb. 21 press release: http://goo.gl/…

The two sides did get together on Sunday, Feb. 22, for several hours in Ottawa with officials of the government's Federal Conciliation and Mediation Service, but were unable to negotiate all terms of a new contract. However, the two parties will meet again Monday, Feb. 23, morning in Ottawa to resume collective bargaining.

In a press release late Sunday, the CN said: "In the absence of a negotiated settlement or agreement on binding arbitration by Monday evening, CN will deploy its labor contingency plan, with trained management personnel safely performing the work of Unifor members, to protect service to the best of its ability. CN has begun to advise its customers in Canada of that possibility."

On Monday, Feb 23 with the deadline approaching, the CN negotiated a tentative labor agreement with Unifor. In a press release on their website, they said, "As a result, CN has withdrawn its lockout notice to Unifor, which would have come effective at 2300 hours local time tonight in the absence of a settlement. Details of the tentative agreement are being withheld pending ratification by Unifor members. The union is expected to announce the results of the ratification vote in the next three weeks."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary on Twitter @MaryCKenn

(AG/CZ)

Posted at 1:35PM CST 02/23/15 by Mary Kennedy
 

Monday 02/16/15

White House Sending U.S. Labor Secretary Perez to Referee Port Disputes

OMAHA (DTN) -- Talks between West Coast dock workers and employers have stalled and the White House will be sending U.S. Labor Secretary Thomas Perez to referee the disagreement. However, some industry watchers say it's too late as some shippers make plans to move away from West Coast ports to other venues.

(DTN photo by Elaine Shein)

Union workers are suspected of launching deliberate work slowdowns at West Coast ports and on Feb. 11, the employers' group, the Pacific Maritime Association (PMA), announced suspension of four days of premium-pay weekend and holiday vessel operations -- Feb. 12 (Lincoln's Birthday); Feb. 14; 'Feb 15; and Feb 16 (Washington's Birthday).

Here is the link to the entire PMA press release: http://goo.gl/…

Robert McEllrath, president of the International Longshore and Warehouse Union (ILWU), told the New York Times the employers were deliberately making the congestion crisis worse to gain leverage at the bargaining table.

PMA spokesman Wade Gates said, "Last week, PMA made a comprehensive contract offer designed to bring these talks to conclusion. The ILWU responded with demands they knew we could not meet, and continued slowdowns that will soon bring West Coast ports to gridlock. What they're doing amounts to a strike with pay, and we will reduce the extent to which we pay premium rates for such a strike."

According to the PMA press release, one of biggest issues right now is a demand by the union to have the right to fire any arbitrator who rules against them at the end of each contract period, even though those arbitrators are the mediators who keep West Coast ports operating smoothly. The PMA said that, "During the 2008-2014 contract period, the four area arbitrators found the ILWU guilty of more than 200 slowdowns or work stoppages." The PMA said allowing this demand to be met could "cripple the West Coast waterfront."

A Midwest container broker with customers on the West Coast told DTN on Friday, "The situation is now unsustainable; there will either be a breakthrough and a tentative agreement which will keep in place the current situation until ratified and signed. Even still, once the Union starts working at full capacity it will take three to four months to clean up the mess. Or, there will be a strike or lockout, then after a week Taft Hartley will be invoked, forcing them to go back to work and negotiate, which will get us back to the current stalemate essentially until they work something out.

"In my opinion," he said, "the ILWU realizes that importers will be using the West Coast less in the future due to the increase in Canadian port productivity, more direct via Suez shipping to East and Gulf Coast -- 65% of the consumer market is east of the Mississippi I think, if not more -- the wider Panama, and the new Mexican port and rail connections. I think they are going for it all now as they know the long-term outlook for the West Coast work load is not good."

One sign of that became apparent on Feb. 10 when Hanjin Shipping Co. withdrew officially from the Port of Portland saying their last day will be March 4. According to The Oregonian, shipping companies that work with Hanjin received a letter saying Portland had been dropped as a stop for container ships and Portland would only be serviced by truck and rail via the Seattle port. The Oregonian noted that Hanjin ships account for 78% of the business at Terminal 6, moving 1,600 containers per week. Those shipments moved most Oregon agricultural exports to Asia, and brought apparel for Northwest-based companies like Nike and Columbia Sportswear in and out of the country and generated $83 million annually.

In a Feb. 11 article, the Associated Press reported that Hanjin's pullout isn't a surprise. In recent years, the company has been unhappy about the pace of work among longshore workers and announced its intention to withdraw two years ago. "If you are in Portland you should know why. Can't afford the expense of operating there. Simple," said Mike Radak, senior vice president for Hanjin USA.

Late Saturday evening on Feb. 14, the Wall Street Journal reported the White House said it would intervene in stalled labor talks at West Coast ports, sending the labor secretary to meet with both parties and urge them to complete a new contract and avoid further slowdowns. "Out of concern for the economic consequences of further delay, the president has directed Secretary of Labor Tom Perez to travel to California to meet with the parties to urge them to resolve their dispute quickly at the bargaining table," White House spokesman Eric Schultz said in a statement.

There are some who feel that the White House has good intentions, but it may be too late to solve the differences between the two groups. The National Retail Federation told the WSJ it hopes Perez can recommit the two sides to reaching a deal. "The slowdowns, congestion and suspensions at the West Coast ports need to end now."

MIXED RESULTS IN CANADA'S CP, CN RAILROAD LABOR NEGOTIATIONS

The Canadian National (CN) railroad went into this weekend facing potential strike action from two unions representing the company's employees. DTN Canadian Grain Analyst Cliff Jamieson said thanks to an agreement with Unifor, the union representing about 1,800 CN safety and maintenance workers was struck just prior to the deadline. "CN Rail reports that a tentative agreement has been reached between that company and the Teamsters union, with will be voted on in April and negotiations with Unifor continue," said Jamieson.

"At the same time, a deal between the Canadian Pacific (CP) and the Teamsters Canada Rail Conference was not reached, which meant that approximately 3,300 engineers and train workers went on strike as of 12:01 a.m. on Sunday morning." Jamieson added, "The strike may not be a long one. On Friday, the Canadian government paved the way for introduction of back-to-work legislation that will likely be introduced on Monday. The Globe and Mail reports that the last time CP workers walked off the job in 2012 estimates pegged the potential damage to the Canadian economy at $540 million/week. The current strike will see close to 20,000 commuters impacted on three commuter lines in Montreal which will place further pressure on government to intercede."

"The current labor dispute comes at a time when both railroads are behind in spotting cars for grain movement. The most recent statistics suggest both railroads were behind 17,701 cars as of week 24, or the week ending January 18. Of this total, 7,732 cars are CN, while a further 9,969 cars are CP. This volume represents 10% of total demand with 46% of this total have been outstanding for more than four weeks."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary on Twitter @MaryCKenn

(CZ/SK)

Posted at 10:42AM CST 02/16/15 by Mary Kennedy
Comments (1)
The N.West ports became successful when the Millers went on strike at the Twin Ports at on Lake Superior. The problem might cure itself.
Posted by Bonnie Dukowitz at 1:45PM CST 02/21/15
 

Monday 02/09/15

"Do or Die" for West Coast Labor Talks

OMAHA (DTN) -- In an effort to end the nine-month-long contract dispute with the International Longshore and Warehouse Union (ILWU), the Pacific Maritime Association (PMA) announced Feb. 4 that they had made an "all-in" contract offer that would significantly increase compensation to the members of the ILWU.

(Graphic courtesy of the Pacific Maritime Association)

"Our members have shown tremendous restraint in the face of ILWU slowdowns that have cut productivity by as much as 30, 40, even 50%," PMA President Jim McKenna stated in a press release. "This offer puts us all-in as we seek to wrap up these contract talks and return our ports to normal operations." McKenna told Associated Press that he wants to avoid a coast-wide port shutdown, but employers won't keep paying workers who aren't moving cargo at their normal rate if the ports become much more gridlocked.

The Wall Street Journal reported that on Feb. 5, the ILWU circulated photos of empty yards at the ports. ILWU President Robert McEllrath said in a statement accompanying the photos, "PMA is leaving ships at sea and claiming there's no space on the docks, but there are acres of asphalt just waiting for the containers on those ships, and hundreds of longshore workers ready to unload them."

Late Friday, Feb. 6, the PMA announced that weekend vessel loading and unloading operations would be temporarily suspended over the weekend at all 29 West Coast ports. They said that yard, rail and gate operations were continuing at terminal operators' discretion.

The PMA said that vessel operations are scheduled to resume Monday, Feb. 9. "Yard operations -- that is, moving processed containers for truck and rail delivery to customers -- will continue at terminal operators' discretion, although the ILWU continues to limit operations by withholding the needed crane operators or operating slowly."

In a press release received by DTN from the Port of Long Beach, Port of Long Beach Chief Executive Jon Slangerup issued the following statement on the labor issue: "The Port of Long Beach isn't a direct party to the negotiations, but we again urge the PMA and ILWU to quickly resolve their differences so all the West Coast ports can focus on clearing the growing backlog of cargo."

"The PMA and ILWU are vital partners in an industry that here in Southern California employs more than 500,000 workers -- in and outside the ports.

"Business has already moved to other ports due to the congestion. It's critical that we stop the hemorrhaging. This region simply can't afford to lose jobs because of cargo heading elsewhere."

The Port of Los Angeles Executive Director Gene Seroka told the Wall Street Journal that containers are stacked about six high at the Port of Los Angeles. "If a labor deal is reached and other solutions are implemented, it could take about eight weeks to get the port back to normal," he said.

In the meantime, refrigerated beef and pork, poultry, apples, frozen and dehydrated potato products and frozen vegetables wait for shipment in the hope there is no spoilage. The delays to shipping those products and more are costing industries hundreds of millions of dollars in lost sales, according to news reports. A container shipper in the Upper Midwest told DTN that fresh produce waiting for shipment late last year did spoil and had to be destroyed.

Shippers who move containers of ag products from the Midwest are frustrated and have told DTN that their businesses are at risk of losing key customers because of the ongoing dispute. One shipper told DTN that he is angry and feels helpless that there is nothing he can do but watch and wait and lose customers.

The Seattle Times reported that stakeholders in port operations have been pleading for President Barack Obama to step in since port slowdowns first started in late October 2014. After Friday's announcement, the Times said that "politicians and associations across the country urged for the president to step in."

The administration's only statement on the issue came at the end of November 2014 when the president said he was confident both sides could reach a deal "through the time-tested process of collective bargaining."

The PMA noted that despite four weeks of help by a federal mediator, the parties have not yet been able to "bridge the considerable gaps between them." On top of that, the union recently added significant new demands, with the most significant being that the union wants to change the decades-long process for selecting arbitrators. The PMA said the union is "trying to change the rules on the waterfront in their favor, giving them the ability to unilaterally remove arbitrators who rule against them."

McKenna, speaking at a news conference said that without the arbitration process in place, the ILWU would call the shots and employers would be powerless to stop the slowdowns. "Some might wonder how the union was able to take such unilateral actions to cripple the West Coast ports. The short answer is, because they can," he said.

Here is a link to the entire press release and PMA offer: http://goo.gl/…

Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow Mary Kennedy on Twitter @MaryCKenn

(AG/SK)

Posted at 12:44PM CST 02/09/15 by Mary Kennedy
 

Thursday 02/05/15

A Pensive Moment in the History of Pit Trade

The trading pits are about people. They can be emotional, brash, full of fury and glory. They're a noisy, rambunctious fraternity in octagonal organization, or so I've been told. The movie "Trading Places" is older than I am, and by the time I started writing about agriculture, electronic trade had already become the norm. And while I didn't witness pit trading at its height, I love hearing the stories people have to tell. It's an end of an era I barely knew, yet I appreciate its loss because of the stories I've heard.

It's sad to say that everyone saw it coming. Sooner or later, the pits would close. But now that we know most trading pits in Chicago and New York will go dark on July 2, it's like we just put open outcry trade in hospice care. No matter how prepared we were for this moment, it was bound to provoke pensive thoughts and a walk down memory lane. It's simply how people process knowing they're going to lose something special, regardless of whether it's a loved one or a storied institution.

Perhaps one of the most honest reflections of this moment is from Jeffrey Carter, an independent trader, angel investor and former member of the CME's board of directors. With his permission, we're rerunning several excerpts from his recent blog post, "The End of the Pits," unedited. You can read the entire post here: http://bit.ly/…. Please feel free to share your stories and thoughts in the comments section.

Excerpt One:

To those that don't know the business, the trading floor is the cultural heart and soul of an exchange. It's the beating heart.

But, used correctly, the trading floor is also the brain. It's also the ethos, and the morality of an exchange.

Of course, today most of the market is on the screen and electrified.

Some people love electronic markets. Some hate them. What I will tell you is they aren't better or worse, but they are different. That's not "good" or "bad" in a moral sense. They are just different.

There are some realities that one has to grasp when looking at the trading business.

First, the power brokers in New York (Big banks) have always hated Chicago. Prior to 1972, Chicago was small potatoes. Post the introduction of financial futures, Chicago was an international powerhouse. New York guys were jealous because they didn't think of it. They were pissed because a few thousand guys that didn't have prep school/fancy college degrees were beating the pants off them in the market every single day.

Post demutualization, the power brokers were able to exert their influence over CME corporate structure to give artificial advantages to people that were not necessarily members of the exchange. Co-location, fee breaks, other perks.

Some will say this was purely a fight between an old way of doing things, open outcry, and a new way of doing things, electronic trading. They aren't really correct. The members of the exchange voted to take the first two contracts of Eurodollars electronic under competitive threats from Eurex back in 2001. It took a few years before the entire contract made the jump to the screen. But, in fairness, CME marketing people were out on the street actively telling customers to go to the screen rather than the pit.

The pit not only had advantages for traders, but many customers were advantaged by the pit too. You can't bitch about a fill on the screen and get it adjusted. You can't use a "tick" on the screen. There are no fat fingers in a trading pit.

Excerpt Two:

The floor was the place for dreamers. It was the place for entrepreneurs, because that's what independent traders really were. It was a place where a guy that never graduated from high school but had his wits about him, and a high appetite for risk could make a living. Some even got rich.

The floor was a place for everyone and anyone. It was like America, democratic. All walks of life. All you needed was enough money to rent a seat and you were a trader. No special qualification or certification. No degree. Sure, there were cliques. It was clubby. Not everyone was ethical. Not everyone liked everyone else. There were fights. But, the floor reminds me of startup companies today.

The floor was a constant vaudeville show. Colorful. Frenzied. Loud. Smelly. Smoky. It was on the run entertainment from 5AM to 4PM. Every day. Tourists would come like the zoo, stand behind thick panes of glass and point at the animals.

The floor was an economic engine that built all of the cultural institutions in Chicago. All of them. They have roots in the floor. The banks that line LaSalle Street are here for one reason. Chicago would be nothing without its exchanges. Fortunately we made the right choices in the late 1990's and Chicago still has its exchanges. The city and state would be in even worse shape without them.

But maybe most of all, the floor was about hope. It was a place where you could realize some of your wildest dreams. You could go from electrician, cop, milk man, farmer, military, to wealthy trader. I think hope still exists on screens, but it's a lot different. Hope always works better when there are other people next to you supporting you.

Today, it's almost impossible to start out as an independent trader on a screen and make it. If you want to really compete and become a high frequency trader, the startup costs are just too high. Frankly, to be an HFT trader, you better be a very skilled programmer and probability theorist as well-and be able to take some risk. The barriers to entry on trading are much higher today than they were back when I started.

I left the floor a few years ago. I finally sold my last seat last year. So, I am not a shareholder, or a member of CME. But, I still have friends there that I think of. Even guys that I haven't spoken to in years. Some of the old Eurodollar ($GE_F) guys, the Hog ($HE_F) guys, and just people you'd see everyday. The truth is, if you were a real trader and spent a long time there, a piece of the floor is always in you-and a piece of you will always be in the floor whether it's open or not. I am trying to start a new venture. Maybe old floor traders want to chat about it?

When traders meet on the street, there is an instant comfort. Floor trading had a code. Floor traders engaging in the "real world" have learned that the rest of the world doesn't live by that code. That's why lawyers stay in business.

It's not a sad day that the floor is closing. What's sad is that the dynamic innovative energy from the floor isn't concentrated anywhere else. When you get a group of 3000 risk takers in one room, stuff happens. A lot of it fails, but a lot of it is quite successful. Remember, we had three trading floors full of crazies in Chicago. Not only things inside the exchange, but businesses outside the exchange too. The floor created a ton of value outside of trading. It was the greatest social network in the world. It was the original co-working space.

(AG\SK)

Posted at 3:44PM CST 02/05/15 by Katie Micik
Comments (1)
I happy to have had my 30 minutes on the floor 10 years ago it's a memory I'll never forget. I remember my heart just keep beat faster as I stood there.
Posted by Unknown at 7:53PM CST 02/08/15
 

Tuesday 02/03/15

Labor Dispute Gets Meaty

By now, farmers are no strangers to labor disputes and disruption they cause in getting goods to the end user. But that doesn't mean it's any less frustrating or annoying.

A prolonged standoff between grain terminals and longshore workers in the Pacific Northwest simmered for years before it got so tense it scared off the grain inspectors. Shortly after and under political pressure, both sides reached a resolution.

Now the issue is with the large container ports on the West Coast, primarily in California. In short: The International Longshore Warehouse Union (represents workers at the ports) and the Pacific Maritime Association (represents 72 companies including terminal operators and cargo carriers) are negotiating a new contract. They've been at it for nine months without reaching a deal and have brought in a federal mediator.

The pace of shipments has slowed, goods are backing up at the ports, congestion is growing and the ramifications are being felt across the supply chain. On Monday, 80 Congressmen sent their third letter to both parties urging them to come to an agreement, but there's really nothing else Congress can do, a recent article in the Journal of Commerce (http://bit.ly/…).

More than 90 agriculture groups have also petitioned the two groups to come to an agreement in a letter of their own.

"This regrettable situation is having a severe impact on our ability to export agricultural and food products to many of our main export markets," wrote the groups in the letter. "Inevitably, these overseas customers will look to other sources for their supply of these goods. Similar to what we encountered after ill-advised export embargoes in the past, once lost, a foreign customer can be difficult to recapture."

A University of Missouri Extension economist warned that the slowdown could significantly affect meat exports, particularly to Japan.

"We exported about 21 percent of the pork, 10 percent of the beef and 19 percent of the chicken produced last year," said Ron Plain, the economist. "In total, over $5 billion worth of meats went out through those ports last year. At the rate we're going, not near that amount is going to get shipped this year."

Most of U.S. beef exports to Japan ship as the fresh, chilled variety. With the back up at the port, much of that beef will need to be frozen to keep it from spoiling, and Plain said that means a large dockage in its value. And if the U.S. can't meet the needs of Pacific Rim customers quickly enough, they may turn to other sources.

The port situation has also resulted in shortage of rail cars and refrigerated trucks, Plain said. There's also reluctance on the part of meat companies to send meat to the coast for shipping. "It is impacting the revenue that comes to packing plants, and therefore impacting what packing plants are willing to bid on livestock for slaughter."

Plain noted the port dispute may also affect nut and cotton exports.

"Even once an agreement is reached, it will take quite some time before backlogged product can be moved through those ports and we can get back to the normal shipping time."

(CZ/SK)

Posted at 2:54PM CST 02/03/15 by Katie Micik
 

Monday 01/26/15

Industry Facing Shortage Up to 30,000 Drivers

OMAHA (DTN) -- The U.S. trucking industry is seeing a shortage of 30,000 drivers nationwide, said Truckload Carriers Association Safety and Policy Director David Heller in a recent interview with Wisconsin Public Radio.

The National Grain and Feed Association reported that 2015 is poised to be a big year on the trucking front for the grain, feed and processing industry. (DTN photo by Elaine Shein)

"It's an epidemic at this point," Heller told WPR. "Carriers aren't hauling freight not because they don't have equipment, not because they don't have freight; it's because they don't have the drivers to haul them." Heller went on to say that "the average driver is getting older, and that more technology and regulation is causing some of them to leave."

The Federal Beige Book, a consolidated economic report from the 12 Federal Reserve Districts released on Jan. 14, 2015, reported that many districts are concerned about the freight transportation industry, particularly the trucking sector. The report is based on information collected on or before Jan. 5, 2015.

The Atlanta District transportation contacts reported "slightly higher activity from late November through December compared with year-earlier levels. Trucking and logistics contacts noted significant increases in demand; however, capacity constraints due to a lack of drivers continued to hinder growth."

The Richmond, Va., contacts throughout the district continued to cite difficulties finding skilled workers, specifically in truck driving. In the New York City area, a trucking industry expert reported that "while business conditions have improved substantially in late 2014, reflecting both strong demand and falling diesel prices, truck drivers are in high demand."

The Cleveland District reported, "Freight volume increased since our last report, with demand being described as broad based. Profit margins improved due to lower diesel fuel prices. Hiring drivers is an ongoing process, and industry executives agree that their ability to attract and retain truck drivers is critical to their ability to expand capacity. Although capacity constraints remain an issue industry-wide, carriers are encouraged by amendments to the hours-of-service rules that were included in the recently passed federal omnibus bill."

The hours-of-service rule required a restart of a 60-to-70-hour limit, which drivers were required to comply with beginning July 1, 2013. According to an article published by Bulk Transporter on Jan. 23, "The Federal Motor Carrier Safety Administration (FMCSA) announced in December that it had suspended enforcement of certain sections of the hours-of-service (HOS) rules, specifically the 60- or 70-hour rule, as required by the Consolidated and Further Continuing Appropriations Act, 2015, (also known as Cromnibus) enacted Dec.16, 2014."

Sen. Susan Collins, R-Maine, is responsible for the Collins Amendment language, which, according to the article, "suspends restrictions on the use of the so-called 34-hour restart that requires drivers to take two consecutive periods of 1 a.m. to 5 a.m. off during the restart, thus pushing them into riskier daytime driving and then lifts the restriction on using the restart more than once every 168 hours, or one week."

ATA President and CEO Bill Graves told the trade publication Bulk Transporter, "One of our members told us several of his drivers took four days off for the recent Thanksgiving holiday, yet when they returned to work, their hours were limited because that 96-hour break could not count as a 34-hour restart. That's just one of the impacts FMCSA failed to research that we hope they fully examine as a result of this congressional mandate."

According to Bulk Transporter, the suspension of the restart rules will continue until the end of Fiscal Year 2015 (Sept. 30) or until the final report on the naturalistic study has been submitted to the House and Senate Committees on Appropriations, whichever is later.

PROPOSED NEW RULES COULD PROVE COSTLY FOR INDUSTRY

The National Grain and Feed Association reported that 2015 is poised to be a big year on the trucking front for the grain, feed and processing industry. On tap for the trucking industry this year is potential rulemaking at the FMCSA and Congress' need to pass a new highway bill before the old one expires May 31.

The NGFA said, "The rulemaking under consideration at FMCSA would increase the minimum levels of financial responsibility for motor carriers (liability coverage for bodily injury or property damage), and would increase financial responsibility for freight brokers and freight forwarders. Currently, there is a minimum of $750,000 in financial responsibility for each for-hire interstate general freight carrier. FMCSA's research report on Financial Responsibility Requirements for Commercial Motor Vehicles estimates an insurance premium cost of $5,000 per truck per year for $750,000 to $1 million in coverage."

In comments, which are due by Feb. 26, NGFA plans to ask FMCSA to consider the effect of any increase in financial responsibility on freight rates and prices received by sellers of agricultural commodities.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(SK)

Posted at 11:18AM CST 01/26/15 by Mary Kennedy
Comments (7)
When ever and where ever any bad news occurs, are truckers, like farmers, not assumed to be guilty? Then impossible to prove innocent. Check out some of the criminal charges of negligent homicide, etc.
Posted by Bonnie Dukowitz at 11:52AM CST 01/27/15
Why do you think there is a shortage with truckers? Welfare and unemployment benefits are better than working for a living. When we have a government handing out money why would people work? Not hard to figure that problem out.
Posted by DAVID/KEVIN GRUENHAGEN at 9:21AM CST 01/28/15
With the slowdown in the Bakken there should be quite a few truckers looking for work. At least until the oil prices go back up again.
Posted by CRAIG MOORE at 1:08PM CST 01/28/15
Think again, CM. The unemployment benefits are too great and too long. Call me what you like, but if a check comes in the mail or direct deposited, I'll spend it. Why dry truck, milk cows, flip burgers or other, if one can milk the government?
Posted by Bonnie Dukowitz at 2:10PM CST 01/28/15
we need stop making jobs and make people that will work its sad all the jobs and no worker. the government can not see what there doing they want votes
Posted by Unknown at 7:41AM CST 01/29/15
New commercial truck driver applicants would need to pass a drug and alcohol test just like train and plane operators or members of the military. Good luck with that. The majority of American youth do not qualify for military service because of drugs. Bad government, maybe, bad parenting, definitely.
Posted by Don Thompson at 8:45AM CST 01/29/15
Being involved with class 8 transportation for 3 plus decades the industry has failed to recognize the most important asset of good reliable drivers and continue to dilute the profession with laws like 70 hour rules, being absent from home for weeks at a time and the so called "boss " that has never spent 15 minutes behind the wheel. Having a truckers - ATA - convention to hand wring out the wonder why's display's the mindset of an industry plagued with an over abundance of experts dreaming up unrealistic gimmicks and now are reaping what they have sown. Sincerely - Dan Waldow
Posted by Unknown at 1:16PM CST 01/29/15
 

Monday 01/19/15

West Coast Ports Suffering Slowdowns, Work Stoppages

OMAHA (DTN) -- The Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) are still at odds over labor contracts, and the ongoing dispute is affecting service at several West Coast ports, according to trade sources.

Loaded containers heading west by rail along the northern corridor in early January. (DTN photo by Mary Kennedy)

A trade source told DTN via email that both sides are still blaming the other for the failure to reach an agreement. The source said the ports having the most problems are Oakland, Portland and Seattle/Tacoma. "LA/Long Beach is apparently better; Oakland is the worst and has been closed completely off and on."

The PMA stated on their website in December that, "ILWU slowdown tactics have reduced productivity at Pacific Northwest ports for more than a month and a half, with drop-offs of 30-40% now the norm, according to PMA analyses of terminal operations. Intermittent walk-offs have also occurred in Oakland. At the ports of Los Angeles and Long Beach, the nation's busiest, the ILWU restricted dispatching skilled crane operators to operate yard cranes, among the most important jobs to relieve congestion on the docks."

According to the PMA, the union actions are tied to the ongoing negotiations for a new coast-wide labor contract between container terminal operators and the ILWU. Negotiations began in May for the contract that expired July 1, and talks have been occurring almost constantly for the past six months. The contract being negotiated covers nearly 20,000 longshore workers at 29 West Coast ports.

In a press release on their website Jan. 15, the Federal Maritime Commission said that Chairman Mario Cordero announced to staff on Jan. 13 that his priority for the commission in 2015 is addressing congestion issues that are plaguing the nation's ports.

Chairman Cordero stated, "Among the commission's statutory goals is the assurance of an efficient ocean transportation system. The efficient operation of the nation's ports is squarely within that mandate and paramount to the commission's responsibilities. As we move forward, I look forward to a thorough review of the issues and views that have been provided from various maritime industry stakeholders. The FMC will continue its role in protecting the shipping public and addressing unreasonable or unjust practices by carriers or marine terminal operators."

On Jan. 5, Allison Beck, acting director of the U.S. Federal Mediation and Conciliation Service (FMCS), issued the following statement on the FMCS website: "In response to a joint request for assistance from the parties, collective bargaining between ILWU and PMA representatives will continue as soon as possible under the auspices of the Federal Mediation and Conciliation Service (FMCS). We are prepared and ready to render prompt assistance. Deputy Director Scot Beckenbaugh, a senior FMCS mediator with extensive collective bargaining experience in this industry, has been assigned to help the parties bring these important negotiations to a mutually acceptable resolution."

The press release went on to say the FMCS will not release information regarding future meeting dates and locations. "In addition, the FMCS will have no further comment at this time regarding the status or substance of the negotiations."

Earlier this month, the BNSF said on their website that the marine terminal operators at the ports of Oakland, Los Angeles and Long Beach had advised BNSF of their intentions to limit marine terminal labor calls to support their marine terminal operations. A similar action had also been done at Pacific Northwest marine terminals.

"In anticipation of further slow-downs and marine terminal congestion," the BNSF said, "we are issuing an embargo to be effective Monday, Jan. 5, 2015, for westbound traffic received at interchange points destined for all marine terminals served on the West Coast. The embargo was lifted Jan. 7, but the BNSF continues to monitor the ongoing labor issues at the West Coast terminals and has stated that they are encouraged by the participation of the FMCS.

A container broker told DTN, "From what we hear, the main issue is maintenance of chassis. ILWU wants to have that job and income and work from it for their mechanics. The problem is that the shipping lines and terminals no longer own the chassis, so they have no say or legal right to give the maintenance to the ILWU. The contract is left to another union off the terminal site. It's a catch 22."

"We are doing some business, but we easily passed on over 2 million in sales over the past 60 days. Some of that is lost, but some may come back to us. A lockout or strike keeps being rumored."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG\SK)

Posted at 12:16PM CST 01/19/15 by Mary Kennedy
 

Monday 01/12/15

Proposal Would Make Weekly Reporting Permanent

OMAHA (DTN) -- Weekly service performance reports from railroads may become a permanent requirement following a recent decision by the Surface Transportation Board (STB).

(DTN photo by Mary Kennedy)

On Dec. 30, the STB issued a proposal of new regulations for permanent weekly reporting by all Class I railroads and by the Chicago Transportation Coordination Office (CTCO). The current order requiring weekly service updates was on a temporary basis and had no expiration date.

The weekly filings have allowed the board and rail stakeholders to monitor performance and have allowed the board to begin to develop baseline performance data. "Based on the board's experience with the reporting to date, the board is now moving forward with a rulemaking to determine whether to establish new regulations for permanent reporting by the members of the Class I railroad industry, the Class I carriers operating in the Chicago gateway, and the CTCO through its Class I members," the STB said.

The permanent collection of weekly performance data would improve the STB's ability to "identify and help resolve future regional or national service disruptions more quickly, should they occur," the board said. "Transparency would also benefit rail shippers and other stakeholders by helping them to better plan operations and make informed decisions based on publicly available, near real-time data, and their own analysis of performance trends over time."

The entire STB decision can be found here: http://goo.gl/…

A second Dec. 30 proposal directs BNSF Railway Company to "submit a detailed description of the contingency plans the carrier would use to help mitigate an acute coal inventory shortage at one or more generating stations in a region."

With respect to BNSF and coal specifically, the STB stated, "Totality of the information collected to date suggests that BNSF's coal service has struggled, although there has been some progress in recent weeks." The board stated it is critical they continue to closely monitor BNSF's performance for indications of improving or deteriorating service.

"In addition to monitoring BNSF's coal service performance via the data we collect," said the STB, "we will continue to hold regular meetings with BNSF senior management so that we can receive first-hand information about the challenges and progress BNSF is experiencing with respect to all service issues, including coal."

Here is the link to the entire decision by the STB concerning this issue: http://goo.gl/…

Comments and replies on both decisions may be submitted either with the board's e-filing format or in the traditional paper format. Comments are due by March 2, 2015. Reply comments are due by April 29, 2015.

BNSF REPORTS COLD, SNOW, PNW LABOR DISPUTE HAVE SLOWED TRAFFIC

Below-zero temperatures and blizzard conditions in the Midwest and Northern Plains required reduction of train lengths across the northern portion of the network last week, according to the BNSF website. The restrictions were expected to remain in place through the past weekend until temperatures return to more normal levels early this week.

"Despite the harsh conditions, our team of over 300 rapid responders has helped keep the network running strong with just some minor weather-related delays," said BNSF. "In addition, we continue to experience strong performance gains due to additional locomotive availability and reduced post-holiday season volumes."

The railroad also said it is continuing to manage service inconsistencies at ports in the PNW and California because of the ongoing labor dispute. Because of work slowdowns causing some disruptions, "temporary restrictions on export/import traffic were briefly instituted and subsequently withdrawn as volumes proved manageable," the BNSF website said. The U.S. Federal Mediation and Conciliation Service announced on Monday, Jan. 5 that it was "prepared and ready to render prompt assistance." The AP reported last week that pressure, both political and financial, has been mounting while each party faults the other for the sluggish movement of billions of dollars of cargo across the docks at 29 seaports that form a vital trade link with Asia.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(SK/CZ)

Posted at 12:00PM CST 01/12/15 by Mary Kennedy
 

Tuesday 01/06/15

Railroads Getting Better Grades for Service

OMAHA (DTN) -- Freight customers are giving railroads better ratings on service, compared to a year ago, and observers report a slight decrease in oil cars spotted in the northern corridor.

(DTN photo by Mary Kennedy)

In the Soy Transportation Coalition's third bi-weekly rail service survey, 78% of respondents said cycle times for railroads are faster than they were a year ago, according to USDA's weekly Grain Transportation Report. In comparison, the first survey showed 67% and the second survey showed 70%.

Although fewer rail customers reported past due orders, USDA said the survey showed "the average number of days past due for those that are experiencing delays increased from 13.4 days in the second survey to 30 days in the third survey."

Besides good weather allowing faster speeds and more locomotives available to pull loaded cars, there has been a slight decrease in oil cars seen in the northern corridor. Up until just recently, most trains one would see moving along northern routes consisted of at least 75% or more 100-car oil trains. In the past few weeks, observers say oil cars are still moving, but there is more of a mix of grain, container, coal and oil cars in 100-car-units lately.

It is unlikely there will be a significant falloff in volumes shipped out of North Dakota's Bakken oil field in the near term, a source who works for an oil and gas exploration service told DTN. The first reason is most large producers have hedged a majority of their production at prices close to or above $90.00 and they need to make delivery on those contracted barrels, he explained. Second, numerous wells remain that have been drilled and cased, but are waiting on completion. From a cost-forward basis, these wells will meet economic hurdles and they will be completed over the next few or more months, the source said.

"My guess is train-shipped oil volumes will not begin to decline until mid-year," he said, "unless Saudi Arabia allows oil prices to rebound before then. Even then, there will still be a lag as companies drop rigs, hence well count and oil volumes to ship also drop."

RAILROAD REPORTS

In its weekly update to the Surface Transportation Board (STB), The Canadian Pacific (CP) said, "Our U.S. network continues to be in good operating condition. Average dwell at origin for unit grain trains has improved, and grain loadings remain steady. Train speed has increased. With respect to the Rapid City, Pierre & Eastern Railroad (RCP&E), locomotives are in overall balance this reporting week, understanding that the number varies from day to day. We fulfilled 237 of 300 RCP&E grain car requests, which is an improvement over last week." Here is a link to the full Dec. 31 service update: http://goo.gl/…

On Jan. 5, the Burlington Northern Santa Fe (BNSF) reported on its website that the shuttle turns per month for the PNW were slightly lower from one week ago at 2.4 TPM vs. the desired turn time of 2.5. Here is the weekly update by the BNSF to the STB on Dec. 31: http://goo.gl/…

WEST COAST PORT ISSUES

"We continue to monitor the ongoing labor situation at the West Coast ports," BNSF said on its website. "While negotiations between port operators and dockworkers continue, we are actively responding to changing conditions affecting both inbound and outbound shipments."

The Pacific Maritime Association (PMA) released a statement on Jan. 2 citing current issues affecting operations and asking the International Longshore and Warehouse Union (ILWU) to stop withholding skilled longshore workers from their shifts on the docks, especially in Southern California ports. Here is the full press release from the PMA: http://goo.gl/… .

On Jan. 5, the Federal Mediation and Conciliation Service released a statement on its website announcing they will step in and help mediate negotiations. "In response to a joint request for assistance from the parties, collective bargaining between ILWU and PMA representatives will continue as soon as possible under the auspices of the Federal Mediation and Conciliation Service (FMCS). We are prepared and ready to render prompt assistance. Deputy Director Scot Beckenbaugh, a senior FMCS mediator with extensive collective bargaining experience in this industry, has been assigned to help the parties bring these important negotiations to a mutually acceptable resolution."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary on Twitter @MaryCKenn

(CZ/SK)

Posted at 1:11PM CST 01/06/15 by Mary Kennedy
 

Wednesday 12/31/14

Railroads Pick Up Steam

OMAHA (DTN) -- With improved service and fewer customer complaints, the holiday season has been a merrier time for U.S. railroads than at other times throughout the year.

Railroads have been reporting fewer delays this past month. (Photo by Roy Luck, CC BY 2.0)

The Canadian Pacific Railway (CP) told the Surface Transportation Board in a letter on Dec. 24 that, "Overall, our U.S. network is in good operating condition. Terminal dwell is down. Grain loadings have improved week over week, and dedicated grain cycle times are in line with plan."

The CP went on to report that with respect to the Rapid City, Pierre & Eastern Railroad (RCP&E), the locomotive balance varies from day to day but approaches equilibrium. "We fulfilled 194 of 300 RCP&E grain car requests this reporting week. The episodic flow of returning empty grain cars from the east affects our ability to satisfy these requests. We will continue to work with our interchange carriers and the other components of the supply chain to balance these flows."

Bob Zelenka, executive director of the Minnesota Grain and Feed Association, told the Grand Forks Herald that service complaints about the railroads have been "fairly quiet."

"Unit train loaders have been getting pretty good service and less-than shuttles are experiencing delays -- but it's been two to three weeks rather than four to eight weeks," Zelenka said. But many farmers have slowed selling as they wait for the new tax year, or better prices, which leaves less grain to ship right now. Zelenka said that because of farmers keeping grain home, elevators that bought freight for January and February might not be able to use it and might have to sell it in the secondary freight market.

The BNSF reported Monday that shuttle turns per month to the Pacific Northwest were at 2.5 TPM. While this is slightly lower than the previous week, the desired shuttle turnaround time for the BNSF is being met. In their service update prior to Christmas, the BNSF said, "Total volume was heavy with a robust 210,998 units in Week 50. This represents our second-highest weekly total of the year, and our 20th week in 2014 that total volume has exceeded 200,000 units. System-wide on-time performance held steady at 74% for the week. Intermodal on-time performance was slightly below the system-wide result at 72.3%."

WEST COAST LABOR DISPUTE STILL UNRESOLVED

The intermodal performance is still affected by the ongoing labor dispute on the West Coast. The container ports involved in the current contract talks are Los Angeles, Long Beach, Oakland, Portland, Seattle and Tacoma. Meetings prior to Christmas between the International Longshoremen and Warehouse Union and the Pacific Maritime Association (PMA) did not provide any solutions in the contract negotiations.

The PMA asked for federal mediation on Dec. 22 and in a statement posted on their website said, "After seven months of negotiations, we remain far apart on many issues. At the same time, the union continues its slowdowns, walk-offs and other actions that are having impacts on shippers, truck drivers and other local workers -- with no end in sight."

On Dec. 29, the PMA released this statement on their website: "The ILWU's press release today underscores the need for federal mediation in these negotiations. Unfortunately, the characterization that the PMA and ILWU have only a 'few issues' left to resolve is inaccurate. Significant issues remain unresolved, including wages, pensions, jurisdiction and work rules. Further, the ILWU's escalating rhetoric on congestion is nothing more than a smokescreen for its slowdown activities."

"Given the lack of progress at the table, the ILWU's continuation of debilitating work slowdowns and the impact those actions are having on businesses throughout America, it's clear that mediation is required to resolve the many issues that remain at the bargaining table." Here is the link to the full Dec. 29 press release by the PMA: http://goo.gl/…

In response to the ongoing labor issues on the PNW, Zelenka agrees that should that stay unresolved and tensions rise, delays could return, especially with traffic in and out of the West Coast. "If you slow down anything in this tight system, it backs up and affects everything," Zelenka said.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/SK)

Posted at 2:47PM CST 12/31/14 by Mary Kennedy
 

Monday 12/22/14

Railroads Performing Better Due to Mild Weather, More Locomotives

OMAHA (DTN) -- On Dec. 16, the Senate approved a 9-cent-per-gallon increase in the barge diesel fuel user fee, which will take effect April 1, 2015. This addition to the current barge fuel tax of 20 cents, paid by barge and tow-boat operators, is expected to generate approximately $40 million in additional revenues annually, which will be deposited into the Inland Waterways Trust Fund for the benefit of priority navigation project construction and major rehabilitation.

On Dec. 18, the U.S. Army Corps of Engineers (USACE), St. Paul District, in a press release stated that they were closing the Upper St. Anthony Falls Lock in Minneapolis to all navigation. (Photo by Kelly Moshier)

NGFA President Randy Gordon said in a press release on Dec. 17, "America's inland waterways infrastructure is in desperate need of renovation and modernization, and this much-needed increase in the user fee is absolutely essential to the future global competitiveness and economic growth of U.S. agriculture and other industries, and job creation they represent."

On June 10, President Barack Obama signed into law the Water Resources, Reform and Development Act (H.R. 3080), which provided a process for authorizing certain inland waterway navigation projects. However, legislation did not include an increase in the inland waterways user fee, which is imperative for funding lock-and-dam and all other improvement projects. The NGFA noted in a press release on Dec. 17 that industry estimates are that the 9-cent-per-gallon increase in the barge diesel user fee will generate up to an additional $80 million per year when combined with the federal matching funds.

There are 29 locks and dams total on the Mississippi River from Minneapolis, Minn., to St. Louis, Mo. The lower 27 are numbered, with Lock and Dam Number One located near the Ford Bridge between Minneapolis and Saint Paul. The two locks that are not numbered are the Upper and Lower St. Anthony Falls Locks and Dams, located in downtown Minneapolis. Most of the inland waterway locks and dams were built in the 1930s with a projected 50-year life span. Of the nation's 241 locks, 57% now are 50 years are older, while 26% exceed 70 years of age.

While this extra fee is good news for the aging waterway locks and dams, it may be too late to help out the upper-most locks and dams on the Mississippi River. On Dec. 18, the U.S. Army Corps of Engineers (USACE), St. Paul District, in a press release stated that they were closing the Upper St. Anthony Falls Lock in Minneapolis to all navigation. "The action is mandated as a result of the Water Resources Reform and Development Act of 2014 with the requirement that the lock be closed on or before June 10, 2015," explained the USACE.

"The action will end all use of the lock by commercial, recreation and other navigational uses," said the USACE. "This will end the ability to ship cargo, such as gravel and scrap metal to and from barge terminals above Upper St. Anthony Falls Dam. Cargo that would otherwise be moved by barge during the normal shipping season will likely now be moved by truck or other transportation means. This will have an economic effect for those companies above the dam."

Here is the public notice released on Dec. 18 by the USACE: http://goo.gl/…

EXTRA POWER, GOOD WEATHER HELPS RAIL TRAFFIC IMPROVE

The Burlington Northern Santa Fe (BNSF) in its weekly service update to customers said that they experienced another week of improving car velocity and steady on-time performance. "Aided by the impact of additional resources and capacity, along with generally favorable weather conditions, we maintained good fluidity throughout the network even as we handled one of our largest weekly volumes of the year. As we come to the official beginning of winter and year's end, our typical winding down of maintenance projects also helped to improve fluidity."

The BNSF told customers that additional locomotives have steadily reduced the number of trains holding for power and in the last month, have reduced trains held by more than 50%. "Looking into 2015, we expect to make even more performance gains with the 330 new locomotives that will be added to our fleet next year," said the BNSF.

The Canadian Pacific Railway (CP) told the Surface Transportation Board (STB), that "Our performance as relates to the Rapid City, Pierre & Eastern Railroad (RCP&E) was strong as we fulfilled 314 of 300 requests. And as we indicated last week, the locomotive balance is approaching the target of zero. On Dec. 15, there was only one more RCP&E locomotive on CP than there were CP units on RCP&E. The locomotive balance will fluctuate, but it is trending in line with the zero target."

Tim Luken, Manager of Oahe Grain, Onida, S.D., told DTN that service was better on the RCP&E. "We have been getting service once a week with 50 to 55 cars, so I can't complain," Luken said. "That's much better than getting less than 50 cars as we experienced during the wheat harvest."

The labor problems on the West Coast continue to have some effect on both the CP and BNSF. The BNSF said in their service update to customers on Dec. 19, "We continue to monitor the ongoing labor situation at the West Coast ports. While negotiations between port operators and dockworkers continue, we are actively responding to changing conditions affecting both inbound and outbound shipments. We remain hopeful for a resolution in the near future."

However, as of Dec. 19, there were no resolutions to the contract talks that took place in San Francisco Thursday between negotiators for the Pacific Maritme Association (PMA) and International Longshore and Warehouse Union (ILWU).

On Monday, Dec. 22, the PMA requested federal mediation in its contract negotiations with the ILWU. "After seven months of negotiations, we remain far apart on many issues," said PMA spokesman Wade Gates. "At the same time, the union continues its slowdowns, walk-offs and other actions that are having impacts on shippers, truck drivers and other local workers -- with no end in sight. It is clear that the parties need outside assistance to bridge the substantial gap between us." Here is the link to the full press release: http://goo.gl/…

The U.S. Federal Mediation and Conciliation Service (FMCS) responded it has been closely monitoring these negotiations for some time and due to the sensitivity of the negotiations, "the FMCS will have no further comment on this request and will not comment regarding the status or substance of the negotiations." Here is the link for the full press release: http://goo.gl/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/BAS)

Posted at 12:44PM CST 12/22/14 by Mary Kennedy
Comments (1)
really another railroad blog? What about a story about how far off USDA was on yield in 2014.Our local elevator has shipped most of it's corn to Canada already and it's not even the end of the year yet.Have heard of talk from guys in Ill. that they had normal yields.They said 250 bu. is normal for them nothing not records.
Posted by Raymond Simpkins at 8:21AM CST 12/30/14
 

Friday 12/19/14

Informa: Beans Acres Exceed Corn Acres

OMAHA (DTN) -- Private analytical firm Informa Economics sees farmers planting more soybean acres than corn acres next year for the first time since 1983.

Based primarily on its survey of producers in December, Informa said farmers are likely to plant 88.8 million acres of soybeans next year and 88 ma of corn. The changes are slight adjustments to group's prior estimates.

"Informa Economics made a slight reduction to their estimate for corn acres in 2015, from 88.3 million to 88.0 million acres," DTN analyst Todd Hultman said. "Their estimate of soybean acres increased slightly, from 88.3 million to 88.8 million acres, based on their December survey."

Informa's latest estimates are 3.2% lower than last year's corn acreage and 5.5% higher on soybeans. Corn acreage in the Eastern Corn Belt is expected to decline 1 ma from 2014 while the Western Corn Belt is expected to decline 1.4 ma. Soybeans are most likely to be planted on those acres, Informa said.

"As could be expected from these slight changes, corn and soybean prices showed no impact from Informa's report Friday and were trading lower both before and after the numbers were released," Hultman said. "The anticipation of more corn acres going to soybeans in 2015 gives new-crop soybeans an early bearish bias, but there is a long way to go before harvest next fall."

Informa's report included production forecasts based on trend-type yield. It projects corn production at 13.4 bb with a 165.9 bpa yield, and soybean production at 4 bb with a 45 bpa yield.

Winter wheat was seeded on 42.3 million acres this fall, Informa estimated. That's about 121,000 acres lower than last year's plantings. Hard red winter wheat area, at 30.9 ma, is 408,000 acres higher than last year. Soft red winter wheat planting is estimated at 561,000 acres lower than last year at 7.9 ma.

"Informa's estimate of all wheat acres slipped from 56.8 million to 56.6 million acres and also had no visible impact on prices Friday," Hultman said.

All wheat production was projected at 2.21 billion bushels, about 180 mb larger than in 2014, Informa said. The all wheat average yield, at 45.6 bushels per acre, is about 2 bpa higher than last year.

USDA will release its initial winter wheat seedings report at 11 a.m. on Jan. 12. It will also release quarterly Grain Stocks, the Crop Production Annual Summary and the World Agricultural Supply and Demand Estimates.

(CZ)

Posted at 11:20AM CST 12/19/14 by Katie Micik
 

Monday 12/15/14

Logistic, PNW Labor Issues Hurting Business

OMAHA (DTN) -- "Frustrated" was the one word Bob Sinner, president of SB&B Inc. located in Casselton, N.D., kept repeating during a recent conversation with DTN.

Flatbed truck loading containers of soybeans. (Photo courtesy of SB&B Foods Inc., Casselton, N.D.)

Sinner's business manages the marketing and sale of an extensive line of identity-preserved (IP), non-GMO and organic products to customers worldwide and has been supplying food-grade crops both domestically and internationally for over 20 years. Lately, however, it has been a challenge to do so because of the most recent snafu in logistics: a stall in negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). The ILWU in this case consists of a group of 20,000 workers and the PMA represents shippers, stevedores and terminal operators at 29 West Coast ports.

Both organizations have been in contract discussions since May in hopes of avoiding problems when the contract expired on July 1 and eventually agreed to continue working under the current contract and continue talks. Sinner told DTN, "Here it is, five months later and things are only getting worse."

According to the PMA, tensions began to escalate in October, causing slowdowns and disruptions to container shipping. The union denied responsibility and told the press the problems were due to operational and logistic issues.

Sinner said both exports and imports of all containerized commodities are suffering. According to an article in the Minneapolis Star Tribune, "The dispute affects any cargo that needs to be shipped in containers, including fruit, vegetables, wine, beef and pork, high-protein distillers dried feed grain from ethanol plants, and specialty soybeans. It does not affect bulk vessels that ship Midwest corn and soybeans for animal feed abroad."

In late November, the BNSF railroad ceased shipments from St. Paul of empty railcars heading for Seattle or Tacoma to pick up containers from ships. Sinner said his only "saving grace" was his ability to move containers out of Minneapolis on the Canadian Pacific Railway through Vancouver, BC. While this helped move some of the 240 containers of high-quality soybeans that he normally ships each month to the PNW, he said there are still many containers waiting to move.

Sinner said others were not so fortunate. He mentioned vegetable and fruit producers on the West Coast had to dump product in fields because the products weren't getting shipped and therefore spoiled.

Sinner is concerned his customers will get tired of waiting and look elsewhere for product, like Canada and South America. Sinner's customers reside in 15 countries, including Japan, Korea and Taiwan, and each customer has specific instructions for every bag of non-GMO soybeans that are shipped. He said his customers will not tolerate late arrivals of soybeans and will charge late fees or even cancel the delayed shipment altogether; a very costly situation for Sinner's business.

A small container shipper told DTN he has been unwilling to make sales because he is unsure if they will ship or not. "You can imagine what is happening to other guys and the losses in fresh fruit, veggies, hay off California, Oregon, Washington; losses are in the nine-digit range and jobs are being lost."

Sinner told DTN the only glimmer of hope right now is the scheduled caucus in San Francisco beginning on Dec. 15 between the ILWU and PMA.

"Every port on the West Coast is suffering right now," said Sinner. "While there are strong hopes for a resolution during the caucus, it would still take weeks before the members vote. It is so frustrating not knowing what is going on."

On Nov., 17, a group representing United States agriculture and forest products producers -- including farmers, food processors, exporters, and transportation and logistics providers -- wrote a letter to President Barack Obama urging him to send a labor mediator to help reach a contract deal. In the letter, the group warned, "There is nothing that we produce in this country in agriculture and forest products, that cannot be sourced somewhere else in the world. We can grow the best in the world, but if we can't deliver our products affordably and dependably, the customer will go somewhere else and may never come back."

According to the Minneapolis Star Tribune, "A White House spokesman said the president is monitoring the situation, but isn't planning to force a resolution."

Here is a link to the letter written to the president: http://goo.gl/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary on Twitter @MaryCKenn

(AG/CZ)

Posted at 11:20AM CST 12/15/14 by Mary Kennedy
 

Monday 12/08/14

Milder Weather, Lower Freight Volumes Allow Railroads to Boost Performance

OMAHA (DTN) -- Milder weather and lower freight volumes have helped improve railroad service across the country, according to a recent BNSF report.

Canadian Pacific freight train moving through the Twin Cities corridor. (DTN photo by Mary Kennedy)

In its weekly service update, BNSF said that operations remained fluid over the past week with strong gains in on-time performance across all business groups. "With Thanksgiving behind us and freight volumes returning to their traditional levels, locomotives are becoming more available and favorable conditions exist for improved velocity and network performance as we approach the New Year. We also expect milder, above-average temperatures throughout much of the network, particularly in the North Region, during the upcoming week."

One snag in service last week was a derailment on Dec. 1 near Wadena, Minn., which closed both tracks. Service was restored by Dec. 4, and traffic is once again moving at a normal pace.

The ongoing labor dispute in the Pacific Northwest is still an issue for all railroads in that corridor. BNSF said it is continuing to manage service inconsistencies at the ports and in some cases have place restrictions on some export/import traffic at several of its hubs. BNSF said, however, some of those restrictions were "subsequently withdrawn based on a daily evaluation of conditions. With port operators and dockworkers resuming contract negotiations this week, we continue to hope for a resolution in the near future."

According to its weekly update to the Surface Transportation Board (STB), BNSF cars due in North Dakota rose to 3,783 versus 3,145 the prior week. Montana's total was lower at 1,361 versus 1,381 the prior week, and Minnesota's total was also lower at 617 versus 891 cars the prior week. Shuttle turns per month to the PNW was steady at 2.4 TPM versus the desired turns of 2.5 per month.

To see all of the Class 1 railroad service updates to the STB on Dec. 3, go to: http://goo.gl/…

CANADA EXTENDS MINIMUM MANDATE BUT LOWERS TARGETS FOR RAILROADS

This past August, the Canadian government raised the minimum weekly volume for shipments of grain that Canadian Pacific Railway (CP) and Canadian National Railway (CN) have to move in order to alleviate the rail backlog in Canada that was costing farmers and grain handlers lost revenue. The original mandate of 500,000 metric tons of grain was set in March, and in August, the mandate was raised to 536,260 metric tons with an expiration date of November. If the railroads did not meet those mandates, there were monetary penalties to be paid.

On Saturday, Nov. 29, the Canadian government extended a mandate for the movement of grain by rail through the end of March 2015. The new weekly minimum will require the CN and CP to ship 200,000-465,000 metric tons and can fluctuate in that range through March 2015. Dow Jones reported the following targets for Nov. 30, 2014, through March 2015:

Time period Metric tons per week
Nov. 30, 2014 to Dec. 20, 2014 345,000
Dec. 21, 2014 to Jan. 3, 2015 200,000
Jan. 4, 2015 to Feb. 21, 2015 325,000
Feb. 22, 2015 to March 21, 2015 345,000
March 22, 2015 to March 28, 2015 465,000

The mandate is designed to ensure Canada's grain crop is moved in a timely fashion in the hopes of preventing the backlog that left nearly 30 million metric tons of grain waiting to be moved through the first half of 2014.

According to an article published by Argus Media, the government also ordered carriers to provide data on railcar order fulfillment by corridor, including the placement of cars at producer loading sites and along short-line railways to help promote transparency, a similar request made in the U.S. by the Surface Transportation Board. The difference is that the Canadian order includes a penalty of up to C$100,000 per violation if a carrier misses its quota, while there is no monetary penalty in the U.S.

Small single-car grain shippers on short lines in Western Canada felt the original mandate only helped the large-unit shippers and left them short of cars most of the year with no recourse to the railroads. One of those shippers told DTN in an email that "It's nice to see the government appear to hold the railways to account, but it isn't clear that these orders do much to affect their performance ... except to give the railways another excuse to not service small shippers."

He went on to say that shippers continue to receive roughly "half of their weekly wants. With the new process of canceling unplanned orders at the end of each week, CN shows no backlog of orders. Since this implementation, we have had over 300 orders cancelled."

He said that shippers have seen some cars most weeks, which is a huge improvement from last winter. "Service hasn't deteriorated ... yet." Many shippers wonder what will happen if the winter turns ugly and if railroad performance will suffer even with the mandates in place. Both railroads were also required to submit winter contingency plans to the government to include service strategies for "producer car loaders and short-line railways" through July 2015.

Both the CP and CN have publicly stated that they will continue to meet the grain mandates even though they don't agree with Bill C-30. In April, prior to the mandate becoming law, the Calgary Herald reported that the CEOs of both rail companies expressed their opposition to the House of Commons. The Herald reported that CN CEO Claude Mongeau called the introduction of the bill "a sad day for Canada," while CP CEO Hunter Harrison called it "grossly unfair."

The Herald also reported that Harrison told the government at the April meeting, "We are very concerned about the speed and lack of consultation by the government in making such significant changes to the rail transportation system that could result in unintended consequences for all stakeholders. We need to move away from reactionary legislative interventions that target unfairly one participant."

Mary Kennedy can be reached at mary.kennedy@dtn.com
Follow Mary Kennedy on Twitter @MaryCKenn

(AG\SK)

Posted at 10:31AM CST 12/08/14 by Mary Kennedy
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