Wind Some, Lose Some for Bay Area Shippers

In August, the Port of San Francisco’s Pier 80 Omni Terminal welcomed the M/V Star Hansa, which was carrying wind turbine components for San Leandro-based Halus Power Systems. The wind tower sections, blades, nacelles, hubs and other parts for three complete wind turbines were purchased from a windfarm in Germany. The parts moved both breakbulk and containerized, in flatrack and open-top containers that were offloaded using the port’s gantry cranes.

The port is pleased to assist with the logistical needs of Halus Power Systems, noted Port Maritime Director Peter Dailey. It is good to see a company like Halus providing renewable energy manufacturing jobs right here in the San Francisco Bay Area.

The wind turbines will be remanufactured at Halus Power Systems’ San Leandro plant near Oakland. One turbine has already been sold to the Cuyahoga County Fairgrounds in Ohio; another will be installed at a farm near Ellensburg, Washington. Louis Rigaud, the company’s founder and general director, said the 0.5-megawatt windmills were considered state-of-the-art and the largest in the world in the mid-1990s.

Today the standard is 2-3 megawatt wind turbines at the large industrial windfarms. The older models are being cleared out of windfarms in Germany and Denmark to make way for the newer models, but the older models are still more than adequate for smaller-scale users such as businesses and large farms. Halus employs a staff of 10 and recently relocated to a larger San Leandro plant after outgrowing its nearby Hayward facility.

Pier 80, operated by Metro Ports, is a 70-acre facility that includes over nine acres of covered storage. The Port of San Francisco’s Pier 80 is the only marine terminal in northern California able to handle containers, breakbulk and heavy lift cargoes simultaneously. In addition to the Halus Power Systems cargoes, the Star Hansa also discharged sheet pile and other steel products.

Grieg Star Shipping, owner of the Star Hansa, is engaged in breakbulk shipping trades serving North America, the Far East, Europe and South America. The firm is headquartered in Bergen, Norway.

In its quarterly statement to investors, Alexander & Baldwin announced that Oakland-based Matson would withdraw one of its two U.S.-China ocean carrier services. 

Persistently high fuel prices and overcapacity in the transpacific trade had a significant negative impact on the performance of our two China-Long Beach services (CLX1 and CLX2), which overshadowed the company’s otherwise strong second quarter performance, said Stanley M. Kuriyama, A&B president and chief executive officer.

According to spokesmen, weak transpacific fundamentals have had a pronounced impact on CLX2 due to the absence of CLX1’s advantage in carrying westbound cargo from the U.S. mainland to Hawaii and Guam. As a result, and because of sustained high fuel costs, CLX2 incurred significant operating losses during the second quarter and first half of the year.

Spokesmen noted, however, that since the service’s inception in September 2010, the company was able to achieve a number of CXL2’s operating goals, including building a shipper base that allowed it to meet sales volume and vessel utilization expectations.

But spokesmen added that these accomplishments were not sufficient to overcome what is now forecast to be long-term levels of higher fuel prices and an increasingly uncertain transpacific container rate environment. After evaluating the available alternatives for this service, the company has concluded that CLX2’s outlook does not merit continued investment and will discontinue the service.

While the termination of the CLX2 service is a significant disappointment to us, our remaining services—Hawaii, Guam and CLX1—will not be affected by the termination, and remain fundamentally sound with strong long-term prospects, said Kuriyama.

The ongoing withdrawal of capacity by other carriers does not come as a surprise to many industry experts, who say that even the Port of Oakland may feel the impact. Expect to see a shift from the West Coast ports towards all-water services to the Gulf Coast ports, said Don Pisano, ocean cargo chairman for the Industrial Transportation League. This trend will be especially true for lower valued products that are less sensitive to longer transit times.