The following is an update to our blog published July 21, 2014. We’ve highlighted in red a passage pointing out that Horizon Lines, at some point, has plans to leave the Hawaii market. Our Managers don’t believe they’ll last long enough to sell it, unless it’s soon.
Debt-ridden Horizon Lines in talks to sell Puerto Rican assets to Crowley
Horizon Lines is reportedly in talks to sell off its facilities at the port of San Juan, as well as its ships and routes to and from Puerto Rico, to Jacksonville-based competitor Crowley Maritime.
Industry sources told Caribbean Business that Goldman Sachs is brokering an $80 million deal between Crowley and Horizon.
The talks for the San Juan port facilities and lines are reportedly part of Horizon’s plans to sell all three of its Jones Act routes — San Juan, Alaska and Hawaii — to different buyers for each of these markets.
Last year, Horizon posted more than $100 million in losses and the company has $700 million in debt, the company reported to the Securities and Exchange Commission.
Crowley is currently conflicting with the Puerto Rico Ports Authority over tax credits it wants to cover the estimated $100 million the company will need to invest in port facilities to receive two new ships, El Coquí and El Taíno, scheduled for delivery in the second quarter of 2017.
If Horizon does sell to Crowley, then Crowley could use Horizon’s docks without having to improve their own.
“If Crowley buys Horizon’s ports facilities, Crowley wouldn’t have to make the improvements. All they would have to do is move over to Horizon’s facilities at the dock,” one industry source said. “Crowley was expecting to get tax credits from Ports to make the improvements, but since the government is broke, the authority doesn't want to give Crowley tax credits for this investment.”
Monday, July 28, 2014
Monday, July 21, 2014
Will Horizon Lines Survive?
We have said for at least five years that Horizon Lines current business plan is a recipe for investor disaster. The older management at Horizon Lines could care less about their investors; this has become an issue of “every man for himself,” particularly in Hawaii where management ego and having a job to go to has become more important than longer term profit and survivability. This leads to the investors eventually losing out if/when the business folds.
The following article was written in and is found in the Journal Of Commerce:
Analyst: Horizon Lines faces debt crisis
Joseph Bonney, Senior Editor | Jul 14, 2014 11:35AM EDT
Horizon Lines will have difficulty refinancing its heavy debt during the next two years and may be forced to shed assets, a move that would shake up the Jones Act domestic trade, analysts from BB&T Capital Markets said.
“If Horizon Lines cannot refinance its debt obligations, which come due in 2016, we believe the balance of supply and demand will tip in favor of the remaining vessel operators” in the Jones Act trade, BB&T said in a research note.
“Our sense is Horizon will no longer be able to kick the can down the road because the company’s debt obligations keep growing, increasing at double-digit interest expense, and that Horizon will have to shed assets,” BB&T said.
Horizon skirted bankruptcy in 2011 with a refinancing that left the company with a heavy load of high-interest debt. BBT noted that the company has more than $100 million in interest debt obligations due in each of the next two years and more than $600 million due in 2016.
The company’s earnings before interest, taxes, depreciation and amortization were $95.3 million in 2013, and are expected to be only $85 million to $95 million this year, BBT said.
Horizon posted a GAAP operating loss of $8.6 million in the first quarter, compared with a loss of $4.3 million a year earlier.
“The company continues to incur debt to help fund operations, and as it struggles to turn a profit, we expect the debt load will rise and with an aging fleet in need of repair and overhaul and significant capex requirements, the ability to successfully turnaround the company is a challenge to say the least,” BB&T said.
Horizon’s ships have an average age of 37 years, making its fleet among the oldest of any liner company in the world. They compete in Puerto Rico, Hawaii and Alaska markets where competition is increasing and rivals are introducing modern ships.
Horizon’s future has been the subject of industry speculation since Sam Woodward, the company’s CEO, resigned June 27 with a year left on his contract. Board member Steve Rubin, principal of intermodal consulting firm InterPro Advisory LLC, was named interim CEO.
Rubin could not be reached for comment today.
Six former executives of Horizon and Sea Star Line were sentenced to prison in connection with a price-fixing scheme that began after Navieras exited the Puerto Rico market in 2002 and continued until federal agents raided company offices in 2008. Horizon, Sea Star and Crowley pleaded guilty to antitrust violations.
The market for carriers serving Puerto Rico’s depressed economy is “oversaturated,” BB&T said. Sea Star and Crowley have announced LNG-powered vessels that will compete with Horizon’s aging ships.
Horizon also faces challenges in the Hawaii market, where Pasha is introducing a second ship, and Alaska, where TOTE soon will have LNG-powered ships that unlike Horizon’s will comply with new emissions requirements.
The aging ships in Horizon’s fleet don’t comply with environmental rules that will require Jones Act domestic vessels to use LNG or low-sulfur diesel by 2020.
“Any way you slice it, Horizon Lines is looking at a significant capex spend the next couple of years just to bring all of the company’s vessels into compliance with current environmental laws,” BBT said.
BB&T said that with the carrier&rsquos competitive and capital investment challenges and $500 million in debt as of the first quarter, “it is hard for us to envision how Horizon turns things around.”
The following article was written in and is found in the Journal Of Commerce:
Analyst: Horizon Lines faces debt crisis
Joseph Bonney, Senior Editor | Jul 14, 2014 11:35AM EDT
Horizon Lines will have difficulty refinancing its heavy debt during the next two years and may be forced to shed assets, a move that would shake up the Jones Act domestic trade, analysts from BB&T Capital Markets said.
“If Horizon Lines cannot refinance its debt obligations, which come due in 2016, we believe the balance of supply and demand will tip in favor of the remaining vessel operators” in the Jones Act trade, BB&T said in a research note.
“Our sense is Horizon will no longer be able to kick the can down the road because the company’s debt obligations keep growing, increasing at double-digit interest expense, and that Horizon will have to shed assets,” BB&T said.
Horizon skirted bankruptcy in 2011 with a refinancing that left the company with a heavy load of high-interest debt. BBT noted that the company has more than $100 million in interest debt obligations due in each of the next two years and more than $600 million due in 2016.
The company’s earnings before interest, taxes, depreciation and amortization were $95.3 million in 2013, and are expected to be only $85 million to $95 million this year, BBT said.
Horizon posted a GAAP operating loss of $8.6 million in the first quarter, compared with a loss of $4.3 million a year earlier.
“The company continues to incur debt to help fund operations, and as it struggles to turn a profit, we expect the debt load will rise and with an aging fleet in need of repair and overhaul and significant capex requirements, the ability to successfully turnaround the company is a challenge to say the least,” BB&T said.
Horizon’s ships have an average age of 37 years, making its fleet among the oldest of any liner company in the world. They compete in Puerto Rico, Hawaii and Alaska markets where competition is increasing and rivals are introducing modern ships.
Horizon’s future has been the subject of industry speculation since Sam Woodward, the company’s CEO, resigned June 27 with a year left on his contract. Board member Steve Rubin, principal of intermodal consulting firm InterPro Advisory LLC, was named interim CEO.
Rubin could not be reached for comment today.
Six former executives of Horizon and Sea Star Line were sentenced to prison in connection with a price-fixing scheme that began after Navieras exited the Puerto Rico market in 2002 and continued until federal agents raided company offices in 2008. Horizon, Sea Star and Crowley pleaded guilty to antitrust violations.
The market for carriers serving Puerto Rico’s depressed economy is “oversaturated,” BB&T said. Sea Star and Crowley have announced LNG-powered vessels that will compete with Horizon’s aging ships.
Horizon also faces challenges in the Hawaii market, where Pasha is introducing a second ship, and Alaska, where TOTE soon will have LNG-powered ships that unlike Horizon’s will comply with new emissions requirements.
The aging ships in Horizon’s fleet don’t comply with environmental rules that will require Jones Act domestic vessels to use LNG or low-sulfur diesel by 2020.
“Any way you slice it, Horizon Lines is looking at a significant capex spend the next couple of years just to bring all of the company’s vessels into compliance with current environmental laws,” BBT said.
BB&T said that with the carrier&rsquos competitive and capital investment challenges and $500 million in debt as of the first quarter, “it is hard for us to envision how Horizon turns things around.”
Monday, July 07, 2014
Shipping Lessons Learned
Although we’ve been DHX-Dependable Hawaiian Express (DHX) since 1982, in 1999 we joined the international freight forwarding industry as DGX with the assumption of the company was going under. With DHX we had historically focused on selling to shippers, however the beneficial cargo owners (BCO’s), for DGX were primarily other freight forwarders. We felt with time, our DGX customer base would eventually change and be made up of a few loyal forwarder partners, with more emphasis on customers who were shippers/BCO's.
Our study of the international forwarding community revealed that serving other forwarders as an NVOCC was a fruitless business. Many NVO’s had failed and been acquired by others, with their business folded into the business of the acquirer. So, our thrust was to build on the base forwarder business with BCO business. 15 years later we see we have failed in certain trade lanes, but made progress in others.
The question is how to turn those failures into successes.
In the meantime, We have learned valuable lessons:
A manager not wanting to look lesser, coupled with a lack of appropriate knowledge and/or abilities to teach what they have learned from years of experience, can potentially stop upper management’s thrust to a different type of customer base in its tracks.
So where do we go from here? We are always, hopefully, learning, changing and evolving. More to come on these challenges.
Our study of the international forwarding community revealed that serving other forwarders as an NVOCC was a fruitless business. Many NVO’s had failed and been acquired by others, with their business folded into the business of the acquirer. So, our thrust was to build on the base forwarder business with BCO business. 15 years later we see we have failed in certain trade lanes, but made progress in others.
The question is how to turn those failures into successes.
In the meantime, We have learned valuable lessons:
- You cannot teach a domestic transportation salesperson the international business easily and rarely successfully. When you attempt to train, the salespeople want to sell what they feel comfortable with, and lots of what they sell in the domestic trade is based on value, that is how you differentiate yourself in the market plus a competitive price. When dealing with other forwarders, such as our international business was, selling is primarily focused on one thing - price, given that service between most NVO’s to the forwarders is relatively the same. So, when selling value to BCO’s and price to other forwarders, not only do the salespeople have to have an extended knowledge of the product to be able to sell to both forwarders and BCO’s, but their salaries and talents are minimized when selling to forwarders because their focus is based on delivering a cheaper price, as opposed to product differentiation and value.
- Selling to BCO’s for international import and export business requires not only product knowledge and differentiation, but also an infrastructure and expertise to support it. Where freight forwarders know the import /export rules and regulations, a BCO, depending on size, may not. So all the sales associates in your office need an in depth knowledge of your service. Basically, the BCO needs to rely on your expertise to protect and serve them. Add to this a domestic sales force that’s really not familiar with international freight and you do not get warm, fuzzy feelings of confidence if they go to an associate in the international business with a BCO question, and then get a response they do not believe is a knowledgeable, professional response. They feel exposed that they are placing their existing accounts at risk, and soon stop selling a service they don’t know and/or feel uncomfortable with.
- If management feels changing to a different customer base will hurt their area on the surface they may support the change on the surface only because leadership is pushing for it, but they probably are not expending energy to make it happen. During the time the change is being made, they will look lesser to themselves and the boss, so it is against their human nature to support something that may hurt them.
A manager not wanting to look lesser, coupled with a lack of appropriate knowledge and/or abilities to teach what they have learned from years of experience, can potentially stop upper management’s thrust to a different type of customer base in its tracks.
So where do we go from here? We are always, hopefully, learning, changing and evolving. More to come on these challenges.
Tuesday, April 08, 2014
A Clean House
In our various offices and freight facilities, our standards have always included having/keeping a clean house, and ensuring it’s kept as clean as possible on a continuing basis. It’s an issue of pride in what we do, how we do it and our image in doing so. We want to be the best in everything we touch or are involved with. That’s why we were so happy with the results of a recent audit we had performed on us as part of our ongoing commitment to meet our food shipping customers’ needs.
The audit, called “Distribution Center Food Safety and Quality Systems Audit” received a 96.7 score out of a possible 100 points, indicating an outstanding outcome. Our operations management and systems management really have pulled together to ensure, on a consistent, continuous basis, we are taking appropriate measures to keep our facility clean and are surpassing current food shipping standards. This audit is performed annually at the request of certain customers, using an independent, outside third party with expertise in food handling and warehousing, and we are delighted with the results. To all of our Associates reading this - way to go! Thank you.
The audit was performed by Silliker, Inc., a Merieux NutriSciences Company, who works as a third party consultant in the food industry performing audits like the one performed for DHX - Dependable Hawaiian Express. A copy of the audit is available upon request by email: cammie.laster@dhx.com.
This is another way we like to point out the “Dependable Difference” to our Customers. Thank you for your support and your business!
The audit, called “Distribution Center Food Safety and Quality Systems Audit” received a 96.7 score out of a possible 100 points, indicating an outstanding outcome. Our operations management and systems management really have pulled together to ensure, on a consistent, continuous basis, we are taking appropriate measures to keep our facility clean and are surpassing current food shipping standards. This audit is performed annually at the request of certain customers, using an independent, outside third party with expertise in food handling and warehousing, and we are delighted with the results. To all of our Associates reading this - way to go! Thank you.
This is another way we like to point out the “Dependable Difference” to our Customers. Thank you for your support and your business!
Thursday, February 20, 2014
How competitive are the Hawaii/Guam Shipping Lanes?
A historical review of the Hawaii and Guam shipping lanes will show you there have never been three large ocean carriers shipping from the mainland to the Hawaiian Islands and Guam. Historically, there is Matson, and then there is Brand X - whoever it may be. Brand X is usually someone Matson “lets” into the trade because they see them as being a threat, but a manageable threat.
The last time Matson had a real competitor was in 1974 - I believe a company called Seatrain Lines. Seatrain Lines ran a Hawaii service from 1969 until 1974. They actually competed against Matson service-wise - so, when Seatrain Lines (which had a roughly 20% market share of the Hawaii Trade after being in the business five years) ran into financial difficulties, Matson acquired certain property improvements and rolling stock (keeping anyone else from getting them) and the competitor (Brand X) left in the trade was a weaker, more “manageable” ocean carrier, US Lines.
The winds of change are among us, and right now, nobody is talking. We do know that Pasha Group, the newest Hawaii ocean vessel operating carrier, did not renew their intra-island shipping permit, so they can no longer compete with Young Brothers on intra-island freight moves. Plus when their new vessel comes, they will not have the equipment available to service all the islands themselves in a timely manner.
We also know that Horizon Lines who evolved from US Lines into Sealand into CSX Lines and then into Horizon Lines has old, unreliable vessels which have a tough time staying on schedule given all the mechanical issues their old vessels have.
Pasha, after their new vessel (their second vessel) is operating, will only have one vessel that can take more than a small amount of containers. Between Pasha and Horizon Lines, I believe that sooner or later their managements will realize the benefits of working together, and try to solidify both of their strengths in one “not publicly offered” combined service when they are bidding for the business of steady, weekly or twice weekly shippers/consignees.
Matson will continue to maintain a roughly 70% market share (100% for Guam) until a serious competitor with lots of $$$ gets involved.
Frankly, I do not believe anyone else wants to/can take on Matson given the investment as well as the stiff competition.
The last time Matson had a real competitor was in 1974 - I believe a company called Seatrain Lines. Seatrain Lines ran a Hawaii service from 1969 until 1974. They actually competed against Matson service-wise - so, when Seatrain Lines (which had a roughly 20% market share of the Hawaii Trade after being in the business five years) ran into financial difficulties, Matson acquired certain property improvements and rolling stock (keeping anyone else from getting them) and the competitor (Brand X) left in the trade was a weaker, more “manageable” ocean carrier, US Lines.
The winds of change are among us, and right now, nobody is talking. We do know that Pasha Group, the newest Hawaii ocean vessel operating carrier, did not renew their intra-island shipping permit, so they can no longer compete with Young Brothers on intra-island freight moves. Plus when their new vessel comes, they will not have the equipment available to service all the islands themselves in a timely manner.
We also know that Horizon Lines who evolved from US Lines into Sealand into CSX Lines and then into Horizon Lines has old, unreliable vessels which have a tough time staying on schedule given all the mechanical issues their old vessels have.
Pasha, after their new vessel (their second vessel) is operating, will only have one vessel that can take more than a small amount of containers. Between Pasha and Horizon Lines, I believe that sooner or later their managements will realize the benefits of working together, and try to solidify both of their strengths in one “not publicly offered” combined service when they are bidding for the business of steady, weekly or twice weekly shippers/consignees.
Matson will continue to maintain a roughly 70% market share (100% for Guam) until a serious competitor with lots of $$$ gets involved.
Frankly, I do not believe anyone else wants to/can take on Matson given the investment as well as the stiff competition.
Sunday, December 01, 2013
The many cultures of shipping and happy holidays
Having a group of companies shipping cargo to Hawaii, Guam and worldwide involves people from many cultures. This may seem like a statement of fact, but when you think of DGX (Dependable Global Express), DAX (Dependable AirCargo Express) or DHX - Dependable Hawaiian Express, do you think of many different people, in all different shapes and sizes, with differing personal attitudes? We hope not!
What we hope to convey is the quality services we provide, no matter who you speak with, and how that manner of conducting business is consistently how we approach our business globally.
It isn’t easy to manage differences. The holidays are a cultural “mixed bag,” because different people within cultures, in different areas of the world, may or may not believe in Thanksgiving, Hanukkah or Christmas. What is important is the spirit of kindness and warmth and caring the time of the year brings. I am one individual who wishes all business were conducted with the same spirit all year long — what a better world we’d have! How less stressful would your daily duties/responsibilities be?
This year, we will be sending out ecards — digital Holiday greeting cards — to remind our customers and vendors how focused we are on the environment and the future. Most importantly, we remind those we care about of the true spirit of the Holidays, and hope they catch the spirit and enjoy the season. Happy Holidays to all of you!
As always, thank you for your business during the past year - we appreciate it! Ho Ho Ho!
What we hope to convey is the quality services we provide, no matter who you speak with, and how that manner of conducting business is consistently how we approach our business globally.
It isn’t easy to manage differences. The holidays are a cultural “mixed bag,” because different people within cultures, in different areas of the world, may or may not believe in Thanksgiving, Hanukkah or Christmas. What is important is the spirit of kindness and warmth and caring the time of the year brings. I am one individual who wishes all business were conducted with the same spirit all year long — what a better world we’d have! How less stressful would your daily duties/responsibilities be?
This year, we will be sending out ecards — digital Holiday greeting cards — to remind our customers and vendors how focused we are on the environment and the future. Most importantly, we remind those we care about of the true spirit of the Holidays, and hope they catch the spirit and enjoy the season. Happy Holidays to all of you!
As always, thank you for your business during the past year - we appreciate it! Ho Ho Ho!
Friday, November 22, 2013
Adopt-A-Highway
If you live in the USA, you could be driving down the road and see that sign that states “Adopt -A-Highway.” Haven't you wondered how you do this, what it takes, what civic responsibilities you have to perform when you adopt? Having just lived through this experience, we feel great about it and want to share our experience!
Our “Highway” adoption was coordinated by “Adopt-A-Highway” and recommended by the Long Beach Chamber of Commerce - both a pleasure to work with. The street we adopted gets cleaned once a month.
We have adopted a very busy section of Pacific Coast Highway in a very popular/populated area. We feel a sense of ownership and civic pride. Just like the wonderful feeling my wife and I have had adopting plenty of pets over the years. You may know that Long Beach is a great port city, the center of a whirlwind of ocean shipping and freight forwarding companies. It’s where we live and work. Hundreds of millions have been invested in renovating the downtown area of Long Beach. It is clean, beautiful, and a wonderful place to live.
We are bubbling over and proud of the fact that one of our companies, Dependable Global Express (DGX) is doing its civic duty by "Adopting -A-Highway," in Southern California. Hopefully some of you will see our sign, and the cleaner highway ahead! Now if we can only make it through those teenage years...
Our “Highway” adoption was coordinated by “Adopt-A-Highway” and recommended by the Long Beach Chamber of Commerce - both a pleasure to work with. The street we adopted gets cleaned once a month.
We have adopted a very busy section of Pacific Coast Highway in a very popular/populated area. We feel a sense of ownership and civic pride. Just like the wonderful feeling my wife and I have had adopting plenty of pets over the years. You may know that Long Beach is a great port city, the center of a whirlwind of ocean shipping and freight forwarding companies. It’s where we live and work. Hundreds of millions have been invested in renovating the downtown area of Long Beach. It is clean, beautiful, and a wonderful place to live.
We are bubbling over and proud of the fact that one of our companies, Dependable Global Express (DGX) is doing its civic duty by "Adopting -A-Highway," in Southern California. Hopefully some of you will see our sign, and the cleaner highway ahead! Now if we can only make it through those teenage years...
Tuesday, October 22, 2013
When a frequent, informational email matters and my reaction to "What’s Not There?"
Recently, I realized that one of our past ocean carrier partners had taken my name off of their “Notifications” email address listings. This surprised me.
Normally I must unsubscribe to the email “spam” I don’t want (if the filter hasn’t caught them), the sender just doesn’t delete me. I was truly surprised, until I realized why.
The sender of these “Notifications” emails is an ocean carrier that has vessels with an average age of somewhere around 30 years old.
In the shipping industry, that’s old. As vessels age, similar to an automobile, they start developing mechanical issues, and sailing schedules become harder to maintain, due to “mechanical” problems. Schedule delays mean shipping delays and problems.
Because of the delays in their service, and our policy of offering a “Best in Class” service, we at DHX-Dependable Hawaiian Express no longer use them and have switched to a competitor. What’s worse, in my opinion, is that their competitive disadvantage will continue – there is no end to the issue in sight for them; they don’t have the funds to replace the vessels.
Occasionally, in sales calls our sales professionals will say “We use xxxx, because Brand Y has unreliable, older vessels and we promise the best quality of service. Best in Class is a mission for us.” Apparently, this information got back to Brand Y, and their reaction was to remove me from their email listing.
Funny thing is, others in our company forwarded their last message to me, because they were surprised by the message content.
Where in the past “Brand Y” had always given an explanation as to why a vessel is late, now they do not. A lack of information is not good in the shipping business, particularly when you are a Customer trying to ascertain your supply chain weaknesses and risks. The last notification just stated “the vessel will be late” and discussed how it impacted their transfer cargo at destination. We wonder why there's no explanation.
We use the promotion line “Dependable from Start to Finish”, and we at DHX-Dependable Hawaiian Express, DGX and DAX are here to help. Visit us. Call on us. Depend on us. We’re the supply chain partner you can Depend on!
My advice to you: Caveat Emptor.
Normally I must unsubscribe to the email “spam” I don’t want (if the filter hasn’t caught them), the sender just doesn’t delete me. I was truly surprised, until I realized why.
The sender of these “Notifications” emails is an ocean carrier that has vessels with an average age of somewhere around 30 years old.
In the shipping industry, that’s old. As vessels age, similar to an automobile, they start developing mechanical issues, and sailing schedules become harder to maintain, due to “mechanical” problems. Schedule delays mean shipping delays and problems.
Because of the delays in their service, and our policy of offering a “Best in Class” service, we at DHX-Dependable Hawaiian Express no longer use them and have switched to a competitor. What’s worse, in my opinion, is that their competitive disadvantage will continue – there is no end to the issue in sight for them; they don’t have the funds to replace the vessels.
Occasionally, in sales calls our sales professionals will say “We use xxxx, because Brand Y has unreliable, older vessels and we promise the best quality of service. Best in Class is a mission for us.” Apparently, this information got back to Brand Y, and their reaction was to remove me from their email listing.
Funny thing is, others in our company forwarded their last message to me, because they were surprised by the message content.
Where in the past “Brand Y” had always given an explanation as to why a vessel is late, now they do not. A lack of information is not good in the shipping business, particularly when you are a Customer trying to ascertain your supply chain weaknesses and risks. The last notification just stated “the vessel will be late” and discussed how it impacted their transfer cargo at destination. We wonder why there's no explanation.
We use the promotion line “Dependable from Start to Finish”, and we at DHX-Dependable Hawaiian Express, DGX and DAX are here to help. Visit us. Call on us. Depend on us. We’re the supply chain partner you can Depend on!
My advice to you: Caveat Emptor.
Tuesday, October 01, 2013
Want answers to your shipping questions?
- Odd sizes?
- Proper dimensions and weight?
- Pallets
- Shrink wrap?
- Handicapping the freight forwarder; the space is already occupied.
- If your freight is initially shipped on pallets, will it be stripped off of the pallet when loaded into a container or put into an airplane? If your response is yes, then do not include the pallet weight or dimensions in your totals for ocean or air freight charges purposes.
- If your freight is shrink wrapped with a sign that states “Do not break shrink wrap” then include the pallet weight and measurements in your calculations.
- If your ocean freight weighs over a certain amount per cubic foot (Hawaii and Guam cargo) or meter (International freight), then you may get charged with a “density charge” because the freight is disproportionately heavy, and it may mean the freight company cannot completely fill a container because it then would be too heavy to transport legally. Similarly, if the freight is odd sized or longer than a certain length you may be charged an extra charge for the Forwarder having to take extra time to block in the pieces or load around them.
- Remember that on odd sized pieces that you take the highest, widest and longest point to determine your overall measurement. So, if something in your shipment juts out past the edge of a pallet, even if only in one spot, you will be charged as if the entire shipment juts out over the pallet. The argument for this practice is that that space is lost in the container, because the Forwarder cannot load anything with a flat surface up against it because the space is already occupied.
- For airfreight, whether Hawaii or Guam or International cargo, there are also dimensional calculations based on the density of the freight. However, the end result is the opposite of the ocean shipment. For airfreight, similar calculations take place, but you are charged for dimensional weight used for the lighter freight, not the heavier freight. The reason for this is that there is limited space in an aircraft, and, unlike ocean freight, where charges are based on cubic feet (Hawaii and Guam ) or cubic meters (International), airfreight charges are based on weight.
- More information on the whys? With the limited space in an airplane, as well as its ability to put only so much freight weight-wise into the plane, if the plane was only filled with light freight then the total revenue charged by the airline would be less than they theoretically could charge with a mix of light and heavier freight. Thus, the calculation computes a dimensional weight, and you may be charged additional weight for your shipment if too light.
Friday, July 12, 2013
Horizon Lines Makes Plans Diesel Engine Conversion
On June 25, 2013 – Horizon Lines, Inc. (“Horizon”) announced that it plans to convert the power plants on two of its steam turbine cargo vessels to modern diesel engines capable of burning conventional liquid fuels or liquefied natural gas (LNG). One of these vessels is supposedly going to be used in the Hawaii Ocean Freight Trade Lane.
Can we say congratulations? First let’s see if we understand correctly. Horizon Lines, which have some of the oldest Jones Act vessels still seaworthy but barely under 40 years of age, announced plans to reconfigure 2 of these older ships into vessels containing “modern diesel engines”.
Our question is how are they going to pay for them? Horizon has recently undergone an arrangement for the benefit of creditors, and are paying an interest rate of between 13% and 15% on their current debt load, if we’re reading this correctly on their current Form 10-K filed with the Securities and Exchange Commission. (If we read it wrong, we apologize, but it is a lengthy and verbose document that appears to have been designed to put the reader asleep.)
Horizon doesn’t have much operating profit, and now that Matson Navigation Company, who has newer and more fuel efficient vessels, has reduced their fuel surcharges four percentage points in the last three months, that little financial “windfall” will disappear, impacting Horizon’s profit outlook in a negative way.
All we want to know is how they are going to pay for it, and how they'll be able to keep the rest of their old fleet operating as the fleet ages.
The key question to ask is “Are they looking for a White Knight?” Someone willing to inject a billion dollars into them for new equipment? Or is there someone with newer, better equipment waiting to step in someone with more than two Ro Ro (roll on, roll off) vessels. Someone who may have a barge system already available and in place?
Can we say congratulations? First let’s see if we understand correctly. Horizon Lines, which have some of the oldest Jones Act vessels still seaworthy but barely under 40 years of age, announced plans to reconfigure 2 of these older ships into vessels containing “modern diesel engines”.
Our question is how are they going to pay for them? Horizon has recently undergone an arrangement for the benefit of creditors, and are paying an interest rate of between 13% and 15% on their current debt load, if we’re reading this correctly on their current Form 10-K filed with the Securities and Exchange Commission. (If we read it wrong, we apologize, but it is a lengthy and verbose document that appears to have been designed to put the reader asleep.)
Horizon doesn’t have much operating profit, and now that Matson Navigation Company, who has newer and more fuel efficient vessels, has reduced their fuel surcharges four percentage points in the last three months, that little financial “windfall” will disappear, impacting Horizon’s profit outlook in a negative way.
All we want to know is how they are going to pay for it, and how they'll be able to keep the rest of their old fleet operating as the fleet ages.
The key question to ask is “Are they looking for a White Knight?” Someone willing to inject a billion dollars into them for new equipment? Or is there someone with newer, better equipment waiting to step in someone with more than two Ro Ro (roll on, roll off) vessels. Someone who may have a barge system already available and in place?
Tuesday, April 30, 2013
Shipping to Central and South America
When DGX (Dependable Global Express) got into the Central and South America ocean freight business in 2009, we were really surprised by the competitive landscape. There were literally hundreds of Freight Forwarders, thousands maybe, all doing the same basic thing – shipping your LCL (Less-than-ContainerLoad) product into Miami and then moving it from Miami down to the applicable port/country.
We started planning, looking around, and then realized that maybe we were looking at the markets the wrong way. The alternative, as presented to us, was that we should be shipping ocean freight off the West Coast into the West Coast of Central and South America – and using Panama as “our Miami” for East Coast Latin America destined shipments.
We wish we could claim this as our idea, but we cannot. Another freight company used to do this but unfortunately unsuccessfully after a good ten year run, for a multitude of reasons.
The two men that had operated that company, and were in the process of winding it down, came to speak with us. Their ideas made sense, and DGX/DAX/DHX – Dependable Hawaiian Express has always believed in experimentation to grow our business. So, after mulling it over, we decided to offer the two principals positions at our company setting up and starting a Latin America division.
How has it worked out? Fabulously! We are unique – others may offer one destination off the West Coast to a port somewhere in Latin America, but nobody does it like we do. We have a very unique product in the way that we ship to Latin America – we ship West Coast (Southern California) USA to West Coast Latin America for multiple destinations. We do it for all LCL and FCL (Full Container Load) business.
Our shipping advantages, based on our West Coast service, includes:
Even those manufacturing in Mexico are finding it easier to ship their product to Los Angeles and move their ocean freight off the West Coast. Simpler, cleaner, less expensive.
Our streamlined shipping process should be enough without even discussing the additional fine qualities DGX brings into the mix in shipping to Central and South America: the Dependable Companies have been in business for 60+ years, DGX is ISO 9008-2001 Certified, and a member of CT-PAT and Smartway. Our culture is one of quality and integrity. Check our website for sailing schedules. We cover eight different destinations directly, plus a host of others via Panama.
We are Dependable. From Start to Finish.
We started planning, looking around, and then realized that maybe we were looking at the markets the wrong way. The alternative, as presented to us, was that we should be shipping ocean freight off the West Coast into the West Coast of Central and South America – and using Panama as “our Miami” for East Coast Latin America destined shipments.
We wish we could claim this as our idea, but we cannot. Another freight company used to do this but unfortunately unsuccessfully after a good ten year run, for a multitude of reasons.
The two men that had operated that company, and were in the process of winding it down, came to speak with us. Their ideas made sense, and DGX/DAX/DHX – Dependable Hawaiian Express has always believed in experimentation to grow our business. So, after mulling it over, we decided to offer the two principals positions at our company setting up and starting a Latin America division.
How has it worked out? Fabulously! We are unique – others may offer one destination off the West Coast to a port somewhere in Latin America, but nobody does it like we do. We have a very unique product in the way that we ship to Latin America – we ship West Coast (Southern California) USA to West Coast Latin America for multiple destinations. We do it for all LCL and FCL (Full Container Load) business.
Our shipping advantages, based on our West Coast service, includes:
- We have an all water service – West Coast to West Coast – this means much less handling of the product, and probably less claims than ocean shipping through Miami
- We have better frequency in sailings
- We have much better transit times than the option via Miami
- Coupling the above two items with less handling involved than trucking to Miami, and you have much lower costs because the trucking and rehandling to Miami is eliminated, as well as superior routing
Even those manufacturing in Mexico are finding it easier to ship their product to Los Angeles and move their ocean freight off the West Coast. Simpler, cleaner, less expensive.
Our streamlined shipping process should be enough without even discussing the additional fine qualities DGX brings into the mix in shipping to Central and South America: the Dependable Companies have been in business for 60+ years, DGX is ISO 9008-2001 Certified, and a member of CT-PAT and Smartway. Our culture is one of quality and integrity. Check our website for sailing schedules. We cover eight different destinations directly, plus a host of others via Panama.
We are Dependable. From Start to Finish.
Sunday, April 28, 2013
Customer Communications is as Important as Moving Freight
Most companies have business models and strategies these days. There are different avenues a company can take insofar as pricing, the quality of the product or service they offer, how they position themselves in the marketplace for their industry, etc. Here at DHX – Dependable Hawaiian Express, we have always believed that communicating with our Customers is as important as moving freight. We want to make our Customer’s logistics challenges and product transportation simple- which is why our business purpose has been defined as “To make shipping and logistics EASY for our Customers, while solving any challenges.”
To do this, we have defined the parameters within which we offer value to our shipping Customers. We believe that there is a combination of shipping service levels to Hawaii and Guam plus rates which will equal the best value for each individual Customer. That’s what we sell to our Customers - that combination of our premium quality service plus competitive rates which equals their best value.
How do we do this? First we listen. That may sound like a cliché, but we have more “boots on the ground” constantly visiting and communicating with our Customers. We also realize that we have in excess of 50 different points of contact with our Customers – every point being a unique experience for the shipper, consignee or third party involved. At each point, our goal is simple – to ensure the Customer leaves that point of contact believing they are dealing with an outstanding company who has their act together, and is professional, knowledgeable, efficient and effective.
The second thing we do is establish multiple methods of communications with our Customers. Whether it’s communicating through EDI, email, fax, via our website by Live Chat, Newsflashes, or “What’s New” Letters, all ears are open constantly, consistently saying “We’re here, we’re listening – how can we help?” You now have 24/7 access to rate quoting for Less-than-Container Load (LCL) shipments through “Quick Quote” on our website because you asked for a quick way to receive a quote on your LCL shipments, even after normal business hours. Communication is one of our key strengths and has evolved into a major focal point for everyone in our company.
Communications is a major product service feature for our shipping and logistics business. Another service value is operational excellence. Communications is great, but if your shipment gets to its destination but not on time, we have failed in providing a key value we hold dearly for Customers.
How do we ensure success? One facet: internal communications. Owning our own trucking operations in the major port cities in both Hawaii and Guam, allows us to obtain what we need to analyze our loading ability and any issues which may arise with your shipment. We receive constant feedback from destination locations and analyze this with photos taken both at origin and destination, video cameras that line our docks at our origins, and meetings to discuss any potential problems.
We focus on eliminating damages. Knowing part of our value offering is based on moving shipments as damage free as possible – it makes shipping to either Hawaii or Guam easier for everyone involved. Because of the longer transport times to Hawaii and Guam, this is critical. We believe operational excellence is also a core competency that has helped us establish a reputation over the years that is unparalleled in the freight forwarding industry to Hawaii and Guam. We make shipping easy!
So, ask yourself – what’s your value proposition? If you know it, and you’re not a Customer, call us. We’ll listen and try to match up. We call it a win/win. So will you.
To do this, we have defined the parameters within which we offer value to our shipping Customers. We believe that there is a combination of shipping service levels to Hawaii and Guam plus rates which will equal the best value for each individual Customer. That’s what we sell to our Customers - that combination of our premium quality service plus competitive rates which equals their best value.
How do we do this? First we listen. That may sound like a cliché, but we have more “boots on the ground” constantly visiting and communicating with our Customers. We also realize that we have in excess of 50 different points of contact with our Customers – every point being a unique experience for the shipper, consignee or third party involved. At each point, our goal is simple – to ensure the Customer leaves that point of contact believing they are dealing with an outstanding company who has their act together, and is professional, knowledgeable, efficient and effective.
The second thing we do is establish multiple methods of communications with our Customers. Whether it’s communicating through EDI, email, fax, via our website by Live Chat, Newsflashes, or “What’s New” Letters, all ears are open constantly, consistently saying “We’re here, we’re listening – how can we help?” You now have 24/7 access to rate quoting for Less-than-Container Load (LCL) shipments through “Quick Quote” on our website because you asked for a quick way to receive a quote on your LCL shipments, even after normal business hours. Communication is one of our key strengths and has evolved into a major focal point for everyone in our company.
Communications is a major product service feature for our shipping and logistics business. Another service value is operational excellence. Communications is great, but if your shipment gets to its destination but not on time, we have failed in providing a key value we hold dearly for Customers.
How do we ensure success? One facet: internal communications. Owning our own trucking operations in the major port cities in both Hawaii and Guam, allows us to obtain what we need to analyze our loading ability and any issues which may arise with your shipment. We receive constant feedback from destination locations and analyze this with photos taken both at origin and destination, video cameras that line our docks at our origins, and meetings to discuss any potential problems.
We focus on eliminating damages. Knowing part of our value offering is based on moving shipments as damage free as possible – it makes shipping to either Hawaii or Guam easier for everyone involved. Because of the longer transport times to Hawaii and Guam, this is critical. We believe operational excellence is also a core competency that has helped us establish a reputation over the years that is unparalleled in the freight forwarding industry to Hawaii and Guam. We make shipping easy!
So, ask yourself – what’s your value proposition? If you know it, and you’re not a Customer, call us. We’ll listen and try to match up. We call it a win/win. So will you.
One Company for All Your Hawaii/Guam Shipping Needs
When shipping freight to Hawaii and/or Guam, as a business owner or professional you always think about the long term repercussions of who you select as your shipping company. Your considerations should include asking certain questions, depending on your needs as a company and you as an individual.
Questions like:
Can you obtain a Shipping Rate Quote for Hawaii and Guam on line? In what time span? Does that forwarders website look professional; in case your Boss (if you're not an entrepreneur) wants to take a look?
There's only one company that does all the above. Guess who?
Questions like:
- Do you want a partner who cares about your business, or do you want a vendor?
- Do you want a company that services all three West Coast ports to Hawaii and Guam, or could you/would you want to use two service providers depending on what port the shipping service provider does service?
- Would you like a company that offers both ocean and airfreight shipping and logistical services in case you're in a pinch and need something rushed?
- How about a company that controls the quality of its service by owning the delivery service in all major ports in Hawaii and Guam, to ensure the quality of its service?
- What other items do you think you should look for?
- How about an ISO Certification, which gives you assurance that when shipping your cargo to either Hawaii or Guam, you can be certain that specific International Quality standards will be met?
- Speaking of International shipping, shouldn't your shipping company have the ability to ship from any point in the world to Hawaii or Guam?
- If that's not important, then is shipping eastbound from Hawaii, intra-island within Hawaii or moving your freight/shipment to Guam from Hawaii important? If you have a social conscience, what "green" actions has the freight company you deal with participated in?
- Do they regularly participate in charitable giving within your business community?
Can you obtain a Shipping Rate Quote for Hawaii and Guam on line? In what time span? Does that forwarders website look professional; in case your Boss (if you're not an entrepreneur) wants to take a look?
There's only one company that does all the above. Guess who?
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