PANAMA CITY: The Panama Canal Authority (ACP) and the Grupo Unidos por el Canal (GUPC) consortium have reached an agreement for the construction of a third set of locks as part of their contract to widen the waterway.
The deal requires GUPC to finish the work by December 2015; deliver to Panama the 12 lock gates currently in Italy by next February; GUPC and APC will each pay US$100 million to ensure project continuity; a performance bond of US$400 million will 
only be released to Zurich North America for the contractor to obtain financing for the same amount to complete the work; and the moratorium for the repayment of advances may be extended until 2018, subject to certain milestones and other conditions.
The consortium is formed by Sacyr Vallehermoso (Spain), Impregilo (Italy), Jan de Nul Group (Belgium) and Constructora Urbana (Panama).
Meanwhile, for the fourth consecutive year, the ACP has been included in the Ethisphere Institute "2014 World's Most Ethical Company" list.
The list features 144 corporations from 41 sectors covering retail, business services, energy, utilities, electronics, transportation and logistics. ACP joins UPS and marine group Saltchuk Resources in the transport sector. The canal authority is one of four Latin American companies on the list. The others are Banco do Brasil and Natura Cosmeticos (Brazil); and Cementos Progreso (Guatemala). The vast majority of the companies listed by Ethispehere are U.S.
"It is an honor for the Panama Canal to receive this award, especially during the year of its centennial," said administrator Jorge Quijano. "The ACP thrives to ensure that our business model shows our commitment to transparency, ethical values, and responsibility to the Panamanian people, our customers and the environment."
Based in New York, Ethisphere is a consulting company promoting best practices in corporate ethics and governance.
WASHINGTON, D.C.: A report from the U.S. Commerce Department's International Trade Administration (ITA), says the global renewable energy sector will receive $7 trillion of private-sector investment by 2030.
Despite some "short-term challenges", growth is expected in each renewable energy subsector, including wind, solar, geothermal, biomass, hydropower, and renewable fuels – albeit at different rates.
The ITA says Canada, China, Brazil, Chile, and Mexico will be the top five markets for U.S. renewable energy exports during the next two years, and the wind sector is expected to overtake solar as the largest exporter of renewable energy products. Rounding out the top 10 growth markets are the U.K., Nigeria, Belgium, Peru and the Philippines.
The report analysis suggests wind will account for nearly 32 percent of all renewable U.S. energy exports through 2015, followed by ethanol (27 percent) solar (19 percent), hydropower (14 percent), biomass pellets (7.0 percent), and geothermal (2.0 percent).
When all subsectors are combined, the top 10 markets are expected to account for 75 percent of all U.S. renewable energy exports through 2015 with the top 30 markets accounting for nearly 96 percent of all exports. The ITA expects Canada to account for 32 percent of all U.S. exports, highlighting the importance of its growing renewable energy market and geographic proximity.
However the administration warns that protectionist policies requiring local content requirements and high tariffs continue to limit demand for U.S. products in India, South Africa, Brazil, and Saudi Arabia.
Ken Hyatt, acting under secretary of Commerce for International Trade commented:[The] release of the Top Markets Report is an important part of ITA's continued efforts to help American companies understand global opportunities and connect more sellers of critical renewable energy and energy efficiency products and services to global buyers."
BRUSSELS: A new law, expected to come into force later this year, will require at least 6,000 publicly-listed companies in Europe to report on key human rights and environmental issues within their supply chains. This follows a last-minute compromise deal between the EU Council of Ministers and the European Parliament.
However the European Coalition for Corporate Justice (ECCJ) – representing NGOs, consumer groups, trade unions and academics – said it was a "timid step forward" in forcing companies to be more transparent because Germany, the UK and Poland had weakened the proposal.
Nevertheless, for the first time companies will have to explicitly report on environmental, human rights, social, corruption, and diversity issues. Reporting will now cover the policies they have in place to manage not only financial but also environmental and social risks.
The new law will also require companies to identify, prevent, mitigate and account for adverse impacts they may have on workers, communities, and the environment as they relate to the supply chain. Guidelines on how to report water and land use, greenhouse gas emissions and use of materials are expected from the European Commission in the next two years.
ECCJ coordinator Jerome Chaplier said: "This is an important step forward as it means citizens and investors will have access to meaningful information from companies – rather than the selective and often misleading data currently provided. ...This means a listed large oil company will have to report on its oil spills and the health risks from gas flaring for example, or a listed clothing retailer will have to consider risks in its supply chain."
In a related issue, Global Witness, a campaigner for the ban on conflict minerals in the supply chain, said a new proposal by the Commission on responsible sourcing of minerals will not stop companies from financing conflict or human rights abuses.
The Commission has announced voluntary measures that will only apply to companies importing processed and unprocessed minerals into the European market. The proposal covers companies involved in the tin, tantalum, tungsten and gold sectors – widely used in industrial technology and consumer products.
Sophia Pickles from Global Witness commented: "The proposal is tantamount to the EU saying that it's ok for companies to choose not to behave responsibly. This risks undermining the duty states have to protect human rights, which is well-established under international law. The proposal could even be redundant. EU governments have already endorsed voluntary due diligence guidance developed by the Organisation for Economic Co-operation and Development."
Aid and human rights organisations have also expressed disappointment that the proposal is so narrow: "By focusing only on four minerals, the Commission fails to address reports that other natural resources are also fuelling conflict," said Astrid Schrama from PAX. "Our research shows that in Colombia, coal extraction has financed the creation of armed paramilitary groups that have caused the deaths of thousands and has led to the displacement of at least 60,000 people in the mining area of Cesar region."
WASHINGTON, D.C.: The U.S. Department of Justice has fined Chilean carrier Compañía Sud Americana de Vapores S.A. (CSAV) US$8.9 million in contravention of the anti-trust Sherman Act.
The fine follows CSAV pleading guilty to conspiring to fix prices for car carrying services to and from the U.S., including the port of Baltimore.
CSAV, currently the signatory to an MoU for an IPO with Hapag-Lloyd, was charged with suppressing and eliminating competition by rigging bids, allocating customers and price-fixing between January 2000 and September 2012.
"Today's charges are the first to be filed in the antitrust division's investigation into bid rigging and price fixing of ocean shipping services," said Bill Baer, assistant attorney general in charge of the Department of Justice's Antitrust Division. "Because of the growth in the automobile ocean shipping industry over the past 40 years, the conspiracy substantially affected interstate and foreign commerce. Prosecuting international price-fixing conspiracies remains a top priority for the division."
According to the charge CSAV, and as yet unnamed co-conspirators, agreed on prices, allocated customers, refrained from bidding against one another and exchanged customer-pricing information. The companies then charged fees based on the agreements at "collusive and non-competitive prices".
The Department of Justice antitrust investigation of the international ocean shipping industry is ongoing. CSAV has agreed to cooperate.
WASHINGTON, DC: Two new reports by the World Bank says logistics can play a critical role in resolving Vietnam's exposure to climate change if the country moves to a less carbon-intense economy.
According to Luis Blancas, the lead author for the reports: "The research we have conducted over the past 2-3 years, including numerous conversations with freight logistics stakeholders in Vietnam, reveals that unpredictability in supply chains is the main driver of logistics costs for Vietnam. "
The bank says the country's logistics operations are more expensive than China, Malaysia, and Thailand with shippers spending US$100 million annually in extra inventory carrying costs due to clearance delays.
In a bid to spur low carbon-based economic growth, the bank says the government should adopt e-freight and apply transparency and consistency to the facilitation of international trade.
This will lead to more international players in the country's freight forwarding and third-party logistics service-provider market and encourage collaboration between foreign and domestic players.
Other bank recommendations include the definition and management of "multimodal logistics corridors" where containerized flows on trucks and barges can move on adequate infrastructure and with minimal regulatory delays; the improvement of hinterland connections to deep-water ports in the north and south of the country; the development and execution of a plan to match supply and demand in container terminal handling at these gateways and the promotion of a more sustainable supply-demand balance in the trucking industry.
A second report on Vietnam's inland and coastal waterways says more investment will bring significant economic benefits as the sector offers attractive economies of ship size. Larger barges not only result in lower unit transport costs but also lower emissions of pollutants and greenhouse gases — a major benefit given the country's exposure to climate change.
The bank recommends capacity expansion for the inland waterway corridor linking Vinh Long and Ho Chi Minh City and more investment in the northern corridor from Quang Ninh to Viet Tri as well as a dedicated coastal shipping terminal at Haiphong port.
Victoria Kwakwa, the World Bank's country director for Vietnam comments: "Many of the country's past sources of economic growth—such as a shift in economic activity towards higher-productivity manufacturing and a rapidly growing labor force—are quickly depleting and need to be replaced with new sources of productivity growth.
"Moreover, Vietnam's exposure to the risks caused by climate change—such as sea level rise and increasingly unpredictable severe-weather events—make it imperative for Vietnam to find less carbon-intense development trajectories. We believe that more efficient transport and freight logistics can play a critical role in meeting both these challenges," she adds.
WASHINGTON, D.C.: United Parcel Service has declared its support for U.S. president Barack Obama's executive order to fast track America's International Trade Data System (ITDS) which is designed to reduce the approval time for U.S. exports from "days to minutes".
The order will allow businesses to electronically transmit by a single entry all import and export data required by multiple government agencies. The compliance date is December 2016.
"This executive order will be beneficial to improving our supply chain efficiency and moving goods and services that cross our borders," said Scott Davis, UPS chairman and CEO. "This change will be particularly meaningful to our small and medium-sized customers that depend on global trade to grow their businesses and reach the 95 percent of consumers that live outside U.S. borders." Davis is a member of the President's Export Council, which has supported the goal of a single window to help facilitate commerce and increase compliance with trade laws.
U.S. Trade Representative Michael Froman added his support for the new measure saying the president's action will reduce the costs of trade, support new jobs, and allow companies to ship American-made goods around the globe at a faster rate.
A December 2013 ministerial meeting of the World Trade Organization agreed to expedite the movement, release and clearance of goods, improve cooperation among WTO Members on Customs matters, and help developing countries with the process.
"This executive order helps to clear the way for American businesses large and small to compete and win in the global marketplace. The United States is a leader in facilitating trade around the world, but the president's action ensures that the elimination of red tape begins here at home," said Froman.
In signing the order, Obama noted that since 2009 U.S. exports have risen by US$694 billion, providing a third of America's economic growth. Private-sector employment is up by 8.5 million since February 2011; the number of exporting companies has risen from 276,000 to 302,000; and the number of jobs supported by exports has grown by 1.3 million. At 13.5 percent, the export share of GDP is reportedly now the highest level ever measured.
LONDON: The Lloyds Bank Group says 25 percent of Britain's small and medium-sized businesses think sustainability is one of their top three priorities for 2014.
However, the bank says many UK businesses are still focused on "green'" initiatives rather than extending sustainability to their supply chains and sourcing criteria.
In a survey of 1008 SMEs with an annual turnover of up to £25 million, the bank says the 87 percent of respondents that have implemented sustainable business practices believe there are clear benefits in doing so. Some 54 percent think it helps to reduce their costs.
More than 40 percent say that sustainability makes a positive contribution to the environment, 30 percent say the business practice increases profitability and 27 percent think it makes them a more attractive employer.
Conversely, 87 percent of the SMEs surveyed believe that ignoring sustainable business practices is risky with 49 percent saying it could have a negative impact on their costs. Over 40 percent think it would harm profits, 39 percent believe it would diminish their reputation, 32 percent think it could exclude them from future tenders and 21 percent think it could make them less competitive.
Despite this, Lloyds finds many companies still don't think sustainability is a core business issue with 46 percent saying they are less likely to offer customers a clear business code of conduct. However 42 percent of respondents say they work responsibly within a supply chain; 25 percent operate an ethical sourcing policy; 24 percent work with local charities and 17 percent offer apprenticeship schemes.
The Lloyds survey suggests 33 percent of SMEs expect to increase their investment in sustainable business practices over the next five years, while 42 percent expect their investment to remain flat. Only two percent think they will cut back on spending in this area.
The bank adds that of those businesses that currently have no sustainable business practices, 44 percent say they will start investing over the next five years in order to reduce costs and increase profitability while making a positive contribution to the community.
Since 2009 the Lloyds Bank Group has remained in partial public ownership following an unsustainable acquisition of HBOS that cost UK taxpayers close to £20 billion and the economy more than 30,000 jobs. According to a recent survey by the London School of Economics, Lloyds has set aside £9.2 billion for "conduct costs" associated with its business behaviour. No bank executive has been held accountable.
In September last year the UK government sold six percent of its shares for £3.2 billion and retains a 32.7 percent stake in the bank. Press reports suggest the balance, currently worth £18.4 billion, could be sold off by the end of 2014.
VIENNA, VA: The CASS Freight Index reports domestic freight shipment volumes in North America fell 6.2 percent from November to December last year, making it the largest monthly drop in 2013 and the third straight monthly decline.
In addition, December shipments were 3.2 percent lower year-on-year and 1.8 percent lower than 2011.
In line with the volume decrease, freight spending dropped 5.4 percent from November to December. Given that rates for most modes remained largely unchanged in 2013, CASS says these numbers support other data that the average shipment was larger and therefore more expensive.
The CASS Index does not capture small parcel traffic, so the drop in freight movements was somewhat offset by the increase in small package shipping during the holiday period.
Despite the U.S. National Retail Federation reporting that Thanksgiving/Black Friday sales fell 2.7 percent, the first drop in seven years, on-line sales were at record highs. With 36.8 million items ordered from Amazon.com on Cyber Monday (December 2), the company had to limit signups for its Amazon Prime service so that it could honor its shipping guarantees to existing members.
"This staggering order volume came at the rate of 426 items per second," says report author Rosalyn Wilson, a senior business analyst with Virginia-based consulting company Delcan Corporation.
Reviewing 2013, Wilson says the freight climate was "mediocre" with the average number of monthly freight shipments 0.7 lower than in 2012. "Inventories remained high, manufacturing stalled mid‐year, and exports and imports were relatively flat for most of the year. All of this contributed to another bumpy year in the recovery that hasn't quite gotten there," she adds.
This was reflected in five three‐year lows in shipment volumes; freight spending that saw eight three‐year highs; a fall in U.S. unemployment and yet the number of new jobs created averaged below 2012.
At the same time the number of workers leaving the U.S. labour pool has now reached near‐historic highs notes Wilson. In addition, the Congressional budget stand‐off in the autumn that forced 800,000 federal workers, and even more contractors, off the job led to a slowing of economic growth in the fourth quarter after a gain of 4.1 percent in the third.
Wilson says imports and exports slowed in the third quarter of 2013; the housing market lagged in the fourth quarter and while manufacturing gained strength for most of the year, it was at a very modest rate of two-tenths of one percent. "2013 was still well below pre‐recession production levels," she adds.
Looking to 2014 the analyst thinks the freight picture "should strengthen as the year progresses despite some hurdles. Globally, new orders are up, but more for exports to developing countries than to the U.S. or Europe. The market for U.S. goods should strengthen by the second half."
Wilson thinks consumers still hold the key to a fully recovered U.S. economy and she warns "there are few signs that they feel confident to resume old spending habits".
Nevertheless she predicts freight growth will still be "measurably stronger" this year with volumes up consistently for several months, putting pressure on capacity before there is a subsequent rise in rates. "The virtual rate freeze that has existed for almost three years should thaw and give way to higher freight expenditures by the second half of the year due to higher costs and volumes."
LONDON: A new study by the London School of Economics and Political Science (LSE), estimates that 10 of the world's leading banks have incurred self-described "conduct costs" of £148.02 billion since 2008.
The research, led by LSE professor Roger McCormick, assessed bank misconduct costs between 2008-2012 resulting from, amongst other things, mis-selling payment protection insurance, manipulating LIBOR, and failing to observe anti-money laundering rules.
Top of the list is Bank of America at $54 billion followed by JP Morgan Chase and UBS at $24.65 billion respectively. The seven other banks have estimated liabilities of an additional $44.72 billion.
Commenting on the study professor McCormick said: "This league table allows the public for the first time to view an independent, objective set of figures which relate in one way or another to bank behaviour over the five years ending December 2012 (including provisions as at that time). The banks ranked here are all household names. The fundamental question is: can we expect these costs to start going down soon if these banks now have sound ethical cultures? If not, why not?"
McCormick compares the bank's contingency costs to the £150 billion GDP of Singapore and Greece; the world's 24 richest nations' annual aid budget of £80 billion; and the UK National Health Service budget of £100 billion.
"Banks are required by regulators to 'know your customer' and, in any event, they can't help knowing rather a lot about us simply by virtue of the fact that they know a lot about our finances and what we do with our money. But do we know as much as we should about them? Is it time for more 'know your bank'? Notwithstanding the ongoing scandals, they say they are trying to be more ethical than in the past and determined to 'restore public trust'. How can we test that? Is it just the latest PR message or is there some substance to it?"
The LSE study says that future levels of conduct costs in the European Union will, in part, be determined by the European Commission (EC) cartel settlement procedure. The LSE points out that currently banks can receive full immunity for revealing the existence of cartels. This allowed UBS to avoid a fine of approximately €2.5 billion. Also, under the EC's leniency programme, banks can also be granted a 10 percent discount on their fines by agreeing to a settlement.
2008-2012 (£bn) Total Costs Provisions and Contingent Liabilities Grand Total
Bank of America 30.41 23.58 54.00
JP Morgan Chase & Co 18.52 6.13 24.65
UBS 23.69 0.95 24.65
Citigroup, Inc 8.71 3.13 11.84
Lloyds Banking Group PLC 5.87 3.37 9.24
HSBC 4.03 2.22 6.25
Barclays PLC 3.06 2.00 5.06
Royal Bank of Scotland 1.73 2.51 4.24
Santander 2.70 1.44 4.14
Goldman Sachs 1.76 2.19 3.95
Grand Total (£bn) 100.48 47.52 148.02
NEW YORK: Public relations firm Edelman says the 14-point gap between business and government trusting each other is now the largest since it began the series in 2001.
Following a survey of 33,000 people in 27 countries, the company says the trust divide is over 20 points in nearly half - including 21 points in the U.S., India (26 points) and Brazil (36 points).
"In a few nations, the divide is as much as 40 points. This is a profound evolution in the landscape of trust from 2009, where business had to partner with government to regain trust, to today where business must lead the debate for change," it says.
The barometer says trust in government fell globally four points to an historic low (44 percent) in 2013, making it the least trusted institution for the third consecutive year. The drop in government trust was even more dramatic on a country level, falling in the U.S. (16 points to 37 percent), France (17 points to 32 percent) and Hong Kong (18 points to 45 percent). Among the general population trust in government fell Spain 14 percent in Spain, 18 percent in Italy and 20 percent in France.
However according to Richard Edelman, company president and CEO, it would be a "monumental error in judgment" if businesses interpret the new data as an opportunity to push for deregulation.
"Our research indicates a reputation hangover for business from the Great Recession of 2008. Events of the past 12 months, including a record fine of $13 billion for J.P. Morgan on the sale of troubled mortgage securities, the largest ever bankruptcy in Latin America with the failure of Eike Batista's EBX deep-water oil drilling firm, and food scandals involving antibiotics in the poultry in China, have renewed concerns about business' ability to self-regulate."
Edelman says there is an opportunity for companies to make their case for change, with 84 percent of respondents believing corporations can pursue self-interest while doing good work for society. To this end, he suggests CEOs become "Chief Engagement Officers" and use a public platform for change – rather than relying on lobbying regulators or elected officials.
"Go on tour, engaging in debate with critics, informing media of all stripes, from mainstream to social. Enable your partners, from NGOs to academics, by briefing them regularly. Foster a culture that supports employees speaking out, amplifying the engagement and creating mass movement," he declares.
"We strongly urge business to take the chance to redefine value as being also about values, to connect with its stakeholders in a deeper manner by explaining the economic, societal and environmental context in which it seeks to operate. Trust will be conveyed to those companies and industries that recognize the need to move beyond transactional thinking toward better understanding of the tangible actions that will solve the issues we face," he concludes.
