A Clear Majority

Bill Mongelluzzo said it best in this week’s Journal of Commerce. In his article entitled, “No time to waste”, Bill begins with the warning that “The U.S. freight-transportation industry is on the brink of an infrastructure meltdown, but only a few port and shipping executives have been brave enough to state publicly how critical the situation is”. He ends his article on the same note: “As shipping executives have warned, that cargo will crush U.S. ports and the inland transportation network if infrastructure isn’t expanded quickly. It’s a warning that should be heeded”.

As Dave Barry would say, Bill isn’t making this stuff up. The “Journal” issued a supplement this week, and Joseph Bonney, in his editorial, tells us that when asked to discuss briefly what they see as the top industry issues for 2005, a clear majority of the 205 responding executives voted for port and intermodal capacity. These commentaries total approximately 65,000 words, and we agree with Mr. Bonney when he says that these thoughtful statements by people whose opinions count make fascinating reading. There’s just one problem, though. Many, many people just don’t have the time to read a 65,000 word treatise, and that’s a doggone shame because the folks at the Journal outdid themselves. It’s a tough act to follow.

For those not privileged to have access to this supplement, or the time to read it through, we’d like to provide excerpts from some of the thoughtful statements contained therein. Such a sampling might encourage a thorough reading of this supplement and might even lead to a unified effort by the freight community to search for the elusive solution to supply line congestion. Let’s begin.

“2004 demonstrated once again the fragility of the international transportation system. The combination of unexpectedly strong volumes out of China and issues with “right-sizing” the Southern California work force brought previously unimaginable delays to the movement of trans-Pacific cargo. Other ports around the world struggled with congestion, but none suffered the level of disruptions of Southern California … We are seeing diversions to other West Coast ports and new all-water services starting up. We will definitely be faced with a much broader set of issues in 2005.”
— Douglas A. Tilden, President and chief executive, Marine Terminals Corp.

“The majority of our ports are bursting at the seams. Available shorelines are becoming increasingly scarcer in parts of the country. As this is becoming more the reality for the nation’s ports, we have to address the issue that compounds the problem of expansion – cargo opportunities are increasing. Increasing international cargo could potentially overload the inland transportation systems in delivering goods in a timely manner. Best practices, technology and innovative cargo handling can only take us so far. However, as an industry we need to collectively determine a long-term strategic plan. We have adapted, as an industry, in the past when new innovations came along and we will do so again, but it will take the concerted effort of all of us working together to meet the demands of the future.”
— James J. White, Executive director, Maryland Port Administration

“The U.S. transportation and logistics industry in 2004 faced pressures on all fronts, and became headline news for all the wrong reasons. On the West Coast, ships were delayed for days, sometimes weeks, in ports. New behemoth 8,000 – TEU vessels, heralded by the carriers as the solution for the lowest costs, were found to take seven days to offload, and no one on the carrier sales force wanted to tell the poor small consignee when his box finally reached the pier. The railroads experienced meltdown, with intermodal speeds across the country substantially less than those achieved by Lance Armstrong … What are the important changes and news for 2005? I am an optimist. I believe that at least some members of the transportation and logistics industry will hear the cries of shippers for reliable service at a fair price, of something approaching service and cost guarantees in slow periods as well as the peak, and will step up a superior offering … Who will history show to be have been equal to the challenge?”
— J. Douglass Coates, Principal, Manalytics International

“In forecasting the biggest changes for the industry this year, all one needs to do is reflect on the West Coast freight bottleneck of 2004. The problems on the West Coast were primarily due to unexpectedly high volumes. Vessels were not worked in a timely manner. Ships sat idle off the coast for days, costing the U.S. economy millions of dollars and putting the holiday shopping season at risk for retailers nationwide. Even if vessels had been worked quickly, the inland intermodal infrastructure, particularly the railroads, was not prepared to handle the volume of freight moving across the Pacific.”
— Rick A. Kessler, President and chief executive, Horizon Services Group

“Two of the most important challenges requiring more attention in 2005 are accurate forecasting and congested infrastructure … Infrastructure expansion is expensive and requires a long lead time. As a result, some expansion plans are under way to address the doubling of container traffic in the next decade. In the interim, we must find ways to move more cargo through existing capacity. This will be accomplished only with effective planning, and that planning must begin with an accurate projection of the volume expected to move through these facilities.”
— Russ Bruner, President and chief executive, Maersk Inc.

“Congestion is the question; diversification of cargo routings will be the answer. While ocean carriers continue to enjoy the bounty of plentiful cargo, the U.S. ports and intermodal systems are becoming bottlenecks for the national and global economies. Too much cargo through too few ports, and diversifying the routings of import cargos will be the only way for our country to steer safely through these rocky shoals. Containerized cargo growth will continue, and perhaps accelerate, and we must make better use of our distribution infrastructure to move these boxes quickly and efficiently.”
— Jerry A. Bridges, Executive director, Port of Oakland

“This year may be our industry’s last best window of opportunity to help craft an effective and productive national response to today’s global trading and security challenges. We must work toward a coordinated and multidimensional response that balances national security with trade facilitation and economic security.”
— Hallock Northcott, President, American Association of Exporters and Importers

“Congestion on the West Coast will continue to alter shipping patterns for months, and perhaps years, to come. With all-water service from Asia to the East Coast now under 25 days, the impetus to use Los Angeles-Long Beach and rail has decreased. The imposition of congestion surcharges is pushing cargo to Houston and the Pacific Northwest at alarming rates and this is already overwhelming carriers’ ability to cope with the surge in freight.”
— Alan E. Baer, President, Ocean World Lines

“In 2005, concerns about capacity and security will have a profound effect on ports. These issues are not new, but they will manifest themselves in new ways – and they are likely to attract increased attention from the world beyond the maritime industry. Capacity concerns require an intensified focus on the landside transportation system. For years, ports have worked with ocean carriers and others to maximize the ocean side of the transportation system to accommodate larger vessels and cargo flows. With the recent growth in trade, we now face real and impending crises in managing the volumes of cargo that ports move to and from the land side of the transportation system. We face bottlenecks in the system, conflicts with other interests for the use of highway and rail capacity as well as for use of land , and the ever-present concern about the environmental impact of our business activities.”
— Richard M. Larrabee, Director, Port Commerce Department, Port Authority of NY and NJ

“The deterioration of ocean carrier, port, truck and rail capacity and service threatens the agricultural export and import supply chain and the U.S. economy.”
— Peter Friedman, Executive Director, Agricultural Ocean Transportation Coalition

“Many ports, especially on the West Coast, are facing congestion and labor problems resulting in costly delays for shippers and carriers. Ports continue to be squeezed by cities and metropolitan areas that have grown up around them, and there are never-ending battles with public and private interest groups that are not in favor of port expansion, regardless of the cost to international commerce and the economic benefit that accompanies port activity.”
— Rick Ferrin, Executive director, Jacksonville Port Authority

“Ocean carriers continued with the pursuit of rate stabilization for all trade lanes throughout 2004. But much to the chagrin of all parties involved, we were confronted with the challenges of the port environment in Southern California beginning early in July … The Los Angeles-Long Beach port complex handles an astonishing volume of imports from Asia. This gateway is critical to the industry, and all entities must work together in a unified approach to properly service our clients in 2005 and beyond who elect to use these facilities.”
— Toshio Suzuki, President and chief executive, “K” Line America

“The driver shortage, consolidation of LTL carriers, rail service problems and West Coast port congestion, combined with a volatile fuel situation, are all likely to continue well into 2005. Combined, they create an environment where shippers will increasingly need to find methods by which to cut their costs, consolidate their shipments and enhance their shipment facilities.”
— Bill Clark, President, American Institute for Shippers’ Associations

“There is much evidence that driver pay has not increased as fast as some other blue-collar occupations over the past few years as trucking companies were hit particularly hard during the recession. This discrepancy makes it difficult to attract new men and women into the profession. The driver shortage problem will not be easy to solve, but if we are going to keep the world’s largest economy running smoothly, it is something the entire freight community will have to deal with.”
— Bill Graves, President and chief executive, American Trucking Associations, Inc.

“We started early last year to see warning signs of port congestion and infrastructure constraints. However, with full ships, few focused on these issues globally or realized how they would affect our industry and our customers’ supply chains … Trade growth will make the constraints more acute in 2005 … There is no doubt about the scale of the challenges in front of us, and the need to think differently about our business. But by working together in 2005 and beyond, we can positively influence the environment, and find solutions that minimize the impact on service reliability.”
— Ron Widdows, Chief executive, APL Ltd.

“The long-term picture projects world trade to double in volume by 2020 and in some markets such as Los Angeles and Long Beach, volume could easily triple. To handle this growth, we must lead changes in the national transportation infrastructure, the productivity level of waterfront labor and cargo-handling capabilities at our container terminals. New efficiencies, stronger teamwork and innovative approaches are needed industrywide … Strong cargo volume will mean more jobs for waterfront labor, and the need for a higher level of productivity. Container terminals need higher productivity, achieved through the use of new technology, processes and equipment.”
— Tony Scioscia, President, APM Terminals North America

“We face two major issues over the next few years. First and foremost is the meltdown of ship-rail/truck connections in North America. You move the cargo rapidly over thousands of miles of ocean only to find you cannot unload it from the ship because there are four ships waiting to use the same berth. Then you can’t move the cargo onto a railcar because there are not enough railcars to accommodate everyone’s backlogged volume. In the middle of all this chaos is the heightened security vigilance that adds to the delays … Unfortunately, the domestic transportation system cannot absorb all the cargo that mega-sized vessels are delivering to our shores. And if you look at the new ships on order, it’s going to get a lot worse over the next few years.”
— Andrew Abbott, Chief executive, Atlantic Container Line

[The seventeen officials just quoted say pretty much the same thing. We’re overburdened … Greater volumes of cargo are coming this way in ever-increasing amounts, and we don’t know what to do about it … We’ll soon be overwhelmed by congestion at every link in our supply chain, and then it’ll be too late for a response to the crisis … No one denies a willingness to participate in a cooperative effort to contend with this dooms-day threat to our economy, but they see no further avenues to explore. There seems to be no way out. Well, there is a way out, as a matter of fact. Readers of this website fully understand that the storage, retrieval and delivery system promoted herein is the one sure way of avoiding the unthinkable, yet seemingly inevitable, transportation gridlock that looms on the horizon. As soon as one of the above officials stumbles upon this site, quick action will follow and our port and supply line problems will be solved. And when our “Problems & Solutions” segment and our October 14th commentary are assessed, we’ll be home free.]