…but no one seems to care.

What do you suppose would happen if drivers at the Indy 500 ignored caution flags? Right. Threatening conditions would develop into catastrophes. But when officials wave those warning signs, drivers immediately take heed and respond without a moment’s hesitation. Those drivers know that watchful eyes, positioned to see the whole field, recognize life-threatening situations and are bringing unseen perils to the attention of those whose field of vision is necessarily constrained. The drivers take heed because compliance assures them of an eventual safe passage.

Caution flags have been fluttering in the faces of maritime officials and port authorities for several years now, but no one seems to care. Some months ago we were reminding readers that ‘watchful eyes, positioned to see the whole field’, were directing our attention to potential economic disasters. The lack of accountability in the containerization industry has prevailed, however, and is bringing this nation’s supply chain to the brink of disaster.

1. Mr. Norman Mineta, former Secretary of the DOT, stated a while back that the 60 container handling ports in the U.S. will not be able to handle the increase in volumes projected for the foreseeable future. Mr. Mineta stated that another 200 of the country’s 361 ports must be converted to container handling facilities. The logic of his assessment became more and more apparent as time passed … but no one seems to care.
2. At Port Industry Day sponsored by the NY/NJ Port Authority in 2000, moderator Conrad Everhard questioned the wisdom of expensive dredging projects in order to accommodate foreign-owned megaships. He noted that larger vessels cause increased traffic congestion and higher levels of pollution, and that public funding of dredging amounted to a subsidy for those foreign entities building those ships … but no one seems to care.
3. Mr. Nolan Gimpel of Axiom Consulting has stated that mega-ships strain the capacity of inland infrastructure, terminal operators, the railroads and truck carriers. As terminals run out of space, he added, ports will be required to seek alternate ways of expanding their operations. The most logical and least costly way to expand without straining the capacity of inland infrastructure, terminal operators, and rail and truck carriers is to establish smaller container ports closer to end users. The benefits will accrue to all taxpayers and consumers …but no one seems to care.
4. Mr. Neil Davidson of Drewry Shipping Consultants at San Francisco’s Navis World 2004 called attention to the operational and commercial limitations that reduce the effectiveness of mega-ships. Mr. Davidson warned that carriers would have a more difficult time filling these large vessels, thereby cancelling out the ‘economies of scale’ these ships are supposed to produce. He also cited the limited number of ports able to service these larger vessels because of harbor depths, and the inability of these ships to accommodate importers and exporters who prefer direct, less costly service. “The bigger the ship, the more transshipment and feedering you need, and that costs money,” Mr. Davidson said. This is another example of an unwitting subsidy paid to shipping lines by the taxpayer/consumer, and emphasizes the need for smaller container handling ports in closer proximity to end users … but no one seems to care.

Well, some people care. The folks overseas, for example, who seem to be more alert than their American counterparts, are going public with their suspicions. In “Bernama.com” from Kuala Lumper comes this report, dated today, July 28th:

“Vessel supply ‘mis-match’ hurting container shipping”.

“As bigger container vessels enter into service, the container shipping industry is beginning to feel the pinch as demand has not picked up as much of late, says Winston W.F. Loo, managing director of Barwil Unitor Ships Service Malaysia. Barwil is part of the Wilhelmsen Maritime Services Company, the single largest agency house in Malaysia with 13 offices covering all ports in the country.

“‘Volume was satisfying during the last six months but rates have been a major issue as new and bigger vessels started coming into the industry during the period,’ said Loo. On the local front, he said rates had dropped like about 19 percent at the end of the first half of the year compared with the last quarter of 2005. When compared with the first quarter of 2005, the drop has been in excess of 30 percent, he disclosed. Base Ocean Rates to Europe in the local market currently have been hovering between US $ 700-750 per TEU, way below rates of US $ 1,200-1,300 per TEU during the heydays of 2004/05 period …”

Mr. Loo also said that “there was a problem affecting the container industry, especially with the mis-match in timing of these large vessels entering into service after they were ordered during the good times of 2004 and 2005. You can’t order for ships today and get them tomorrow, because of the considerable lag time before the ships could come into service after they had been ordered”.

“The (start of the) second half of the year is not looking good given that the summer season is usually a period whereby volume would actually start to taper off, with the rebound coming in late August or September before tapering off again for the year end festivities in November,” he said …

It was forecast that the available container capacity worldwide would expand by about 50 percent between 2006 and 2008, Mr. Loo said, but “the scary part is whether there is enough demand to take up the ample space (in the vessels),” he told Bernama in a recent interview.

That’s what we’re hearing from Asia. From Europe we’re hearing a warning from BRS Alphaliner, a Paris-based consultant, that by this fall, when cargo demands slide to seasonal lows and new ship deliveries peak, container ships could be heading for a lay-up (mothballs), or even breaker yards.
See what happens when officials are not held accountable for their stupidity? Well, why should they care? It’s the taxpayer/consumer who pays for all this waste, and even our own logisticians have yet to catch wise. These experts of ours are still urging ports “to dredge harbors and berths, and retool dated facilities and equipment to accommodate growing container volume and vessels”, and at the same time they’re suggesting that “ocean carriers must add new ships to their fleets and increase the frequency of port calls”. They just don’t get it.

[Pogo said it first … “We have met the enemy, and they is ‘us'”.]