Fed Up

“Short and Sweet” was the title of our Vol. II, Art. 20 commentary. Our criticism was aimed at a piece of propaganda intended, earlier this year, to assure the public that the crowded conditions in Southern California ports had been “resolved”. The publisher of that profound statement was that eminent authority in maritime matters … the Federal Reserve Bank of San Francisco? You can look it up. How accurate were they in this public pronouncement? Let’s look at what more reliable observers have been saying.

“We have seen nothing to suggest that there is going to be a fundamental improvement this year.” (Mark Yeager)

“Without massive investment in infrastructure, grid lock will persist for years.” (Financial Times)

“Crippling Congestion at LA Port Expected to Recur.” (Singapore Business Times)

“Bearing in mind that an additional 1.7 million TEUs are projected to come eastward this year, how can anyone be satisfied that last year’s ‘solution’ will suffice for this year’s problems?” (Bloomberg)

“Drayage companies face idling limits and higher fuel costs … and begin exiting the business, leaving fewer carriers to move containers off the ports, adding to space problems and congestion — and the ships get bigger and want to ground more containers when they dock. I say get ‘mode active’ or get a mop — you’ll need it when your pipeline starts blowing gaskets.” (Perry Trunick)

“There’s a general concern this year about the ability of the railroads to handle the volumes, given the increased availability of longshore labor.” (Doug Tilden)

“Last year the congestion was sitting on ships … this year we’re going to move it onto the roadways and onto rail.” (Doug Tilden)

“The FRA (Federal Railroad Administration) said the number of rail accidents has steadily increased in recent years. In 2004, there were more than 3,100 rail accidents, up from just over 2,700 in 2002.” (Angela Greiling Keane)

“How can marine terminals that were operating at close to capacity in 2004 handle nearly 10 percent more containers without being choked?” (Bill Mongelluzzo)

“Ports on the U.S. West Coast receive 70 percent of all shipments from China, and the number of shipments is increasing by 14 percent annually … With that kind of growth, you’d think the ports would be doing everything they can to ensure the smooth flow of goods into the country. And of course, you’d be wrong.” (Chuck Lounsbury)

[The “Fed” hardly ever gets it right anyway.]