“If the U.S. sneezes, the Asian maritime industry catches cold.” That’s how T.E. Raja Simhan began his story in the Hindu Business Line last week.
Well, the U.S. is indeed sneezing and the Asian maritime industry is indeed catching cold.
You may recall the many times we’ve complained about the willingness, or rather the insistence, on the part of U.S. port authorities, that U.S. taxpaying consumers comply with demands issuing from shipping interests to dredge our container ports. This dredging is required, you see, because expensive Postpanamax leviathans must be accommodated in order for shipowners to be able to attain “economies of scale”. Our gripe has been that these demands and commands were directed not at the profit-takers but at the taxpaying consumers, the very ones who don’t share in the cash profits generated by the monies they hand over to the maritime industry.
Dredging is a waste of money, and because a reduced amount of taxpayer dollars are being appropriated for such profligacy, the “Asian maritime industry”, as they’ve threatened, is being forced to carry out their threat to look elsewhere for consumers. So they’ve decided to dump as much as they can on the EU countries. More power to them. But there are only so many consumers in Europe, and pretty soon the entire “bigger is better” mentality will come back to haunt them.
In fact, that day has arrived. Maersk got things rolling with the “Regina Maersk”, remember that? And when other carriers began to follow suit, didn’t we, and others who are far more qualified, issue cautions about the difficulties that would be encountered in filling these giant vessels to their break-even points? And because of the inability to achieve break-even capacities, didn’t Maersk just announce a half-billion dollar loss and a consequent reduction in its work force of some 3,000 employees last week?
What is it with those authorities who spend other people’s money? Don’t they care about break-even points, or the “tipping point” that Fran Inman warned them about? Southern California port officials in particular exhibit little in the way of common sense. First they pushed through the PierPass initiative at $ 50 per TEU, then they approved a $ 35-per TEU tax, and just the other day they added another $ 15-per TEU tax. And if that isn’t enough, Senator Lowenthal, D- Long Beach, intends to propose a $ 30-per TEU tax later this year.
Those folks still believe that container fees are needed to replace the Gerald Desmond Bridge and the Commodore Heim Lift Bridge so that Postpanamax vessels can deliver enormous loads to demanding U.S. consumers … despite the fact that Ben Bernanke has all but guaranteed a recession.
And furthermore, a study conducted at U.C. Berkeley in 2006 showed that fees above $ 100 per TEU could cause about 1 million TEUs to divert from LA/Long Beach ports to other West Coast ports.
[Good. We’ll be waiting with open arms up at the Port of Grays Harbor in Washington.]