Going to the well … again!

When asked earlier this year to comment on the industry’s pressing needs, Mr. Michael White, President and Chief Executive of P&O Nedlloyd North America, had this to say, “… U.S. infrastructure has not and will not cope with growing cargo volumes without attention and action from all users and beneficiaries. We must find a way to ‘sweat’ the assets (terminals, equipment, rail and highway infrastructures) better than we do today, while developing a framework for longer- term improvements. Inefficiency breeds delays, with attendant costs — and security risks. 2004 was not a pretty picture, and without action, things will only get worse. The need for capital improvements, which cannot take place overnight, even if sufficient funding were available, will drive all supply-chain partners to find ways to improve our vision, forecasting and utilization of assets and labor.”

In his May 2nd keynote address to The Journal of Commerce’s Second Annual Trans-Atlantic Maritime Conference in Jersey City, Mr. White was just as direct. He stressed the need for government as well as the maritime community to recognize the inability of U.S. ports and inland transportation systems to handle projected increases in cargo volumes. Unlike the recent past, when U.S. port authorities had “… thrown money and land at solving the problem of handling more cargo”, he said, these options are no longer available because of space and environmental constraints. Mr. White noted that it will be necessary for terminal throughput capacity in the U.S. to grow by 38% in order to cope with the projected volumes over the next six years, but in order to get to this level of productivity, he said, terminals will be required to move to grounded operations, employ higher levels of information technology, and forecast trade volumes more accurately.

Dr. John Ricklefs, Vice President of Moffatt & Nichol, though, doesn’t quite agree with Mr. White’s assessment that U.S. port authorities no longer had the option of solving cargo handling problems by throwing money around. He still feels that money can still be thrown at infrastructure obstacles and he sees private sector funding as “an alternative” now that state and federal funding is constrained. He suggested that cleverly crafted “container facility charges” tied to municipal bonds could be used to finance upgrades throughout the intermodal supply chain, and said that these fees would be passed through the carriers and on to the shippers. “Prices will have to go up to pay for removing bottlenecks,” he said, inferring that the ultimate financing will be the burden of the end users, the consumers. [You can go to the well once too often, remember.]

Mr. Paul Devine, OOCL (USA) Vice President of Trans-Atlantic trade offered the most interesting comments heard at the Conference. By suggesting that shippers should build more time into their supply chains and look for alternate ports in order to avoid delays caused by port congestion, he exhibited a lack of confidence in the various steps now being taken to reduce congestion in port communities and along the supply chain. He was less than optimistic when reminding (or scolding) the attendees that, “We are saying the same things, year after year”. Mr. Devine raised the question that everyone in the industry has been asking … and wondering about. “What’s our game plan?” [The industry’s response, as usual, will be … when in doubt, punt.]