“Is there an echo in here?” (A reprint of Vol. VII, Art. 18 – May 12, 2006)
C I’s recent report of another threat to US ports to “invest in more terminal capacity and deeper harbours, or lose the flood of its imports from Asia”, requires us to repeat an earlier commentary.
- If you were asked to pay for the construction of a store in your neighborhood, you’d fully
expect to be a shareholder in that facility. Wouldn’t you?
- And as a shareholder you would fully expect the Board ofDirectors to select a management
team that would be competent, efficient, knowledgeable, productive and accountable.
- And when suppliers sought to provide wares for the store, you would expect reasonable
prices from them as well as conscientious servicing arrangements. Wouldn’t you?
- And if these providers insisted that you purchase the adjacent lots and spend money to
expand your warehousing facilities and loading docks so that their large trailer trucks can be
accommodated, thereby enabling those providers to realize larger “economies-of-scale-type”
profits, you’d tell those providers to take a hike. Wouldn’t you?
- You certainly wouldn’t permit your management team to gauge your steady customers by
adding surcharges and fees to all your prices so that the “add-on”costs could be passed back
to those providers hoping to realize “economies-of-scale-type”profits. Would you?
- Knowing full well that the “customer is always right”, and that the customer would surely
shift his allegiance and his purchasing power to a competing merchant, you would dismiss
those arrogant providers and seek other sources of supply. Wouldn’t you?
That’s how businesses operate. But here’s what’s happening in and around U.S. container ports.
- U.S. taxpayers have contributed enormous sums for the construction of our container ports,
but they’ve been awarded no stock ownership.
- Management teams can hardly be described as competent, efficient, knowledgeable, or
productive. They don’t have to be because they are accountable to no one.
- Terminals and endusers, of course, have no say regarding pricing and servicing.
- Carriers have designed and built dozens of mega-ships and have given an ultimatum to U.S.
taxpayer/end users. “Accommodate us or we’|l take our goods elsewhere. Expand. Dredge.
Tear down and rebuild your bridges and highways. Bear the entire financial burden
yourselves so that we can realize our “economies-of-scale-type”profits … or else.”
- Arbitrary surcharges and fees are imposed and passed through to submissive endusers.
- Up to this point, the submissive end user, the uninformed customer, the customer who “is
always right”, has not reacted. The “tipping point” has yet to be reached.
When the sleeping giant awakens, however, repercussions will be felt far and wide. The sleeping
giant, the U.S. consumer, will bring all trading to a screeching halt when it rises up and says “Thanks, but no thanks. Send your behemoths elsewhere. Sell your wares to another country. Find
250 million steady customers in another part of the globe, if you can. Either you service us with
vessels our existing terminals and infrastructure are set up to accommodate… or else.”