Logic 101

Last month, in Vol. VII, Art. 33, we quoted Mr. John Bowe, senior executive of NOL and APL America’s boss, as saying, “The U.S. economy has been transformed by unprecedented growth in containerized imports. Growth in transportation infrastructure hasn’t kept pace. If we don’t fix this, supply chains will bog down, consumer prices will go up and the economy will suffer.” Those were his exact words.

They were also the exact words used by Lisa Harrington to begin her feature story as presented in June’s “inboundlogistics.com”. She said a lot more, too.

“While Bowe’s comments may sound dire,” she said, “they are far from unfounded. One look at port volume statistics shows why.

“From 1990 to 2005, container traffic at the ports of Los Angeles and Long Beach rose 280 percent, from 3.7 million TEUs to 14.2 million TEUs. The Port of Seattle saw its container volume grow 78 percent, Charleston grew by 147 percent, and Savannah rose by 354 percent.”

Ms. Harrington also quoted Mr. Richard Bank, a former director of the Office of Maritime Affairs at the U.S. Department of State, and currently a partner in the DC law firm Thompson Coburn LLP, who has stated that “No one will tell you that U.S. ports are fine”.

“As trade with China and the rest of Asia mushroomed, and vessel size grew to realize economies of scale (using larger ships lowers the per-box shipping cost), trade flows shifted,” Bank explains. “Now, the great volume of goods moves direct from the Far East to U.S. West Coast ports …

“This volume tested the limits of our port and intermodal infrastructure and serious constraints began to emerge,” Mr. Bank went on. “Facility inadequacies caused delays and other problems, raising concerns among carriers and shippers.”

Such concerns prompted shippers to route their freight through the Ports of Oakland and Seattle, and as Linda Hothem, CEO of Oakland’s Pacific American Services reported, “Cargo diversion from Los Angeles created a 25-percent increase in business last year. At least 15 percent of that growth came from importers looking for alternate ports.”

“Although the U.S. West Coast recently has accommodated trade growth, primarily from China, it is walking on thin ice,” Mr. Bank warns. Under current work rules, capabilities, and road and rail infrastructure, West Coast ports are not ready for the next spurt in ocean trade …”

[So why not just alter the ‘current work rules’? If shippers are quick enough to “divert” cargo, why not develop Port Hueneme, Humboldt Bay, Grays Harbor, etc., etc., etc.? Why are the so-called “economies of scale” always tipped in favor of offshore shipowners, to the detriment of the American consumer/taxpayer? Does anyone recall what they were taught in “Logic 101”?]