Gary Ferulli is ocean product manager for Ocean World Lines and can usually spot a bottleneck when he sees one. In our Vol. XII, Art. 39, which we posted back on September 28, 2007, Gary expressed his concern about the low productivity in our West Coast ports.
Productivity was far behind the output at U.S. East Coast ports back then, and way, way behind the numbers being achieved in foreign container yards. He pointed to a number of bottlenecks and, in fact, he used that term about a half-dozen times in his critique – so we titled our article, “Hitting the Bottle(neck)”.
Earlier this week, an exasperated Gary told Cargo News that he sees this year as probably the “most chaotic year” in shipping in his 40-year career. Here’s how the Cargo News reported his assessment.
“Non-vessel operating common carriers now represent more than 35 percent of Asia-to-US containerized trade and pay most if not all rate hikes and surcharges.
“‘NVOs take the hit, and, for the most part, pass it on to their customers,’ he said.
“In what he describes as probably the ‘most chaotic year’ in shipping in his 40-year career, Mr. Ferulli confessed he was at a loss to find his way through the murk.
“‘Rates plummeted in the Asia-Europe trade through much of the first half of the year as a supply-demand imbalance no one would want to face only exacerbated Europe’s economic troubles,’ the NVOCC man wrote in Newark’s Journal of Commerce.
“‘That was tough enough, but then rates suddenly spiked 165 percent in early July, and carriers pulled out more than six percent of capacity in what should be the middle of the peak season. In the eastbound transpacific, prolonged contract negotiations were highlighted by carriers taking the rare (unprecedented?) step of walking away from some low offers, but in the end there was little real change in 2013-2014 contracts,’ he said.
“‘In the course of 60 days,’ he said, ‘there will have been a general rate increase and a peak-season surcharge, and nothing resembling a real peak-season in the offing’…
“‘With all the carrier machinations to change rates and services at virtually the drop of a hat, chaos is becoming the norm. How do you plan for a 165 percent rate increase? Or three rate increases in three months?’ …
“Does not all this reduce cost to shippers? Mr. Ferulli confessed he had no answer. ‘It’s all the result of there being no answer.'” –
[But there is an answer, Gary. It’s “the supply-demand imbalance no one would want to face”.]