Not much shopping is being done nowadays in our neighborhood stores. Folks are purchasing only bare essentials these days and they’re traveling to a nearby town to purchase those necessities because of lower costs at a nationally-known and very busy retail outlet located there.
You’ve probably guessed already that we’re referring to the average buyer’s preference for goods offered by Wal-Mart. That’s about the only retailer in the U.S. that’s making a profit.
And you’ve probably already figured that one out, too. That’s right. It’s those lower costs. Wal-Mart’s modus operandum has always been to attract customers by offering lowered prices, and lowered prices, of course, generate high volume sales. Lower prices and high volumes – is that a good strategy? It is in this case – and the proof is in the pudding.
Bearing that in mind, let’s look at the strategy decided upon by the maritime industry.
• “Ocean carriers are not fools”, one of the stories was headlined. Acknowledging the critical times facing container lines, such as a plummeting demand for goods and raw materials, collapsing freight rates, the laying up of more than a million TEUs of excess capacity (some 400 vessels) and the cancelled orders for dozens of newbuilds, maritime journals are reporting the decisions by ocean carriers (who “are not fools”) to raise container rates by as much as $ 300 per TEU.
[Yup. Raised prices. That’s how to attract customers, alright.]
• Another brainstorm. Yesterday one of the carriers announced its intention to eliminate payment of commissions to freight forwarders on U.S. exports, effective April 1st . That’s one more sure way to promote business – for the competition.
Container port officials aren’t much brighter, sorry to say. Here’s what we read on today’s American Shipper’s website:
• “Long Beach weighs intermodal incentives — The Long Beach Board of Harbor Commissioners will next week consider a package of incentives aimed at retaining international trade business and attracting additional cargo to the port, which has seen cargo volume decline dramatically the past few months.”
That part about “attracting additional cargo” … port officials either don’t understand the workings of “supply and demand” or they’re laying down a smokescreen in order to retain not cargo but their own shaky jobs. They’re just pretending not to know that the only thing that will “attract” a supply of goods from overseas manufacturers is a demand for those goods on the part of buyers.
[The only thing that higher prices, incentives to carriers (and political junkets) will attract is a yawn.]