Here’s a scenario, using some round numbers and some familiar numbers. Let’s say a small port in Southeastern New England decides to import and export containers. Permission is granted by the community for Deepsix Shipping Lines to own the terminal and deliver 3,600 TEU per week, or approximately 180,000 TEU per year. If Deepsix knew ahead of time that each of its vessels had to tread water for ten days before being allowed to dock, however, the deal would fall through. Deepsix is incurring costs of about $ 36,000 per day to operate each vessel and the ten-day waiting period would not only put them in the red, but it would also disrupt their delivery schedule. Instead of turning around one 3,600 TEU vessel every week, the ten-day turnaround time for each vessel would force the company to restrict operations to one ship every ten days, and would thereby reduce the annual volume to less than 130,000 TEU. The CEO at Deepsix, knowing ahead of time that this would be a lose-lose situation, would wisely look elsewhere.
The shipping line/terminal owner in this fictitious Southeastern New England scenario is in a much better position, however, than the shipping line/terminal owners in not-so-fictitious Southern California. Commitments were made several years ago by these latter shipping lines, long before the flood of imports could have been anticipated, and now each of the lines finds itself in desperate straits. How do they bail out? The noose-like bottleneck gets tighter every day. As an example, and using round numbers, if one of these shipping lines had planned to be offloading 14,400 TEU per week at its terminal in 2004 (about 720,000 TEU annually), and it intended to utilize vessels each having a capacity of 3,600 TEU, then each of these vessels at $ 36,000 per day would be treading water for ten-day periods. That’s a lot of money being divested. Better it should be invested.
Here’s how. Instead of frittering away the $ 36,000 cost of operation (approximately) per day for each waiting vessel, the shipping line should opt for the efficiencies provided by our patented system. Installation of these facilities would be completed and in full operation within months, and the investment would be considerably less than the daily losses the line is now being forced to assume. The income flow would be reversed, and the many disadvantages that were inherent in their conventionally structured terminal would no longer be present. Relief would be felt all along the supply chain and everyone would benefit. Refer once again to the commentary dated October 14th, 2004, entitled, “Plus Signs”. Every one of these improvements and benefits will be realized as soon as someone, some entity, “steps up to the plate”. That someone, that entity, will make a heckuva lot of money and a heckuva lot of friends.
The decision to make this innovative move cannot be made by longshoremen, truckers, the railroads, brokers, or political entities, however. The decision to introduce this necessary and cost-effective system of operation lies in the hands of shipping lines and terminal owners because they are the ones who unintentionally created, but now prolong, the shortcomings impeding our supply chain.