On The Same Wave Length (A reprint of Vol. II, Art. 3)

If you don’t have a copy of the January 3rd issue of The Journal of Commerce, by all means get one. The “Journal”, as most of you already know, is one of the world’s leading sources of port and shipping information, and is staffed by some of the finest analysts. Now let’s get back to the January 3rd issue.

Peter Leach put together an article entitled, “Uniting against a common enemy”, dealing with the comments by Maersk executives with respect to the concerns their customers have about intermodal congestion. This entire article is so accurate and so timely that it requires little paraphrasing, and most of what follows in this commentary, therefore, will be a verbatim use of Peter’s words. Using the “good news/bad news” scenario, Peter reminds us that the world’s port and intermodal infrastructure is straining to handle explosive growth in containerized trade. That’s the bad news, he says. The good news, according to Maersk Sealand executives, is that there’s a growing recognition of the problem among shippers. The problem is affecting the relationship between shippers and carriers and is forcing the two sides to unite against what’s seen as a common problem – congestion that is slowing shipments to a crawl.

J. Russell Bruner, president and chief executive of Maersk Inc., said that last year’s port and intermodal delays weren’t a one-time event and that he and other Maersk executives have noted the growing concern among their large customers that the world’s port and intermodal infrastructure won’t be able to handle the accelerating growth of world trade volume. “The issues of 2004 – 2005 will seem inconsequential by comparison with what’s coming down the road,” Mr. Bruner is quoted as saying. He expressed concern about how to get all of the various interests that depend on the nation’s port and intermodal infrastructure to understand the dangers they’re facing. “We have to change what the country is doing”, he said.

The astute Mr. Bruner pointed to port trucking, which he sees as the weakest link in the intermodal chain. “It all begins and ends with the trucker,” he said. “You have to use trucks to haul containers to the railroad – even the on-dock railroads.” He noted that congestion at terminals “is causing owner-operators to leave the trucking industry. We’ve seen 30 percent of all port truckers leave the industry in the last five years. The trucking fleet continues to deteriorate, and the number of trips a driver in a day can make has been cut.”

To reverse this decline, Mr. Bruner thinks the shipping industry should provide higher wages to drivers. “It’s simply a matter of dollars and cents,” he said. Because BTT, Maersk’s trucking subsidiary, overhauled its compensation plan last June, “We’re seeing an increase in the number of owner-operators who want to work for us,” he said. “Truckers have to be paid more, and the terminals have to operate more efficiently.”

We’re on the same wave length, and Mr. Bruner’s observations require further comment.

When Mr. Bruner shows concern “about how to get all of the various interests that depend on the nation’s port and intermodal infrastructure to understand the dangers they’re facing”, we were reminded of the AAPA’s S.H.A.R.E. initiative and Kurt Nagle’s presentation at “America’s Ports: Gateway to Global Trade”. This website covered Mr. Nagle and the AAPA’s S.H.A.R.E. initiative in our September 30th, and in our October 4th, 11th and 12th commentaries. Mr. Bruner’s and Mr. Nagle’s concern for this lack of understanding was shared by Mr. Philip V. Connors, Maersk’s executive vice president and chief commercial officer, who said, “All the stakeholders – carriers, ports, truckers, railroads and government at national and local levels – need to get involved”.

When Mr. Bruner correctly warned that, “We have to change what the country is doing”, we had to recall the words of Mr. Doug Tilden who so clearly stated, “We have to find a different way to operate, or else we are not going to be able to handle the trade”. This website stressed Mr. Tilden’s words in our October 27th and December 6th, 7th, 8th and 13th commentaries. Our “Quotable Quotes” commentary on November 8th was devoted exclusively to the admonitions of sixteen of the more recognizable maritime authorities. Every statement had to do with the stressful conditions imposed upon our terminals by the rapid rate of growth, and every statement was a call for remedial action. In fact, every statement was a plea for remedial action.

Because of his extensive background in trucking operations, Mr. Bruner is particularly concerned about the state of port trucking, which he sees as the “weakest link” in the intermodal chain, and he also suggested that in order to reverse the decline in driver ranks, the drivers should be paid better. This website recognized the plight of drivers in the September 30th; October 1st, 4th, 11th, 12th and 29th; November 12th, 15th, 16th, and 18th; and December 23rd commentaries.

In the Journal’s interview, Mr. Bruner cited the inaccuracies of the too-low trade growth forecasts and blames these forecasts for many of the current problems facing ports and the intermodal infrastructure. No maritime official contests this observation, and this website treated this subject in our October 6th, 18th, 26th and 27th commentaries. Because Maersk’s economic models were within a percentage point or two of actual growth in trade, he said … “We couldn’t understand why the ports were making so little plans to cope with the volume we could see coming”. Alarmed at underinvestment in port and intermodal infrastructure, Mr. Bruner predicted that, “By 2010 there will not be enough capacity to handle the demand”. He noted that China is making plans for huge increases in port capacity to handle its continuing boom in export trade, but ” … you wonder where all that cargo is going to go … China has aggressive growth plans, but their numbers don’t match up with the growth numbers at the other end.”

Peter’s article is spotlighting the problems that have been stressed in this website:
– “We have to change what the country is doing.”
– “Truckers have to be paid more …
– …and the terminals have to operate more efficiently.”
– “All the stakeholders … need to get involved.”

We’re all on the same wave length, alright, but most of us have our receivers turned off.