Partly cloudy, with a chance of flood … (A reprint of Vol. XXV, Art. 27 – Two years ago today.)
The date was May 6, 2006, and here’s the headline that was presented to us in the Virginia Pilot that day: “Maersk executive says U.S. ports need to prepare for flood of cargo”, and this is how the exec made his point:
“NORFOLK – The North American head of shipping conglomerate A.P. Moller-Maersk Group called for increased investment in U.S. ports and said planning is already underway for the second phase of the new terminal his company is building in Portsmouth.
“James R. Bruner, president and chief executive officer of Maersk Inc., said North American ports need to vastly increase their capacity to handle a flood of cargo containers expected from Asia in coming years. He spoke Thursday evening at the annual banquet of the Virginia maritime Association, formerly the Hampton Roads Maritime Association, at the Norfolk Marriott Waterside and Waterside Convention Center.
“The number of containers moving to and from North America grew 13 percent last year, he said. That pace is unlikely to ease, he said, with the growth of manufacturing in China, India and the rest of Asia in the past decade.
“Already, the equivalent of 16 million 20-foot-long shipping containers is being imported to North America, while 7.8 million are exported, he said …
“Without expansion, many ports will hit capacity limits by 2010, Bruner said. Also, 58 percent of the ships being built won’t be able to call on many East Coast ports, he said, because the harbors are not deep enough to handle those megafreighters, some with the capacity to carry more than 10,000 containers apiece …
“Because many ports are landlocked with limited room for expansion, Bruner also spoke out about the need for ports to improve how they operate. Ports such as Shanghai in China, can handle at least three times as many containers per acre as North American ports, he said.
“This is the only near-term solution we have,” Bruner said.
Well, that was then, and this is now. First of all that “flood of cargo containers” never materialized, and although many authorities in 2006 shared Mr. Bruner’s view that the “pace was unlikely to ease”, it has indeed eased. It was easing in 2006, as a matter of fact, and none other than Mr. Bernanke said so. He’s in denial now but he’s on record as stating in early 2006 that the recession had already begun. The official spinnage, however, is that the recession began in December of 2007. Even Shipping officials were illusory. Rarely were words spoken that did not include the phrase, “economies of scale”. Newbuilds had to be larger – they had to be faster – and they had to be much more numerous in order to handle that “flood of cargo containers”. “Economies of scale” – that was the way to puff up the bottom line – at the expense of the U.S. consumer, of course.
Then we began hearing from overseas sources that hundreds of thousands – no, millions – of TEUs were being taken out of service because of “overcapacity”. Not because of a reduced demand, mind you, but because of “overcapacity”. Those vague “TEUs”, in fact, were hundreds and hundreds of container ships that were laid up – just treading water – in places like Singapore, Rotterdam, Subic Bay and the Fjords in Norway.
Then we heard of another scheme to reduce the cost, the wear and tear, and even the risk, of semi-mothballing. The idea was that some of those layups could be squeezed back into service by cutting back on the speed of the ships still in service. We’re supposed to think that shipping magnates were quite clever by initiating what they referred to as a “fuel-saving measure”. They weren’t being clever, they were being devious.
“Slow-steaming” was the new catch-word. Reducing the speed of those gigantic megaships from 24 knots to 12 or 14 knots was a sure-fire way to save on fuel, they keep telling us. That’s baloney. In their attempts to achieve “economies of scale” carriers ordered bigger and faster container ships because they were so cocksure that the ignorant consumer would foot the bill. It isn’t happening that way because the “recession” has affected, adversely, that “flood of cargo containers”.
The ignorant consumer is now wondering how 24-knot giants are profitable when running at 12 to 14 knots. How does that square with the “economies of scale”concept, they’re asking. And by squeezing in extra vessels, how does that reduce fuel consumption? Looks like we’ve been had.
Fast-forward to December 1st, 2010, and an article in OpEdNews with a different sounding headline: “The U.S. Economy: Stand by for more worse news” – by Wayne Madsen.
“A top economic advisor to the Democratic Party, told Mr. Madsen that the domino-like collapse of the economies of Iceland, Greece, Ireland, and now, possibly Spain, is coming also to the United States.
“One of the triggering mechanisms will be at the end of this month when two million idled workers, now collecting unemployment, will be dropped from the rolls. At the end of December, another two million workers will join the ranks of those who have exhausted their unemployment benefits and a total of 4 million Americans will be without unemployment checks and face destitution.
“Four million Americans will put financial pressure on municipalities and state governments already facing bankruptcy. Unlike Iceland, Ireland, Greece, Portugal, and, to some extent, Spain, which have strong central government control, the United States is a federal republic and, as such, the collapse of the economy will be state-by-state and begin at the municipality level, according to our source who has contacts within the Obama White House and the Democratic leadership in Congress.” –
A “flood of cargo containers”, huh? What’s really in the works are those four million newly destitute Americans and an inevitable collapse of the economy – and even though our elected geniuses in Washington are well aware of it, they’re sitting on their hands?
We need jobs. And quickly. Just like we needed jobs in the 1930s. Anyone for shipbuilding?