Prophet Margin

As long as we’re talking about change, let’s look at how long we’ve been talking about change. Respected names in the industry long ago recognized that the status quo could not be maintained for any length of time without disastrous consequences. That’s what Douglas Tilden said about four years ago, and this is exactly how he put it; “For our industry to continue to serve U.S. foreign commerce and not become an obstacle to economic growth, we must implement new processes and technologies that allow greater utilization of our resources … The status quo will not do”.

Ron Brinson, the former CEO at the Port of New Orleans, also had his eye on the troubles ahead when he stated a while back, “Waterborne trade is the currency of the global economy; more than 90% of global trade moves via water carriage. Therefore America’s successful participation in the global economy depends upon the capacities of U.S. ports and related infrastructure”. Mr. Brinson didn’t have a crystal ball at hand, he was just stating the obvious. “Most trade routes will experience a doubling of containerized cargo volumes during the next 12 years. Some trade routes will double within the next 6 to 8 years”, he added. Crystal ball or not, his words back then were right on the money.

Here’s what was really prophetic. A panel of logisticians at “Transcomp 2000″, a conference that was held in Fort Lauderdale in November of 2000, identified these upcoming problems:
• The lack of available real estate for expanding facilities.
• Shortages of equipment and personnel.
• Environmental constraints.

Sound familiar? These problems were presented to the attendees at that Fort Lauderdale conference by a panel of experts, remember, and not by an individual. It’s an indication that these concerns were being widely studied, but in the intervening years no one has been able to come up with workable and lasting solutions. Damage control has been attempted wherever breakdowns occur in the supply chain, and the ongoing crisis in LA/Long Beach is just one more example of a complex system being held together with bailing wire. At this writing the logjam of vessels at that port has forced authorities to hire more than 5,000 additional workers, but this and similar emergency repairs amount to locking up the barn after the horse has been stolen.

Three years ago Mr. Vickerman stated that, “Even with conservative 2020 econometrics, cargo forecasts call for two to four-fold increases in demand at key U.S. container ports”.

Three weeks ago Mr. Tilden stated that, “We have to find a different way to operate, or else we are not going to be able to handle the trade”.

A “different way” to operate is the way he put it. Now we’re getting somewhere.