The “National Crisis”…(More of the Same)

Back in February of 2000, at a seminar sponsored by the Transportation Research Board, Michael Belzer of the University of Michigan’s Institute of Labor Relations stated, “Low wages, long hours, piece work and unsafe working conditions. You have working conditions that I believe can be characterized as sweatshops … If the problem is not resolved soon, you won’t have to worry about gridlock because there won’t be any trucks on the road … I can’t comprehend why people don’t respond to this as a national crisis”.

There have been limited responses, of course, but because of the inability to coordinate the stovepiping operations that make up the intermodal supply chain, an effective and decisive response has been an impossibility up till now. There is no lack of concern or determination, however. At the AAPA seminar in Long Beach the other day, Philip V. Connors, Maersk’s Executive VP, stated that although the capacity limitations at the ports are bad, the infrastructure limitations are even worse in the rail and trucking industries. “The real problem is infrastructure”, he said. “When we talk about infrastructure, you better be worried.” Mr. Connors then echoed Mr. Belzer’s earlier warning by saying, “It is, in my opinion, a national crisis”. This seemingly hopeless situation is exacerbated by a shortage of port drivers. Because of low wages and costly unpaid delays, the national fleet of owner-operators serving container ports has declined from 160,000 five years ago to approximately 110,000 today, says Mr. Connors. This decline has been verified by Mr. Clark Brown, the President of Bridge Terminal Transport Inc., who states, “We estimate that more than 50,000 drivers — roughly one-third of the total — have left the profession since 2000. Inadequate income is the top cause”.

Nor is this the first time Mr. Connors has sent cautionary words to the intermodal industry. In an earlier interview, when alluding to the widespread logjams in the supply chain, he said, “All the stakeholders — carriers, ports, truckers, railroads and government at national and local levels — need to get involved”. The logistical problems throughout the supply chain have been anticipated, however, for the most part anyway, and they’ve been addressed as they’ve developed, but now the gravity of the crisis is being freely acknowledged by those who will ultimately be held accountable. We’ll be hearing more about this “national crisis” as conditions grow worse.

Mr. Tommy Stramer, President of Zim American Integrated Shipping Services Co., looks at this crisis in the U.S. transportation system and lays it right on the line when he states:

“I hope there will be changes during 2005, namely in the infrastructure of the U.S. ports and the railways. If changes can be made in such a way as to allow a higher turnover of containers in the ports — coupled with the ability to transport these boxes to inland destinations — then our industry will survive. Otherwise, we are going to see ports, more so on the West Coast of the U.S., but also on the East Coast, approach the point where cargo will not be able to go through them, ships will wait outside, schedules will no longer be maintained, and the new ships of 8,000-TEUs-plus will be just another white elephant in the industry.

“So what are the changes that need to be made? We must find a way to build more terminals on the West Coast. We must find a solution for the environmental problem and deal with it. There will be more all-water strings to the U.S., which will mean heavier pressure on East Coast ports. A way must also be found to build more terminals there.

“To build new railways is a project for more than a year or two. Ever year the U.S. is importing more containers, with exports on the rise as well. Therefore, without significant changes in the infrastructure, the American people will have to adjust their buying habits by reducing their standard of living or by purchasing more domestic products — products that will reflect the increased cost.

“If I sound a bit pessimistic, it is because I am. We must achieve improvements in port and transport infrastructure.” So there you have it, from an observer with a more objective point of view.

Mr. Stamer should be our company’s PR man. He places heavy emphasis on the need for a higher turnover of containers in the ports — a distinct advantage provided by our patented automated system. He cites the needed capability to transport these boxes to inland destinations — another distinct advantage provided by our innovative delivery system. He says we must find a way to build more terminals on the West Coast and on the East Coast — a simple matter in our case because no additional space would be required when retrofitting our space-creating systems within existing sites.

Space-creating — a perfect lead-in. As Mr. Richard Steinke, Executive Director of the Port of Long Beach, so eloquently put it a few months ago, “I’m here to tell you, the land will run out”. It appears now as though the land has indeed run out. Mr. Connors addresses this lack of acreage and informs us that shipping lines that do not operate their own terminals will in all likelihood be shut out as third-party tenants in West Coast ports. “As an industry, we’re in bad shape. Some of these lines will not have a home”, said Mr. Connors at the AAPA seminar. Terminal operators that customarily cater to third-party tenants will soon be able to service only vessels of their parent companies because of ever-increasing volumes. Ed DeNike, Chief Operating Operator of SSA, one of the few operators willing to take on third-party business, stated that in order to do so SSA will be required to double its effective throughput to 8,000 TEU per acre. But there’s a catch, or two — or three. To double the density to the degree Mr. DeNike feels will be necessary, SSA will have to “expand its use of technology, look to off-dock sites for the storage of containers and invest in modern equipment that can stack containers higher”. It won’t be as simple as it sounds, however, because when and where that technology, those off-dock sites and the modern stacking equipment can be made available is anyone’s guess. And the theoretical and considerable cost of these speculative acquisitions is an even wilder guess. [And why would anyone want to “stack containers higher”? Aren’t the additional retrieval costs and delivery delays bad enough as things are now?]

Just think, though, what could be accomplished by retrofitting our inexpensive storage, retrieval and delivery systems. Each terminal would be condensed to one-tenth its current size … that would take care of the space problem. Slotting instead of stacking would allow a one-day turnaround … that would eliminate costly repositioning, delays and stacking vehicles. Our in-house delivery system would eliminate gates, traffic jams, and piecework pay for drivers. Drivers would become full-time employees. The systems efficiencies will permit unimpeded growth in container volume and create thousands of additional jobs. And we’d see an end to the “national crisis”.