The Party’s Over
It’s early yet …There’s still time to get ready for tonight’s company after we rest up a bit … And besides, we’re still cleaning up the mess left over from last night’s party …They won’t be here for awhile anyway …We’ll handle them when they get here. This seems to be the prevailing attitude on this side of the pond, but we’re in for a rude awakening. Here’s what’s happening on the other side.
1. One day last week COSCO contracted with Hyundai Heavy Industries to build four new 10,000 TEU container ships. We can gather from this move that COSCO has an ambitious shipping program in the works for the coming years. But COSCO’s enthusiasm doesn’t end there. Along with this aggressive shipping strategy, the company is taking even greater leaps with its shipbuilding program. Today’s February 3rd Singapore Times just revealed that where COSCO’s shipping arm has been accounting for 40% of the company’s annual profits, the rapid transformation of its COSCO Shipyard Group will account for 80% of company profits “within two years”.
2. It was also revealed in today’s Times that Hyundai, Daiwoo, and the other South Korean yards expect to increase their combined 2005 output by 24% because of rising demands. The article also stated that this year’s world-wide ship production will more than double the rate of growth in 2004.
3. From India yesterday we heard that The Shipping Corporation of India (SCI) has initiated moves to acquire an additional 18 vessels as part of a substantial fleet expansion plan. According to a senior official, the company’s requirement for these was “yesterday”.
Almost every day newspapers and maritime journals are announcing the giant strides taken by non-U.S. participants in the intermodal supply chain. Being closer to the Asian sources of production, and therefore being privy to consumer demand, these shippers, carriers and even shipbuilders are exercising good business judgement and reacting in timely fashion, and even as early as “yesterday”. At the same time, a disinterested or neutral observer would be inclined to think that, in spite of the nightmares that surfaced on this end of the chain in 2004, and the anticipated gridlock in 2005, U.S. strategists appear to be sitting on their hands. It would be difficult to come up with any kind of an effective argument against that perception. To be sure, except for strong and expensive attempts to counter real and imagined threats of terrorism, little if anything is being done to prepare for the tidal wave of containers coming this way. If the status quo were to be maintained in 2005 and there would actually be a zero rate of growth in container imports, serious breakdowns would still take place throughout the supply chain because adequate damage control measures have not been taken. Repeated warning signals have been given, projections in the way of outright guarantees have been published, and alerts such as those seen in the above announcements have all provided certain indications that, regardless of the lack of preparation in the U.S. delivery system, massive amounts of incoming containers will hit our ports even earlier than usual this year, and the crippling gridlock, or breakdown, or shutdown of the intermodal supply chain will become a reality.