Umbrella Policy

John Vickerman of TransSystems Corp. always makes good copy. At last week’s AAPA Seminar in Long Beach he threw his weight behind two issues we’ve had occasion to discuss in these pages, one of which has contributed to U.S. supply line congestion, and the other almost a sure bet to bring relief all along the chain. The first issue is one we dealt with in our commentaries dated the 13th and 18th of October, and on the 2nd of November. Mr. Vickerman hits the nail right on the head when he criticizes the reckless building programs of foreign shipyards and shipping lines in their efforts to upstage one another. Because the onslaught of megaships brought considerable grief to U.S. providers and consumers in 2004, the brakes should have been applied and radical logistical planning should have been initiated. A pause of some kind at that point would have done much less damage than a catastrophic stoppage would do in the coming months. This lack of planning was his second point. Didn’t it occur to anyone that if “… trying to fit a 16-inch pipe into a 4-inch opening” doesn’t work, (Thank you, Jean Godwin.) why the heck would anyone try to jam in an even larger one? With no thought to the consequences of an almost certain breakdown in the U.S. transportation system, shipping lines have rushed headlong into newbuild programs that will soon glut our “driftboxes” with more than 150 of these behemoths. To make matters even worse, just last week Hyundai Heavy Industries announced that COSCO had ordered four new vessels with capacities of 10,000 TEU, and that designs for 12,000 TEU vessels have already been completed.

The shipping lines were quick to criticize the ineptness of terminal operators in the LA-Long Beach complex as well as the inaccurate growth projections in all areas of the U.S. supply chain, but these same lines openly boasted that they correctly forecasted 2004’s growth in volume and accordingly introduced the appropriate amount of capacity to accommodate this growth. But does that give them bragging rights? Those unexpected vessels, caught in a predicament of their own making, wasted anywhere from one to two weeks waiting to be serviced, and at an operational cost of $ 50,000 per day, who do you suppose ends up with the tab? Take a guess. And wouldn’t you think that the “correctly forecasted” growth figures would have been shared with the rest of the transportation supply chain? This was the theme of our previous commentary which relied upon the statements of 15 well-known maritime officials, and prompted our call for an umbrella-type organization akin to the “national intermodal freight policy” called for by Mr. Vickerman at last week’s seminar.

We referred above to our November 2nd commentary, and it might be wise to take particular note of paragraphs numbered 5 and 6. Mr. Nolan Gimpel of Axiom Consulting warned us several months ago that mega-ships strain the capacity of inland infrastructure, terminal operators and rail and truck carriers, and that the least costly way to expand these separate but linked operations is to establish smaller container ports closer to end users. Mr. Neil Davidson of Drewry Shipping Consultants called attention to the operational and commercial limitations that reduce the effectiveness of mega-ships and also emphasized the need for smaller container handling ports in closer proximity to end users. These are assessments that an “umbrella association’s” brain trust would surely consider.

[Mr. Vickerman, Mr. Gimpel and Mr. Davidson would fit comfortably under that new umbrella.]