In this podcast, Associate Editor Bill Mongelluzzo shares his thoughts on the year's biggest trans-Pacific stories, including his coverage of the global trade rebound and harbor trucking disputes. This is the first podcast in a five-part series.
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Q: What would you say were some of the bigger stories you covered in 2010?
A: I think the biggest story was the rebound in global trade, and especially in the trans pacific trade, and that generated related stories on the vessel capacity crunch earlier in the year, equipment shortages and slow steaming which is a new method of operation for the carriers.
The reason this was such a big story is that 2010 followed what was really the worst year for container shipping in the history of the U.S. since container shipping began in the 1960s. 2009 was just a very bad year. It was the first year that actually there was negative growth compared to the previous year. And the ports, the shipping lines, trucking companies, service industries like the freight forwarders, they were all just hammered by the recession.
So this past year the carriers began with just a recession mentality. They slashed their capacity in the trade by about 10 percent. But as that was happening the trade actually started to rebound. So what we saw is that cargo was being rolled at Asian ports in January and February of this year. there should be plenty of excess capacity but this year it was the opposite. There was a capacity crunch. As a result the carriers were able to increase their rates, which they did. They got quite high freight rates earlier this year. And that helped them to reverse their loss. In 2009, according to the companies that traced this, the ocean carriers actually lost about 15 billion dollars accumulatively. And in 2010 they are going to make up about 13 billion of that.
And like I said the freight rates had dropped, they had dropped below $1,000 per FEU in 2009 where as this past year the carriers made that up easily. The rates got as high as $2,800 for shipping a forty-foot container from south China to L.A., for example. The rates were high, the volumes were there. At first the capacity wasn’t. But as the year when on the carriers returned a lot of capacity to the trade. But they learned to manage it; they learned to put their vessels in as needed. So during slow periods like the Chinese new year in Asia, they would take some capacity out. And when these factories cranked up again after the celebrations they would add the capacity so this was kind of a water shed year for the carriers in that they finally learned that they could manage capacity, that they could remove ships from the trade without losing market share, because all of the carriers did that. So that to me was the biggest story of 2010.
Q: And which of these would you say you found most interesting to cover and why?
A: You know what I really, really have enjoyed covering is the harbor trucking situation. Not only in southern California and the west coast but nation wide. And the reason I like it is when you’re dealing with truckers, you’re dealing with pretty much mom and pop-type operations. I call them and I get the owner on the phone. Whereas when you deal with shipping lines its more bureaucratic and you go through public relations. But I just like dealing with the trucking industry. To me this is really true entrepreneurship. And when you talk to truckers, you talk to teamsters, who are really trying to organize the truckers nationwide. So I’ve really enjoyed covering the harbor trucking industry.
I think there are three areas that have made news in harbor trucking this year. The first area is a lawsuit that the American Trucking Association filed against the port of L.A. for its testing requirements. These are requirements under the clean air plan where harbor truckers, in order to call at the port of L.A., have to register with a clean truck, etc. But L.A. has this somewhat unique requirement that the companies phase in the use of employee drivers. And what that is really intended to foster is organization of these drivers, unionization by the teamsters. L.A. is a very labor friendly city. The major is a former organizer. So the city and the port want to basically see union drivers. And when a driver is an independent contractor as most are at U.S. ports, by law they cannot be organized by a union. However as employees of a company they are fair game.
So the American Trucking Association filed suit against the port. This was two years ago. The case has bounced back and forth this past year from the district court in L.A. to the 9th circuit of court of appeals in San Francisco and it’s back there now waiting to be heard most likely to be heard this spring. Another area where the harbor trucking made news was in Congress where the teamsters once again have been behind a proposed bill, a bill that was actually sponsored by Rep. Jerrold Nadler (D-NY). And this in effect would create a regime similar to what L.A. is trying to create. If passed it would amend the federal pre-emption law to allow for the ports to regulate harbor trucking for purposes of the environment, congestion and issues like that.
And once again if the ports could regulate trucking then they could set their own rules for the types of drivers that would be used. And yet another area where harbor trucking made news was in the U.S. House. The House Transportation Infrastructure Committee, its transportation subcommittee, had hearings into the sub classification of drivers. Are these drivers being misclassified when they are said to be independent contractors or are they truly employed drivers? And if so then that opens up a number of tax issues as well as makes them eligible to be organized by the teamsters. So it’s an exciting story and will continue on into the new year, and I enjoy covering it.