Learning From the Past — or Not

“Those who don’t learn from the past are doomed to repeat it.”

Winston Churchill wasn’t talking about the freight transportation industry when he paraphrased the famous quote originally penned by author George Santayana. But he could have been.

We have, after all, been hammered this year with story lines that, if history had been a guide, might not have been story lines at all.

It starts, of course, with global container shipping lines that, regardless of how often they’re hit over the beam by history, just can’t learn from it. How else to explain the never-ending chase for cargo to fill their ever-larger vessels that, economics aside, has driven down freight pricing and contributed to billions of dollars in losses over the past four years. (Well, there is the theory that the big, profitable carriers are trying to drive smaller lines out of business, but what has that gotten them?)

And then, of course, there’s Washington, where Republicans and Democrats seem less interested in learning from history than making it — in all the wrong ways.

We started 2013 with the threat of federal sequestration hanging over everyone from Main Street to Wall Street. And despite those fears, the economy was poised to accelerate — perhaps to levels that actually could help close the supply-demand gap that has plagued ocean carriers wrestling with a glut of capacity.

As we quoted Don Ratajczak, Georgia State University economist, in January: “I’m bullish, really bullish,” but “only if Washington gets out of the way.” It didn’t. In fact, that sequestration threat seems a distant memory, replaced by a partial government shutdown in October that will lower fourth quarter GDP anywhere from 0.6 to 2.0 percentage points, according to various estimates. Worse, that shutdown, ended only by a short-term budget resolution and lifting of the debt ceiling, could be replayed in the first month of 2014. Is it any wonder the economy, despite strong fundamentals — from a strong housing market, an improving jobs market, recovery in Asia and Europe and a record run-up in stocks — is being dragged down by weak consumer sentiment that resulted in the most tepid start to a holiday shopping season since 2007?

All this isn’t to say that some freight interests haven’t learned from the past. Ocean carriers are cutting costs any way they can to limit the damage, and the most successful — led by industry leader Maersk Line — actually have profited. Trucking companies, after years of fighting an unwinnable battle, have given up unprofitable freight.

But the losses have outweighed the victories, and there could be more damage in the coming year. Washington will be at it again, with new battles over the budget leading to another potential shutdown in February, and, by midyear, debate over a new surface transportation bill just two years removed from the lukewarm MAP-21.

And then there’s potentially the biggest story of 2014: negotiations to secure a new West Coast longshore contract. That potentially contentious process will come just a year after the International Longshoremen’s Association and management in the East and Gulf secured a hard-fought deal that could be described as a Pyrrhic victory, considering the market share East Coast ports have relinquished to the West this year, as Senior Editor Peter Leach reports.

Cargo interests have suffered from labor battles of the past, most notably in the 2004 West Coast port shutdown, when a failure to be proactive caused massive backlogs.

Rest assured, they won’t let history repeat itself.

Contact Chris Brooks at cbrooks@joc.com and follow him at twitter.com/cbrooks_joc.

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