For the last couple of years, I’ve engaged in a regular e-mail exchange with a few friends — several retired steamship line executives, others who are still active, and a port executive — about the ocean carrier industry and the issues affecting it.
Our club of 11 has a combined — and this is conservative estimate — 400 years of industry experience, and we’ve all seen massive changes spurred by growth in global trade.
On the ocean side alone, we’ve lived through the paltry (by today’s standards) 600-TEU ships calling at makeshift terminals in Vietnam in the 1960s and ’70s, the superfast SL-7s and the slow-but-large Econships of the ’80s, the 15,000-TEU Emma Maersk and her sisters, and, now, the first of Maersk Line’s 18,000-TEU Triple Es and, soon, even larger vessels from China Shipping and United Arab Shipping. Terminals have gone through the same dramatic changes, from stick cranes to gantries and now robotics.
Infrastructure in various countries also has changed dramatically. Though it lags in some regions, railroads have helped lead significant change in the form of double-stack operations and inland port depots.
Topical subjects among our little group arise almost weekly. Pithy comments — and sarcasm — abound. The most common theme is: The more things change, the more they stay the same — that is, an industry that has a history of shooting itself in the foot. But we also touch on issues we have in common: the labor-technology-jobs-productivity tit-for-tat; tightening global trade cycles that influence industry decision-making; slow-steaming that, while reducing carrier costs and soaking up capacity, reduces service levels to shippers and consignees; and recognition that carriers need a cost structure that will withstand rate volatility.
We frequently marvel about what China has done in the last 25 years to its ports. That inevitably starts a dialogue comparing China’s development to what is happening — or isn’t happening — in the U.S. We’ve known for several years the Panama Canal by 2015 would be able to handle vessels twice the size of those that can transit the waterway today. There’s been a significant amount of publicity about how few U.S. ports are capable of having those mega-ships load and discharge cargo, primarily because of the lack of depth, so states and cities that own the ports are scrambling to make the necessary changes to accommodate 14,000-TEU and larger vessels.
It hasn’t been easy, and little progress has been made, primarily because it isn’t a politically sexy topic. So the (fill-in-the-blank) administration and Congress pay little attention, other than knowing there is a huge sum of money they can tap into for other purposes from those who pay the Harbor Maintenance Tax.
Our group feels that many have missed the boat, because our ports and surrounding infrastructure have been neglected to the point where it’s costing shippers and consignees significant money. And it isn’t going to get better, because there’s little interest on a national level of improving it. There should be, under the Department of Transportation, a national plan and policy on port and infrastructure development, supported by the HMT and private funds, that maximizes the efficiency of those facilities to the benefit of us all.
Knowing that larger, more efficient vessels can’t call most of our ports is saying we accept inefficiency, and the higher costs associated with those inefficiencies. One way or another, American consumers pay for that. Those directly impacted — shippers, consignees, carriers, truckers and railroads — must come together and make their voices heard in the halls of Congress, the White House and to the general public.
“How big of a deal is this?” you might ask. “Our ports are pretty good as they are.” Really? Wait until you hear that your cargo bound for Tennessee or Alabama leaves Asia on a 14,000-TEU ship that stops in Jamaica, where it’s transshipped onto a smaller vessel so it can enter the U.S. Although that represents efficient use of the larger vessels, it slows the movements to the customer and increases costs due to double handling. And what happens to the ports that can handle the big ships? The ships will arrive, and it’ll take three, four or more days to unload and longer for you to get your cargo.
The lack of national leadership and policy is palpable, and it’s going to get worse. Unfortunately, only those of us involved realize by how much, so it’s up to us to raise the issue to a level to be heard and understood. Even politicians can understand that doing the right thing here can save the country money and create more jobs.
But we need those involved in this — a coalition of shippers, carriers and ports — to band together to create and deliver a message to national, state and city officials. It’s time to be heard. Who’s with me?
Gary Ferrulli, a veteran of nearly 40 years in the shipping industry, is director of export carrier relations for non-vessel-operating common carrier Ocean World Lines, a subsidiary of Pacer International. Contact him at email@example.com. The views expressed here are his own and do not necessarily reflect those of OWL.