Volatile View

Barely a month into retirement, Ron Widdows looks like a relaxed man. It’s the look of ease, a kind of lightness of being, that comes from having responsibility for billions of dollars in a troubled industry and a global transportation network serving the world’s largest businesses lifted from your shoulders.

But Widdows, who retired last month as chairman and CEO of NOL Group, parent of container line APL, is hardly interested in offering a relaxed and sanguine view of the shipping industry.

At an event for apparel importers in New York last week, Widdows gave a clear-eyed, exceedingly sober view of the industry’s struggles over the past few years and, more importantly, a view of where the business is heading. It was also a view filled with a passion that, it’s fair to say, was close to anger, providing a hint of the emotional side to the roller-coaster companies have been riding since 2008 and the pressures that questions of competition have exerted across the shipping industry.

Those questions are no easier today than they have been since the global trade downturn changed the rules of the game.

“How do you configure a company to be profitable in an environment like this?” Widdows asked, detailing the volatility hitting businesses from all directions. “It’s damned difficult.”

For the shipping industry, it’s proved all but impossible, as the results from this year’s third quarter show, and that is where Widdows’ real passion comes out. “Our industry is returning to the dark side, and in some cases it has done that with some vigor,” he said.

Widdows has always paid close attention to shippers as the real owners of supply chains — he was the one, after all, who brought global shippers to Washington in the mid-2000s to argue for greater infrastructure investment — and he aimed his message in New York directly at the apparel industry shippers he says will buckle when ocean carriers pull back capacity, as inevitably they must.

“You should be really pissed off by a carrier community that behaves this way,” Widdows said.

“Shippers have not driven the rates down,” he said. “Carriers have, and for a variety of reasons. Some carriers in this process of trying to gain market share (are saying), ‘I’m big, I’m bad. I’m going to run people out of business.’ For some, it’s ego. In other cases, it is on the national agendas of some countries. It’s a whole variety of things.

“The upshot is, your service delivery is affected because the only response from the carrier standpoint is to reduce capacity, to try to reduce the hurt,” he said.

But shippers and carriers also shouldn’t expect things to change much.

Container lines, he said, really have to buy the newer, larger ships because they are just too fuel-efficient to reject. That will create an awkward transition period for several years as new ships are introduced and older vessels continue to operate.

“The industry is going to have to manage in a world where, for quite a period of time, it will have too many assets,” Widdows said.

It’s hardly a period, in other words, in which any business will be able to relax.

Paul Page is executive director of The Journal of Commerce. He can be contacted at 202-355-1170, or at ppage@joc.com. Follow Paul Page on Twitter, www.twitter.com/paulpage.

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