Washington's Red Tide

Like many men of a certain age, I have a monthly night out with the guys, usually to catch up with each other, play a few hands of cards and generally whine about the state of the economy and the world in general.

Over the years, my friends have come to understand I work in an industry that may provide some insight into future economic activity levels.

Just like the small stakes of our card games, no one has ever made any serious bets on the cloudy images in my personal crystal ball, but at least I’ve done my part by explaining things such as the peak season, order cycles, the importance of the supply chain, and how much of our local, national and global economies are driven by international trade. We tend to stay away from the details, because my friends think I work in a really interesting business (I do) that rationally (debatable) performs a vital global service. I haven’t told them we’re often wildly off the mark.

Although our dysfunctional national government somehow managed to avoid dragging us over the precipice of debt default at the 11th hour early this month, the renowned but questionably reliable rating agency (at least based on past performance), Standard & Poor’s, downgraded America’s credit rating to “AA plus” from “AAA,” sending U.S. and international stock markets seesawing on a wild cycle of huge declines followed by huge recoveries.

Consumer confidence is low, housing prices, with few exceptions, haven’t recovered, unemployment remains stubbornly high, and ocean shipping companies, seemingly unaware of the parlous state of the global economy, can’t raise freight rates yet continue to build colossal container ships and presumably expect to somehow fill them with cargo.

There’s little doubt our economy and those of other developed nations are in difficulty. There’s been less searching for meaningful solutions than there has been finger-pointing. When things get really bad, we tend to get silly rather than knuckling down to find solutions.

A recent item in The Journal of Commerce about the Federal Maritime Commission, for example, illustrates the point. First, some background:

The main concentration of ports in this country is along the U.S. West Coast, with the country’s largest port complex — Los Angeles-Long Beach — in Southern California’s San Pedro Bay. In addition to a top global container port — its combined volume puts it fifth in the world (see The JOC Top 50 World Container Ports, page 20), the West Coast has the two Puget Sound ports of Seattle and Tacoma, the Port of Oakland in Northern California and the Port of Portland, Ore.

Together, these six ports handle some 50 percent of U.S. container volume, in the range of 20 million 20-foot equivalent units a year (in a good year, at least).

To the north in Canada are the ports of Metro Vancouver (about 2 million TEUs a year) and Prince Rupert (about 500,000 TEUs). All of the ports have a mixed and varied customer base of container shipping lines, except for Prince Rupert, which has just Cosco, and Portland, with one line Asia service (the CKYH alliance) and one European service (Hapag-Lloyd).

Congressional representatives from the West Coast states apparently have a problem with the Port of Prince Rupert and want the FMC to look at containerized cargo movements through the Canadian port to determine if the U.S. ports are being “unfairly disadvantaged.”

Now, I have lived on the West Coast for more than 30 years, and while I’m sure we have a stellar group of members of Congress, I have doubts about how much these folks actually know about our industry, or even if they could actually point to the Port of Prince Rupert on a map.

I wonder what it is they think that one Canadian port, with one ocean carrier customer, is doing to unfairly disadvantage the combined efforts of six U.S. facilities. Are these activities somehow doing harm to American importers and exporters? Maybe these West Coast politicians would make better use of their time if they’d focus more on how we could make U.S. ports more efficient, or how we could improve our rail and highway infrastructure, or help ports improve throughput and productivity to make U.S. ports more competitive.

It all seems rather silly and a waste of time to me, but maybe I’m just in a bad mood. The stock market just lost another 634 points.

Barry Horowitz is the principal of CMS Consulting Services. Contact him at 503-208-2232 or at barryh@cms-cs.com.

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