THE INDUSTRY NEEDS TO GET ITS ACT TOGETHER

THE INDUSTRY NEEDS TO GET ITS ACT TOGETHER

Take a close look at what's happening at West Coast ports these days.

Congestion at container terminals at Seattle and Tacoma has already resulted in labor disruptions by the drivers who haul containers in and out of the terminals - and there may be more.Because enormous ships arrive in bunches at most West coast ports, each discharging thousands of containers at a time, it can take three days for a landed container to get out of a terminal and be delivered to a distribution center only a few miles from the port.

Double-stack trains headed for the Midwest or East Coast routinely depart behind schedule. Reports of road-rage accidents are on the rise among Southern California truck drivers who have had to wait on their own time in long lines outside terminals.

Is the problem that too many ships arrive at one time? Is it sagging dockworker productivity? Is it that marine terminals and corporate distribution centers still don't operate 24 hours a day? Or is it simply the soaring volumes of international trade?

The answer is all of the above. The difficulty is finding a solution when there's no one in charge.

In spite of all the well-intentioned efforts by ports and multi-stakeholder harbor committees to improve cargo flow, no silver-bullet solution has been found, or even appears in sight.

Ocean carriers say they would gladly spread out their ship arrivals, but only if shippers would accept departures from Asia on different dates. As Bill Mongelluzzo reported in Thursday's JOC, carriers say it's not easy to convince shippers to accept new sailing dates because that means altering production and distribution schedules all the way back to the factory floor in Asia.

Operators of West Coast distribution centers, moreover, might be convinced to stay open 24 hours a day. But for trucks to roll in one after another at 3 a.m., ocean carriers must be willing to pay longshore workers the overtime to keep marine terminal gates open throughout the night. It's not surprising that no one is willing to step up to the plate first.

With every day that passes without a systemic resolution of these cargo-flow issues, the problem grows more serious.

Trade through West Coast ports has grown so much, and so quickly, that the port system there is no longer a mere blip on the radar screens of major importers, or even of economic policymakers in Washington.

Waterborne trade through West Coast ports has grown from a ''mere'' $61 billion in 1980 to an estimated $285 billion this year, a 467 percent increase - double the rate of growth of the U.S. economy, according to a 1998 study by the Berkeley Roundtable on the International Economy. And Booz-Allen & Hamilton has predicted that container volumes through Los Angeles-Long Beach could triple by 2020.

The total U.S. economic impact of West Coast cargo flows is $588 billion, or 7 percent of U.S. gross domestic product in 1998, according to a recent study by Martin Associates of Lancaster, Pa.

With that kind of economic engine, even the slightest disruption can be catastrophic.

According to the Berkeley Roundtable study, a five-day labor shutdown of West Coast ports would cost the national economy $3.8 billion. A 20-day strike would cost the nation $38.2 billion, 190,000 jobs, and would likely jar the stock markets and perhaps world currency markets as well.

Such is the importance of the system to U.S. corporations that the chairman of Wal-Mart Stores personally phoned President Clinton during the recent West Coast longshore negotiations to ask that the White House quietly help ensure a peaceful contract. Bruce Lindsey, a senior adviser to Clinton, became a less-than-visible presence during the negotiations, officials involved in the talks said.

Unlike the 1996 West Coast longshore negotiations, when angry dockworkers slowed cargo movements to a crawl, these talks were resolved peacefully.

Yet for major U.S. retailers like Wal-Mart, the long-term issues are as unresolved as ever.

It's not surprising that some of them are talking, quietly of course, about what long-term alternatives might be available to the current dysfunctional system.

The answer is not to reroute cargo to ports on the East or Gulf coasts; experts agree they could not possibly handle the masses of containers - 6.6 million TEUs in 1998 - that move through West coast terminals. Mexico is years away from offering a competitive gateway.

Nor is the answer to do away with the truculent International Longshore and Warehouse Union. That's a pipe dream.

The answer, of course, is to somehow achieve effective coordination among the ocean carriers, longshoremen, terminals, truckers, railroads and distribution centers.

The free market has produced the facilities, moving assets and expertise to handle cargo flows - but not coordination between them.

The need for coordination grows as cargo volumes swell. And if the industry can't get its act together, something else will inevitably increase, too: calls for government to make sure, one way or another, that the job gets done.