LETTERS

LETTERS

Let's talk about maritime jobs Stuart Rattray is right on target in his column concerning recruitment, careers, etc., in the maritime industry ('Making shipping attractive,' JoC Week, March 19-25).

Since I have been at the California Maritime Academy, I have 'sung the same song' as it applies to this institution. But, guess what? No one from this exciting industry has taken the time to discuss the issue with anyone at CMA.If this issue is so important, then I challenge the industry to contact me not just for talk but for a commitment of both time and resources to find ways to make the maritime industry and employment the choice of CMA graduates.

Jerry A. Aspland

President

California Maritime Academy

Vallejo, Calif.

Useful information

Peter Tirschwell's 'A story we omitted' (JoC Week, April 16-22) was a particularly insightful and well-reasoned overview of the Jones Act landscape.

The 'Survival of the fittest' story on the Puerto Rico traffic lane (same issue) captured many of the dynamics at work in a rapidly changing market. One indication of these further changes is the year-to-date overall share of market information for the five carriers compared to the pie chart showing overall 2000 share of market.

While CSX Lines and Sea Star are unchanged for the first two months of 2001 (the latest available PIERS period), Navieras has slipped three percentage points to 26 0.000000rom 29%, Crowley Liner Services has added two percentage points to 27 0.000000rom 25%, and Trailer Bridge has added one percentage point to 15 0.000000rom 14%. Among other things, this data is bolstering evidence of shippers' growing preference for the higher-cube equipment offered by Crowley and Trailer Bridge.

We appreciate and encourage these types of analytical features and believe that compilations and comparisons using data from your PIERS affiliate provides your readers with useful and constructive fact-based information not available elsewhere.

John D. McCown

Chairman and chief executive

Trailer Bridge Inc.

Jacksonville, Fla.

Survival of the fittest

The report on the Puerto Rico trade (JoC Week cover story, April 16-22) outlined the carriers' financial issues, but it would have been informative to note how that situation came to be.

I have been involved in the Jones Act trades for over l7 years, representing both carriers and shippers. The do-mestic trades are closed to foreign competition and have long since been determined to be oligopolies. The October l996 passage of the Maritime Security Act resulted in cargo capacity 'caps' for all carriers in the MSA program, including Sea-Land and Crowley, which both had subsidized international and unsubsidized domestic services.

The current rate structures in the Puerto Rico trade are a direct result of an effort by another carrier, Navieras, to eliminate non-vessel-operating common carriers from the trade. On Oct. 8, l996, Navieras cut rates by about 20%, offering single-container rates l0% below Navieras' best 'volume' rates. These actions were documented in filings at the Surface Transportation Board and resultant court litigation. Navieras then solicited customers of NVOs and brokers with which it had signed volume agreements. The resulting 'rate war' was caused by the carrier, not by economic pressures of overcapacity or shipper demands. Shippers have stood on the sidelines and have been forced to deal with deterioration of carrier services such as reduction in ports of call, lack of maintenance of equipment, and reduced hours of operation.

I note that you quoted a carrier executive as stating that the carriers have lost a collective $100 million in fiscal 2000, which represents a 'transfer of value' from carriers to the shippers. This presents only a short-term view by a carrier. The real question is: Are today's rates too low, or were yesterday's rates too high?

In June l977, Edward O'Donnell, then the pricing mastermind of Navieras, complained in a JoC article that reefer rates in the Puerto Rico trade were approximately $3,000 per container. In 1989-1992 the reefer rates hit an average of $5,000. Those high rates receded only when a small carrier expanded into a major export port for Puerto Rico cargo. While today's rates are certainly down from their peak, they simply represent the series of peaks and valleys that directly reflect the level of carrier competition. The issue is whether shippers in the 1980s and 1990s 'transferred' value to the carriers that 'was not equitable.' I have never found a circumstance where carriers complained about shippers paying too much for ocean freight.

The carriers that are 'surviving,' and may actually be considered to be doing well, are those that undertook to establish and maintain good customer relations and service. Carriers that are 'in trouble' failed to do this. Ocean transportation services have always had periods of overcapacity or undercapacity. While no shipper wants to see the demise of any carrier, shippers can't protect carriers from themselves.

Rick Rude

Attorney

Washington, D.C.