Looking for Bright Spots

Looking for Bright Spots

After listening to speakers at last month’s Trans-Pacific Maritime Conference, reading industry-related publications and viewing various television reports, it is hard for me to find anything remotely reflecting optimism for business in 2009 (absent those of us who received bonus checks from AIG!). So I searched for anything I could find that reflects bright spots, lights at the end of the tunnel, anything positive.

Here are a few:

* Exports of construction equipment increased 20 percent in 2008, to more than $20.7 billion. Infrastructure projects outside the U.S. apparently are gaining momentum for the same reasons they will be here: to get other local economies moving.

* Manufacturing increased 3.4 percent in February, ac-cording to the Department of Commerce. That was the first increase in manufacturing in seven months and, hopefully, the start of a positive trend.

* U.S. housing starts jumped 22 percent in February from January, with the biggest winners in the Northeast. Some of the increase is attributable to a relatively mild winter in some areas of the Northeast, allowing earlier-than-normal starts to spring building. As we have learned, housing is one of the backbones of the economy because it sets the table for other spending, specifically to furnish the home.

* Existing home sales rose 5 percent in February. That primarily reflects the bargains in the market with so many foreclosures and bank sales.

* The North Carolina State Ports Authority landed two new customers/carriers: Independent Container Line and Maersk Line.

As more people pay attention to indigenous cargoes and the lowest-cost flow of goods, Wilmington can become a force. Some infrastructure improvements within the port and accessibility to and from the U.S. heartland are required, but the North Carolina ports are going in the right direction.

*  The American Trucking Associations must have had a rougher time than I did trying to find some bright spots. Late last month, it issued a report predicting truck freight growth would rise 26 percent and freight revenue by 68 percent — by 2020! Talk about stretching to find something good. Eleven years from now?

So much for the bright spots, although I will continue the search. I see members of the Transpacific Stabilization Agreement are also optimistic, waiting until mid-March before trying to salvage the contracting season. I think they are right in what they are trying to do, but it’s bad timing nonetheless. The horses seem to be out of the barn, or enough of them to influence what happens to the rest.

On a not-so-bright spot, Europe is moving to do away with carriers colluding to the degree necessary to have alliances or joint services. While it doesn’t appear to have a lot of support from shippers, the effort is proceeding anyway. I’ve never understood the rationale behind trying to end alliances, especially from the shipper’s perspective. Shippers have never had so many choices of service from so many carriers.

I suppose in the broadest context of competition, there could be less for those who share vessels, terminals and the like, but I don’t believe that’s the case. The lines within an alliance compete with each other. On a very high theoretical level, I can understand that one might take the view that, absent alliances and joint services, all carriers would try to replicate their existing services, launch another round of shipbuilding and create overcapacity. It won’t happen.

I’m reminded of meetings I attended 30 or more years ago as railroad deregulation was discussed at length. I heard many people a lot wiser and more experienced than me speculate that “someday there will only be four railroads; two east and west, two north and south.” They weren’t off by much.

And I recall two years ago being at a conference in Newport, R.I., listening to a shipper describe how a railroad had his facility held virtually hostage by “outrageous” rates. And now I’m reading articles about moves to re-regulate the rail industry.

I know there are varied interests here, but in a sense, this shipper got what he asked for once, realized 30 years later that he didn’t like the results and now wants to regulate the rails. I guess the answer is, “If it helps me, I want it; when it doesn’t help me, I don’t want it.”

There may be a direct analogy here: If the ranks of the ocean carriers shrink — and that seems likely — could there be a situation where a captive audience emerges? Not likely, but it could happen.

Remember that age-old saying: “Be careful what you wish for. You just might get it.”

Gary Ferrulli is president of Global Logistics Consulting in Chandler, Ariz. He can be contacted at ferrulig@mindspring.com.