TWO SPEECHES, ONE MESSAGE

TWO SPEECHES, ONE MESSAGE

Events like the New York Traffic Club dinner earlier this month make you sit back and wonder if there isn't really something to all this talk of an approaching national crisis in freight transportation. Two industry leaders -- Rudy Mack, top executive of Hapag-Lloyd in the U.S., and Edward Emmett, president of the National Industrial Transportation League, the leading shippers' voice in the U.S. -- had no idea of what the other was going to say to the club's 95th annual gathering. Yet their comments were remarkable in how openly each attacked the status quo and how explicitly each called for remedial action. They showed that at the highest levels of the industry, frustration is growing.

Mack, the group's person-of-the- year honoree, was up first. He reminded his audience that in the international ocean transport business, it's the steamship line that most often controls the container from origin to delivery, not just from one port to the other. 'If something goes wrong, wherever it is on the way from A to Z, the customer calls us,' Mack said. He noted that to deliver end-to-end service to shippers, carriers are at the mercy of ports, railroads, terminals and truckers, to name a few. Either because of their own lack of foresight or execution, or because of their failure to adequately communicate with each other, problems arise that make it difficult for Mack to deliver a service he or his customer regards as acceptable.

No doubt, most other major carriers would say the same thing, and would acknowledge they're not blameless either. Mack said the Port of New York and New Jersey hasn't grown to meet today's cargo demands. 'I think everybody here in New York slept fitfully when they looked at the future of the port,' Mack said. 'In the meantime, the volume skyrocketed and the port is full -- completely filled up.' The breakup of Conrail by CSX and Norfolk Southern hasn't helped. 'The railroads are not back to the quality service we had before the merger,' Mack said. He recalled how Hapag-Lloyd was forced to divert containers to Halifax and hire additional staff to handle calls from customers in the aftermath of the breakup.

Today, port, rail and other problems often have tangible, costly consequences: Ships don't depart on time because containers are delayed in getting into the port and loaded. Then the carrier must drop subsequent port calls to get its ships back on schedule.

Mack called for creation of a forum in New York to bring parties together to work out the tough issues. 'We have to get the service chain providers together to identify problems and see what we can do jointly, because we can't do it individually,' he said. 'These service failures cannot continue.'

Next came Emmett, the keynote speaker. He got people's attention by stating that his speech 'marks the beginning of the most important legislative-regulatory effort in the league's 94-year history.' He compared it to a speech he gave in the early 1990s to the Maritime Law Association in which he committed the NIT League to maritime reform. That decision led directly to the landmark 1998 Ocean Shipping Reform Act. Comparing ocean shippers' treatment at the hands of the Trans-Atlantic Agreement in the early 1990s to the experience of railroad shippers today, Emmett declared that the league is committed to fundamental change in railroad policy.

Emmett was in an expansive mood, quoting philosophers ranging from Intel's Andy Grove to the late Grateful Dead guitarist Jerry Garcia, who once said, 'Somebody has to do something, and it's just incredibly pathetic that it has to be us.' Emmett said the need for a new railroad policy is driven by long-term trends -- a decline in coal shipments and export grain, cash cows for some railroads; rationalization of ports; growth of shared distribution centers, air cargo; e-commerce; and continuing shortages of truck drivers. Yet despite these structural changes in the economy, railroads maintain an us-vs.-them mentality toward their customers while underperforming financially compared to other industries.

'If the U.S. economy is going to continue its amazing growth, there has to be a renaissance of the North American railroad industry. I realize that many who call for dramatic change are branded as heretics, but the situation with major railroads has to change, for everyone's sake,' Emmett said.

Two speeches, very similar messages. The clamor for change is growing louder.

Peter Tirschwell is editor of JoC Week. He can be reached at (973) 848-7158, or via e-mail at ptirschwell

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