The Rusty Chain
September 29th, 2004

“Trade within the United States, both that of domestic and international goods, is dependent on the transportation system.” Angus Cooper, of Cooper/T. Smith, said that a few years ago.

“Making additional improvements to the cargo chain is a top priority, because building mega-terminals for ever-larger container ships won’t give a port an advantage if cargo can’t move efficiently to its final destination.” Mr. Dinsmore, the Port of Seattle’s Executive Director, was almost prophetic when he issued this warning some months ago.

Mr. Vickerman of TransSystems Corp. was in a position to be even more direct. He has stated that, “With limited financial funding resources, it is not feasible to develop two to four times the U.S. port infrastructure needed to serve this demand. Terminals must change the logistics cost-to-value relationship and become dramatically more productive quickly.”

These knowledgeable men weren’t alone in their thinking. For a number of years all eyes have been focused upon the incredible growth of containerized imports and the scarcity of waterfront acreage. Officials at Oakland, for example, citing the conditions in LA/Long Beach, revealed their intention almost four years ago to spend $1 billion on terminal expansion. “Oakland is betting the lines will hit a brick wall in Southern California,” said Douglas Tilden of Marine Terminals Corp.

Nowadays the lines seem to be hitting brick walls everywhere. Could it be that the demanding American consumer is at fault, by requiring so many container ships to seek berthing in our ports? No, that can’t be so. Maybe the port authorities are at fault because they failed to anticipate this demand? No, that can’t be so, either. The port director can hardly be blamed for the lack of waterfront acreage ... and what about the other roadblocks he’s running into ... if only the Unions would be more cooperative ... and if the drivers could be more reliable ... and if communities could have foreseen the need for better roads ... and if the railroad people had only been able to see into the future ... Which of these is the weakest link in our logistics chain, anyway?

Instead of looking for a culprit, the industry should acknowledge what Mr. Vickerman has been trying to point out. Where others must spend their working hours in a cubby-hole, relatively speaking, his position enables him to survey the entire field. Be assured that he recognizes, first and foremost, the pressures placed upon personnel at every level and not just upon those who’ve gathered the headlines. Teamwork counts for something, we must admit, and when dissension exists in a clubhouse, there is a pronounced and noticeable drop in performance and efficiency on the playing field. So maybe there isn’t a single weakest link in the chain. Maybe every link is rusty. Maybe Mr. Vickerman is trying to tell us that the chain needs change.

Unless you think the situation is hopeless, please feel free to submit your observations, inquiries and recommendations.

The Weakest Link?
September 30th, 2004

The AAPA’s America’s Ports: Gateways to Global Trade stated that: “For some ports, the weakest link in their logistics chain is at their back doors, where congested roadways or inadequate rail connections to marine terminals cause delays and raise transportation costs.” Admittedly, that’s a weak link, but those faced daily with congestions and inadequacies in surface transportation see things differently. They correctly point out that had they been properly forewarned by port authorities with respect to the rate of annual growth, then certainly things would be running more smoothly in their domains.

But again, in fairness to port authorities, their planning has depended on those international consulting firms that are expected to have all the answers. The consulting firms, however, can only produce information by relying upon data gleaned from retailers, brokers, carriers, terminal operators, truckers, the railroads, and from the whole supply chain, in fact. But there is no crystal ball available. Not to the consultants nor to anyone else. The result, of course, is that the industry is repeatedly put in the position of reacting rather than acting. Everyone in every phase of container transport is playing the game of “catch up”... and in some places it’s already critical.

For example, look at what truck drivers are enduring. Look carefully at the burdens they’re required to shoulder, and consider the possible consequences of their reactions. Rick Knapp, the GM of Virginia International Terminals stated at the Trans-Atlantic Maritime Conference that: “The Achilles Heel of the maritime industry is the truckers’ ability to deliver product to the door.” Events testify to the accuracy of that statement and dire warnings have been issued in the past by Labor and Industrial Relations authorities. Recall, if you will, the words of Michael B. Belzer, of the University of Michigan’s Institute of Labor and Relations. In February 2000, at a seminar sponsored by the Transportation Research Board, he cited the low wages, long hours, unsafe working conditions and recent rise (even back then) in fuel costs. He went on to emphasize that because harbor truck drivers are paid by the trip, rather than by the hour, and because they were not being compensated for the time spent waiting at congested marine terminals, many owner-operators have left the industry and have contributed to the severe driver shortage at our seaports. “It doesn’t take a rocket scientist to figure out why there is a labor shortage”, he said.

We expect to be forewarned so that we can be forearmed. That has been the demand (or alibi?) from each segment of the supply chain, but could any warning be clearer than the one issued by Mr. Belzer more than four years ago? “Low wages, long hours, piece work and unsafe working conditions. You have working conditions that I believe can be characterized as sweatshops ... If the problem is not resolved soon, you won’t have to worry about gridlock because there won’t be any trucks on the road ... I cannot comprehend why people don’t respond to this as a national crisis”.

Could non-union owner-drivers be the weakest link in our rusty chain?

A House of Cards
October 1st, 2004

Because maritime consultants may never be in a position to predict the numbers of incoming containers with any degree of accuracy, systemwide breakdowns will continue to call for emergency stopgap measures all along the supply chain. In the last few months, for example:
• More than 1000 unskilled casuals were forced into the breach in late June and July when an unexpected surge of containers engulfed the LA/Long Beach complex. By mid-August, in spite of the fact that more than 60 ships were berthed, approximately 20 more were anchored and waiting.
• When Local 13 in Southern California rejected a request by the PMA to make an exception over Labor Day and permit longshoremen to work, the resulting backup of vessels exacerbated the crowded conditions in the complex to the extent that an additional 3000 unskilled longshoremen had to be hired. Because so much time is required to train these newcomers, however, little relief even now is being felt.
• An already burdened Union Pacific Railroad was further stressed in mid-August when a fire in a 3100 foot tunnel rerouted trains until the end of the month.
• A BNSF washout in mid-August interrupted all rail traffic to and from Long Beach for a 24-hour period.
• Two other UP and BNSF derailments in the Long Beach and Oakland areas also brought about costly delays.
• The derailment of a 98-car train in Alabama shut down the major UP and CSX rail route servicing New Orleans and the Texas Gulf Coast.

Could any of the instances cited above have been foreseen and provided for by those engaged in forecasting supply chain developments? Not a chance. There are no safety valves available in the present scheme of things. There are ways, however, to prepare and provide for emergencies and even prevent those crises which have plagued the industry from time to time. The 2002 shutdown of the 29 West Coast ports serves as a pretty good example of an avoidable crisis. Is this the sort of event that deserves some thoughtful consideration? What about the “sweat shop” conditions that were described by Mr. Michael Belzer? Just recently, Ron Carver of the Teamsters’ port division addressed this situation again and referred to owner-operated trucks as “rolling sweatshops”. Instead of waiting for the other shoe to drop, and as long as so many people are directly affected by truck transport, isn’t it time to bring some relief to that segment of the delivery system?

Chuck Mack, director of the Teamsters union’s port division, sees it this way: “Conditions are so bad that the turnover rate among these port drivers exceeds 150 percent per year as they cycle in and out of the industry ... It’s perplexing why no one is stepping up to the plate. Everyone is afraid to make the first move.”

A Shared Crisis
October 4th, 2004

Any number of authorities can be cited who are waving red flags at the “rolling sweatshop”issue. Paul Heylman, an attorney specializing in waterfront labor problems, stated that; “The current economic model with drivers is probably not sustainable. Truckers are making practically nothing compared to the ILA and the ILWU”. Instead of appeasement in any form, however, these truckers are now faced with longer turnaround times, chassis shortages, and sections of terminals that are closed off to traffic without prior announcement. Because of these costly delays disgusted drivers are quitting and not being replaced. John Drewes of Devine Intermodal recently said; “This is the first time since I’ve been in trucking that I don’t see new drivers coming into the industry”. This may be the onset of that “national crisis” Mr. Belzer was visualizing.

Ron Carver as well as Mr. Belzer were correct when they cautioned against conditions that can be characterized as “sweatshops”. But what produces the longer turnaround times, the chassis shortages, and the unexpected traffic tie-ups within the terminals? The drivers themselves are not responsible for these difficulties but they’re the ones that seem to be holding the bag. The actual causes are known and can be described by almost anyone engaged in terminal operations, so there’s no point in dwelling upon them in this column. We know for sure that water transport is highly efficient, though; so efficient, in fact, that on any given day anywhere from 60 to 80 ships can be seen treading water while they wait to berth at the LA/LB complex. That particular link in the delivery chain is quite sturdy and will become even stronger in the coming years.

Heed what Chuck Raymond, CEO of Horizon Lines LLC, has to say in this regard. He issued this warning in the form of a rhetorical question recently; “By 2020, every major container port in the United States is projected to at least double the volume of cargo it will handle, with selected ports tripling or quadrupling in volume. In fact, there are many warning signs that point to serious shortfalls in our intermodal freight capacity, and that future cargo volumes may very well overwhelm the nation’s infrastructure. This impending freight capacity crunch, therefore, leads us to one overriding policy question – what will happen if plans are not made today for tomorrow’s freight realities?”

What Mr. Raymond is asking you to consider is this. What kind of an effect will this steady increase in the number of container ships and containers have in the coming years upon the turnaround times, the chassis shortages and the traffic obstacles that are almost unmanageable in today’s container ports? He has a dog in this fight, he is acutely aware of the other problems in the supply chain, and he fully expects to hear some brainstorming from other concerned officials. Band aids won’t do at this late date. This illness could be terminal and requires the kind of treatment Kurt Nagle has suggested. Kurt has reminded us that the AAPA’s SHARE initiative (Seaports of the Hemisphere Allied in Relationships for Excellence), “...promotes both the principle and the process of banding together and pooling resources for greater muscle, which will serve to the greatest benefit for each of us individually and the entire industry collectively”.

The commentaries appearing on this website are being offered with exactly that purpose in mind.

On Track
October 5th, 2004

The sketch at the top of this website depicts a container ship with containers on board. Some of those boxes are destined to be freighted by truck and some by rail. Prior comments in this column dealt with hurdles facing truckers, but only if railroad problems can be adequately funded and managed will a plan be formulated that will bring timely and cost-efficient delivery to end users. But the obstacles are considerable. “The rail infrastructure is a critical problem”, says John Bowe of APL.

One of the problems that may never be overcome is the general feeling among investors that the rate of return on invested capital is unacceptable. In his recently released annual study, transportation specialist Wendell Cox stated that; “In order to carry increasing freight volumes, railroads need more capacity. Rail capacity depends on investment returns. Since railroads are not meeting their cost of capital, government policymakers may want to consider investment incentives to help meet the growing demand for freight rail”. Raising rates in order to fatten up the bottom line for investors, however, may not be possible because these rates are controlled by powerful shipping lines. These lines negotiate long-term contracts in order to keep prices at a level that generate profits for the shipping lines, albeit unattractive returns to potential investors, and because the rate of return is in low single figures, potential investors are not likely to materialize, with or without tax incentives.

The surge in cargo, however, has placed great strain upon railroads, and the amount of spending required to keep pace is almost mind-boggling. “ Keeping pace” means that BNSF, for example, is investing $ 1.9 billion in 2004 in order to add some 400 locomotives and thousands of railroad cars to its inventory, along with more than 2,000 train-operating personnel to its roles. “Keeping pace” means that Union Pacific has added 500 locomotives to its fleet in the past year and hired and trained over 3,000 train-operating personnel as well. “Keeping pace” in NY/NJ means proposing a two-track tunnel to carry intermodal trains under New York Harbor at an estimated cost of $ 7 billion, according to Rep. Gerald Nadler of Brooklyn. The wily Everett Dirksen once said that; “A billion dollars here and a billion dollars there and pretty soon we’re talking about real money”, or something to that effect. More recently, Chuck Raymond reminded us that many transportation planners acknowledge that the national highway and rail systems cannot build themselves out of this impending trade explosion.

Bear in mind also that a seagoing vessel can steer any course desired and even be redirected to an alternate destination because there are no barriers at sea. A trucker can likewise elect to take a detour because of the millions of miles of roads and highways that crisscross the nation. Trains, however, don’t have the luxury of being able to alter course. Trains are restricted to travel along existing railroad tracks, but communities will eventually put limitations on new track construction, and no amount of capital, even if it could be made available, will remove that natural barrier.

On A Tangent
October 6th, 2004

Within the past few days an announcement from the U.S. Senate requires that I digress. Senator Charles Schumer’s proposed amendment to the National Intelligence Reform Act is being opposed by everyone in our already distressed supply chain. No one questions the good intentions of Senator Schumer because all agree that the present rate of random scanning of all containers landing in U.S. ports (about 4%) just doesn’t cut it. 100% scanning of all containers, including empty ones, would provide the peace of mind we need, but simply and candidly put, the chaotic operations within conventionally-structured terminals will not permit anything higher than the 4%. There’s not enough space, there’s not enough time, there’s not enough personnel, there’s not enough money, etc., etc. ... There’s no shortage of problems, though. Senator Schumer, however, has attempted to take the bull by the horns by legislating manual inspection of 10% of landed containers, and although he deserves an “A” for effort, his proposal has hit raw nerves. Rather than being a step in the right direction, such a requirement would adversely affect our troubled delivery chain and could very likely bring operations to a grinding halt.

Fourteen of the leading trade groups contacted members of the Senate advising them in writing of their opposition to the amendment. These signatories cited traffic problems at ports, delayed deliveries, and subsequent shortages and price increases for consumers. An even more important consideration would be the additional stress placed upon personnel in the supply chain and their normal reactions to such stress. If Senator Schumer’s time-consuming amendment were to become law, the response by encumbered employees along the entire supply chain would amount to a “national crisis” and would elicit a noisy response from all quarters.

Please review item #6 on this website’s Problems and Solutions page. The problem side clearly but briefly acknowledges that inspections are severely hampered in container terminals because of hasty and random stacking. This is a result of what has been stated above and needs to be repeated; “There’s not enough space, there’s not enough time, there’s not enough personnel, there’s not enough money, etc., etc. ...”. On the solutions side of that ledger it states that our patented system assures that inspections will be smooth, efficient and unhampered. Our system requires that each container, assigned to a predetermined slot prior to arrival, must first pass through an x-ray scanner. Then it is stored in its programmed slot. Because our system utilizes a small fraction of the acreage now committed to present day terminal operations, there’s no lack of space for scanning procedures. Because our system does away with unnecessary repositioning moves, there’s no lack of time for scanning procedures. Because our system permits timely hiring and training procedures, there’s no shortage of personnel. Because our system requires so little in the way of material handling equipment and general maintenance, there’s no lack of money. It boils down to an equation:

Sufficient space + sufficient time + sufficient personnel + sufficient money = 100% scanning

Senator Schumer has our best interests in mind, and he sure knows how to get our attention.

A Ticking Clock
October 7th, 2004

At the Los Angeles/Long Beach complex, where approximately 12 million TEU were handled last year, facilities for managing close to 33,000 TEU daily are required. At least those are the estimated numbers we get from the maritime journals. But things are not going very smoothly right now, and they’re about to get a lot worse. At the AAPA convention last week, Robert West of Global Insight noted that container trade will grow at twice the originally predicted rate of 4.3% next year.

Supposing ... just supposing ... that all containers were being hauled from those ports and no traffic tie-ups existed, in or outside the ports. Sounds like a perfect world. But let’s make that assumption for a moment. In such a situation nothing would hamper offloading operations, except for the lack of space within the ports. But let’s also suppose that operating space wasn’t a problem. If this dream could ever come true, then ships would be coming and going like clockwork.

Referring to the animated graphic in this website’s Method of Operation, note that the automated facility stores, retrieves and delivers 1920 TEU per day. At that rate, 17 of these structures would efficiently deal with the containers passing through. Note also that each 1920 TEU facility requires only 25 acres, including the delivery system. Instead of the several thousands of acres now being used at these ports, the patented systems, with dramatically simplified operational procedures, would require less than 425 acres. And ships would indeed be coming and going like clockwork.

These patented storage and retrieval systems will provide other benefits as well. Consider for a moment the impact that PostPanamax container ships will have upon our environment as well as our pocketbooks. Conrad Everhard, as moderator at the Port Industry Day symposium four years ago, reminded those in attendance that massive and costly dredging will be required in order to accommodate those giant vessels. He stated that public funding of these dredging programs amounted to a subsidy for those companies building those vessels. In support of this position, at a Capital Hill briefing sponsored by the AAPA in June of 2001, James Hartung advised that dredged deep-water ports used as hubs by these giant vessels in a hub-and-spoke system of operation would actually, “... decrease the efficiency of the marine transportation system and skew the economic benefits”.

On the other hand, when the 17 facilities described above are in operation, only small-to-medium sized vessels will be required for the annual 12 million TEU throughput. Let’s do the arithmetic. On a daily basis ... and these are approximations ... eight 3840 TEU ships plus one 1920 TEU ship would carry 32,640 TEU. Over the course of a year the number of TEU adds up to 11,913,600. That’s pretty close to the estimated 12 million TEU running through Los Angeles/Long Beach now. And how many vessels are backed up today because of the insurmountable problems within these terminal operations? 40? 50? 60? Wouldn’t the nine smaller vessels be a lot more manageable?

And Mr. West, recall, has just revealed that the forecasts have turned out to be too low again.

Casual(ties)
October 8th, 2004

On Capitol Hill this past Tuesday the Senate excluded Senator Schumer’s proposed container inspection amendment from the National Intelligence Reform Act. Although the trade groups strongly opposed his suggested amendment, Senator Schumer can’t be faulted for his attempt to get something done about this Achilles heel. 4% random scanning leaves much to be desired, as all readily admit, but the reaction from the intermodal industry served to play the spotlight on more than just security concerns. The spontaneous protest of the trade groups is an indication that the element of time has become the primary concern all along the supply chain. In this respect, the Senate’s rejection of Senator Schumer’s proposal can be looked upon as a plus for the industry, but the question of security cannot be sidetracked much longer. Unwelcome and sudden legislation could be imposed without warning, if those in authority felt it to be for the common good. It wouldn’t be the first time emergency legislation was enacted.

On a negative note, the PMA/ILWU program for hiring casual workers at LA/Long Beach is meeting with little success. The hiring and training of these part-timers was thought to be the best way to reduce the backlog of vessels at that complex but, as it turns out, these “casuals” have been aptly named. These temporary workers are paid lower wages and receive no benefits, and because some have full-time employment elsewhere, attendance at the terminal is not a top priority. The naysayers remind us that; “You get what you pay for”, and sadly, the truth in that maxim has never been more obvious. Absenteeism in significant numbers of these casuals has become a painful headache for authorities at the ports and has provoked reactions from importing companies and shipping lines. A number of vessels are known to have been diverted to Oakland, to Seattle, and even directly to East Coast ports. Pat Moffett of New York-based Audiovox states that alternate routes of delivery have already been decided upon by his firm as a result of the lengthy delays at LA/Long Beach. Rather than suffer through these costly delays, Mr. Moffett revealed that Audiovox has opted for all-water deliveries from Asia to the East Coast, and for sea-truck service to the East Coast originating from Seattle instead of from LA/Long Beach. Oakland, said Doug Tilden a little while ago, “ ... is betting the lines will hit a brick wall in Southern California”. It’s happening.

James McKenna acknowledged last week that as many as 400,000 applications were received when it was decided to put those casuals on the payrolls at the LA/Long Beach complex. That’s evidence of a sizeable labor pool and a positive indication that full-time longshore gangs could be readily organized, trained, and made available, if a way could be found to utilize them efficiently. As everyone now knows, however, dozens of ships have been forced to sit and wait for servicing because of the many uncertainties within congested terminals. This raises the questions; How can those stalled ships and their cargos be placed in the hands of this anxious labor pool? What is it about these spacious terminals that hinder the efficient flow of goods?

Common Ground
October 11th, 2004

We should thank our lucky stars that cooler heads prevail in this country. Last Wednesday, dock workers at the Port of Iquique, Chile, who had organized a peaceful demonstration with the intention of pressing for a fair conclusion to a wage dispute, were assaulted by units of the Chilean armed forces. In what appears to be an unprovoked attack, six workers were severely injured. Jorge Silva Beron, the General Secretary of the union, was singled out, severely beaten, and remains in intensive care in a Santiago hospital. His very survival is in doubt.

We have wage disputes in this country, too, but at least our chosen representatives have the good sense to sit down and compromise. The recent tragedy in Chile should remind us how much risk we take when little or no consideration is given to an opponent’s position. Long-lasting animosities develop and even encourage further disagreement. The AAPA’s S.H.A.R.E program stands in sharp contrast to attitudes that prevail in other parts of the world, and is a clear demonstration of the willingness and good will that exist between the opposite poles of labor and management. Is there any way, do you suppose, that the S.H.A.R.E. principles could be instrumental in establishing a common ground for these two entities? This is more than just wishful thinking, and it’s a question that merits our attention.

But first, let’s deal with the two questions that were raised last week in this column regarding the backlog of vessels at LA/Long beach: “How can those stalled ships and their cargos be placed in the hands of this anxious labor pool?”, and “What is it about those spacious terminals that hinder the efficient flow of goods?”. The obvious answer, up to this point anyway, has been that these “spacious” terminals are already overcrowded. This congestion generates traffic tie-ups, longer turnaround times, disgruntled drivers and longshore workers ... and around and around we go in this vicious cycle. It’s redundancy ... it’s deja vu all over again. Mr. Vickerman and others have stated repeatedly that sufficient expansion is not feasible, and that terminals must change. No one, however, has been able to put forth a workable suggestion for the required change, and the situation is now becoming explosive. This website has been established to illustrate that the many difficulties encountered in the intermodal supply chain can be remedied by one single step. All the serious problems in this gasping pipeline can be eliminated when the patented system described by this website is fabricated and installed at the site of each existing terminal. Review once again, if you will, the Problems & Solutions page. The very first benefit to be seen is the reduction in the amount of space presently required for operations. The resulting creation of generous amounts of usable space then makes it possible to place those stalled ships and cargos in the hands of an “anxious labor pool”, because even though the system itself requires much less in the way of material handling equipment and maintenance, eliminates container repositioning, simplifies operational procedures and training procedures, etc., etc., the hiring of many more longshore workers will be absolutely necessary in order to handle efficiently the unimpeded growth made possible by this new installation.

New Discoveries
October 12th, 2004

Thus far this column has been concerned with the infrastructure of the intermodal supply chain and the operational breakdowns along that chain. What most of us fail to notice, however, as we scan the daily reports dealing with these logistical problems, is the affect these pressures have upon those who make up the human element in this infrastructure. The recent tragedy in Chile should alert us to our own trouble spots and to the need for some immediate damage control. It would be incorrect, however, to assume that those in overall authority in our ports have the wherewithal to repair the cracks in the system and provide comfort zones simply by acquiring acreage for expansion purposes. More than three years ago, for example, Mr. Richard Steinke, Executive Director of the Port of Long Beach, subtly hinted that the land needed for expansion was no longer available. “ I’m here to tell you, the land will run out”, were his exact words.

As congestion becomes more and more acute because of this inability to expand, port drivers, the lowest ones on the totem pole, incur further delays and even more costly income reductions. To make matters worse for these poorly-paid drivers, Teamster officials warn that relief is not likely to be forthcoming until these drivers are able to become unionized employees. But the law won’t allow that. So, what does the future have in store for these terminals and especially for the independent drivers? What recourse would be available to these drivers? Was Mr. Belzer right when he warned that if the problem is not soon solved, there’ll be no trucks available for deliveries? That would be a tragedy, but not as dire as one along the lines of what took place in Chile last week. A comfortable working environment and a living wage will elicit positive responses instead of negative ones from terminal workers and lead to the kind of cooperation Mr. Nagel hopes to see. But the favorable working conditions must first be in place.

In theory, free-flowing, unimpeded container terminals would allow for systematic berthing and servicing of manageable numbers of container ships each and every day. Unhampered storage, retrieval, and delivery of these containers presuppose congestion-free passage in and around these terminals, and such utopian conditions would provide the comfortable working environment required for all personnel. Immediate and serious consideration, therefore, must be given to the pages in this website which describe the space-saving/creating features of these patented storage, retrieval, and delivery systems.

Designed to assure free-flowing and unimpeded operations within container terminals, these systems would also reduce operating costs and increase profits significantly. This financial windfall, unavailable in conventionally-structured terminals, would allow for permanent employment of port drivers for these in-house delivery systems. Employment by the terminal delivery systems would thereby qualify these drivers for union membership, and an important step in accordance with the S.H.A.R.E. principles will have been taken.

Charting the Course
October 13th, 2004

Based on what authorities continue to report, none of the nation’s container ports will be able to handle the projected increase in container volume in the foreseeable future. Mr. Norman Y. Mineta, Secretary of the U.S. Department of Transportation, and certainly one of the best known of these authorities, stated about a year ago, that of the 361 ports in the U.S. only 60 are presently equipped to handle containers. He predicted, however, that another 200 ports will be handling containers in the pressing years to come. From his vantage point he is able to survey and evaluate the entire length of the nation’s stressed out supply chain, and his unique position enables him to see more clearly not only the hurdles that must be overcome, but also those that must be sidestepped.

As an example, the AAPA began studying capacity limitations long before the general public became aware of them, and its advisories, recommendations and admonitions are widely distributed and respected by maritime interests. In March of 2003, in a letter to the House Appropriations Subcommittee on Energy and Water Development, the AAPA pointed out that the $ 179 million requested by the administration for deep-draft construction projects (dredging) was far less than the hoped-for minimum of $ 459 million. Two years earlier, however, in his criticism of the “hub-and-spoke”concept, James Hartung of the AAPA had wisely alerted officials to some of the problems in that concept, and cautioned against the use of large container ships. He said that concentrating truck and rail traffic at a few ports would worsen congestion, and pointedly asked, “If you took the traffic of Philadelphia and Baltimore and other ports and shoved that into New York, what kind of issues would we be dealing with?” To deal with those “issues”, as we now know, would require a price tag that neither the taxpayer nor the Office of Management and Budget (also the taxpayer) would consider acceptable. Mr. Neil Davidson of Drewry Shipping Consultants in London was even more direct a few months ago when he stated that; “The bigger the ship, the more transshipment and feedering you need, and that costs money ... With ports under pressure to reduce air pollution and traffic congestion caused by trucks, they will not, as they did in the past, automatically build bigger terminals and dredge their harbors deeper each time carriers introduce a new generation of ships. Eventually ports will say, ‘We can’t do it anymore.’” That’s the double-edged sword Mr. Everhard was warning us about at Port Industry Day back in July of 2000. “Public funding of dredging amounts to a subsidy of shipping companies building such vessels”, he said. Mr. Everhard’s assessment was an accurate one. First, we pick up the tab for the dredging, then as a result of this dredging we’re forced to eat the added costs of transportation from faraway “king ports”.

If we read between the lines, this is what Mr. Mineta was implying. By offloading container ships at ports closer to the end user, instead of at distant “king ports”, the industry will reduce traffic congestion, vehicle pollution, and across-the-board expenses for the taxpayer and consumer. Smaller, shallow draft ships, readily available at a lower cost to shipping lines, will service these conveniently located ports and require no dredging. Mr. Secretary foresees a win-win scenario.

Plus Signs
October 14th, 2004

Let’s examine that win-win scenario closely. The corrective measure proposed would:

• Allow ships unhampered access to and from preassigned berths,
• Provide for quick and efficient servicing of these vessels by longshoremen,
• Scan every container,
• Eliminate expensive container handling equipment,
• Position every container in a preassigned slot,
• Require no repositioning of containers prior to retrieval and delivery,
• Allow for an in-house, programmed delivery system by salaried drivers,
• Require no gates,
• Release valuable acreage for other uses (or for future expansion),
• Provide valuable acreage for warehousing and cross-docking facilities,
• Eliminate traffic tie-ups within terminals and in surrounding communities,
• Reduce pollution caused by idling vehicles and outmoded material handling equipment,
• Eliminate long distance delivery,
• Ease the burden on truck drivers,
• Ease the burden on railroads,
• Reduce costs to the end user,
• Increase profits for terminals and port authorities,
• Eliminate the need for dredging,
• Eliminate the need for taxpayers to assume dredging costs,
• Create employment opportunities presently restricted by cramped operations,
• Create employment opportunities in those 200 additional container ports,
• Provide lower costs and higher profits to shipping lines,
• Require the development of short-sea shipping,
• Increase the need for Jones Act ships and barges,
• Revive U.S. shipbuilding,
• Create employment opportunities in U.S. shipyards.

In fact, no stone would be left unturned. Not only would business entities benefit by the ability to expand and embrace new opportunities, but the various unions would also see unexpected and unopposed growth and influence in this unusually favorable atmosphere. Bearing in mind the win-win opportunities indicated above, along with the cooperative attitude of the AAPA as seen in its S.H.A.R.E. principles, as well as the plea from Chuck Mack ( “It’s perplexing why no one is stepping up to the plate. Everyone is afraid to make the first move.”), allow me to put Chuck’s question to you in another way. “Why isn’t everyone stepping up to the plate?”

Another Plus Sign
October 15th, 2004

Now that things have quieted down in our Southeastern States to the point where recent hurricane damage can be assessed and repaired, an ancillary benefit of the patented storage and retrieval system can be evaluated. As the recent storms approached and evacuation orders were issued by civil authorities, those not in a position to comply with those orders were required to seek shelter wherever protective cover could be found. One of the humanitarian announcements given wide publicity was the offer from officials at the U.S.S. Alabama Memorial to open its doors to any and all who sought refuge from the onslaught of those impending storms. A number of local residents no doubt availed themselves of this thoughtful invitation, and these present day ancient mariners who opened their arms and their hearts to the those in danger deserve to be recognized and remembered.

Recall, if you will, that more than half a century ago hundreds of sturdy young men boarded a much younger U.S.S. Alabama (BB-60), and together, this ship and its crew conducted themselves admirably in naval campaigns aimed at assuring the security of this nation and its people. It comes as no surprise then, that this magnificent vessel and its not so young crew should once again take the lead in efforts to provide protection and shelter for those exposed. U.S.S. Alabama, one of the four innovative South Dakota-class battleships commissioned during World War II, is a 680-foot long, 35,000 ton steel structure built to withstand the most severe assaults, and in battle conditions and in typhoons as well, its walls (bulkheads!) shielded all those who manned this mighty ship. At the conclusion of hostilities the nation paid tribute to this great ship and to those men whose dedication and devotion to duty is still much in evidence. The walls of this mighty ship have yet again given protection and solace to threatened occupants. Par for the course.

The ancillary benefit mentioned above merits comment at this point. The coincidence should be noted that both the U.S.S. Alabama and the structure depicted in this website’s illustration are both 680 feet in length. Like the U.S.S. Alabama, these mobile storage and retrieval facilities, of whatever length, would be made available as Civil Defense Shelters during emergency situations. Although the designers had threats of terrorism in mind when designing this website, the administration building shown between the two mobile carriage sections would be made available to serve as temporary living quarters for several thousand refugees in any sort of emergency. The recent weather conditions along the Gulf and South Atlantic Coasts has prompted the design of units for use as additional shelters in these structures, and these specialized units will be on standby in those ports exposed to adverse weather conditions.

Because technology and reconnaissance provide us with advanced warnings of approaching storms, Mother nature’s assaults are somewhat manageable. There are no fail-safe methods as yet for predicting acts of terrorism, however, and concerted efforts must be directed to those dangers. Senator Schumer’s proposal was unacceptable because it was unworkable. It required time, and there is no time to spare in the present scheme of things. The scheme requires amendment.

Eureka! We've found it!
October 18th, 2004

When Frank Divona of Metropolitan Stevedore Co. said; “It’s the perfect storm”, he wasn’t describing one of the hurricanes that besieged the Southeastern States this past month. “Everywhere you turn around, some group is having a problem”, he said. He was referring, of course, to the disruptions at every point in the supply chain caused by congestion all along the chain. Jean Godwin of the AAPA summed it up nicely when she stated that, “It’s like trying to fit a 16-inch pipe into a 4-inch opening”. She said that about four years ago, by the way. She’d probably describe it as a 24-inch pipe nowadays, and she could hardly be accused of exaggerating because one of the news services just issued this discouraging report about the hopeless conditions on the West Coast:

“US West Coast Ports - Congestion: No relief is in sight from the heavy congestion at the ports of Los Angeles (LA) and Long Beach (LB). Although more than 2,000 casual workers have been hired, most ships are sitting idle through 7 or 8 shifts (3 - 4 days or more) before their allocation number comes up and labour can be assigned. As at yesterday, there were some 89 ships in port including around 45 at anchor. LA/LB ports are currently using the USCG-approved ‘contingency anchorages’ located off Huntingdon Beach, where there is room for 12 ships to be anchored. If the harbour runs out of room at these ‘contingency anchorages’ they will begin assigning ships to occupy ‘drift boxes’ located south of the Precautionary Area - where ships will be instructed to maintain their position inside the boxes. These ‘drift boxes’ have been approved by the USCG. All ships assigned to such boxes will be officially logged in as having ‘arrived’ by the Marine Exchange just as if they had anchored offshore in one of the USCG-approved anchorages. Port time at present is averaging 8 days, with some vessels showing a 10-day turnaround time.”

Vessels encounter no delays when crossing the Pacific. They arrive at their destinations right on schedule, but then they’re forced to wait for a week or more before they can be serviced. Mr. Nicola Arena, President of Mediterranean Shipping Co. in the U.S., noted that where projections were inaccurate in other areas of the supply chain, shipping lines correctly forecasted this growth and were able to introduce the appropriate amount of capacity to accommodate this growth. “Now”, he added,“it’s time for other entities to do the same.”

Because there’s no reason to doubt Mr. Arena’s statement, let’s give some thought to his reasoning. If the shipping lines could predict exactly the rate of growth; and if the shipping lines could prepare in advance the amount of capacity required to accommodate this volume of shipping; and if the shipping lines own the major terminals in the U.S.; and if the shipping lines, therefore, are in a position to make the necessary adjustments within these terminals to enable terminal operations to accommodate the increasing volumes ... then why don’t the shipping lines step up to the plate and relieve the incredible pressures that are straining every link in our delicate supply chain?

Our search for the weakest link has ended.

Cause and Effect
October 19th, 2004

This column attracted some attention yesterday. Trucking companies and railroad companies are now wondering why shipowners continue to absorb the $ 30,000 to $ 50,000 daily cost of waiting for berthing spaces in congested ports like Los Angeles and Long Beach. Some of those shipowners, though not all of them, own terminals, and the operations within these terminals can only be described as primitive. Except for some pretty expensive container handling equipment, these terminals stack, search for, retrieve and deliver boxes exactly the way it was done forty years ago. But ports are handling much, much more now than had to be handled back then. Trucking companies and railroad companies are expanding and will continue to expand as long as they have the space and the resources to do so, but container terminals have already come to the end of the line ... as far as space is concerned, that is. There is an abundance of financial resources and brainpower available, but no space. Meanwhile, yard workers, truck drivers, independent terminal operators and the railroads are being blamed for all the hangups that occur along the supply chain even though the cause of the problems, as well as the solution, lies elsewhere.

When seeking a solution for an unacceptable effect (the congestion), one must first consider the cause (the growing volume). Those who are in authority in those shipping companies that own container terminals have given every indication that, no matter what the cost, they’ll find a way to solve the problems besetting the supply chain. Their ships are offloading ever increasing amounts of profitable cargo at their own terminals, and this is what’s causing the delays and breakdowns all along the delivery chain. Failed efforts to speed up the handling and delivery of this cargo in congested terminals subtract great sums from the bottom line as a result, but what can be done about it? This brings us again to the financial resources, the brainpower, and the “no matter what the cost” issues. Millions, no ... billions of dollars have been spent in sincere attempts to make life easier for those in the delivery chain and, according to the maritime journals, billions more have been set aside to continue this uneventful search. It’s obvious that there’s no lack of funding here, and it’s also widely known that there’s no lack of will power and no lack of brain power. But no matter the degree of mental acumen, the old, old adage still holds; “You don’t know what you don’t know.”

The purpose of this website is to introduce and describe a patented system for storage, retrieval and delivery of containers. If anyone at all, regardless of his/her IQ, could have anticipated this system beforehand, the patent would have been unobtainable. This absolves from blame, therefore, all those who haven’t solved our congestion problems because they had yet to learn of this patented system. But with this new knowledge, the available funding, and their ever-present determination, what is standing in the way of implementation? The cost, maybe? That’s the rosy part of the picture.

[If you made an attempt to reach us and received no response, it’s because your inquiry didn’t get through. The fault was at this end and has been corrected by our programmer. We regret the delay and respectfully request that you resubmit your transmission. Thanks].

On Deck
October 20th, 2004

Here’s a scenario, using some round numbers and some familiar numbers. Let’s say a small port in Southeastern New England decides to import and export containers. Permission is granted by the community for Deepsix Shipping Lines to own the terminal and deliver 3,600 TEU per week, or approximately 180,000 TEU per year. If Deepsix knew ahead of time that each of its vessels had to tread water for ten days before being allowed to dock, however, the deal would fall through. Deepsix is incurring costs of about $ 36,000 per day to operate each vessel and the ten-day waiting period would not only put them in the red, but it would also disrupt their delivery schedule. Instead of turning around one 3,600 TEU vessel every week, the ten-day turnaround time for each vessel would force the company to restrict operations to one ship every ten days, and would thereby reduce the annual volume to less than 130,000 TEU. The CEO at Deepsix, knowing ahead of time that this would be a lose-lose situation, would wisely look elsewhere.

The shipping line/terminal owner in this fictitious Southeastern New England scenario is in a much better position, however, than the shipping line/terminal owners in not-so-fictitious Southern California. Commitments were made several years ago by these latter shipping lines, long before the flood of imports could have been anticipated, and now each of the lines finds itself in desperate straits. How do they bail out? The noose-like bottleneck gets tighter every day. As an example, and using round numbers, if one of these shipping lines had planned to be offloading 14,400 TEU per week at its terminal in 2004 (about 720,000 TEU annually), and it intended to utilize vessels each having a capacity of 3,600 TEU, then each of these vessels at $ 36,000 per day would be treading water for ten-day periods. That’s a lot of money being divested. Better it should be invested.

Here’s how. Instead of frittering away the $ 36,000 cost of operation (approximately) per day for each waiting vessel, the shipping line should opt for the efficiencies provided by our patented system. Installation of these facilities would be completed and in full operation within months, and the investment would be considerably less than the daily losses the line is now being forced to assume. The income flow would be reversed, and the many disadvantages that were inherent in their conventionally structured terminal would no longer be present. Relief would be felt all along the supply chain and everyone would benefit. Refer once again to the commentary dated October 14th, 2004, entitled, “Plus Signs”. Every one of these improvements and benefits will be realized as soon as someone, some entity, “steps up to the plate”. That someone, that entity, will make a heckuva lot of money and a heckuva lot of friends.

The decision to make this innovative move cannot be made by longshoremen, truckers, the railroads, brokers, or political entities, however. The decision to introduce this necessary and cost-effective system of operation lies in the hands of shipping lines and terminal owners because they are the ones who unintentionally created, but now prolong, the shortcomings impeding our supply chain.

Mother Knows Best
October 21st, 2004

Our mothers, our wives, our daughters ... efficiency experts. Every one of ‘em. They wasted nothing. Not a minute of time, not an inch of space. They saw everything, they heard everything, and they could even read our minds. They ran the show. They got results. Who can deny it?

Now look at the way men manage an operation. Go back three, five, even ten years, and you’ll recall the authorities enthusiastically forecasting a highly profitable future for the intermodal industry. Everyone could see that growth was inevitable but no one seemed to be concerned about its unexpected rate or about managing it and providing for the day when we’d run out of coastal acreage. But that day of reckoning has been drawing closer and closer and those in the trenches are seeking relief from any source. A lot of money is being thrown around, but the ever-threatening Sword of Damocles is becoming nightmarish.

The periodicals are rife with critical commentaries, but the criticisms are always about the other guy. Nothing positive is being offered by spokesmen beyond the repetitious reminders that channels must be dredged deeper, productivity per acre must be increased, the railroads need to be improved, highway congestion must be addressed, terminal gate hours must be extended, rail shuttles are needed to move containers to inland yards, more manpower is needed in terminals, more technology is needed and less manpower, etc., etc. None of these recommendations have anything to do with what causes delays in the supply chain, and amidst all the hand-wringing Jean Godwin’s warning rings clearer than ever; “It’s like trying to fit a 16-inch pipe into a 4-inch opening”.

Are workable and affordable solutions being proposed by authorities? Well, no, because only two solutions were ever available, time and space, and they’ve already been used up. But aren’t efficiency experts supposed to be able to make more time and more space available when the need arises? In times past, when living quarters were not as spacious as they are today, our mothers, the epitomes of efficiency, never seemed to run out of space. And they’d find more than 24 hours in a day, too. Or so it seemed. This pickle of ours would be a perfect setup for them. If ever they caught sight of the recent comment that between $ 50 million and $ 60 million worth of technology was a worthwhile price to pay “to have the location of containers available at the click of a mouse”, couldn’t you just hear their reaction? “Open your eyes! If it got any closer it would bite you!”, they’d say. Losing track of anything was absolutely forbidden. It was their very nature to familiarize themselves with those methods that gained and preserved time and space, and if ever they had been exposed to the travails of a congested terminal operation, they would long since have recognized and utilized our patented storage, retrieval and delivery systems. If it meant a saving in time, a saving in space, and a saving in cost, it would get the immediate attention of these efficiency experts.

And when you couldn’t see the obvious, remember the put down? “College education! Humph!”

A Way Out
October 22nd, 2004

The Coalition for Secure Ports was formed about a month ago by maritime interests in order to lobby for enhanced maritime security. Mr. Basil Maher, President of Maher Terminals and President of the National Association of Waterfront Employers, stated that, “Too much is at stake for the nation to be lulled into a false sense of security”, and he called for the government to focus as much attention on maritime security as it has on aviation security. The coalition has for its purpose to make policymakers aware of the progress that has already been made in marine cargo security, and to avoid actions that merely impede the flow of commerce, creating that false sense of security without delivering real container security.

A number of influential members of Congress continue to remind us that a mere 4% or 5% of containers are now able to be scanned at our terminals. Senator Chuck Schumer even went so far as to file legislation that would require manual inspection of at least 10% of all incoming containers. The suggestion was roundly shouted down, however, because it was considered to be a definite impediment to “the flow of commerce”. To add emphasis to the general feeling that little has been done with respect to the inspection of containers, President Bush signed the $ 28.9 billion Homeland Security Appropriations Act on October 18th, which includes funding for radiation detection monitors to screen cargo at ports.

Mr. John Kerry, the Democratic presidential hopeful, in a recent speech accused the Bush administration of settling for a security policy that screens only 5% of the cargo that comes into U.S. ports. He quite accurately echoed all the information that has been made known on this matter. Almost immediately Customs and Border Protection Commissioner Robert C. Bonner took Mr. Kerry to task. Mr. Bonner stated; “It’s terribly misleading to say you’re not inspecting 95 percent of the containers, and leave out the fact that for the first time since 9/11, we get information, and we do a risk assessment of every container that’s heading to the United States ... The containers we identify, 100 percent of them are inspected using large-scale x-ray machines and radiation detection equipment. We have implemented CSI (Container Security Initiative) to be able to screen the highest risk containers before they leave the foreign port”. (So, take that, Senator Kerry!)

Unless Mr. Bonner is resorting to double-talk, therefore, Senator Kerry, Senator Schumer, and many others in Congress are way off base. But let’s look at what Dennis Eng wrote on October 18th in “The Standard”, a newspaper of the Sing Tao Newspaper Group and Global China Group. He’s closer to the action than we are and reports that Daniel Wagner, senior co-financing specialist at the ADB (Asian Development Bank) states that about 90 percent of all goods transported into or out of the United States occurs by sea but only 5 percent of this is inspected. This is a statement that’s difficult to ignore because the threat of terrorism is just as important to the Asians as it is to us. Mr. Wagner makes it clear that, “When one considers the extent to which Asian economies are dependent on exports to the U.S. [and Europe] for their livelihood, the risk that a terrorist attack on the transportation infrastructure of the U.S. would impact Asian countries is profound”. Mr Wagner makes it perfectly clear that the Asians aren’t playing games with security issues.


Back in the first paragraph, you’ll recall, we related the purpose of the Coalition for Secure Ports. The intention of this Coalition, it was stated, is to lobby policymakers to avoid actions that merely impede the flow of commerce ( which is why Senator Schumer’s amendment was defeated last week) and also to avoid creating a false sense of security without delivering real container security. ( For any policymaker to give knowingly a false sense of security to the people in this country would be nothing short of criminal.)

Senator Kerry is striking for the presidency, and although his statement could be taken with a grain of salt, there’s no denying that it was in line with everything else that has been said or published about the amount of container scanning being done in our ports.

Mr. Bonner has just as much at stake because he holds a position in the challenged administration, but his statement, with regard to our security, our livelihoods, and quite possibly our very lives, is supposed to be the gospel truth. His obligation is supposed to be to us, not to any political agenda. Mr. Bonner was emphatic when he added, “We have done an amazing amount of things to better secure cargo containers that are being shipped to the U.S. And at the same time do it beforehand, and in a way that’s consistent with security, and doing it without shutting down our economy, and the economy of the rest of the world”.

Mr. Wagner of the Asian Development Bank assesses the situation differently, however. He is at the scene, and because his position in the ADB requires first hand knowledge of high risk situations, it doesn’t seem likely that he’d be in the dark on this matter. Neither is President Bush in the dark apparently, else why would he appropriate more than $ 28 billion for the problem? Hasn’t Mr. Bonner advised him yet that container inspections are being adequately handled in Asia? Do you suppose someone is pulling Mr. Bonner’s leg? Or do you suppose Mr. Bonner is pulling ... Nah!

There’s a way out of this quandary. We can dispense with all political agitation, labor disputes, unemployment problems, and yes, even security concerns by reviewing some of the previous commentaries offered by this website. For a fraction of that $ 28 billion just appropriated, a small fraction, this whole question of container scanning and guaranteed security can be put to rest. Everyone would come out a winner. The patented system this website is touting is the answer to everyone’s concerns, whether they be economic concerns, safety concerns or political concerns. Inevitably it will come to pass, but as we all know, “the first step is the hardest”.

It's About Time
October 25th, 2004

Yes it’s about time, but it’s about space, too. The money has never been a problem, though, because there has always been plenty of it around by the sound of things. Just last week $ 28.9 billion was appropriated by the administration for security problems, and a sizeable chunk of that is destined for use in container yard operations. And several years ago, as a matter of fact, you may recall Chris Koch, CEO of the World Shipping Council, stating that an investment of more than $ 34 billion would be needed in order to expand the transportation infrastructure. Here are his exact words; “Liner shipping moves roughly two-thirds of the value of America’s international commerce, yet for most Americans, the industry is out of sight and out of mind ... Another challenge is upgrading the nation’s transportation infrastructure to handle the forecast doubling of containerized trade by the end of the decade. It has been estimated that our industry must invest over $ 34 billion in additional operating assets to service this growth”.

No one in the industry flinched at Mr. Koch’s statement because the shortcomings that are plaguing the intermodal supply chain have been recognized, acknowledged, and acted upon in a variety of ways for the last decade. In fact the “Kipplinger Letter” of February 16, 2001, contained the following advisory:

[“Heavy investment in unsnarling cargo traffic is a sure thing in Uncle Sam’s next big funding bill, coming in ‘03. About 60% of $ 200 billion plus will be earmarked for projects all over the U.S. Aim is to smooth out the transfer and flow of cargo between ships, railcars, trucks, planes and intermodal connection points. Spending is seen as critical to productivity in the years ahead. Without breaking logjams where goods intersect, just-in-time deliveries and many other innovations intended to shave business costs won’t work.”]

Please note that the above forecast was given out months prior to the September 11th World Trade Center disaster. That unfortunate event put a much higher price on the cure-all for our supply chain delays and also assured that no longer would it be true that “ ... for most Americans, the industry is out of sight and out of mind”. Not a day goes by that newspapers and TV channels fail to devote media time to events and even to documentaries about container ships, container yards, and the personnel that are concerned with the handling and delivery of containerized goods. Nor have political personages failed to notice how easy it has become to draw attention to themselves by involving themselves in transportation and security issues. Some 22 existing government agencies and an estimated 170,000 employees, in fact, have been transferred to the Department of Homeland Security. With so much attention being given to the plight of containerization, and with so many learned minds involved, and with so much funding available, what is our fretting about?

Oh, yes, that’s right. It’s about space, and it’s about time.

Wishful Thinking
October 26th, 2004

“Wishing will make it so ...” is a line from an old song, but in leaner times those words were wisely denied by our parents. Wishful thinking never worked for them and they strongly advised us to avoid the pitfalls brought about by complacency. A number of influential analysts, who should know better, are on record as having said that the influx of containers will slack off early in 2005 after the peak holiday period, and also because of annual Chinese New Year celebrations. These analysts assure us that U.S. ports will then clear up their congestion and logjams. Yeah, right.

If our elders were alive today they’d be reminding us of their admonitions about wishful thinking. The Chinese have no intentions of halting or even slowing down their rate of production, nor do the shipping lines have any intention of reducing any phase of their operations. China’s Minister of Communications, Zhang Chunxian, revealed that his country’s containerized trade will grow from this year’s 60 million TEUs to 100 million TEUs by the year 2010. That works out to a little less than a 10% annual growth rate, in line with World Bank forecasts which have been badly underestimated of late. Mr. Chunxian also revealed that total tonnage during the coming six-year period will increase from this year’s one billion tons to 3.5 billion tons. But that doesn’t reflect a 10% growth rate, it reflects a growth rate in excess of 20%, and this is what should concern those in the U.S. who are expecting a slowdown. The significant difference in Mr. Chunxian’s figures cannot be accounted for in breakbulk and automobile shipments. Simply translated, it means that the 10% rate of growth for container estimates is far too low, especially when one considers that Chinese output has tripled in the past five years. China makes no secret of the fact that the biggest obstacle to their plans for continued growth are the inadequacies in the infrastructures of foreign transportation systems, especially those in the U.S. Here’s a true ripple effect. What we are putting off is causing sleepless nights for analysts on the opposite shore of a 7,500 mile wide ocean.

Let’s hear it from another authority ... someone who has “put his money where his mouth is”, so to speak. Mr. Nicola Arena, the U.S. President of operations for Mediterranean Shipping Co., expressed confidence in the forecasts of continued and rapid growth of international trade and he chided others in the international supply chain to do some homework and acknowledge the investments that carriers have made in their fleets. His 8,130 TEU MSC Texas is the first of some 30 vessels recently ordered by MSC, now the second largest carrier in the world, and while 60, 70, and even 80 vessels are regularly backed up in LA/Long Beach, we talk about an impending slowdown and restful interlude. That won’t happen because there are no time outs in this game. If the peak periods, the holiday weekends, and the terminal slow downs are more than we can handle now, what will it be like next year, or the year after that? Mr. Arena reminds us that it took just six months to build the Texas, and the other 30 vessels are soon to follow. He also reminds us that it took just 11 days for the Texas to cross the Pacific, and that vessels lose almost that much time waiting in line for a berthing space in LA/Long Beach. He and many other maritime authorities have issued repeated warnings that the U.S. supply line needs an immediate transfusion or transformation.

It’ll be a transformation, not a transfusion. We don’t need more of the same, we need changes.

Prophet Margin
October 27th, 2004

As long as we’re talking about change, let’s look at how long we’ve been talking about change. Respected names in the industry long ago recognized that the status quo could not be maintained for any length of time without disastrous consequences. That’s what Douglas Tilden said about four years ago, and this is exactly how he put it; “For our industry to continue to serve U.S. foreign commerce and not become an obstacle to economic growth, we must implement new processes and technologies that allow greater utilization of our resources ... The status quo will not do”.

Ron Brinson, the former CEO at the Port of New Orleans, also had his eye on the troubles ahead when he stated a while back, “Waterborne trade is the currency of the global economy; more than 90% of global trade moves via water carriage. Therefore America’s successful participation in the global economy depends upon the capacities of U.S. ports and related infrastructure”. Mr. Brinson didn’t have a crystal ball at hand, he was just stating the obvious. “Most trade routes will experience a doubling of containerized cargo volumes during the next 12 years. Some trade routes will double within the next 6 to 8 years”, he added. Crystal ball or not, his words back then were right on the money.

Here’s what was really prophetic. A panel of logisticians at “Transcomp 2000", a conference that was held in Fort Lauderdale in November of 2000, identified these upcoming problems:
• The lack of available real estate for expanding facilities.
• Shortages of equipment and personnel.
• Environmental constraints.

Sound familiar? These problems were presented to the attendees at that Fort Lauderdale conference by a panel of experts, remember, and not by an individual. It’s an indication that these concerns were being widely studied, but in the intervening years no one has been able to come up with workable and lasting solutions. Damage control has been attempted wherever breakdowns occur in the supply chain, and the ongoing crisis in LA/Long Beach is just one more example of a complex system being held together with bailing wire. At this writing the logjam of vessels at that port has forced authorities to hire more than 5,000 additional workers, but this and similar emergency repairs amount to locking up the barn after the horse has been stolen.

Three years ago Mr. Vickerman stated that, “Even with conservative 2020 econometrics, cargo forecasts call for two to four-fold increases in demand at key U.S. container ports”.

Three weeks ago Mr. Tilden stated that, “We have to find a different way to operate, or else we are not going to be able to handle the trade”.

A “different way” to operate is the way he put it. Now we’re getting somewhere.

The Future Is Now
October 28th, 2004

Whenever reports are issued about congestion and logjams in and around container terminals, the cause of each crisis is laid at the feet of rapid and unexpected growth. The consequent lack of storage space in these hard-pressed terminals, the time-consuming nature of offloading and storage operations, and even the diminishing ability to retrieve and deliver offloaded containers all contribute to the many unnerving delays in this 21st century system of distribution. In the present scheme of things, however, except where labor disagreements arise, hardly anyone could criticize port authorities and terminal personnel in their efforts to introduce efficiencies and acceptable innovations in order to avoid or untangle inevitable tie-ups.

A century ago, when people relied upon horse and wagon for highway travel and transport, there was never a lack of attention to innovative measures in an effort to make this mode of conveyance more efficient. Upgrading, improved designs, new ideas and inventions were everyday occurrences in those days, just as they are today. There was always opposition to change, and there was always derisive criticism, but practical and cost-effective innovations eventually held sway. The term now given to those advancements and developments in years past is ... progress.

When you nodded in acknowledgment to those difficulties mentioned in the first paragraph above, had you forgotten the words used in the opening paragraph of the “Home” page of this website? There it is stated that, “ ... the most efficient, space saving, timely and cost effective transport of goods to the consumer is achieved by creating space, eliminating most of the steps required in traditional methods of handling containerized goods, and introducing an entirely new method of product distribution and delivery”. That statement spells out exactly what is required to eliminate the obstacles being encountered daily in every container yard in the U.S. Something new and different must be introduced. Something like an upgrading, an improved design, a new idea, or even a new invention ... something like the invention described and pictured in this website, for example. By retrofitting this patented system in space-starved terminals, every one of the sought after benefits referred to in the opening paragraph above will be realized. Relief will be provided to every link in the supply chain and goods will flow uninterruptedly and at reduced cost to the end users. Years from now our children and grandchildren will look back with gratitude upon our persistent efforts to improve the distribution system and chalk it up to ... progress.

Advancement almost always entails heavy costs and personal sacrifice, and such was the case in the slow and steady changeover to steam and gasoline power. Unlike the expensive transition to the horseless carriage, however, retrofitting our condensed storage, retrieval and delivery system into existing terminals will be relatively quick and inexpensive. In most instances, if not all, the entire facility will be fabricated and put into operation at no cost to the community or to the port authority ... and none of the existing expansion plans now on drawing boards are being offered in this way.

Caution Flags
October 29th, 2004

This column on September 30th quoted Mr. Belzer of the University of Michigan’s Institute of Labor Relations as saying; “Low wages, long hours, piece work and unsafe working conditions. You have working conditions that I believe can be characterized as sweatshops ... If the problem is not resolved soon, you won’t have to worry about gridlock because there won’t be any trucks on the road ... I can’t comprehend why people don’t respond to this as a national crisis”. You’ll recall that he was talking about non-union owner-drivers.

So was John Drewes of Devine Intermodal whom we quoted in our October 4th column. He was waving a caution flag when he said; “This is the first time since I’ve been in trucking that I don’t see new drivers coming into the industry”.

The Teamsters’ Chuck Mack also issued a warning in this regard when he said recently; “Conditions are so bad that the turnover rate among these port drivers exceeds 150 percent per year as they cycle in and out of the industry ... It’s perplexing why no one is stepping up to the plate. Everyone is afraid to make the first move”.

At MARAD’s Short Sea Shipping Conference held in New York on recently, one of the most influential of our maritime authorities was taking a broader view and was quoted as saying; “The U.S. has yet to achieve a truly intermodal national transportation system. The system today represents an aggregate of public and private modes of freight and passenger delivery, each with its own stovepipe areas of interest and funding”. There could be no more accurate way to describe wasteful and costly overlapping procedures than the use of the synonym, “stovepipe”. The speaker citing this comparison, you may have guessed, was Chuck Raymond, CEO of Horizon Lines. Stressing the importance of coordination in the transfer of goods, he had stated at an earlier conference; “In my opinion, there isn’t a greater challenge facing our economy today than the challenge of safe and efficient movement in an ever expanding global market ... The impending freight capacity crunch, therefore, leads us to one overriding policy question — what will happen if plans are not made today for tomorrow’s freight realities?”.

The four officials quoted above, along with a number of others cited in these commentaries, are giving us a preview of the disastrous conditions that await us. For the better part of ten years these admonitions have been directed at every segment of the supply chain, because each link, as in any chain, depends on the reliability of every other link. But it might be time to take a closer look at this analogous terminology we’ve been using. Mr. Raymond’s concept, the “stovepipe”, more accurately describes the loose-fitting, ragtag arrangement that makes up our intermodal system of product transfer. And he’s right. What we have is nothing like a functioning chain linkage. Strikes, slowdowns, harbor congestion, shortages of owner- drivers and other personnel ... you name it. Almost every day a breakdown in one of these independent segments is making the headlines. Integration of these segments, as Mr. Raymond has recommended, would solve all our problems.

"Run To Daylight"
November 1st, 2004

Vince Lombardi coined the expression “Run to daylight”, and because of him and his champion Green Bay Packer teams the meaning behind those words will never require further clarification. Coach Lombardi and his offensive coordinators wisely directed running backs away from those areas of congestion which, as every fan knew, would impede the team’s progress and lead to a shut down rather than a first down.

Why don’t port authorities, terminal operators and ship owners recognize the logical philosophy employed by successful coaches at every level? Some of the ship owners do, of course, by diverting their ships away from bottlenecks such as the one prevailing at LA/Long Beach. Most shipping lines, however, have no safety valves in their game plans and have no recourse other than to add their vessels to the pileup. The result? No gain. Back to the drawing board. In a football game the assistant coaches “up in the booth”, a vantage point providing a bird’s-eye view of the congestion down on the field, sense that in their arena of operation an end run might be just the right call at this point. Although they can only speculate how much yardage will be gained by this stratagem, they’re assured of one development at least; the congestion will no longer be in the middle of that line of scrimmage.

A coaching staff would see the obstructions hindering the movement of our cargo containers and would react by calling for some kind of an end run, or a spread formation, or anything that would dilute the congestion in the middle of our scrimmage line. These tacticians would never lay the blame for a pileup on a flanker or a wide receiver far removed from the logjam. Maritime consultants and logisticians, on the other hand, in casting about for the culprits responsible for supply chain backups, have repeatedly done just that. In placing responsibility on the shoulders of truck drivers, or on rail systems, or on outdated or inadequate highways, these analysts do a disservice to those at every point in the supply chain. Who gains? No one. Who loses? Unlike the game of football, where a winner almost always emerges, everyone is a loser in today’s unsuccessful efforts to solve our supply line and security problems.

After studying the many and varied reports about the unequaled and overpowering tie-ups in the LA/Long Beach complex these past months, could there be any doubt in anyone’s mind that the source of these worsening conditions lies within the terminals and not anywhere else? It has long been evident that if terminal operators could disgorge containers through the gates at the same rate that longshoremen offload vessels, then there would be no logjams, no tie-ups, no congestion. Conventionally-structured container yards have already reached the point where their operational capabilities restrict container deliveries to a number far below the number of container arrivals. This deficient condition has been anticipated for the past decade and although logisticians and maritime interests have devoted unlimited time, money and space to this threatening eventuality, every effort made so far has turned out to be nothing more than a stopgap measure. Let’s admit that desperate times call for desperate measures. Let’s try something logical.

A Fitting Solution
November 2nd, 2004

Here’s a question that requires logical analysis. Why should containers carrying products destined for U.S. consumers be diverted to container ports in Canada and in Mexico? This diversion extends delivery time, increases the cost of these goods to the end users, and also deprives our trucking and railroad systems of the opportunity to deliver these goods. The shipping lines show little concern for the consumer’s added burdens, however, because these detours save time and money for them, and like any well-run business entity, shipping lines will gladly accept whatever subsidies the consumers and taxpayers unwittingly grant them. Let’s put the pieces of this puzzle together by reviewing some of what we’ve heard from transportation authorities, and let’s begin at the very top.

1. Mr. Norman Mineta, secretary of the DOT, stated a while back that the 60 container handling ports in the U.S. will not be able to handle the increase in volume projected for the foreseeable future. Mr. Mineta stated that another 200 of the country’s 361 ports must be converted to container handling facilities and the logic of his assessment becomes more and more apparent as time passes. To pay added fees for transshipment from Mexico to the U.S. consumer and to deprive U.S. workers of the opportunity to service these vessels in U.S. ports amounts to a lose-lose situation. The majority of the 29 West Coast ports participating in the 2002 shutdown are not container handling ports and a number of these should be equipped to handle containers in order to service those vessels now being “diverted”. When Mr. Mineta’s logic begins to sink in, considerable financial benefits will be realized by these new container handling ports and by communities adjacent to these ports.

2. Mr. Chuck Raymond has endorsed short sea shipping as an efficient and cost-effective way of transporting containers from one U.S. port to another, and from one U.S. coastal region to another. Mr. Raymond’s reasons for taking this position are obvious and commendable. He has in the past directed our attention to the unacceptable levels of pollution generated by truck traffic as well as to the heavy cost of building new highways. As opposed to inexpensive coastal waterways, Mr. Raymond reminds us that new highway construction costs $ 32 million per mile. Increasing the number of container handling ports will not only remove unacceptable levels of pollution but will also provide more efficient service and lower costs to a greater number of end users. Until we embrace the logic behind Mr. Raymond’s reasoning, and until more ports are equipped to handle containers, problems with our infrastructure and the cost of goods will continue to mount.

3. At Port Industry Day sponsored by the Port Authority of NY/NJ four years ago, moderator Conrad Everhard questioned the wisdom of expensive dredging projects in order to accommodate mega-ships. He noted that larger vessels cause increased traffic congestion and higher levels of pollution because of the additional trucks required to deliver containers, and that public funding of dredging amounts to a subsidy of shipping companies building these large ships. Establishing additional container handling ports, and locating them closer to end users, would provide relief to those large port communities now forced to contend with unhealthy pollution levels and unacceptable highway congestion, and would also eliminate the need for expensive dredging projects and costly transshipment from distant hub-ports to end users.

4. Mr. James Hartung, when speaking on behalf of the AAPA, stated that port officials would oppose a hub-and-spoke system as a solution to congestion. At a Capitol Hill briefing sponsored by the AAPA in 2001, Mr. Hartung affirmed that concentrating truck and rail traffic at a few ports would worsen congestion and create extraordinary logistic challenges. “To king-make and favor a few ports would decrease the efficiency of the marine transportation system and skew the economic benefits,” he said. Conversely, it should be apparent that increasing the number of container handling ports, and even reducing the size of our largest ports, would increase the efficiency of the marine transportation system and generate more favorable economic results.

5. In discussions about the cost of dredging to accommodate the new generation of oversized container ships, the U.S. Office of Management and Budget has cited the prohibitive cost of such projects and is even now objecting to current dredging projects. This reluctance reflects extensive study on the part of the OMB and a determination to exercise fiscal responsibility with respect to the development of marine transportation issues. Additional ports servicing smaller vessels, rather than hub-and-spoke ports catering to mega-ships, will serve the interests of all U.S. consumers and taxpayers, and the OMB seems to be well aware of this.

6. Mr. Nolan Gimpel of Axiom Consulting has stated that mega-ships strain the capacity of inland infrastructure, terminal operators and rail and truck carriers. As terminals run out of space, he added, ports will be required to seek alternate ways of expanding their operations. The most logical and least costly way to expand without straining the capacity of inland infrastructure, terminal operators and rail and truck carriers is to establish smaller container ports closer to end users. The benefits, as stated above, will accrue to all taxpayers and consumers.

7. Neil Davidson of Drewry Shipping Consultants at Navis World 2004 in San Francisco called attention to the operational and commercial limitations that reduce the effectiveness of mega-ships. Mr. Davidson foresees carriers having a more difficult time filling these large vessels, thereby cancelling out the economies of scale these ships are supposed to produce. He also cites the limited number of ports able to service these larger vessels because of harbor depths, and the inability of these vessels to accommodate importers and exporters who prefer more direct, less costly service. “The bigger the ship, the more transshipment and feedering you need, and that costs money,” Mr. Davidson said. This is another example of an unwitting subsidy paid to shipping lines by consumers, and emphasizes the need for smaller container handling ports in closer proximity to end users

The close-fitting pieces of this puzzle, when interlocked, reveal a very simple solution to what has been looked upon as a very complex problem. Every projection and every prediction put forth by analysts point to chaotic conditions for the supply chain, and maritime authorities have yet to propose a viable solution. The patented system described by this website is a viable and logical solution and can be retrofitted wherever needed at no cost to port authorities or taxpayers.

Our “Problems & Solutions” page and our October 14th commentary offer quick reviews of the benefits and advantages provided by this viable, logical and inevitable solution.

A Bridge Too Far
November 3rd, 2004

Ordinarily it wouldn’t be fair to pick out and pick on just one of the U.S. container ports, but since the Port of Long Beach plays such an important part in the movement of containers in and out of the country, and because so much is being reported about congestion and other newsworthy happenings in and around the port, this commentary will be devoted to that San Pedro location.

A few years before container terminals gained prominence, National Steel was busily scrapping decommissioned Navy vessels at the site, and the owner of National Steel, Mr. Joe Shapiro, would often go out of his way to teach and even treat the “navy guys” who hung around to pick his brain. Meetings convened in time for lunch at the “Princess”, a much smaller regent than the Queen now reigning, and sea stories were swapped. Real sea stories. As each vessel was being dismantled Mr. Shapiro made certain that the name plates of each of the heroic naval ships were preserved and mounted in his office, and his sentimental visitors spent long hours reminiscing about service aboard those valiant warships. Some of us had even experienced the euphoria of watching those ships as they were being built. And then we were forlorn as we watched them die.

One of the most remarkable structures in all of Southern California in those days was the imposing Gerald Desmond Bridge. It took your breath away. It was state of the art and almost brand new. It would outlive us all, we thought, and our suspicions in this regard were assured when seismic improvements were undertaken and completed just a little while ago... we thought. Well, maybe it won’t outlive us after all. Word of the Gerald Desmond Bridge Replacement Project have begun to make the rounds, and it appears as though port authorities are quite serious about the endeavor. When a figure of $ 700 million is published, then you know the authorities are quite serious. The funds are not yet in the bank, however, so until that date arrives there’s still time for more analysis.

So now another man-made historic wonder is slated to be dismantled. Not scrapped, mind you, but dismantled. Those storied navy vessels were never scrapped either. That word, “scrapped”, is now and always was an indignity. Like the Gerald Desmond Bridge those vessels rendered a service to society, and with the passing of those valiant ships memories of their service are fading away.

But with respect to (and for) the Bridge, let’s wait a bit. Let the jury sit a bit. There are a few things to be considered that might sway them. San Pedro has seen the final days of many steel giants, and those moments were mostly sad ones. Don’t stand by and watch this one die. You’ll feel it in the pit of your stomach. It was born in 1968 and has yet to see its fortieth birthday, so it’s still young. The heavy burdens imposed upon it in recent years were not anticipated back in its planning days, but seismic stresses weren’t considered back then either. Accommodations for these seismic stresses were made, though, so quite possibly accommodations can be made in this present situation as well. Let’s look at a replay. The officials can reverse their decision, you know.

$ 700 million is a lot of money.

Look Before You Leap
November 4th, 2004

Some of the figures being published with respect to the Gerald Desmond Bridge are typos. They must be. When the MSC Texas was passing under the bridge on the 15th of October, it was reported that the vessel’s height of 196 feet came within six to ten feet of the bridge. But the Replacement Project published on the port’s website lists a clearance height of only 156 feet, so there’s a misprint somewhere. Which of the quoted measurements is accurate and which is inaccurate is immaterial in this discussion because a number of important factors mitigate against the unnecessary expenditure of the $ 700 million estimated to be the cost for demolition and replacement of the bridge. ($ 700 million is a lot of money!) The point is, that complete and accurate information should be made available to all residents so that the community can properly determine the correct course to steer. The details being presented in this website must especially be disseminated, and for starters the following points should be emphasized.

1. A total of 29 West Coast ports participated in the 2002 shutdown. Along with LA/Long Beach, Oakland, Seattle, Tacoma, Portland, San Francisco and San Diego, some of the other ports involved were; Richmond, Port Hueneme, Stockton, Redwood City, Coos Bay, Bellingham, Everett, Kalama, Longview and Olympia. Most of the ports in this group not already equipped to handle containers soon will be. Secretary Minetta tipped us off about that. The Office of Management and Budget has likewise given us a hint or two about its reluctance to fund dredging projects that benefit only mega-ships but increase port congestion. Remember also that these mega-ships aren’t Jones Act ships, so why should this nation’s taxpayers and consumers subsidize offshore owners by funding dredging projects and demolishing and rebuilding bridges, especially if it can be shown that there is a more efficient and profitable way to handle the increased volumes of TEUs in the coming years.

2. This alternative won’t cost the taxpayers $ 700 million either. The progression from chaos to order will be quick, smooth and profitable for everyone, from the beginning of the chain to the end, and it won’t be an expense to the port or to taxpaying citizens. As an added bonus, valuable and unneeded coastal acreage will be returned to the community for more practical uses.

3. Shipowners will find a use for the mega-ships already in service. In the future these owners will have a more difficult time filling these ships, warns Neil Davidson, and would realize far greater profits if they used smaller, more manageable vessels. These smaller vessels, easier to fill and costing considerably less to build, will serve the Port of Long Beach as well as the new container ports. So save the bridge and the $ 700 million.

4. A profitable, programmed and orderly distribution of containers in widespread localities will generate more employment opportunities and eliminate the friction that exists between management and labor. The friction, after all, boils down to money. It has always boiled down to money because the bottom line has always been a sparse one. But that was then, and this is now. With our patented systems in place up and down the coast, all shortcomings, drawbacks, obstacles, confrontations, etc., will no longer be a concern.

Daydreaming
November 5th, 2004

What’s wrong with this picture? The Long Beach Skyway (where the Gerald Desmond Bridge used to be) provides a welcoming archway high above the steady flow of incoming vessels. The ever increasing annual volume of the port has just passed the 15 million TEU mark and the “Santa Clause Sleighs”, the late season mega-ships, are pushing the envelope again. The year is 2020, by the way, and approximately 275 vessels are in offshore “drift boxes” each awaiting berthing space at the 6,000 acre port complex.

It won’t happen that way, that’s what’s wrong with this picture.

1. The Gerald Desmond Bridge will still be in place because updated studies revealed that there was no need to replace it after all. In addition to that, the initial cost estimate of $ 700 million for demolition and replacement was determined to be far less than what the project’s ultimate cost would be. That was the eventual result of other ambitious project around the country, such as the Alameda Corridor and Boston’s “Big Dig”, and an open-ended gamble of this nature was not an appealing one to the port authorities and the Long Beach community.

2. Any thought to doubling the size of the port area from 3,000 acres to 6,000 acres in order to accommodate the 150% increase in TEU volume turned out to be a daydream. The community had nothing left to give and the sea could surrender only so much.

3. Three week waiting periods in offshore “drift boxes”, at a cost of $ 50,000 per day per ship, adversely affected the profit picture of shipping lines and this loss of time and money led to drastic increases in shipping costs. Ship owners followed the advice of disgruntled shipping agents and end users, and began to direct smaller, less expensive vessels to smaller, more efficient ports.

4. Congestion and time-consuming breakdowns throughout the length of the supply chain and the unforeseen expense of container transshipment eventually convinced consumers, shipping agents, railroad and trucking authorities, and even port officials and shipping lines that the hub-and-spoke concept was proving to be a dismal failure.

5. In actuality, the patented storage, retrieval and delivery systems, retrofitted in almost all West Coast ports, generated unexpected ease and profit for all. Annual volume in the Port of Long Beach has been arbitrarily limited to 6 million TEU and a relaxed atmosphere prevails. The efficiencies of the installed systems and the income generated to the port authority has eliminated the need for the usual $ 450 million annual budget and has created employment opportunities and an atmosphere of good will between union and management. Less than 200 acres are now used for container handling operations and more than 2,500 acres have been made available for other uses.

6. In the year 2020 there is now general agreement that the number of TEUs handled in the course of a year is not what’s important, it’s the number of $ $ showing on the bottom line.

Quotable Quotes
November 8th, 2004

Here are some of the statements that may have come to your attention in the past few months.

“In the U.S. we are severely challenged. What’s happening in Southern California is not sustainable. We need more productivity per acre. We need to move vessels faster. It’s not enough just to dredge channels and develop efficient shoreside terminals. We must address the rail infrastructure issue. We need to address highway congestion.”
— Peter Keller, COO of NYK Line North America

“Working 24/7 is not going to solve our problems. We will need major infrastructure improvements.”
— Gill Hicks, Former GM of Alameda Corridor Transportation Authority

“Terminal capacity and rail capacity worldwide are growing more slowly than vessel capacity. The rail infrastructure is a critical problem ... Trade is growing at 10 percent a year. Where are we going to have the capacity to handle that? What does supply and demand matter if I can’t get my ship alongside a berth?”
— Ron Widdows, CEO of APL, Ltd.

“There is more container availability than there is transportation capacity. Trucking has gone way up, but that supply is limited, too.”
— Captain Ivan Lantz, Operations Manager, Shipping Federation of Canada

“It’s like trying to fit a 16-inch pipe into a 4-inch opening.”
— Jean Godwin, Senior VP at the AAPA

“We’re not going to double the space for container terminals ... We need to find innovative ways.”
— Rick Larrabee, Port of NY/NJ

“Without aggressive modernization of facilities and operations, U.S. seaports risk losing business not only to other modes of transport but to other foreign ports.”
— Daniel Griswold, Director, The Cato Institute

“The West Coast cannot get enough gangs to unload vessels, there are not enough chassis to go around in many ports and inland facilities, the rail carriers are full, truckers are having a tough time keeping drivers, and the roads to the docks are overloaded every day.”
— John T. Hyatt, VP of Irwin Brown Co.

“We’re falling about 25 to 30 gangs short ... We must never get in this position again.”
— James McKenna, President of PMA

“In my opinion, there isn’t a greater challenge facing our economy today than the challenge of safe and efficient freight movement in an ever expanding global market.”
— Chuck Raymond, President and CEO of Horizon Lines

“Member lines and their customers are grappling with transit time delays of eight to nine days that are largely beyond their control, and infrastructure gridlock that will easily take more than a year to fix.”
— Brian Conrad, TSA Director

“The Southern California ports in the last few years greatly expanded their terminals, but the supporting infrastructure wasn’t expanded in step with that capacity increase.”
— Brendan Dugan, Port of Tacoma Senior Director

“Ships calling at Los Angeles-Long Beach must wait anywhere from two to four shifts before being assigned labor. Once the containers are taken off the ship, they may sit for two or three days because the Western railroads lack the locomotives, railcars and staff to handle the demand.”
— Jim Andrasick, CEO, Matson Navigation Co.

“We’re looking very hard at the Gulf because the West Coast is extremely congested ... it is something many of the major lines are considering.”
— Howard Finkel, Senior VP, Cosco’s American Trade Division

“We have serious intermodal problems and we need collective solutions, rather than individual finger-pointing. We want to bring everyone to the table to find solutions – the shipping lines, the ports and their terminals, the railways, trucking, importers and exporters, warehousing, and the federal, provincial and local governments.”
— John Bescec, VP of Canadian Association of Importers and Exporters

Mr. Bescec isn’t proposing something that hasn’t been tried before. His suggestion that everyone be brought to the table again should be given serious thought, however, because this website is adding a new dimension to terminal operations. Rational discussion about the system described in this website by authorities from every link in the stovepiped supply chain will lead to widespread understanding and acceptance of these patented systems.

Mr. Douglas Tilden, CEO at Marine Terminals Corp., summed everything up when he offered this advice; “We have to find a different way to operate, or else we are not going to be able to handle trade.” What could be clearer? Every step, every modification, every innovation introduced so far has provided nothing more than temporary relief at one point or another in the supply chain. This patented system is the “different” way of operation required by the containerization industry, and the longer it takes to make this changeover, the more trade we lose to our friendly neighbors to the North and to the South.

Even if we continue to ignore the admonitions of the authorities quoted above, Mr. Bescec, one of our friendly neighbors to the North, may have just provided us with an unintentional push.

How Do You Spell "Relief"?
November 9th, 2004

Today’s commentary is directed to shipowners serving the West Coast. “We feel your pain”, is what you’ve been hearing nowadays, and because no relief of any kind is in sight, nothing but sympathy has been available ... until now, that is. This website, and the company sponsoring this website, has been asked to locate one or more shipping lines interested in bringing containers from Asia to a more efficient and less costly U.S. West Coast port. Discussions have been held with port authorities at Grays Harbor, on the coast of Washington, and a program has been arranged whereby our systems will be installed at that site. Three of our systems, with an approximate annual capacity of 2,000,000 TEU, are in the initial planning stages, and one of the world’s largest real estate developers has shown an interest in developing the adjacent 400 to 500 acres at the port.

Until recently the Port of Grays Harbor was dedicated to the logging industry, but little activity is seen at its 2,000 feet of berthing space today. Both UP and BNSF provide service to the terminals with direct rail connections to destinations throughout North America. Here’s what the port’s attractive literature states:

• Deep-water shipping terminals only one and a half hours from open ocean.
• Direct rail connections to destinations throughout North America.
• Only four lane highway to the coast north of San Francisco.
• Transportation routes that by-pass heavy congestion areas.
• Telecommunication system with excess capacity and redundancy.
• Large and small industrial and commercial parcels available for development.
• Reasonably priced commercial and industrial land.
• Regional jet capable airport with full ILS.
• Foreign Trade Zone designation.
• Low cost natural gas, industrial water and power.

The literature also describes the Coastal Super Corridor as, “ the fastest route from the West Coast to your market. Located in the innovative Pacific Northwest, Grays Harbor County and the Coastal Super Corridor is the West Coast’s newest hub for business development and international trade. Positioned centrally between the markets of Seattle and Portland, the Coastal Super Corridor provides road, rail, telecommunications and marine transportation routes to deliver your products to market without facing the everyday congestion of the urban areas.”

The Marine Terminals are further described as being the closest U.S. multi-modal port to the Pacific Rim, with a channel depth of -36 feet MLLW from Port docks to open sea, and a U.S. Foreign Trade Zone (#173) covering 587 acres of land and buildings.

Mr. Leonard Barnes is the Director of Trade and Development and can be reached at (360)533-9515.
Arrange a meeting with him and Gary Nelson, the Executive Director. They’d love to hear from you.
Or you could hit the [CONTACT US] button on this website if you like.

A Haven
November 10th, 2004

More on Grays Harbor ... the best-kept secret in the world of shipping.

“Grays Harbor County has a dedicated and stable work force that enjoys the quality of life in their communities. Community governments are appreciative of businesses that create jobs and are readily accessible for assistance. Good training programs are available through Grays Harbor College and the CELL Technology Center.” — Commissioner Isabelle Lamb, Port of Grays Harbor.

SEAPORT — The gem of the County is its deepwater Port. Grays Harbor is maintained at >36 mllw (mean lower low water depth) in the main channel. It is the only deep-water port located on the Washington Coast and the only one on the Pacific north of San Francisco. The Pacific Ocean is only two hours sail from the private docking facilities located on the Chehalis River. The Port boasts 4 marine terminals: three have full docking facilities, two have warehousing, one has cargo cranes and one has a tie-up area for barge loading.

HIGHWAYS — Grays Harbor County’s uncongested transportation routes deliver your products to market without the congestion of urban areas. There are 218 miles of state highway in the county. State Hwy 8/U.S. Hwy 12 connecting the Port with Olympia at I-5 is at only 20% capacity as compared with I-5, which is often over 90% capacity in many areas of Puget Sound. Five major highways converge within the county to provide easy, uncongested access to all communities.

TRUCKING — There are 14 trucking firms offering long-haul service and another 6 that provide local cartage. With the heavy volume of lumber shipped to and from Grays Harbor, numerous independent truckers also serve the area on a regular basis. Grays Harbor is served by United Parcel Service, Federal Express and other overnight and ground shipping companies.

RAIL — The Puget Sound and Pacific Railroad is a Washington shortline that operates daily on 60 miles of track in the county and interchanges with both Burlington Northern and Union Pacific Railroads. Having the capability to interchange with both these railroads provides very competitive freight rates to destination service throughout the United States. Puget Sound and Pacific is a subsidiary of RailAmerica, which owns 39 railroads and controls 11,000 miles of track in four countries.

AIRPORTS — Bowerman Airport, located on the bay in Hoquiam, has a 5,000 foot jet-capable runway and full ILS navigational services. Other public airports include one in Elma, which is adjacent to the Satsop Industrial Park, one in Ocean Shores and one in Westport. Major airport facilities and commercial airlines are available at Seattle-Tacoma International Airport, an hour and a half from downtown Aberdeen, and at Portland International Airport, which is less than 3 hours by Interstate 5.

[If two ships per week docked at this port this year, there’d be no backlog in LA/LB! Do the math.]

Doing The Math
November 11th, 2004

It has been estimated that “9 million containers enter U.S. seaports each year”. At least that was the estimate for this year. It’ll be higher next year and still higher the year after that. But for now let’s use the 9 million figure. Stephen Flynn, who knows something about maritime security, tells us that to equip containers with “smart box” technology would cost between $ 10 and $ 20 per use over the life of a container. So at a minimum, 9 million containers per year at $ 10 per container comes to $ 90 million dollars per year for “smart box” technology ... assuming that we’ll never see more than 9 million containers each year and that the cost will be kept to $ 10 per use.

Heritage Foundation Defense and Homeland Security Senior Researcher, James Carafano, must have done the math already. He stated that spending money on smart-box technology would not give shippers the most bang for their security buck and isn’t the most logical next step in security.

Deputy Homeland Security Secretary James Loy didn’t even mention smart-box technology at the Washington Conference on Maritime Counter-Terrorism on October 14th. He was concerned with the volume of containers and the several “programs” being used to monitor maritime cargo.

Customs Commissioner Robert Bonner was mistakenly advised recently that a risk assessment is done on every container heading to the U.S., and that 100 percent of those identified are inspected using large-scale x-ray machines and radiation detection equipment. Because of information that has since been brought to his attention he can now state that, although there are plenty of technology initiatives being studied, there isn’t enough being done to produce workable tools to combat terrorism. In other words, Senator Schumer, Senator Kerry, and a number of others, were correct when they were criticizing the inadequacy of our container inspection/scanning program.

So here’s what we can gather from these authoritative reports:
• $ 90 million per year is too much to pay for ...
• ... “smart box” technology that isn’t effective and isn’t logical ...
• ... and is just one of the programs now in use ...
• ... in a failed effort to deal with a situation that places all Americans at risk.

Please review our “Method Of Operation” and our “Homeland Security” website pages. In our patented system every container must pass through an x-ray scanner before it can be stored. This existing scanner technology is already in use, its cost is widely known, and for much, much less than the conservative estimate (above) of $ 90 million per year for questionable “smart box” technology, every incoming container will be inspected/scanned. There should be no room for speculation where the threat of terrorism is concerned. The perfect solution is available and affordable.

With respect to the lack of success with smart-box technology, Mr. Bonner stated that, “This is the one gap that has been very vexing in terms of getting it done ... I don’t know why we can’t do that to a container”.

Pier Pressure
November 12th, 2004

Because of cargo delays, traffic congestion, air pollution and a shortage of longshore workers, the marine terminal operators’ group in LA/Long Beach, known as PierPass Inc., proposed to initiate a program calling for extended gate hours. This plan, outlined this past August, gained the approval of the Federal Maritime Commission and was intended to encourage the movement of exports and imports during off-peak hours making it possible for trucks to move faster over less crowded highways. The plan called for one extended gate per month to be phased in for five consecutive months. As a further inducement, PierPass proposed to impose a fee, or a fine, of $ 20 per TEU on any importer or exporter who preferred to move cargo during the hours of 8 a.m. and 5 p.m. The program was to go into effect on November 1st, and support was immediately forthcoming from some of the large retailers. Rick Gabriel, of Target Corp., stated; “No one likes to see transportation costs increase, but our industry felt it was best to work together to develop a private-sector program to reduce day-time traffic”. Working together sounds good .

Late in September, however, the target date of November 1st had to be moved back a few months because the difficulties that inspired this good sounding idea in the first place, delays and a shortage of longshore labor, also turned out to be the hangups which stood in the way of the idea’s implementation. There were no personnel available and no electronic means of collecting the fees, or fines. How ironic.

Now it’s November and the truckers are having their say. They’ve said that opening just one gate would not provide them with enough flexibility to adjust their weekly schedules. They’ve insisted on five extended gates per week and participation by all of the harbor terminals. Scott Smith of Eagle Marine Services is quoted as saying that, “Truckers made it clear that a sufficient number of evening shifts must be available to them each week before they will adjust their lives to working nights”. PierPass agreed to speed up the program and phase in the five gates within the first month.

Time to do some more math. PierPass Inc. proposes to collect the fees and administer the program, and along with an advisory committee from the shipper and transportation community, PierPass will evaluate the program to determine if the fees being collected cover the true costs incurred by terminal operators for running extended gates. Here’s where it gets tricky. More truckers conforming produce less fees, right? More truckers conforming require more gates, right? More gates in operation require more money, right? So where’s the money for the increasing cost of gate operations coming from if fewer fees are being collected from truckers?

The terms “helter-skelter”, “willy-nilly”, “topsy-turvy”, “herky-jerky”, all come to mind when flip-flops (there’s another one) are executed. What sounded like a good idea in this crisis is just another unworkable stop-gap measure. Owner-operators will resent being herded like cows, and Mr. Belzer made that perfectly clear when he characterized the present working conditions as “sweatshops”.

Back to the drawing board.

Sharing The Load
November 15th, 2004

Too bad Bill Mongelluzzo’s reports aren’t available to the general public. Last week in the PACIFIC SHIPPER he summarized the situation in and around the LA/Long Beach complex and the contents of his well-written and concise article provided a lot of food for thought. One wonders, though, if the residents (read, “taxpayers”) in Southern California are ever told about the “solutions” that are about to be thrust upon them.

Here’s what the authorities know:
1. 15% of all international containerized seaport freight travels on the I-710 Freeway.
2. Trucks hauling these containers cause bumper-to-bumper traffic tie-ups.
3. Taxpayers will be told to pay $ 4 billion to rebuild the route so that this truck traffic can be accommodated.
4. Other projects will include around the clock gate operations, busier on-dock railyards, new shuttle-train service to offsite distribution centers, and even an additional near-dock rail intermodal yard.
5. These costly projects, along with the $ 4 billion I-710 project, will only reduce traffic flow by 20%, however.
6. In spite of these expended billions, this 20% reduction will be more than offset by the predicted 150% increase in container volume between now and the year 2010.

A few weeks ago Mr. James Carafano of the Heritage Foundation criticized an unwise expenditure of funds at Homeland Security as being “not the most logical next step in security”. He readily saw that the considerable funds proposed to be spent would never catch up to the developing problems. Mr. Carafano would be horrified if he could see the amount of money authorities are planning to spend in this malignancy and he would surely question the logic of the proposed measures. It isn’t a question of logic, though, it’s a question of awareness, and the same lack of information that has muddled the thinking of security experts has made it impossible for port authorities to solve the problems encumbering U.S. ports because of the unexpected volumes passing through these ports.
And what about the average citizen? Or the average freeway driver? If the general public, as well as the authorities, could be given the opportunity to evaluate the congestion in Southern California and to consider all the proposals (ALL the proposals), isn’t it reasonable to assume that a true and affordable solution, as opposed to another stop-gap measure, would be preferred? Where will this headlong flight end? Bigger isn’t always better. Spending enormous amounts of money to bring in enormous amounts of TEUs just adds to the enormous problems already facing this community. A relatively small amount of the imported containers are for local consumption, anyway, so why foot the bill? Didn’t LA/Long Beach get some relief recently when a few dozen ships were “diverted” to other ports? Why not divert as many as possible? An unused West Coast port in the state of Washington (Grays Harbor) would be thrilled to relieve LA/Long Beach of about 2 million TEU every year, and the Welcome Mat is out. Shipping lines, the port authorities and the taxpayers would all benefit from a move in that direction.

The Ideal Scenario
November 16th, 2004