Upon further review ...
Vol.
II, Art. I
At Port Industry Day in June of 2000, Conrad Everhard,
who was serving as Moderator, began warning us of the downside aspects of
megaships. He reminded those in attendance that massive and costly dredging
projects will be required in order to accommodate these giant vessels, and that
those projects would require public funding. This public funding would amount
to nothing less than an outright subsidy for those shipowners building and
operating those vessels, he said, and he accurately predicted the increase in
traffic tie-ups and the increased pollution generated by that traffic.
About a year later, at a Washington briefing sponsored by the AAPA, James
Hartung cautioned that dredging deep-water ports to be used as king-ports by these megaships, in a hub-and-spoke system of
operation, would ... decrease the efficiency of the marine transportation
system and skew the economic benefits. We never pay any attention at all
to these local fellows, though. The real maritime authorities are the
international spokesmen whose occasional pronouncements provide all the
logistical guidance and advice we could ever need. They know their stuff.
Indeed they do. Just this week, in a FINANCIAL TIMES article summarized by
an Asian reporting service and forwarded to us by e-mail, heres
whats being said:
Future Need of Mega Container Ships
Questioned.
Doubts have been raised about the future need for
so-called mega container ships, capable of carrying more than 8,000 TEU.
The doubts come at a time when industry insiders expect vessel
capacity to increase faster than cargo volumes, the FINANCIAL TIMES reported.
While giant container ships, which came into service in 2004,
are expected to revolutionize container trade between Asia and the US and
Europe, some shipping executives and analysts have questioned the
apparent economies of scale offered by such vessels.
The
introduction of these large container ships will require shipping lines to
reorganise their services to reflect the longer times these vessels will have
to spend in port, the report stated.
To maintain current
schedules, such vessels will have to sail faster to make up for the extra time
in port. To achieve this, even with modern, fuel-efficient engines, this
is likely to mean extra spending on fuel.
The article
added that ultimately savings will depend on vessels operating with capacity
loads.
[Even though we ignored the words of Mr. Eberhard and Mr.
Hartung, it appears as though the overseas authorities were listening very
closely.]
Fully Loaded
Vol. II, Art.
2
The last line of the previous commentary reads as
follows:
The article added that ultimately savings will depend
on vessels operating with capacity loads.
The article being
reviewed stated that these words originated with industry insiders,
and that observation, therefore, speaks volumes. It was revealed just a few
days earlier that container ships have been operating at somewhere between 75%
and 85% capacity, and lest this bit of information pass unnoticed, lets
look back a few weeks ago at what maritime authorities were trying to bring to
our attention. That 75% - 85% capacity figure has a great deal of significance
because, depending on the source, the break-even figure for container ships
falls somewhere in that range. At Navis World 2004 when Neil Davidson of Drewry
Shipping Consultants called attention to the operational and commercial
limitations that reduce the effectiveness of mega-ships, he pointed out that
carriers will have a more difficult time filling these large vessels, thereby
cancelling out the economies of scale these ships are supposed to produce. Mr.
Davidson had done his homework. Its simple math so lets look at a
hypothetical situation.
An 8,100 TEU mega-ship requires
somewhere around 6,480 TEU (80% capacity) before it could even consider getting
underway. This ship, of course, would absolutely not sail until additional
cargo was taken aboard. It would be cheaper to put the vessel in mothballs.
Two 3,240 TEU container ships, however, would be fully loaded (6,480
TEU) and en route in that same time frame, and would be 100% profitable for the
ship owner.
Or three smaller 2,160 TEU container ships could be
fully loaded (6,480 TEU) and en route in that same time frame, and bringing
100% profit to the ship owner. Bear in mind that in these latter two cases
product would be arriving at destinations much earlier.
Other
important aspects will weigh heavily in this scenario .
The smaller
vessels are not restricted to just a handful of U.S. ports.
No
expensive dredging projects are necessary to accommodate them.
No
excessive freighting will be required in order to deliver goods to distant
consumers.
There are other industry insiders who will also
have a say in the matter. Shipping Agents have a lot at stake and will have
good reasons to shy away from these restrictive and inflexible mega-ships.
Time is always a major factor. Smaller ships, fully loaded and underway
days in advance of mega-ship departures, assure quicker delivery of goods.
Lost time will force competing agents to choose the quickest, least
costly vessels.
When mega-ships offload at king-ports,
the cost of additional freighting to ultimate destinations will reduce an
agents profits and increase costs to the consumer.
Consumers
will rely upon the agent using the quickest and least costly means of
transit.
When money talks, people listen.
On The Same Wave Length
Vol.
II, Art. 3
If you dont have a copy of the January 3rd issue
of The Journal of Commerce, by all means get one. The Journal, as
most of you already know, is one of the worlds leading sources of port
and shipping information, and is staffed by some of the finest analysts. Now
lets get back to the January 3rd issue.
Peter Leach put
together an article entitled, Uniting against a common enemy,
dealing with the comments by Maersk executives with respect to the concerns
their customers have about intermodal congestion. This entire article is so
accurate and so timely that it requires little paraphrasing, and most of what
follows in this commentary, therefore, will be a verbatim use of Peters
words. Using the good news/bad news scenario, Peter reminds us that
the worlds port and intermodal infrastructure is straining to handle
explosive growth in containerized trade. Thats the bad news, he says. The
good news, according to Maersk Sealand executives, is that theres a
growing recognition of the problem among shippers. The problem is affecting the
relationship between shippers and carriers and is forcing the two sides to
unite against whats seen as a common problem congestion that is
slowing shipments to a crawl.
J. Russell Bruner, president and chief
executive of Maersk Inc., said that last years port and intermodal delays
werent a one-time event and that he and other Maersk executives have
noted the growing concern among their large customers that the worlds
port and intermodal infrastructure wont be able to handle the
accelerating growth of world trade volume. The issues of 2004 - 2005 will
seem inconsequential by comparison with whats coming down the road,
Mr. Bruner is quoted as saying. He expressed concern about how to get all of
the various interests that depend on the nations port and intermodal
infrastructure to understand the dangers theyre facing. We have to
change what the country is doing, he said.
The astute Mr.
Bruner pointed to port trucking, which he sees as the weakest link in the
intermodal chain. It all begins and ends with the trucker, he said.
You have to use trucks to haul containers to the railroad even the
on-dock railroads. He noted that congestion at terminals is causing
owner-operators to leave the trucking industry. Weve seen 30 percent of
all port truckers leave the industry in the last five years. The trucking fleet
continues to deteriorate, and the number of trips a driver in a day can make
has been cut.
To reverse this decline, Mr. Bruner thinks the
shipping industry should provide higher wages to drivers. Its
simply a matter of dollars and cents, he said. Because BTT, Maersks
trucking subsidiary, overhauled its compensation plan last June,
Were seeing an increase in the number of owner-operators who want
to work for us, he said. Truckers have to be paid more, and the
terminals have to operate more efficiently.
Were on the
same wave length, and Mr. Bruners observations require further
comment.
When Mr. Bruner shows concern about how to get all of
the various interests that depend on the nations port and intermodal
infrastructure to understand the dangers theyre facing, we were
reminded of the AAPAs S.H.A.R.E. initiative and Kurt Nagles
presentation at Americas Ports: Gateway to Global Trade. This
website covered Mr. Nagle and the AAPAs S.H.A.R.E. initiative in our
September 30th, and in our October 4th, 11th and 12th commentaries. Mr.
Bruners and Mr. Nagles concern for this lack of understanding was
shared by Mr. Philip V. Connors, Maersks executive vice president and
chief commercial officer, who said, All the stakeholders carriers,
ports, truckers, railroads and government at national and local levels
need to get involved.
When Mr. Bruner correctly warned that, We have to change what the country is doing, we had to recall the
words of Mr. Doug Tilden who so clearly stated, We have to find a
different way to operate, or else we are not going to be able to handle the
trade. This website stressed Mr. Tildens words in our October 27th
and December 6th, 7th, 8th and 13th commentaries. Our Quotable
Quotes commentary on November 8th was devoted exclusively to the
admonitions of sixteen of the more recognizable maritime authorities. Every
statement had to do with the stressful conditions imposed upon our terminals by
the rapid rate of growth, and every statement was a call for remedial action.
In fact, every statement was a plea for remedial action.
Because of
his extensive background in trucking operations, Mr. Bruner is particularly
concerned about the state of port trucking, which he sees as the weakest
link in the intermodal chain, and he also suggested that in order to
reverse the decline in driver ranks, the drivers should be paid better. This
website recognized the plight of drivers in the September 30th; October 1st,
4th, 11th, 12th and 29th; November 12th, 15th, 16th, and 18th; and December
23rd commentaries.
In the Journals interview, Mr. Bruner cited
the inaccuracies of the too-low trade growth forecasts and blames these
forecasts for many of the current problems facing ports and the intermodal
infrastructure. No maritime official contests this observation, and this
website treated this subject in our October 6th, 18th, 26th and 27th
commentaries. Because Maersks economic models were within a percentage
point or two of actual growth in trade, he said ... We couldnt
understand why the ports were making so little plans to cope with the volume we
could see coming. Alarmed at underinvestment in port and intermodal
infrastructure, Mr. Bruner predicted that, By 2010 there will not be
enough capacity to handle the demand. He noted that China is making plans
for huge increases in port capacity to handle its continuing boom in export
trade, but ... you wonder where all that cargo is going to go ... China
has aggressive growth plans, but their numbers dont match up with the
growth numbers at the other end.
Peters article is
spotlighting the problems that have been stressed in this website:
We have to change what the country is doing.
Truckers have to be paid more ...
...and the terminals have to
operate more efficiently.
All the stakeholders ... need
to get involved.
Were all on the same wave length,
alright, but most of us have our receivers turned off.
Braking Point
Vol. II, Art.
4
Californias Senate Committee on Labor &
Industrial Relations and the Assembly Committee on Labor & Employment held
a joint hearing last week to investigate the developing crisis in the
inland transportation leg of international container shipping.
Trucking, in other words.
Public attention has been focused on
the huge number of ships unable to gain access to Southern California port
terminals, said Chuck Mack, director of the Teamsters Port Division.
The real crisis affecting traffic congestion, deteriorating air quality,
and highway safety are critical problems created by the shipping industries
ability to thwart government oversight and regulation. Hopefully this hearing
will mark the turning point.
Port truckers addressed the causes
of these crises, explaining how they spend several hours a day idling their
trucks when they are waiting for containers, bringing about forced delays which
have had a severe environmental impact on the port and surrounding communities. The drivers are constantly waiting three to four to six hours, said
Miguel Lopez, the Teamsters representative in the port. Im looking
at the testimony of one driver who spent 11 hours waiting in a terminal to get
a load discharged. These guys are losing substantial amounts of time they
arent getting paid for.
In addressing the Senate and Assembly
committees, members of the California Trucking Association presented their
long-held grievances:
Truckers are paid by the load, not by the
hour, and their earnings are unjustly reduced when forced to wait in terminal
lines for their designated containers.
Companies that lease trucks
to port drivers are taking a bigger hit through fees assessed by the terminals
for picking up and returning containers late.
These so-called
demurrage and detention fees are about $ 60 a day and
significantly cut into the profit margins of the trucking firms and the rates
paid to their drivers.
Traffic congestion caused by operations
within the port makes the fees unfair.
This is the fastest
growing and possibly most profitable industry in the globalized economy,
stated Mr. Mack. There is no reason the foreign-owned steamship lines and
the giant retailers should not be held accountable for the hazards that the
chaotic inland transportation system poses to the general public.
This is beyond a trucking-industry problem, said Patty
Senecal, vice president of Transport Express. When the yield per truck is
so significantly reduced because of the velocity the terminals are processing
the trucks, its unfair to hit us with late fees, she said.
Our concern and fear is a continued driver shortage. Theres a
nationwide driver shortage, but you have to have trucks. We are a critical
link, and were the weakest link.
[Well, maybe so. Now
lets examine the sources of the stress being placed upon this
weakest link. By pinpointing the causes of this crisis, we can zero
in on a cure. A guaranteed cure this time.]
A Clear Majority
Vol. II,
Art. 5
Bill Mongelluzzo said it best in this weeks
Journal of Commerce. In his article entitled, No time to waste,
Bill begins with the warning that The U.S. freight-transportation
industry is on the brink of an infrastructure meltdown, but only a few port and
shipping executives have been brave enough to state publicly how critical the
situation is. He ends his article on the same note: As shipping
executives have warned, that cargo will crush U.S. ports and the inland
transportation network if infrastructure isnt expanded quickly. Its
a warning that should be heeded.
As Dave Barry would say, Bill
isnt making this stuff up. The Journal issued a supplement
this week, and Joseph Bonney, in his editorial, tells us that when asked to
discuss briefly what they see as the top industry issues for 2005, a clear
majority of the 205 responding executives voted for port and intermodal
capacity. These commentaries total approximately 65,000 words, and we agree
with Mr. Bonney when he says that these thoughtful statements by people whose
opinions count make fascinating reading. Theres just one problem, though.
Many, many people just dont have the time to read a 65,000 word treatise,
and thats a doggone shame because the folks at the Journal outdid
themselves. Its a tough act to follow.
For those not privileged
to have access to this supplement, or the time to read it through, wed
like to provide excerpts from some of the thoughtful statements contained
therein. Such a sampling might encourage a thorough reading of this supplement
and might even lead to a unified effort by the freight community to search for
the elusive solution to supply line congestion. Lets begin.
2004 demonstrated once again the fragility of the international
transportation system. The combination of unexpectedly strong volumes out of
China and issues with right-sizing the Southern California work
force brought previously unimaginable delays to the movement of trans-Pacific
cargo. Other ports around the world struggled with congestion, but none
suffered the level of disruptions of Southern California ... We are seeing
diversions to other West Coast ports and new all-water services starting up. We
will definitely be faced with a much broader set of issues in 2005.
Douglas A. Tilden, President and chief executive, Marine Terminals
Corp.
The majority of our ports are bursting at the seams.
Available shorelines are becoming increasingly scarcer in parts of the country.
As this is becoming more the reality for the nations ports, we have to
address the issue that compounds the problem of expansion cargo
opportunities are increasing. Increasing international cargo could potentially
overload the inland transportation systems in delivering goods in a timely
manner. Best practices, technology and innovative cargo handling can only take
us so far. However, as an industry we need to collectively determine a
long-term strategic plan. We have adapted, as an industry, in the past when new
innovations came along and we will do so again, but it will take the concerted
effort of all of us working together to meet the demands of the
future.
James J. White, Executive director, Maryland Port
Administration
The U.S. transportation and logistics industry in
2004 faced pressures on all fronts, and became headline news for all the wrong
reasons. On the West Coast, ships were delayed for days, sometimes weeks, in
ports. New behemoth 8,000 - TEU vessels, heralded by the carriers as the
solution for the lowest costs, were found to take seven days to offload, and no
one on the carrier sales force wanted to tell the poor small consignee when his
box finally reached the pier. The railroads experienced meltdown, with
intermodal speeds across the country substantially less than those achieved by
Lance Armstrong ... What are the important changes and news for 2005? I am an
optimist. I believe that at least some members of the transportation and
logistics industry will hear the cries of shippers for reliable service at a
fair price, of something approaching service and cost guarantees in slow
periods as well as the peak, and will step up a superior offering ... Who will
history show to be have been equal to the challenge?
J.
Douglass Coates, Principal, Manalytics International
In
forecasting the biggest changes for the industry this year, all one needs to do
is reflect on the West Coast freight bottleneck of 2004. The problems on the
West Coast were primarily due to unexpectedly high volumes. Vessels were not
worked in a timely manner. Ships sat idle off the coast for days, costing the
U.S. economy millions of dollars and putting the holiday shopping season at
risk for retailers nationwide. Even if vessels had been worked quickly, the
inland intermodal infrastructure, particularly the railroads, was not prepared
to handle the volume of freight moving across the Pacific.
Rick A. Kessler, President and chief executive, Horizon Services Group
Two of the most important challenges requiring more attention in 2005 are
accurate forecasting and congested infrastructure ... Infrastructure expansion
is expensive and requires a long lead time. As a result, some expansion plans
are under way to address the doubling of container traffic in the next decade.
In the interim, we must find ways to move more cargo through existing capacity.
This will be accomplished only with effective planning, and that planning must
begin with an accurate projection of the volume expected to move through these
facilities.
Russ Bruner, President and chief executive, Maersk
Inc.
Congestion is the question; diversification of cargo
routings will be the answer. While ocean carriers continue to enjoy the bounty
of plentiful cargo, the U.S. ports and intermodal systems are becoming
bottlenecks for the national and global economies. Too much cargo through too
few ports, and diversifying the routings of import cargos will be the only way
for our country to steer safely through these rocky shoals. Containerized cargo
growth will continue, and perhaps accelerate, and we must make better use of
our distribution infrastructure to move these boxes quickly and
efficiently.
Jerry A. Bridges, Executive director, Port of
Oakland
This year may be our industrys last best window of
opportunity to help craft an effective and productive national response to
todays global trading and security challenges. We must work toward a
coordinated and multidimensional response that balances national security with
trade facilitation and economic security.
Hallock Northcott,
President, American Association of Exporters and Importers
Congestion on the West Coast will continue to alter shipping patterns for
months, and perhaps years, to come. With all-water service from Asia to the
East Coast now under 25 days, the impetus to use Los Angeles-Long Beach and
rail has decreased. The imposition of congestion surcharges is pushing cargo to
Houston and the Pacific Northwest at alarming rates and this is already
overwhelming carriers ability to cope with the surge in
freight.
Alan E. Baer, President, Ocean World Lines
In 2005, concerns about capacity and security will have a profound effect
on ports. These issues are not new, but they will manifest themselves in new
ways and they are likely to attract increased attention from the world
beyond the maritime industry. Capacity concerns require an intensified focus on
the landside transportation system. For years, ports have worked with ocean
carriers and others to maximize the ocean side of the transportation system to
accommodate larger vessels and cargo flows. With the recent growth in trade, we
now face real and impending crises in managing the volumes of cargo that ports
move to and from the land side of the transportation system. We face
bottlenecks in the system, conflicts with other interests for the use of
highway and rail capacity as well as for use of land , and the ever-present
concern about the environmental impact of our business activities.
Richard M. Larrabee, Director, Port Commerce Department, Port Authority
of NY and NJ
The deterioration of ocean carrier, port, truck and
rail capacity and service threatens the agricultural export and import supply
chain and the U.S. economy.
Peter Friedman, Executive
Director, Agricultural Ocean Transportation Coalition
Many
ports, especially on the West Coast, are facing congestion and labor problems
resulting in costly delays for shippers and carriers. Ports continue to be
squeezed by cities and metropolitan areas that have grown up around them, and
there are never-ending battles with public and private interest groups that are
not in favor of port expansion, regardless of the cost to international
commerce and the economic benefit that accompanies port activity.
Rick Ferrin, Executive director, Jacksonville Port Authority
Ocean carriers continued with the pursuit of rate stabilization for all
trade lanes throughout 2004. But much to the chagrin of all parties involved,
we were confronted with the challenges of the port environment in Southern
California beginning early in July ... The Los Angeles-Long Beach port complex
handles an astonishing volume of imports from Asia. This gateway is critical to
the industry, and all entities must work together in a unified approach to
properly service our clients in 2005 and beyond who elect to use these
facilities.
Toshio Suzuki, President and chief executive,
K Line America
The driver shortage, consolidation
of LTL carriers, rail service problems and West Coast port congestion, combined
with a volatile fuel situation, are all likely to continue well into 2005.
Combined, they create an environment where shippers will increasingly need to
find methods by which to cut their costs, consolidate their shipments and
enhance their shipment facilities.
Bill Clark, President,
American Institute for Shippers Associations
There is much
evidence that driver pay has not increased as fast as some other blue-collar
occupations over the past few years as trucking companies were hit particularly
hard during the recession. This discrepancy makes it difficult to attract new
men and women into the profession. The driver shortage problem will not be easy
to solve, but if we are going to keep the worlds largest economy running
smoothly, it is something the entire freight community will have to deal
with.
Bill Graves, President and chief executive, American
Trucking Associations, Inc.
We started early last year to see
warning signs of port congestion and infrastructure constraints. However, with
full ships, few focused on these issues globally or realized how they would
affect our industry and our customers supply chains ... Trade growth will
make the constraints more acute in 2005 ... There is no doubt about the scale
of the challenges in front of us, and the need to think differently about our
business. But by working together in 2005 and beyond, we can positively
influence the environment, and find solutions that minimize the impact on
service reliability.
Ron Widdows, Chief executive, APL
Ltd.
The long-term picture projects world trade to double in
volume by 2020 and in some markets such as Los Angeles and Long Beach, volume
could easily triple. To handle this growth, we must lead changes in the
national transportation infrastructure, the productivity level of waterfront
labor and cargo-handling capabilities at our container terminals. New
efficiencies, stronger teamwork and innovative approaches are needed
industrywide ... Strong cargo volume will mean more jobs for waterfront labor,
and the need for a higher level of productivity. Container terminals need
higher productivity, achieved through the use of new technology, processes and
equipment.
Tony Scioscia, President, APM Terminals North
America
We face two major issues over the next few years. First
and foremost is the meltdown of ship-rail/truck connections in North America.
You move the cargo rapidly over thousands of miles of ocean only to find you
cannot unload it from the ship because there are four ships waiting to use the
same berth. Then you cant move the cargo onto a railcar because there are
not enough railcars to accommodate everyones backlogged volume. In the
middle of all this chaos is the heightened security vigilance that adds to the
delays ... Unfortunately, the domestic transportation system cannot absorb all
the cargo that mega-sized vessels are delivering to our shores. And if you look
at the new ships on order, its going to get a lot worse over the next few
years.
Andrew Abbott, Chief executive, Atlantic Container
Line
[The seventeen officials just quoted say pretty much the same
thing. Were overburdened ... Greater volumes of cargo are coming this way
in ever-increasing amounts, and we dont know what to do about it ...
Well soon be overwhelmed by congestion at every link in our supply chain,
and then itll be too late for a response to the crisis ... No one denies
a willingness to participate in a cooperative effort to contend with this
dooms-day threat to our economy, but they see no further avenues to explore.
There seems to be no way out. Well, there is a way out, as a matter of fact.
Readers of this website fully understand that the storage, retrieval and
delivery system promoted herein is the one sure way of avoiding the
unthinkable, yet seemingly inevitable, transportation gridlock that looms on
the horizon. As soon as one of the above officials stumbles upon this site,
quick action will follow and our port and supply line problems will be solved.
And when our Problems & Solutions segment and our October 14th
commentary are assessed, well be home free.]
All? Or Nothing!
Vol. II,
Art. 6
In our October 22nd commentary we dealt with the
questionable inspection methods of imported containers and the conflicting
positions held by Senator Kerry and Mr. Bonner, the U.S. Customs and Border
Commissioner. Diplomatic double-talk led to a standoff, but we made our
feelings known with the following parenthetical statement:
(For any
policymaker to give knowingly a false sense of security to the people in this
country would be nothing short of criminal.)
Without a doubt, these
words brought nods of agreement from our readers, and without a doubt, the
thought was quickly dismissed. There was no need to worry after all because the
word we heard from those in the know assured us that all necessary steps have
been taken to provide the security promised. Baloney. Read the following
article appearing in the Long Beach Press Telegram.
By Associated Press
Sunday, January 16, 2005 LOS
ANGELES Thirty-two Chinese immigrants were found inside two cargo
containers aboard a ship arriving from Hong Kong, authorities said.
They were discovered Saturday night when a crane operator at the Port of
Los Angeles saw three men climbing out of a container, said Lt. Titus Smith of
the Los Angeles Port Police.
The suspected illegal immigrants,
including 28 men and four male teenagers, were being questioned by federal
authorities, said Virginia Kice, spokeswoman for U.S. Immigration and Customs
Enforcement. All appeared to be in good health after the 10-day journey.
The 40-foot containers had little more than food, water, sleeping
bags and battery-powered fans and arrived aboard the Panamanian-flagged NYK
Athena. Authorities dont believe the ships crew knew about the
stowaways.
Now go back to our October 22nd commentary, if you
will, and read the assurances we were given about the sure-fire inspection
operations that were supposedly put in place overseas. Its simply a
fantasy. Theres no such system in place. Well, if satisfactory security
cannot be made available in foreign ports, ( and there are a few dozen reasons
why security measures on our behalf will never be reliable), and if space and
time constraints allow U.S. terminals to inspect only 4%, or so, of all
incoming containers ... then isnt it fair to say that a policymaker at
one level or another has decided to give knowingly a false sense of
security to the people in this country? And when you nodded your head in
agreement three months ago, didnt you also agree that such duplicity
would be nothing short of criminal?
Somebody owes us an
explanation. An honest one.
Here are some questions that must be
considered:
What if the crane operator had been looking the other way
and didnt see the three men?
What if those three men had decided to
lay low a little while longer?
How many other 40-footers pass under
the radar in our hit-and-miss random inspection system?
If
unsophisticated illegals are getting through the inspection system,
as this group did, how much easier is it for sophisticated
terrorists to circumvent our half-baked inspection systems?
Do
you suppose these terrorist-types would limit their carry-on luggage to food, water, sleeping bags and battery-operated fans?
And
the $ 64,000 question is, Will we sit on our hands until another 9-11
awakens us?
If you havent yet read Dr. Stephen
Flynns book, America The Vulnerable, do yourself a favor.
Read the book. Dr. Flynn makes it clear that:
Foreign-based
inspectors are not being adequately trained by Customs personnel.
Foreign-based inspectors can inspect only the tiniest of percentages of
containers.
The government is fighting terrorism overseas
while refusing to provide adequate protection to the vulnerable superstructure
at home.
Instead of providing a general report of our
vulnerabilities, the government refuses to be candid with its citizens.
The many millions of containers that arrive in U.S. ports each year pose
the greatest vulnerability, but not enough is being done to respond to the
terrorist threats in this sector.
Mr. Jay B. Grant backs up Dr. Flynn
as follows:
He called homeland security a band-aid
approach.
He cited the failure of Congress and the
administration to make the kind of effort that is needed to protect our
ports.
He said that Washington may have overreacted on aviation
security funding, and that, Spending billions of dollars on programs
making all airline passengers remove their shoes at airports ... does not add
any real value to fighting terrorism.
On at least a dozen
occasions in this website weve described the scanning/inspection aspects
of our patented storage, retrieval and delivery system. Time and space
constraints in conventionally-structured terminals place unacceptable
limitations on scanning/inspection equipment and allow no more than an
estimated 4% of incoming containers to be examined. Our patented facility
guarantees that 100% of all containers will be scanned/inspected prior to being
stored in designated and preprogrammed slots.
Under no circumstances
could illegals, or terrorists, or contraband escape
detection when our system is in place. It couldnt happen. And because we
cannot rely on foreign nationals in overseas ports for our security because of
their laxity, or unconcern, or even preconceived notions toward us, we must
assume for our own safety that the measure of success at those detection points
is something in the 0% range. The Los Angeles stowaways justify that
assumption. In contrast to that, the measure of success in our patented
facility will always be 100%.
A Consensus
Vol. II, Art.
7
The seventeen maritime and transportation officials
quoted earlier were just a sampling of the many comments submitted to the
Journal. The fact that so many took the time to provide answers to the
Journals questionnaire is an indication of the severity of the conditions
in the intermodal chain and the sincere interest each has in the
industrys search for a panacea. Here are more excerpts.
Despite the growth of the European Union, the U.S. remains the
worlds largest consumer market, and the U.S. West Coast is its major
gateway. The fact that the ports there have become bottlenecks, rather than
funnels, should be a significant concern and a priority issue to solve in the
immediate future.
Capt. S.Y. Kuo, Vice group chairman,
Evergreen Group
While radio-frequency identification will
continue to dominate the headlines, most logisticians will face more immediate
and critical challenges, such as finding ways to secure trucking capacity and
overcome port delays.
Adrian Gonzalez, Director, Logistics
Executive Council, ARC Advisory Group
In 2004, strong American
demand for Asian-made products increased trade by more than 10% at the ports of
Long Beach and Los Angeles. The prospect of still more cargo growth in the
years ahead, and trades impact on highway traffic and on air quality have
many people in Southern California wavering in their support for further trade
growth.
Richard D. Steinke, Executive Director, Port of Long
Beach
Its the time for creative, consensus solutions.
Southern Californias advantages as a distribution hub are threatened by
its own success and from an ever-growing consumer population. We must take a
realistic look at short- and long-term solutions, even those discounted earlier
... Solutions are the product of new alliances and strong leadership.
Bruce E. Seaton, Interim executive director, Port of Los Angeles
Shipowners, liner operators and port operators can hardly cope with
the volumes. Ships from Asia are full. Congested terminals, especially in
Europe and the U.S., have delayed ships and disrupted the tight schedules of
usually well-oiled weekly loops. This is a challenge for 2005.
Capt. Yann Le Gouard, Consultant, BRS - Alphaliner
The days of
keeping stockpiles of empty containers and fields of chassis are over. Planning
for labor requirements to load and unload ships, operate equipment and provide
necessary clerical services must move in step with terminal capacity planning,
as must the road, feeder and rail facilities for moving cargo to and from the
terminals. Close partnership between carriers, major shippers and ports will
ensure that terminals have the labor, equipment, terminal space, and rail,
feeder and road infrastructure in place in an orderly fashion.
Michael A. Leone, Port director, Port of Boston
The marine
intermodal drayage industry faces two important issues: the shrinking pool of
available owner-operators, and congestion at ports, railyards and customer
facilities. Solving the congestion problem would have a positive effect on
driver capacity, but there are a number of other contributing factors that
affect the industrys ability to recruit and retain independent
owner-operators. We estimate that more than 50,000 drivers roughly
one-third of the total have left the profession since 2002. Inadequate
income is the top cause. A competitive environment has kept the base pay rates
low since the 1980s. When, with our customers support, we were able to
raise drivers base rates in many lanes, we immediately saw a
corresponding increase in the number of new owner-operators contracting with
us, and in the retention of contracts with existing owner-operators.
Clark E. Brown, President, Bridge Terminal Transport Inc.
The emphasis on international trade will affect the entire intermodal
supply chain, including steamship lines, port terminal operators, trucking
companies and railroads. The key to fluidity will be attaining full use of the
available capacity of each link in the chain. That will mean doing business
differently; at some ports, for example, moving to 24-7 operations and
achieving higher production standards.
Matt Rose, Chairman,
president and chief executive, Burlington Northern Santa Fe Corp.
The volume increases that we are experiencing are taxing the
infrastructure in place to accommodate it. This growth has presented challenges
in terminal design, labor availability and intermodal capabilities amid
heightened environmental concerns ... Our industry in 2005 is experiencing a
call to arms. The challenges are enormous, the solutions not simple. Valid
arguments on all sides of an issue mandate that compromise be a necessary part
of every solution. Compromise with all due deliberate speed will allow us to
achieve solutions well before we gridlock the system.
Thomas
J. Simmers, President and chief executive, Ceres Terminals Inc.
Two million TEUs of containers entered the intermodal stream this year.
Assuming similar growth in 2005, congestion will reach epic proportions. Factor
in additional security requirements atop this growth, and we could be headed
for port gridlock. Can we accept delays of a week or more to unload container
ships? Manufacturers, distributors and retailers increasingly view the
marine-intermodal supply chain particularly with larger vessels
as their warehouses for just-in-time products. But limited port and docking
space, not to mention handling facilities, will place an enormous burden on our
ports. Are we ready, willing and able to confront this reality before it is too
late? Perhaps its too late already!
Henry F. White,
President, Institute of International Container Lessors
West
Coast ports, particularly the Los Angeles-Long Beach basin, are in need of
operational plans for the future. Growth is a key to prosperity and plans need
to be laid for that growth. Proper coordination between the various parties
involved, including management and labor, is needed to secure this
regions future. Issues such as productivity and investment are high on
everyones agenda. Other West Coast ports also need to plan for future
expansion and development that reflects increased vessel size and container
volume.
Zhang Bing, President, China Shipping North
America
Sometimes I think we are stuck in the 20th century
making todays decisions on the basis of our understanding of the
world then. We find ourselves falling behind and moving in directions that will
not serve us well in this century. Why? Because we transportation
providers, operators, users and government dont always speak
plainly, understand or listen to one another, or respond to the reality before
us. We have not paid enough attention to funding and improving the assets that
are needed to deliver goods. Active national policies to encourage global trade
are out of balance with our passive transportation supply policies.
Lillian C. Borrone, Chairman, Eno Transportation Foundation
As sophisticated as we are in world commerce today, transacting nearly $
10 billion of commerce each second, there is still plenty of money on the
table. Much of the worlds liner shipping continues to be done haphazardly
and with little planning by service suppliers. The supply chain is not
well-linked it is generally a series of actions taken by parties, often
in response to the previous persons actions ... Generally in container
transportation today, no one in the supply chain is alerted to his role until
it is his turn to act.
Charles G. Raymond, Chairman, chief
executive and president, Horizon Lines
The backlog of import
boxes stranded on the U.S. West Coast and in European terminals, plus the
parking lot lookalike 8,000 TEU vessels awaiting berths in Los Angeles-Long
Beach and Seattle, are a clear sign that our facilities are overtaxed. Our
inland infrastructure is NOT capable of handling the influx of containers. And
our ports, too, look frail. We do not have enough truckers or skilled laborers
on the waterfront.
Jim Poon, Chairman, Hong Kong Liner
Shipping
Carriers introduced the 8,200-TEU mega-vessels to
assist in delivering improved service reliability and economies of scale, but
any benefit gained was quickly negated by land and terminal infrastructures
that could not support the increased volumes. These bottlenecks caused
disruptions and added costs to the customers supply chain
pipeline-distribution channels as well as to container carriers due to berthing
delays, terminal congestion, diversion costs and decreased
productivity.
Frank J. Baragona, President, CMA CGM (America)
Inc.
I believe the most important issue facing us is how to deal
with the record trans-Pacific volumes while facing serious congestion at West
Coast ports and on railroads. Many carriers have addressed the ballooning
volume by building larger vessels ... Even with the extra tonnage being
deployed, volume has overwhelmed ports and railroads, in one of the longest
peak seasons we have ever seen. Ocean carriers are always pleased to see an
increase of volume, but if your vessels cant get into port and your
containers are backed up at the terminal, the supply chain is seriously
affected.
Zhang Liyong, President, Cosco Americas Inc.
A negative consequence of growth has been severe congestion at the
ports. However, the growth has not been and will not be the only cause for the
congestion. Labor shortages, a crowded intermodal rail network and an influx of
mega-ships are all contributing factors. Unfortunately, port congestion will
persist as a nagging problem into 2005.
J.Y. Park, Chairman,
Hyundai Merchant Marine
The shipping industry faced
unprecedented challenges last year with the severe port congestion in Southern
California, coupled with historically high vessel-operating costs. These two
areas will have a major impact on shippers and carriers in 2005. We will
undoubtedly continue to experience major infrastructure problems at the ports
of Los Angeles and Long Beach, which have led to recurring congestion and long
delays for shippers ... These slowdowns are plaguing global supply chains,
forcing shippers to change the way they manage the transportation process for
the time-sensitive delivery of global goods.
Sergey Kozlov,
Vice president container lines, Fesco
The infrastructure
development is not keeping pace with the increase in world trade, creating
numerous bottlenecks at ports, terminals and railroads, mostly in the U.S., but
also now developing in some European locations, and approaching in Asia. We
must work to develop port and rail capacity to cope with the rising volume
requirements. Terminal capacity, already stretched to the limits, needs to be
expanded. Where this is not possible through horizontal growth, different
vertical solutions must be found, and procedures allowing for
improved efficiencies must be developed to deal with volume
increases.
Rudy Mack, President, Hapag-Lloyd (America)
Inc.
As international trade continues to grow, the ability of
customs brokers to expedite the delivery of shipments will be challenging.
Problems with lack of infrastructure reached elevated levels during 2004, and
prospects for 2005 are not much brighter. Larger container vessels, scarcity of
acreage for terminal expansion, insufficient labor supply and shortage of truck
drivers at insufficient wage levels will continue to put a strain on
supply-chain reliability.
Peter H. Powell, Sr., Chairman,
National Customs Brokers & Forwarders Association
Historically, terminal operators have proved to be very flexible in
rising to the occasion and finding ways to deal with challenges. However, the
experiences in 2005 will most likely underscore a fact that has become
increasingly apparent: The congestion problem cannot be solved with fixes that
occur solely within terminals. In particular, inbound cargo can be moved off
the terminals only at the rate that the supporting road and rail infrastructure
will permit, and the capacity of that network is nearing its limit in many
areas. Think of a backyard pool; it will empty only as fast as its drainpipe
allows.
Michael J.S. Seymour, President, Americas, P&O
Ports
As international trade continues to grow at an
ever-increasing pace, one of the most pressing problems facing the
transportation industry is congestion port congestion, rail congestion
and highway (truck) congestion.
Paul F. Richardson, President,
Paul F. Richardson Associates
[The spokeswoman and the 21 spokesmen
above echo the plaints and admonitions of the 17 we quoted in our Article 5
commentary. A quick assessment of this website and the contents of the Trends & Developments segment will convince these concerned
officials that our container yard systems will assure the transportation
industry of a trouble-free future.]
More Guesswork?
Vol. II,
Art. 8
Guesswork and stopgap measures have been the order of
the day during the developing years of the intermodal industry. Not very long
ago containers were dropped directly on chassis in order to locate these boxes
and avoid delivery delays. We were given assurances that this wheeled system of doing things would be the way terminal operations
would provide orderly tracking and delivery of containerized cargo, but it
wasnt to be. Terminal operators were forced to abandon this method when
it became apparent that this simple luxury required more acreage than what was
available in order to handle the increasing and unanticipated volumes that have
been generated by U.S. consumer demands and Asian capacity for production. So
that operations could be condensed, therefore, stacking was then
determined to be the solution to terminal crowding, but it soon became obvious
that this measure made it extremely difficult to locate and retrieve
containers. A variety of tracking methods were introduced in order to make it
possible just to locate a targeted box after that box itself had been shuffled
out of the way during previous searches for boxes, and ... well, you know the
story.
The entire development of the industry has experienced unending
growing pains, which have been promoted and perpetuated by guesswork and by
introducing one stopgap measure after another. Given the information available,
though, would any of us have acted differently if we had been positioned as a
port official or terminal operator? Not a chance. No one can see into the
future, nor was a cure-all available for the problems that have cropped up
because of unexpected growth. Even now, uninformed port authorities are backed
into a corner on the West Coast and are desperately looking for ways to stem
the threatening flood tide that they hoped would show signs of receding after
the recent seasonal peak. No relief is in sight, however, and further problems
are assured.
Fearful of an impending gridlock, West Coast authorities
are now recommending the establishment of an inland container depot and a rail
shuttle line connecting the harbor and that offsite depot. But officials also
know that this will be just another stopgap measure because an elevated
expressway on Route 47 is also in the works down the line. What the last two
sentences dont say, but do imply, is that someone will be asked to shell
out several billions of dollars for these projects. (And can you guess who that
will be, Mr. and Mrs. Taxpayer?) Admitting that no one yet knows of a better
way to postpone this chaos, what else can possibly be done in this crisis?
If youve gotten to this point in these commentaries and have yet to
familiarize yourself with our patented storage, retrieval and delivery system,
please click on to this websites opening pages. Youll see that we
can conduct all operations on one-tenth the acreage now being used at the
LA-Long Beach complex and still have room to spare. Youll see that our
delivery system would be a programmed distribution of cargo utilizing existing
rail services in conjunction with generously paid truck driver employees, and
youll see that our system would relieve the community of its present
environmental concerns. Wed like to add that the amounts of income
generated to the port authorities, the state, the county and the city
governments would greatly exceed amounts now being realized, and NO funds would
be required from beleaguered taxpayers because currently proposed demolition
and reconstruction would be unnecessary. [Money talks, but is anyone listening
yet?]
Force Majeure!
Vol. II, Art.
9
This formal declaration signals that trouble in one
form or another has encumbered some person or agency. The implications are that
adverse circumstances brought about by outside forces require the aggrieved
party to plead for understanding, assistance and exemption from responsibility
or legal liability. Terminal Systems, Inc., the operators of Deltaport in
Vancouver have just been forced to declare Force Majeure because of
a backlog of more than 5,000 containers. Phrases such as, greater than
average ship discharges and a higher than average amount of
containers are wordy ways of admitting that the terminals primitive
methods of operation have spawned congestion. And thats what it is ...
purely and simply ... congestion. But this mess will take months and months to
clear up, and by that time the effects of the projected increase in volume for
2005 will be felt.
This website, and our frequent commentaries, have
stressed the many warnings issued by maritime authorities with respect to the
impending gridlock in our intermodal transportation system. Each of these
officials have deliberately appealed to every participant in every link of the
supply chain to take heed and to come together in a joint effort to avert this
expected disaster. Yes. Disaster. Maybe catastrophe would be more
accurate. The folks in Vancouver could describe it exactly, no doubt. Vancouver
saw an 8% increase in containers in 2004, reaching the 600,000 TEU mark, and
with a projected tripling of throughput by the year 2020, 2005 will see at
least an 8% increase over 2004's unmanageable growth. Whats worse than
catastrophe? Armageddon, maybe?
TSI will be forced to divert, intentionally, that 2005 increase because Vancouver will
never find a way to accommodate the burden. If it isnt obvious to
everyone by now, it soon will be. Where will the diverted vessels go? To
LA-Long Beach, maybe? Forget it. According to the latest admission, 115 ships
were diverted from that complex during the year end peak season. And speaking
of the turmoil in LA-Long Beach, how are the authorities in that overwhelmed
basin proposing to handle the 10 to12% increase projected for their terminals
in 2005?
Force Majeure, thats it! ... and let the
devil take the hindmost, as the oldtimers used to say. No, that wont
happen. The heady maritime authorities often quoted in these commentaries will
eventually be directed to this website and will do whats right. Either
that, or the U.S. Department of Transportation will see the need for an
intermodal supply chain commissioner of some sort ... and that wouldnt be
right. There are several hundred associations looking to the well-being and
profitability of their members, but there is no all-embracing intermodal supply
chain association as yet. This website would like to go on record as suggesting
the formation of just such an association. Consisting of experienced and
capable authorities, such an alliance would quickly promote the means that
would best serve the interests of all, and especially the interests of the most
neglected segment ... the very last link in the chain ... the American
consumer. Would sacrifices be required of anyone along the line? None whatever.
The patented system promoted by this website would come to the attention of
this brainstorming group, and in order to avoid a domino-like intermodal
collapse, with Vancouver as the starting point, our recommendations would be
adopted. More profit would be generated all along the chain, as a matter of
fact. Take it to the bank.
A Win-Win Situation
Vol. II,
Art. 10
Much is being said about technologynowadays, but there are good kinds of technology and
there are bad kinds of technology. The term high-tech almost
immediately brings to mind the dot-com disaster that cost U.S. investors
billions of dollars three or four years ago. Now thats an example of bad
technology. And of course, that bombshell hit right after the Y2K fiasco, which
should have taught us that there are Information Technology swindlers on the
loose, and that maybe we should do some homework instead of being intimidated
in this age of so-called rocket science. Homework doesnt seem to be our
strong suit, however.
Labor-saving technology is the worst
kind of bad technology, but that depends upon whose ox is being gored. A
tenuous contract between the International Longshore and Warehouse Union and
the Pacific Maritime Association is a six-year arm-wrestling engagement
concerned mainly with the advancement, or encroachment, of information
technology in West Coast terminals. The ILWU, of course, wants to preserve as
many jobs as possible, and to be perfectly frank about it, the PMA wants to
eliminate as many jobs as possible. Thats what the term
labor-saving means, doesnt it?
This website has
described our patented system as being efficient. Our October 14th commentary
lists more than two dozen cost-saving advantages that are not, and could never
be, offered by conventionally structured and operated container yards. These
benefits are achieved by using, of all things, technology. But this is good
technology because the goal in our system is not labor-saving but
job-creating. Even the PMA boasts that even though their aim is to
eliminate clerks at gates, a resulting increase in volume will more than offset
the loss in clerk jobs. This was borne out when TraPac (Trans Pacific Container
Service Corp.) introduced automation in its gate operations. About 19 clerks
were eliminated by this move but the subsequent increase in cargo volume
required the addition of dozens of equipment operators and yard workers. A
win-win situation.
As volume goes up, work opportunities for the
ILWU will increase, said Doug Tilden of Marine Terminal Corp., and though
he agreed that technology will help he also pointed out that technology alone
wont solve the problem. Terminal operators are already aware of the
inevitable saturation point in todays space-starved terminals. Art
Merrick, president of Long Beach Container Terminal, said, We need more
space. Without enough space, you spend more time shifting containers than
moving them. And so go the quandaries besetting labor and management in
container terminals.
Retrofitting our systems in those terminals
would solve everything. Space would be no problem. In the limited amount
wed require, the system would handle as much cargo as the community and
the transportation modes would allow. The increased cargo volume and added
distribution centers would create, not dozens, but thousands of new jobs. Acres
and acres of valuable land would be returned to the community for other more
practical and more profitable uses. The efficiencies in this new system of
ours, made possible by good technology, would bring significantly higher
incomes to all employees, increased revenues to port authorities and terminal
operators, and greatly reduced operating expenses for carriers. [Now
thats what youd call a real win-win situation.]
On The Same Page
Vol. II,
Art. 11
A few days ago, in Article 9, we commented on the many
national associations that have been set up to promote the interests of
concerned members, but we noted the absence of an umbrella-like intermodal
supply chain association that would serve to link the links, so to speak. The
growing need for such an alliance becomes more and more obvious as the
transportation industry muddles through one crisis after another, each one more
severe than the one preceding. What is also quite obvious is the subliminal
emphasis that has been placed upon this need time after time by so many
transportation officials these past few years. It might be worthwhile at this
point to review recent statements made by some of the industrys foremost
spokesmen citing the need for coordinated efforts and a sharing of information
with respect to forecasting and developing trends. Here are just a few
quotations that bear repeating, and we can begin with the AAPAs S.H.A.R.E
initiative.
Kurt Nagle said that this initiative, ...
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.
Chuck
Raymond, at MARADs Short Sea Shipping Conference, said, 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.
John Bescec, VP of Canadian Association of Importers
and Exporters, said, 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.
Dr. Andrew Traill, the Freight Transport Associations Head of
Maritime Cargo Policy in the UK, stated, This is something that cannot be
solved by any single group. Shippers, ports, shipping lines, rail freight
operators, Network Rail, the Highway Agency, and others all need to work
together to sort things out, planning together appropriate actions to ensure
the traffic keeps moving.
Hallock Northcott, President of the
American Association of Exporters and Importers, says, This may be our
industrys last best window of opportunity to help craft an effective and
productive national response to todays global trading and security
challenges. We must work toward a coordinated and multidimensional response
that balances national security with trade facilitation and economic
security.
Steven R. Blust, Chairman, Federal Maritime
Commission, says, One of the greatest challenges facing the industry is
to ensure that our transportation system is capable of safely, securely and
efficiently accommodating the requirements of ever-expanding trade and global
supply chains ... The creation of forums for communication and discussion among
the industry segments should be promoted and facilitated. Active collaboration
among cargo interests, carriers, ports, intermediaries and government entities
will be a key element in reaching effective solutions.
Ron
Widdows, Chief Executive of APL Ltd., says, There is no doubt about the
scale of challenges in front of us, and the need to think differently about our
business. But by working together in 2005 and beyond, we can positively
influence the environment, and find solutions that minimize the impact on
service reliability.
Tony Scioscia, President, APM Terminals
North America, says, To handle this growth, we must lead changes in the
national transportation infrastructure, the productivity of waterfront labor
and cargo-handling capabilities at our container terminals. New efficiencies,
stronger teamwork and innovative approaches are needed industrywide.
Adrian Gonzalez, Director, Logistics Executive Council, of the ARC
Advisory Group, says, Although the need for better collaboration among
shippers and carriers is a recurring theme, maintaining the status quo will be
impossible in light of physical constraints and more demanding service
requirements. Although this prediction has been made in the past, you will see
better collaboration and more outside-the-box thinking between
shippers and carriers in 2005.
Zhang Bing, President of China
Shipping North America, says, All responsible maritime carriers wish to
assist in the evolutionary process of providing smooth and effective surface
transportation to the shipping public.
Henry F. White,
President, Institute of International Container Lessors, says, There is
no single answer, but if no solutions are sought through organizations or
governments in 2005, we can foresee the usual political rhetoric forcing
governments to act and undesirable solutions imposed on the maritime
industry.
Edward J. Kelly, Executive Director, Maritime
Association of the Port of New York and New Jersey, says, As
transportation congestion creates a negative impact on the general populace,
our transportation industry will become a target on every politicians
radar screen. The industry must collectively and creatively create internally
formulated solutions, or an irate public will initiate their own
solutions.
James J. White, Executive Director, Maryland Port
Administration, says, Increasing international cargo could potentially
overload the inland transportation systems in delivering goods in a timely
manner. Best practices, technology and innovative cargo handling can only take
us so far. However, as an industry we need to collectively determine a
long-term strategic plan.
John B. Ficker, President, National
Industrial Transportation League, says, There is still value to be gained
in transportation and logistics, but it will require even more effort and
collaboration. That collaboration must be on many fronts: Between shipper and
carrier; Between the departments within carriers and shippers; Between the
public and private sectors; Between the modes of transportation; Between labor
and management ... That will be the challenge of 2005.
Sandy
Kennedy, President, Retail Industry Leaders Association, says,
Stakeholders (carriers, terminal operators, truckers, unions, etc.) need
to work together to develop an industry-wide solution that works for everyone
instead of relying on governments on how the ports should operate. For the
longer term, industry, transportation providers, unions, ports operators,
importers-exporters and other players in the supply chain need to work together
to solve the more critical issues facing port congestion ...
Lets nominate these 15 officials to be board members of the
industrys umbrella association.
Umbrella Policy
Vol. II,
Art. 12
John Vickerman of TransSystems Corp. always makes good
copy. At last weeks AAPA Seminar in Long Beach he threw his weight behind
two issues weve had occasion to discuss in these pages, one of which has
contributed to U.S. supply line congestion, and the other almost a sure bet to
bring relief all along the chain. The first issue is one we dealt with in our
commentaries dated the 13th and 18th of October, and on the 2nd of November.
Mr. Vickerman hits the nail right on the head when he criticizes the reckless
building programs of foreign shipyards and shipping lines in their efforts to
upstage one another. Because the onslaught of megaships brought considerable
grief to U.S. providers and consumers in 2004, the brakes should have been
applied and radical logistical planning should have been initiated. A pause of
some kind at that point would have done much less damage than a catastrophic
stoppage would do in the coming months. This lack of planning was his second
point. Didnt it occur to anyone that if ... trying to fit a 16-inch
pipe into a 4-inch opening doesnt work, (Thank you, Jean Godwin.)
why the heck would anyone try to jam in an even larger one? With no thought to
the consequences of an almost certain breakdown in the U.S. transportation
system, shipping lines have rushed headlong into newbuild programs that will
soon glut our driftboxes with more than 150 of these behemoths. To
make matters even worse, just last week Hyundai Heavy Industries announced that
COSCO had ordered four new vessels with capacities of 10,000 TEU, and that
designs for 12,000 TEU vessels have already been completed.
The
shipping lines were quick to criticize the ineptness of terminal operators in
the LA-Long Beach complex as well as the inaccurate growth projections in all
areas of the U.S. supply chain, but these same lines openly boasted that they
correctly forecasted 2004's growth in volume and accordingly introduced the
appropriate amount of capacity to accommodate this growth. But does that give
them bragging rights? Those unexpected vessels, caught in a predicament of
their own making, wasted anywhere from one to two weeks waiting to be serviced,
and at an operational cost of $ 50,000 per day, who do you suppose ends up with
the tab? Take a guess. And wouldnt you think that the correctly
forecasted growth figures would have been shared with the rest of the
transportation supply chain? This was the theme of our previous commentary
which relied upon the statements of 15 well-known maritime officials, and
prompted our call for an umbrella-type organization akin to the national
intermodal freight policy called for by Mr. Vickerman at last weeks
seminar.
We referred above to our November 2nd commentary, and it
might be wise to take particular note of paragraphs numbered 5 and 6. Mr. Nolan
Gimpel of Axiom Consulting warned us several months ago that mega-ships strain
the capacity of inland infrastructure, terminal operators and rail and truck
carriers, and that the least costly way to expand these separate but linked
operations is to establish smaller container ports closer to end users. Mr.
Neil Davidson of Drewry Shipping Consultants called attention to the
operational and commercial limitations that reduce the effectiveness of
mega-ships and also emphasized the need for smaller container handling ports in
closer proximity to end users. These are assessments that an umbrella
associations brain trust would surely consider.
[Mr.
Vickerman, Mr. Gimpel and Mr. Davidson would fit comfortably under that new
umbrella.]
"The more things change, the more they remain the
same."
Vol. II, Art. 13
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.
[This is a reprint of
The Future Is Now, dated October 28th, 2004 ... because the more things
change, the more they remain the same.]
The "National Crisis"
Vol.
II, Art. 14
Back in February of 2000, at a seminar sponsored by the
Transportation Research Board, Michael Belzer of the University of
Michigans Institute of Labor Relations stated, 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 wont have to worry about gridlock because there
wont be any trucks on the road ... I cant comprehend why people
dont respond to this as a national crisis.
There have been
limited responses, of course, but because of the inability to coordinate the
stovepiping operations that make up the intermodal supply chain, an effective
and decisive response has been an impossibility up till now. There is no lack
of concern or determination, however. At the AAPA seminar in Long Beach the
other day, Philip V. Connors, Maersks Executive VP, stated that although
the capacity limitations at the ports are bad, the infrastructure limitations
are even worse in the rail and trucking industries. The real problem is
infrastructure, he said. When we talk about infrastructure, you
better be worried. Mr. Connors then echoed Mr. Belzers earlier
warning by saying, It is, in my opinion, a national crisis. This
seemingly hopeless situation is exacerbated by a shortage of port drivers.
Because of low wages and costly unpaid delays, the national fleet of
owner-operators serving container ports has declined from 160,000 five years
ago to approximately 110,000 today, says Mr. Connors. This decline has been
verified by Mr. Clark Brown, the President of Bridge Terminal Transport Inc.,
who states, We estimate that more than 50,000 drivers roughly
one-third of the total have left the profession since 2000. Inadequate
income is the top cause.
Nor is this the first time Mr. Connors
has sent cautionary words to the intermodal industry. In an earlier interview,
when alluding to the widespread logjams in the supply chain, he said, All
the stakeholders carriers, ports, truckers, railroads and government at
national and local levels need to get involved. The logistical
problems throughout the supply chain have been anticipated, however, for the
most part anyway, and theyve been addressed as theyve developed,
but now the gravity of the crisis is being freely acknowledged by those who
will ultimately be held accountable. Well be hearing more about this
national crisis as conditions grow worse.
Mr. Tommy
Stramer, President of Zim American Integrated Shipping Services Co., looks at
this crisis in the U.S. transportation system and lays it right on the line
when he states:
I hope there will be changes during 2005,
namely in the infrastructure of the U.S. ports and the railways. If changes can
be made in such a way as to allow a higher turnover of containers in the ports
coupled with the ability to transport these boxes to inland destinations
then our industry will survive. Otherwise, we are going to see ports,
more so on the West Coast of the U.S., but also on the East Coast, approach the
point where cargo will not be able to go through them, ships will wait outside,
schedules will no longer be maintained, and the new ships of 8,000-TEUs-plus
will be just another white elephant in the industry.
So what
are the changes that need to be made? We must find a way to build more
terminals on the West Coast. We must find a solution for the environmental
problem and deal with it. There will be more all-water strings to the U.S.,
which will mean heavier pressure on East Coast ports. A way must also be found
to build more terminals there.
To build new railways is a
project for more than a year or two. Every year the U.S. is importing more
containers, with exports on the rise as well. Therefore, without significant
changes in the infrastructure, the American people will have to adjust their
buying habits by reducing their standard of living or by purchasing more
domestic products products that will reflect the increased cost.
If I sound a bit pessimistic, it is because I am. We must achieve
improvements in port and transport infrastructure. So there you have it,
from an observer with a more objective point of view.
Mr. Stamer
should be our companys PR man. He places heavy emphasis on the need for a
higher turnover of containers in the ports a distinct advantage provided
by our patented automated system. He cites the needed capability to transport
these boxes to inland destinations another distinct advantage provided
by our innovative delivery system. He says we must find a way to build more
terminals on the West Coast and on the East Coast a simple matter in our
case because no additional space would be required when retrofitting our
space-creating systems within existing sites.
Space-creating a
perfect lead-in. As Mr. Richard Steinke, Executive Director of the Port of Long
Beach, so eloquently put it a few months ago, Im here to tell you,
the land will run out. It appears now as though the land has indeed run
out. Mr. Connors addresses this lack of acreage and informs us that shipping
lines that do not operate their own terminals will in all likelihood be shut
out as third-party tenants in West Coast ports. As an industry,
were in bad shape. Some of these lines will not have a home, said
Mr. Connors at the AAPA seminar. Terminal operators that customarily cater to
third-party tenants will soon be able to service only vessels of their parent
companies because of ever-increasing volumes. Ed DeNike, Chief Operating
Operator of SSA, one of the few operators willing to take on third-party
business, stated that in order to do so SSA will be required to double its
effective throughput to 8,000 TEU per acre. But theres a catch, or two
or three. To double the density to the degree Mr. DeNike feels will be
necessary, SSA will have to expand its use of technology, look to
off-dock sites for the storage of containers and invest in modern equipment
that can stack containers higher. It wont be as simple as it
sounds, however, because when and where that technology, those off-dock sites
and the modern stacking equipment can be made available is anyones guess.
And the theoretical and considerable cost of these speculative acquisitions is
an even wilder guess. [And why would anyone want to stack containers
higher? Arent the additional retrieval costs and delivery delays
bad enough as things are now?]
Just think, though, what could be
accomplished by retrofitting our inexpensive storage, retrieval and delivery
systems. Each terminal would be condensed to one-tenth its current size ...
that would take care of the space problem. Slotting instead of stacking would
allow a one-day turnaround ... that would eliminate costly repositioning,
delays and stacking vehicles. Our in-house delivery system would eliminate
gates, traffic jams, and piecework pay for drivers. Drivers would become
full-time employees. The systems efficiencies will permit unimpeded growth in
container volume and create thousands of additional jobs. And wed see an
end to the national crisis.
The Party's Over
Vol. II,
Art. 15
Its early yet ...Theres still time to get
ready for tonights company after we rest up a bit ... And besides,
were still cleaning up the mess left over from last nights party
...They wont be here for awhile anyway ...Well handle them when
they get here. This seems to be the prevailing attitude on this side of the
pond, but were in for a rude awakening. Heres whats happening
on the other side.
1. One day last week COSCO contracted with Hyundai
Heavy Industries to build four new 10,000 TEU container ships. We can gather
from this move that COSCO has an ambitious shipping program in the works for
the coming years. But COSCOs enthusiasm doesnt end there. Along
with this aggressive shipping strategy, the company is taking even greater
leaps with its shipbuilding program. Todays February 3rd Singapore Times
just revealed that where COSCOs shipping arm has been accounting for 40%
of the companys annual profits, the rapid transformation of its COSCO
Shipyard Group will account for 80% of company profits within two
years.
2. It was also revealed in todays Times that
Hyundai, Daiwoo, and the other South Korean yards expect to increase their
combined 2005 output by 24% because of rising demands. The article also stated
that this years world-wide ship production will more than double the rate
of growth in 2004.
3. From India yesterday we heard that The Shipping
Corporation of India (SCI) has initiated moves to acquire an additional 18
vessels as part of a substantial fleet expansion plan. According to a senior
official, the companys requirement for these was yesterday.
Almost every day newspapers and maritime journals are announcing the
giant strides taken by non-U.S. participants in the intermodal supply chain.
Being closer to the Asian sources of production, and therefore being privy to
consumer demand, these shippers, carriers and even shipbuilders are exercising
good business judgement and reacting in timely fashion, and even as early as yesterday. At the same time, a disinterested or neutral observer
would be inclined to think that, in spite of the nightmares that surfaced on
this end of the chain in 2004, and the anticipated gridlock in 2005, U.S.
strategists appear to be sitting on their hands. It would be difficult to come
up with any kind of an effective argument against that perception. To be sure,
except for strong and expensive attempts to counter real and imagined threats
of terrorism, little if anything is being done to prepare for the tidal wave of
containers coming this way. If the status quo were to be maintained in 2005 and
there would actually be a zero rate of growth in container imports, serious
breakdowns would still take place throughout the supply chain because adequate
damage control measures have not been taken. Repeated warning signals have been
given, projections in the way of outright guarantees have been published, and
alerts such as those seen in the above announcements have all provided certain
indications that, regardless of the lack of preparation in the U.S. delivery
system, massive amounts of incoming containers will hit our ports even earlier
than usual this year, and the crippling gridlock, or breakdown, or shutdown of
the intermodal supply chain will become a reality.
No Timeouts Remaining
Vol.
II, Art. 16
Heres how U.S. planners are addressing
todays chaotic supply line congestion. A report in the LA Times tells us
that the MTA (Metropolitan Transportation Authority) has just approved a plan
to expand the 710 Freeway in an effort to ease traffic congestion from the
ports of LA and Long Beach. This expansion project would create four elevated
truck-only lanes which would boost the capacity of the highway to 10 traffic
lanes at an estimated cost of $ 4.5 billion (thats in todays
dollars). The article went on to say that port officials and the business
community stressed the fact that there is an URGENT need to find a solution to
ease the traffic gridlock, which theyve acknowledged to be so heavy that
trucks are seen crawling along, nose-to-tail, down the same lane.
But
there are some flies in this ointment. (Hurdles is the term used in
the Times article). The major stumbling block is funding. This has been common
knowledge, however, because early in December even the Long Beach Telegram
mentioned the fiscal shortfall. Mr. Zev Yaroslavsky, an MTA director and LA
County Supervisor, has stated, I dont have a clue where the $ 4
billion is going to come from. The MTAs budget deficit is reported
to be close to $ 50 million, and the state government is reported to have
frozen funding for new expressway construction. Work to expand the highway is
unlikely to commence anytime soon, therefore, regardless of whether the federal
or state governments foot the bill, or the funds are raised through other
channels, including the levying of highway tolls and container charges. To make
matters worse, according to the report, environmental reviews and engineering
and design plans are expected to keep the project on hold for the next decade.
No wonder the MTA directors so magnanimously approved of this impossible
expansion program.
Recalling the discomforting events in the U.S.
transportation system in 2004, and being advised of the logistical developments
taking place in Asia at this very moment, isnt anyone in a position to
step forward and take charge? MTA directors, port officials and the business
community all recognize the urgent need for a solution to the problem, but no
one knows how to approach the quagmire. Thats unfortunate because we have
no more timeouts left. In our preceding commentary, we wrote about aggressive
shipping and shipbuilding programs being undertaken in Asia, and todays
Lloyds List revealed that Hyundai Merchant Marine intends to have its
affiliate, Hyundai Heavy Industries, build another eight 9,000 TEU ships. As if
the problem isnt bad enough already, this additional vessel capacity,
announced in the past few days and not foreseen by prognosticators, has only
added to our woes. So what steps are being taken in the LA-Long Beach complex
to handle this years assured increases in volume? An official decision
has been made to expand a highway about ten years from now. So there.
That oughtta do it.
The astute observer can see the problem. No one
wants to step forward, simply because no one has the expertise to do so. This
is the very first time a crisis of this magnitude has been encountered, and
because no one individual can be held responsible for the tragic failings at
every link in the supply chain, and because it seems so convenient to point an
accusing finger at an adjoining link, the prevailing attitude is, Let
George do it. But as weve just indicated, George is
incapable.
"Easy come, easy go"
Vol.
II, Art. 17
In a city audit, issued on December 3rd, the Port of
Los Angeles was declared to be adrift and suffering from lack
of vision. The report said the port clearly needs more strategic planning
in order to improve its efficiency. Linda Chick, the controller who authorized
the audit at the direction of Mayor Hahn and the city council, said, Now,
it is easier to understand many of the issues plaguing the port. The
audit was conducted for the city by Northside Consulting Group and recommended
the development of a formal master plan and strategic plan for future
operations, clear management guidelines and clear priorities for community
advisory councils. It also called for limiting the role of the Harbor
Commission in the day-to-day management of the department.
That report
was issued more than two months ago and there is still no evidence of strategic
planning, improved efficiency, formal master plans, clear management or stated
priorities. The operations of PierPass, Inc. are the kinds of actions that have
been taken in response to the citys recommendations, but this is exactly
the type of inefficiency that prompted the Mayor to call for the audit in the
first place. We cited what should have been seen as inherent shortcomings in
the peak box fee concept in our November 12th, 16th and 22nd
commentaries, and sadly, the attempts to set this operation in motion have only
served to justify the criticisms issued by the auditors and the city officials.
Being adrift with a lack of vision is the worst kind of
a pickle for a mariner to be in and one to be avoided at all costs, and the use
of this terminology leaves no doubt that this blunt assessment by the auditors
and the city was meant to be taken seriously.
Once again, though,
this unpopular and impractical fee program has been postponed. Thats the
good news. The bad news is that a top-notch IT firm has been engaged to develop
the information software that should eventually get the program operational.
Hows that for being fiscally responsible? Is the ability to waste time
and money the only qualification for employment in the LA-Long Beach complex?
Hasnt it occurred to port officials that the inefficient use of time and
money in operations in and around the port are the very reasons the Mayor
called in the auditors? As questionable as this concept was at its introduction
during the chaotic months of 2004, do the authorities really expect this
program to be beneficial in the predicted 2005 crunch? How does this program
create the space so urgently needed? After all, the lack of space is the cause
of all the woes in the complex. What if owner-operators decide that late hour
operations have no appeal, and en masse, they shun the industry rather than
absorb the fees (fines?)? Or, alternatively, what if every port trucker decides
to avoid the penalty fees and make use of the after hours gate accommodations?
Still more gates would be required, and with no offsetting fees, this would
guarantee a lose-lose situation for the port complex. We did the math back on
November 12th, remember? The avoidance of fees, which are supposed to pay for
the additional gates, would impose added costs to port operations, and now,
with the engagement of one of the most capable IT firms in the world,
cant you just imagine how the Mayor and the city council will react at
these misdirected expenditures?
Easy come, easy go, is one
way to look at it. The Mayor and the city council wont see it that way,
though.
"Truck Driver's Blues"
Vol.
II, Art. 18
Councilwoman Janice Hahn, in her January 28th statement
at the Public Meeting on Goods Movement & Ports, stated that she was
speaking, ... in 2 capacities. First, as Councilwoman, I represent the
Port of Los Angeles and the communities of Wilmington and San Pedro
communities that have suffered from the effects of port operations. I am also
Chair of the Alameda Corridor Transportation Authority. Ms. Hahn,
therefore, knows what shes talking about, and she manages to get right to
the point. [Unfortunately, because of unsatisfactory conditions in the port
communities, Ms. Hahns candor requires her to use the word
suffered, rather than the word benefitted.] Here are
some more of her accurate observations:
On congestion: Today,
about 12 million containers are passing through our port complex every year.
And, that number is expected to triple in the next 20 years. The international
trade industry is booming, and we must do something to prepare for this growth.
Highways in Southern California are already gridlocked and congestion will
continue to worsen, unless we do something now ... It is my belief that
congestion at our port complex, and on our roads and highways, is the one thing
that will drive business out of California.
On independent
truckers: While addressing you this morning, I wanted to bring another
important issue regarding goods movement to your attention. And that is the
plight of the independent trucker. These truckers are a vital link in the goods
movement supply chain for this entire country. 40% of all our nations
goods come through our port complex, and without these truckers, our entire
economy would be crippled. Independent truckers are currently working
unbelievable hours and barely making enough money to feed their families.
I stand before you today to send a message that if we, as leaders,
do not do something to improve the working conditions for our independent
truckers, we could face a meltdown in goods movement statewide.
Allen Clifford, Senior VP of Mediterranean Shipping Co., voiced the same
concerns at this weeks meeting of the Raritan Traffic Club. Things
will get worse before they get better, he said, and he compared port
congestion with the futile attempt to park three cars into a two-car garage,
closely paraphrasing an earlier description offered by Jean Godwin. In citing
the rapid departure of drivers from the industry because of low pay and lengthy
delays, Mr. Clifford said, If it means paying truckers more money, so be
it ... We have to change the way we do business, not only in America, but in
the world.
In still another address, this one given at the Los
Angeles Transportation Club, Stephen Russell, chief executive of the Celadon
Group stated that the driver turnover rate averages about 125% annually, and
has brought about a 20% reduction in the nations truckload capacity.
[Sounds like were playing a broken record.]
The Magic Bullet
Vol. II,
Art. 19
The following is excerpted from the Congressional
Record, and the words are those of Virginias Senator Robert Byrd. One of
the most knowledgeable and most respected of this nations legislators, he
was urging his fellow senators to vote against the proposed Homeland Security
Bill.
This is one of the most far-reaching pieces of
legislation I have seen in my 50 years. I will have been in Congress 50 years
come January 3rd. Never have I seen such a monstrous piece of legislation sent
to this body. Our poor staffs were up most of the night studying it. They know
some of the things that are in there, but they dont know all of them. It
is a sham and it is a shame ...To tell the American people they are going to be
safer when we pass this is a hoax. We ought to tell the people the truth. They
are not going to be any safer. I was one of the first in the Senate to say we
need a new Department of Homeland Security. I meant that. But I didnt
mean this particular hoax that this administration is trying to pander off to
the American people, telling them this is Homeland Security.
To
be sure, this amalgamation of 22 government agencies and 170,000 employees is
the most confusing blend of bureaucracy any administration has ever attempted
to pander off to the American people. Many of the declarations,
restrictions, and regulations issuing from this massive body are contradictory
and irrational, and this administrative inefficiency must have been what
Senator Byrd had foreseen in his harsh criticism in the Senate hearings.
Lets examine some of what has transpired in recent months.
1.
Not too long ago, when a campaigning Senator Kerry accused the Bush
administration of settling for a security policy that screened only 5% of the
cargo coming to U.S. ports, he was taken to task by Customs and Border
Protection Commissioner Robert Bonner. Mr. Bonner stated; Its
terribly misleading to say youre not inspecting 95% 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 thats heading to the
United States ... The containers we identify, 100% 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. [See our
October 22nd commentary.]
Daniel Wagner, however, publicly disputed
Mr. Bonners words. Mr. Wagner is a financing specialist at the Asian
Development Bank and revealed that only 5% of what comes to U.S. ports is
inspected, and he made it perfectly clear that because an act of terrorism
would adversely affect Asian manufacturers, Asians are quite serious at their
end and are not playing games with security issues. But a perfect example of
the ineffectiveness of the CTI, as well as the Asian watchdogs, was seen when
32 Chinese immigrants were detected on January 15th by an alert crane operator
at the Port of Los Angeles. They had arrived in a container, undetected, on a
ship arriving from Hong Kong. The ships crew claimed, as one would
expect, that they were unaware of the stowaways. [See our Vol. II, Art. 6
commentary.]
Check out Mr. Bonners resume, if you have the
time. Youll see that hes eminently qualified and certainly not a
dummy, but he seems to be the fall guy in what Senator Byrd feels is a hoax. 22
agencies and 170,000 government employees? No one, not even Mr. Bonner, could
ride that bronc.
2. It gets worse, but to Mr. Bonners credit, he
confessed the Departments shortcomings when he was required to submit a
new set of cargo security requirements for members of a public-private trade
security partnership. The goal of C-TPAT (Customs-Trade Partnership
Against Terrorism), he said, is to decrease the prospect of a
terrorist weapon being concealed in a container headed for the United
States. Then he contradicted his earlier statement to Senator Kerry and
admitted that, We, as the U.S. government, cant regulate back to
the point of origin of a product. To ensure a safer and more efficient
delivery of cargo-carrying containers, Mr. Bonner announced that C-TPAT members
would be required to equip containers with a proposed smart-box
technology when it becomes available, probably later this year. At this point
he said, A seal alone only adds a marginal amount of security. Another disconcerting admission.
First, we were assured of the
reliability of inspections by vigilant overseas agents in the supply chain,
then we were given assurances of tamper-proof seals. As it turned out, neither
of these setups could be described even as a stopgap measure because nothing in
the way of security was actually provided. Lets take an objective look at
the next magic bullet, the proposed smart-box. Still in the
development stages, the technology in this specially equipped container is
intended to detect tampering in transit, and importers using (and paying for)
this technology will be assured of expedited inspections, or no inspections at
all, in some cases. Expediting means speeding up and saving time, so
thats an advantage. But its the only advantage being offered so
far. On currently held test runs, the so-called false-positive detection rate
is about 5%. When the false-positive rate can be brought to below 1%, says Mr.
Bonner, the product will hit the market. But since when does any kind of a
system with false-positives provide a sense of security? How many
times will false alerts disrupt security operations? And wont security
personnel soon tend to ignore these alarms? Like the boy who cried Wolf!
Wolf! once too often ... well, you remember that story.
Thats a minor drawback, though. If, indeed, the terrorist threat is real,
and if, indeed, a bomb-laden container would strike a crippling blow to the
U.S. economy, how long do you suppose it would take for someone with hostile
intentions to find out exactly which C-TPAT members are getting kid glove
treatment by Customs inspectors in U.S. ports? The smart-box system
and its public announcement are an open invitation to these terrorists. Look in
a mirror, if you will. You see an upstanding American citizen. Believe it or
not, most of the people in the world dont see you that way. They see you
as the ugly American. Its time to be honest with ourselves.
Smart-boxes may turn out to be the real hoax. There are thousands
upon thousands in foreign lands who, for the right price, would look the other
way when these containers are being prepared for shipment to our ports.
Isnt that how the 32 Chinese managed to reach the Port of Los Angeles?
The old smugglers rhyme is recited in every language and in every port in
the world, Theres an extra weeks pay, if you look the other
way. Weve allocated billions of dollars in futile attempts to
provide security to this country and now were giving a green light and a
road map to those who are trying to destroy us. Well, maybe were not
really ugly, but we certainly are stupid.
We at Automated Storage & Retrieval Systems, Ltd. have an axe to grind and were not at all
embarrassed to present our case. The first few pages of this website provide
simple schematics and a concise description of our patented storage, retrieval
and delivery systems. The advantages of our systems as opposed to the
disadvantages of conventionally-structured container yards are clearly spelled
out, and they can be quickly reviewed if theres a need to do so. Security
is what were dealing with in this commentary, however, and because no
sure barrier has been erected by Homeland Security, and because so much is at
stake, we have an obligation to make this sales pitch.
Our
container yard system: The space and time created by this system allows the
operation to make use of existing scanning/inspection technology with the
result that every container is inspected as it is being offloaded, and prior to
its being positioned in a preassigned slot. Because constraints in todays
U.S. port operations permit only random scanning/inspections, weapons,
contraband, illegal immigrants, and terrorists as well, have been smuggled into
places like the Port of Los Angeles. If it were not for a stroke of luck, those
32 Chinese immigrants would have landed safely last month. An unwitting crane
operator, and not any security measures, stymied their efforts. When only 4% of
all containers are being scanned, we must ask ourselves how many other
immigrants have gained entry in uninspected containers. How many of them are
terrorists? How much in the way of contraband has been introduced into our
markets? How many weapons have arrived?
With our system installed in
U.S. ports, every container will be inspected/scanned. No weapons, no
contraband, no immigrants and no terrorists could possibly get through. No
longer would we be required to rely on overseas personnel for our safety and
security, especially when so many beyond our shores have shown a lack of
interest. The magic bullet mentioned above is proven, patented and
readily available. It will be installed in one-tenth of the time, in one-tenth
of the space and in one-tenth (or less) of the cost of a
conventionally-structured terminal. Along with guaranteed security for all,
port authorities will realize higher incomes, more job opportunities will be
created, and taxpayers and consumers will be relieved of financial burdens.
Our shipboard systems: Although this website is dedicated to
terminal operations, if ultimate security is ever required, it can be obtained
by means of our shipboard storage and retrieval system. Our
Chronology page makes reference to U.S. Patent Number 5,860,783,
Granted on Jan.19,1999, and Entitled: CARGO CONTAINER STORAGE AND RETRIEVAL
SYSTEM AND METHOD INCLUDING ON DECK CARRIAGE ASSEMBLY. This shipboard system
makes it possible to retrieve, or store, any single container, regardless of
its location aboard the vessel, without handling any other container. As an
added advantage, the system allows for the scanning/inspection of every
container while the vessel is en route to our shores. The procedure can be
completed in one weeks time, and prior to arrival at our ports, every
safe container will be granted clearance, and any suspect containers may very
well be jettisoned. The threat to deepsix offenders will be enough
to discourage terrorists and any others who would wish to gain illegal access
into our country. [Checkmate!!]
By adopting one or both of these
systems, security at our ports will be guaranteed, unambiguous, and acquired at
a cost far below the amounts now being spent and allocated in state and federal
budgets. We ... all of us ... deserve a good nights sleep for a change.
Short and Sweet?
Vol. II,
Art. 20
This is supposed to be the IT age, the age of Information Technology. The problem is that the information being
spewed out for public consumption is either inaccurate, incomplete or
insincere. In a lengthy analysis of the economic conditions on the West Coast,
the Regional Economic Briefing published by the Federal Reserve Bank of San
Francisco included 31 graphs, a generous amount of charts and some
authoritative comments on past and future developments. In all, the
presentation required 12 full pages and had the appearance of a white paper
rather than a briefing. But .... only 7 lines were devoted to the
West Coasts most important economic issue, the congestion thats
strangling port operations and the transportation infrastructure. The report,
however, states that the situation has been resolved. Heres
what appears at the bottom of page 4 of the briefing:
Transportation
The backlog of inbound ships in Southern
California generally has been resolved.
Contacts at the Los
Angeles port indicated that the bottlenecks were in part resolved by hiring new
workers to handle the high volume of traffic.
Shipping lines
had responded to the bottlenecks by increasing their prices for ground and sea
transport.
According to our contacts, transport lines have not
lowered their prices as the backlogs have been resolved.
So
there you have it. Short and sweet. The backlogs have been resolved, according
to contacts. Those contacts, of course, werent identified in
the report, but just a few days ago at the Long Beach AAPA seminar, Mr. Philip
Connors, Maersks Executive VP, saw things differently. After citing the
ports adverse capacity, he stated that the infrastructure limitations in
the rail and trucking industries are even worse. The real problem is
infrastructure ... It is, in my opinion, a national crisis. How did the
contact miss out on this assessment? Mr. Connors was one of the
featured speakers at the AAPA seminal.
In nearby Oaklands
Marine Terminals is an acknowledged authority on West Coast congestion, Douglas
Tilden, and hes the one the Feds should have consulted. This is
what he said:
2004 demonstrated once again the fragility of the
international transportation system. The combinations of unexpectedly strong
volumes out of China and issues with right-sizing the Southern
California work force brought previously unimaginable delays to the movement of
transPacific cargo ... Other ports around the world struggled with congestion,
but none suffered the level of disruptions of Southern California ...We will
definitely be faced with much broader issues in 2005". [Makes you wonder on
what other matters the Fed may have been led astray.]
"You ain't seen nuthin' yet!"
Vol. II, Art. 21
Peter Keller of NYK North America had some interesting
comments to make about the state of affairs in the U.S. supply chain. Here are
some of the concerns he touched upon in a recent interview.
Everybodys mesmerized by this just-in-time thing. What
people really want is predictability. We have to deliver the predictability in
the supply chain. Thats as true for the hay cubes as for the fur
coats.
With respect to the West Coast terminal work stoppages
late in 2002, Mr. Keller pointed out that this event brought home the
fact that we probably had too many eggs in one basket. Long-term, we need to
spread our risk ... we need to look for other places to accommodate
growth.
In criticizing the low rate of productivity at LA/Long
Beach, he stated that even an improved rate would contribute little to the
solutions so desperately needed. Even if you increase productivity, all
youre doing is buying time until 2009 or 2010", he said.
His
advice to the industry was to address the approaching crisis in two ways. In
noting that steps had to be taken in order to cope with the growing congestion
at the LA/Long Beach complex, he stated first of all that existing resources
must be utilized more efficiently, but in acknowledging the severity of the
challenge ahead, he recommended the construction of new facilities and the
acquisition of new equipment.
Mr. Keller has been involved with
transportation for the better part of 40 years, and has witnessed the
phenomenal growth that has taken place in this industry during those years. In
the past half-dozen years or so this phenomenal growth has turned into
explosive growth. Think it was bad in 2004? As Al Jolson would say, You
aint seen nuthin yet! The respite after the Christmas season
was supposed to bring relief to bedraggled port personnel. It was catch up
time. It was time to make preparations for the coming year. And, according to
the script, the shutdowns during celebrations of the Chinese Year of the
Rooster would also provide the terminals with some breathing room. But it
isnt shaping up that way. To the surprise of exactly everyone, January
shipments at the Port of Long Beach were 35% higher than they were last
January, and this record rate of increase is projected to continue through the
rest of 2005. Look at Vancouver. The port is so badly jammed up that force
majeure was declared a couple of weeks ago. The outlook is so bleak that
carriers are forced to reduce incoming volumes and to divert to other ports.
This is one of the ports that is supposed to accommodate diverted vessels from
Southern California, remember?
Now about those new facilities and
equipment Mr. Keller recommended. Our patented and programmed systems are the
answer to his concerns with respect to just-in-time efficiencies
and predictability. Our November 1st commentary endorses his suggestion to
spread the risk, and our systems space-creating and time saving features
produce undreamed of rates of productivity.
We agree wholeheartedly
with Mr. Kellers analysis and hope to be of assistance in the days ahead.
Enough Is Enough
Vol. II,
Art. 22
1. As Peter Keller just advised us, we have ...
too many eggs in one basket ... we need to spread the risk ... we need to look
for other places to accommodate growth.
2. Jean Godwin was one
of the first to speak out about cramming and jamming within container terminals
when she said, Its like trying to fit a 16-inch pipe into a 4-inch
opening.
3. Allen Clifford of Mediterranean Shipping said the
same thing earlier this month when he compared port congestion with the futile
attempt to park three cars into a two-car garage.
4. Nolan Gimpel of
Axiom Consulting warned us several months ago that mega-ships are straining the
capacity of inland infrastructure, terminal operators, and rail and truck
carriers, and that the least costly way to expand these separate but linked
operations is to establish smaller container ports closer to end users.
5. Neil Davidson of Drewry Shipping Consultants also emphasizes the need
for smaller container handling ports closer to the end user.
6. Jerry
Bridges at the Port of Oakland says, Too much cargo through too few
ports, and diversifying the routings of import cargos will be the only way for
our country to steer safely through these rocky shoals.
7. We must find a way to build more terminals on the West Coast, said
Tommy Stramer of Zim American Shipping. There will be more all-water
strings to the U.S., which will mean more pressure on East Coast ports. A way
must also be found to build more terminals there.
The maritime
authorities cited above are now worrying about the unavailability of acreage
for port expansion. Until recently this shortage of land seemed to be a remote
possibility, but almost overnight port directors, terminal operators and
transportation managers along the entire supply chain have come to feel the
crushing impact of this scarcity. Those cited above say it in different ways,
but the meaning in each case is quite clear. Enough is enough, and Secretary
Norman Mineta made no bones about a few months ago when he reminded us that
only 60 of the more than 360 ports in the U.S. handle containers at the present
time, but that another 200 of these U.S. ports will be required to handle
containers in the foreseeable future. From afar, he saw the developing logistic
problems in the nations transportation infrastructure, and because the
solution is so obvious and so simple, he put it on the table in an obvious and
simple way. On October 13th, this website reminded the readers of Secretary
Minetas advisory. Retrofitting other U.S. ports to handle containers
would be like killing a half-dozen or more birds with one stone, and the sooner
this tack is taken the sooner our entire transportation system will be
streamlined. Some folks dont quite get it, however. Even though a measure
of relief was realized at LA/Long Beach when more than one hundred ships were
diverted to other ports last fall, the full meaning of Secretary Minetas
strategy has yet to register.
Acknowledging that transportation
gridlock is imminent, West Coast authorities are now considering an inland
container depot and a rail shuttle connecting the LA/Long Beach complex with
that offsite depot. Think about that for a minute. Its no secret that
there are 29 ports on the West Coast. The media made that fact known to the
whole country during the stoppage in 2002. Less than half these 29 ports are
handling containers but they would dearly love to get in on the act. Peter
Keller says, ... we need to spread the risk ... and spreading the
risk by retrofitting these ports for container handling, and at so little cost,
would greatly ease the congestion at the LA/Long Beach complex and would be
highly advantageous to the West Coast economy.
But to consider
building an inland container depot and a rail shuttle between the port and this
offsite depot for the purpose of easing congestion? What are they thinking? It
would take years just to get the project off the ground, and time is one of the
commodities that is in short supply. It would also cost billions of dollars,
and Mr. Zev Yaroslavsky, an LA County Supervisor, has already admitted that
money is another commodity in short supply. While were on the subject of
money, has anyone calculated what it will cost for the extra moves required in
order to transport an o