"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.

• “Everybody’s mesmerized by this ‘just-in-time’ thing. What people really want is predictability. We have to deliver the predictability in the supply chain. That’s 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 you’re 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 ain’t 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 isn’t 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 system’s space-creating and time saving features produce undreamed of rates of productivity.

We agree wholeheartedly with Mr. Keller’s analysis and hope to be of assistance in the days ahead.