Subscribe to our free, weekly email newsletter!



Shippers and the supernatural

By Patrick Burnson, Executive Editor
April 16, 2014

In the long ago late night television era, Johnny Carson had a memorable fortune teller routine. As “Carnack the Magnificent,” this classic comedic genius would predict the answers to questions that were concealed inside a sealed envelope about unexpected and monumental changes in government, commerce, and society.

In the shipping industry, we have our own “Carnack” in Peter Friedmann, the affable and capable leader of the Agriculture Transportation Coalition (AgTC). He won’t be donning a turban for his chrystal ball prognostications at the annual meeting this June in San Francisco, but a certain amount of levity may be needed when addressing the issues that keep shippers up past their bedtime.

Friedmann has already told his constituents that new contract talks between the International Longshore and Warehouse Union the Pacific Maritime Association will be stalled beyond the June 30th deadline, thereby requiring an extension.

“We can learn from the recent past,” says Friedmann.  “Over the past 12 months, ALL container terminals on the West Coast have been shutdown by ILWU for varying lengths of time (from a few hours in Tacoma to 5 days in LA/Long Beach), and this was without any contract expiration in sight.”

He adds that the ILWU locals – to varying degrees – have demonstrated their eagerness to stage wildcat strikes.

“So we should not be surprised to see disruption and slow downs at all the U.S. west coast marine terminals,” he says.

Shippers will also learn more about the projected impact of the P3 Alliance, comprising Maersk, MSC and CMA-CGM. This consortium – recently sanctioned by The Federal Maritime Commission – will control nearly 40%  transpacific cargo.

According to Friedmann, the cultural dissonance may further complicate matters as “schedule discipline” is not part of every carrier’s makeup.  He points out that the three carriers currently each maintain their own sales, documentation, customer service networks.

“But it is logical to ask whether some of these services will be combined, once the operations consolidation is fully implemented,” he says. “We do expect that there will be fewer but larger ships, resulting in reduced frequency of port calls, although with the same or even greater total vessel and equipment capacity. We are going to be monitoring this closely.”

Meanwhile, six ocean carriers are forming the G6 alliance, which has raised fewer concerns because they are already operating in vessel sharing mode in the transpacific, without detrimental impact to shipper interest.

Vessel operators will be paying close attention at the AgTC meeting too, as it features the annual “Ocean Carrier Performance Survey.” Here, Ag shippers measure companies in eleven categories of service. This includes the coveted “best vessel schedules and transit days” ranking.

Finally, a highly anticipated presentation on ocean cargo rates will be provided by Brian Conrad, executive administrator of the Transpacific Stabilization Agreement (TSA).

Conrad has compared the recent imposition of general rate increases in the trade lane to decisions by governments worldwide to defer needed infrastructure investment.

“We are in effect negotiating the annual operating budget for a major piece of global transportation infrastructure that happens to be privately financed,” he argues. “Competitive pressures to match the lowest short-term rate levels and lock them into 12-month service contracts across the board amounts to a significant deferred investment in the trade.”

Conrad maintains that TSA carriers will eventually have to stop pricing based solely on supply-demand and pay more attention to long-term service reliability and flexibility.
If this fails to develop, Conrad’s own chrystal ball shows more “acute” problems surfacing, at significant cost to Ag shippers. 

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

While shippers ready themselves for the long Labor Day weekend, we’d like to remind them that new security and compliance regulations are - as always – looming ahead.

United States Class I carloads were down 56,104 carloads–or 4.6 percent annually–at 1,115,957 in August, and intermodal containers and trailers were up 3.6 percent--or 38,617 units- at 1,114,370.

A new report from Chicago-based freight transportation and logistics consultancy CarrierDirect released this week examines current freight market conditions and what logistics and supply chain stakeholders need to do and know in order to stay one step ahead of the competition.

You’ve heard the old saying, it was the best of times, it was the worst of times. Rob Handfield sees this as the best of times for procurement professionals, who have an opportunity to deliver real value to their organizations

While core metrics were down from a very impressive July, the August edition of the Non-Manufacturing Report on Business from the Institute of Supply Management (ISM) was still very strong.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA