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“The Turbulent ‘10s” will have profound impact on ocean shipping

“The escalating price of fuel trumps almost every other ocean carrier concern,” said Dr. Walter Kemmsies, chief economist for Moffat & Nichol
By Patrick Burnson, Executive Editor
June 09, 2011

While labor costs and “green” initiatives may be making West Coast ports less dominant in the coming years, they are hardly at risk, said a prominent industry analyst.

“The escalating price of fuel trumps almost every other ocean carrier concern,” said Dr. Walter Kemmsies, chief economist for Moffat & Nichol. “Ships will continue to make inbound calls to leading load centers here because of the huge resident populations, and then will push off under their own power with a little export cargo.”

Tongue firmly in cheek, Kemmsies added: “I believe the expression is ‘slow steaming.’”

Speaking at the annual “Ports & Terminals” luncheon sponsored by the Pacific Transportation Asssociation in Oakland yesterday, Kemmsies shared several other observations on “The Turbulent ‘10s.”

“Structural problems persist in the U.S., as it struggles to come out of the past recession,” he said. “Ports and railways need more investment, but seem to have to come up with it themselves most of the time. The nations sill lacks a transportation policy. China and India are the world leaders in this regard.”

The tepid employment recovery in the U.S. has also been led by the private sector, with the federal government remaining concerned with stabilizing the housing and financial markets, said Kemmsies.

“And what does that do for ‘consumer confidence?’” he asked. “Even for those of us with good jobs, the will to spend is just not there. The companies we work for are also focused on cost control, rather than spending.”

Macro-economic trends will also define the next decade for shippers, said Kemmsies. As the need for raw materials ramps up, U.S. exporters may become a larger part of the solution.

“This is a huge food-producing nation,” he said. “And it touches upon every imaginable aspect of world trade, including bio-technology. We have the water and forest products that much of the developing nations lack, and those resources, too, will be in greater demand.”

That forecast will certainly be greeted with enthusiasm when Kemmsies speaks to the Agriculture Transportation Association (AGTC) tomorrow. The association’s annual conference in San Francisco begins today, with exports being the major topic of conversation, advocacy, and debate.

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About the Author

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).

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