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May 26, 2014

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2 THE JOURNAL OF COMMERCE ©2014 The Journal of Commerce — All Rights Reserved For more information, visit our Web site, EXECUTIVE EDITOR Chris Brooks 973.776.7818 MANAGING EDITOR Barbara Wyker 973.776.7817 SENIOR EDITORS Joseph Bonney, Finance and Economics 973.776.7809 William B. Cassidy, Trucking and Domestic Transportation 202.499.2285 Bill Mongelluzzo, Trans-Pacific 562.428.5999 Mark Szakonyi, Rail/Intermodal, Regulation, Policy 202.499.2295 Greg Knowler, Asia +852 3975.2647 SENIOR EDITOR, DIGITAL Harry G. Butler, 609.433.7215, EDITOR-AT-LARGE Peter T. Leach, Trans-Atlantic 212.755.0940 RESEARCH EDITOR Marsha Salisbury 973.776.7828 ECONOMIST Mario O. Moreno 973.776.7850 SPECIAL PROJECTS EDITOR Alessandra Gregory Barrett 973.776.7808 SPECIAL PROJECTS EDITOR, ASIA Annie Zhu +86 (21) 60396986 SENIOR DESIGNER Sue Abt, 973.776.7825, DESIGNER Bryan Boyd, 973.776.7827, WEB PRODUCER David Pulis, 973.776.7807, ASSOCIATE WEB EDITOR Grace M. Lavigne, 973.776.8506, PUBLISHER Tony Stein California, Minnesota, Georgia sales, 678.456.8530 SALES Cindy Cronin, Senior Account Manager Pacific Northwest, Midwest, Gulf, Canada sales, 954.551.8305 Zachary Gorman, Account Executive Northeast sales, Classifieds/Reprints/Copyrights 973.776.7820 Greg March, Asia Director Asia, Europe sales, 852.2585.6119 For Magazine Subscription Customer Service: Domestic (Toll-Free): 877.675.4761 International: 847.763.4932 E-mail: 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105 973.776.8660 • 800.952.3839 CHIEF EXECUTIVE OFFICER, Gavin Carter CHIEF OPERATING OFFICER, Rhiannon James EXECUTIVE VICE PRESIDENT/CHIEF CONTENT OFFICER, Peter Tirschwell CHIEF FINANCIAL OFFICER, Ian Blackman VP, PUBLICATIONS, Amy Middlebrook VP, HUMAN RESOURCES, Cindy Mevorah GENERAL MANAGER, Julia Murphy DIRECTOR, PRODUCTION, Carmen Verenna EDITOR'S LETTER Chris Brooks The Journal of Commerce (USPS 279 – 060), May 26, 2014, ISSN 1530-7557, Volume 15, Issue No. 11. The Journal of Commerce is published bi-weekly except the last week in December (printed 26 times per year) by JOC Group Inc. 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105. Subscription price: $344 a year. Periodicals postage paid at Newark, N.J., and additional mailing offices. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, P.O. Box 1059, Skokie, IL 60076-8059. YO U ' R E T H E OW N E R of back-to- school goods due to arrive at a U.S. West Coast port in June for delivery to retail shelves in July. If you've been managing cargo for a decade or more, you remember or certainly have read about the 2002 lockout of West Coast longshore workers that crippled supply chains and cost the U.S. economy billions of dollars. And if you're a neophyte, then you need only go back a year to contentious talks on the East Coast that likewise caused disruption throughout U.S. supply chains despite the lack of an outright port shutdown. Well, here we go again. With this month's launch of contract nego- tiations between the International Longshore and Warehouse Union and West Coast waterfront employ- ers, U.S. importers and exporters again face a dilemma: Ride out the storm, take your chances and con - tinue to ship through any of the large West Coast ports handling the bulk of Asian imports and exports, hop- ing your goods aren't caught up in a peak-season slowdown — or shut- down — or hope for the best, but plan for the worst. According to two new shipper surveys — one by the JOC and the other by investment firm Wolfe Research — a majority of cargo own- ers are opting for the path of least resistance by planning to divert at least some of their goods through ports on the U.S. East or Gulf coasts or through Canada to avoid poten- tial disruption in the run-up to a new West Coast longshore contract to replace the six-year deal that runs through June 30. It's another reminder of who actually controls the movement of freight: the beneficial cargo own- ers who we celebrate in this Top 100 Importers and Exporters issue. But as we enter the backstretch of 2014, the ILWU negotiations are just one story line in what is devel- oping as a turnkey year for supply chain interests. The Wolfe survey, broken down by Senior Editor Mark Szakonyi on page 56, is particularly illuminating in its highs and lows. Consider the following: l Shippers responding to the M a rc h-A pr i l s u r ve y e x p e c t same-store shipment volumes to increase 3.5 percent over the next 12 months, the highest volume expectation in the quarterly sur- vey since the boom post-recession year of 2010. l Inventory levels are running moderately higher in the second quarter compared to the same period last year, yet about half of respondents expect shipping activ- ity to increase through June, the highest percentage in the survey since 2010. l Rail service, disrupted so severely during the harsh winter, received its lowest grade from shippers in 10 years. As Szakonyi discusses on page 58, intermodal operators will have to restore confidence quickly to expand the domestic volumes that have led their growth for the better part of three years. That will include freeing up capacity that has constrained to some degree 75 percent of survey respondents. l Truckload shippers expect rates to increase 2.4 percent, net of fuel, over the next 12 months, the high- est expected truckload increase in nearly two years. l A record number of shipper survey respondents — 38 percent — plan to shift some of their heavy freight volumes from air to ocean, extending a modal shift analyzed in the JOC's May 12 issue. And perhaps the biggest take- away is this: 71 percent of shippers responding to the Wolfe survey expect shipment volumes to grow over the next year, up from 62 per- cent a quarter ago. All signs point to increasing demand. The big question now is this: Will transportation providers and a constricted infrastructure be able to handle it? JOC MAY 26.2014 What Shippers See

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