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4 THE JOURNAL OF COMMERCE www.joc.com Editor's Letter ©2014 The Journal of Commerce — All Rights Reserved For more information, visit our Web site, www.joc.com. EXECUTIVE EDITOR Chris Brooks 973.776.7818 cbrooks@joc.com MANAGING EDITOR Barbara Wyker 973.776.7817 bwyker@joc.com SENIOR EDITORS Joseph Bonney, Finance and Economics 973.776.7809 jbonney@joc.com Peter T. Leach, Trans-Atlantic 212.755.0940 pleach@joc.com William B. Cassidy, Trucking and Domestic Transportation 202.499.2285 wcassidy@joc.com Bill Mongelluzzo, Trans-Pacific 562.428.5999 bmongelluzzo@joc.com Mark Szakonyi, Rail/Intermodal, Regulation, Policy 202.499.2295 mszakonyi@joc.com SENIOR EDITOR, DIGITAL Harry G. Butler, 609.433.7215, hbutler@joc.com RESEARCH EDITOR Marsha Salisbury 973.776.7828 msalisbury@joc.com ASIA EDITOR Annie Zhu +86 (21) 60396986 azhu@joc.com ECONOMIST Mario O. Moreno 973.776.7850 mmoreno@joc.com SPECIAL PROJECTS EDITOR Alessandra Gregory Barrett 973.776.7808 abarrett@joc.com SENIOR DESIGNER Sue Abt, 973.776.7825, sabt@joc.com DESIGNER Bryan Boyd, 973.776.7827, bboyd@joc.com WEB PRODUCER David Pulis, 973.776.7807, dpulis@joc.com ASSOCIATE WEB EDITOR Grace M. Lavigne, 973.776.8506, glavigne@joc.com 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: JOC@halldata.com 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 Chris Brooks The Journal of Commerce (USPS 279 – 060), March 17, 2014, ISSN 1530-7557, Volume 15, Issue No. 6. 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: $295 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. O N E O F T H E more compel l i ng moment s a mong ma ny at t his month's TPM Conference came not from the stage, but from the audience. "Is there any hope for this indus- try?" That question came during the Q&A session that followed an hour- long fusillade on the dire state of the container shipping industry from Ron Widdows, CEO of shipowner and lessor Rickmers Group and its Rickmers Linie operating unit. "Close your eyes and think of the discussion we've heard for the last 10 years — that the industry is busted," Widdows responded. "Unless the people who are running the compa- nies get to the point where they can price the product at a level where they can make money, then we will stay at the same rate levels for years." Widdows, an outspoken industry critic even in his previous roles as CEO of APL and then president of its par- ent company NOL, clearly is feeling unshackled, relieved to be removed from an industry that has lost control over pricing — and not likely to retain it anytime soon, given the significant capacity that has drenched the market in a lukewarm economic recovery. "You can't see it out there with a Hubble telescope because it's way out there, so for all this jazz about trade growth and demand growth, people are going to build ships because they have to in order to lower their costs," he said. It is, of course, that lack of control over pricing that has carriers focused on the only recourse they have to remain profitable: costs. It's a focus that, like the 8,000- to 10,000-TEU ships shifting to the trans-Pacific and other trades that can't handle the even larger vessels entering the Asia-Europe market, is cascading throughout the supply chain, be it through carriers' exit from the chassis business to their formation of mega-alliances such as the P3 Net- work, G6 and expanding CKYHE. Th e c h a s s i s s i t u a t i o n , a s described by Senior Editor Joseph Bonney on page 46, underscores the severe ramifications filtering down to U.S. terminals at New York-New Jersey, Virginia and Los Angeles- Long Beach, where a shortage of available equipment is contributing to hours-long truck lines at gates. Meanwhile, carriers say the key differentiator in this low-rate envi- ronment — service — is instilling little confidence among their shipper customers. Adam Hall, Dollar Gen- eral's senior director of international logistics, said at TPM that the forma- tion or expansion of alliances doesn't foster improved overall reliability. That's clearly no ringing endorse- ment for an industry whose vessels have struggled to arrive on time in recent months, according to analyses from SeaIntel and Drewry. Indeed, the opportunities for carriers to cancel specific sailings when they perceive load factors to be insuffi - cient will only increase, Hall said. If there is hope for container car- riers, and the shippers they serve, it might be found by looking to the heav- ens, or at least to the skies. It wasn't so long ago, after all, that international airlines — like their container ship- ping brethren — were awash in too much capacity, too many planes fly- ing half-full and billions of dollars in losses. But, as Widdows pointed out, the airlines figured out how to man- age their assets. The result? When, he asked, was the last time you flew on a plane that wasn't full? "I laid up 20 percent of my capac- ity in 2010," he said, referencing the most profitable year for the industry in nearly a decade. "It could be tomor- row that they (carriers) take out excess capacity." Carriers, in other words, have the ability to change the pricing dynamic. Like their airline brethren, they have the way. Problem is, they lack the will. JOC MARCH 17.2014 Hope Against Hope

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