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Mar. 03, 2014

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BENEATH THE SURFACE 114 THE JOURNAL OF COMMERCE www.joc.com MARCH 3.2014 Gary Ferrulli THE GATHERING STORM I'VE BEEN READING various articles on Southern California's operat- ing problems related to chassis, terminal conditions, truckers and an unfortunate internal report of a container sitting at a terminal in Long Beach for 10 days after being discharged from the vessel awaiting a trucker to take it to the railyard for movement by train to Chicago. I'm also keeping track of the "cascading down" process that occurs when new larger vessels enter service, primarily in the Asia- Europe trade, pushing the vessels they replace into markets of shorter distances. I was tempted to include t he term "sma ller t rades" but realized one of the trades where cascading is occurring is the trans- Pacific. I've also read a few articles about the pending negotiations between waterfront employers and the International Longshore and Warehouse Union, and some of the key issues revolving around costs relating to health care taxes and pensions, jurisdiction, job security and automation, and — not written about but always there — productiv- ity. The current contract expires on July 1. Carriers in that May-June time- frame also will transition from their winter schedules to summer sched- ules that typically include a peak season. This year, however, several larger vessels will cascade down to the trans-Pacific in that same relative time frame. This will cause longer stays in terminals to unload and load the vessels, putting addi- tional stress on the already strained infrastructure involving truckers, the rails and, of course, the termi- nals themselves. Getting loaded containers out of the terminals efficiently is a challenge under "normal" circum- stances, but what will happen if there are labor issues? I have a tough time seeing anything other than chaos for several weeks even if a labor issue were dealt with in a cou- ple of days. That's not to say I truly anticipate a labor issue, because my optimistic outlook is that those in charge will realize the importance of a continuation of services without disruption. Simply put, there are enough issues to resolve without any labor disruption. How do stakeholders address those in the next sev- eral months, even in the coming few years, to get the U.S. West Coast terminals somewhere near w orld-class operations? Consid- ering the volumes West Coast ports handle, there must be a way to create an environment where productivit y and efficiency are high priorities to all stakeholders, while always protecting safety stan- dards and addressing the concerns of labor. These three complex sets of issues — and this is by no means a complete description of those com- plexities — all relate to U.S. West Coast terminal operations, and it's obvious that the potential for some- thing to go very badly is more than a slight possibility. After all, each of these issues can be consequential in and of themselves, but they're inter- twined, and if certain conditions unfold, we could be in the prover- bial perfect storm. This is the time and this is the place where the stakeholders must come together and find solutions to complex issues. Without those solutions, those who use the West Coast ports and terminals will suf- fer lengthy, costly delays, and in the end it will impact how business is done in the future. Approximately two-thirds of the people in the United States live east of the Mississippi River and nearly two-thirds of the cargo flow- ing into the United States over the U.S. West Coast goes somewhere else. If it becomes more difficult than it is today to move that cargo, alternatives will be sought, as they were after a series of slowdowns led employers to lock out the ILWU for 10 days in 2002. The bigger ships will make it more difficult. They are here now, and more are coming. Waiting to find solutions and kicking the can down the road isn't the answer. That's easy to write about, I know, but there are too many mod- els in the world — and in the U.S. itself — to think it can't be done except in an article like this. JOC Gary Ferrulli, a 40-year shipping industry veteran, is director ocean product for non-vessel-operating common carrier Ocean World Lines, a subsidiary of Pacer International. Contact him at mrgt4811@mindspring.com. The views expressed here are his own and do not necessarily reflect those of OWL. Getting loaded containers out of the terminals efficiently is a challenge under "normal" circumstances, but what will happen if there are labor issues?

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