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Jan.12, 2015

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EDITOR'S NOTE 2015 ANNUAL REVIEW & OUTLOOK 2 014 was far from the first year to see waterfront labor issues disrupt cargo flows at U.S. ports. Nor was it the first year to see the formation of large vessel-sharing alliances, big ships, equipment dislocations, truck driver shortages, suspect rail service or unexpectedly strong growth in cargo volumes. Each has been prevalent through- out North American supply chains in given years going back a decade or, in some cases, more. But what made 2014 unique is that they converged simultaneously to form a potent mix that sets the stage for one of the more challenging years in memory for sup- ply chains. The extent of those challenges shines through in the executive com- mentaries in this Annual Review and Outlook issue, and through the views in the showcase Shipper Roundtable. It is beneficial cargo owners, of course, who have felt the greatest pain from the congestion that inun - dated sea and landside transportation networks throughout 2014. It is also BCOs who will continue to make the adjustments they deem necessary to ensure they have their goods in place to meet customer demand, whether those adjustments be rerouting their product through ports of least resistance, acceler- ating shipment schedules or increas- ing inventory as a buffer against disruption. The problem with that last option, as Springs Window Fashions' Mike Modica says in the Shipper Round- table, is that "inventory is cash," an investment that Springs Window Fashions and other cargo owners would rather have go toward things that, well, actually would increase capacity to feed their bottom lines. That customers have borne the brunt of the congestion pain isn't lost on service providers. "On Feb. 19, Asia begins its celebration of Lunar New Year — the Year of the Sheep. Per- haps our industry should consider a variation on a theme: the Year of the Customer," Chris Lytle, execu - tive director at the Port of Oakland, writes in one of more than 170 execu- tive commentaries. "Goodness knows we made them suffer enough in 2014. We've got to do better for them this time around." The good news is that providers up and down the supply chain recog- nize their customers' needs, as well as the stakes if they don't act quickly. The largest U.S. gateways — Los Angeles- Long Beach and New York-New Jersey — have formed stakeholder task forces to forge solutions. Gray chassis pools will start early this year, the next big step to resolving equipment short- ages. After crippling strikes by harbor truckers last spring, Port Metro Van- couver resolved its congestion issues through far-reaching reforms that included government-imposed pric- ing for drayage moves and a portwide appointment system. Railroads are investing billions of dollars in upgrades and staffing to avoid a repeat of the crippling 2013-14 winter that led to a yearlong degradation of service. Motor carriers are raising wages for historically underpaid and over- worked drivers in a bid to slash a near-100 percent annual turnover rate; fill a driver shortage that, according to the American Trucking Associations, will require nearly 100,000 new opera- tors a year over the next decade; and stave off a potential capacity crisis. There is no debate, 2015 will be a turnkey year for supply chains. The question is this: When we look back a year from now, will the discussion be about the cross-functional solutions that resolved the worst congestion in more than a decade or the shortsight- edness that left shippers in the lurch, again. JOC YEAR OF THE CUSTOMER? B Y C H R I S B RO O K S The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, January 12, 2015, Volume 16, Issue No. 1. 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, 2 Penn Plaza East, Floor 12, Newark, N.J. 07105-2257. 4 THE JOURNAL OF COMMERCE JANUARY 12.2015 EXECUTIVE EDITOR, THE JOURNAL OF COMMERCE AND JOC EVENTS Chris Brooks 973.776.7818 MANAGING EDITOR Barbara Wyker 973.776.7817 ASSOCIATE MANAGING EDITOR, JOC.COM Mark Szakonyi, 202.499.2295 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 Greg Knowler, Asia +852 3975 2647 EDITOR-AT-LARGE Peter T. Leach, Trans-Atlantic 212.755.0940 RESEARCH EDITOR Marsha Salisbury 973.776.7828 ECONOMIST Mario O. 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