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Mar.7, 2016

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2 THE JOURNAL OF COMMERCE Editor's Letter Chris Brooks A S WE D E SCE N D on Long Beach, California, for the 16th Annual TPM Conference, it's worth looking back to a year ago to evaluate how far we've come on supply chain effi ciency and how far we have to go. Memories are raw enough that we don't need to dwell on the months of port disruption that led to millions of dollars in lost sales opportunities for retailers and economic damage resulting from brutal negotiations between the International Long- shore and Warehouse Union and waterfront employers. A year ago, that disruption was just beginning to abate following the tentative contract agreement the two sides reached in mid-February. So are supply chains any more effi cient since cargo fl ows through the West Coast normalized last spring? Well, it's a mixed bag. Certainly, West and East Coast ports aren't dealing with the level of congestion they experienced in late 2014 and early 2015. But even with the security blanket that comes with multiyear longshore contracts now in place throughout the U.S., labor remains a critical concern for shippers. "I certainly wouldn't have said a year ago that we would be struggling so much with the West Coast and that the problem would last as long as it did. I certainly hope we're not looking at those types of struggles" in 2016, Alison Leavitt, managing director of the Wine and Spirits Ship- pers Association, told The Journal of Commerce in December. 2016 was barely under way when the Interna- tional Longshoremen's Association launched a one-day wildcat strike at the Port of New York and New Jersey. Beyond labor, a slew of other issues now threatens to disrupt shipper supply chains. Long-awaited consolidation among container car- riers is under way, with Cosco and China Shipping Container Lines merging and CMA CGM's acquisi- tion of APL likely to be completed in the second half of the year. Interestingly, shipper concerns about consolidation don't — or shouldn't — center around what a smaller pool of carriers means for competition or rates, because the huge amount of capacity carriers have built up over the past fi ve years won't disappear. It's here to stay, and more is on the way, so only a rally in cargo volumes — good news for shippers and carriers — would increase freight pricing in a signifi cant way. That's not likely to happen until 2017, at least. No, the real concern around consolidation is its impact on the already-spotty service and lack of visibility that comes with the global vessel-sharing alliances carriers have established to keep their mega- ships at least close to fi lled. Those alliances will undergo dramatic change at some point, raising more concerns for shippers. "When we do our allocations, it's based on carrier first, but then alliance second. So we have to make sure that we have alliance coverage," Greg Boyle, director of forward- ing and distribution at diversified products manufacturer Philips, told Editor-at-Large Peter Leach in Feb- ruary. "And now you're talking about redoing almost every major alliance in the industry. That's very concerning." Of course, shippers' biggest concern is the looming container weights policy mandated by the International Maritime Organiza- tion, the subject of this week's Cover Story, and an issue that will resonate through TPM and beyond. As Perry Bourne, director of international transportation and rail operations at Tyson Fresh Meats (and who will present at TPM), sees it, the regulation could add $250 per container in non-value-added services that Tyson won't be able to recover from its customers — not to mention the pressure the rule could put on already congested ports. New costs plus the potential for disruption simply isn't a recipe for supply chain effi ciency. Progress, it seems, will be no less painful this year than it was in 2015. JOC So This Is Progress? The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, March 7, 2016, Volume 17, Issue No. 5. 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 offi ces. © 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. MARCH 7.2016 EXECUTIVE EDITOR, THE JOURNAL OF COMMERCE AND JOC EVENTS Chris Brooks 973.776.7818 MANAGING EDITOR Barbara Wyker 973.776.7817 EXECUTIVE EDITOR, JOC.COM Mark Szakonyi 202.872.1234 SENIOR EDITORS Joseph Bonney, Trans-Atlantic, East and Gulf Coast, Latin America 973.776.7809 William B. Cassidy, Trucking and Domestic Transportation 202.872.1228 Bill Mongelluzzo, Trans-Pacifi c 562.428.5999 Greg Knowler, Asia Editor, IHS Maritime & Trade +852 3975 2647 Turloch Mooney, Ports, IHS Maritime & Trade +852 9011 9109 ASSOCIATE EDITOR Reynolds Hutchins, Intermodal Rail and Government/Regulation 202.572.1487 EDITOR-AT-LARGE Peter T. Leach 212.755.0940 RESEARCH EDITOR Marsha Salisbury 973.776.7828 ASSISTANT WEB EDITOR Dustin Braden 973.776.8652 ECONOMIST Mario O. Moreno 973.776.7850 SENIOR CONTENT EDITOR Alessandra Gregory Barrett 860.248.5238 SENIOR DESIGNER Sue Abt, 973.776.7825 DESIGNER Bryan Boyd, 973.776.7827 PUBLISHER Tony Stein 770.295.8809, SALES Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954.551.8305 Zachary Gorman, Account Executive Northeast sales, Classifi eds/Reprints/Copyrights 973.776.7820 Ria Van den Bogaert, Sales Representative Europe, Middle East sales, +32 2 569 8905 Bon Kwok, Sales Representative Asia sales, +852 31707373 Michihiro Kawahara, Sales Representative Japan sales, +81 3 3212 3671 For Magazine Subscription Customer Service: 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105 973.776.8660 • 800.952.3839 MANAGING DIRECTOR, MEDIA AND EVENTS, IHS MARITIME & TRADE, Rhiannon James SENIOR DIRECTOR, CONTENT, IHS MARITIME & TRADE, Peter Tirschwell DIRECTOR, JOC AND RAILRESOURCE, IHS MARITIME & TRADE, Amy Middlebrook DIRECTOR, IHS MARITIME & TRADE, Julia Murphy MANAGER, PRODUCTION, Carmen Verenna MARKETING PROGRAMS MANAGER, PIERS AND JOC, Jesse Case ©2016 The Journal of Commerce — All Rights Reserved For more information, visit our website,

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