specialty conveyors
SpiralVeyor® SV
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transportationreport PORTS
contract cycles later this decade, is what can be proactively
done to minimize future damage, especially after memories
of 2012 have faded.
Bruno said companies should take stock of their third-party relationships. “Did they take steps to mitigate your
risk?” she said. “Did they make an effort to schedule calls at
non-ILA ports? Did they do a good job of negotiating ‘
bullet mini-landbridge’ rates?” (a reference to arrangements
with ship lines allowing companies that normally use the
Panama Canal to shift their containers to intermodal service at West Coast ports).
Another approach would be for companies to conduct an
extensive modeling exercise covering their global supply
chains and to view a port as just another node in the network, similar to, say, a distribution center. Jeffrey J.
Karrenbauer, president of Insight Inc., a Manassas, Va.-based firm that performs these types of simulations, said
companies could simulate a preferred port’s being knocked
out of commission, and then use the model to gauge if they
are overcommitted to any one port, and to estimate the full
range of costs incurred to shift to other ports.
A fringe benefit of the exercise, Karrenbauer added, is
that “you’ll probably discover things about your operations
you didn’t know before.”
The problem, he said, is that while the transportation
folks live and breathe the day-to-day action, the upper ech-
elon decision-makers are more focused on broader issues,
notably their company’s stock price if it is publicly traded.
As many at the C-level view it, investing millions of dollars
to reconfigure a supply chain as protection against an event
that may not happen is less desirable than sweating out a
work stoppage and then resuming normal operations,
according to Karrenbauer.
“Wall Street doesn’t reward risk mitigation,” he said.
There may be logic behind the passive attitude, however. Because containerization remains a cost-effective
means of transporting goods internationally, many executives in and out of supply chain management don’t want
to rock the proverbial boat. As they see it, the periodic
turmoil is a small price to pay for the benefits of the service, as long as the work stoppage doesn’t occur at or
around peak season.
Another factor that may favor inaction is the power of
the bicoastal labor axis. A steamship line, cargo owner, or
intermediary with significant tonnage could seek out a port
with nonunion labor but may not find one with the size or
resources to meet its needs. In addition, maritime labor
may decide to punish a steamship line for seeking a
nonunion port by “working to the rule,” an action that has
the effect of dramatically slowing the cargo loading and
unloading process.
“The message that goes out is ‘If you call a nonunion
port, just try to get your freight moved the same way
again,’” said a high-level industry executive who asked not
to be named. ;
