CONECT (Coalition of New England Companies for Trade) held its annual spring Trade & Transportation Conference at the Verve Hotel in Natick, MA on June 22, 2022. This year’s conference given the challenges the industry faces was aptly titled “The Way Forward” and a solid lineup of speakers were put in place to help show a full-house of 150 plus attendees the path ahead.
Among the speakers in the morning session was Laura Baughman, President of the Trade Partnership Worldwide. Baughman directs the research activities of the firm and frequently testifies before various US government agencies on the likely impacts on competitiveness of prospective or actual trade policies. The presentation, “Global Economic Outlook for the Trade Community” was a table setter for the conference. Although the presentation had a wide focus covering so many aspects of the global economy, the topic that stood out was whether a recession was at hand. When asked via a follow up email, what was the big takeaway from the presentation, Baughman wrote: “I guess the main message is that a large number of actors are combining to present a slow-down in growth over the next year, even two. Higher inflation should be expected. While the Fed will do what it can to reduce inflation, its influence is limited to the demand factors that are pushing prices higher.”
Baughman added that there were other influences that could play a role, like “semiconductor shortages and other supply chain problems, port issues, the war in Ukraine – those factors/events also contribute importantly to inflation, are not within the Fed’s ability to influence, and likely will remain with us for at least another year.”
The Shipping Economy
Baughman wasn’t the only speaker concentrating on the economy. David McLaughlin, chief operating and financial officer of RoadOne IntermodaLogistics, presented in rapid fire fashion his views on the economic landscape from the vantage point of a trucking company engaged in nearly every aspect of the business with a customer base that includes everything from shipper to ocean carrier, terminal, port operators, NVOs and freight forwarders. McLaughlin’s report, “Shipping Outlook – From Labor to Inflation” is a detailed look at the “shipping” economy of the U.S.
When asked by AJOT, what are the main operational challenges facing trucking companies? McLaughlin responded: “Given all of the supply chain issues we are currently dealing with, the primary obstacle that we [trucking companies] cannot overcome is chassis availability. Granted this varies by location, but in some port and rail locations pool chassis have been at or near zero for over a year.”
But there are other issues involved. “There are numerous reasons for the chassis shortages:
- Overall volumes are up YOY [year-on-year] but increased out-gate dwell time;
- Empty termination shut outs due to port & rail congestion;
- Off dock empty termination locations full;
- Pool chassis out gate for so long annual FHWA [Federal Highway Authority] inspection have expired;
- And new build chassis not available until late in the year or early next year have contributed to the shortages.”
Of course, it is more than equipment shortages as trucker shortages are a major challenge facing the industry. McLaughlin noted in his presentation: “According to the U.S. Bureau of Transportation Statistics and the American Trucking Association (ATA) there were 3.6 million professional truck drivers in the US in 2021 of which only 1.8 million were Class A (tractor trailer). The ATA estimated that the 2021 driver shortage was almost 80,000 drivers. According to their experts, if this current trend continues, the trucking industry could need more than 160,000 drivers by 2030.”
And addressing the driver shortfall may be difficult: “Securing a CDL driver continues to be challenging, according to the ATA the average age of a driver is 55 years old and 60% are over 45 with 20% over 55. Then when we add in the complexity of dealing with international cargo where a driver needs a TWIC (Transportation Workers Identification Card) to be allowed access onto a port facility, the driver on-boarding process becomes a daunting task for many drayage recruiters across the country.” As McLaughlin says of the problem: “In order to maintain and attract new drivers, we have increased compensation and benefits along with providing new equipment to our drivers to try to make driving here at RoadOne a more attractive job. Of course, having good two-way communications is paramount for our drivers are our best asset.”
Luncheon Keynote
The keynote luncheon speaker for the conference, was George Goldman, president of Zim USA, Zim Integrated Shipping Co. LLC. The keynote introduction was given by Lauren Gleason, deputy port director, Business Development for Massport, Port of Boston.
Massport’s terminals and supporting infrastructure have been undergoing major upgrades and a recent announcement of a new Zim service from Boston to Southeast Asia represents a significant new service for the port. “It has been an exciting time at the Port of Boston as we are nearly completed with modernization upgrades, including dredging Boston Harbor, constructing a new berth, and commissioning three new ship-to-shore cranes,” said Massport Deputy Port Director of Business Development Lauren Gleason. Adding, “These investments are paying off. Ocean carriers are realizing the potential of providing solutions to importers and exporters alike through congestion-free terminals like the Port of Boston. One of these visionary carriers is ZIM shipping lines, who recently started serving Boston. The Port of Boston is proud to partner with ZIM on direct connectivity from South China and Vietnam.”
George Goldman’s speech came under the title “The State of the Transportation Industry: Future Challenges and Opportunities for the Trade”. He was remarkably candid.
Goldman is a 38 year veteran on the ocean carriage side of the shipping equation having spent near 25 years with APL, including a decade in Hong Kong and Shanghai as Managing Director China, besides the seven with Zim. Among the topics Goldman delved into were the current labor negotiations between waterfront management (PMA – Pacific Maritime Association) and the ILWU (International Longshore Warehouse Union). Goldman’s contention was that the lack of terminal productivity (on all coasts) has to change relative to what we see in some parts of the world – an improvement addressed through greater focus on infrastructure development and conveyance through the terminals. He argued that the low ‘landside’ productivity when compared with China’s ports like Shanghai or Ningbo-Zhoushan, is one of many contributors to problems with the supply chain, particularly to the pile up of ships awaiting berths. While Goldman said the ILWU’s labor itself is good, the need for more transparency in cargo flows, availability and automation is a must. He also suggested that there might not be any loss of workers but rather a shift in the types of jobs – less physical and more technical. (see Stas Margaronis, July 5th article, “Do automated LA and Long Beach container terminals generate more work and higher pay for ILWU” at www.ajot.com). Goldman tackled shippers’ ire over demurrage and detention and other issues by saying that ocean carriers “do have to do better generally speaking but specifically in some of the facets around communication and customer service”. But being a veteran of the industry, he reminded the audience that just a short time ago freight rates were low and ocean carriers weren’t making money. And Goldman believes real danger is that with falling demand many of the issues with the supply chain will diminish and will not be addressed to the detriment of all; there are fundamental issues around fixing the supply chain infrastructure that will require all of us to participate from the local level to the international level.
