In last year’s final West Coast Trade Report, Pacific Merchant Shipping Association President John McLaurin reflected on issues having the greatest impact on shippers in 2019, while speculating on what we may expect in the coming months.
On the West Coast trade community, he noted that 2019 had been “a difficult year,” with market share continuing to decline and reversal not likely to come any time soon. “The Trump tariffs are definitely having an impact on cargo volumes, but those impacts deal primarily with the suppression of cargo volumes,” he said. “The shifting of cargo away from West Coast ports has been well documented.”
According to McLaurin, the challenge for 2020 is whether, collectively, West Coast supply chain stakeholders and public officials have the capacity to engage in an honest discussion and come together to redirect their focus about how to compete with other North American gateways.
“This is a discussion that should be done openly, publicly and be guided by hard facts and analysis. It will not be an easy discussion,” he added.
McLaurin further said that to regain lost volumes of cargo in 2020 and beyond requires innovation, not the maintenance of outdated legacy operating systems. “It requires recognition of the importance of trade on our local economy—and the realization and acknowledgment that it cannot be taken for granted. And it requires us to avoid self-inflicted wounds,” he said.
In this interview, McLaurin expanded upon these observations:
Bay Crossings: Last December you stated that while our world is changing—irrespective of our national trade policies—stakeholders have to fight to regain what we have lost, adding that “silence and inaction are not viable options.” Can you elaborate on this observation?
John McLaurin: Complacency will result in continuing loss of market share. Competitive gateways value the jobs that cargo brings to a region and, as a result, they continue to build infrastructure and engage in effective marketing while offering competitively priced alternatives. Loss of West Coast market share will continue unless the collective industry recognizes what is happening and is willing to engage to prevent further erosion and to compete for what has been lost.
BC: What major innovations are likely to get underway in the ports and terminal sectors?
McLaurin: Greater sharing of information with all parties in the supply chain will continue to grow and evolve. The hope is this should provide greater visibility, predictability and productivity for all.
BC: What about regional cooperation similar to what is happening in the Pacific Northwest?
McLaurin: Regional cooperation should provide benefits, but it should not be viewed as the only answer to competition. The Northwest Seaport Alliance has been a success. But the NWSA faces the same competitive pressures and loss of market share as other West Coast ports.
BC: How is carrier consolidation making life complicated for shippers on the Pacific Rim?
McLaurin: I would defer to those in the BCO community as to how consolidation has impacted their lives. Consolidation, however, is a function of the marketplace and has been influenced by shipper desires and practices.
BC: Do you see more or less regulatory compliance burdens having an impact on West Coast shipping?
McLaurin: Regulatory burdens will continue for all parties in the supply chain that do business on the West Coast. Proposals range from “indirect source rules” on warehouse and logistics centers to expansion of cold ironing of vessels, stormwater runoff measures for marine terminals, zero emission requirements for truckers and the like. The list goes on. We refer to these as “command and control” requirements—they typically raise costs and may limit operations, but do not come with any corresponding mitigation program to offset the burdens that are created. The supply chain has been innovative in reducing environmental impacts. Unfortunately, policy makers have not been equally innovative, nor have some recognized the cumulative impacts these regulations have on competitiveness and jobs.
BC: What leverage can shipping associations and industry influencers have on reversing this trend?
McLaurin: The industry has to engage in regulatory and legislative development. Cargo will take the path of least resistance. Public policy goals, no matter how well intended and thought out, frequently have unintended consequences. Silence can only be harmful to the industry.
BC: Can emerging technologies like drones, AI and robotization drive the change you view as crucial?
McLaurin: Technology will play an important role in meeting environmental goals and will also have a positive impact on cargo fluidity.
Bay Crossings
By Patrick Burnson