AJOT Insights

Capacity challenges, tariff impacts grappled with at New Orleans event

Apr 12, 2018

While tens of thousands of sports entertainment aficionados were throwing down less than a mile away at WrestleMania 34 events at the Mercedes-Benz Superdome, a couple hundred participants in the 10th anniversary Cargo Connections Conference found themselves grappling with far more serious issues.

The CCC, hosted April 8-10 by the Port of New Orleans at The Chicory event venue, has helped attending industry leaders be better equipped to wrestle with congestion and capacity challenges but left them still worried about uncertain impacts of new U.S. import tariffs while encouraged by projections of a rebound of the breakbulk and multipurpose sector.

Optimism about the noncontainerized ocean shipping segment was expressed by leaders of both Leer, Germany-based BBC Chartering and Amsterdam-headquartered Spliethoff.

“Finally, we’re finding a sector that is starting to rebalance itself,” said Ed Bastian, global sales director for BBC Chartering USA LLC, confident that the segment, which has been plagued by low rates and minimal profit margins, will continue to hold a favored niche in transport of such cargos as forest products and metals, as well as equipment for mining, construction and solar energy industries.

Pieter Flohil, director of Spliethoff, said that, whereas costs related to low-emissions fuel mandates remain troublesome, “We’ve been bullish for quite a while.”

However, such a level of sanguinity was not articulated at the CCC by executives of leading beneficial cargo owners when it comes to moving their goods regardless of modality.

Boise Cascade Co.’sinternational transportation manager for building materials distribution, Lee Goodwin, said his Idaho-based wood products megafirm is encountering virtually unprecedented chokepoints in rail and truck shipping and at many ports.

“It’s been very difficult across the board in all modes,” Goodwin said, citing specific concerns related to the fact that Boise Cascade’s cargos are “bulky, heavy and cheap.”

Lee Goodwin, international transportation manager for building materials distribution at Boise Cascade Co., left, talks about meeting challenges during a session including, from left, Doug Sturgis, North American logistics leader for plastics at The Dow Chemical Co.; and Randy Guillot, president of Triple G Express Inc. (Photo by Paul Scott Abbott, AJOT)
Lee Goodwin, international transportation manager for building materials distribution at Boise Cascade Co., left, talks about meeting challenges during a session including, from left, Doug Sturgis, North American logistics leader for plastics at The Dow Chemical Co.; and Randy Guillot, president of Triple G Express Inc. (Photo by Paul Scott Abbott, AJOT)

The Dow Chemical Co.’s North American logistics leader for plastics, Doug Sturgis, singled out the ports of Los Angeles and Long Beach as “extremely congested,” adding that resin pellets being produced at his company’s new plant in Louisiana’s Plaquemine Parish are being targeted for export exclusively through the Port of New Orleans.

“My main concern, truthfully, is with the container availability and the steamship lines,” Sturgis said.

Sturgis said he nonetheless is not too concerned about drayage, as he reached over and patted the back of Randy Guillot, president of Louisiana-based drayage trucking provider Triple G Express and current second vice president of the American Trucking Associations. Guillot said Dow is his firm’s biggest customer and added that, unlike the case at some ports, the relationship with truckers is relatively friction-free at the Port of New Orleans.

In another CCC session, Eddie Candilora, director of logistics for Covington, Louisiana-based Pool Corp., the world’s largest wholesale distributor of swimming pool and related backyard products, said trucking capacity issues and constant delays are of greater concern to him than higher freight rates.

“It’s going to be a tough year for us on the capacity side and with delays,” Candilora said, adding that his firm may be forced to expand its internal fleet.

Donna Lemm, executive vice president of national sales for drayage trucking provider IMC Companies LLC, noted that her firm gave its drivers a 33 percent pay increase effective April 1, but, she said, the overall driver shortage remains real. She said that, to get drivers home each night, as well as to comply with the new electronic logging mandate, the trucking industry is likely to begin relying more upon a hub-and-spoke concept.

Armelle Honkou, operations and contract manager for PGS (USA) LLC, the Metairie, Louisiana-based warehousing and logistics firm formerly known as Pacorini, which counts Folgers Coffee among key customers, said congestion remains a significant worry while trucking ought to be presented as a more attractive industry.

Armelle Honkou, operations and contract manager for PGS (USA) LLC, discusses the need to treat drivers with due respect as Eddie Candilora, director of logistics for Pool Corp., listens attentively. (Photo by Paul Scott Abbott, AJOT)
Armelle Honkou, operations and contract manager for PGS (USA) LLC, discusses the need to treat drivers with due respect as Eddie Candilora, director of logistics for Pool Corp., listens attentively. (Photo by Paul Scott Abbott, AJOT)

“Drivers need to be treated with a kind of respect that is paid to CEOs,” Honkou implored.

Lonny Kubas, director of international intermodal for the Canadian National Railway Co., said terminals must provide a more efficient link between truck and rail modes, noting that CN is investing in terminal operations – including potentially shifting to more grounded than wheeled operations – and aiming toward greater supply chain integration.

Noting that both Boise Cascade and Dow are among significant CN customers, Kubas said CN is working aggressively with shippers to ensure rail capabilities are in place where and when needed.

“It’s a real balancing act,” Kubas said, observing that flows of export resins in particular are leading to a greater demand for southbound containers. He cited CN’s presence not only in the resin production corridor of Louisiana but also in the Canadian province of Alberta, which is experiencing a petrochemicals boom as well.

Lonny Kubas, director of international intermodal for the Canadian National Railway Co., left, emphasizes the importance of industry collaboration in a panel discussion featuring, from left, Rashard D. Howard, industrial development manager for CSX Transportation; David Edmund Black, manager for ports at Union Pacific Railroad; Trish Haver, senior port development manager for Norfolk Southern Railway; and Jay Johnson, senior sales account executive for the Kansas City Southern Railway Co. (Photo by Paul Scott Abbott, AJOT)
Lonny Kubas, director of international intermodal for the Canadian National Railway Co., left, emphasizes the importance of industry collaboration in a panel discussion featuring, from left, Rashard D. Howard, industrial development manager for CSX Transportation; David Edmund Black, manager for ports at Union Pacific Railroad; Trish Haver, senior port development manager for Norfolk Southern Railway; and Jay Johnson, senior sales account executive for the Kansas City Southern Railway Co. (Photo by Paul Scott Abbott, AJOT)

Union Pacific Railroad’s manager for ports, David Edmund Black,said the UP also is being assertive in keeping pace with accelerating resin activity, commenting, “It’s exciting and a little bit nerve-racking at the same time.”

Meanwhile, another rail panelist, Jay Johnson, senior sales account executive for the Kansas City Southern Railway Co., said a key focus for his company and its sister Monterrey-based railroad continues to be cross-border trade, interjecting, “We’re still very, very bullish on Mexico.”

Norfolk Southern Railway’s senior port development manager, Trish Haver, said the NS is concentrating on enhancing velocity and reducing dwell times and, like all Class Is, is actively hiring.

CSX Transportation’s industrial development manager, Rashard D. Howard, when asked about the just-announced sale of trackage in Alabama and Georgia, said more such divestitures may be expected, saying, “We want to make sure we’re railroading smartly.”

Many of the CCC speakers voiced woes related to the steel and aluminum import tariffs imposed for alleged national security reasons by the Trump administration in March – and a concomitant trade war.

The American Institute for International Steel’s chairman, John D. Foster, president of steel trading company Kurt Orban Partners LLC, blasted the tariffs as “dangerous and unnecessary,” warning of “sinister unintended consequences,” with foreign nations retaliating, including with levies on U.S. agricultural exports, thus spurring higher transportation costs.

John D. Foster, president of Kurt Orban Partners LLC and chairman of the American Institute for International Steel, expresses concerns about tariffs on steel imports. (Photo by Paul Scott Abbott, AJOT)
John D. Foster, president of Kurt Orban Partners LLC and chairman of the American Institute for International Steel, expresses concerns about tariffs on steel imports. (Photo by Paul Scott Abbott, AJOT)

Maritime economic Bill Ralph, president of the R.K. Johns & Associates consulting firm, said that, while the effects of the tariffs remain unpredictable, he is still embracing confidence, commenting, “Hopefully, the trade war will just be a cloud in the sky and not a real thunderstorm.”

For complete CCC coverage, please see the April 23 print edition of AJOT

Author Photo

For more than a quarter of a century, Paul Scott Abbott has been writing and shooting images for the American Journal of Transportation, applying four decades of experience as an award-winning journalist.
A graduate of Northwestern University’s Medill School of Journalism, with a master’s magna cum laude from Trinity Evangelical Divinity School, Abbott has served as president of chapters of the Propeller Club of the United States, Florida Public Relations Association and Society of Professional Journalists.
Abbott honed his skills on several daily newspapers, including The Cincinnati Enquirer, The Richmond (Va.) News Leader, Albuquerque Journal and (South Florida) Sun-Sentinel, and was editor and publisher of The County Line, a weekly newspaper he founded in suburban Richmond, Va.
A native Chicagoan, he is a member of American Mensa and an ever-optimistic fan of the Chicago Cubs.

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