An upturn appears in the cards for carriers of outside-the-box cargo, while exports of petrochemical resins are booming to the extent that they are straining container availability in the U.S. Gulf. Those are among takeaways from the Cargo Connections Conference, which also featured rail executives pushing for better customer service and a cry for favorable U.S. trade policies. Things may be looking up for ocean carriers in noncontainerized business, according to leaders of a trio of such companies speaking at the conference, hosted April 4-6 by the Port of New Orleans. “We’re getting much closer to a recovery in our sector than we have been in a long time,” said Edwin Bastian, global sales director for BBC Chartering USA LLC, the U.S.-based unit of the Germany-based global operator of 170 multipurpose and heavylift vessels. The “many hurdles” the sector must yet overcome include “noncompensatory rate levels,” Bastian said, citing a 50 percent decline in freight rates over the past seven to eight years. “It’s going to take probably twice that long to recover that,” Bastian said, calling it “a tough cycle to break when we were all picking each others’ pockets.” Bastian also noted fleet overcapacity, low commodity prices, limited capital investment and impacts of health, safety and environmental quality regulations. Pieter Flohil, director of Dutch-flagged multipurpose vessel operator Spliethoff, said substantial capital is still invested in “substandard ships,” which, he said, are likely to be very difficult to sell. Flohil said huge overcapacity will “take time to get rid of” but added, “We seriously believe we are at the bottom of what could be a very interesting new cycle. “From here on, we believe we’re in for very nice and interesting tonnage,” Flohil said. “We strongly believe the market is really bottoming out.” David Groves, director of Houston-based multipurpose fleet operator MACS Maritime Carrier Shipping LLC, formerly Galborg USA LLC, said “some challenging times” remain ahead, but rays of hope are provided by such opportunities as South African steel, a changing bulk market led by wood pellets and strong U.S. Gulf resin production and exports.
David Groves, director of MACS Maritime Carrier Shipping LLC, left, takes note of a point made by Pieter Flohil, director of Spliethoff. (Photo by Paul Scott Abbott, AJOT)
David Groves, director of MACS Maritime Carrier Shipping LLC, left, takes note of a point made by Pieter Flohil, director of Spliethoff. (Photo by Paul Scott Abbott, AJOT)
The Gulf petrochemical resins boom will be sustained as long as the United States continues to be the world’s largest producer of fracked oil and gas, according to Dr. Walter Kemmsies, managing director, economist and chief strategist for the ports, airports and global infrastructure practice of the Jones Lang LaSalle commercial real estate firm. “It is really a good time to be a Gulf Coast port,” said Kemmsies, who pointed to recently expanded direct weekly services from the Port of New Orleans by France-based container line CMA CGM, including to Latin America, Asia and Northern Europe. Nick Fafoutis, senior vice president of sales and chief operating officer of CMA CGM (America) LLC, said the new services from New Orleans are part of a concerted strategy to differentiate his ocean carrier firm from others and capitalize upon what he sees as a very bright future for the Gulf market, adding that he does not believe going into West and East coast ports is sufficient for container lines.
Nick Fafoutis, senior vice president of sales and COO of CMA CGM (America) LLC, right, draws smiles from, from left, Robert Landry, vice president for commercial at the Port of New Orleans; Keith Reardon, vice president of intermodal services at Canadian National Railway; Jack Oney, CEO of Oney Consulting (Photo by Paul Scott Abbott, AJOT)
Nick Fafoutis, senior vice president of sales and COO of CMA CGM (America) LLC, right, draws smiles from, from left, Robert Landry, vice president for commercial at the Port of New Orleans; Keith Reardon, vice president of intermodal services at Canadian National Railway; Jack Oney, CEO of Oney Consulting (Photo by Paul Scott Abbott, AJOT)
Fafoutis nonetheless said he anticipates equipment issues to continue in the Gulf at least through next year, with an insufficient supply of containers for exports. “We want to grow,” Fafoutis said, “but we can’t do that if the boxes aren’t here to do that.” Fafoutis said proactive efforts to improve that situation include partnerships with railroads and SEACOR AMH LLC, which last year began container-on-barge service along the Mississippi River from Baton Rouge to New Orleans using boxes floated down the river from Memphis. Jack Oney, chief executive officer of Oney Consulting, who spent 25 years with Procter & Gamble Co., said he believes street turns of containers and other cooperative actions can help drive waste from the supply chain and assist in alleviating container shortages. Robert Landry, vice president for commercial at the Port of New Orleans, said he sees progress with the opening last year of an on-dock rail facility linking Port NOLA’s Napoleon Avenue Container Terminal to services of six Class I railroads. Speaking on the same panel, Keith Reardon, vice president of intermodal services at Canadian National Railway, said the CN strives to do street turns with almost every container it can and emphasized the importance of reducing the cost of inland moves. CMA CGM’s Fafoutis said he believes Class I railways have made significant customer service strides of late, commenting, “I think railroads have become very customer-friendly over the past year.” But, in separate remarks, intermodal executives of a pair of Class Is said the rail industry still has a ways to go in that regard.
Michael McClellan, VP of industrial products at Norfolk Southern Corp., says Class I railroads must improve customer service. (Photo by Paul Scott Abbott, AJOT)
Michael McClellan, VP of industrial products at Norfolk Southern Corp., says Class I railroads must improve customer service. (Photo by Paul Scott Abbott, AJOT)
“We’ve got a lot of work to do to improve the customer experience,” said Michael McClellan, vice president of industrial products at Norfolk Southern Corp., noting that the NS is focused on enhancing responsiveness in terms of pricing and providing “digitally driven, exception-based customer service” while re-engineering its fleet, going from 71 car types to 14, and investing in infrastructure. “If you provide a crappy underlying service,” McClellan said, “it doesn’t matter what you do to your website or anything else – people aren’t going to use you.”
Eric Hansen, vice president of intermodal sales and marketing at the Kansas City Southern Railway Co., sees the KCS as “the north-south railroad in an east-west world.” (Photo by Paul Scott Abbott, AJOT)
Eric Hansen, vice president of intermodal sales and marketing at the Kansas City Southern Railway Co., sees the KCS as “the north-south railroad in an east-west world.” (Photo by Paul Scott Abbott, AJOT)
Speaking in yet another session, Eric Hansen, vice president of intermodal sales and marketing at the Kansas City Southern Railway Co., said the KCS, which he described as “the north-south railroad in an east-west world,” is concentrating on “how can we better serve customers in terms of being easier to deal with.” Shippers must work with all modes to ensure a sufficiency of containers to meet demand, according to Brent Bordelon, commercial manager at Sasol North America, a leading – and growing – producer and exporter of resins and related petrochemical products. Calling container availability “a huge concern,” Bordelon referenced the multibillion-dollar petrochemical complex Sasol is building in Lake Charles, Louisiana, and said, “Sasol’s worst nightmare is we’ve spent $11 billion and we can’t get our product to our customers.” Louis Rodriguez, president of TCI Packaging, a New Orleans-based firm providing packaging solutions to the resin industry, also cited lack of empty containers as a concern, saying, “High volumes create inevitable constraints.” TCI is among the partners with SEACOR AMH, the ports of Baton Rouge and New Orleans, CMA CGM and Ports America in the container-on-barge operation, which SEACOR Vice President Richard Teubner said is “set up for a good summer.”
Nick Iacopella, director of logistics for Grove Services, right, offers thoughts on poultry exports as Brent Bordelon, commercial manager at Sasol North America, listens. (Photo by Paul Scott Abbott, AJOT)
Nick Iacopella, director of logistics for Grove Services, right, offers thoughts on poultry exports as Brent Bordelon, commercial manager at Sasol North America, listens. (Photo by Paul Scott Abbott, AJOT)
Meanwhile, Nick Iacopella, director of logistics for frozen poultry exporter Grove Services Inc., is increasingly counting on supply of refrigerated containers in reliably getting product to global markets, including meeting burgeoning demand in Southeast Asia and West Africa. Now, 80 percent of Grove Services’ export volume moves in refrigerated containers, with the remaining 20 percent shipped via bulk and breakbulk means, numbers he said are reversed from just five years ago.
Former US Rep. Charles W. Boustany Jr., R-La., calls for a multilateral approach to trade policy. (Photo by Paul Scott Abbott, AJOT)
Former US Rep. Charles W. Boustany Jr., R-La., calls for a multilateral approach to trade policy. (Photo by Paul Scott Abbott, AJOT)
In his closing address, former U.S. Rep. Dr. Charles W. Boustany Jr., R-La., urged a multilateral approach to U.S. trade policy. Boustany, a retired physician who served in Congress from 2005 through January of this year, said he believes it was a mistake for Trump to summarily remove the United States from the Trans-Pacific Partnership agreement. “A winning trade policy cannot be defensive only,” Boustany said, adding that a U.S. tax on imports, while likely to be challenged by the World Trade Organization, would “clearly be disruptive to supply chains.” Earlier in the conference, in a spirited discussion of U.S. trade policies, Steve Lamar, executive vice president of the American Apparel and Footwear Association, called such a border adjustment tax an “extinction-level event,” with member companies of his industry group saying the import taxes they would pay would be three to four times their profits and thus they would be unable to stay in business. (For reception photos see page 22.)