NITL Ocean Cargo Chairman Shares Views on Current Supply Chain Issues

Editor’s note: Don Pisano, ocean cargo chairman for the National Industrial Transportation League and vice president in charge of imports for the American Coffee Corporation graciously agreed to respond to questions on ocean carriage for our sister publication, Logistics Management, as part of a “round table” discussion. Below are his observations and insights.

Supply Chain Management Review: While the P3 Network failed to materialize, the G6 Collaboration remains on the table and there’s talk of other carrier alliances being formed this year. What impact will this have on global shippers?

Don Pisano: Increasing efficiency and cost saving measurers is in everyone’s interest. Collaboration – not manipulation – is the key.

SCMR: Collaboration between mega-shippers and carriers is also a constant theme these days. Are beneficial cargo owners (BCOs) really calling the shots?

Pisano: Certainly in shipping, volume matters. I am not sure that translates into the mega-shippers calling the shots as there are always two parties to any negotiation. Not being a mega-shipper myself, I believe I should defer to them to respond more directly to that question.

SCMR: With the Panama Canal is moving toward completion, will carriers be reconfiguring their deployments through 2015? Which ports are likely to profit by this?

Pisano: I expect some reconfiguring will take place, but the Suez Canal will remain a viable option for east coast ports.

SCMR: The Nicaraguan Canal is also being considered as a viable alternative by some shipping executives. Any thought on how this might alter carrier calls?

Pisano: At a projected cost of over 40 billion dollars, at least five years before completion along with mounting internal concerns in Nicaragua about jurisdiction, foreign influence, as well as environmental protection,  it is not quite on our radar screen yet.

SCMR: In the meantime, which trade lanes will capture most of the mega-carrier traffic?

Pisano: Certainly Asia to the US West Coast will continue to be the main trade lane for the megaships but we can expect to see infiltration to the east coast and gulf coasts from Asia and Europe. Do not see any megaships being deployed in the north / south trade.

SCMR: Any thoughts on rates? What challenges will ocean carriers face regarding fuel prices for the remaining months of 2014? Are there other hidden costs shippers should be aware of?

Pisano: We expect ocean rates to be fairly stable through the end of the year with ample capacity to meet current demand. We do not expect fuel to spike unless we have a significant flare up in the Middle East. We are currently more concerned on the domestic front with truck availability and see prices trending higher. As a commodity importer, we are very concerned about mounting costs associated with government directed examinations and the future costs associated with complying with government regulations resulting from the Food Safety Modernization Act.

SCMR: Finally, what strides are ports and carriers making toward fostering more seamless intermodal networks?

Pisano: I believe that Washington has finally woken up to that fact that our infrastructure has been neglected for decades and that our nation demands long term investment in ports, intermodal connectors and projects that support the movement of goods and people.

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