SCB: In your view, Adrienne, have the alliances formed by the steamship lines been helpful to supply chains or is it possible that they have been just the opposite — that they’ve hurt supply chains?
Bailey: Anything that the steamship lines have been able to do to assist themselves in continuing to be productive with high utilization is helpful to the United States supply chain. So by forming the alliances, the steamship lines have really responded to the very difficult situation that their industry has found itself in.
SCB: How so?
Bailey: They have been able to preserve the number of lanes that they are able to service and the number of departures per week that they are able to provide to shippers who need to get goods from a variety of places around the globe. So, at the end of the day, from that perspective, the alliances have really served the supply chain and created some benefits.
SCB: Let’s talk about what strategies you feel might be employed by shippers if they are looking to offset the complexity and the disruption in international freight movement that quite frankly seems to be the new normal?
Bailey: These disruptions that we see are in some ways being created, again, by the situation that the steamship lines find themselves in within their industry.
SCB: Walk us through that situation, please.
Bailey: So, here are a couple of things that have happened that are quite significant: First, there is the movement of the chassis away from the steamship lines and into the market itself.
SCB: Surely, not unique to the United States.
Bailey: Everywhere else in the world this is the normal way that business is done, but because the United States market is so different from the rest of the world in terms of our reliance on inland rail transportation, the geography that we’re serving, in terms of its expanse and the population size and density, and the fact that this industry has never operated that way in the past, this has become a very difficult and complex thing for our industry to manage.
SCB: And the other occurrence?
Bailey: The other thing that’s happened over the years is that operational management centers for a lot of steamship lines had very strong headquarters in the Unites States, and as a result, those senior executives really understood the complexity and the nuances of the rail-intermodal transportation.
SCB: What role did steamship management play in those days?
Bailey: In fact, the steamship lines were part of the piloting of the whole double-stack concept in the United States, which has been so valuable. So when management moved offshore, as another strategy to consolidate and save costs and really try to manage these steamship lines through these difficult times, we lost the connection to how to optimize for that rail network.
SCB: With what result?
Bailey: It’s introduced another whole layer of complexity and, frankly, a diminished utilization and efficiency, especially in the Port of Los Angeles area, because we’re no longer trying to optimize the way APL used to do.
So the question is, what can shippers do with this? If you are a small shipper, using an NVOCC to help you manage through these kinds of complexities around the chassis and optimal use of on-dock rail, that is a way to take advantage of those kinds of companies’ knowledge base and ability to lever some of these operational issues.
SCB: And if yours is a large company?
Bailey: If you’re a very large shipper, getting very close to your carriers and understanding the operational realities of the different strings, where they’re calling and trying to create some kind of consistency in the way your freight is handled, through the port to final destination, which can really help you manage down the complexity in those situations.
SCB: Are these then the top challenges you see the industry facing in the next several years, maybe as much as 10 years out?
Bailey: One of the most difficult things our industry will face is talent, and it’s going to be talent at a variety of levels. The driver base in this country needs to be bolstered, and we need to create an environment that attracts people into that driver community, and create a lifestyle that is deserving of the kind of talent that we want to attract. That’s an industry problem and we have got to address it.
SCB: You mentioned “levels.” What other talent level is of concern to you?
Bailey: The next layer of talent is around the leaders of this industry over the next 20 years. We need ability to attract and really use the kind of talent that can bring digitization and big data and analytics into this industry and really get the value of those things that are there latently. Frankly, we as an industry are behind a lot of the other industries in the world in terms of taking advantage of those things.
Yusen Logistics (Americas) Inc.
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