Richard J. Higgins, Head of Logistics, 1A Auto, Inc.

https://www.1AAuto.com
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Richard J. Higgins

This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.

We tacitly accept changes like ocean consolidations, capacity elimination, and the practice of “carrier-determined” blank sailings. We also accept the inconsistencies by carriers in attempting to explain IMO 2020 regulations, fuel formulas, and the benefits (or lack thereof) of scrubbers versus alcohol, biomethane, ammonia, etc. Also, despite major variances in transit times, slow ­steaming, and erratic ship schedules altered regularly, we continue to receive steep accessorials like chassis, per diem, and other punitive charges.

The Agriculture Transportation Coalition (AgTC) claim with the FMC states ocean carriers and terminal operators are mostly responsible for port congestion, then profit off it by charging demurrage, detention, and other fees. This issue accentuates the divide between cargo owners, lines, and terminals about whether these costs encourage cargo flow or just harm users. The practices at terminals in the application of rules, the five-day clock, and terminal operating hours need to be thoroughly reviewed. The FMC will endeavor to judge if the fees are reasonable, even though many of us have already endured excessive fines.

Domestic intermodal traffic is down 6.3 percent year-to-date, according to IANA. One reason is tariffs; another is favorable truck rates and ample capacity. Pricing is also key, as railroads offer similar rates to truck, which is clearly a superior service. Our decision to convert from rail to truck is easy when we are offered inflated rates, then add in the rail-related “per diem,” storage, transit time, and other seasonal surcharges.

Tariffs devastated US retailers this year. The NRF, RILA, and others cautioned the administration without success. Tariffs contributed directly or indirectly to the closing and/or bankruptcy of 9,000 retail stores this year. Charlotte Russe (520), Family Dollar (390), Gymboree (800), Dress Barn (650), and Payless (2,100) are some of the many businesses hurt, and 2020 will be worse than 2019. The above dynamics continue to impact our businesses. The administration and providers noted need to be held accountable for their decisions, high costs, service levels, fees, and discretionary surcharges.