Jim has been watching the port situation:
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Greetings John,
I see some of my emails to you were useful for you blog, glad to help. As you know the west coast ports were shut down yesterday due to ongoing union demands and it brought me to thinking about the future and what part the new 900 million super port in Mexico that will open next year will bring in changes.
Here are some facts:
A dispute between shipping lines and dock workers led to a shutdown of all major western U.S. ports in 2003, "The world's biggest retailers want to have more options open," This started the Mexico super port ideas. Kansas City Southern de Mexico, will intermodal containers from Mexico to Kansas City. Kansas City is positioned to become one of the busiest (Inland) ports in the world.
Kansas City smart Port has already invested millions. They claim to have the largest underground warehouse space in the world.
The Port will handle 2.2 million TEU, becoming the third largest port in the world
Chinese billionaire Li Ka-Shing, whose company controls 35 major ports in the world is behind this as well as many major retailers in the USA. This coalition has the experience and financial ability to pull this off. The plan is to reduce transportation costs by as much as 50% by using Mexican ports over west coast ports. By using the Mexican ports, the international corporations managing this global trade are able to avoid the U.S. labor union workers who otherwise would unload the ships in west coast ports
CARB (California Air Resources Board) has some of the highest truck regulations in the world. I work with a company that dispatches over 25 trucks in and out of Oakland port daily and know first hand the cost of these regulations add to logistics.
These are some compelling facts that say change is on the horizon. If the big boys create a route that FCL or LCL WILL BEfaster and cheaper to Kansas City rather than to Los Angles or Oakland that will mean big changes. We know that with change comes winners and losers and my questions is how do we positions ourselves to be in the winning column? Your teaching which I whole hardly agree with is the let the big boy do what they do with the low margins but we look for opportunity to have higher margins on smaller volumes.
Questions I ask myself:
1. How will these changes effect imports? A pick and pack in Sparks NV might not make sense.
2. How will these changes affect exports? Are there commodities in the mid-west that the rapidly expanding Chinese would want?
3. What is the low hanging fruit during this transition?
4. How to be one step ahead?
I look forward to your thoughts.
Jim
Feel free to forward this by email to three of your friends.
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