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OCR for page 185
THE IMPORTANCE OF
PRODUCTIVE, EFFICIENT
INTERMODAL TRANSPORTATION
FOR INTERNATIONAL
COMPETITIVENESS
ROBERT KLEIST
The business of world trade is exceedingly competitive, but with
tremendous opportunities for the United States as well as for the
rest of the world. There is Tots of world trade; it needs stimulation,
and it needs productive transportation available in order for it to
succeed. Productivity in the liner industry, in ports, and in the
whole intermodal process is important to the business of world
trade.
Port productivity cannot be measured simply in terms of ter-
minals, wharves, cranes, and people. It must include the port's
location as well as the political, social, and environmental atti-
tudes of the people it serves. There are many external influences
over which the port management has little control.
World trade grew at the rate of about 9 percent in 1984, and
probably at a rate of 5 percent in 1985. Total world trade between
all nations in 1984 exceeded $3 trillion. The United States was
responsible for more than half a trillion, $543 billion out of the
total of $3 trillion. Imports to the United States amounted to
$323 billion, exports to $220 billion, leaving the United States
Robert Kleist, who presented the closing address at the symposium, is
vice-president of Evergreen Marine Corporation.
185
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186
with a deficit in 1984 of $113 billion. Sadly, in 1985, the deficit
in our export account is expected to reach $140 billion. When
you take a look at this, it isn't too hard to understand that the
balance of cargo movement between the United States and almost
everywhere else is decidedly one-sided.
A little bit of the history of world trade is in order for those
who may not be all that familiar with it. Before World War II,
the United States engaged in two-way trade to the extent of ap-
proximately $30 billion per year. Of course, U.S. participation
in world trade had been adversely affected by the Smoot-Hawley
Act, protective tariff legislation passed at the beginning of the De-
pression to protect American industry. Actually, it probably drove
more American industry out of business than it protected. After
World War IT, American business began to pay more attention to
the value and the potential of international trade. Yankee traders
traveled around the world and did a very good job of selling more
than just simply American goods, products, and services. They
also sold American ideals. Those of us involved in international
trade in the early 1950s recall a lot of talk to the effect that "you
can't expect to export unless you import," because the nations of
the world need to earn dollars in order to buy U.S. exports.
Obviously, when you take a look at today's $113 billion deficit,
we oversold the case considerably. The United States had been
running at the rate of $7 billion to $10 billion surplus in our trade
account, and now the country is paying for it with interest.
What are some of the factors that influence productivity in our
industries, and how do they affect international trade? What does
our collective transportation system need to do? What do we
need from each other, to not only handle international trade, but
to contribute to its well being? What are the factors that affect or
limit our industry's productivity, and how do we view the role of
the ports and other intermodal elements in the scheme of things?
What do we need, and therefore what do we expect, and what can
be expected of us? How do we view the effect of the productivity of
the respective elements, particularly the ports, on our activities?
In looking into what the people in world trade think about
the matter of productivity, ~ found a report made by the famous
accounting and consultant firm of Touche, Ross and Company.
One of the articles in the report was written by Thomas J. Murrin
of Westinghouse. In his conclusion he wrote,
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187
We will delude ourselves tragically if we think that there are substitutes
for improved productivity and quality in our efforts to maintain the standards
of life that have made our country the envy of less fortunate lands. If our
nation as a whole regards productivity as a matter affecting only corporate
balance sheets or stockholders' dividends, little will be achieved in meeting
the productivity challenge. But if all of us come to see productivity and
quality for what they in truth are, crucial elements, not only of our personal
prosperity, but also our capacity to thwart Soviet ideological and military
ambitions, then they will become achievable. Although the challenge we
face is a formidable one, the United States should not be presumed to be
the latest in the long list of countries that used to enjoy world economic
leadership. No other nation ever has possessed human and natural resources
of the nature and magnitude of ours. We can prevail if we do our best.
Nothing more is needed, but nothing else will do.
~ spent about a year with the Pacific Far East Line in Japan
observing productivity Japanese style. One experience in partic-
ular showed me the importance attached to productivity by that
trading partner.
One of our ships happened to have the misfortune of running
into a tanker after it had departed from Tokyo. It came back
under its own power into Tokyo Bay, arriving at about five o'clock
in the morning. ~ had been alerted to it and was on a launch
out to the ship before daybreak. Instantly at daybreak there
were three potential repair facilities that had their launches out
inspecting the damage to the ship. It was hardly possible that
they could have even known about the accident, because it had
only occurred about 6 hours earlier. But somehow, whether people
still talk about Japan, Incorporated or not, it really works as if
it's incorporated. Within 12 hours we had made an agreement to
take the vessel into an available dry dock. ~ was instructed by our
head office to have temporary repairs made to the ship. We gave
the order for temporary repairs, and they were done in about 72
hours a large hole in the hull had been patched, a crack in the
propeller had been repaired, and the vessel was again out to sea.
When it arrived back in San Francisco for its permanent repairs,
the inspection proved that the temporary repairs were better than
the permanent repairs would have been had they been performed
elsewhere. That was the level of productivity, the quality of the
work that was done.
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188
The productivity of a port directly influences its ability to at-
tract cargo. Who would have expected, for example, that cotton
grown in California would be exported from the United States
through the Pacific Northwest? For years, cotton moved through
the ports of Los Angeles and Long Beach. North San Joaquin
Valley cotton was shipped through the ports of San Francisco and
Oakland. For a few years, the Port of San Diego made an intru-
sion into the cotton export market, and received quite a bit of the
cotton from across the Mexican border at Mexicali. Subsequently
the Mexicans opened the Port of Ensenada; that ended significant
cotton exports from the Port of San Diego.
So it was until several years ago, when an enterprising shipping
company executive figured a way to move cotton at a very advan-
tageous intermodal rate from West Texas up through the ports of
Seattle and Tacoma. Thus, a port that never dreamed it would
have cotton exports captured a large share of the trade as a result
of the most-productive, least-cost intermodal innovation.
Another question is, just how unproductive can ports become
when they serve a captive area of 15 million people? Is Long
Beach/Los Angeles an area where a port simply cannot fail? Quite
likely that is a possibility. But blessed by a neighboring competi-
tor, each of these ports has become a vital and major intermodal
link with high productivity. So competition is clearly a factor
in motivating port and intermodal productivity. The ports have
jointly planned for their future. The plan, called the 2020 plan,
calls for reclaiming 2,419 acres of land; 500 acres will be developed
outside the breakwater.
An intermodal truck-ra~l container transfer facility is another
recent development. This facility will be able to accommodate
up to eight unit trains simultaneously. It is located strategically
at about the center point of a line running north joining the two
harbors, Los Angeles and Long Beach, a maximum distance of
5 miles from the marine terminals, and as close as 2.5 miles to
the nearest terminal in Wilmington and the northern area of the
Port of Long Beach. This facility will replace the current rail
intermodal tertn~nal, which is between 25 and 27 miles from the
harbor. This is the type of productive facility that the Ports of Los
Angeles and Long Beach are developing for the accommodation of
international trade.
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189
One of the critical issues in improving productivity is the matter
of people and their performance. My company provides extensive
personnel training. It operates a fully operational, 440 TEU con-
tainer training ship that accommodates 200 cadets. Each cadet
spends 1 year in training aboard this vessel after having taken
basic seamanship and basic training. ~ mention this simply as an
example of what the liner industry is doing to accommodate world
trade.
What is the volume of trade, in a practical sense, that needs
to be handled? My company operates around-the-worId service
in both east and west directions on a weekly basis. Most of that
service is provided by vessels capable of lifting 2,728 TEUs. If you
put two 4~TEU units on a railroad car, a Boxcar unit train would
carry 100 40-foot containers. It would take 13.5 unit trains, which
would measure 10.2 miles of railroad track, to fill one of these ships
one time. That certainly is less than would be required by some of
the ships that are coming onstream now, which can accommodate
up to 4,000 containers. So that is a measure of the extent of cargo
implied in the figure of $3 trillion worth of world trade.
Facing the reality that the future of U.S. participation in world
trade demands the utmost productivity from us, how do we in the
liner industry view our own productivity, and how do we approach
the need for improvement? We need to appraise our knowledge
of our own business, our resources (financial, technological, and
human), our resourcefulness, our ingenuity, our imagination, our
courage, and our competence. All of these we can do something
about, and we'd better, or get out of the business.
We need to compare our facilities and services with those pro-
vided by others. We need also to consider the environment in
which all of this takes place.
People are particularly important—our organization, our man-
agement team, the work force, labor, organized labor, and others.
The public's perception of what we do and why, and how it affects
them, is also important. It influences productivity to have your
company in the headlines of even a local paper. This can be an
influence for productivity, but it also can be a counterproductive
influence.
It is also helpful to understand the staffs and the commissions
of the organizations with which we do business. How often are we
really working in the same direction? The customers themselves
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190
need looking at this is the most valuable of all factors, and the
object of the whole exercise.
Finally, government policies and rules affect our activities.
So we come to the conclusion that we're all in this together,
and that's why ~ have expressed the optimism that ~ did at the
outset. Here we are with some of the best and most conscientious
minds in our great country, with the added supercaliber input from
abroad, discussing the means by which we can actually become
more productive.
The age of the Pacific, referred to by Richard King (in this
volume), is the most dominant force in world trade. Through
intermodalism as well as by direct all-water service, we have the
great opportunity to participate in and to benefit from it. Port
and intermodal productivity is a vital force in the future of world
trade.
The great British historian, Arnold Toynbee, said, "I'm glad
that I'm growing old in England. Americans are dedicated to the
new and super efficient. It must be depressing to be old in the
United States." Wouldn't that be a sad commentary to have to
make about yourself and about the area in which you have lived
and are living?
Although the challenge we face is a formidable one, the United
States should not be presumed to be the latest in the Tong list
of countries that used to enjoy world economic leadership. No
other nation ever has possessed human and natural resources of
the nature and magnitude of ours. We can prevail if we do our
best. Nothing more is needed, but nothing else will do.
Representative terms from entire chapter:
international trade
