Insights - January/February 2018 - 17

"Inland intermodal is a very important service," said Howard
Finkel, executive vice president at COSCO Shipping. "It is just
that - a service. A lot of shippers think we should do it at cost or
below. When we are offering intermodal service, we have other
industries involved. It's time consuming and costs money. When
someone is interested in intermodal, it has to be paid for."
Finkel stressed intermodal's importance by saying 50 percent
of COSCO's business arriving in North America is IPI, or inland
point intermodal, as governed by beneficial cargo owners' routing
decisions.
Trucking availability and infrastructure in Southern California
also will need continued attention to ensure efficient inland intermodal capacity, Craig said.
Michalski shared that intermodal drayage is a key area of
focus, including assurances of an adequate supply of drivers and
efficient management of chassis.
The revenue side of the economics equation remains prominent for steamship lines that have suffered as declining rates
throughout the industry led to the Hanjin bankruptcy.
"It was clear then [in 2016] and now that sustainable freight
rates are needed to support the growing costs in fuel, labor and
infrastructure investment," Nielsen said.

Matching Capacity to Demand
Finkel said rates remain the most important issue for the
Chinese carrier, as all carriers face the issue of matching capacity
to demand in an environment where overcapacity continues.
The importance of rates needs to be underlined, he said,
because based on early shipper negotiations there hasn't been
enough realization that ocean carriers'
profitability must improve or bankruptcies
will happen again.
"Contracts long have been all about
rates," he said, and were treated as rate
sheets by BCOs. "There needs to be more
moves toward service. I hope we can get
to the point where we can charge different
prices as we provide more and different
levels
of service."
There also was wide agreement about
a broader issue for ocean carriers.
"We see the wave of consolidation in
2017 as a positive step which we hope
will lead to a healthier industry. Maersk
is participating in this positive trend with
the acquisition of Hamburg Sud this
year," Nielsen said. He cited benefits from
mergers related to information technology,
customer service, equipment, port
operations and other services.
Craig and Michalski also highlighted
the importance of closely monitoring the
changes resulting from consolidation and
realignment. Craig added that the creation
of the Ocean Network Express, known as
ONE, including Mitsui O.S.K. Lines and two
other Japanese carriers, K Line and NYK
Line, is going smoothly as the carriers

"When we are offering intermodal
service, we have other industries
involved. It's time consuming and costs
money. When someone is interested in
intermodal, it has to be paid for."
- Howard Finkel, executive vice president, COSCO Shipping
consolidate to serve a range of international cargo markets.
Hofstra University Professor
Jean-Paul Rodrigue focused on how
structural changes in global shipping
patterns are affecting intermodal.

'Rebalancing'
"One issue has been unfolding for
several years and involves a level of rebalancing between the East and West
Rodrigue
Coasts' volumes due to the all-water
route through Panama," he told Insights. That has challenged
East Coast ports' operational efficiency with volume and ship call
frequency changes, he added.
"This shift limits the growth prospects of long distance intermodal rail from the West Coast," Rodrigue added. "While West

January/February 2018 | Intermodal Insights

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