Latest / The Intermodal Logistics Podcast / Investing in U.S. ports

Transcript

Investing in U.S. ports · The Intermodal Logistics Podcast

• 0:02
  SPEAKER_00: Thanks very much for joining us on this edition of the Intermodal Logistics Podcast.
• 0:07
  SPEAKER_00: I'm Kevin Baxter, and uh today we're heading towards the coast, pretty much all of them actually, to look at ports and port infrastructure with someone who's worked in the ocean-related area uh throughout his career, former Federal Maritime Commission Commissioner and current National Association of Waterfront Employers, or NAWE president, Carl Bentzel.
• 0:29
  SPEAKER_00: Carl, thanks very much for taking the time to speak with us.
• 0:31
  SPEAKER_01: Thanks, Kevin.
• 0:32
  SPEAKER_01: I uh uh happy to do it.
• 0:35
  SPEAKER_00: Yeah, I I so I talked about you've been dealing with ocean issues, maritime issues for for throughout your career.
• 0:42
  SPEAKER_00: So um tell us a little bit more about uh that background and and how it led you to where you are today.
• 0:48
  SPEAKER_01: Sure, sure.
• 0:49
  SPEAKER_01: No, I uh actually am a maritime lawyer by training.
• 0:52
  SPEAKER_01: I went to uh the uh University of Alabama School of Law, and the first day of law school, we started talking about different areas, and I was captivated by uh maritime law and the description.
• 1:04
  SPEAKER_01: And so I said, How do I get involved more in this area?
• 1:08
  SPEAKER_01: Uh it is a relatively esoteric area where you don't have tons of folks involved.
• 1:14
  SPEAKER_01: And I ended up going to uh Tulane University, got an LLM in Admiralty Law.
• 1:20
  SPEAKER_01: Okay, and uh and the first job I got, uh believe it or not, was working uh in the House of Representatives as the committee counsel for the House Committee on Merchant, Marine and Fisheries, and uh and became a senior counsel uh in 1995 uh uh on the Senate Committee on Commerce, Science and Transportation, where I covered uh maritime issues and railroads and trucking issues and worked on transportation policy uh during that time.
• 1:51
  SPEAKER_01: So I've been working on it since basically 1990.
• 1:55
  SPEAKER_01: Uh the first issue I had to deal with, uh Kevin, was uh was the Oil Pollution Act, and we had uh 200 tankers waiting offshore uh trying to get into the United States, somewhat similar to the issues that we have today uh in the Persian Gulf.
• 2:12
  SPEAKER_01: So uh things come around.
• 2:16
  SPEAKER_00: Yeah, everything's in cycles, right?
• 2:18
  SPEAKER_00: Over over the years.
• 2:19
  SPEAKER_01: Yeah, yeah, it is.
• 2:21
  SPEAKER_01: And so uh after after uh my career on on Capitol Hill, I worked as a lobbyist uh uh for a number of years, working on trucking issues and representing uh owner operator independent truck drivers association and uh maritime companies and uh on the other side uh on the advocacy side until 2019 when I was nominated by uh President Trump to serve on the Federal Maritime Commission, did uh one term there and was renominated by President Biden and was contemplating uh that uh until uh and had actually gone through the hearing process and a number of painful uh uh uh things to have to go through.
• 3:06
  SPEAKER_01: And decided uh that an offer from the National Association of Waterfront Employers was the Terminal Industry Association, was just too good to be uh uh uh denied.
• 3:17
  SPEAKER_01: And now I'm here as the president of NAWA and uh and uh and also the executive director of the National Maritime Safety Association, which is the safety functions of the terminal industry.
• 3:32
  SPEAKER_01: So uh I'm doing what I like.
• 3:35
  SPEAKER_01: I've been really lucky.
• 3:36
  SPEAKER_01: Uh I've been working on policy issues at a high level for a long time, and uh every day I go to work, I I enjoy what I do.
• 3:47
  SPEAKER_00: That's a very important piece of uh of any puzzle, I would say.
• 3:51
  SPEAKER_00: So so uh tell us a little bit more about NAUI and uh and um you know the the background of the organization and its membership, things like that.
• 4:01
  SPEAKER_01: Sure.
• 4:02
  SPEAKER_01: So a lot of times uh people uh conflate uh what a port is uh and perhaps not uh understand uh who are the the folks that do the work at the port, and that's the the maritime terminal industry.
• 4:16
  SPEAKER_01: And so uh now these uh members are are are companies that are engaged in and moving cargo through marine terminals at U.S.
• 4:25
  SPEAKER_01: ports um and uh operating ports as well.
• 4:30
  SPEAKER_01: So uh my c my uh my association companies are sometimes their ocean shipping lines that have terminals here in the United States, or uh independent terminal owners, uh, or sometimes uh port authorities that function as uh businesses such as uh Georgia Ports Authority or Port of Houston or Virginia Ports Authority.
• 4:52
  SPEAKER_01: Um so uh our members uh span from uh both coasts from top to bottom.
• 5:00
  SPEAKER_01: Uh we carry over 90 percent, well over 90 percent of the nation's containerized trade, a majority of the nation's brake bulk, uh, and almost all of the cruise ship passengers that go on are are handled through our terminal complex or managed through our terminal complex.
• 5:20
  SPEAKER_01: So um so it is the industry of shipping.
• 5:23
  SPEAKER_01: Uh I I like to say it's the nation's supply chain and uh in essence when you connect it to uh to the railroad industry and the trucking industry to get it to ultimate destination.
• 5:35
  SPEAKER_00: Yeah, I mean, every everything starts at the ports and uh starts and uh continues from the ports too, if you're going the other direction.
• 5:43
  SPEAKER_01: It does.
• 5:43
  SPEAKER_01: I mean, uh our nation, uh I don't think we really understand from a policy perspective how connected we are to our trade.
• 5:52
  SPEAKER_01: Um, you know, almost all of our retail goods right now are outsourced from uh foreign nations.
• 5:59
  SPEAKER_01: Uh manufacturing itself relies in just in time delivery, and components are delivered uh uh across the world for uh installation and and uh manufacturing uh plants in the United States, even food and and products like that, uh automobiles, and so they're all connected through the port complex.
• 6:21
  SPEAKER_01: Uh when I started working uh the in the United States, we uh transported six million TEUs of cargo a year.
• 6:31
  SPEAKER_01: Uh, I think the last year that I left the Federal Maritime Commission, which was a year ago, was 38 million TEUs of containerized cargo moving through U.S.
• 6:40
  SPEAKER_01: ports.
• 6:41
  SPEAKER_01: So it is truly a growth industry, and it's and and the nation is reliant uh on the uh functions of our terminal industry and our partners in the intermodal uh industry at trucking and rail uh uh assets to deliver uh all of this.
• 6:59
  SPEAKER_01: So I believe we're we're sort of undervalued uh or or not understood as as much as we should be.
• 7:07
  SPEAKER_00: Well, I think we've definitely gotten a little bit more exposure, I think, over the last few years.
• 7:13
  SPEAKER_00: Um I mean, really starting with the the pandemic was when ever uh the news started to notice supply chain, supply chain, supply chain, and then you start to see um you know the the chips off uh you know, waiting to in queue, waiting to just get into the ports because there's just so much volume.
• 7:30
  SPEAKER_00: But uh I mean how has that changed, you know, since you've been you know in this uh field.
• 7:36
  SPEAKER_01: Very, very good point.
• 7:37
  SPEAKER_01: It was probably the first time that the public took cognizance.
• 7:41
  SPEAKER_01: I remember seeing Jimmy Kimmel doing a bit about supply chain logistics and some of the stuff that your uh podcast considers uh on national TV.
• 7:51
  SPEAKER_01: Um and and really we had problems.
• 7:54
  SPEAKER_01: We had a we had about a 27% increase of containerized imports for a two-year period during the pandemic.
• 8:02
  SPEAKER_01: So uh the market was up.
• 8:04
  SPEAKER_01: Uh and frankly, uh we just were overwhelmed with the volumes that came in.
• 8:11
  SPEAKER_01: There was some uh dislocation of equipment necessary to move it.
• 8:17
  SPEAKER_01: Uh Intermodal Rail had problems.
• 8:20
  SPEAKER_01: Uh the container the manufacturers of uh of uh Chinese uh shipping containers uh had suppressed, intentionally suppressed uh uh production of containers.
• 8:33
  SPEAKER_01: So all of these issues uh resulted in uh in uh rates that went up uh 15 times.
• 8:42
  SPEAKER_01: Uh and and probably more importantly than the rate and the cost uh of the transport was uh uh the slowdown and the congestion that occurred.
• 8:53
  SPEAKER_01: And that really hurt the economy because uh automobiles would be delayed in their manufacture because they couldn't get tires.
• 9:00
  SPEAKER_01: And so really had a macro impact that I believe is the primary cause of the inflation uh that we have uh right now.
• 9:09
  SPEAKER_01: So it was a game changer.
• 9:11
  SPEAKER_01: Uh legislation was enacted, uh, the Ocean Shipping Reform Act uh uh passed.
• 9:17
  SPEAKER_01: Uh and ultimately we were able to handle during the pandemic huge volumes.
• 9:23
  SPEAKER_01: So it was a testament to the longshoremen and the people that work in the industry, the transportation industry in general, that they really sustained our nation during this time.
• 9:34
  SPEAKER_00: Yeah, absolutely.
• 9:35
  SPEAKER_00: And and now we've had a few years to settle in a little bit and uh see what the needs are now that the the hair's not on fire anymore so much.
• 9:46
  SPEAKER_00: Uh but uh and that sort of segues into uh this survey because um the survey that you released last month uh where you talked to uh 25 members of leadership at the ports and executives uh involved in ocean shipping.
• 10:02
  SPEAKER_00: So uh so tell us a little bit about that, where the survey comes from, what what the idea was behind it, and and some of the key findings.
• 10:11
  SPEAKER_01: Sure, sure.
• 10:12
  SPEAKER_01: So we are a growth industry.
• 10:14
  SPEAKER_01: It does, even though we've got 27% increases and then actually were substantial reductions in movement of cargo because we had so much uh for a period of time.
• 10:26
  SPEAKER_01: Uh um, but uh but uh the Biden administration had been looking at uh policies related to Chinese uh market dominance and the maritime industrial base.
• 10:40
  SPEAKER_01: Uh and USTR had uh initiated an in an investigation and they found that that that uh the Chinese government government was manipulating uh the market uh for uh the maritime industrial base.
• 10:55
  SPEAKER_01: And in the case of our equipment, and the reason that we did the survey was the finding was that uh that they had uh suppressed uh competition and uh and uh USTR uh was in the process of uh sanctioning uh Chinese manufacturing of uh ships uh and also uh STS cranes and uh and and large equipment that we use in our terminal facilities.
• 11:26
  SPEAKER_01: Um so that was the initiation of trade sanctions against uh against the Chinese uh government uh uh companies uh and the initiation of tariffs of uh proposed 100% tariffs of doubling the cost of products coming into China.
• 11:46
  SPEAKER_01: And so we uh as an association uh you know we we couldn't challenge the actual report itself because it was it was accurate.
• 11:58
  SPEAKER_01: Uh 98% of the ship to shore cranes that we use that are critical to get stuff off a ship and into our terminal complex uh are uh uh are manufactured in China by uh a number small number of companies that are Chinese government controlled.
• 12:17
  SPEAKER_01: Uh and so uh the problem is uh if uh and these the sanctions have been held off for further negotiations, uh that that at present we're not hearing, you know what's happening with respect to the negotiations, but the uh the uh the tariffs would be implemented in November, and it would mean that uh essentially 98% of the market that we use for vital equipment at our terminals would not capable be capable of being uh uh used uh in the future.
• 12:54
  SPEAKER_01: And so we're wrestling with how do we as an industry move forward um uh uh uh in a market that has been uh uh essentially eviscerated uh uh and still competitively be able to get in the new equipment, the new uh uh modern equipment necessary to uh to to handle the trade volumes that are coming in.
• 13:21
  SPEAKER_01: So we uh decided to survey our members uh to get uh an assessment of uh of what would be needed in the next five years uh and and uh came up with a survey.
• 13:34
  SPEAKER_01: And again, uh we cover Seattle to San Diego and and Brownsville to uh uh to uh New York uh on the coast.
• 13:45
  SPEAKER_01: So it's it is most of the the market uh for this uh uh product, but we'll need 6.7 billion dollars of car large STS cranes, the large cranes that take things off the ship, and the equipment that we use in our yard to move and manage uh uh the stuff, rail intermodal equipment that we that we install to to uh to uh push rail cargo through the terminal complex.
• 14:13
  SPEAKER_01: And that is just the equipment itself.
• 14:16
  SPEAKER_01: Uh I I would estimate uh estimate that that's probably only 20% of the total cost of the product of the infrastructure, so multiply that times five, and that's what our needs would be for the next five years.
• 14:30
  SPEAKER_01: So we are uh working to try to get clarity from the administration about what the policies are gonna be.
• 14:38
  SPEAKER_01: Uh and frankly, I think we will need assistance.
• 14:42
  SPEAKER_01: Uh we uh nowe has uh worked to to get all of the equipment manufacturers uh to become associate members of our association.
• 14:53
  SPEAKER_01: And uh there's there, in my view, there's going to have to be some sort of stimulus that uh would help for the creation of a new industry, hopefully in the United States, but uh but also working with our allied uh nations and the equipment.
• 15:08
  SPEAKER_01: But uh at a certain point, if we don't get this addressed, it will uh it will uh affect uh the efficiency of our uh operations, our ability to expand and uh and and safety.
• 15:23
  SPEAKER_01: Uh so uh we're hopeful that we can get more clarity.
• 15:27
  SPEAKER_01: Uh we'll probably need help uh to to overcome the challenge of of having our major market of equipment uh being uh being uh subject to uh trade sanctions that that that will disallow us from using them in the future.
• 15:44
  SPEAKER_00: Yeah.
• 15:45
  SPEAKER_00: Uh so you are our cranes, would you say the cranes are like the the most the the keystone piece of this?
• 15:53
  SPEAKER_01: You know, uh um it's probably a combination, it's all really connected, you know.
• 15:59
  SPEAKER_01: Yes, the the ship to shore crane is the stuff that takes it right off the ship, but then it's gonna go into the yard where it's managed for for pickup, and uh and there's a lot that goes into that.
• 16:11
  SPEAKER_01: So so you want to get it off the ship very quickly, but almost as important as your yard management to make sure um all of our facilities tend to be in or many, most all of them are in large urban centers uh where there was a port before there was a city.
• 16:30
  SPEAKER_01: You know, New York, New York was a port before it became 20 uh billion people, urban uh sprawl.
• 16:37
  SPEAKER_01: And so we have a tough time getting additional space.
• 16:42
  SPEAKER_01: So we're going to have to have equipment that allows us to actually use the intermodal assets behind us as efficiently as possible to move cargo through and and be more efficient uh in our port complexes because there's not new space that's readily available.
• 16:59
  SPEAKER_01: Uh there are a couple of terminals that are under construction, but uh, but it's it's decades before you see these sort of things.
• 17:07
  SPEAKER_01: But uh but uh it's a challenge that requires uh new equipment across the board.
• 17:14
  SPEAKER_01: But the ship to shore cranes are are are are are particularly acute because the market was almost all in China.
• 17:22
  SPEAKER_00: Yeah.
• 17:23
  SPEAKER_00: And uh and and it was noted um somewhere that I was reading as well that I mean some the the ship sizes have uh we're starting to see bigger ships, and so that that changes thing the uh math a little bit too with the existing equipment.
• 17:38
  SPEAKER_01: It does.
• 17:38
  SPEAKER_01: Uh and so it's not it's sort of a combination.
• 17:41
  SPEAKER_01: I always say once you've seen one port, you've seen one port.
• 17:45
  SPEAKER_01: Uh they're all a little different, uh uh and they have different needs.
• 17:50
  SPEAKER_01: So on the East Coast, for instance, uh because of the uh resizing of the Panama Canal being a little bit bigger, um, the ships that can go through the Panama Canal are now larger.
• 18:03
  SPEAKER_01: And so we need to reach out further and uh and uh and replace a lot of equipment if we want to accommodate uh the larger vessels now coming in from Asia.
• 18:14
  SPEAKER_01: Uh on the West Coast, uh the challenge is just really there's uh a lot of congestion in the complex uh itself.
• 18:25
  SPEAKER_01: Um but uh and and a lot of equipment just needs to be replaced at a certain period of time.
• 18:31
  SPEAKER_01: It's uh it's uh it's older and and less uh less efficient for movement.
• 18:39
  SPEAKER_01: So it's a combination of issues that drive the the need, but but we again are in a growth industry.
• 18:46
  SPEAKER_01: It can it continues to take up from 6 million when I started to 38 million uh 600 over 600% increase in that market.
• 18:56
  SPEAKER_01: So um given the constraints that we have, environmental mandates that are that are being uh uh required to comply with, um we we need to we need uh to really be aggressive uh to get best our best equipment in.
• 19:16
  SPEAKER_00: So you're you're still in sort of uh a little bit of a holding pattern on the on the tariff thing, uh it sounds like yeah.
• 19:23
  SPEAKER_01: We've written to USTR and we've had numerous meetings and we're engaging with the administration.
• 19:29
  SPEAKER_01: And frankly, we've had they've been very receptive, uh, but a lot of this is held up with respect to uh trade negotiations that are at a level that uh uh that that were that result in us not getting the answers that we need to move forward uh with with our planned uh developments.
• 19:51
  SPEAKER_00: So I mean the tariffs uh tariffs have obviously impacted the shipping industry in a number of ways.
• 19:57
  SPEAKER_00: Uh I mean the the volume picture has has how has that shifted, I guess, in terms of since since last January or so?
• 20:06
  SPEAKER_01: Yeah, yeah.
• 20:07
  SPEAKER_01: It's been it's been interesting.
• 20:09
  SPEAKER_01: Uh sometimes tariffs aren't the entire driver in supply and demand.
• 20:15
  SPEAKER_01: Uh uh so we've had uh uh last year, for instance, was was not horrible.
• 20:22
  SPEAKER_01: You know, it wasn't a great year, but there was still uh uh solid demand in areas.
• 20:28
  SPEAKER_01: There's been some fluctuations on how shippers buy things.
• 20:33
  SPEAKER_01: Sometimes they wait until the last second because they think that that that the tariff might go down or up.
• 20:40
  SPEAKER_01: And so it's uneven, is what I would say.
• 20:43
  SPEAKER_01: Patchy.
• 20:44
  SPEAKER_01: Um, probably not great.
• 20:47
  SPEAKER_01: I think the uh latest data that I'd seen is the last quarter was a 4% reduction in imported containerized cargo, so that's not great.
• 20:57
  SPEAKER_01: Uh now we're seeing an uptick.
• 20:59
  SPEAKER_01: Uh uh, so shipping tends to be a little cyclical.
• 21:04
  SPEAKER_01: You know, there are certain time frames, for instance, a lot of retail goods are stocked up in uh November and uh and uh September to get ready for Christmas season.
• 21:16
  SPEAKER_01: And so we're seeing that more even more exaggerated.
• 21:20
  SPEAKER_01: Uh so uh so I would say uneven at best, uh a little bit down.
• 21:26
  SPEAKER_01: Uh and and then right now we're seeing it sort of a uh uh a surge right now.
• 21:32
  SPEAKER_01: So it's tough to say.
• 21:35
  SPEAKER_01: Um but uh but I always believe that supply and demand is the overriding uh determine determination of what uh of what uh what what volumes go through ports.
• 21:49
  SPEAKER_01: So uh the US consumer has been pretty aggressive continuing to buy.
• 21:56
  SPEAKER_01: Uh I think we're all used to Amazon and and hit.
• 22:00
  SPEAKER_01: Buttons on your internet and getting things pretty much delivered more reflective than what the economy is or anything else.
• 22:09
  SPEAKER_01: So that's been the good news.
• 22:11
  SPEAKER_00: Yeah.
• 22:12
  SPEAKER_00: I mean the the inflation piece is is sort of that looming question like what's what's the threshold where consumers start to hold back a little bit.
• 22:22
  SPEAKER_01: Or do they shift to something else?
• 22:25
  SPEAKER_01: Yeah.
• 22:25
  SPEAKER_01: So so uh whether they pull back or shift, uh yeah, no, it's it's a sense of unease, uh, I'd say in the the industry and and and patchiness, but not not horrible uh uh economic uh uh uh activity.
• 22:42
  SPEAKER_01: Uh and we'll see.
• 22:44
  SPEAKER_01: Uh again, the the Persian Gulf um uh and Straits of Hormuz is is starting to create issues for our industry.
• 22:54
  SPEAKER_01: Uh fuel is not available for transshipment, so some of the large ships are having to wait.
• 23:01
  SPEAKER_01: Uh container flows, you you have to have a container to move your cargo.
• 23:06
  SPEAKER_01: Right.
• 23:06
  SPEAKER_01: And sometimes uh uh the disruption of an area trade has impacts on other areas.
• 23:15
  SPEAKER_01: So we're starting to feel that a little bit more.
• 23:18
  SPEAKER_01: Um so the uh the uh if uh for instance uh chemicals, uh uh uh about 25% of the uh product that uh goes through the Straits of Hormoose uh is dedicated to chemical production, which goes into manufacturing and materials and component parts.
• 23:38
  SPEAKER_01: Uh so we're seeing a slowdown in certain products because of that.
• 23:42
  SPEAKER_01: So there will be some challenges adjusting to this in the next couple of months.
• 23:47
  SPEAKER_01: Uh so I uh and and and frankly, uh it it doesn't appear to me that this will open anytime soon.
• 23:56
  SPEAKER_01: Uh and if it does, it will take a little time to adjust.
• 24:01
  SPEAKER_01: Uh, you've got to convince people to go through a war zone area that work on shipping, and I don't blame them for being less than reluctant uh to get on a ship that's uh that's uh the site of an active uh uh uh war.
• 24:16
  SPEAKER_01: And so so we'll have some challenges.
• 24:19
  SPEAKER_00: Yeah, yeah.
• 24:20
  SPEAKER_00: Uh I mean uh no no dull days in this this industry, alright?
• 24:24
  SPEAKER_01: No, no, no.
• 24:25
  SPEAKER_01: It would be nice just to be able to move stuff around without uh foreign governments and bad weather and uh and and uh and economic events that uh are beyond our industry's control, but that's the business that we're in.
• 24:40
  SPEAKER_01: So it's it is an international business.
• 24:43
  SPEAKER_00: Uh so getting back to the the survey, in terms of uh you identified the need uh and you identified the uh I've you've obviously identified the that costs are going to be an issue.
• 24:55
  SPEAKER_00: So so where are you looking at for for funding to come from for to upgrade this equipment?
• 25:01
  SPEAKER_01: Yeah.
• 25:02
  SPEAKER_01: So um legislation is pending in Congress, uh uh the SHIPS Act, uh, House and Senate.
• 25:08
  SPEAKER_01: It's got strong uh bipartisan support, uh bipartisan sponsorship.
• 25:14
  SPEAKER_00: You don't hear that too much these days.
• 25:16
  SPEAKER_01: Yeah, yeah.
• 25:17
  SPEAKER_01: No, I mean my industry is relatively uh bipartisan in terms of the support uh coming from both sides.
• 25:25
  SPEAKER_01: Uh you know, rationale is sometimes a little different, but but they uh they all sort of see the need to continue uh to uh but the question will be will there be money behind that and uh and to support infrastructure development.
• 25:41
  SPEAKER_01: So we're asking for a billion dollars a year to be allocated for grants for infrastructure funding.
• 25:47
  SPEAKER_01: Uh we're support uh we we are going to be requesting support for the administration to try to support the development of the maritime industrial base and cargo handling equipment uh and and and more options for us.
• 26:03
  SPEAKER_01: Uh so we're working with the industry uh to get uh some support uh for that uh when the sanctions come into effect.
• 26:12
  SPEAKER_01: Um and uh the SHIPS Act is uh President Trump uh announced a maritime action plan and uh uh a uh strategic uh support and executive order uh to uh to have all the federal agencies work together to come up with some policies uh to bolster our uh our our maritime industrial base in shipbuilding um uh uh and ship operations and on uh on the port logistics side of the equation.
• 26:46
  SPEAKER_01: So we're hopeful that uh a trust fund can be set up that would be dedicated to to uh uh to provide support to to the the challenges of uh Volvos.
• 27:00
  SPEAKER_01: Uh I mean the U.S.
• 27:02
  SPEAKER_01: fleet right now, the U.S.
• 27:03
  SPEAKER_01: flag fleet is at an all-time low level in the world at a time when we need reliable shipping more than ever.
• 27:12
  SPEAKER_01: And uh so I hope that that sort of is a wake-up call, but we're working legislation uh supporting the SHIPS Act and the creation uh of uh of a of a dedicated trust fund for investment.
• 27:25
  SPEAKER_01: And we're hopeful that we can convince Congress that we deserve a portion of that for uh for new equipment and infrastructure development to move forward.
• 27:36
  SPEAKER_00: So I that that maritime security trust fund is is sort of akin to the the highway uh trust fund that that we've already that's been uh around for quite a while, and I think a lot of people are familiar with, right?
• 27:47
  SPEAKER_01: Yes, sure.
• 27:48
  SPEAKER_01: It's uh exact uh exact same uh uh concept.
• 27:52
  SPEAKER_01: And frankly, we support the the highway trust fund bills because a lot of that infrastructure, intermodal infrastructure behind our port complex is is assisted as a result of that.
• 28:03
  SPEAKER_01: Uh this one would be a little bit more focused on the waterside activities and and development.
• 28:10
  SPEAKER_01: Uh, you know, we've we've outsourced almost all of our equipment uh right now.
• 28:15
  SPEAKER_01: So hopefully we can set up some policies that assist in re-uh developing this.
• 28:22
  SPEAKER_01: Uh the market here is we're a pretty big market for equipment and and port, our port operations, our market is one of the most important uh international shipping destination markets in the world.
• 28:33
  SPEAKER_01: So uh so uh what we do will affect not only us, it will affect everybody in the world.
• 28:40
  SPEAKER_01: So hopefully we can get it together and get something passed.
• 28:44
  SPEAKER_00: Yeah, I mean you talk about the the connection, the supply chain connection.
• 28:48
  SPEAKER_00: Obviously, you're you're dealing with rail equipment that you you want the on-dock rail to to get bolstered.
• 28:54
  SPEAKER_00: You uh obviously have trucks coming in and out all the time.
• 28:57
  SPEAKER_00: So um so how important is it to have each link of the supply chain at its best uh uh equipment-wise?
• 29:08
  SPEAKER_01: You know, it's critical.
• 29:09
  SPEAKER_01: Uh this is uh um sometimes, for instance, in California when we started off during the pandemic and there was 150 vessels waiting off shore uh for you know uh you know two to four weeks to try to get in.
• 29:28
  SPEAKER_01: Uh sometimes uh some of an example would be you you look at a uh sink, and this is one of my fellow commissioners uses, so I am uh I am perjuring.
• 29:38
  SPEAKER_01: Uh uh but uh you look at a sink and it's all clogged up and there's water in it, and you say, oh man, that sink's not really good.
• 29:47
  SPEAKER_01: Um, but uh but really the stop is the clog is uh in the drain four inches down, and it's the result of that.
• 29:55
  SPEAKER_01: So we need that system to be able to flush through as quickly as possible.
• 30:00
  SPEAKER_01: And we have to work with our intermodal service providers, the trucking companies, and uh the railroads.
• 30:07
  SPEAKER_01: Uh we invest, our terminal industry invests billions of dollars in railroad infrastructure to support on dock rail and on dock cranes to put to facilitate it.
• 30:18
  SPEAKER_01: And it's really important in the growth of uh of a of a number of facilities uh um uh so long term.
• 30:28
  SPEAKER_01: So Baltimore, for instance, and and the mid-Atlantic ports uh are gonna see a double stack rail service for the first time from the East Coast that will allow them to get into Chicago.
• 30:39
  SPEAKER_01: It's gonna be a game changer.
• 30:41
  SPEAKER_01: So it is critically important to work with uh the other modes that uh that are are at our ports um and uh deliver cargo through our ports.
• 30:52
  SPEAKER_01: Um so we have a a pretty pretty good relationship in general.
• 30:57
  SPEAKER_01: Uh we work at a local level very closely.
• 31:00
  SPEAKER_01: So uh they're operationally, they're used to working with each other, and but there's always challenges uh that that go uh, you know, for instance, uh the Union Pacific closed uh service during the height of the pandemic for one week uh to intermodal cargo coming out of LA Long Beach, and that's that's just brutal uh to a terminal which is brimming with cargo and it's actually starting to slow down.
• 31:27
  SPEAKER_01: Uh uh terminals uh two that are too clogged operate less efficiently and it and it harms everybody.
• 31:36
  SPEAKER_01: So we we've got to be able to uh deliver it through our infrastructure in the United States on the intermodal side.
• 31:43
  SPEAKER_00: Mm-hmm.
• 31:44
  SPEAKER_00: Uh so another piece of the uh equipment puzzle is uh the people who are operating the equipment.
• 31:50
  SPEAKER_00: And uh and obviously uh another thing that's been in the news the last few years has been uh labor negotiations between uh the unions who represent dock workers and uh and the industry, the employers.
• 32:03
  SPEAKER_00: So um and one piece of all of that was automation, uh sort of limits on automation to ensure that uh from their perspective that the uh employees still have jobs uh all the way through.
• 32:17
  SPEAKER_00: Um so how are you balancing uh working with with those uh contractual pieces and working with the employees to uh identify how you're which equipment you want to get and what kind of and and how best to optimize it?
• 32:33
  SPEAKER_01: Yeah, it it really is uh unit by unit, terminal by terminal, and how they work to get and install.
• 32:41
  SPEAKER_01: And I to me automation is a four-letter word.
• 32:44
  SPEAKER_01: Uh uh I I don't think every every everybody in the United States is a little uneasy with uh the pace of AI and automation and whether or not they'll be supplanted.
• 32:55
  SPEAKER_01: And so I can understand that and uh and and and empathize with that.
• 32:59
  SPEAKER_01: So I like to characterize it as a as a as an issue of efficiency.
• 33:04
  SPEAKER_01: Uh and and uh in our terminal complexes, again, we don't have a lot of room to be able to grow, so we have to make that facility work better.
• 33:15
  SPEAKER_01: Um and our markets are going up.
• 33:18
  SPEAKER_01: So so uh I I counsel our folks to to focus on job generation at terminals and growth.
• 33:27
  SPEAKER_01: And the only way I can see uh uh doing that is working through the equipment, uh the equipment uh side of the equation to get the most efficient uh use of the space and to maximize how we can be productive and get more ships in uh uh using the same footprint.
• 33:47
  SPEAKER_01: Uh so uh I think you know our industry can make a claim that there will be new jobs in this industry regardless going forward because trade is going to go up and and we just have limitations on space.
• 34:01
  SPEAKER_01: Um automation has been it's not, it's uh my experience, and I've looked at it in Europe and and Asia and and the United States, um it is more efficient, but you have to have cargo volumes that are very high, and and there are areas where sometimes it it's uh it doesn't work as well as uh as equipment.
• 34:26
  SPEAKER_01: I I was in Rotterdam visiting a port where they were taking out um their automated gates uh because they found that truck drivers weren't coming in on the weekends because they had uh hours of service requirements and uh and they uh and they didn't work that day.
• 34:44
  SPEAKER_01: So they they looked at it and said, does that make uh as much sense as just having people uh manning the gates?
• 34:51
  SPEAKER_01: And they made the decision.
• 34:53
  SPEAKER_01: So, you know, uh we will need some level of of new equipment uh that will be more efficient and allowing us to move cargo.
• 35:05
  SPEAKER_01: And I think we can work with our our labor partners to do get to get that done.
• 35:11
  SPEAKER_01: Um uh uh but sometimes people get stuck up on the nomenclature of automation versus what uh the real target should be is making that facility the most efficient facility to move cargo through, uh given the footprint that they have to operate in.
• 35:29
  SPEAKER_01: And that will gain jobs, uh, you know.
• 35:33
  SPEAKER_01: So so we sort of work at piecemeal each uh operation as they look at what they want to do uh competitively uh to upgrade their terminals, we'll make decisions on what they need.
• 35:46
  SPEAKER_01: Uh uh some of it, for instance, is more in the yard itself um uh uh than uh uh than other places.
• 35:55
  SPEAKER_01: And it's different.
• 35:56
  SPEAKER_01: Like in China, the Chinese government says there are three shifts of workers that will come in with trucks, and so automation works pretty well there because everything is mandated uh as uh a function of a command and control system.
• 36:10
  SPEAKER_01: So uh so hopefully we'll we'll move forward working with labor to to get uh to uh a compromise on what what we can bring in uh to to upgrade uh the efficiencies uh of our facilities.
• 36:24
  SPEAKER_00: Well, and and the safety piece.
• 36:26
  SPEAKER_00: You mentioned uh obviously the the other position you have is is leading the National Maritime Safety Association.
• 36:33
  SPEAKER_00: Uh safety is uh in a number of different facets, I think uh it sounds like something that you'd be also you dealing with the the workers themselves and also the the people that are coming through the ports, uh as you mentioned, the the cruise lines as well.
• 36:47
  SPEAKER_00: That's got to be a piece of it.
• 36:49
  SPEAKER_00: But uh with with the equipment, that the safety piece has to be heavily considered as well, I would think.
• 36:56
  SPEAKER_01: It does.
• 36:56
  SPEAKER_01: Uh uh it's critical.
• 36:58
  SPEAKER_01: Uh it's critical to have interface with uh with the ILA and the ILWU um on the safety of the equipment and and get input.
• 37:08
  SPEAKER_01: Uh we actually have a pretty good working relationship in this area.
• 37:12
  SPEAKER_01: Um there is uh OSHA is our regulator in terms of safety at uh at uh terminals, uh, and so we have some standards in place.
• 37:23
  SPEAKER_01: Uh we work through the collective bargaining process in other areas, and then there's uh safety advisory uh uh committees, uh Makash, uh uh Maritime uh OSHA uh advisory committee, which is uh currently uh in abeyance.
• 37:42
  SPEAKER_01: Uh and so we've been asking for the administration to to allow us to work with our counterparts in labor uh uh to reinstate that.
• 37:51
  SPEAKER_01: So but it's a fairly good uh relationship, in my view, uh that sort of has a process of uh of dialogue on safety and continual.
• 38:03
  SPEAKER_01: The records are that uh that uh U.S.
• 38:06
  SPEAKER_01: terminals, although being one of the more dangerous industries in the United States, have been uh making a lot of headway in terms of safety.
• 38:14
  SPEAKER_01: But it's a continual effort to work on, you know, you know, making sure people are safe, they've got the the best equipment to work on.
• 38:26
  SPEAKER_01: Uh and so uh at NIMSA uh we were having a conference in San Diego, and uh, you know, we're we're concerned right now with lithium-ion batteries and the safety of of those uh primarily because they're they're present in our equipment, they're present in cargo all the time, and they're and they're also being imported and exported uh in a lot of uh cases to be reconditioned through the ports, and and you have electric vehicles.
• 38:55
  SPEAKER_01: Uh so we probably have more lithium-ion batteries, and right now the response to a fire is you have to wait until it burns out, and so that's not gonna work in a major complex uh like ours uh that could affect uh a major fire in LA Long Beach could affect all of the terminals.
• 39:18
  SPEAKER_01: Um and so if that closes down, that's 40% of our containerized, over 40% of our containerized cargo coming in the United States.
• 39:27
  SPEAKER_01: So the safety issues are are incredibly important.
• 39:31
  SPEAKER_01: Um and so we work them on a continual basis.
• 39:36
  SPEAKER_01: I think the process that we have is is pretty good, uh, but it's it still needs to be better uh to do better.
• 39:45
  SPEAKER_00: So uh before I let you go, uh one other piece that uh dovetails with intermodal uh quite a bit is uh the rail merger that's uh in process right now between Union Pacific and Norfolk Southern.
• 39:58
  SPEAKER_00: And uh as uh as an organization, Nowie has actually submitted uh back in December a letter uh expressing some concerns about uh about that merger.
• 40:09
  SPEAKER_00: Where are you standing right now as it's been uh about six months since that letter, and we're at sort of a new phase of the application process?
• 40:17
  SPEAKER_01: So uh we do have uh concerns.
• 40:20
  SPEAKER_01: Uh and I I would say uh my industry, some of them have a very good relationship with a particular partner, so they may have a slightly different view.
• 40:31
  SPEAKER_01: Um, but we invest uh enormous amounts of money for regional economies in the development of intermodal rail that's predicated on having a competitive uh system of movement of intermodal rail.
• 40:46
  SPEAKER_01: Uh, and so it's very important uh industry to us.
• 40:50
  SPEAKER_01: Um concern is uh if you have transcontinental uh railroad, right now we have two on the east and two on the west, essentially.
• 41:00
  SPEAKER_01: Uh there there may be some uh some uh you know north-south moves that can get uh some of the Canadian uh railroads involved, but but but for the most part, it's two in the east and two in the west.
• 41:12
  SPEAKER_01: Uh you eliminate one of those competitors and make it a transcontinental railroad.
• 41:18
  SPEAKER_01: Um decisions could be made by the railroad about cargo coming into to a port on the east coast or the west coast based on uh the position of that railroad.
• 41:30
  SPEAKER_01: And that is an uneasy feeling to have.
• 41:33
  SPEAKER_01: Uh uh and so you know, hundreds of millions of dollars is going into uh railroad projects, for instance, in in the Baltimore area for double stack rail service.
• 41:46
  SPEAKER_01: Uh and if the decision is uh that cargo should not go there because the railroads make more money on it someplace else, uh it could be very challenging.
• 41:57
  SPEAKER_01: Also uh uh uh you know uh one of the other issues is the uh STB has implemented a couple of uh of uh exemptions to intermodal car cargo handling uh uh intermodal uh rail service.
• 42:16
  SPEAKER_01: So it's exempted from some oversight at the at the STB.
• 42:20
  SPEAKER_01: So some of the protections for uh adverse actions are are are not applicable to this trade.
• 42:28
  SPEAKER_01: So those two issues are of big concern.
• 42:32
  SPEAKER_01: Uh they still haven't announced the plan to move forward for consideration uh of the merger, but I intend uh to submit uh comments and hopefully testify uh uh if uh if they open it up for uh for for uh questions.
• 42:52
  SPEAKER_01: But this is a lot uh uh at stake for local and regional economies around the around the coastline in terms of how uh well they can uh maximize uh the use of our rail system.
• 43:07
  SPEAKER_01: And so we want to use rail.
• 43:10
  SPEAKER_01: And so we we hope that the decision considers uh the issues affecting our stakeholders, which again are big.
• 43:18
  SPEAKER_01: You know, it's uh it's all these warehouses and logistics services and trucking services that are affiliated through that all through the nation.
• 43:27
  SPEAKER_01: Uh and so uh so an immense amount of cargo are coming through the ports on this.
• 43:32
  SPEAKER_01: I think it's the biggest market, railroad market right now, is their intermodal rail uh market uh by by per capita um uh uh revenues.
• 43:43
  SPEAKER_01: Um so we hope they pay attention to to our comments.
• 43:48
  SPEAKER_01: Uh and it is uh it is a critical issue.
• 43:52
  SPEAKER_01: So we're gonna be active on that.
• 43:54
  SPEAKER_00: All right.
• 43:55
  SPEAKER_00: Oh uh Carl, thanks very much for taking the time.
• 43:57
  SPEAKER_00: Uh tell tell folks where they can learn more uh about NAWI.
• 44:01
  SPEAKER_01: Sure.
• 44:01
  SPEAKER_01: www.naui.com or.us, excuse me.
• 44:05
  SPEAKER_01: Uh uh, we've got a website that uh uh outlines a lot of our issues and and policies.
• 44:13
  SPEAKER_01: Um and uh and my folks are all across the nation, so at a local level, just go to your local port or terminal operations and you you'll get information about what they're doing and and how they're trying to process cargo.
• 44:28
  SPEAKER_01: Um but uh it's a we really truly I'm uh pleased to be on an intermodal logistics podcast because uh in we are the critical element in intermodal transportation.
• 44:43
  SPEAKER_01: Uh so we're the hub uh in the spoke.
• 44:46
  SPEAKER_01: And so if we're not working well, uh that whole uh wheel will grind to a halt.
• 44:52
  SPEAKER_01: And so uh so it's it's very good to to to to talk to you about uh these issues uh in a larger context.
• 45:02
  SPEAKER_00: Carl, thanks again for joining us.
• 45:07
  SPEAKER_00: Ports obviously a vital part of our uh national infrastructure and international trade, supply chain, all of that.
• 45:15
  SPEAKER_00: So uh great to talk to Carl uh about the equipment needs there and uh a number of other issues affecting the ports and how they relate to railroad trucking, all of that.
• 45:28
  SPEAKER_00: So again, thank you to Carl Bensel for joining us from Nowie.
• 45:32
  SPEAKER_00: And thank you for joining us on this edition of the Intermodal Logistics Podcast.
• 45:38
  SPEAKER_00: Please do like, subscribe, rate, and review however you get your podcasts from us.
• 45:45
  SPEAKER_00: We always appreciate comments, questions as well.
• 45:48
  SPEAKER_00: Do those in uh the platform that you use, or you can also email us at podcast at intechlogistics.com and visit in tech logistics online at www.intechlogistics.com for more about the company.
• 46:04
  SPEAKER_00: Thank you again for joining us.
• 46:05
  SPEAKER_00: I'm Kevin Baxter.
• 46:06
  SPEAKER_00: We'll be back again soon with another episode.