2009 RO-RO Trends

What to expect in the coming year — the good and the bad

By Richard Knee

Lower Rates, More Storage
The good news for shippers is that overcapacity and a fuel price plunge have pulled rates down and made vessel space easier to find, even on short notice. Companies that store surplus inventory may stand to gain from the traffic slowdown. For the nation’s ports, that might mean a short-term bump in revenues.

“Because of slow auto sales in the U.S., there have been national stories about decreased demand at dealerships, which has translated to increased demand for storage,” says Josh Thomas, a spokesman for the Port of Portland, Ore.

Late last year, the port negotiated short-term, month-to-month leases of more than 40 acres of additional storage space that auto importers can use. This supplements existing leases, including AWC-Hyundai, 122 acres; American Honda, 62 acres; and Toyota Logistics Services, 110 acres.

“The short-term revenue from auto storage is not a windfall by any means,” Thomas says, “but it does help offset decreased revenue from receiving fewer ships. We expect that the demand for storage will likely diminish as fast as it has appeared. It is a temporary situation.”

Thomas says the Port is looking toward the future.

“Car companies in China and Japan, with electric and plug-in hybrid models, are looking at doing business in Portland, and the port’s capabilities are a part of that decision.” The Port of Portland and the surrounding metropolitan area are ideally suited to accommodate electric vehicle imports.”

Encouraging Signs
In the north-south trade off the U.S. East Coast, container and Ro-Ro volumes for Crowley were off 10 percent at the start of the year from a year earlier, says John Hourihan, the carrier’s senior vice president and general manager of Latin American services.

“Vehicle moves are fairly routine and regular. It’s difficult to project (volumes for) cargoes,” he says, but Crowley has seen some “encouraging signs.”

“Things we were working on before are still on track to move. … We’ve had nothing of a dramatic nature canceled, nothing slowing down. … The Central American markets so far have held up. But we don’t know if it will hold up or whether it’s lagging other markets [in the downward trend]. I wish I could see the future,” Says Hourihan.

Equipment Forecast Flat
Equipment for rebuilding and repair projects and for energy systems is moving to Central America, he says. “Each country has different projects. Costa Rica has hydroelectric systems. Other countries are bringing in wind turbines.”

“We’re cautiously watching the market,” says Rob Grune, Crowley’s senior vice president and general manager of Puerto Rico and Caribbean services. “We’ve been able to hold onto some of our volumes. We have nine barges dedicated to the trade. We’ve pulled some capacity in order to control costs.”

The forecast has volumes in the trade “flat throughout the year,” he says. Tourism is the chief economic driver in the Caribbean region, and that sector has slowed because of the economic slump, causing hotel building projects to freeze.

Grune believes the change of administration in Washington brings some optimism for getting the U.S. economy back on track; with one party controlling both the White House and Congress, it’s possible that greater political cooperation will end the logjam that has stalled some needed programs.

Reducing Costs
TOTE’s John Parrott says advance bookings are off and customers are ordering barge Ro-Ro equipment as needed. “In normal times, customers order space in November or December for a February sailing.”

He adds that new-vehicle volumes are “way off” as wary consumers are buying more used autos to save money.
At TOTE, “We’re taking every step we can to reduce costs,” says Parrott. The company isn’t laying off any workers, but it has implemented a hiring freeze that includes vacated positions.

With an initial inbound shipment of 3,100 cars in mid-January, Grays Harbor, Wash., joined the list of U.S. Ro-Ro ports, and in mid-February 1,100 autos were loaded onto a Pasha Hawaii Transport Lines vessel bound for Hawaii.

In This Issue

News, Trends & Analysis
New Items

Inventory Investment and the Implications on GDP Growth

Supply Chain
Responding to Changes in the Supply Chain

Compliance Corner: How to Utilize Technology to Manage Global Trade Compliance

Overseas Opportunities for Exporters

Create a Strategy before Cutting Costs

Features
Gateway at a Glance – Great Lakes, St. Lawrence Seaway

2009 Ro-Ro Trend

Supply Chain product review
Automotive Supply Chain Software

Ports & infrastructure
Five Major Ports, Five Different Ways to Handle the Recession

Funding a National Freight Policy

Commentary
Will the Stimulus Package Help the Trade Conditions?

Casualties

Who, What, Where, When

Final Say