A Teachable Moment- For All of Us
Adam Smith wrote in his 1776 publication entitled -“Inquiry into the Nature and Causes of the Wealth of Nations”, “As by means of water-carriage a more extensive market is opened to every sort of industry than what land-carriage alone can afford it, so it is upon the sea-coast, and along the banks of navigable rivers, that industry of every kind naturally begins to sub-divide and improve itself, and it is frequently not till a long time after that those improvements extend themselves to the inland part of the country.” Adam Smith’s two hundred and thirty-nine year old treatise regarding the direct relationship of geography and international trade are even more relevant now that we have entered the “Globalization Age” – whereby international trading partners are tightly interconnected. A new imperative has been created where supply chains are measured in hours and days - not weeks. Information flows are measured in seconds and nanoseconds. With that, essential knowledge is distributed in near real-time to a hand-held smart phone. Geographic access to the sea and distance to major markets directly correlate to relative shipping costs. This correlation is a major determinant of the success in manufactured exports and long-term economic growth. Empirical evidence proves the fact that countries with lower shipping costs have had faster manufactured export growth and overall economic growth than country’s with higher shipping costs. Moreover, high-shipping costs make it extremely difficult – if not nearly impossible - to promote export-led economic growth and development. The Columbia River and its associated tributaries have been and always will be - the immense economic engine that has fueled the wealth and economic growth of the Pacific Northwest. As a direct result of the virtual elimination of container services through the Port of Portland's Terminal 6, it is our position that our “economic engine” has been needlessly imperiled. Exporters and importers throughout Oregon as well as Southern and Eastern Washington and Idaho are now experiencing historically higher overall shipping costs as a consequence of the loss of those container services. However, we assert that the key issue is not the termination of container services through the Port of Portland – rather – the essential issue is (and always has been) the competitive disadvantage that all shippers face in our economic region. We must regain the vital cost advantage that is derived from being able to perform a particular activity – specifically transportation - more efficiently than a competitor. Whether you are an onion farmer in Vale, Oregon or an entrepreneurial small business retail product manufacturer in Bend, Oregon – the equation is the same. Higher shipping costs make your product more expensive and less competitive. Business Oregon and its partners recently launched a statewide initiative with the goal of helping to develop potential private and public sector solutions that will enable manufacturers and farmers to continue to have the ability to cost effectively reach out to international suppliers and customers. Additionally, The State of Oregon and four of Oregon’s largest private economic development organizations have recently announced their agreement to work together to improve business development coordination and align their efforts to help grow Oregon’s economy. Allports sent representatives to each of these six workshops conducted throughout Oregon. We believe that the workshops were a great start at identifying potential workarounds to the situation that now exists with the termination of the majority of container services through the Port of Portland. These workshops identified a myriad of grass roots ideas that we feel would certainly have the long-term effect of reducing overall shipping costs for regional shippers. So far, most of the ideas generated through the discussions at the various workshops has centered on cost saving workarounds that require a great deal of public sector support and involvement. Additionally we feel that the resolution of the protracted dispute between labor and the current operator of the T6 terminal at the Port of Portland is best left at the federal and state level. However, the regional impact of this dispute on the long-term wealth and economic prosperity of the entire region cannot continue to be essentially ignored. If Adam Smith were able to speak from the grave - he would certainly be advising our state and federal political leadership that to allow the current situation to continue is extremely detrimental to the Pacific Northwestern region’s economy and its citizens. There is definitely a sad irony to the realization of having access to a viable seaport – such as Portland and a vibrant navigable waterway - such as the Columbia River – and yet our entire region is relegated to the higher shipping costs and their detrimental economic effects - normally associated with a “land-locked” state. However, time is not anyone’s friend in working to solve the dominant issue of regaining the competitive advantage through reduction of shipping costs. Time is not on the side of the Oregon family farmer nor is it on the side of the small business entrepreneur. They cannot afford to wait and see whether or not a public sector solution will evolve in several years that may or may not impact their current plight. Each will be faced with the fairly immediate decision of whether or not to shutter their family farm or their manufacturing business because they may no longer be profitable due to the inability to reach their import/export markets at a competitive price. The small business manufacturer in Bend at least has the alternative course of action to relocate the business in order to “improve itself” as Smith observed. Unfortunately, the family onion farmer in Vale – does not enjoy that option. Nevertheless, both the farmer and the entrepreneur share the additional courses of action to offset higher shipping cost in order to maintain profitability that include: cutting employee wages, reducing their workforce or reducing hiring in order to reduce their overall costs. None of these options - if executed by the farmer or the entrepreneur - will benefit the overall economic growth and ultimately the “wealth” of our region. Allports steadfastly believes that the near-term private sector solution should be aimed at restoring the competitive advantage for all businesses including - the Vale onion farmer and the Bend small business manufacturer. The essential piece of that solution lies in cost savings obtained from the variables that make up the shipping cost equation. Allports intends to devote extraordinary effort for each and every customer as a leader in the industry – to squeeze every possible cost savings and efficiency - while playing a key role in restoring our partner’s competitive advantage in the marketplace.