Saturday, 3 January 2015

No french fries in Japan

If you go to a McDonald's in Japan, be prepared for no french fries (freedom fries ?). Or, at best, if you smile nicely at the young girl, you might get a small fries. No wolfing down the one tonne abomination called large fries. The end of the world has arrived !! What on earth has happened ?

Well, the problem is not in Japan, but in the US. There is a big mess in the ports on the US West Coast. McDonald's ships frozen fries to Japan through these ports. Shipments are getting massively delayed. McD don't make french fries in Japan at all - all of it is sourced from the US. Hence the problem in Japan.

What is the mess on the US West Coast ports ? Well, almost everything is a mess. They account for more than half of all US maritime trade and the two ports of Los Angeles and Long Beach account for some 40% of US shipping.  There are are a number of problems across all these ports.

Firstly there is a labour dispute going on. The union and the management of these ports have been negotiating for 7 months now and have made no headway. As usual, pay, working hours, etc etc are in dispute. Now the Pacific Maritime Association, the management group, wants President Obama to intervene and appoint a mediator. As if the President has nothing else to do. Solve your problems yourselves, you lot. I thought businesses wanted governments to leave them alone, not intervene. Well, this speaks of the real demands of businesses from governments - leave us alone when the times are good and come in and pick up the pieces when times are bad.

Secondly, as is happening in almost everywhere in the US, infrastructure is not keeping pace. Container ships have doubled in size and yet US ports have made little investments to handle such behemoths. This is a general problem with US infrastructure everywhere - ports, airports, roads, whatever. Everything is slowly going down and there is little money to spend on them. The citizens of the US would rather spend on dropping bombs on others (Defence),  doling themselves out (Social Security) and cossetting the elderly, even if they are comatose (Medicare). The crumbling of infrastructure is slow and therefore incrementally not noticed. It takes an infrequent visitor to see how far the US has slipped. Today, the drive from JFK to Manhattan, is inferior to the drive from Bangalore Airport to Whitefield - and that really says something.

The third problem, of all things, is a shortage of truck chassis to haul containers in and out. I have no idea why this is so. And apparently there are more factors, unique to the region and specific to the industry.

This is a real shame. When economic growth is at a huge premium, surely you cannot afford to lose because of bad planning, poor infrastructure and intransigent unions.

Ah well; Mr Tamaguchi has to simply control his craving for fries. Perhaps the union workers in Long Beach are concerned about his cholesterol levels ! It just goes to show, how in today's interconnected world of business, a completely unrelated problem in one corner of the world might have repercussions in the other corner. And "drastic repercussions" if you are like Mr Tamaguchi looking for his fix.


Anonymous said...

Hi Ramesh,
Cossetting the elderly, even if they are comatose (Medicare) - now that is a bit harsh :).
I would agree that medicare is needed, more effort is obviously required to make it affordable.
Agree with other things you say. Singapore is a great example on improving facilities at a port - a small city but with such tremendous vision (probably born out of necessity)
Indonesia is another example of a place with tremendous potential but with decision making and governance poorer than even India, lags well behind.. (especially with regard to facilities at the ports)


Ramesh said...

Yeah - that was a bit too harsh, but I have an underlying point of view here. Universal unlimited free health care for the elderly is just not a sensible, or even moral, policy. If any, there is a better case for universal healthcare for the young rather than the old. Just because the old have the vote and use it, there has been a complete distortion in priorities in the US. Matter for a post, or even a series of posts later.

Yes, Singapore is a great model. In infrastructure at least, China is an even better model because it has done it on gigantic scale.

Sriram Khé said...

I am now hungry for French Fries! ;)

Ramesh said...

Oh come on. You can afford to have a super large fries given what the Walmart machine is showing consistently !!

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