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Transportation News Bulletins - Logistics

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Labor Productivity Can be 50% of Warehouse Operating Cost
Wednesday, 15 July 2009 00:00

As it announced its SCM Labor Management solution, Infor pointed out that labor and warehouse productivity can account for up to 50% of the total operating costs of a warehouse.

Labor costs are typically the largest expense in the warehouse, said Infor, and in many operations, such as third party logistics providers (3PLs), it can account for up to 50% of a warehouse's total operating costs.

Many companies plan for and track workforce schedules and actuals through spreadsheets, a manual process prone to errors. This process does not generate an accurate, real-time view of tasks in the warehouse or allow management to identify inefficiencies. Integrating labor management with a company's warehouse management system, can reduce these costs up to 30% by identifying areas of high performance as well as the comparable inefficiencies. With the fully integrated labor management, operations can pinpoint unproductive time, such as idle time between tasks, meetings, repair work, etc. Direct activities can also be tracked, in which all users can be measured against expected standards, and each other, to prove and showcase good performance, while also identifying areas for improvement and corrective action.

"You cannot improve what you cannot measure," said Mark Humphlett, director supply chain, global solutions marketing, Infor. "The warehouse has traditionally been an area of high costs and companies have not had visibility into the labor productivity that drives warehouse operations. Infor SCM Labor Management provides a simple, graphical way to direct, track, measure, and report employee productivity. This provides a better understanding where labor time is being used, where productivity could be improved, and places control of warehouse labor in the hands of the company."

Humphlett added, "Businesses are looking for ways to maintain a competitive advantage, maintain profit margins, and specifically better utilize labor resources.”

Logistics Today, 7/15/2009

Taking care of business, Office Depot CEO calls on Congress to raise fuel tax to pay for “critical” infrastructure improvements
Wednesday, 15 July 2009 00:00

That’s according to Steve Odland, chairman and CEO of Boca Raton, Fla.-based Office Depot, the $14.5 billion-ayear office supply company that operates in 48 countries through a network of more than 1,700 stores. Odland spoke Wednesday at the U.S. Chamber of Commerce “CEO Leadership Series” luncheon in Washington.

“We have an investment gap—five to eight cents a gallon for the next five years is nothing,” Odland told business leaders who traveled to Washington to lobby Congress on transport spending. “Our view is that it’s a user fee.”

That avoids the dreaded word “tax.” The federal tax on fuel—18.4 cents on gasoline, 24.4 cents on diesel—has been unchanged since 1993. That has resulted in the bankruptcy of the federal Highway Tax Fund as revenue has not kept pace with the rising cost of building and maintaining highways and bridges. And that, he said, means raising that fuel tax.

“Revenue and funding is the elephant in the room,” he said. “It’s in a dire situation. We have to deal with the gas tax. I know it’s a political third rail. But we have to deal with it. It’s a good short- and medium-term solution.”

Failure to act could mean the chance of the United States falling from its preeminent economic perch, Odland predicted.

“Our infrastructure has helped create the greatest economic superpower,” Odland said. “We need to create and sustain the pre-eminent transportation system in the world—and we need to do it now.”

Unlike most years, transportation is high on Washington’s agenda this year. That’s because the current $286 billion, five-year highway reauthorization bill is expiring Sept. 30.

There are various proposals floating around Washington that would expand the highway authorization bill in the neighborhood of $450 billion over five years. The Obama administration, fighting two foreign wars abroad and the recession at home, has signaled it favors an 18-month extension of the current law at approximately the same spending levels before seriously tackling the nation’s crumbling infrastructure in 2011.

Whatever comes out of Washington will directly impact shippers and business leaders such as Odland, whose business depends on a smoothly functioning transportation system to satisfy its customers. Odland came to Office Depot at 2005 after a stint as CEO of AutoZone and a former senior executive at Quaker Oats.

“The supply chain and national infrastructure is a passion of mine,” Odland said. Office Depot is one of the largest internet retailers with a $4.8 billion e-commerce operation. Office Depot operates two separate North America distribution centers more than a half-million deliveries a week.

“Our dependence on the surface transportation system is considerable,” Odland said. “We use the entire complex web—roads, rails, air, water—as an interconnected network that leverages all kinds of assets around the nation.”

Odland served on the 2005-2008 bipartisan 12-member national transportation system studying how best to expand the highway bill to fix the nation’s crumbling infrastructure. The commission assessed the entire surface transportation network and concluded with a 50-year strategic plan.

“This was an eye-opening experience for me,” Odland said. “The history of infrastructure in our country is constructive. Everything we have accomplished as a nation is a result of our infrastructure. It created a connection of the vast continent that resulted in an economic powerhouse.

” What created the United States as a superpower, Odland asked? “It was our economic might supported by our infrastructure. Now that the country has evolved from an agrarian to an industrial society, the nation has outgrown our current transportation system,” he said.

Some facts:

  • 43,000 killed and 2.5 million injured in accidents occur in highways every year
  • $78 billion of fuel is wasted every year because of congestion.
  • In next 50 years, country’s population will expand to 420 million. That’s the equivalent of adding 11 metropolitan areas the size of Los Angeles.

“We ought to consider of the costs we are incurring every single day because of the waste in the current system,” Odland said.

He said the nation needs to spend an additional $250 million annually on transportation spending. There are other issues exacerbating the problem, according to Odland:

  1. Funding has dried up.
  2. Layers of regulation and litigation have slowed development.
  3. Private sector has few incentives to make infrastructure investments.
  4. Demand-management technology tools have not been emphasized.
  5. The nation has not made transportation investment a priority.

“We are at a crossroads and it is now time to make this a priority,” Odland said.

By comparison to the United States’ spending of 1 percent of its Gross Domestic product on transportation, China spends 9 percent and Indian 5 percent of its Gross Domestic Product on transportation and infrastructure. Those countries are “investing mightily in transportation and infrastructure” to support their growing economies, Odland said. “I don’t want to live in a country that is No. 2 or 3 in economic might,” Odland said. “That’s where we’re heading if we don’t spend more on transportation infrastructure.”

Commission recommendations included a national asset management program to maintain repairs; development of a freight transportation network; improve metropolitan mobility, improved safety programs, better connections in rural areas, development of alternative fuels, and improved research and development on transport issues.

“We are increasingly moving to a Just-in-Time world and the United States needs the ability to compete,” Odland said. “We have to think about the supply chain from overseas to how we connect ports.” Odland said the American GDP can triple in the next 50 years with sufficient financing. But for that to happen, it needs more public and private financing. Clearly, he said, the federal, state and local governments play an essential role in this process.

“It is essential we de-politicize this process,” referring to the 6,300 earmarks in the current bill. He is calling for an independent commission to prevent such wasteful projects in the future.

He said the current recession has actually given the country “a breather” regarding infrastructure. “We reached capacity about a year and a half a go,” he said. “What better time than now to act?”

Odland called on the U.S. business community “to stand up and say how important infrastructure is” the nation’s well-being. He was in Washington with other business leaders on a lobbying blitz visiting Congressional members on importance of transportation.

“It’s critical we tell them we mean business,” he said. “Our infrastructure has helped create the greatest economic superpower. We need to create and sustain the pre-eminent transportation system in the world—and we need to do it now.”

Odland was invited to speak by Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce and a former president of the American Trucking Associations,

“Steve has another quality all too rare in a CEO—he understands how decisions in Washington affect everyday life in everybody’s business,” Donohue said. “His real passion is transportation and transportation infrastructure. The company’s success depends on a transportation and logistics system that allows products to be delivered on time and on budget. Logistics and transportation efficiency goes right to the bottom line.”

Logistics Management, 7/15/2009


U.S. to Require Contractors to use E-Verify
Thursday, 09 July 2009 00:00

Starting Sept. 8, only those firms that use the online program, which checks whether employees are in the country legally and are authorized to work, will be eligible for federal contracts.

The Obama administration continued its push for a legal workforce Wednesday with an announcement that federal contractors and subcontractors would soon be required to verify that their employees are eligible to work in the U.S.

Beginning Sept. 8, the government will award contracts only to companies that enroll in E-Verify, an online program that uses federal databases to check whether employees are in the country legally and authorized to work. Businesses receiving money under the federal stimulus program also will be subjected to the rule, adopted under President George W. Bush but never implemented.

Homeland Security Secretary Janet Napolitano announced plans to throw out a rule that would have allowed the federal government to use mismatched Social Security data to find illegal immigrants in the workplace.

The "no-match" rule had been on hold since October 2007, when a federal judge in San Francisco decided that punishing companies that didn't clear up discrepancies between names and Social Security numbers would cause "irreparable harm to innocent workers." Groups that filed the lawsuit against the government argued that some mistakes are just mistakes and not proof of fraud.

"The idea is to make sure that we are providing employers with a system of employee verification that is accurate, respects the laws of privacy and is truly a good and strong model to maintain a legal workforce," said Homeland Security spokesman Matt Chandler.

Separately, the Senate passed an amendment Wednesday that would mandate the use of E-Verify by federal contractors and subcontractors. Napolitano's move comes one week after her department notified more than 650 businesses nationwide of pending audits of their employment records. The department also recently issued guidelines for immigration agents to go after employers rather than just workers.

Supporters of E-Verify said the expansion of the effort to federal contractors and subcontractors would help crack down on illegal immigrants in the workforce and could help stem the flow of migrants across the border. Critics said mandating the program for federal contractors would only slow the country's economic recovery.

Randel Johnson, vice president of labor, immigration and employee benefits for the U.S. Chamber of Commerce, said Wednesday that although some employers hadn't had any problems with E-Verify, others had received inaccurate information from the government's database.

"It should be rolled out slowly and tested rather than being applied to the employer community immediately," he said.

The chamber filed a lawsuit in 2008 to prevent the government from implementing the contractor requirement, arguing that the president did not have the authority to mandate a voluntary program.

Other business groups praised the administration for Wednesday's move but said more needed to be done, such as legalizing undocumented workers.

"We believe, of course, that there has to be a mechanism to verify the legal work status of employees," said Beto Cardenas, executive counsel to Americans for Immigration Reform, a Houston-based coalition of businesses. "But we also believe that immigration reform has to be brought."

American Civil Liberties Union staff attorney Jenny Chang Newell called the decision to abandon the nomatch rule "a victory for all American workers."

The ACLU was a plaintiff in the suit that prompted the ruling in San Francisco two years ago. But Newell said she had concerns about the E-Verify requirement and its potential to cause discrimination and unlawful firings based on inaccurate databases.

"Rather than punishing American workers for errors in the government's own databases, the administration should enforce the workplace rights of all workers," she said.

Los Angeles Times, 7/9/2009

Strong Transport Policy or Weaker Prosperity
Wednesday, 08 July 2009 00:00

The Freight Stakeholders Coalition has adopted 10 principles it feels will help strengthen the role of the US transportation system in ensuring better domestic prosperity and global competitiveness.

The US needs substantial investment in its freight transportation infrastructure or all modes of goods transportation will continue to deteriorate.

“We are committed to working together, with the Congress, the [Obama] Administration and other important interests, to develop the public-private consensus necessary to develop a freight transportation policy and program that will meet the needs of the nation.” The Freight Stakeholders Coalition has agreed to the following principles for the upcoming surface transportation authorization legislation:

Mandate the development of a National Multimodal Freight Strategic Plan. The next surface transportation authorization should mandate the development of a National Multimodal Freight Strategic Plan. The development of this plan should be led by the US Department of Transportation, in partnership with state DOTs, cities, counties, Municipal Planning Organizations (MPOS) and regional planning organizations, ports, freight shippers, freight carriers, and other stakeholders.

Provide dedicated funds for freight mobility/goods movement. The legislation should provide dedicated funds for freight mobility/goods movement. Dedicated funds should be provided to support capital investment in critical freight transportation infrastructure to produce major public benefits including higher productivity, enhanced global competitiveness and a higher standard of living for our nation. High priority should be given to investment in efficient goods movement on the most significant freight corridors, including investment in intermodal connectors into freight terminals and projects that support national and regional connectivity.

Authorize a state-administered freight transportation program. Congress should authorize a state-administered freight transportation program as a new core element of the federal highway program apportioned to states.

If a new freight trust fund is created, it should be firewalled, with the funds fully spent on projects that facilitate freight transportation and not used for any other purpose. Priority should be given to nationally and regionally significant infrastructure, with funds distributed through a competitive grant process using objective, merit-based criteria. Appropriate projects that are freight-related should still be eligible to compete for other federal funding sources.

Establish a multi-modal freight office within the Office of the Secretary. Freight mobility should be a key priority within USDOT. The Secretary’s office should have staff with freight expertise who can focus on nationally and regionally significant infrastructure.

Form a national freight industry advisory group pursuant to the Federal Advisory Committee Act to provide industry input to USDOT, working in conjunction with the new multi-modal freight office. The advisory group should be funded and staffed, and it should consist of freight transportation providers from all modes as well as shippers and state and local planning organizations. Despite the best efforts of the agency to function as “One DOT,” there is still not enough of a focused voice for freight. An Advisory Group would meet the need for regular and professional interaction between USDOT and the diverse freight industry, and could help identify critical freight chokepoints in the national freight transportation system.

Fund multi-state freight corridor planning organizations. Given that goods often move across state lines and involve multiple modes of transportation, Congress should fund multi-state, multi-modal planning organizations that will make it possible to plan and invest in projects where costs are concentrated in a single state but benefits are distributed among multiple states.

Build on the success of existing freight programs. There are numerous existing transportation programs that facilitate freight mobility and are demonstrably valuable. A new national freight policy should continue and strengthen these core programs or build on their principles and successes to guide freight program development if DOT is restructured and/or program areas are consolidated. Examples of these successful core freight programs are the Projects of Regional and National Significance, National Corridor Infrastructure Improvement Program; Freight Planning Capacity Building Program; Transportation Infrastructure Finance and Innovation Act, National Cooperative Freight Transportation Research Program; Coordinated Border Infrastructure Program; Private Activity Bonds for Intermodal Facilities; Capital Grants for Rail Line Relocation Projects; Rail Rehabilitation and Improvement Financing (RRIF); Congestion Mitigation and Air Quality Program, Truck Parking Pilot Program, and Rail-Highway Crossings. Funding for discretionary programs should be awarded through a competitive grant process.

Expand freight planning expertise at the state and local levels. Given the importance of freight mobility to the national economy, States and MPOs should be provided additional funds for expert staff positions dedicated to freight issues (commensurate to the volumes of freight moving in and through their areas). All states should have a freight plan as a tool for planning investments and for linking to the national freight system.

Foster operational and environmental efficiencies in goods movement. As in other aspects of transportation, improvements designed to achieve long term sustainability in goods movement are desirable to meet both commercial objectives—economy and efficiency—and public objectives—energy security and reduced environmental impact. Federal policy should employ positive approaches to enhance freight system efficiency and throughput with the goal of reducing energy consumption and green house gas emissions.

The Coalition includes: American Association of Port Authorities, American Association of State Highway and Transportation Officials, American Trucking Associations, Association of American Railroads, Coalition for America’s Gateways and Trade Corridors, Council of Supply Chain Management Professionals, Inland Rivers Ports and Terminals Inc., Intermodal Association of North America, National Association of Manufacturers, National Association of Regional Councils, National Association of Waterfront Employers, National Industrial Transportation League, National Retail Federation, Retail Industry Leaders Association, US Chamber of Commerce, Waterfront Coalition and World Shipping Council.

Logistics Today, 7/8/2009

Obama Taps Elliott to Chair Surface Transportation Board
Monday, 06 July 2009 00:00

Rail union attorney would head key rail regulator for rail mergers, shipper disputes

President Obama nominated Daniel R. Elliott III, an associate general counsel at the United Transportation Union, to become the next chairman of the Surface Transportation Board.

Elliott's nomination would not only fill the empty seat on the three-person board that oversees rail economic regulation, but would have the rail labor attorney replace Acting Chairman Francis P. Mulvey in leading the agency.

Elliott fills a board vacancy left when W. Douglas Buttrey, a Republican appointee, left in March. At that time Obama also designated Mulvey, a 2004 Democratic appointee to the board, to take over as acting chairman.

Republican Charles D. Nottingham stepped down from the chairmanship to take a regular board seat and said he would remain through his term that ends in 2010.

Some observers had said they expected Obama to pick someone new to chair the agency, after he installed Mulvey in an acting capacity. The agency regulates highly sensitive issues of rail mergers, shipper disputes over rail pricing and service, and community complaints over disruptions from rail activity.

Elliott has held his UTU job since 1993, presenting the union’s case on various issues before the STB, National Mediation Board, National Labor Relations Board and the Department of Labor.

UTU represents train conductors and some other rail workers, and is the single largest rail union.

Obama earlier picked another former UTU official, Joseph Szabo, to head the Federal Railroad Administration that oversees safety issues and finance programs, and he is now its administrator.

Journal of Commerce, 7/6/2009

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