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Transportation News Bulletins - Logistics

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Chassis providers still pushing roadworthy responsibility on drivers
Thursday, 17 December 2009 00:00

On a day when truckers who pulled intermodal chassis should be breathing a sigh of relief—knowing their intermodal equipment is roadworthy—it’s not looking like that’s the case with at least one major group of intermodal chassis providers.

The Federal Motor Carrier Safety Administration enacted new regulations in late 2008 that were supposed to ensure that truckers were only offered intermodal equipment that was deemed roadworthy. That regulation partially goes into effect today, Dec. 17.

In theory, because of the new regulation, drivers should be able to take an intermodal chassis from a ready staging area and know that the equipment is roadworthy and compliant with all the equipment regs.

That’s not the message OOIDA Senior Member Danny Schnautz has heard at recent meetings with a group representing intermodal chassis providers who supply approximately 80 percent of all intermodal chassis.

“The original stated goal, of course, was the equipment offered to us would be in good shape; it would be roadworthy,” Schnautz.

Rather than seeing an overhaul of the existing procedures in picking out intermodal chassis for use, Schnautz said the only change in the process is that “we are certifying what we have is good.”

One big problem with that is if the intent of the regulation were in fact being followed, drivers would not even be offered equipment that isn’t roadworthy.

Schnautz said the “certification” process includes either the company or the driver sending a written statement to the intermodal equipment provider saying that the equipment is good. He also said that the intermodal equipment providers will consider the equipment certified as good if a driver leaves the yard with it.

Drivers have always checked out the intermodal equipment to make sure it’s roadworthy, but these certification reports now required from drivers are only going to increase a driver’s liability, Schnautz pointed back.

“Now the driver is providing another certification to it, which to me is just another noose that could be used in the event of a lawsuit or a citation,” Schnautz said.

The meetings also delivered the financial blow to drivers who may find themselves with cited equipment. If you get a ticket pulling a chassis that you signed off on as roadworthy, you may be billed for the citation.

“That again, totally undoes the intent of the law,” Schnautz said.

If the driver doesn’t pay the citation back to the company, drivers and motor carriers could be shut out.

“That’s the hammer that the IEPs use to get all the money in they think they’re due,” he said. “It’s really a one-sided justice system.”

There have been mixed messages on what exactly drivers are going to be liable for certifying, Schnautz said. One is that the driver is 100 percent responsible for the entire chassis. The other says that drivers will only be responsible for what they can visibly see.

If a driver does see something wrong with the chassis, Schnautz said the intermodal providers are encouraging drivers to not fill out reports on bad equipment.

“They said a bad report would take that chassis off-line in the computer, and putting it back in service just takes a lot of computer work on their part,” Schnautz said. “They’ll find it because they are supposedly doing all the good yard work, like they always have. If they had always done this, we wouldn’t have this new rule.

“For them it’s an inconvenient truth if we report a bad chassis. They don’t want to hear it.”

The intermodal group’s policy seems to fly in the face of information provided by Jack Van Steenburg, director of enforcement and compliance with FMCSA to the members of the Owner Operators Coalition of Virginia. The group is a non-profit association of owner operators conducting business out of the Port of Virginia, CSX, and Norfolk Southern rail yards located in Hampton Roads.

Van Steenburg spoke with the group in August and plainly said that any chassis placed for use in the pool must be roadworthy. If found otherwise, it would be in violation of the rule.

Joe Rajkovacz, director of regulatory affairs with the Owner-Operator Independent Drivers Association said the Association is extremely concerned with intermodal providers shoving the responsibility—and seemingly liability—for the chassis off on drivers.

“FMCSA has said in very clear terms that it is the intermodal equipment providers’ responsibility to make sure the chassis are roadworthy,” Rajkovacz said. “This intermodal group’s efforts are nothing more than a thinly veiled attempt to not only circumvent the intent but the letter of the regulations.”

Rajkovacz, who has worked closely with port groups around the country and FMCSA on the new intermodal rule, said OOIDA will continue to “closely monitor how this situation will play out.”

In an effort to protect themselves from liability, Rajkovacz encouraged all drivers to fill out the DVIR— driver vehicle inspection reports—on all chassis, good or otherwise.

“It doesn’t matter if the equipment provider doesn’t want to hear it. If the equipment is bad, it’s their job to fix it,” Rajkovacz said.

If an intermodal equipment provider continually tenders defective equipment to drivers, Rajkovacz said that FMCSA’s Jack Van Steenburg encouraged drivers to report the provider to the agency’s toll-free number 888-DOT-SAFT (368-7238).

Land Line Magazine, 12/17/2009

NATSO: Extend biodiesel tax credit
Thursday, 17 December 2009 00:00

The National Association of Truck Stop Owners on Dec. 16 urged Senate leaders to quickly extend the biodiesel tax credit before it expires Dec. 31 to ensure an affordable biodiesel supply for the nation’s 3.5 million truck drivers and to secure the environmental investments of the nation’s truck stops and travel plazas.

Lisa Mullings, NATSO president and chief executive officer, says extending the tax credit will increase biodiesel production while spurring retail investment in the infrastructure necessary to supply biodiesel to commercial carriers and the motoring public. Mullings’ request came just days after the U.S. House of Representatives passed a one-year extension of the current $1 per gallon tax blender credit for biodiesel.

“Our members want to support green initiatives,” Mullings says. “But they are concerned that if they make the investment in biodiesel fueling infrastructure and the tax credit isn’t renewed, they won’t be able to sell the biodiesel because of the price disparity between biodiesel and other fuels. We would like to see the tax credit extended so that fuel retailers will be to make these investments.”

Promoting biodiesel as part of a comprehensive national energy strategy, which includes strict quality standards, is vital to ensuring an adequate, uninterrupted supply of fuel, according to NATSO; a biodiesel tax credit lapse would grind biodiesel production to a halt, further distressing an industry that has encountered significant hardship over the last year.

Congress imposed biodiesel production mandates in recent years to stimulate renewable fuel development. Without an extension of the tax credit, however, the production mandate would become meaningless as consumer demand for the product eroded, NATSO says.

The biodiesel tax credit, which is part of the “extenders” package known as H.R. 4213, includes $5 billion in individual tax relief, $17 billion in business tax relief, $1.2 billion to encourage charitable giving, $2.6 billion for disaster tax relief provisions and more than $1 billion to extend expiring energy tax provisions., 12/17/2009

Roadability Rollout Hits Snags Nationwide
Thursday, 17 December 2009 00:00
Truckers 'very disappointed‘ at implementation of FMCSA rules.

Thursday's implementation of the government's roadability regulations for intermodal equipment is causing headaches for motor carriers and equipment providers at marine and rail terminals across the country.

"We are very disappointed at the rolling out of this program," said Curtis Whalen, executive director of the American Trucking Associations' intermodal conference.

Drayage operators that call at marine terminals and intermodal rail yards are reporting delays in the interchange of chassis. Truck lines were forming at coastal facility gates and at inland locations, Whalen said. "There's a great deal of confusion," he said.

Intermodal equipment providers can not claim that the Federal Motor Carrier Safety Administration's roadability regulations were dropped on them unexpectedly. The trucking industry has been lobbying for 10 years now for a clear demarcation of responsibilities for shipping lines, terminal operators and motor carriers in ensuring that intermodal chassis and domestic trailers are in good operating condition when the equipment interchange takes place.

The government agency announced months ago that the roadability regulations would take effect on Dec. 17. Industry workshops were held across the country.

The problem, according to Whalen, is that the information systems required for transmitting reports and other data among truckers and equipment providers are not communicating properly and consistently with each other. Intermodal facilities and providers have varying systems, he noted.

Under the new regulations, the equipment provider, which is usually a shipping line or railroad, is supposed to have in place by now a systematic program to inspect and repair chassis. Therefore, when a trucker arrives at a marine terminal or intermodal rail yard, the facility operator should be tendering only pre-examined, defect-free equipment to the trucker.

Truckers under the regulations must perform a driver's inspection report which the driver or the motor carrier's dispatcher must file with the equipment provider. Confusion is resulting because the actual owner of the equipment may not be readily known or the systems for transmitting and receiving reports are not communicating, Whalen said.

The Ocean Carrier Equipment Management Association, which represents the shipping lines that provide intermodal equipment to truckers, anticipated that confusion would result and therefore had already petitioned FMCSA for a six-month delay in implementation of the roadability regulations, said Jeff Lawrence, OCEMA's general counsel. Lawrence said he expects an FMCSA response shortly. The agency did not immediately return a phone call.

OCEMA is prepared in the coming months to develop an electronic reporting system and provide it to intermodal truckers free of charge, Lawrence said.

Journal of Commerce Online, 12/17/2009

Copenhagen, Carbon, Consumer Goods Supply Chains
Thursday, 17 December 2009 00:00

Business leaders across sectors are becoming acutely aware of the impact of Copenhagen and the transition to a low carbon economy in the next 2 to 5 years on global supply chains. As evidence of this growing awareness—which for some is a concern and for others a new chance to open up areas of differentiation—it is telling that two of the highest profile CEOs at the UN Summit have been Paul Polman of Unilever and Muhtar Kent of Coca-cola. Two of the world‘s biggest branded consumer goods companies with large, complex supply chains that depend heavily on fossil fuels to move products around the world. Not to mention two companies who rightly believe that the way they run their high performing supply chains brings them business advantage.

Muhtar Kent, CEO of Coca-Cola, said this week at Copenhagen, "We believe there will be massive innovation at the interface of supply chains and sustainability… we believe supply chain can be a massive source of competitive advantage in a re-set world".

This growing alertness to carbon and energy and the need to look strategically at the end-to-end supply chain to include all aspects of the product lifecycle is playing out at a couple of levels. First, a growing awareness of the vulnerability of supply chains to a carbon price, not to mention the fuel price volatility we have already seen in recent times. This is particularly important if, as it was claimed at the launch of the WBCSD Value Chain event last Friday, consumer goods companies‘ full supply chain represents as much as 5 billion tons of CO2 emissions globally. If that is indeed right and you applied the current European Emissions Trading Scheme carbon cost per ton (14.40 euros) for illustration purposes, it would mean in excess of $100 billion of value up for grabs in the global consumer goods supply chain if it were subject to cap and trade or tax, even at today‘s conservative carbon prices.

Second, this is also about future-proofing consumer goods businesses against customer and consumer demand. A "carbon insurance" policy if you like. Many of the chief marketing officers I speak to at least tell me that although we are waiting for consumers to really drive demand for low-carbon and sustainable products, it is clear that their consumer research tells them this is coming—particularly among Generation X and Y. Not to mention the pressure from big retailers such as Tesco and the "Wal-Mart" effect driving environmental demands and standards through its global supply chain.

This focus on carbon and supply chain takes place against the backdrop of some serious discussions at Copenhagen Summit on how to treat "bunker fuels" and whether to tax or cap them as a way to drive emissions reductions in the shipping and aviation industry, sectors at the centre of the transport and logistics backbone of most global supply chains, which—although only one part of the supply chain and not including areas like agriculture—our analysis shows is still responsible for 5% to 6% of man-made greenhouse gas emissions.

But the good news—at least on logistics—is that around 60% of potential carbon abatement opportunity is within the transport and logistics industry's direct control, which therefore also applies to consumer goods companies who operate their own supply chains or work in partnership with transport and logistics players. And many of those opportunities align closely with cost reduction by driving out inefficiencies. They often come in the form of projects with fast payback and good returns. And even though economic uncertainty has changed the immediate outlook for the supply chain sector...the underlying business imperatives for supply chain decarbonization remain valid.

So what to do? The trick is to align cost effectiveness, customer service and sustainable supply chain practices. This will be even more important in the post-Copenhagen transition to a low carbon economy. Here are 10 ways to cut carbon emissions in global supply chains based on client experience and also drawing on research Accenture partnered on with the World Economic Forum and its group of Transport and Logistics CEOs. The abatement potential identified below applies to the logistics sector, but it gives you a sense of what might be possible with a wider lens on supply chains.

  • Clean Vehicle Technologies: Introduce clean and environmentally efficient technologies—cut an estimated 175 million metric tons of CO2e (CO2 equivalents which include all greenhouse gases) per annum.
  • Rethink the Speed of Different Parts of the Supply Chain (often know as 'De-speeding): Increase efficiency by collaborating to ease time constraints—171 million metric tons of CO2e per annum.
  • Help Optimize Sourcing (e.g. enable sourcing from least carbon source): 178 million metric tons of CO2e per annum.
  • Drive Efficiency of Transport Networks and Planning: Million metric tons of CO2e per annum.
  • Implement Green Building Technologies More Widely: 93 million metric tons of CO2e per annum.
  • Reduce Weight and Volume of Packaging: 132 million metric tons of CO2e per annum.
  • Help Optimize Production Locations Across the End-to-End Supply Chain: 152 million metric tons of CO2e per annum.
  • Widespread Improvement in Driver or Pilot Training in the Sector (especially to subcontractors): Million metric tons of CO2e per annum.
  • Modal Switches (e.g. changing the method of transport used in different stages of the supply chain, especially switches from international air to sea, and from continental road to rail): 115 million metric tons of CO2e per annum.
  • Reverse Logistics/Recycling: Improve percentage of total supply chain waste which is recycled: Million metric tons of CO2e per annum., 12/17/2009

Steep Worldwide Ocean Shipping Slowdown Forces Truckers to Alter Handling of Boxes
Monday, 14 December 2009 00:00

Early in 2008, when forecasts called for a continued, long-term rise in ocean shipping activity, many maritime companies accelerated the building of new vessels and leased as many containers as they could obtain.

As shippers geared up to move more containers through U.S. ports, trucking companies likewise enjoyed increased activity as a result of the spike in container movement.

But the forecasts for ocean shipping could not have been more wrong. Since the collapse of the global economy last year, ocean shippers who signed container leases have been shedding them as quickly as they can. Not only is that creating a massive oversupply in the face of shrinking demand, it is necessitating a dramatic reversal in strategies for the trucking and equipment manufacturing industries.

“Consider a big container terminal like Chicago,” said Lee Robinson, president of OHC Intermodal—a division of OHC Inc., an import company that brings containers into the Port of Mobile, Ala. “When there are fewer full revenue boxes going into one area . . . they cut service to that area. They cut it to where supply equals demand.

“There are fewer containers to be dispersed on the highway locally or regionally from those container yards,” he said.

Robinson added that the resulting reduction in rail and trucking activity spreads not only to other regions, but also affects other manufacturers.

Like containers, trailer makers are also struggling as fewer shipments leave fleets with too many empty trailers on their lots, and little interest in purchasing new equipment.

“Trailer manufacturers have produced less than half the trailers than have been typical,” Robinson said. “We just got the forecast for next year, and they’re forecasting even less. This is horrifying.”

Trailer makers’ reports bear out Robinson’s observation. For example, trailer maker Wabash National reported that it sold only 3,200 units in the third quarter, compared with 9,700 units during the third quarter of 2008—which also was the last quarter Wabash reported a profit.

Although Wabash, Lafayette, Ind., has slowed the bleeding from its first-quarter loss of more than $21 million, it still lost more than $4 million in the most recent quarter.

“We are encouraged by these results despite the challenging demand environment,” said Wabash CEO Dick Giromini.

Although Robinson said OHC’s intermodal business is good at the moment, he attributed that mainly to the fact that Mobile has been underserved in that sector until recently. Overall, he predicted excess container capacity and a shortage of container movement for several years to come.

Dave Manning, president of Tennessee Express and chairman of American Trucking Associations’ Intermodal Motor Carriers Conference, said continued price pressure is greatly affecting intermodal carriers.

“We continue to have big customer after big customer leveraging their capacity,” Manning said. “Our revenue continues to fall, even though volume hasn’t changed, so there’s a battle over price.”

Until the pressure subsides, Manning said, many intermodal carriers can do little more than cover their costs.

Tennessee Express began operating in survival mode earlier this year when it became clear what was ahead.

“We had to take a look in the March time frame at how we are going to survive this,” Manning said. “We looked at all of our costs, and we put a plan together that involved a number of changes in terms of equipment capacity and even wages. It got us to a break-even point.”

That is an acceptable objective for now, Manning said if it maintains operations.

“We are content, when we have to be aggressive in pricing to keep our drivers busy and to keep our equipment busy, to do it on a break-even basis,” Manning said. “It’s scary, because once rates get to that point, getting them back up is going to be a monumental challenge, especially if business is coming back slow. It’s going to be a battle. No one is in business to trade dollars long term.”

Jeff Joachim, president of World Trade Distribution Inc., Houston, said that trucking also is likely to suffer from continued federal weak dollar policies, which will result in rising exports and falling imports— meaning fewer containers entering the United States.

For trucking, that means less of a chance to obtain a profitable backhaul load after hauling goods to port for export.

But if there is a silver lining for trucking, Joachim believes it is the necessary impetus to improve efficiency to take advantage of some opportunities.

“During a time of [container] oversupply, you’ve got outlying ports like Dallas and Oklahoma City, which are far away from the ocean, and you’ve got steamship lines that are trying to do business in these outlying areas,” Joachim said. “So you’ve got to do round-trip drays. He’s got to take the load up there and bring the empty back. You see the trucking industry being forced to become more efficient.”

That market dynamic, according to Joachim, creates opportunities for trucking companies with terminals and lines in locations that allow them to put together one-way service—provided a trucking company can create and maintain the efficiencies that would allow them to serve one-way lines profitably.

“It does stimulate business for the truck line that is able to be competitive on one-way rates,” Joachim said.

Before the economic downturn, industry observers also reported a shortage of chassis, without which containers cannot be moved by truck.

And yet, ironically, there is little prospect for the production of new chassis to ease the shortage, precisely because there is little use for the ones currently in circulation. Joachim said that it’s common to see large quantities of chassis sitting unused in shipping yards.

The same is true for containers. Trucking companies have a hard time finding containers coming in to port because imports are down, but globally there is a glut.

The oversupply of containers is so severe that it is taking a major bite out of container producers’ profits and forcing them to virtually halt production.

CAI International and Textainer Group Holdings, two major container manufacturers that originally predicted 2009 profits, have posted losses since the fourth quarter of 2008.

Globally, other container shippers suffered similar fates. Nippon Yusen, a huge Japan-based holding company for bulk shipping fleets, reported its first full-year loss in 23 years, citing lower demand for container shipping. Competitor Mitsui OSK Lines Ltd. cut its profit projection by 25%, while competitor China Cosco Holdings Co. also reported a loss.

Industry analysts do not predict a near-term turnaround.

“It’s a challenging market,” said Steve Blust of the Institute of International Container Lessors. “I know that the leasing industry essentially stopped acquiring new containers the middle of last year. So with normal attrition, at the end of 2009, their inventories should actually be down a bit from last year.”

In its most recent report to shareholders, Textainer notes that 2009 has seen virtually no new factory production of containers, a situation with the potential to shrink the world’s overall container fleet by as much as 5%—with the leasing industry’s container volume declining 10%. That situation would help balance supply and demand leading into any economic turnaround.

The container glut among shippers also is exerting major downward pressure on container leasing rates.

“The ocean carriers have got boxes stacked to the skies,” said Ted Prince, principal with T. Prince & Associates and a former chairman of the Intermodal Association of North America. “So there have been better times. The stronger leasing companies are doing well, and you still see investment—not so much in dry bins but in special types of equipment. Some of the domestic container players are investing just to maintain the same level of inventory capacity. For years, all investment was growth.”

Paul Bingham, an analyst at IHS Global Insight, said that the leasing companies are watching the troubles of container manufacturers nervously.

“The lessors are in a situation that’s ultimately desperate, because all their suppliers are in a state of distress,” Bingham said.

The flip side of sinking leasing rates is that anyone looking to lease containers generally can do so for a phenomenally low rate. But for trucking, that does little to boost activity.

Joachim warned against attributing too much of trucking’s woes to ocean shipping or container overcapacity.

“It’s hard to point to one thing like containers and say, ‘This is how it’s affecting the industry,’ because the industry has been hit by a nuclear bomb,” Joachim said. “I wouldn’t say the lack of container activity or abundance of containers has impacted the industry very much at all, compared with the impact of the vessels that have been taken out of circulation.”

Transport Topics, 12/14/2009

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