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Transportation News Bulletins - Logistics

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New report signals a recovery for global express markets in 2010
Monday, 30 November 2009 00:00

The findings of the London-based research firm mirror anecdotal evidence gathered recently by LM suggesting a soft rebound in the coming year.

The global express parcels market will contract by 13 percent in 2009 according to the latest figures revealed by Transport Intelligence in its just-published report, "Global Express, 2010."

"Overall, we're starting to see some indicators that we may have indeed hit bottom," said Doug Caldwell, vice president of Parcel Research, a consolidator. "The carriers themselves—here in the U.S. and particularly in Europe—are telling us that they are starting to see a glimmer of light at the end of the tunnel, and are anticipating an uptick for peak season."

According to Ti, The international express sector has been even more badly affected by the economic downturn, with revenues expected to fall by 14.5 percent, hit by the meltdown in world trade at the beginning of the year, and only just recovering.

However the report's author, Joel Ray, expects the magnitude of the fall in 2009 to be a "one off" and for the market to return to growth.

"When manufacturers and retailers were forced to run down inventory levels at the beginning of the year, the express industry was badly affected. The latest quarter shows that revenues are starting to recover, and we expect positive growth over the coming years, albeit at low levels."

Following such a substantial fall in revenues, it will take some time for the market to rebound. For example, Ti does not expect either the domestic or international express parcels market in Europe or North America to reach 2008 levels until after 2012.

One exception will be the Asia Pacific international express market, fuelled by growth from China. The Middle East has been the least affected of all the regions, and will also show strong growth in the future, helped by a recovering oil price and a general global upturn.

Opportunities for higher levels of growth still exist, but express companies must look further afield, according to Ray. “To achieve the sort of growth rates which many express companies have been used to over the past decade, they will have to invest heavily in emerging markets. Our report highlights the potential for markets such as Russia, Turkey and Brazil as well as more established markets in China and India.”

Logistics Management, 11/30/2009

 
CARB update
Monday, 30 November 2009 00:00

Editor’s note: This overview of California’s latest environmental moves is part of a series of articles analyzing the impact of the state’s new regulations on fleet management as January 2010 approaches.

The California Air Resources Board (CARB) has completed drafting two major regulations that will determine what equipment may be operated within California. Final regulatory action is set for early December, but the regulations are for all practical purposes final now. As a result of these and previously approved measures, California is set to dictate spec’ing decisions regarding engines, tractor and trailer aerodynamics and tires, as well as engines on reefer units on trailers for tens of thousands of fleets.

One regulation—known as the truck and bus rule—that was finalized in October mandates a phased adoption of 2010 or better engine emissions technology through 2022, beginning in 2011. Under that rule, any engine less than seven years old is always ahead of the compliance schedule, and a truck with a 2007 engine is good through 2020. The regulation offers several compliance options, as well as some exceptions. By Jan. 1, 2023, all trucks operating in California would have to meet 2010 emissions standards.

The other just-finalized regulation, which has come to be known somewhat misleadingly as the SmartWay rule, seeks to reduce greenhouse gas (GHG) emissions from trucks by mandating low rolling-resistance tires and aerodynamic styling and spec’ing choices on certain tractors and 53-foot box-type trailers. The regulation requires equipment that has been approved or verified by the Environmental Protection Agency’s SmartWay program, which is a voluntary initiative. That regulation takes effect in January for new equipment.

In addition to the GHG and truck/bus rules, two previously approved regulations affecting drayage operations and fleets operating refrigerated trailers are slated to kick in at the end of December. The drayage rule prohibits trucks with 1993 and older engines by Dec. 31 of this year, although several key ports already have implemented bans of trucks of that age or older. Trucks with engines 1994 through 2003 also must have particulate filters installed by that date. Those trucks, as well as trucks with 2004- 2006 model engines, will need to meet 2007 emissions standards or be replaced by 2014. Drayage trucks meeting 2007 emissions will be fine through 2020, when they would be subject to the phase-out schedule under the truck/bus rule.

Another previously approved regulation that is slated to take effect at the end of the year is one affecting transport refrigeration units (TRUs) on trailers. The American Trucking Associations and others are challenging EPA’s decision in January to grant a waiver to CARB to implement the rule, which would require that 2002 or older reefer unit engines meet low-emissions standards or be replaced by Dec. 31. Newer models would be subject to ultra-low-emissions standards by Dec. 31 of the year that is the model year plus seven years. In other words, a reefer unit with a 2004 engine would either have to be retrofit or replaced to meet ultra-low-emissions standards by Dec. 31, 2011.

All of these mandates are on top of existing rules regulating auxiliary power units on trucks with 2007 or newer engines and limiting engine idling to five minutes in the absence of an approved Clean Idle engine.

Most of the new and recent CARB rules contain provisions that will require clarification or interpretation, or will work to disadvantage some fleets relative to others, notes Kirk Altrichter, vice president of maintenance for Pacific, Wash.-based Gordon Trucking. Some also could lead to unexpected headaches, Altrichter said during a presentation in September at the Technology and Maintenance Council Fall Meeting in Raleigh, N.C. For example, CARB is requiring that aerodynamic technologies not be used if they are damaged to the extent that their effectiveness is compromised. For starters, fleet will bear maintenance costs, but the extent to which a device is too damaged also could be a judgment call, he says.

Altrichter also questions whether CARB misses the larger picture. Gordon Trucking calculates that all of the technologies CARB contemplates would add up to 1,750 pounds per tractor-trailer. The effect, therefore, would be to reduce payload, requiring more trucks to haul the same freight.

For details on all CARB regulations regarding commercial trucks, visit the agency’s interactive webpage at www.arb.ca.gov/truckstop.

Commercial Carrier Journal, 11/2009

 
Supply chain becomes key to efficiency
Tuesday, 24 November 2009 00:00

Supply chain. Logistics. I know, they’re words that sound arcane or boring or both.

But before you roll your eyes and move on to the next article, please realize how important they’re becoming in the business world.

That was made clear to me recently by three unrelated events.

First, when I was interviewing Dr. Helene Gayle, chief of CARE, I did not expect to get into a discussion about logistics. But she talked about the importance of developing an efficient supply-chain system so CARE can get disaster relief to calamity-stricken areas as quickly as possible.

What’s more, the Metro Atlanta Chamber of Commerce is targeting logistics as a key growth engine. That’s partially because of the local expertise of companies like UPS, Home Depot and Manhattan Associates, and our position as an airport, rail and trucking hub.

Finally, my 20-year-old son, a junior in college, is taking a required supply-chain course this semester. He can’t get a business degree without it.

What gives?

To find out, I talked with Craig Menear, head of merchandising and supply chain at Home Depot.

“Supply chain is how you drive the effective flow of product, so you get the right product in the right place at the right time,” Menear said. “It can drive enormous efficiency or inefficiency in retail or manufacturing, and have a big impact on working capital.”

For a retailer, Menear said, working capital is deployed to stock shelves and for a manufacturer, it’s used to buy materials to make goods. Inefficiency means lots of money gets squandered.

“Supply chain’s importance has grown as companies look to drive the cost of operations down and the return on capital up,” Menear, 52, said.

One of those companies is Home Depot. The world’s largest home-improvement retailer is in the middle of fixing what became an inefficient supply chain system as the company grew. Instead of having manufacturers or suppliers deliver their products to each individual store, the company is spending $260 million to open 20 Rapid Deployment Centers throughout the country.

The suppliers ship goods to these so-called RDCs and then these centers deliver them to each store, improving the inventory situation. Unlike how it worked previously, there are no minimum requirements from suppliers before a store can place orders because the RDCs are ordering for many stores. Before, either a store had to order unneeded inventory, tying up cash, or go without.

“Customer service starts with in-stock,” Menear said. “You can have the best location and the best associates in the world. But if they don’t have the product, they disappoint the customer. … Customers are time-starved.”

The RDCs also reduce the time it takes for a store to re-stock shelves. And Home Depot’s overall transportation costs are reduced because its trucks are more efficiently organized at the RDCs to carry more goods.

“We’re flowing much more effective cubic feet inside the trucks,” Menear said.

All told, Menear said the RDC investment will improve gross profit margins by 20 basis points to 40 basis points—and take $1 billion of unneeded inventory out of the system when all the centers are up and running next year.

“This business environment has forced everybody to become more efficient,” Menear said.

Now I understand.

Atlanta Journal Constitution, 11/24/2009

 
Washington Distractions Hurt Freight, Leaders Say
Friday, 20 November 2009 13:19

Politicians’ fixations on issues such as health care are deflecting attention from crucial restoration of the transportation infrastructure and impairing the ability of American businesses to cope with the recession and revive the freight industry, three industry leaders said during a recent roundtable discussion.

Those key messages need to be driven home to Congress, the White House and the Transportation Department; said leaders from the Intermodal Association of North America, the National Industrial Transportation League and the Transportation Intermediaries Association during the event held recently and was sponsored by Transport Topics.

“Apparently, our government can do only one thing at a time—and that is health care,” said Bruce Carlton, president of NITL. “Like it or not, that is where we are. We are stalled. This city [Washington] is in neutral.”

Joni Casey, president of IANA, agreed.

“Maybe we can help Congress learn to multitask, because that ultimately is what is going to have to happen,” she said. “The infrastructure needs did not take a sabbatical during the recession. In fact, the deterioration continues. The infrastructure needs have only increased because of the lack of attention and funding.”

Meeting with Transport Topics staff before the Intermodal Expo and TransComp, scheduled for this week in Anaheim, Calif., the officials were united in their view that U.S. leaders need to focus on freight policy and funding now, as intermodal and other freight indicators show some signs of improvement.

In addition to calling for faster action in Washington, Carlton, Casey and TIA President Robert Voltmann, analyzed other issues, including the Transportation Department and environmental matters.

The three association leaders offered their comments as Washington officials also struggle with challenging economic and geopolitical decisions while long-term transportation issues are pushed aside, they said.

“We’ve got to move people to work and goods to market,” Voltmann said. “For the past several administrations, they have ignored all of it. This administration seems to be putting those decisions off yet again. We haven’t worried about keeping U.S. manufacturing in the U.S., which is a product of not being able to move freight to market efficiently.”

Getting the economy moving again is freight shippers’ top concern, Carlton said, noting that Americans have become more aware of the importance of transportation as “a well-oiled machine.”

“The process breaks down when the only discussion of transportation [in Washington] is Interstate 66 and the backups at every commuter rush hour,” Carlton added. “The long-term reauthorization that everyone is hoping for in point of fact is not happening. Maybe there will be a miracle—but it’s not very likely.”

Voltmann said the reauthorization process “was hijacked by health care and a new Transportation secretary that said we are not going to deal with it.” At the same time, however, he credited Rep. James Oberstar (D-Minn.), chairman of the Transportation and Infrastructure Committee, for his readiness to get new legislation passed this year.

As politicians focus elsewhere, the freight business is showing signs of life.

IANA statistics show that domestic intermodal volumes have grown by 1.5% to 4% over the past several months, Casey said, consistent with economic indicators such as industrial production.

“You have to take, in this case, a little shorter window of comparison to see some of the positive indications,” she said. “If we continue to compare volumes to last year or the year before or the benchmark year of 2006, you are always going to come up short.”

The officials backed a fuel tax increase, also supported by American Trucking Associations, to pay for improvements—as long as the money is used for infrastructure.

“We have to stay with the tried and true funding mechanisms . . . and not throw those out because we have administration officials that feel, with the economic downturn, that people don’t want to hear or think about that [a fuel tax increase],” Casey said. “If you poll people who are sitting in traffic, I will guarantee you that they are willing to give you a couple of pennies more, at least, if they didn’t have to sit.”

“The most efficient tax the federal government has is the gas tax—it costs pennies to collect,” Voltmann said. “It’s needed to be adjusted for years. Make it a percentage instead of a flat dollar amount.”

“It’s a nearly perfect system,” Carlton said. “I don’t really know why we were collectively bamboozled the last time around and the second-to-last time around when it was fixed without an inflation adjustment. That was truly sticking our collective heads in the sand.”

They also broadly agreed on the need to set and follow through on federal transport policy priorities.

“It’s about prioritizing and focusing on areas of real need, even if that violates the fundamental Washington premise of spreading the wealth,” Carlton said.

Transport Topics, 11/16/2009

 
U.S. West Coast Ports Announce Collaboration
Monday, 16 November 2009 00:00

Six major US West Coast ports and two western railroads recently announced their intent to collaborate at the World Shipping Summit (WSS) in Qingdao, China. The U.S. West Coast Collaboration (USWCC) is comprised of six container-ports on the U.S. West Coast—Seattle, Tacoma, Portland, Oakland, Long Beach, and Los Angeles—along with BNSF Railway Company and Union Pacific Railroad.

According to Omar Benjamin, executive director, Port of Oakland, “Today’s economic conditions have compelled all of us to take a closer look at how we conduct our business to discover new approaches that yield improved results. This is happening throughout the entire supply chain, and U.S. West Coast ports and Western railroads are no exception. Our mission is to further strengthen the U.S. West Coast ports’ position as the preferred gateway for Asia cargo to and from the US Midwest and U.S. cities further east.”

Timothy Farrell, executive director of the Port of Tacoma, highlights the advantages that the ports offer in terms of shipping choices and access to growing US and international consumer markets. “We have more than 100 ships sailing to and from the West Coast each week,” Farrell says, “providing access to 80 ports in 36 key consumer markets around the world. Looking to the future, our ports will provide strategic access to America’s consumers, whose numbers are expected to grow to 228 million by 2030.”

John Kaiser, vice president and general manager, Union Pacific Railroad, comments, “Union Pacific has a long track record of investing in its network to support the growth of the West Coast ports and its customers. With valuable input from both, we use a systematic, structured approach. We have added capacity and enhanced service through new and expanded terminals, a new interline gateway and additional main line capacity. Working with the ports, we are creating faster, more reliable service, as well as greater access to growing markets throughout the United States.”

According to John Lanigan, BNSF executive vice president and chief marketing officer, “BNSF and the other members of the U.S. West Coast Collaboration are committed to helping shippers get more from their supply chains. At BNSF alone, we have invested $30 billion to create a rail network that delivers more goods, to more markets faster and with less environmental impact than all-water alternatives."

Richard Steinke, executive director, Port of Long Beach, says, “The U.S. West Coast Ports are major players in world trade because of our deep water, vast container terminals, an unrivaled roadway and rail network, and the neighboring warehousing to complement our ports. These advantages enable us to handle more than $450 billion in trade a year.”

Geraldine Knatz, executive director of the Port of Los Angeles, emphasizes the U.S. West Coast rail network and infrastructure. “Beyond our local markets, the West Coast ports offer 200-250 weekly trains to all major intermodal hubs in the United States. Our terminals are served by both on-dock and neardock facilities that guarantee cargo shipments leave our docks within eight hours of arrival by ship. Based on a scenario of 8,000 TEUs per acre, our total U.S. West Coast capacity today is almost 41 million TEUs and growing.” Transit times from China to the U.S. West Coast, she adds, are 10 to 14 days, with rail from four-six days to the Midwest and East Coast.

Members of the USWCC traveled to Washington, D.C., this past summer to carry the message to the federal level—a national goods movement plan is essential for sustaining America’s role in global trade; and that more federal resources are necessary to maximize the advantages of moving goods from Asia through the U.S. West Coast.

Meetings with top leadership among the ports and rails followed soon thereafter and a strong commitment was made to develop a new collaborative effort that would achieve the following objectives: Identify and communicate the strengths and advantages of shipping through the U.S. West Coast with ocean carriers and cargo owners; clarify and correct misinformation and/or misperceptions about the U.S. West Coast ports and the Western railroads; create one strong voice in Washington advocating for investment in U.S. West Coast gateway intermodal infrastructure, and promoting a strong national goods movement strategy.

The benefits of the combined gateway include:

Service: 30+ ocean carriers, two Class I rail networks, supported by trucking and logistics services and warehousing facilities. 31 container terminals with 225 cranes and more than 2000 hectares of capacity

Network: 100+ weekly vessel calls with direct connections to 80 ports in 36 countries and links to multiple North American road and rail routes

Cost efficiency: Closest U.S. ports to Asia, lower fuel consumption, larger economies of scale

Reliability: Multiple ports/routing options, ample labor force, proven track record

Responsibility: Lowest carbon emissions to U.S. markets, proactive environmental programs

Logistics Today, 11/16/2009

 
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