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Transportation News Bulletins - Logistics

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U.S. Postal Service Lost $3.8 Billion in 2009
Monday, 16 November 2009 00:00
Revenue dives $6.8 billion as mail volume plunges 12.7 percent

The U.S. Postal Service lost $3.8 billion in its fiscal year 2009, in what the chief financial officer called “one of the most challenging (years) in the history of the Postal Service.”

Operating revenue dived $6.8 billion to $68.1 billion as volume plunged 12.7 percent to 177.1 billion pieces.

Cost-cutting efforts resulted in $6 billion in savings and a $4 billion reduction in required payments for retiree health benefits, USPS said. The savings came through job losses for 40,000 career USPS employees as well as reductions in overtime hours, transportation and other costs. The health benefit payment reduction was passed into law for fiscal 2009 to allow USPS to maintain fiscal solvency while continuing to provide service.

Despite the savings, this year’s deficit topped last year’s by $1 billion.

“The deep economic recession, and to a lesser extent the ongoing migration of mail to electronic alternatives, significantly affected all mail products, creating a large imbalance between revenues and costs,” said Chief Financial Officer Joseph Corbett.

The Postal Service will file its 2010 Integrated Financial Plan later this week. The plan estimates a revenue decline of $2.2 billion, a net loss of $7.8 billion, cost reductions of more than $3.5 billion and a reduction in mail volume of 11 billion pieces for the year, based on the assumption that there will be no change in the number of delivery days per week, and no change in the current retiree health benefits payment schedule.

“We’re grateful to Congress and the Administration for the necessary 2009 adjustment to our retiree health payment,” said Postmaster General John Potter. But he urged further help, saying, “As volume contracts and we struggle to match the costs of an expanding delivery network with revenues received, it’s clear that long-term success requires fundamental, legislative change.”

Journal of Commerce Online, 11/16/2009

Importers readying for 10+2 enforcement
Thursday, 12 November 2009 00:00

The so-called 10+2 regulation has been in the trade horizon for some years, first in the discussion and rulemaking phases and then with its formal enactment in January 2009. Despite its entry on the books, however, U.S. Customs and Border Protection has held off on the formal enforcement of the regulation, with fines and other penalties such as denied entries, for a full year.

That grace period is about to expire, and importers are making the final tweaks to their systems and processes to make sure that they are in compliance. Although importers should have been working on this for some time, industry observers note that there will be a transition in the run-up to January.

"There are always early adopters" of technologies and systems, said Michael Odrzywolski, a product manager for U.S. Customs Brokerage at Livingston International, a logistics provider and customs broker with head offices in Buffalo and Toronto. "There was a lull during the summer, but now everyone else is kicking into gear as we get closer get to January."

The regulation in question requires that importers collect and submit to CBP, in an Importers Security Filing (ISF), twelve data elements in connection with import shipments. Ten data elements which provide descriptive information in shipments are due 24 hours prior to vessel loading. This information includes the identity and location of the manufacturer, seller, and buyer; the eventual destination; the container stuffing location and the stuffer’s identity; the identities of the importer of record and the consignee; the country of origin of the goods; and the Commodity Harmonized Tariff Schedule number.

Two message sets to be provided by the ocean carrier are due within 48 hours of vessel departure; including the vessel stow plan and any container status messages.

Once enforcement begins, importers will be much more careful to comply with the rule, according to Gary Price, Livingston's director of U.S. marketing. "I expect that once the regulation is being enforced, we will see an increase number of times importers will be modifying their filings," he said.

The rule's requirements present a number of challenges to importers. "One of the biggest problems is coordination between the importer and the carrier," said Jackson Wood, a corporate business manager at eCustoms, a Buffalo-based provider of trade compliance software. "The importer is responsible for the filing, yet it must rely on the shipping company to provide some of the data."

"Importers often struggle getting information, especially for unrelated suppliers," added Price. "They used to collect his information while the vessel was on route. Now the time frame has been moved to prior to vessel loading."

Some importers don't have a great deal of visibility about who they are doing business with. "Where some importers run into issues is with overseas companies that have agents here placing orders," said Paul Kaszubski, managing director for customs compliance at Livingston Consulting. And yet visibility is exactly what CBP is demanding, especially when it comes to receiving favorable treatment as part of programs like the Customs-Trade Partnership Against Terrorism (C-TPAT).

Some larger companies are relying on electronic data interchange (EDI) for the transmission of the ISF to Customs, according to Price. This presupposes that all of the required data is available in electronic format, which is not always the case, and could require the use of specialized EDI service providers.

Alternatives to EDI include the internet portal services provided by both Livingston and eCustoms. Users of the portal are able to log on to the site to enter information pertinent to the ISF.

Portals also allow for collaboration among diverse parties, all of whom must provide information for a common ISF filing. An importer can arrange for overseas supplies to gain access to the site for the purposes of adding ISF data and viewing information pertinent to that particular supplier. Around half of Livingston's portal customers are requiring their supply chain partners by contract to enter relevant ISF data in connection with their shipments, according to Price.

"This minimizes the burden on importers to gather all of this data in electronic format and transmit it on," he said. The Livingston tool, which is a standalone application and part of its electronic customs brokerage package, can also accommodate EDI messages.

The eCustoms ISF tool endeavors to make the data submission process as simple as possible by consolidating it onto a single web page, according to Wood. "We put a lot of research and development into the interface," he said. "Once the information is added to the page and the user believes it is correct the user clicks the submit button. The software then analyzes the submission to make sure all fields are populated with data and sends a notification to the user in case of error. When it is complete, the form is submitted to CBP. Once CBP sends an accepted message, it is returned back to the software and the customer has the green light to proceed with the shipment."

The eCustoms application can also be integrated with an information system infrastructure so that relevant data can be pulled into the application automatically. The eCustoms tool is also one module as part of a larger electronic system which automates importing and customs brokerage processes.

Compliance with 10+2 should make it easier to demonstrate "reasonable care," the key criterion which CBP requires of importers to receive favored treatment of their shipments under programs like C-TPAT. "Those are CBP's two magic words," said Livingston's Kaszubski. The 10+2 process will "expose where a company is not being compliant. Importers should know who their business partners are. It is all part of performing due diligence. They should be maintaining their databases properly to provide the proper tariff classification. They should have process to ensure uniformity and control over what they are presenting to Customs."

CBP views programs like C-TPAT as business partnerships "and they want to know your business," Kaszubski continued. "They ask for much of this information in a general way on the C-TPAT application. With 10+2 CBP is collecting this information for every shipment. They want to know as much as possible about what is coming in. This visibility supports their decisions on which shipments to target. Then they want to be able to locate a shipment that they decide to inspect."

Importers should have their "ducks lined up," advised Kaszubski in order to receive favorable treatment by Customs in the event of an incident which shuts a port down. "That way yours will be one of the first to move when they start releasing shipments." Now is the time, said Kaszubski, for importers to fine tune their processes and procedures to make sure that all parties are providing data on a timely basis. "Customs has given importers a window during which to test everything and iron out any glitches before the 2010 deadline," he said.

American Journal of Transportation, 11/12/2009

Border advocacy group says $6 billion, 5,000 inspectors needed to bolster land port security
Thursday, 12 November 2009 00:00

McALLEN, TX—The country's understaffed land ports of entry need massive investments in infrastructure, technology and personnel to avoid becoming the path of choice for human and drug smugglers, according to a report released Wednesday by a border advocacy group.

The Texas Border Coalition, a group representing border city mayors, county judges and economic development commissions, called for $6 billion to improve land ports of entry and 5,000 new customs officers during the next four years. The group said the money is needed to correct the imbalance between the security at ports of entry and the security covering the points between.

"We definitely have to redirect the way we've been thinking," said Monica Weisberg-Stewart, chairwoman of the coalition's Border Security and Immigration Committee. In addition to shoring up security at the ports of entry, the additional funding and staffing would also help with facilitating legitimate trade and travel, said Weisberg-Stewart, a McAllen business owner.

From 1993 to a projected 2010, the Border Patrol budget has grown from $400 million to an expected $3.5 billion while funding for customs inspectors increased from $1.6 billion to an anticipated $2.7 billion during the same period, according to the report.

Comparisons between the security situation in the two areas are difficult. The only hard numbers available are for apprehensions of illegal immigrants, leaving how much gets by beyond that to guessing. But the coalition argues that the funding discrepancy is making ports of entry more attractive targets for smuggling.

"In the present environment, the (drug) cartels are choosing to conduct their trade across the bridges and highways, through the ports of entry and are rejecting the risk of crossing the Rio Grande and open spaces between the ports of entry," the report said.

It echoed one of the recommendations from the Southwest Border Task Force, created by Homeland Security Secretary Janet Napolitano, which advised in September that the ports of entry were in serious need of improvement.

And last month, the president of the National Treasury Employees Union, which represents customs officers, testified before Congress that the federal Customs and Border Protection agency needed several thousand additional customs officers and agriculture inspectors.

A 2007 report by the Government Accountability Office noted that the agency's managers at land ports said understaffing contributed to "morale problems, fatigue, lack of backup support and safety issues when officers inspect travelers—increasing the potential that terrorists, inadmissible travelers and illicit goods could enter the country."

Representatives of Customs and Border Protection and the General Services Administration, which controls the majority of the land port facilities, were not immediately able to offer comment. Government offices were closed Wednesday for Veterans Day.

There are 42 land ports of entry on the southern and northern borders.

The Texas Border Coalition, which opposed the border fence built along 670 miles of the southern border, plans to formally present its report at a conference Friday in Laredo.

Los Angeles Times, 11/12/2009

Stimulus Supports 10,000 Transport Projects
Thursday, 12 November 2009 00:00
State agencies approved transportation construction under ARRA.

The economic stimulus law has now racked up more than 10,000 transportation construction projects that it is backing, according to Vice President Joseph Biden and Transportation Secretary Ray LaHood.

They said state agencies this week reported they had approved 10,041 projects for funding under the American Recovery and Reinvestment Act.

Most stimulus projects aided by the Department of Transportation go to highways and bridges, initially for quick-start repairs and resurfacing but increasingly for more lengthy construction including new lanes or bridge structures.

The law was approved by Congress and signed by President Obama in February. DOT first had to go through state project applications. Once it OK’d them, states could begin lining up construction crews for the immediate repairs or bring in engineers to plan for new projects.

Despite persistent criticism that the DOT is not pushing the stimulus work fast enough, especially with the jobless rate now at 10.2 percent and still rising, the administration says it has already created or saved over 1 million jobs with Recovery Act spending.

“Just nine months in, tens of thousands of people are on the job at highway, bridge, rail and airport improvement projects across the country” because of DOT’s stimulus projects, said Biden. He said the construction would help as well to “lay a strong foundation to support our 21st century economy.”

Out of $48.1 billion available for DOT to award, it has obligated $30.6 billion for road, transit, bridge and airport work. And it said 6,547 transportation projects have already gotten under way.

Journal of Commerce Online, 11/12/2009

Logistics Firms Seek Ways to Cut Costs to Cope With Revenue Drop in 2009
Monday, 09 November 2009 00:00

Logistics service providers are adjusting as the global economic downturn has caused many companies to curtail production and reduce inventories, stalling the longtime trend of expanding international trade, thereby reducing demand for transportation services in North America.

“We estimate that 2009 will be the first recorded negative year in third-party logistics revenue growth since we started tracking it in 1996,” said Richard Armstrong, chairman of Armstrong & Associates in Stoughton, Wis.

Armstrong works with Transport Topics to compile the annual list of the Top 50 Logistics Companies.

UPS Supply Chain Solutions and Exel Americas remain Nos. 1 and 2 on the list, which is based on revenue from logistics activities in the United States, Canada and Mexico.

While revenue for some companies has fallen in the past 12 months, industry observers said they expect spending on logistics services to continue to grow as more companies look for ways to reduce distribution costs.

“We’ve seen a very significant increase in focus on the supply chain,” said Paul Carbery, managing principal of Frontenac Co., an investment firm with stakes in several distribution-related companies.

Carbery said firms are targeting improvements in transportation and logistics as a way to reduce operating costs and limit the need for debt to fund ongoing business operations.

John Paugh of Carter Logistics in Anderson, Ind., said his firm sees increased demand for what he calls a “shared milk-run network,” in which parts and materials for several different manufacturing firms are picked up and delivered in the same tractor-trailer. That reduces the number of trucks required to make deliveries and reduces storage costs by fully utilizing space in trailers and in warehouses.

With excess freight-hauling capacity, especially among air and ocean carriers, many shippers are seeking to lock in lower freight rates.

Steve Sienkiewicz, senior vice president of global sales and marketing for Agility Logistics, said shippers are requesting more “dialogue” with freight carriers on capacity commitments, and they want the ability to make adjustments as market conditions change.

And there are signs that the economy is improving.

“Retailers are slowly starting to import more merchandise, and that’s a positive sign,” said Jonathan Gold, vice president for supply chain and customs policy for the National Retail Federation.

Transport Topics, 11/9/2009

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