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Transportation News Bulletins - Logistics

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Closing the loop
Monday, 19 October 2009 12:21
Automated communications lacking with shippers, 3PLs

Many carriers use electronic data interchange (EDI) and various Internet-based technologies to automate the communications process with customers. As more shippers deploy transportation management systems (TMS) and outsource to third-party logistics firms, the level of complexity of electronic communications is increasing, says Woody Lovelace, director of corporate planning for Southeastern Freight Lines, a less-than-truckload carrier based in Columbia, S.C.

Pickups are one instance where the complexity can cause problems. For starters, many of the communication protocols in TMS originally were developed for the truckload model and still require some adjustments to work seamlessly with LTL, Lovelace says. At SEFL, 10 percent of the fleet’s pickup orders currently are received electronically. Lovelace expects this figure will grow to 20 or 25 percent next year as a result of more shippers deploying TMS and outsourcing to 3PLs.

Lovelace welcomes the increase, but the change comes with a bullet. Consider the standard EDI transaction set used to tender loads to carriers (204). Upon receipt, the carrier has a block of time to accept or reject the load. From the LTL perspective, a 204 is not a load offer but a pickup request, Lovelace says. “If a shipment is within our service area, we don’t need to tell you if we will take it or not,” he says. “We take them.”

LTL carriers usually will set up their systems to “auto-accept” 204s, or alternatively will have their customers send an electronic bill of lading (a 211) on the day a shipment is to be picked up, Lovelace says.

In some scenarios, 3PLs are sending a pickup request—either a 204 or 211—to the carrier before the shipment is available. “We do have challenges where a pickup doesn’t match up with what we actually received,” Lovelace says.

A 3PL usually is not physically sitting with the freight. Instead, its TMS is at work behind the scenes automatically generating pickup orders for carriers when the consignees in its system make purchase orders.

In addition, 3PLs’ TMS software often generates supplemental numbers for each pickup that are not found on the physical bill of lading. To accurately submit freight bills and receive payment, carriers have to match these supplemental numbers to the physical bills they collect at pickup.

Sometimes the miscommunication between 3PLs and shippers results in carriers missing pickups altogether. Suppose the carrier receives a pickup request and dispatches a truck, but the shipment is not ready or the shipper is not expecting a pickup. Currently, the only EDI transaction used for such events is the 214, a status update. The carrier sends the first 214 when a pickup is made. If the carrier misses a pickup, no 214 is sent.

“There is not an EDI standard that says ‘We missed it,’” Lovelace says. Nor is there a standard set of reasons to describe why a shipment was missed. In the event the carrier does not send a 214, some 3PLs automatically send a spreadsheet that the carrier has to fill out. This process adds manual research and data input for the carrier.

To address these challenges, Lovelace has initiated a task force project for the Information and Technology Logistics Council of the American Trucking Associations. The task force will develop a recommended transaction set for missed pickups, including noting when the carrier was at fault.

When complete, ITLC’s task force will send its recommendations to the X12 subcommittee of the Accredited Standards Group. Lovelace anticipates that the X12 subcommittee either will modify the existing 214 transaction to add new status types for missed pickups, or will create a new EDI transaction set.

In the near future, perhaps as a direct result of Lovelace’s work, shippers and 3PLs that use EDI and other electronic processes will add “pickup compliance” to the set of carrier metrics that already include on-time service, claims-free delivery and invoice accuracy. If the measure is accurate and automated, carriers won’t mind.

Commercial Carrier Journal, 9/2009

Pump prices rise quickly as refiners cut back
Monday, 19 October 2009 00:00

Many people filling up cars for the week on Monday are getting a big surprise: gasoline prices have been climbing rapidly.

Gas is still a relative bargain compared with years past, but cheap fuel has been the good news story of a country racked by anxiety over making ends meet. Gas prices have now risen for six straight days.

After lingering below $2.50 for weeks, the national average price for a gallon of gas crossed that barrier Friday and has been moving up since. Prices rose almost 2 cents to $2.564 per gallon overnight, according to auto club AAA, Wright Express and Oil Price Information Service.

Prices in California, Hawaii and Alaska are above $3.

The force behind prices at the gas station can be found in the U.S. dollar, which has been falling steadily since the month began, and at refineries that are slashing production.

Because oil is bought and sold in dollars, crude essentially becomes cheaper for global investors and there has been a run recently on the New York Mercantile Exchange.

A barrel crossed $75 for the first time on Wednesday and came close to $80 Monday morning.

Benchmark crude for November delivery traded up 18 cents at $78.71 on the New York Mercantile Exchange by midday.

How long oil and gas prices continue to move upward is not known, but demand for both remains muted.

"We can certainly produce as much fuel to meet the demand we're seeing right now," said Fred Rozell, retail pricing director at Oil Price Information Service.

Yet that may be the other strong force behind rising gas prices.

Refiners must also buy crude that is growing more expensive to make fuel. And prices are rising at a time when people are not driving like they used to. Trucking companies are not carrying as much freight because of the recession and airlines aren't buying as much jet fuel because business travel is down.

So refiners are shutting down operations or starting regular maintenance while sales are slow.

A government report last week showed that refiners have slashed production to levels more common in the aftermath of a hurricane, which can disrupt operations in the Gulf of Mexico.

San Antonio-based Valero Energy Corp. last month said it would idle two units at its Delaware City, Del., plant, cutting about 150 jobs, and Sunoco Inc. earlier this month said it would indefinitely idle its West Deptford, N.J., facility, which has about 400 full-time workers.

Demand is picking up slowly for fuel, but unless there is a big rebound, which few experts foresee, refiners are unlikely to ramp up production.

"The refining margins have been really pitiful, and as a result it doesn't really make sense to run at full capacities," Rozell said.

In other Nymex trading, heating oil rose less than a penny to $2.03 a gallon and gasoline for November delivery was essentially flat at $1.9775 a gallon. Natural gas for November delivery rose 11 cents to $4.89 per 1,000 cubic feet.

In London, Brent crude for December delivery fell 2 cents to $76.97 on the ICE Futures exchange., 10/19/2009

Demand soars Europe-Asia
Monday, 19 October 2009 00:00
Recyclables and growing China market driving volumes up

Forwarders and shipping lines have reported strong volume increases on the eastbound Europe-Asia trade over the past few months, while westbound demand has also increased.

The latest figures from the European Liner Affairs Association (ELAA) show volumes on services from Europe to Asia increased 10% year-on-year in August, to just under 470,000teu.

It is only the second volume increase and the first double-digit volume increase on the eastbound trade reported by the ELAA this year.

Kuehne + Nagel north-west Europe CEO Tim Scharwath said: "We have seen growth in the secondary recyclable materials sector—waste paper, metal scrap, plastic scrap—which is the driving the volumes to Asia.

"However, those volumes are very volatile. You may have an increase one month, but they can quite easily go down the next, because companies that trade with recyclable materials always ship to where they can get the best price."

Ian Connell, director of UK forwarder Energy Freight, added: "At the moment we’re doing more business on the eastbound trade than we have in recent times, which is fantastic news.

"As a result, shipping lines are successfully increasing rates, and that is not actually a bad thing for forwarders because when rates are low, forwarders’ margins are low."

CMA CGM senior VP for Asia Europe Nicolas Sartini told IFW the increased eastbound demand had started in May, and he was confident it would continue for the coming months.

"It is caused mainly by the continuous growth of the Chinese market," said Sartini. "[It is also] important to mention that carriers are still carrying important volumes of waste commodities."

Sartini was unsure whether the increased eastbound volumes were an indicator that westbound volumes would soon start to grow.

"It would be nice, but it is not 100% sure.

"A growing share of these eastbound volumes is used for the internal [Asian] market-consumption and investment.

"[But], we notice that some Chinese industries, which are foreign trade-oriented, are increasing their inbound volumes and their inventories to be in a position to serve more orders."

Taiwanese carrier Evergreen said it had also experienced stronger than expected demand for October and November as a result of companies replenishing stock, and the wider economic recovery.

This, combined with carriers reducing capacity levels, had resulted in "limited availability" of space.

Scharwath added that demand on the westbound Asia-Europe trade had also increased.

He said this was down to European companies restocking warehouses and trying to save transport costs in light of continuously increasing ocean freight rates.

ELAA figures show that in August westbound monthly volumes surpassed the 1m teu mark in August for only the second time this year. However, volumes were still 11% down year-on-year.

International Freighting Weekly, 10/19/2009

Transport Advocates Optimistic About Road Bill Early Next Year
Monday, 19 October 2009 00:00
Timetable Affected by Health Care, Climate Debates.

Transportation officials said they are optimistic Congress still will pass a long-term highway bill in coming months, but the exact timetable could depend on how quickly lawmakers wrap up debate on other legislation.

Advocates for a long-term highway bill were buoyed by recent comments by Sen. Dick Durbin (D-Ill.), the Senate majority whip and a close ally of the White House, at an Iowa economic forum during which he indicated his support for passing a six-year transportation bill early next year.

“We have to pay for it, and paying for it may mean an increase in the federal gas tax,” Durbin said Oct. 12 at the Tri-State Development Summit in Fairfield, Iowa. “Nobody wants to say those words,” he added. “I’ve said them to you because unless we’re honest about this, we’re not going to see an [adequate] federal highway bill.”

Durbin’s comments were reported by the Quincy (Ill.) Herald-Whig newspaper and confirmed to Transport Topics by a spokesman for the senator.

The newspaper also reported that Durbin told business, labor and community leaders a fuel tax increase would “stimulate new job creation in America.”

A Senate staffer, who asked not to be identified, said lawmakers were “not that far along yet” in highway bill negotiations, but that Durbin appeared to be “trying to get things started.”

Just before the Sept. 30 expiration of the current highway law, it was extended by Congress until the end of October.

Tim Lynch, a senior vice president at American Trucking Associations, told TT that Durbin’s comments, coupled with failed efforts by Sens. Barbara Boxer (D-Calif.) and James Inhofe (R-Okla.) to push through a three-month extension of the highway bill in late September, are sending a signal “that folks in the Senate may, in fact, want to move a [long-term] bill.”

“We’ve been pushing for that bill sooner rather than later since January,” said Jim Berard, spokesman for Rep. James Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee. “So, it is a positive sign that there is support in the Senate.”

Despite this momentum, pending climate change and health-care legislation could delay action on a new highway bill, sources said.

Boxer said her committee would begin hearings on a cap-and-trade bill Oct. 27. She also said provisions have been sent to the U.S. Environmental Protection Agency for review.

ATA’s Lynch said if a climate bill passes, it could make it tougher for the federation to support an increase in taxes for the highway bill.

“. . . We would like to see Congress work on a reauthorization bill, and if they should move on a climate change bill first and impose substantial increases in the cost of fuel, this will make it extremely difficult for ATA to support a subsequent fuel tax increase to support the highway program,” he said.

Berard also signaled that debate on health care could further delay House action on highways.

“Nothing really changes until Ways and Means does their thing,” he said. “And they’re so wrapped up with the health-care bill; I don’t see it happening for a while.”

Noting the current extension carries through October, he said the House and Senate have “a month to debate what kind of extension we want and I think that’s where the debate is going to be.”

Transport Topics, 10/19/2009

Homeland Security Gives States More Time for Delayed Implementation of REAL ID
Monday, 19 October 2009 00:00

The Department of Homeland Security has given states several more weeks to request an extension for implementing toughened driver’s licenses and identification card security standards mandated by the 2005 REAL ID law.

Homeland Security Secretary Janet Napolitano extended the deadline to give Congress time to consider alternative legislation, known as PASS ID, which would be less costly, less burdensome and less controversial to implement, Matthew Chandler, a DHS spokesman said.

“REAL ID has put DHS, the states and the traveling public on a collision course, and Congress must act fast to fix it,” he said.

Chandler said that although Napolitano opposes implementation of REAL ID and is working to support the “Providing for Additional Security in States’ Identification Act of 2009,” or PASS ID, she still is bound to enforce the existing REAL ID federal law.

“Secretary Napolitano believes that PASS ID is the solution to the current stalemate that we find ourselves in under REAL ID,” Chandler said. “Under REAL ID, states that are not materially compliant with REAL ID by Dec. 31, 2009, risk that their residents will not be able to use state-issued driver’s licenses for official purposes, such as domestic air travel.”

The extension does not change the Dec. 31 compliance date—the date by when states must begin to issue driver’s licenses, commercial driver licenses and identification cards that are in compliance with the REAL ID standards—but it merely requires states to request an exemption by Dec. 1.

With the extension, the states would have until May 11, 2011, to implement the REAL ID Act, formally titled “Rearing and Empowering America for Longevity against acts of International Destruction Act.”

Several states have strongly criticized the post 9/11 REAL ID legislation as an “unfunded mandate.”

Officials in 18 states have said they intend to ignore the law and have passed resolutions banning its implementation.

The REAL ID law will bar individuals from entering federal buildings, airports and nuclear plants without the new more secure form of identification.

The fate of the PASS ID act, introduced in June by Sen. Daniel Akaka (D-Hawaii), is unknown. The Senate Committee on Homeland Security and Governmental Affairs approved the bill in July, but the full Senate has not yet voted on it. A companion bill in the House has been introduced, but no further action has been taken.

Napolitano opposed the REAL ID program when she was governor of Arizona and has been publicly opposing it in her new federal post since April.

In a policy position statement, the National Governors Association said it agrees with the necessity of protecting the security and integrity of driver’s licenses but said the REAL ID Act “places unnecessary and costly burdens on states.”

Sen. Susan Collins (R-Maine), ranking Republican on the Homeland Security Committee, said she supports many provisions of the PASS ID Act, but she told Napolitano that she remains troubled with language in the bill that could result in “unintended consequences.”

At a committee hearing in June, Collins said, “driver’s licenses are the keys to the kingdom for terrorists bent on death and destruction, and states have a responsibility to ensure licenses are tamper-proof and issued only to people whose identity and legal status can be verified.”

However, she said, “certain language in the PASS ID Act may undermine that goal because it would not allow TSA [Transportation Security Administration] to prevent a passenger from boarding a plane, based solely on the fact that he or she did not have a compliant license.”

Unless that wording is changed, Collins told Napolitano, “I think you’re creating a situation where a security official feels he or she has no choice but to let the person board the plane.”

DHS said the final rule would require issuing the secure licenses and identification cards to more than 240 million applicants. The agency estimated that the total cost to implement the REAL ID program would total $9.9 billion.

Transport Topics, 10/19/2009

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