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Transportation News Bulletins - Logistics

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Cautious optimism drives supply chain planning
Friday, 25 September 2009 00:00
Council of Supply Chain Management conference emphasizes planning for the upturn

CHICAGO—Speakers and attendees at the 2009 Council of Supply Chain Management Professionals (CSCMP) annual conference in Chicago this week were cautiously optimistic about future demand and are preparing strategies around inventory levels, supplier and carrier relationships and demand visibility as to meet the coming demand.

In a session focused on Transportation Measurement, John Wooten, senior procurement manager for logistics at Clorox Co., outlined that firm's strategies for a recent truckload bid, saying thanks to the prebid planning and data collection, the bid went better than expected. Clorox worked with benchmarking firm Chainalytics on benchmarking its processes and rates.

In "Resourcing to Mexico" three panelists highlighted the trends that are making Mexico a more viable global sourcing option in the new economy. Pete Montano, vice president of sales at Con-way Truckload, said that fuel prices may have dipped recently compared to their record-high levels a year ago, but longterm they will trend up and sourcing from Asia may not make as much sense. He points out that Con-way can get anywhere in the U.S. in two to three days from Mexico, so producing products or sourcing components from that market is a useful option for industries that require quick access to U.S. consumers.

One of those companies is LG Electronics, which has several plants in Mexico. Panelist Larry Monaghan, director of transportation and logistics for LG, pointed out that truckload shipments can go direct to U.S. customers from Mexico and "steamship lines are retiring ships at a record pace" which may impact capacity and rates on the ocean when demand increases again. LG ships about 80% out of Mexico by truck and 20% by rail, he said.

In a session entitled "Collaborative Procurement Strategies" panelists provided tips on how to build truly collaborative relationships with logistics carriers. "Collaboration is easy to say and hard to do," said Paul Newbourne, vice president at LXP, a lead logistics provider. He also said shippers should ensure the carriers they are working collaboratively with want to work that way.

JB Hunt's Mark Calcagni said LXP's strategy of bidding out business in smaller, more "digestible" chunks help the carrier plan capacity. And Mike Bunnell of CR England said LXP work with his company on rearranging some lanes that were not working for England. "We changed the pick up times and made some other changes in those lanes."

Logistics Management, 9/25/2009

 
DHS Launches Technology Program to Detect Weapons and Contraband from Inside Shipping Containers
Friday, 25 September 2009 00:00

WASHINGTON—U.S. Department of Homeland Security (DHS) officials in Washington are asking industry for ideas on how to design a small, inexpensive and unobtrusive electronic sensor for inside standard intermodal shipping containers that would detect and warn of dangerous weapons and contraband during a typical 21-day sea voyage.

DHS is issuing a broad agency announcement, BAA 09-17, for the Time Recorded Ubiquitous Sensor Technologies, or TRUST, program to detect and identify threats to the homeland, such as weapons of mass destruction (WMD) and contraband such as smuggled narcotics, agricultural products, humans, and weapons.

Sponsoring this project are officials of the DHS Science & Technology Directorate. They are looking for industry ideas involving risky technologies with big potential payoffs. DHS officials want a small, portable, prototype system able to operate reliably inside maritime shipping containers, which are produced with traditional microelectronics manufacturing techniques.

The TRUST program seeks to design weapons and contraband sensors optimized for long dwell times of as long as 21 days. Existing systems like the Safe Container (SAFECON) program are designed to detect these things in 60 seconds or less.

Specifically, TRUST sensors must operate:

  • without intervention as an in-situ device;
  • as a single system inside the shipping container;
  • by monitoring the atmosphere inside 20- and 40-foot intermodal shipping containers during transit;
  • by communicating with a physical interface mounted outside the container, such as the Marine Asset Tag Tracking System (MATTS); without disrupting maritime commerce; and
  • reliably in a shipboard environment.

TRUST sensors must man portable, operate autonomously, under limited power for as long as 21 days, be smaller than 12 inches long, six inches wide, and six inches high, weigh less than 30 pounds, and cost about $250.00 apiece in quantities of at least 100,000.

Proposals are due to DHS no later than 4 p.m. eastern time on 9 Nov. 2009. The two-phase program to develop a prototype TRUST sensor and integrate it into a realistic demonstration is potentially worth $15 million to the successful bidder.

Submit questions by e-mail to: This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Before bidding, those interested must register online https://baa.st.dhs.gov.

For more information, see the DHS TRUST solicitation online at https://www.fbo.gov/.

Cargo Business News, 9/25/2009

 
Requests Skyrocket for DOT Grants
Friday, 25 September 2009 00:00
Transport groups ask for $57 billion from stimulus pool of only $1.5 billion

Transportation Secretary Ray LaHood’s $1.5 billion discretionary grant pool won’t come anywhere close to meeting its requests, as states and other transport groups sent in applications for $56.9 billion to cover highway projects as well as transit, rail, seaport and other construction needs.

While LaHood has said he will spend some of these grants on ports because no other stimulus fund specifically covered them, ports turned in requests for $3.38 billion, or more than twice the entire discretionary funding account.

The Department of Transportation calls these TIGER grants, taken from the name it earlier gave to the cross-agency team within DOT that began coordinating Recovery Act implementation policies even before most senior department officials were confirmed by Congress.

The acronym stands for “Transportation Investment Generating Economic Recovery.” In all, the TIGER team has pushed through application policies for $48 billion that DOT alone will spend under the Recovery Act.

But while nearly all of that was targeted for precise types of allocations by Congress—with amounts dominated by highway and bridge repairs but including accounts for airports, railroads and transit system—lawmakers also gave the secretary this untargeted grant account to spend on projects he deemed worthy.

Applications were due into DOT on Sept. 15, and LaHood said the result was “an outpouring of creative and innovative transportation project proposals.” Now comes the waiting for an answer, which could begin soon but may take until Feb. 17, 2010. DOT said LaHood “has committed to announcing all of the projects by January.”

An example is a request for $36 million from Port Manatee, Fla., to build a container handling terminal, extend a ship berth by half, add a mobile crane and buy two switcher locomotives.

While that is small compared with the total account, it is just one of nearly 800 applications for grants ranging from $20 million to $100 million. Ports alone submitted 96 requests or 7 percent of all applications.

Some are hoping for grants to be significantly larger.

The railroad industry’s multi-year program to untangle congestion in Chicago, the continent’s premier hub, hopes for $300 million in TIGER grants. Norfolk Southern Railway also wants $300 million, to fund key parts of its planned Crescent Corridor capacity expansion program that could bring it much more intermodal business from Mississippi River delta terminals up to New York.

Projects seeking over $100 million, said DOT, must provide “an economic benefit-cost analysis” that considers “fuel and travel time savings, carbon emission reductions and economic and public health benefits.”

In all, DOT said it received 1,381 requests for money from the $1.5 billion grant fund. They include 125 rail applications for $5.6 billion; transit systems turned in 220 requests for nearly $11 billion; and states poured in 770 applications for $32 billion in highway infrastructure grants.

For more details, see http://www.dot.gov/recovery/docs/tdgappoverview.pdf.

Journal of Commerce, 9/25/2009

 
Feel-good factor returning as recruitment firms report vacancies
Monday, 21 September 2009 00:00

Hiring employees in the freight industry is back on the agenda again after a pickup in business over the last couple of months.

Recruitment companies operating at a variety of levels told IFW last week that there has been a recent uplift in enquiries from freight forwarders and logistics companies looking to expand headcounts.

Craig Shaffner, operations manager at AA Appointments, had more vacancies on his books than at the same time last year. "There is a feel-good factor going on. I’m probably pulling in 10 to 15 vacancies a week, although it remains quite hard to get good people."

Chas Dowton, director at specialist freight recruitment agency First Choice, said: "This has probably been one of the toughest years—certainly worse than after 9/11—and we’ve gone from a situation in last December, January and February where companies were laying-off staff, to having the past three months of continuous improvement."

However, he added that most of the new appointments were temporary posts, rather than for permanent positions.

"What’s happened is that a lot of companies are really stretched after making redundancies earlier in the year. As soon as the workload picks up they are hiring temporary staff to cover that work, and covering those slots until they are ready to hire permanently.

"August saw our best performance, but I wouldn’t get too excited by it—a lot of companies are still very cautious, and no one is sure how long the recovery will take.

"One client told me he expects it to pick up until November and December, when it will slow, before picking up again next year. If it is a w-shaped recession, we are right at the middle of the w."

He also added that much of the recruitment was for lower-level posts, and the executive search side was recovering at a slower pace.

"Companies want management that will bring business with them, but there are not enough quality people like that."

Larry Woelk, business development director at BiS George Henderson, said that in the last few weeks the logistics recruitment firm had begun receiving unsolicited requests from companies looking to hire.

"For most of this year, most of our assignments came out of our own initiatives.

"I would say that the market is certainly perkier than it was, but it is also more difficult to identify good people. There are a lot more applicants, but less quality, which makes our job harder because every position we have is flooded with applicants.

"But the feel-good factor is starting to return. There’s definitely more of a buzz, although it’s also fair to say that the sector takes longer to feel good than bad."

International Freighting Weekly, 9/21/2009

 
Broker Failures Skyrocket as Shipper Payments Slow
Monday, 21 September 2009 00:00

Freight broker failures have skyrocketed at least 74% in the past 12 months, as they are caught in a financial squeeze between some slower-paying shippers and the carriers who want to be paid promptly for hauling freight, industry officials said.

“There is a growing trend in broker bankruptcies,” Greg Conklin, executive director of sales and business development at First Advantage, Poway, Calif., a credit monitoring company, told Transport Topics. With the recession forcing shippers to stretch payment terms beyond the typical 30 days, Conklin said, 66 brokers have gone bankrupt since September 2008, compared with 38 in the 12 months before that.

The number of failures is far higher when a different measurement is used. Winston Astin, CEO of TransCredit, said 682 third-party businesses failed between July 2008 and July 2009 and no longer answer phone, fax or e-mail contacts.

“Many small operators just fade away instead of bothering to file for bankruptcy,” said Astin, whose firm maintains a listing of 18,000 brokers.

Acknowledging that failures have increased, Robert Voltmann, president of the Transportation Intermediaries Association, said, “It’s really a function of cash flow. These businesses are banks. They are paying the carriers long before they get paid by the shipper. If you have your cash flow compromised because shippers extend their payments—you’re dead.”

Conklin said broker failures peaked at 15 in October 2008 as the financial crisis deepened. Based on this year’s average of 5.1 a month, 61 brokers could go bankrupt during 2009, compared with 50 last year.

Broker bankruptcies that totaled 13 last quarter, based on First Advantage’s figures, trailed far behind the 370 fleet bankruptcies tallied in that period by Avondale Partners, because the businesses are different.

“You see more bankruptcy filings in asset-based entities simply because of the debt they incurred,” Conklin told TT. “Bankruptcies in brokerage are not as common. There is no ability to sell off assets since there are not a whole lot of assets to reorganize [through a Chapter 11 filing].”

Donald Broughton, author of Avondale’s carrier bankruptcy report, said it’s easier for a bank to foreclose on a broker, because there are few, if any, secured assets such as equipment with value that partially could be recouped.

Bankers have another incentive to foreclose on delinquent brokers, Broughton said, because “the bank doesn’t have to pay the poor trucker who is left out in the cold.”

However, brokers do have some advantages in a downturn.

“One of the beauties of a brokerage is that they can downsize more quickly,” Conklin said. “There is no equipment to park and no drivers to furlough.”

Astin cited two indicators of the mounting pressure on brokers: TransCredit’s average credit score for brokers has worsened to 85.2 from 88.1 early last year, and average days for brokers to pay carriers has slowed to 30.5 days from 29.3.

“Although that may not seem like much of a shift, when you consider the size of the industry, this amounts to around $2 billion to $3 billion worth of payments annually that are delayed to carriers,” Astin said.

Broker bankruptcies hurt others in different ways, the experts said.

“Broker bankruptcy is really unfair to trucking companies,” Conklin said, because they wind up not being paid for loads they have hauled. He recommended that carriers try to have themselves listed as critical vendors, so they are more protected in a bankruptcy proceeding.

When a shipper fails, the third party often receives nothing, because the brokers are unsecured creditors with no claim on the failed shipper’s assets, Conklin said.

“There is a growing philosophy in the [freight] industry that brokers should guarantee payment to carriers on behalf of shippers in the event of a broker failure,” he said.

Conklin advocates a trust that would ensure that brokers pay carriers out of the actual payment they receive from the shipper whose freight was moved.

Voltmann labeled such an approach as “the death knell of the brokerage industry.”

“If I [a broker] can’t use my free cash flow, how can [he] stay in business?” Voltmann asked, adding that truckers with one to five tractors would also suffer, because they rely on brokers to find freight.

“The brokers that are especially suffering are the ones whose business is concentrated with a smaller number of customers,” said Darren Brewer, president of Carrier411 Services, Norcross, Ga., a carrier monitoring service. “If one or two or three of those core customers substantially reduce their business, the broker will pay the ultimate price.”

Conklin said brokers face trouble if cash flow needs drive them to factor—or borrow against their receivables—at the same time shippers are slowing down their payments.

Fleets should be wary if a broker’s days to pay the carrier reach 51, Conklin said, because that is a sign the broker likely will fail.

Transport Topics, 9/21/2009

 

 

 
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