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Transportation News Bulletins - LTL and TL

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Reaching Across The Border
Monday, 29 June 2009 00:00

Truck traffic across the Canadian border is lighter these days, but the list of security rules that crossborder truckers and their shipper customers must obey has grown longer.

The latest U.S. regulation added to that lengthy list, the Western Hemisphere Travel Initiative, took effect on June 1. All travelers, including truck drivers, must have a valid passport, a special frequent traveler card or a special driver’s license to enter the United States. Previously, American and Canadian citizens could cross the border with only a driver’s license and birth certificate.

Before June 1, businesses were concerned that drivers would be caught unprepared for the change, leading to backups at border chokepoints. U.S. Customs officials, however, say the WHTI hasn’t caused slowdowns at the border because of high industry compliance with the rule.

That’s a relief to businesses on both sides of a border that handles more than $1 billion in commerce each day. In recent years, Canadians have become more concerned about what they call the “thickening” of the border because of stringent U.S. security regulations.

From the end of the 2001 recession through mid-2008, trade with Canada grew sharply, reaching US$596.9 billion last year, a 31.4 percent increase over the US$409.7 billion reported for 2000.

At the same time, the U.S. rolled out anew security regime that some say throttled what would have been greater growth in trade and strained cross-border supply chains.

The good news for companies in both countries is the congestion that turned some border checkpoints into chokepoints as recently as last year is gone. The bad news is that much of the freight they shipped last year is gone, too.

“When the economy was going gangbusters, there were plenty of delays at the border, and our members might have built that into their transit time” expectations, said David Church, director of transportation and recycling for the Forest Products Association of Canada in Ottawa. “Now that’s far less of an issue. There are no delays at the Detroit-Windsor border any more.”

The recession landed a major hit on two sectors that rely heavily on cross-border supply chains: the housing and automotive industries. There’s been a big drop in exports of lumber and solid wood, and paper used for newsprint, Church said. “Our member CEOs said this is the worst recession they’ve seen in 40 years.”

That’s reflected in the plunging value of goods shipped across the U.S.-Canada border. The value of trans-border goods shipped by truck has inched up month to month this year, rising 9.4 percent to US$21 billion after hitting a low of US$18.1 billion in January.

But the monthly figures are far below those reported for the winter and spring of 2008. In March, the yearover-year figure was 34.2 percent lower, the biggest gap yet, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics.

The drop in trade hasn’t cooled the cost of cross-border trucking.

“There are pressures coming from a whole host of areas in both Canada and the United States that are making trucking—and the shipment of goods generally—more expensive,” Ron Lennox, vice president of the Canadian Trucking Alliance, said while testifying before an agricultural committee of Canada’s House of Commons in Ottawa this month.

The WHTI may not be slowing traffic, but it is adding costs, Lennox said. Canadian drivers must pay $87 for a passport or $50 for a Free and Secure Trade Program card.

And he noted the U.S. Animal and Plant Health Inspection Service’s annual fee on each truck entering the U.S. has more than doubled to $205.

Then there are indirect costs, such as tougher U.S. emissions standards for diesel truck engines. Canadian carriers doing business in the U.S. must comply with these standards, which add thousands of dollars to the cost of purchasing a truck. “Like all other costs, they must be factored in to the rate carriers charge their customers,” Lennox said. “They can’t simply be absorbed.”

Add to that mix a backlash over the “Buy American” provision of the American Recovery and
Reinvestment Act, and fears that Canada could retaliate with protectionist steps of its own. Shippers with operations and customers on both sides of the border want action.

“We really do need more effective regulatory cooperation between our two countries,” said Doug Conant, president and CEO of Campbell Soup, the world’s largest soup manufacturer.

“The North American economy is highly integrated, and whatever we do on one side of the border affects the other,” Conant told U.S. and Canadian business executives on June 9.

Speaking at the Canadian Embassy in Washington, Conant said the $8 billion company—which makes soup, salsa and sauces as well as bread, cookies and crackers—sent about 7,500 shipments across the Canadian border in 2008, including intra-company traffic.

“Some of the ingredients that go into our products cross the border twice,” Conant said. “A tomato from the U.S. makes its way into a box of our V8 soups, gets mixed with both Canadian and U.S. ingredients at our Toronto facility, and then is shipped to retailers throughout America.”

Although it has unique products for the U.S. and Canadian markets, “the ingredients and food we make cross the border almost every day,” he said.

Conant called for a new bilateral commission on border infrastructure modeled on the Boundary Waters Commission established in 1909. At the North American Competitiveness Council, “We have tots of ideas for moving certain customs processes away from ports of entry that will help ease traffic congestion, and we look forward to working with the Obama administration to see if we can help make them happen,” he said.

A host of programs to expedite freight across the border securely are in place or on the drawing board. Programs such as the U.S. Customs-Trade Partnership Against Terrorism have cost shippers and carriers tens of thousands of dollars and changed the way they do business.

But it’s not clear to carriers and shippers whether such programs have cut down or added to bottlenecks at the border. Companies that expected their shipments to move more quickly under C-TPAT say any benefits are incremental.

“For some of our members, it has forced them to look at their operations and what they need to do to be more secure,” Church said. “But whether there has been a huge benefit in terms of speeding inspections at the border, I’m not so sure that’s been the case. Then again, nobody has said they have had increased delays either. I think they see it as a necessary evil, the cost to do business in the U.S.”

“The carrot to get people to join was the idea that if the supply chain is more secure, shipments can move more quickly across the border, but it hasn’t really lived up to the promise,” said Jane DiMarchi, director of government relations for the North American Millers Association, which represents the U.S. and Canadian wheat, corn, oat and rye milling industry.

C-TPAT membership affected less-than-truckload carrier Averitt Express in unexpected ways. “It’s changing our internal processes as a truck line,” said Beth Billingsley, compliance manager.
For example, Averitt drivers don’t cross the border without bolt cutters. That’s because the company is moving away from throwaway door seals to bolt seals. C-TPAT is “a recommendation, not a requirement, but we want to be sure we’re in compliance.”

Cross-border trucking with Canada accounts for 7 to 8 percent of Averitt’s business, a significant amount for a carrier with a primary service area in 13 Southeastern states. Averitt handles close to 1,800 shipments a month in and out of Canada working with Canadian Freightways and Epic Express, which have major hubs in Winnipeg, Manitoba and Toronto.

Ernie Valdez, Averitt’s director of international services, said the exchange rate dictates cross-border business levels. “You’re going to see a lot more southbound activity the stronger the U.S. dollar is,” Valdez said.

Averitt, which has counted on the automotive industry for part of its cross-border business, will feel the effect of downsizing among the Big Three automakers. But Valdez said its Canadian business is relatively strong.

“Some of it is flat, but we’ve seen growth this year versus last year. We’ve made a strong marketing awareness push to our customers with good service, and we’re taking market share,” he said.

Some of the big U.S. carriers and their Canadian counterparts and partners are expanding cross-border business, perhaps at the expense of smaller trucking companies.

Con-way Truckload moved 1,000 shipments across the border in May, an increase of 54 percent from the same period a year ago and 75 percent year to date.

The Con-way subsidiary said adopting new technology to stay on top of changing regulations is key to building and keeping cross-border business. Con-way is working with Descartes Systems Group to help prepare for Canada’s Advanced Commercial Information truck e-manifest system, which will be rolled out in 2010.

ACI e-Manifest will require truckers to send advance electronic notification of cargo shipments to the anadian Border Services Agency an hour before the freight is to arrive at the border, mirroring a similar rogram already in place in the U.S.

“Our customers expect us to support new customs filing regulations and simplify the shipment process for hem,” said Melissa Mathew, manager of customs compliance for Con-way Freight.

Con-way Chief Marketing Officer Tom Nightingale said since the company began filing U.S. Customs anifests electronically in 2003, the time spent waiting to cross the border has been cut to five minutes.

“Using ACI will continue to improve service for cross-border shipments and is going to help us expand hat business,” Nightingale said.

Journal of Commerce, 6/29/2009

DOT Grants Target Modern Bridge Work
Friday, 26 June 2009 00:00

Innovations focus on concrete, sealers and corrosion resistant steel bars

It’s not part of the stimulus money coursing from federal coffers through state highway budgets, but a Department of Transportation program just sent $5.2 million to 14 states to help pay for innovations in bridge construction.

The grants range from $80,000 to $400,000 and are spread over 20 separate projects. They aim at highway structures, some of which include major trucking routes or intersect with freight railroad lines.

The grants may support only part of each construction project, but they help pay for new techniques or materials that can either cut construction or long-term maintenance costs.

“Advanced bridge construction and repair techniques cut construction time and repair costs and ultimately reduce traffic delays,” said Transportation Secretary Ray LaHood.

Grants for three separate projects in Virginia, Kentucky and Washington would utilize “self-consolidating concrete that spreads evenly on its own and needs less equipment and labor,” DOT said.

In Michigan and Idaho, grants went toward “precast bridge elements to accelerate construction.”

The Federal Highway Administration, which issues the grants under its Innovative Bridge Research and Deployment program, said “utilizing prefabrication strategies saves drivers countless hours of congestion caused by prolonged bridge work.”

Hawaii used DOT aid in a bridge project on Maui to install “sensors to monitor bridge conditions such as deterioration.”

California tapped grants for high-performance materials on two bridges to increase the deck’s strength and durability, including special concrete on an Interstate 80 site to help control cracking.

Several states are using the latest grants to look at what types of steel bars best resist corrosion, plus materials that can be added to protect the steel, as well as deck sealers such as epoxy.

The Journal of Commerce Online, 6/26/2009

Study Finds '07 Diesels Cleaner
Wednesday, 24 June 2009 00:00

Reductions in diesel engine emissions far exceed expectations

Clean diesel technologies in engines manufactured beginning in 2007 not only reduced certain emissions by 90 percent compared to 2004 models, but far exceeded expectations in their performance in cleaning
up the nation’s air quality, a new study shows.

Emission reductions by 2007 model engines “exceeded substantially even those levels required by law,” said the study, conducted by the Coordinating Research Council and the Health Effects Institute.

Current engine models produced 98 percent less carbon monoxide, 10 percent less nitrogen oxide, 95 percent less non-methane hydrocarbons and 89 percent less particulate matter than required by EPA’s 2007 diesel engine emission standards.

“These latest emissions figures are a testament to the trucking and engine manufacturing industries’ deep commitment to the environment,” said ATA President and CEO Bill Graves. “We’re proud of the significant
progress that has been made and we look forward to building upon this foundation as we continue to work toward a more sustainable future.”

The Journal of Commerce Online, 6/24/2009

SPECIAL REPORT: Lawmaker urges action on ‘inappropriate’ tariffs
Wednesday, 24 June 2009 00:00

One U.S. lawmaker wants to know what is going to be done to Mexico for “slapping” tariffs on more than 90 U.S. products because the long-haul cross-border program with Mexico was ended.

Rep. Brad Sherman, D-CA, wrote a letter to Ron Kirk, the U.S. Trade Representative, asking what actions his office are taking to rectify these lopsided, “inappropriate” tariffs imposed by Mexico.

Sherman points out in his letter that there are several problems with the tariffs Mexico imposed nearly three months ago.

He starts by pointing out that the North American Free Trade Agreement limits maximum “sanctions” to pre-NAFTA levels.

Mexico has imposed tariffs of $2.3 billion, which according to Mexican officials will generate approximately $427 million in tariff revenue. Mexican officials claim that is roughly the amount of income that Mexican truckers are losing by being denied long-haul access to the U.S.

“However, with the information available regarding the Mexican trucking fleet and relative cost structures, an independent assessment, conducted by Public Citizen, has estimated Mexico’s highest possible annual losses to be between $69 million to $227.6 million,” Sherman wrote in his letter to Kirk. “That is to say that Mexico’s real losses are 16 to 53 percent of what is being imposed.”

The fact that those apparently inequitable tariffs have been in place with seemingly no activity from the U.S. Trade office obviously isn’t sitting well with Sherman either.

“It has been nearly three months since Mexico slapped these sanctions against U.S. trade. If Mexico has imposed tariffs that greatly exceed the actual damages in this matter, I would assume that the USTR is working to seek immediate relief for U.S. producers,” Sherman wrote.

Sherman then ticks off a list of questions regarding the Trade office’s action or inaction on the situation.

He wants to know if the Trade office has attempted to calculate the impact of the tariffs to see if Mexico’s numbers are legitimate. He wants to know if there are delays in getting the needed info to calculate the impact of the tariffs.

He also wants to know what the Trade office is doing to initiate a NAFTA sanctions-level challenge. If there’s not going to be a challenge, Sherman wants to know why.

“American businesses and workers may have been unfairly harmed by inappropriate tariffs recently levied by the Mexican government,” Sherman wrote in closing. “I look forward to hearing what steps the USTR is undertaking to bring relief to U.S. producers.”

Sherman pointed out in his letter that the U.S. had every right to close down the long-haul, cross-border trucking program with Mexico.

“There remain many outstanding issues with respect to Mexico’s domestic trucks’ safety and emission standards, driver licensing, insurance and data-keeping systems,” Sherman wrote.

“The Mexican government has yet to take responsibility to raise its level of safety enforcement for Mexican trucks and drivers,” Sherman wrote. “Until that happens, it is unlikely that the United States alone can ensure that all Mexican trucks and drivers entering the U.S. meet our standards for safety.”

Rod Nofziger, OOIDA’s director of government affairs, applauded Sherman’s efforts in holding the Trade office’s feet to the fire on the tariff issue.

“In addition to questioning the amount of Mexico’s tariffs, Congressman Sherman should be commended for questioning the appropriateness of that government’s actions,” Nofziger said.

If Mexico wants a cross-border program with the U.S., Nofziger said it’s going to take one thing: compliance.

“The onus should be on Mexico to raise their regulatory standards, not on the United States to lower ours,” Nofziger said.

“The tariffs are meant to focus attention away from the fact that Mexico’s regulatory standards for trucking are to say the least paltry in comparison to the requirements currently in place for U.S. trucking companies and truck drivers.”

Land Line Magazine, 6/24/2009

Truckers Take Aim at Oil Speculators
Tuesday, 23 June 2009 00:00

ATA blames 'excessive speculation' as fuel prices rise

Charging that excessive speculation is driving up diesel fuel prices, the American Trucking Associations asked Congress to place new controls on energy futures markets.

The trucking group wants Congress to intervene to increase the transparency of futures markets and impose “reasonable” pricing limits on energy commodities.

The association called the 56-cent increase in the price of diesel since March “inexplicable.”

“It seems that more is at play than just the fundamentals of supply and demand,” said ATA President and CEO Bill Graves.

Thanks to the recession, demand for petroleum products is relatively low and oil supplies are at a 19-year high, ATA Vice President and Chief Economist Bob Costello said.

“In addition, the International Energy Agency recently predicted that global demand for oil will drop by about 2.5 million barrels a day this year compared to last year—the sharpest year-over-year decline in nearly 30 years,” he said.

“While we don’t believe excessive speculation accounts for all of the recent run-up in oil prices, it has to have played a part,” said Richard Moskowitz, ATA vice president and regulatory affairs counsel.

It’s unlikely that Congress, preoccupied with health care reform, the financial crisis and other issues, will respond quickly to the request. However, rising fuel prices this summer may pressure Capitol Hill.

Diesel prices jumped in the second quarter, increasing 23 percent since bottoming at $2.017 per gallon on March 16. The U.S. national average June 22 was $2.616 per gallon.

The average price of diesel fuel across the country increased approximately 4.4 cents or 1.7 percent from June 15 to June 22, the seventh straight week of rising prices.

Prices are still well off last year's July 14 peak of $4.474 per gallon, but the price run-up is giving large and small carriers the jitters. Trucking companies spent a record $150.9 billion on fuel last year, during better economic times when more freight was available—and it was easier to collect surcharges.

Some truckers fear higher fuel prices could push them over the edge into bankruptcy, something some analysts predict and that some competitors would like.

“Lower fuel prices have kept some weaker trucking carriers on the road; however, the recent run-up should help accelerate capacity exiting the market,” said Longbow Research.

However, Longbow also said recent decreases in spot prices on the oil market could herald upcoming “moderation” in diesel prices.

West Texas Intermediate crude oil “spot prices are generally considered to be a leading indicator for diesel prices being that roughly 60 percent of changes in diesel costs are a result of changes in WTI prices,” the financial research firm said.

The Journal of Commerce Online, 6/23/2009

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