Logistics Management: Management Update
An Executive Summary of Industry News
-- Logistics Management, 11/1/2008
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Sigh of relief at Port of Long Beach. Last month, authorities at the Port of Long Beach admitted to LM that they had feared significant glitches in the implementation of its “clean trucks” program. But with few exceptions, the process went well. “We were pleasantly surprised by how fluid the flow of traffic was,” said Bob Kanter, the port’s managing director of environmental affairs and planning. “We were holding our breath when the gates first opened, but it soon became apparent that the plan was going to work.” Stationed outside the Long Beach Container Terminal, Kanter watched as more than 90 percent of incoming trucks cleared inspection. He said about 15,000 drivers had been issued temporary access stickers, and that most had followed instructions on the new entry process carefully.
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3PL CEO survey reflects tough economic times. The current state of the global financial markets—and its impact on third-party logistics (3PL) providers—was evident in the results of the 15th Annual 3PL Provider CEO Perspective survey presented recently at the Council of Supply Chain Management Professional’s (CSCMP) Annual Conference. With financial markets hindering global commerce, it was no surprise that the survey, which polled 39 3PL CEOs in North America, Europe, and Asia-Pacific regions, revealed that one-year revenue growth projections for each region was down across the board. Decreases ranged from 0.3 percent in North America to 1.7 percent in Europe to 7.4 percent in Asia-Pacific.
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Cartel cautions on pricing. Spokesmen for one of the world’s last remaining ocean carrier cartels said that even collective pricing will not keep some carriers from withdrawing capacity on the transpacific trade lanes next year. “No container line is in a position to run a scheduled service with ships running at less than full utilization, given current costs,” said Ronald Widdows, chairman of the Transpacific Stabilization Agreement (TSA). “It’s a safe statement that no carrier is operating profitably in the eastbound transpacific market today,” he added. According to Widdows, rates have not kept pace with operating cost increases, and separate charges to address fuel and other costs have been “routinely undercollected” in a “highly competitive” environment.
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Casey Jones you better watch your speed. President Bush has signed the new Railroad Safety Bill into law. The legislation’s objective is to dramatically change safety-related facets of railroad operations and is focused specifically on crew hours-of-service limits, positive train control (PTC) systems designed to prevent train-to-train collision by 2015, and increasing federal safety inspections. The PTC component of this law is particularly relevant in the wake of a September collision between a freight train and a commuter train in Los Angeles. As a result, Class I railroad carriers Union Pacific, Burlington Northern Santa Fe, and Norfolk Southern said they have reached an agreement on establishing interoperability standards for PTC.
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Pain in the pump. Data from the American Transportation Research Institute’s (ATRI) list of top 10 critical issues facing U.S. truckers reveals that fuel costs—even though they have declined sharply from earlier in 2008—is still the most critical issue for more than 5,000 trucking executives. After fuel, the economy was the biggest concern followed by the driver shortage, driver retention, government regulation, commercial driver hours-of-service, congestion, tolls, and highway funding.
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Reefer madness. In an otherwise bleak ocean cargo scenario, some good news surfaced in a report compiled recently for shippers of perishable commodities. Despite the credit crunch and downturns, the reefer sector is still robust, said Drewry Shipping Consultants, authors of the Annual Reefer Market Review and Forecast 2009. Their report indicates that world trade in perishable reefer cargo is forecast to grow to 215 million tons by 2015 of which 109 million will be seaborne. The bulk of seaborne trade will be carried by container reefer vessels partially because there is limited—and declining—specialized reefer fleet capacity.
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Air capacity, revenue continues to plummet. In what comes as small surprise to most U.S. shippers, the International Air Transport Association (IATA) reports that there is a continuing decline in capacity demand. The situation is most prominent in the Asia-Pacific trade lane. “The contrast between the first half of the year and the last two months is stark,” said Giovanni Bisignani, IATA’s director general and CEO. “The slowdown has been so sudden that airlines can’t adjust capacity quickly enough. While the drop in the oil price is welcome relief on the cost side, fuel remains 30 percent higher than a year ago. And with traffic growth continuing to decline, the industry is still heading for a $5.2 billion loss this year.”
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“Golden” gateway. While most major U.S. West Coast ports are reporting a reduction in containerized cargo throughput, one report issued by a major consultancy indicates that more balance is being introduced into the trade. “We are seeing a sustainable increase in U.S. exports,” said Peter Stone, senior director for Global Insight’s Trade and Transportation group. “For shippers and ports this represents a positive trend…especially in California.” The latest release of the Global Insight Transearch database revealed details of patterns of U.S. freight commodities, modes of transport, and geographic origins and destinations for 2007. California is the single largest state in terms of total outbound tons.
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Trucking capacity trending down. A report by Global Industry Analysts said that with capital investment in the U.S. trucking sector expected to drop in 2008, an overall decline in capacity can be expected heading into 2009. In the meantime, the slowdown of truck-dependent industries like housing and automotive has spurred several trucking companies to cut back on spending in 2008, which, the report said, could create tighter trucking capacity when demand eventually returns.
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Curious about the top global 3PLs? Well, the 16th edition of the third-party logistics (3PL) guide, Who’s Who In Logistics recently released by supply chain consultancy Armstrong & Associates can answer all your questions. Comprised of two volumes with in-depth profiles of more than 200 3PLs, the new edition contains nearly 1,400 pages. Who’s Who In Logistics profiles individual 3PL financial information, key personnel, IT usage and service capabilities. It also includes editorial evaluations, case studies, and important news events, according to Armstrong.
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