Management Update
An Executive Summary of Industry News
-- Logistics Management, 12/1/2008
-
DHL down but not out. In a move anticipated by many industry analysts, DHL announced that it will discontinue its domestic-only air and ground services. Beginning January 30, 2009, the carrier's express business will focus entirely on its international offerings. Spokesmen for Deutsche Post World Net, parent company of DHL U.S. Express, said that the company will nonetheless retain a strong international presence and capability in the U.S. “This is the right move for our U.S. Express operations given the current economic climate and for the long run,” said John Mullen, global CEO of DHL Express. He added that the company “remains committed to the U.S. express market.” Meanwhile, DHL will close its U.S. ground hubs, and reduce the number of stations from 412 to 103. For all of LM's coverage of the DHL restructuring, including highlights from an exclusive lunch meeting with John Mullen, go to www.logisticsmgmt.com.
-
Hapag happy? Given the fact that ocean carrier capacity is ramping up while shipper demand is slackening, the news that NOL has backed out of buying Hapag-Lloyd comes as no surprise to many analysts. German group TUI AG has agreed to sell its Hapag-Lloyd container shipping business to a Hamburg-based consortium led by Klaus-Michael Kuehne of global forwarding and logistics group Kuehne + Nagel last month. The announcement came just days after LM had reported that NOL had withdrawn its offer. Industry analysts suggest that shippers may be less reliant on ocean carriage for sourcing these days. NOL CEO Ron Widdows seemed to concur with this observation by noting in a statement that “NOL will now put all its energy into managing through the current container shipping down cycle.”
-
Gulf gusto... While shippers might assume that the Port of New Orleans is still in recovery mode from Hurricane Katrina and subsequent storms, a recent LM visit revealed that authorities there are doing more than just treading water. “As you can see, there's a lot of new development underway in anticipation of the Panama Canal expansion,” said port spokesman, Chris Bonura. “We have been experiencing steady growth over the past year, and anticipate more as our master plan moves forward.” Indeed, in a recent address to port stakeholders, President and CEO Gary LaGrange detailed how a well-funded 2020 Master Plan would enhance existing container and break-bulk operations. “It is my hope that we will build upon our strengths, secure the necessary funding for expansion, and begin a new, exciting era for the shipping industry in South Louisiana,” he said.
-
…and related confidence in Panama. As global financial markets continue to fluctuate wildly, one crucial ocean gateway expresses measured confidence. Indeed, five major multilateral agencies from Europe, Asia, and Latin America have offered to finance the Canal expansion project, and the Panama Canal Authority, after months of extensive negotiations. “The very nature of oceanborne business is cyclical,” said Panama Canal Authority Administrator and CEO Alberto Alemán Zubieta. “We have been through the market crisis of 1987, the Asian crisis in the 1990s, and the crisis caused by the 2001 attack on the World Trade Center. We have survived all of this, and we are confident that the world's banks and financial institutions will get through this, too.”
-
TSA Tough. The Transportation Security Administration (TSA), which announced that it would begin certification process for targeted freight forwarders last month, is not providing much compliance information to those not involved in the pilot program. “We have invited TSA officials to speak with us at WESCCON [Western Cargo Conference], but they declined,” said John Leitner, an executive with forwarder WJ Byrnes & Co. in South San Francisco. “They said that they would only meet in a closed-door session, and we found that unacceptable.” Meanwhile, spokesmen for TSA in Washington told LM that the agency is moving ahead with tests of high-tech systems designed to inspect cargo loaded aboard passenger airlines. The agency's mandate is to inspect 50 percent of all cargo by February 1, 2009.
-
More bad news for manufacturing. After a hitting a seven-year low in September, the manufacturing sector's PMI (formerly known as the Purchasing Manager Index) hit its lowest level in 26 years in October, according to the Institute of Supply Management. October's PMI of 38.9 percent represents the third straight month of contraction in the manufacturing sector. It's also the lowest level since September 1982, when the index registered 38.8 percent. Any reading above 50 percent indicates that the industry is generally expanding, and anything below 50 percent indicates that it is generally contracting.
-
UPS gets greener. In an effort to spur the commercial availability and usage of alternative fuel vehicles, UPS has purchased seven vehicles equipped with hydraulic hybrid vehicle (HHV) technology. HHV technology combines a high efficiency diesel engine with a unique hydraulic propulsion system that replaces a conventional transmission. HHV technology was initially tested in a federal laboratory of the Environmental Protection Agency (EPA), and UPS was the first company to road-test HHV technology in 2006. UPS' first HHV vehicle will be delivered next year and deployed during the first quarter.
-
Cartel casualty. Having read the writing on the wall, MOL announced that it is resigning from a collective pricing agreement that may soon become obsolete. Effective this month, the Transpacific Stabilization Agreement will be without one of its largest players. Ditto for the Canada Transpacific Stabilization Agreement. “With the European Union's abolition of liner anti-trust immunity, it has become extremely difficult to align the business processes of our entire organization when its regional divisions must operate to differing standards,” said Masakazu Yakushiji, executive vice president in charge of MOL's Liner Division. In an interview with LM, Ed Huebbe, manager, corporate communications, MOL (America) Inc. said the decision was also driven by a need to differentiate the liner's services.
-
Emirates escalate long-haul. Shippers of high-end electronics and oil industry-related goods are now being offered a direct non-stop service from Dubai to Los Angeles. Last month, Emirates SkyCargo began operating the service three times a week, flying a Boeing 777-200LR on a route that Emirates officials call “robust.” The carrier is offering up to 10 tons of cargo capacity in each direction. “Even though ocean carrier rates are steadily dropping, shippers on the West Coast are in need of premium just-in-time service,” said Brandon Fried, president of the Washington, D.C.-based Air Forwarders Association. “Furthermore, there are not that many vessels serving the Pacific Rim to the Persian Gulf on a dedicated basis.” Emirates spokesmen noted that the new service will also be welcomed by U.S. fruit and vegetable exporters.
-
LM's 2009 Salary Survey and Outlook webcasts are just around the corner. Be sure to watch your inbox when you get back to work in the New Year. During mid-January, we'll be sending out 2009 Salary Survey questionnaires via e-mail. Last year nearly 1,400 readers participated in this highly anticipated study, giving the market a clear picture of average logistics salaries around the country, as well as which titles rake in the biggest bucks. In late January, we'll announce the launch date and time of the 2009 Logistics Outlook webcast, the popular event that offers shippers a snapshot of where the U.S. economy is headed and, more importantly, what kind of rates to expect in the coming year. During this interactive event, shippers will be able to ask industry experts questions in real time. We're starting 2009 out strong, so we'll see you online.
View All On-Demand Webcasts