Management Update
An Executive Summary of Industry News
-- Logistics Management, 11/1/2009
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Excess capacity = fewer truck drivers. At a time when there’s excess capacity in the trucking industry, it stands to reason that there should no longer be a driver shortage. This is exemplified by recent data from the American Trucking Associations (ATA) that finds that both truckload and less-than-truckload carriers “took further steps to reduce employment in the face of lower freight volume” in the second quarter. According to the ATA, large truckload carriers cut payrolls the most, as their total employment dropped 2.3 percent during the second quarter. This marks the 11th straight month truckload carriers have lowered employment.
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Peace treaty. Commissioners at the Port of Long Beach Harbor (POLB) have announced that POLB and the American Trucking Associations (ATA) have each approved a settlement negotiated between port officials, ATA, and trucking industry representatives. The settlement is based on a new motor carrier registration process, referred to as a Registration and Agreement, that will replace the port’s “concession agreement” contained in its existing Clean Truck program. All motor carriers wishing to perform drayage services at the Port of Long Beach must, via the new registration and agreement form, register with the port and agree to provide certain operational information to assist the port in monitoring motor carrier compliance with various safety, environmental, and security regulations pertaining to the provision of drayage services.
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Déjà vu all over again. According to the results of the 16th Annual 3PL Provider CEO Perspective Survey recently presented at the Council of Supply Chain Management Professional’s annual conference, harsh economic realities are once again top-of-mind for 3PL CEOs. Although things are probably not as bad as they were a year ago, the survey, which polled 35 3PL CEOs in North America, Europe, and Asia-Pacific regions, found that one-year revenue growth projections for each region was down across the board. Europe’s 3PL market is projected to decrease by 3.3 percent, while the North American and Asia-Pacific markets are projected to grow by a relatively sluggish 6.9 percent and 12.9 percent respectively.
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Tough talk. Carriers comprising the Transpacific Stabilization Agreement were making good on their threat from last July to raise rates and stick to them. As reported by LM, shipping lines serving the Asia-U.S. freight market said at that time that average rate levels achieved in the latest round of service contract negotiations were not sustainable over the typical 12-month 2009-2010 contract term. Since then, the cartel has imposed floating bunker fuel surcharges adjusted on a monthly basis. The organization said that the higher fuel surcharge reflected record-breaking fuel prices. Now, a much larger push to gain revenue is seriously underway; and some shippers have admitted that rate pressures in a distressed market have led to some contracts threatening service levels and carrier viability.
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Is he an Oracle? The global recession is coming to a close, so says Loic le Guisquet, Oracle’s executive vice president for Europe, the Middle East, and Africa. But that doesn’t mean we’re to expect a robust recovery. “I am not an economist,” he said in a talk with business reporters attending last month’s OpenWorld event in San Francisco. “But our analysts suggest that technological advances in services are going to drive the rebound.” Countries heavily reliant on manufacturing, however, may have a harder time of it, he added. “This is especially true in Eastern Europe. Investors feel especially exposed in those markets.” Based in Geneva, le Guisquet oversees a network of 139 offices in 61 countries. His advice for shippers? “Keep focused on the customer no matter where you are operating. Be global, but also be local. Customized service is key.”
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Wal-Mart’s superlative green leverage. When it comes to saving the environment, global mega-shippers can exert tremendous clout on even their most recalcitrant partners. That hopeful declaration was one of many made at eyefortransport’s 3rd Annual Sustainable Supply Chain Summit last month. In her presentation on “Partnerships, Suppliers, and Real Collaboration,” Elizabeth Sturcken, managing director of corporate partnerships for the Environmental Defense Fund, said that it’s all about leverage. “Wal-Mart is China’s eighth-largest trading partner ahead of Russia, Australia, and Canada,” she said. “When we learned this, it made perfect sense to begin working with them to develop an environmentally sound shipping and sourcing model.”
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It should be easy being green. In what many industry analysts suggest may be a trend, UPS became the first small package carrier to offer shippers the ability to offset the carbon dioxide emissions generated by the transport of packages within the United States. Under the UPS carbon neutral program, UPS said it will offer U.S. shippers the option of paying a small fee to calculate and offset the climate impact of the shipment of each of their packages. The per-package price for the optional service is 5 cents for UPS Ground services and 20 cents for UPS Next Day Air, UPS 2nd Day Air, and UPS 3 Day Select services. A flat fee is used, and the price includes the cost of calculation, administrative costs associated with the service, and the cost of the offsets.
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Changing of the guard in the PNW. The Port of Tacoma Commission recently approved the terms of a transition in leadership. Newly drawn plans call for current Executive Director Timothy J. Farrell to work full time through the end of the year, with port employment officially ending May 31, 2010. The news comes in the wake of significant “downsizing” at the port, as it struggles with other U.S. West Coast cargo gateways for inbound traffic. According to the terms, Farrell and the commission will set priorities for Farrell’s focus through the end of the year, ensuring a smooth transition to new leadership. “We want to assure our staff, our customers, and our community that the port is dedicated to their continued success,” said commission president Clare Petrich.
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And the Silver Kingpin Award goes to…Charles T. Connors, president and COO of H&M International Transportation Inc. is the winner of 2009 Intermodal Association of North America (IANA) Silver Kingpin Award. The annual award recognizes individuals for their significant, long-term contributions to the intermodal industry. According to IANA, Connors is considered by many to be the father of the dedicated international rail facility. According to IANA, the idea of aligning the operations of steamship lines, railroads, motor carriers, and terminals at one site has served as an operating model for the industry, benefiting all international supply chain stakeholders.
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