Management Update
Staff -- Logistics Management, 3/1/2003
Truckers are getting hosed at the pumps. The national average price of diesel fuel has reached its highest level since October 2000, thanks in part to an explosive leap of 12 cents a gallon in a single week in February. At press time, the going rate had climbed to $1.70—up from $1.40 in early January, according to the U.S. Energy Information Administration. Anxiety over the possibility of war with Iraq may be partly to blame for the price spikes, but that's likely to be a temporary situation, say some industry observers. For more on the potential impact of war on fuel prices, see "How war with Iraq will hit the home front" in the February 2003 issue of Logistics Management.
Shippers and carriers have had a lot to say about U.S. Customs' "straw man" proposals for advance notice of import and export shipments. One of the most interesting comments has come from The National Industrial Transportation League (NITL). Its suggestion: Rather than notifying the agency so many hours prior to loading a truck, Customs should base the reporting window on the expected time of arrival of the truck at the border. Such a policy change would lessen the potential impact on Just-in-Time shipping, the group says. Copies of NITL's comments are available at www.nitl.org/comments.
Not everybody thought the Super Bowl commercials were amusing. The trucking industry was riled by an ad from Monster.com, the online job recruiter. The commercial showed a driverless tractor-trailer careening through a cornfield before swerving across a crowded highway and crashing into a billboard. Shortly before the broadcast, the American Trucking Associations, the Truckload Carriers Association, and the Owner-Operator Independent Drivers Association slammed the ad for "trivializing" the safety efforts of drivers.
Tighter security regulations are forcing many shippers to increase their cycle times. A survey of exporters around the globe conducted for international logistics provider BDP International and its Centrx consulting unit found that nearly 30 percent of respondents are increasing their order-cycle times in order to comply with U.S. Customs' 24-hour advance manifest mandate. About 15 percent are scheduling simultaneous early arrival of both the cargo and manifest data. Just under one-third said they were incurring moderate costs as a result of compliance, and half said they have not yet figured out how to recover additional costs related to the 24-hour rule.
Quality management could offer some help for shippers struggling with new security rules. Stanford University professor Hau L. Lee and Michael Wolfe of the North River Consulting Group make that case in their article "Supply Chain Security Without Tears" in the January/February issue of Supply Chain Management Review. By applying the principles of total quality management, the authors write, shippers may be able to create strategies that both prevent and mitigate security breaches while strengthening productivity. The key, they say, is for shippers to think about supply chain security in terms of prevention, process control, and design improvements. To read the article and find out more about Supply Chain Management Review, a sister publication of Logistics Management, go to www.supplychainlink.com.
Two leaders in supply chain research have teamed up to create a new "laboratory" for advanced supply chain practices. IBM and Michigan State University's Eli Broad College of Business have established the Center for On-Demand Supply Chain Research. IBM will fund the center and give researchers access to its software technologies. Students will be able to study, simulate, and test relationships in an end-to-end supply chain. Eventually, IBM will link the lab through an advanced computing grid to other universities with specialized supply chain programs.
Need more information on hazmat transportation in this age of increased security? Then consider attending the annual meeting of the Conference on Safe Transportation of Hazardous Articles (COSTHA), scheduled for April 6—9 in Austin, Texas. This year, the conference will feature two days of training in such subjects as 49 CFR compliance, airfreight shipments, chemical classification, and Canadian regulations, followed by the two-day annual meeting program. For more information, call (703) 451-4031 or go to www.costha.com.
A battle over truck safety may be brewing between two government agencies. The National Transportation Safety Board (NTSB) last month chastised the Federal Motor Carrier Safety Agency (FMCSA) for failing to do the job of policing new truckers entering the marketplace. In particular, the Safety Board charged that FMCSA "has no mechanism" for verifying the validity of information provided on an application for operating authority. Those comments stemmed from a Safety Board investigation into a crash between a Greyhound bus and truck semitrailer operated by DelCar Trucking that killed three people. In its accident report, the safety board noted that DelCar, which had lied on its application, had been a registered carrier for 22 months but had never undergone a safety audit.
The once-proud Emery name is no more. CNF Inc. last month jettisoned the last vestiges of the former Emery Worldwide group of companies when it retired the Emery name from its freight forwarding subsidiary. Emery Forwarding now becomes Menlo Worldwide Forwarding, a name that will be phased in during the rest of 2003. The company earlier renamed Emery Expedite! as Menlo Worldwide Expedite!, and Emery Customs Brokers as Menlo Worldwide Trade Services. Founded by John C. Emery Sr. in 1946, the airfreight forwarder was purchased by Consolidated Freightways in 1989; it became part of CNF Transportation when the now-defunct CF Motor Freight was spun off as a separate company.
A changing of the guard at Roadway Corporation puts familiar faces in higher places. Well-known industry executive Michael W. Wickham will step down as chief of Roadway Corporation, but stay on as chairman of the holding company's board. The current CEO of LTL carrier Roadway Express, James D. Staley, will take over the reins of the parent company. Robert Stull, currently vice president of new venture commerce, will succeed Staley as head of the LTL carrier.
The head of the Surface Transportation Board will step down later this spring. In an interview with The Washington Post, Linda J. Morgan said she will leave the STB before her term of office expires. Morgan also noted that shippers, the railroads, and Congress have been increasingly polarized over the future direction of the nation's railroads. Views are hardening, she said, over shippers' proposals for open access to railroads they believe would result in more competition among carriers. She also questioned the potential negative results of constant rate cutting.
The agency shuffle has begun in Washington, D.C., as the federal government revs up the Department of Homeland Security. On March 1, the Transportation Security Agency, the U.S. Coast Guard, the U.S. Customs Service, and the Border Patrol were among the federal agencies that officially transferred into the new department. Customs' trade and revenue functions and the Border Patrol were merged into a new organization called the Bureau of Customs and Border Protection, under Customs Commissioner Robert C. Bonner. Customs' criminal investigators were transferred to the new Bureau of Immigration and Customs Enforcement.
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