Management Update

An executive summary of industry news

By Staff -- Logistics Management, 7/1/2005

Déjà vu all over again? On July 1, shippers got the feeling they'd seen it all before—several times—when President Bush extended the highway bill for the eighth time. This latest extension comes as Congressional leaders squabble over a new formula for funding of road and bridge projects. The extension, however, runs only until July 19. Earlier this year, the House approved a bill calling for $284 billion in highway funding over the next six years, while the Senate adopted a $295 billion measure. Negotiators are stuck on how to divide those dollars between the states. The White House has threatened to veto the bill if lawmakers adopt the Senate's higher price tag.
A proposed new rule could cost shippers an important insurance protection, warns William J. Augello, executive director of the Freight Transportation Consultants' Association. In its "Unified Registration System" rule, the Federal Motor Carrier Safety Administration would repeal a requirement that motor carriers file a "BMC-32" Endorsement with the agency. That endorsement holds carriers' insurers primarily liable for the first $5,000 per vehicle or $10,000 per occurrence for cargo loss or damage, regardless of exclusions or deductibles, up to those limits. "The BMC-32 Endorsement … has enabled claimants to recover hundreds of millions of dollars in otherwise unrecoverable claims from bankrupt motor carriers over the past 70 years," Augello said. Shippers may file comments through Aug. 17 on Docket No. FMCSA-97-2349, online at http://dms.dot.gov or at www.regulations.gov.
Rail shippers will square off against the railroads at an upcoming meeting. Carrier executives will outline their plans for handling growing traffic volumes at a forum sponsored by the Association of American Railroads, to be held Sept. 21 in St. Louis. A question-and-answer session will follow presentations by the carriers and Surface Transportation Board Chairman Roger Nober. A similar meeting last year drew several hundred attendees; shippers wishing to attend this year's event can register at www.aar.org. In a related development, Nober has asked the seven largest railroads to submit plans for meeting increased demand during the fall shipping season.
California could well price its ports out of some business. Beginning this month, shippers will pay $40 to $80 extra for picking up and delivering containers during peak business hours at the ports of Los Angeles and Long Beach, a move that's intended to reduce terminal congestion. (See News & Analysis, Page 17.) Even more fees may be on the way: A proposal approved last month by the California State Senate would levy $30 to $60 on all containers passing through Golden State ports. The legislation (S.B. 760) would use the funds collected to finance port security, infrastructure improvements, reduce congestion, and improve environmental mitigation. Opponents fear the legislation, now awaiting action in the lower house, would encourage importers and exporters to take their business to ports in other states.
A leading U.S. trucker will buy a stake in a Chinese transportation company. Yellow Roadway, parent of Yellow Transportation and Roadway Express, will pay $45 million to buy a 50 percent share of JHJ International. Based in Shanghai, JHJ is the second-largest airfreight forwarder in China. The company employs some 1,000 workers and had estimated revenues of $330 million in 2004. Yellow Roadway said it entered the joint-venture arrangement as part of its effort to expand abroad and offer end-to-end transportation solutions. The Chinese government must first approve the deal.
Give carriers a tax break to buy new trucks with cleaner-burning engines. The American Trucking Associations (ATA) has asked Congress to pass special legislation authorizing such incentives. Under an Environmental Protection Administration mandate that goes into effect in 2007, all trucks sold in the United States must be equipped with engines that emit lower levels of particulate matter and nitrogen oxides. If the new engines prove to be too expensive, carriers may run their current vehicles longer or buy new ones before 2007, thus undermining the intent of the mandate. "Enacting a short-term tax incentive would put the cost of new clean-diesel technology on a level playing field with the cost of today's trucks," said ATA President Bill Graves at a recent forum in Washington.
Learn about the latest trends and developments in logistics at the annual educational conference sponsored by the Council of Supply Chain Management Professionals (CSCMP) this fall. LM's executive editor, James Cooke, will take part in a panel that will present the findings of our annual "Masters of Logistics" study, which will be highlighted in our September issue. The conference, which attracts thousands of logistics and supply chain professionals from around the world, will take place at the San Diego Convention Center Oct. 23 through 26. For more information or to register, visit www.cscmp.org.
CAFTA faces an uphill battle in Congress. Last month, the U.S. Senate approved the controversial Central American Free Trade Agreement on a 54–45 vote. The pact would drop most barriers to trade between the United States and Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua, as well as the Dominican Republic. The White House pushed Republican senators to back the measure, which is opposed by sugar and textile interests. The trade pact now moves to the House of Representatives, where it's expected to encounter stronger opposition.
Who are the top global 3PLs? The latest edition of Who's Who in International Logistics: Armstrong's Guide to Global Supply Chain Management has the answer. The two-volume book profiles dozens of third-party logistics companies and offers information on financials, key personnel, information technology, and service capabilities. Armstrong also publishes a companion guide to U.S. 3PLs. For more information, call (800) 525-3915 or go to www.3PLogistics.com.
Who hires those logistics service providers? A new study from ARC Advisory Group found that 78 percent of the $18.3 billion in net revenues of 20 large third-party logistics service providers came from manufacturers. The majority of those manufacturers represented three sectors: automotive, high-tech, and consumer packaged goods. The study, "Strategic Guide for Logistics Service Providers (3PLs): Industry Trends, Provider Profiles, and Maturity Model," also includes profiles of the 3PLs surveyed. For more information, go to www.arcweb.com.
Don't gawk now, but that's Harrison Ford delivering your package. UPS, which delivers for Amazon.com, will be getting some extra help later this month. As part of a promotion celebrating the online retailer's tenth anniversary, actors, musicians, athletes, and authors will deliver packages to randomly selected customers. Among the celebrities who've agreed to participate are actors Ford and Jason Alexander.