Management Update

An executive summary of industry news

By Staff -- Logistics Management, 12/1/2005

• The visionary leader of CSCMP has retired. Maria A. McIntyre, executive vice president and chief operating officer, retired last month after four years as head of the Council of Supply Chain Management Professionals (CSCMP), the leading educational and research organization in the logistics and supply chain field. McIntyre, who began her career with the group in 1974, is credited with positioning the organization to meet the needs of its members in an era of globalization and technological innovation. "CSCMP is immensely indebted to Maria McIntyre," said former president Dr. John Mentzer. "Her time at the helm was one of transformation and vision as she led the organization into the future." Succeeding McIntyre is Rick D. Blasgen, who most recently was senior vice president, integrated logistics for ConAgra Foods.
• The post-Katrina oil market is stabilizing.Generally adequate supplies and stable prices are driving this trend, says James Haughey, Reed Business Information director of economics, in the latest issue of Logistics Management's "Pricing Trends" e-newsletter. Despite this encouraging news, things are not as rosy for diesel users, with pump prices averaging $2.51 per gallon in late November. Diesel premiums ranged from $0.20 in California to $0.50 in New England; Haughey expects these figures to linger due to lean inventories and a dependency on imported supplies. Other factors supporting the spike in diesel premiums, he says, include political pressure to label more distillate as heating oil instead of diesel, the loss of diesel imports from Europe, and next summer's mandatory cutback in the sulfur content of diesel fuel.
• Maritime security is getting a bipartisan push on Capitol Hill. U.S. senators Patty Murray (D-Wash.) and Susan M. Collins (R-Maine) last month rolled out S. 2008, the GreenLane Maritime Cargo Security Act. The bill zeroes in on federal programs that have recently come under fire. One provision would create an office within the Department of Homeland Security (DHS) to coordinate cargo-security policies among DHS' many departments. Another calls for correcting deficiencies in the Customs-Trade Partnership Against Terrorism (C-TPAT), including DHS' failure to provide benefits for C-TPAT members and the months-long backlog of compliance validations.
• Supply chain management makes the front page. A Page One story in The Boston Globe outlined Northeastern University's plan to offer supply chain management as a core career track in its MBA program. The article noted that the subject has become one of the hottest fields in American business. Steve Matthesen of Boston Consulting Group's supply chain practice said in the article that "a growing appreciation by the CEOs of the world that supply chains drive strategy today" is behind the discipline's increasing importance.
• International shipping acquisitions take center stage. Last month, Deutsche Bahn AG (DB), the German railroad, bought global logistics provider BAX Global for roughly $1.1 billion. A few days later, DP World, Dubai's state-owned port operator, acquired U.K.-based Peninsular & Oriental Steam Navigation Co. for $5.7 billion. Expanding their global reach was a motivating factor for both DB and Dubai in making those deals. Deutsche Bahn expects the BAX purchase to bolster its U.S. presence and help it grow its logistics operations, while Dubai will gain container terminals in Europe, Asia, Australia, and the United States, according to wire reports on www.logisticsmgmt.com.
• A new service from DHL competes with UPS on the international front. DHL Danzas Air & Ocean last month launched Consolidated Distribution Service, a "virtual warehouse" for imports from Asia, Europe, and Latin America. The new service is designed for high-volume importers with multiple delivery points. Heavyweight air or ocean shipments are cleared through a single port of entry; DHL Danzas then deconsolidates the shipments and delivers them via DHL's domestic express network. The service makes it possible for importers to bypass or even eliminate domestic warehousing while reducing total transit times and customs-clearance costs. Consolidated Distribution Service is similar in many respects to the Trade Direct product offered by archrival UPS.
• West Coast ports were clear by Christmas, but railroads were a different story. Container throughput at the ports of Los Angeles/Long Beach, Oakland, Tacoma, and Seattle was humming right along in November, but railroad congestion delayed cargo moving off the docks, according to last month's "Port Tracker" report from the National Retail Federation (NRF) and analysts Global Insight. Record container volumes coupled with continuing disruptions from hurricanes caused rail-terminal congestion and traffic delays of up to four days. For the full report, go to www.nrf.com.
• Disappointed by high RFID-label failure rates? Failure rates of 10 to 40 percent have been widely reported. Now Omron, a developer of automation and electronic components, and partner R and V Group, a label converter, say they have the solution—and are willing to put their money where their mouth is. R and V, which embeds Omron's RFID inlays in its labels, claims to be the first converter to offer a 100-percent performance guarantee for ruggedized RFID labels. President Steve Van Fleet says buyers should shift their focus from labels with low-cost inlays that perform poorly to finished labels that offer an attractive overall cost of ownership.
• They're already coming, so the Alabama State Port Authority is building it. "It" is the Mobile Container Terminal, slated to open in 2007 with a capacity of 350,000 TEUs (20-foot equivalent units). West Coast port congestion and growing import volumes have prompted many shippers to switch to U.S. East and Gulf Coast ports. Hoping to capitalize on that trend, the port authority signed an operating agreement with a joint venture between APM Terminal North America, a subsidiary of Maersk parent A.P. Møller, and Terminal Link, a division of ocean carrier CMA CGM. When completed, the terminal will have an annual capacity of 800,000 TEUs as well as a distribution complex and an intermodal transfer facility.
• Air cargo wholesaler Kitty Hawk is spreading its wings, so to speak,with plans to expand its new ground transportation network to 46 cities. In October, the carrier made the move from pure air carrier to multimodal service provider when it launched scheduled, less-than-truckload (LTL) service to 28 business centers in North America. By the end of the first quarter of 2006, Kitty Hawk will have added ground service to another 18 cities. CEO Robert W. Zoller said the new service will allow the company to better serve shippers' logistics needs.
• Not just for small shipments anymore. NASSTRAC, an association providing educational, networking, and advocacy services for parcel and LTL shippers, has broadened its scope to include all transportation modes as well as global logistics and supply chain management. Executive Director Brian Everett said the change better reflects marketplace trends and members' job responsibilities.
• Which carriers and logistics companies provide the best service? We want you to tell us. Logistics Management's annual "Quest for Quality" awards are based on our readers' ratings of carriers and logistics service providers. Readers rate providers in six different categories on attributes that affect service quality, providing an important industry benchmark for performance across all modes. Beginning with our next issue, we'll include a 2006 ballot for one provider category in each issue. So be sure to look for the Third-Party Logistics ballot in January—and cast your vote!