Management Update

An executive summary of industry news

By Staff -- Logistics Management, 3/1/2006

• Would a 68 mph speed limit reduce or increase truck accidents? Depends on who you ask. The American Trucking Associations (ATA) and the Owner-Operator Independent Drivers Association (OOIDA) hold opposite views on the matter. The ATA wants truck manufacturers to set engine-speed governors on new trucks at 68 miles per hour. The group believes lower speeds will reduce the number of truck-related crashes on U.S. highways. The OOIDA, meanwhile, contends that forcing the lower speed on motor carriers could actually cause more accidents because it would create a dangerous speed differential between trucks and automobiles.
• Airlines around the world are cooperating with an investigation into possible cargo price fixing. Wire services and some of the airlines themselves reported that the European Commission, the U.S. Department of Justice, and South Korea's Fair Trade Commission raided airline offices or issued subpoenas and "requests for information" across Europe, the United States, and Asia. The airlines mentioned in various reports—Air France, American Airlines, Asiana Airlines, British Airways, Cargolux Airlines, Cathay Pacific, Japan Airlines, KLM, Korean Air, Lufthansa, Polar Air Cargo, SAS, and United Airlines—have denied any wrongdoing. According to a statement issued by SAS, the investigation centers on surcharges set by the carriers. LM will be keeping an eye on developments in this story. Watch our website, www.logisticsmgmt.com, for updates.
• Celebrating the decline of diesel prices? Don't break out the party hats yet. The U.S. Department of Energy reported that the average retail price for a gallon of diesel fuel fell for two consecutive weeks last month, but the good vibes didn't last long. By month's end the average price was on the rise again. Such fluctuation is likely to continue: In the first eight weeks of the year, weekly prices rose as often as they fell. As Contributing Editor John Schulz notes in his story on Owens Corning's fuel-hedging program on Page 34, some shippers are attempting to avoid such unpredictability by basing fuel surcharges on where prices are expected to go, rather than on where they've been.
• Movers and shakers are getting ready to talk transportation at the National Industrial Transportation League's third annual Spring Policy Forum, slated for April 3–4 in Arlington, Va. Sessions will focus on transportation regulation, congestion, capacity, service, fuel costs, and security. Featured speakers include Jeffrey Shane, Undersecretary for Policy, U.S. Department of Transportation, and Michael Jackson, Deputy Secretary, Department of Homeland Security. For more information or to register for the event, go to www.nitl.org.
• On-dock rail is keeping congestion under control at the Port of Los Angeles. The nation's largest container port, historically one of the most congested, reported a 23 percent year-over-year increase in on-dock rail moves for 2005. More than one million rail lifts took place on the docks last year; that's nearly one fourth of all containers passing through the port in 2005, and double the number of lifts three years ago. Four on-dock facilities serve six container terminals through a 57-mile network of tracks. Ten to 12 trains leave the Port each day, taking the equivalent of 2,500 trucks off the roads.
• Industry stalwarts recognized by mainstream media. Last month a number of freight transportation and logistics providers were recognized as some of America's most admired companies by Fortune magazine. Selections were based on various attributes, including innovation, employee talent, and quality of products and services, among others. FedEx and UPS ranked second and thirteenth, respectively, in the top 20 companies, while YRC (parent of Yellow Transportation, Roadway Express, USF, and other motor carriers), and Union Pacific topped the lists for the trucking and railroad industries. Expeditors International of Washington ranked first in the transportation and logistics category.
• International air freight begins the year on a high note. Data from the International Air Transport Association (IATA) indicates that international airfreight volume in January was up 5.3 percent compared to January 2004—a strong showing, considering that the segment grew just 3.2 percent for all of 2005. January's boost followed 5.5 percent growth in December, marking the first time in a year that growth hit 5 percent or more for two consecutive months. IATA attributes the uptick to a recovering global economy.
• YRC Worldwide follows FedEx's lead with the announcement that two of its regional LTL subsidiaries will launch a joint transcontinental service. The new westbound service links New Penn Motor Express operations in the Northeast with USF Reddaway operations in the Pacific Northwest and Rocky Mountains. The carriers have cooperated to offer eastbound service since October. YRC's move resembles FedEx's strategy in the early 1990s, when its regional LTL subsidiaries, American Freightways and Viking Freight, cooperated to offer transcontinental service. The carriers later were merged and rebranded as FedEx Freight.
• The China gold rush continues. UPS plans to create 22 additional distribution centers in China in the next few months, said Chief Executive Mike Eskew in a recent interview with Reuters. Rival FedEx, meanwhile, has kept very busy launching new air routes and building new hubs in that country. As reported by LM last month, China's hot economy continues to entice U.S.-based transportation and logistics companies into domestic operations. The motivation for a move into China: U.S. shippers need efficient logistics solutions that can help them bypass China's dated technology and overwhelmed infrastructure.
• Mark your calendar for May 22. National Maritime Day is the day for Americans to recognize the U.S. maritime industry and the men and women of the merchant marine. On that day, commemorative activities will take place nationwide at seaports and along inland waterways. National Maritime Day follows National Transportation Week, May 14–20. For more information on planned activities, visit www.marad.dot.gov.
• Add a link in the supply chain for RFID. "RFID Comes of Age," a new report sponsored by the North of England Inward Investment Agency, suggests that RFID technology has the potential to serve as a catalyst for the development of "supplier networks" that could take the place of linear supply chains. The report's authors, The Economist magazine's Intelligence Unit, say that companies could use RFID technology to share data that would allow them to collaborate in product development, purchasing, and promotion. The regional government agency is promoting North England as a technology development center. The region has already lured Sun Microsystems and Wal-Mart to set up shop there for RFID development work.
• 2006 Logistics Technology Roundtable goes live April 26. Shippers have been hit hard by rising freight rates, fuel costs, and a capacity crunch that won't go away. To "hold the wheel steady" in this storm of logistics woe, shippers are turning to supply chain and logistics technology. On Wednesday, April 26, LM will offer a special webcast designed to bring shippers up to speed on the latest technology developments and how to get the best value out of these solutions. Join Chief Editor Michael Levans and a team of analysts from ARC Advisory Group, Aberdeen, AMR Research, and IDC's Manufacturing Insights as they dive deeper into the trends in transportation, warehousing, and supply chain software. Watch www.logisticsmgmt.com for more details.