Management Update

An executive summary of industry news

By Staff -- Logistics Management, 8/1/2005

• A controversial fuel surcharge provision was dropped from the final version of the highway bill. When federal lawmakers approved a $286 billion reauthorization bill for road and transportation infrastructure projects just before their August recess, they took out a contentious section that would have mandated fuel surcharge payments to motor carriers. House conferees withdrew that proposal at the behest of their Senate colleagues. The bill now moves to the White House, where President Bush is expected to sign the measure. The legislation did not address the hours-of-service rules for trucking, as some observers thought it might.
• Truck tonnage slipped in June, raising concerns that the economy may be slowing. The Truck Tonnage Index tracked by the American Trucking Associations (ATA) slipped .2 percent, to 114.8. For the first six months of the year, the index was 2.7 percent higher than it was during the same period in 2004, but still below ATA's 2005 forecast of 3.0 to 3.5 percent. ATA Economist Robert Costello said June's decline was unexpected because most economic indicators rose that month. Weak production of such heavy commodities as steel and chemicals may have contributed to the drop-off. At nearly 70 percent of domestic freight tonnage, trucking serves as a good barometer of U.S. economic activity.
• Trans-Pacific ocean carriers will impose fuel surcharges for inland container moves. Effective Aug. 15, members of the Transpacific Stabilization Agreement (TSA) will assess a fuel surcharge of $137 per container for intermodal shipments. The group, which represents steamship lines operating between Asia and the United States, will also charge $40 per container for truck transportation within California, Oregon, and Washington, and for local moves on the East Coast. The surcharge will be adjusted quarterly. The TSA says the surcharge is needed to cover rising costs for truck and rail transportation.
• Three acquisitions changed the logistics landscape last month. Northeast regional LTL trucker Estes Express Lines bought Los Angeles-based carrier G.I. Trucking, gaining 46-state coverage for its LTL and truckload services. In another development, Kuwait's PWC Logistics bought international freight forwarder GeoLogistics of Santa Ana, Calif. The combined groups will employ some 10,000 people in more than 100 countries. And UPS strengthened its presence in the United Kingdom by purchasing Lynx Express Ltd. Lynx offers parcel express services as well as a suite of logistics and spare-parts services.
• CSCMP's top award will go to Dr. Martin Christopher. The professor of marketing and logistics at Cranfield University in the United Kingdom will receive the 2005 Distinguished Service Award from the Council of Supply Chain Management Professionals at the group's annual conference in October. Dr. Christopher researches the interface between marketing and logistics, and the impact of globalization on logistics.
• Short-sea shipping may get a boost if a proposed bill becomes law. Last month, Rep. Dave Weldon (R-Fla.) introduced H.R. 3319, which would exempt from the Harbor Maintenance Tax any cargo that moves by vessel along U.S. coastlines. If passed, cargo traveling between the ports of Jacksonville and Boston, for instance, would not be assessed the Harbor Maintenance Tax. Oceangoing vessels would still be subject to the tax, which currently is levied on imports and domestic shipments to generate funds to pay for harbor dredging and maintenance.
• Your purchasing organization could be an award winner. The Institute for Supply Management (ISM) is accepting applications for the first annual R. Gene Richter Awards for Leadership and Innovation in Supply Management. The award will honor organizations that "through strong leadership demonstrate critical and strategic contributions to business success." Judges will review submissions in four categories: process, technology, people, and organization/structure. Organizations of all sizes, domestic or international, are invited to apply. ISM is accepting entries online at www.ism.ws/richterawards. The deadline for entries is September 20, 2005.
• If you're importing products in wooden crates, get ready for a Customs crackdown. Starting Sept. 16, U.S. Customs and Border Protection will begin enforcement of a new U.S. Department of Agriculture (USDA) regulation governing imports of wood packaging material. Issued by USDA's Animal and Plant Health Inspection Service (APHIS), the rule requires wood packaging, such as pallets, crates, boxes, and dunnage used to support or brace cargo, to be treated and marked. Approved treatments include heating to a minimum wood-core temperature of 56 deg. C for at least 30 minutes, or fumigation with methyl bromide. Details are available at www.cbp.gov and www.aphis.usda.gov.
• Want to learn more about logistics outsourcing? Then consider picking up Logistics and Manufacturing Outsourcing: Harness Your Core Competencies. Written by Tompkins Associates consultants, the book discusses how to create and maintain successful outsourcing relationships that benefit the entire supply chain. The book, which sells for $24.95, includes real-life examples of both successful and unsuccessful outsourcing experiences. To order a copy, call 1-800-789-1257, ext. 55494, or go to www.tompkinsinc.com.
• Transportation education at its best. That's what will be on the agenda at Delta Nu Alpha's annual Transportation Education Conference, slated for Sept. 15—17 in Milwaukee, Wis. The organization will offer educational sessions headed by such well-known analysts as Ted Scherck, president of The Colography Group, and Mike Regan of Tranzact Technologies. The conference will also feature the group's annual scholarship awards, officer installation, and honors for DNA's Transportation Person of the Year. For more information, call DNA at 615-360-6863 or go to www.deltanualpha.org.
• Who uses the services of 3PLs? A survey of 20 leading third-party logistics providers (3PLs) conducted by ARC Advisory Group found that 78 percent of the 3PLs' revenues came from manufacturers. Most of their clients were automotive, high-tech, and consumer packaged-goods companies. These and other findings are contained in the report, "Strategic Guide for Logistics Service Providers (3PLs): Industry Trends, Provider Profiles, and Maturity Model." More information can be found at www.arcweb.com.
• Two steamship lines have launched trans-Pacific service to Central America, providing an alternative to clogged U.S. West Coast ports. Maersk Sealand and CP Ships both started new services linking Asia and Central America this spring. Maersk Sealand's CAM-MEX fortnightly service from Asia calls on Ensenada and Lázaro Cárdenas in Mexico, Puerto Quetzal in Guatemala, and Balboa in Panama. CP Ships' service calls on Lázaro Cárdenas, Puerto Quetzal, and Puerto Caldera in Costa Rica every 10 days.
• Transportation spending relative to the cost of goods sold is on the rise. Our 14th annual Masters of Logistics survey, which benchmarks distribution costs and practices, found that transportation expenses as a percentage of the cost of goods sold rose from 2.6 percent in 2004 to 3 percent in 2005. Logistics Management sponsored the study, conducted by researchers at Georgia Southern University, the University of Tennessee, and the consulting firm Capgemini. For more details, be sure to check out our September issue. And watch www.logisticsmgmt.com for information about our Masters of Logistics webcast, scheduled for Sept. 28. During that event, researchers will present the complete survey results and will take questions from the audience.