Management Update

An Executive Summary of Industry News

By Staff -- Logistics Management, 10/1/2006

• The Terminator has terminated a container-tax bill. California Governor Arnold Schwarzenegger squashed state Senate Bill 927, which proposed a $30 tax on each 20-foot equivalent unit moving through the ports of Los Angeles and Long Beach. The tax would have cost shippers an estimated $500 million a year. In his letter to the California Senate, Schwarzenegger said he vetoed the bill because of several flaws, including its application to just two ports and one type of cargo. He also cited concerns that the tax could negatively impact agricultural exports. Read more.
• A former DHS official enters the private sector. Elaine Dezenski, former acting assistant for policy development at the Department of Homeland Security, has joined Cross Match Technologies Inc., a developer of biometric identity technologies. Dezenski, who was deeply involved in credentialing initiatives at DHS, will serve as senior vice president of global governmental affairs in Washington. In her new job, she will oversee Cross Match's efforts to translate government policies and requirements into biometric services for identity management and security. Dezenski will also spearhead the company's relations with the European Union.
• Cross-border truckers and railroads will have to pay up. Effective Nov. 24, truckers and railroads entering the United States from Canada will be required to pay $5.25 per trucks or $7.50 per railcar to the U.S. Department of Agriculture. The new fee, described by the USDA as an “emergency action,” is intended to help pay the cost of tighter inspections at the Canada–U.S. border. According to the USDA, an increasing number of agricultural pests and diseases have been found in shipments of agricultural items entering the United States from Canada. Complete details were published in the Federal Register on Aug. 25, 2006.
• Rail competition has improved, but not enough, says the United States Government Accountability Office (GAO) in a new report on freight railroads. Researchers found that the number of shippers that are “captive” to a single railroad appears to be declining, but the amount of traffic moving at rates that exceed the threshold for rate relief may be increasing. The report notes that limited data prevent the agency from determining whether those findings reflect “reasonable economic practices” by rail carriers or a possible abuse of market power. GAO recommends further analysis of the state of rail competition. To read the complete report, go to www.gao.gov.
• The EPA chips in for “green” yard equipment. The Environmental Protection Agency will contribute $300,000 to the ports of Los Angeles and Long Beach to fund the development and testing of hybrid-technology container-yard tractors. The new equipment could reduce air emissions by as much as 93 percent—or 19 tons of nitrogen oxide (NOx) and 200 pounds of particulate matter—during the six-month test period. Kalmar Industries will build the prototype tractors.
• The 2006 Global Supply Chain Conference is on the launching pad. For the fourth year, Logistics Management and sister publication Supply Chain Management Review have teamed up to offer logistics professionals the most comprehensive online conference of its kind: The 2006 Global Supply Chain Conference. Thought leaders and practitioners from around the world will present a series of sessions on supply chain management best practices and technology on Oct. 25 and 26. The conference will be available on demand after the launch dates, so shippers can listen in any time. This year's topics include: a discussion on the next-generation supply chain; how shippers can get the most out of supply chain technology; the growing importance of business intelligence; and how shippers can benefit from working closely with a global 3PL. Go to www.logisticsmgmt.com/gscc06 to register.
• The TMS market will exceed $1.3 billion by 2010, predicts ARC Consulting. Sales of transportation management systems (TMS) to third-party logistics companies grew by more than 11 percent last year, surpassing the growth rate for sales to manufacturers and retailers, according to ARC's new study, Transportation Management Systems Worldwide Outlook. Report author Adrian Gonzalez says one reason for that growth is that TMS applications are migrating away from being “stand-alone, monolithic applications” employed by only a handful of users.
• Driver-turnover rates for truckload carriers fell in the second quarter. The turnover rate for large truckload carriers dropped to 110 percent, down from 116 percent in the first quarter of 2006. That's the lowest number since the fourth quarter of 2003, says the American Trucking Associations (ATA). For small carriers, the turnover rate declined by 11 percentage points to 100 percent during that same period. The long-haul, heavy-duty trucking segment currently is short by 20,000 drivers. That's forecast to increase to 111,000 by 2014 if demographic trends remain unchanged.
• Do transportation agencies need a reality check? According to former Federal Railroad Administrator Gil Carmichael, they do. In a speech before the Mississippi Senate Highways and Transportation Committee, Carmichael said that despite the many advances made in the transportation industry over the last 25 years, federal and state transportation agencies “remain locked in obsolete attitudes and policy structures that do not address this situation.” Carmichael said that one way to get things pointed in the right direction is through intermodal transportation, which he described as “sharply focused” on speed, safety, reliable scheduling, and economic feasibility that builds on the strength of each transportation mode.
• Korea's first LOGEX event is gaining momentum. UPS and Maersk are just two of the names on the list of attendees for Korea's World Logistics Expo, slated for October 10–14, 2007. Domestic companies planning to attend include Korea Express, Daewoo Logistics, Daeseung Cargo, Blue Sea Ferry, and Sebang. The event, part of an initiative to make Korea a major logistics hub in Northeast Asia, is expected to attract attendees from 30 countries. Organizers say that one of the biggest highlights will be the unveiling of a system designed to control and trace distribution for all goods imported and exported through a port of entry.
• One-stop shopping is not a panacea for shippers. A Unisys survey of logistics executives at 52 multinational companies found that most shippers prefer to do business with several logistics- and transportation-services providers, rather than just one. Many respondents expressed hesitation about putting “all of their eggs in one basket;” they want alternatives available in case one supplier should be unable to perform. Shippers also noted that using multiple providers encourages competitive pricing and higher service levels.
• Wal-Mart Stores continues its push into RFID. Wal-Mart announced that it will add 500 stores and clubs to its radio frequency identification (RFID) initiative by the end of the fiscal year, bringing the number of locations using the technology to more than 1,000. The retail giant also is continuing to work with its largest suppliers; another 300 are expected to begin test shipments this month. If all goes well, those suppliers will implement RFID for shipments to Wal-Mart in January 2007, bringing the number of suppliers using the technology to more than 600.
• Pacer helps turn on the Sunday night lights for NBC. Thanks to a contract win by longtime customer GE, Pacer International will transport a 22-ton generator package to all of the NFL's Sunday night football games this season. Pacer's efforts will ensure that football fans aren't left in the dark: The generator will supply up to 2,400 amps of power to NBC's mobile broadcast studio.