Management Update

An Executive Summary of Industry News

By Staff -- Logistics Management, 2/1/2008

• Have you accomplished a great logistics feat? If so, we want to hear about it! Logistics Management is accepting entries for our 2008 Best Practices Awards contest from shippers who want to share their success stories. Three winners will be chosen from among entries that demonstrate how an innovative logistics strategy has cut costs and improved efficiency. All three will be profiled in the June issue of the magazine; the Gold Award winner will also walk away with an iPod nano and will be featured on the cover. Submissions are due by March 5. Enter here.
• The winner takes it all. The staff of Logistics Management would like to officially congratulate Michael Hackbert, senior buyer, global logistics procurement for Kraft Foods Global, Inc., for winning this year’s Logistics Quiz contest. Michael’s name was pulled from among the dozens of readers who scored a perfect 100 percent on this year’s quiz—which, we heard, was a little tougher this year than last. Michael wins an iPod nano and earns bragging rights through to December 2008. He told us it took him about 30 minutes to complete the 25 questions, and he plans to play everything form Abba to Zappa on his new iPod.
• Downsized Danes. Maersk Line, which has been struggling to recover from huge losses incurred when it acquired P&O Line in 2005, announced a massive restructuring of its workforce. The long-term strategy, say spokesmen, will result in better service for U.S. shippers. “The reality is that a leaner and simpler business requires fewer people, and this means there will be fewer positions in Maersk Line, mainly in the middle management layer,” said Maersk’s CEO, Eivind Kolding, in a statement. Industry analysts were not in full agreement that the move would result in measurable enhancements for shippers. “The carrier’s inland distribution has been cut back since the acquisition, and with the further reduction of regional teams, it can only mean less service,” said a U.S. West Coast maritime consultant.
• Three is a charm? Although the ports of Los Angeles and Long Beach have passed two container fees—one for clean trucks and one for infrastructure—California state Sen. Alan Lowenthal announced that he plans to revive Senate Bill 974, which proposes another $30 per twenty-foot-equivalent unit (TEU) fee. According to Lowenthal, this bill is still necessary because outlying transportation networks (roads and highways feeding into the ports) still need improvements. This will be Lowenthal’s third attempt to get such a bill passed, and will no doubt face resistance from shippers throughout the state, including those using the Port of Oakland which would also be affected by the bill.
• China weathers a tough winter. Brutal weather has battered China’s central, eastern, and southern sections making for what the Chinese Ministry of Public Safety has called the worst winter in more than half a century. “The heavy snow and sleet has paralyzed transport and coal shipments, has led to travelers cramming railway stations and airports, and caused power supply reductions in almost half of the 31 provinces and regions on the Chinese mainland,” China’s Xinhua news agency reported. Factories in the province of Guangzhou were forced to shut down in late January ahead of the Feb. 7 holiday, and nearly one million police have been dispatched to help keep roadways open as thousands of vehicles have been stranded in the snow and ice. The cost of the storms to the Chinese economy has reached $4.5 billion reports China’s Civil Affairs Ministry.
• Retailers say, “Make government do something! Shippers convening at the 97th annual meeting of the National Retail Federation (NRF) in New York last month were demanding that its Board of Directors do something government leaders here were failing to do: Take action on the economy. According to NRF President and CEO Tracy Mullin, “2007 holiday sales were the weakest since 2002, and as the new year begins, consumer spending remains sluggish. Consumer spending represents 70 percent of the U.S. economy and has fueled our economy for the past decade.” In an interview with LM, a spokesman for NRF noted that the board’s call to action is driven with its members in mind. “Prior to the conference, we were not certain how bad the economy was starting to look,” said J. Craig Shearman in Washington. “But after the holiday sales figures were in, we saw that lawmakers must give us a shot in the arm.”
• Taking tips from the ATA. In an effort to learn how to best grow its domestic trucking endeavors, the China Road Transport Association (CRTA) visited the American Trucking Associations (ATA) last month to get a first-hand look at how things are done in the U.S. Some of the topics covered during this visit included operations, truck safety regulations, driver training, and environmental regulations. One key goal for the Chinese concern during this visit was to gain an understanding on how U.S. trucking expanded from localized operations under a patchwork of state laws to today’s streamlined national and international logistics engine, said the ATA. “Over the last year, the Chinese government has invested $100 billion on road construction,” said CRTA President Mingde Yao. “But the efficiency of Chinese freight transportation has a long way to go. Our main purpose is to understand how trucking in the United States has developed.
• Ocean carriers ramp up PR. In an industry first, a collection of the world’s 24 leading container shipping companies has formed the Container Shipping Information Service (CCIS) to increase public understanding of the benefits and impact their industry has on daily life. The public awareness effort is a result of recent third-party research of opinion influencers around the world, which concluded that the traditionally quiet industry needs to do a better job of promoting itself. CSIS plans to address the industry’s role in common areas of concern, particularly the environment, globalization, and security. As a first step, CSIS has created a public website (shipsandboxes.com), designed to appeal to a broad audience. Its features include a “Did You Know” section and a “Jargon Buster” that decodes shipping terms.
• New Latin links. Shippers moving goods to and from the burgeoning South American markets will get a fresh look at new ocean carrier service options this year. Beginning in April, NYK and Hyundai Merchant Marine (HMM) will operate the “New Horizon Express” (NHX) replacing NYK’s current New Good Hope Express Service (NGX), which NYK has operated together with Maersk Line and Hamburg Süd. The New Horizon Express will be a weekly fixed-day service operating a total of 10 vessels, eight from NYK and two from HMM, with a weekly capacity of about 2,500 twenty-foot-equivalent units (TEUs). Ports served in the rotation include Shanghai, Ningbo, Hong Kong, Singapore, Durban, Santos, Buenos Aires, Itajai, and Paranagua. Other main ports in Asia will be covered by feeder connections.
• Former CBP Commissioner joins consulting firm. Robert C. Bonner. the former Customs and Border Protection commissioner, has joined The Sentinel HS Group, a homeland security consulting firm in Vienna, Va., as a senior principal. While overseeing the CBP, Bonner developed and implemented several shipper specific security efforts, including the Container Security Initiative and the Customs-Trade Partnership Against Terrorism (C-TPAT). In his new role at Sentinel, Bonner will provide advice to the firms’s public and private sector clients, focusing on international supply chain and border security, among other areas.
• 2007’s Railroad Facts is fresh off the press. The Association of American Railroads’ (AAR) annual reference book is full of facts and statistics about railroad finance, traffic, operations, equipment, and more. It also includes profiles of Class I railroads, Amtrak, and Canadian and Mexican carriers. The AAR notes that this edition is of particular interest, as it highlights a record-breaking 2006 which set records for total volume, intermodal traffic, and revenues. Single copies are $15.00; discounts are available for larger quantities. Order online at aar.org.