Management Update

An Executive Summary of Industry News

Trucking shutdown was no joke. While it didn’t bring commerce to a halt, independent owner-operator truckers got their message across with their April 1 shutdown, which was staged to protest the run-up in diesel prices and call for the federal government to come up with a plan to provide some relief. Although it was hard to determine exactly how many truckers stood pat, media reports indicated that some truckers got the word out by driving 20 mph on the New Jersey Turnpike.

Carlton gets the nod as NITL president. The National Industrial Transportation League (NITL) has named Bruce Carlton as its next president, effective June 1. Carlton currently serves as assistant administrator and ranking senior executive service career official of the United States Department of Transportation’s Maritime Administration and is responsible for international activities, policy development and implementation, and legislation. He will succeed John Ficker, who resigned as head of the Washington-based organization last November.

Transportation and logistics companies make Fortune list. Several logistics providers and freight transportation companies were recently recognized as some of America’s most admired companies by Fortune magazine. Selections for the annual list were based on a company’s innovation, employee talent, and quality of products and services. FedEx ranked 7th and UPS ranked 17th in the top 20 companies, while YRC Worldwide and Burlington Northern Santa Fe placed in the trucking and railroad categories.

NYC congestion pricing hits a dead end. A year after New York Mayor Michael Bloomberg made his Earth Day proposal to charge a fee to drivers entering the most congested parts of Manhattan below 60th Street between 6 a.m. and 6 p.m. on weekdays, the New York State Assembly has parked the plan. Bloomberg said congestion pricing would have helped cut down on emissions and traffic, but opponents of the plan said it would “unfairly target commuters and their constituents.” As a result of this decision, New York will lose out on $354 million in federal funding it had been awarded through the U.S. Department of Transportation to execute the plan.

Following the money. If there has been any doubt that vessels are being diverted away from North America’s Pacific Rim for more lucrative markets, one needs only to examine recent ocean carrier announcements. In mid-April, The Grand Alliance (comprising Hapag-Lloyd, MISC Berhad, NYK, and OOCL) launched a new EU5 service, updating its dedicated Far East service (EU3 and EU4). According to carrier spokesmen, the newly established EU5, together with service improvements in EU3 and EU4, will enhance schedule reliability. Eight 5,500 TEU vessels will be deployed on the weekly service, calling at Amsterdam, Hamburg, Southampton, Singapore, Shanghai, Ningbo, and Xiamen. At the same time, Maersk Line announced the introduction of an improved WestMed service between the U.S. East Coast and the Mediterranean.

Brother, can you spare a container? U.S. West Coast shippers are fuming over the shortage of containers for their exporting needs. When members of the Agriculture Transportation Coalition (AgTC) convene at the annual June meeting in San Francisco, this will be a major point of discussion, says AgTC executive director, Peter Friedmann: “The government is not going to mandate that ocean carriers put more vessels into service to and from the United States when they can make more money elsewhere,” he said. Describing the situation as “critical,” Friedmann said his constituents would be fighting for capacity at a time when demand for U.S. agricultural exports is at a new high. “And if we do not meet that need,” he said, “shippers from Latin America and the Middle East will.”

Winston’s green tool kit. During the keynote session at NA 2008 in Cleveland, author and environmental strategist Andrew Winston offered attendees the concept of a three-part “green” toolkit for tackling sustainability within an organization. The first tool, said Winston, is eco-tracking, or measuring and recording what goes into a company’s products as well as measuring and recording what stakeholders expect from the company. The second tool is culture. “When a company’s culture includes dedication to environmental change,” he said, “employees are more apt to think creatively and environmental projects are more likely to get done.” The third tool is redesign. An example: Wal-Mart has redesigned refrigerated store aisles, adding doors to save energy, while UPS has redesigned its driving routes to eliminate left turns, reducing the time trucks spend idling in traffic. Food for thought.

Get your kicks on B208. The International Air Transport Association (IATA) has welcomed the implementation of a new air route over China that will reduce air traffic congestion during the Beijing Olympics. The new route, designated B208, was implemented in late April. “We call this route the Olympic Bypass,” said Giovanni Bisignani, IATA’s director general and CEO. “It will alleviate air traffic delays and congestion as flights from Europe to Shanghai, Guangzhou, and Hong Kong will no longer have to be channeled through Beijing.” This is especially important for air cargo shippers moving goods for the Olympics in August, he added.

Security silver lining. Amid news of pending airline mergers, and further Federal Aviation Administration crackdowns on carrier safety violations, shippers have one reason to breathe a sigh of relief. Air cargo security is being screened rather than “inspected.” Spokesmen for the Air Transport Association of America (ATA), the industry trade organization representing the leading U.S. airlines, told LM that it fully supports the measures now in place by the Transportation Security Administration (TSA). “We are delighted that the TSA is moving ahead on screening cargo rather than inspecting it,” said David Castelveter, ATA communications vice president. “We had made our case sometime ago against forcing shippers to reconfigure cargo to meet the earlier demands.”

Railroad routing rule. Under a new federal rule announced late last month, railroads will be required to route every train carrying the most toxic and dangerous materials on the safest and most secure routes. Beginning June 1, railroads are required to conduct a comprehensive safety and security risk analysis of its primary route and any practicable alternative routes over which it has authority to operate. The analysis must consider information provided by local communities and risk factors like trip length, volume and type of hazmat being moved, existing safety measures along the route, and population density. Railroads must implement their routing decisions based on this analysis by September 2009.