An executive summary of industry news

Staff -- Logistics Management, 5/1/2001

Logistics efficiency slides with the economy. Logistics expenses climbed as a percentage of the nation's overall economy last year—due in large part to a buildup in inventory and higher financing costs. That's the word from Robert V. Delaney, who prepares an annual report on the state of the logistics industry for Cass Information and ProLogis. At the Warehousing Education & Research Council's annual conference in April, Delaney said that preliminary figures for logistics expenses amounted to about $1 trillion for the year 2000 or 10.1 percent of the nation's gross domestic product (GDP). The previous year, logistics costs accounted for 9.9 percent of GDP. Logistics Management & Distribution Report will carry a more detailed look at Delaney's findings in our July Annual Report issue.
"The underlying issue in Washington that no one wants to talk about is the state of [South Carolina Sen.] Strom Thurmond's health," says Timothy Lynch, president and CEO of the Motor Freight Carriers Association, which represents unionized motor carriers. The ailing Republican senator, 98, has been hospitalized several times in the last year. "[The reason why] the Bush administration is expending so much effort trying to push through key elements of its agenda ... is that should something occur, the Democratic governor [of South Carolina] will appoint a Democratic senator and control of the Senate will revert to the Democrats," Lynch told the spring meeting of NASSTRAC in Naples, Fla., last month.
The U.S. Customs Service, importers, and customs brokers are drawing closer to an agreement regarding the federal agency's Entry Revision Project (ERP) proposal. John Durant, who heads up Customs' ERP initiative, told the Coalition of New England Companies for Trade last month that members of the Business Coalition for Customs Modernization (BACM) had agreed to develop a firm consensus on which features they would like to see in a revised import-entry process. The group, which has met frequently with customs officials regarding the ERP plan, is expected to present its revised proposal to the Customs Service shortly.
Contrary to some claims that Mexico's maquiladoras have done nothing but steal U.S. jobs, the factories, which assemble imported materials and export them, have actually helped some U.S. industries. Eighty-two percent of raw materials imported by maquiladoras in 2000, worth $44 billion, were imported from the United States, according to Lucinda Vargas, chief economist for the Federal Reserve Bank in El Paso, Texas. Speaking at an international trade conference at Belmont Abbey College in Charlotte, N.C., Vargas told attendees that 56 percent (by value) of the auto parts in cars assembled in Mexico last year were U.S.-made. By contrast, U.S.-made parts represented only 1 percent of the content (by value) of vehicles imported from Japan or Germany.
Conflict among U.S. government agencies is preventing some promising information programs from getting off the ground, says John Simpson. The executive director of the American Association of Exporters and Importers and former deputy treasury secretary told attendees at the same international trade conference at Belmont Abbey College that the Intelligent Trade Data System (ITDS) "has been allowed to languish because of predictable turf wars." The large-scale project is designed to harmonize data collection by all federal agencies involved in transportation and trade into a single system. Although testing of some elements of the project is scheduled for next year, he said, the program is unlikely to see substantial progress soon because "no one in Washington is knocking heads together."
After a long, hard-fought battle for the rights to fly aircraft direct to China, United Parcel Service finally made its inaugural flight to the Asian giant last month. The flight, which landed in Shanghai and Beijing, came just two months after the U.S. Department of Transportation awarded the rights for direct air service to UPS. The carrier will operate six flights weekly from the United States to China, including four from Ontario, Calif., and two from Newark, N.J.
Moving one step closer to one-stop shipping, Lykes Lines, the Tampa, Fla.-based ocean carrier, has announced that it now offers customs clearance services to customers in the United States, the United Kingdom, Mexico, and Brazil. The carrier already allows customers to check customs-clearance status of inbound shipments on its Web site. Tony Bruno, Lykes' vice president-commercial, says that customers have been urging the carrier to provide as many services as possible "to make their lives easier."
Hearing aid: Retailer The Limited Inc. and airfreight carrier BAX Global Inc. have donated transportation services to Project EAR Inc., a non-profit organization that provides audiological outreach to developing countries. The two companies organized transport of donated equipment to the Dominican Republic.
Those power outages in California are posing a problem for the freight transportation industry. In March, the Port of Long Beach was hit twice, with blackouts affecting the port administration building and six of the port's customers for up to two hours. In testimony before the California Public Utilities Commission, Executive Director Richard Steinke asked that the port be exempted from the blackouts because of health and safety issues, the need to safeguard vessel movements, national security issues, and the potential impact on the economy of work stoppages at one of the nation's busiest ports.
The issue of fatigue management is the focus of action by two of the country's largest truckload carriers. Last month, Prime Inc. of Springfield, Mo., and Contract Freighters Inc. (CFI) of Joplin, Mo., sponsored a joint seminar on fatigue management for their drivers, safety personnel, and driver training staff. Dr. William C. Dement, director of the Stanford University Sleep Disorders Clinic and Research Center, conducted the two-day seminar. One hot topic during the program was the relationship between DOT hours-of-service regulations and drivers' need for rest. Stephanie Randel, a CFI driver, said, "[Y]ou know when peak alertness is, when you should be driving, and how little that coordinates with DOT rules for what we can and cannot do."
Eight transportation companies cracked the latest Fortune 500 list, four of them railroads. The top-ranked transportation company, based on revenue, was United Parcel Service at number 52 on the list. The ranking of the 500 largest companies also included FedEx at number 112; Pittston (parent of BAX Global Inc.) at 397; and Airborne Freight, number 489. Railroads Union Pacific (162), Burlington Northern Santa Fe (206), CSX (225), and Norfolk Southern (291) appeared on the list as well.
Want to attend a high-level industry event without the travel hassles? Mark your calendar for Oct. 17 and 18, 2001, the dates of the SupplyChainLinkExpo.com: A Virtual Trade Show and Conference. The event will feature executive-level speakers, "Webcast" seminars, and product and services exhibits, all in real time. Pre-registration for the event will begin on July 1 at www.logisticsmgmt.com.