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INTERNATIONAL SHIPPING, GLOBAL LOGISTICS, ASIAN ECONOMY RECOVERY

 

ETC INTERNATIONAL FREIGHT SYSTEM

INTERNATIONAL SHIPPING, GLOBAL LOGISTICS, AIR, OCEAN, FREIGHT FORWARDERS IN CALIFORNIA, OCEAN SHIPPING

Hopes Rise on Asian Economy Recovery

The economies of China, India and Vietnam are projected to grow faster in 2013 than they did in 2012, raising hopes in the maritime industry that the major east-west trade lanes serving Asia again will be engines of growth.

China’s economy is projected to grow 8.5 percent this year, India’s GDP will increase 5.4 percent, and Vietnam’s economy is forecast to increase 6 percent.

By most every measurement, 2012 was a disappointment for cargo interests, carriers and ports in the east-west trade lanes. Europe slipped into recession, dragging the Asia-Europe trade down with it. Manufacturing in Asia declined, so U.S. exports of raw materials and scrap products to China dropped.

Europe’s containerized imports declined 2 percent, and, for the first time in five years, Europe’s imports failed to match or exceed its exports, according to the North Europe Global Port Tracker published by Ben Hackett Associates. Europe’s exports increased 3.3 percent in 2012, but from the Mediterranean and Black Sea countries, exports increased only 1.4 percent.

The Asia-U.S. trade fared somewhat better, but not much. U.S. containerized imports increased 4.6 percent in 2012, according to Journal of Commerce economist Mario Moreno. Exports increased a paltry 2 percent.

The disappointing trade numbers in 2012, which followed a lackluster performance in 2011, put ocean carriers in a bind. Global container capacity increased 7.2 percent last year, noticeably higher than growth in demand, according to research analyst and consulting firm Alphaliner. Carriers this year will take on a record amount of new capacity. Global container capacity is scheduled to increase 9.8 percent in 2013.

The new ships mostly will be large vessels capable of carrying 10,000 20-foot-equivalent units or more. Although most of the vessels will enter the Asia-Europe trade, their introduction will cause a cascading effect, with vessels of about 8,000-TEU capacity moving from the Asia-Europe to the Asia-North America trades.

About 40 new vessels with a capacity of 10,000 TEUs or more entered service last year, almost all of which went into the Asia-Europe trade. Another 45 mega-ships will be launched this year, including delivery of the world’s first 18,000-TEU container ship to Maersk Line, according to London-based research analyst Drewry.

Vessels larger than 10,000 TEUs greatly lower the per-unit cost of transporting containers compared to Panamax vessels of 5,000 TEUs. These modern ships are also much more fuel efficient than the preceding generation of vessels, reducing fuel costs by as much as $30,000 a day, according to Alphaliner.

When confronted with a significant increase in capacity amid slow growth in demand, however, carriers often panic, slashing freight rates to attract cargo. That’s what happened last year. The average global freight rate peaked last summer at $2,590 per 40-foot container, but plummeted 66 percent by December to $1,706 per FEU, according to Drewry.

Carriers showed somewhat more discipline in the eastbound Pacific, where spot freight rates dropped from a peak of $2,880 per FEU in early August to $2,168 per FEU in December.

Trade conditions will improve this year, with the U.S. and China leading the way. IMA Asia expects U.S. GDP to increase 3.2 percent in 2013, up from 2.6 percent last year. China’s GDP will increase at least 8 percent, with some estimates as high as 8.5 percent, compared with 7.7 percent in 2012.

Vietnam, one of the United States’ fastest-growing trading partners, will experience GDP growth of 6 percent, compared with an increase of 4.8 percent last year. As wages increase in China, manufacturers are looking to Southeast Asia for lower-cost labor. Footwear importers, for example, see imports from China slowly declining in the coming years as some production moves to Vietnam.

India, with a population approaching the size of China’s, will grow 5.4 percent, compared with growth of 4.4 percent last year. Although that’s good, economists such as Walter Kemmsies of port engineering firm Moffatt & Nichol say India is still some years away from becoming an import and export powerhouse, given its poor infrastructure and structural impediments to trade.

Growth also will be stronger in 2013 for other important trading nations in Asia. GDP will increase 3.5 percent in South Korea, 2.3 percent in Taiwan and 6.6 percent in Indonesia, according to IMA Asia. Japan, however, will struggle with growth of only 0.8 percent, compared with GDP growth of 1.6 percent last year.

Most economists predict this year’s first quarter will be sluggish, but growth will pick up in the second quarter and accelerate in the final two quarters of the year. China’s exports to the U.S. and Europe will increase as the year progresses.

Carriers in the Asia-Europe and trans-Pacific trades already are reaping the benefits of the pre-Chinese New Year busy period when factories in Asia push production forward before closing for the two-week celebration. “Vessels are currently full and have been so since the middle of December last year,” Lars Mikael Jensen, head of Asia-Europe trade at Maersk Line, told The Journal of Commerce.

The most recent Global Port Tracker projects month-to-month increases in U.S. imports at least through the end of its forecasting period in May. The December 2012 JOC-PIERS Container Shipping Outlook expects containerized U.S. imports to increase a tepid 1 percent in the first two quarters of this year, before ramping up in the second half of the year.

China’s economy bottomed out in the third quarter of 2012, with the export juggernaut turning around in the fourth quarter. Exports increased 7 percent in October and November compared to the same months in 2011, according to IMA Asia.

China last year initiated an infrastructure development program, which contributed to its growth in the final quarter of the year. The Chinese government also is nudging the country away from almost total dependence on export-led growth to more of a consumption-based economy.

Over the long term, China’s growing middle class will become a strong market for U.S. agricultural exports as food products from the U.S. are respected in China as being of high quality. As China’s middle class consumes more meat products, U.S. exports of feed grains to China will increase. 

Europe is expected to remain in recession during the first half of 2013, with slight growth returning in the third and fourth quarters. Despite the depressing economic news, pent-up demand among European consumers should result in greater consumer spending in the second half of the year.

The U.S. can contribute to growth in Europe and Asia if Washington addresses its budget deficit issues. IMA Asia is bullish on prospects for U.S. growth, especially with the boom in oil and gas production that has been under way for the past few years, and believes the U.S. will help lead the global economy to a broad recovery beginning in the second half of the year.

After slowing last spring, manufacturing activity in the U.S. has picked up, according to a Jan. 10 report by the Manufacturers Alliance for Productivity and Innovation. The group cited increased investment in factories and rising production heading into the new year.

Industry analysts see another year of volatility in freight rates in the major east-west trades. In early January, average freight rates were 26 percent higher than they were in early 2012, according to Alphaliner.

Lars Jensen, CEO of SeaIntel, sees 2013 being a repeat of 2012, with freight rates falling after the Lunar New Year celebration, picking up in the summer, peaking in the fall and then dropping again in the final two months of the year. The east-west trades have entered a phase where they are experiencing two complete up-and-down cycles a year, Jensen said.

In the current environment where capacity is increasing at more than twice the growth rate of container traffic, carriers must manage the deployment of their vessels to better align supply with demand. Carriers last year were unable to achieve this balance in the Asia-Europe trades. Freight rates last summer declined much more rapidly in Asia-Europe than in the trans-Pacific, where carriers exerted more self-discipline.

Trans-Pacific carriers last year ran a two-track strategy in which they offered low — some would say non-compensatory — freight rates to beneficial cargo owners in service contracts, and then raised the rates they charged to cargo consolidators four or five times during the course of the year.

Steve Aldridge, president of Hong Kong-based third-party logistics provider Encompass Global Logistics, said this strategy resulted in an untenable spread in freight rates in which retailers and other large importers were paying $1,800 to $1,900 per FEU on shipments from Asia to the West Coast, while non-vessel-operating common carriers were paying $2,700.

Carriers generally don’t express much sympathy for NVOs who deal primarily in the spot marketplace, although they admit freight rates that were in BCO contracts last year aren’t sustainable. The Transpacific Stabilization Agreement, a discussion group representing 15 of the largest carriers in the eastbound Pacific, announced plans to increase freight rates $600 per FEU to the West Coast and $800 per FEU to all other destinations when contracts come up for renewal this year.

Some carriers are floating the concept of quoting freight rates on a quarterly basis, adjusting rates on a mutually agreed formula based on seasonal fluctuations in cargo volumes, Aldridge said. Carriers, he said, have discovered yield management, but they’re still struggling for a process of dealing with the normal peaks and valleys of vessel load factors throughout the year.

Likewise, they must find a better way of handling round-trip pricing, he said. For more than a decade, carriers have based their pricing on the head-haul, with the eastbound Pacific subsidizing the weaker westbound leg. That results in a wide variation in rates, such as $2,000 for an eastbound container of electronics goods, with a westbound shipment of scrap paper or hay moving at $400 per FEU or less.

The TSA last year moved to rectify this situation by filing a request with the Federal Maritime Commission to combine with its westbound counterpart, the Westbound Transpacific Stabilization Agreement, to have just one discussion group covering both directions in the Pacific trades. The combined group could be formed this year.

International Freight, Shippers Roundtable

 

ETC International Freight System

Freight Forwarders in California, Ocen, air shipping, International Shipping, Global Logistics & distribution

Dangling on the Cliff: Shippers Roundtable

 

Starting Monday, read JOC's 2013 Annual Review and Outlook. Here's a first look:

Fifth Annual Shippers Roundtable.

After a seesaw year in which freight rates bounded up and down like a yo-yo, shippers and carriers alike are looking for stability and predictability in their businesses. Carriers on the ocean, land and in the air want sustainable rates that will support their transportation services. Shippers, under pressure to cut costs, want low rates. Will the various elements of the global supply chain find a solution to these conflicting goals in 2013?

Probably not. In fact, with a huge amount of new vessel capacity scheduled for delivery in 2013, the cycle of ocean freight rates could get even more volatile, leading to several peaks and valleys. That’s just one of the challenges manufacturers face in a year starting with a lot of questions.

One of their biggest concerns, of course, is the state of the global economy, which is undergoing a far-from-steady recovery from the Great Recession. Europe has retreated into recession, while the U.S. recovery is stuttering. Consequently, China’s growth is slowing, and the economic policies of its new leadership team have yet to become clear.

Also causing sleepless nights is the changing pattern of sourcing, as rising Chinese labor costs increase the supply chain strains in time and money, pushing more manufacturing closer to destination. At the same time, increasing U.S. regulations on international shipments are raising concerns about the cost of the delays they cause. And the possibility of more stringent hours-of-service rules on the trucking industry suggests the trouble motor carriers already have in finding and retaining the drivers they need to keep deliveries moving will only mount.

As 2012 wound down, The Journal of Commerce discussed these and other supply chain issues with three global shippers: Patrick Halloran, director of international trade news and logistics for Cardinal Health and former chairman of theGT Nexus Shipper Council; Steve Harmon, vice president of transportation for consumer goods company Kimberly Clark; and Mark Widmer, director of international transportation and customs at Dal-Tile, the flooring manufacturing subsidiary of Mohawk Industries.

“The economy has given us a lot of false hope,” Halloran said. “I think we were waiting for the economy to recover and build (momentum) in 2012, and it never really quite made that.”

With business hopes riding on predictability and stability in the new year, will 2013 be the year they get it?


JOC: We entered 2012 with the same trepidation that marked 2011. The year got off to a fast start before headwinds again sent shockwaves through the freight transportation industry. How will you remember 2012?

Patrick Halloran: Every year starts the same and this year is no different — another challenging year to predict in terms of your budgeting. Are you going to hit your budget? It’s always a crystal ball, so to speak, to see how the supply and demand balance is going to be and what the impact will be on rates and service. In 2012, for example, I guess the surprise was the ability of the trans-Pacific eastbound market to sustain the high spot rate increases that we saw in the latter half of the year. And then, of course, 2012 was capped off by the labor challenges on all U.S. coasts, which will make last year memorable.

Steve Harmon: I’d say that the predicted transportation constraints just didn’t happen. The exception was the second quarter in the Southeast for trucking with seasonal imports and crops coming to market. On the ocean freight side, we felt like it was kind of a year of plenty. There were no constraints or issues for us. We are a net exporter, and ship to all regions of the world.

Mark Widner: For me, 2012 was the year the carriers finally focused on a business model that had profit as a driver, instead of just chasing market share. They were a bit overzealous in it, but I think their constant chasing after GRIs sends a constant message, at least, and they’re working on it.

JOC: What do you think 2013 will look like? Will you conduct your business any differently?

Widner: I don’t think we’ll conduct our business any differently. Our model always has been and will continue to be to build strong and mutually beneficial relationships and partnerships with our core carriers. It’s something that’s served us pretty well so far. We’re pursuing some long-term contracts with some of our core carriers, in the three- to five-year range, for price stability and to keep the business, in a sense, on a steady keel.

JOC: Are most of your annual contracts long-term now?

Widner: No, they’re not. We’re working on them with our primary carrier, and I’m hoping to be able to do something similar with some of our other carriers, as well.

JOC: There’s a tremendous amount of new capacity scheduled to come on line, something like a 9 or 10 percent increase, and yet global demand is forecast at half that or less. In preparing for your negotiations this spring, what is it going to look like?

Widner: I think you’re absolutely right. As I speak with the carriers, the honest ones will admit that they’re building too much capacity. On the other hand, every five years or so there’s an increase in the efficiency of the ships. With the cost of bunker they feel compelled to build the more efficient ships. As a result, you have a lot of older ships out there that they’re unwilling to scrap, or unable to scrap, and we’re stuck with all this excess capacity.

Harmon: For ocean freight, I think rates are going to be flat to lower.

JOC: On both imports and exports?

Harmon: Yes.

Widner: I’d agree that I would see rates flat to lower in the coming year from a carrier perspective.

Halloran: That’s an interesting question. The majority of the ships they’re building are very large, which is where you get the efficiency numbers for the Asia-to-Europe trade. How and when and where the current ships cascade, and/or how they idle them will be a large factor in determining rates. But the challenge is: Are they going to be successful in idling? And I guess it’s going to be a matter of where they lose the least amount of money. I’d hate to be the one making that financial analysis. So, if you look at the forecast from the various analytical companies, they’re reluctant to say exactly how much capacity is going to go into what lane. They keep it at a global level, but they’re pretty targeted with their demand forecasts. So, it’s still hard to say whether the rates will go up or down in any specific lane. It’s a matter of where they park the ships, when they park the ships and for what trade lane.

The economy has given us a lot of false hope. I think we were waiting for the economy to recover and build momentum in 2011, then 2012, and it never really quite made it. So, it depends on how quickly that ramps up, which changes the dynamics of everything.

Having said that, if I look into 2013, what will I do differently? Maybe because it’s so fresh in at least my mind working through the (port labor) challenges, one thing I want to do is evaluate our supply chain’s strengths and weaknesses, and what we learned from the experience. A stress of that magnitude showed us where we were really strong, but it also exposed areas that need to improve. So, some key lessons I’m taking away already are that fast access to reliable data, positive carrier relationships and an experienced logistics team are keys to be able to pivot and adapt quickly.

JOC: Are you budgeting big increases in fuel costs, or have you been able to take that cost out of your supply chains?

Widner: I’m not budgeting anything higher than what we saw at the peak of 2012. I’m not anticipating fuel to be any higher than what it was in the past year.

Harmon: We’re budgeting fuel at the same levels as 2012. On other costs, we still see a lot of ways of reducing and eliminating waste in our supply chain to lower costs. We’re going to be all over that one, as we have in the past.

Widner: I would agree with that. As a business model, I don’t think it’s a great idea to chase your carriers for $20 or $50 every time you go out for a bid. I think you’re going to get a lot more bang for your buck if you look internally at your own supply chain and find efficiencies there and a more direct way of doing things.

Halloran: I think fuel demand is a derivative of global economic growth, so perhaps we’re going to see some price increases in fuel, but absent an external shock like the Arab Spring, I don’t see big increases on the horizon.

Widner: I think where we see a lot more volatility for fuel is in the domestic market. It’s a lot more responsive on the domestic trucking market on a cents-per-mile basis than it is on the ocean transportation side.

JOC: Is your relationship with carriers changing? Are you dealing with them on any different basis?

Harmon: From an ocean carrier perspective, I feel like we still have strong partners, but the world kind of changed with the recession. With the cost pressures and volatility they have certainly been under, it feels more transactional than it did pre-recession.

JOC: Transactional, meaning you’re dealing more with the spot market, spot rates?

Harmon: We’re still dealing with our annual (contract) bid, where we’ve leveraged that globally. But in terms of just face-time engagement in some areas, it seems a lot less strategic and more transactional than it has in years past.

Halloran: Overall, we enjoy a solid, long-term relationship built on a lot of trust and straightforwardness that has been forged and tested with the carriers we have. We’ve parted ways with some, but for our core carriers, this relationship has been tested over the years. Sometimes they need us, and we’re there for them, and sometimes they don’t need us, and we’re there for them, as well. So, it’s tested on both sides of the market for us. We enjoy that relationship, and I hope they do as well. We don’t always agree, certainly, but we have a strategic relationship in mind.

Widner: I can see how Steve would feel the relationship with a lot of the carriers is becoming more transactional. I’ve seen that with some carriers, as well. Again, with the core carriers and the partnerships, they stand behind you when you need it, and you stand behind them when they need it; whether it’s the carriers moving capacity around if they need it someplace, or they’re opening up capacity for you, or providing equipment where you need it and last-minute space. I think those high-level and core-carrier relationships do a lot more for the stability of your business than trying to chase rates and capacity on the spot market.

Harmon: On the trucking side, we have retained and really kind of strengthened our core-carrier concept, even during the recession. So, it’s kind of a tale of two cities.

JOC: What do you see for the year ahead in the retail market?

Widner: I don’t think anybody anticipates it’s going to be the opening of a floodgate. From what we’re seeing in the marketplace as far as home building and construction, it’s going to be a steady growth, rather than explosive growth. Europe and how much it’s going to drag down the global economy, I think, is the wild card.

Harmon: Our products are basically things people need every day, so we don’t see as much volatility in terms of impact on our business. That said, it just feels like the economy is a big question mark and, if anything, the first six months of 2013 feel like they’re going to be really flat for retail.

JOC: One of the big lessons from the recession seems to be with inventories. They remain lean. When we get a sustained recovery, will shippers strive to keep it that way?

Widner: We’ve struggled in years past with inventories, like every company has. I think recovery or not, the well-run companies always strive to keep inventories as lean as their business model and required service levels will allow.

Harmon: I could talk about inventories for an hour. I’ll tell you that there was a big change when the recession hit. We quickly reduced inventories to generate cash. We saw our retailers do it. We saw our suppliers do it. Some of that has come back. A lot of companies took their inventories too low to service the business. I have seen some upswing, but inventories are still much lower than pre-recession. I believe this will continue whether there’s an economic recovery or not. Companies are so focused now on working capital and ensuring they don’t get cash-strapped again. So, I see inventories remaining low, and it puts a lot more stress on those of us who manage transportation. Whether it’s domestic or international, because now we do not have buffer inventories. Any delay in movement of goods to market, is a lot more visible and a lot more painful. If you do not manage for on-time deliveries to ensure that your product is on the shelf at the time the shopper or consumer wants to buy, it will impact the bottom line.

JOC: Hurricane Sandy caused tremendous disruption in the Northeast, which steered a lot of ships to Norfolk and Baltimore. More disruption occurred in Los Angeles-Long Beach a month later. Are you factoring things such as that into your supply chains? Do you have enough buffer to cushion against those kinds of disruptions?

Harmon: The thing we try to promote with our internal supply chain partners and our businesses is that you really need to think more about safety stock, especially if you’re manufacturing outside a region where you’re selling. A lot of times, we’ll think about chasing the lowest-cost manufacturing site, but don’t always think about the length of haul, the time it takes to get to market and then making sure we’re protected from a safety stock perspective. When you have long cycle times, more investment in inventories is wise. We promote that from a transportation perspective.

Halloran: Six years ago, we embarked on a Lean Six Sigma program. That was to support a reduction — a right-sizing — of inventory, I should say. So, we’ve been making great strides, supported with sound principles, to make the right decisions on inventory. Having said that, because we’re in health care, if we’re short on inventory, it’s not just a matter of missing a sale — the greater downside is that we could cause problems in the greater health care system. So for us, it’s not just a matter of lost sales; there’s a far larger impact and responsibility that we have to consider. Surgeries could be missed, so we really have to keep an eye on making sure the inventory is lean but able to withstand stress. You’re talking about hurricanes. Well, to support our plant, for example, in the Dominican Republic with raw materials and then the finished goods coming back, we factor in the hurricane season and carry a higher supply of raw materials and then finished goods to account for those things. It’s a tricky combination. We do have to be cost-effective and efficient because we’re under the same pressures as everyone else to make sure we’re very sharp on our costs.

JOC: How much more does sourcing play into this? Are you near-sourcing more than you have in the past to take risks out?

Widner: We manufacture 80 to 85 percent of the product we sell within North America. Given the nature of the product — it’s heavy and it costs a lot to move relative to your margins — what we foreign-source are things we can’t necessarily get here in the U.S.

Halloran: We have a blend of near-sourcing and far-sourcing. I spoke of our Dominican Republic plant. We have facilities in the state of Chihuahua in Mexico, Malta, and then obviously a manufacturing platform in Asia, and, I should add, the U.S. and Puerto Rico. So, it’s a blend.

Harmon: We haven’t seen any real mass movement to near-shoring with the exception of a couple of product lines. Those were things we did get in trouble with because of the length of the supply chain on some critical products.

JOC: Are you facing any container or other equipment shortages on the export side?

Halloran: With some exceptions, we’re really not experiencing problems. Part of that is good communication with advance notice that our demand is critical. And again, we’re supporting the manufacturing facility. We know what our demand is going to be; it’s fairly consistent. So we tell the carriers six weeks out, here’s what it looks like we’re going to need, then we guide that in as it gets closer. We don’t book eight containers and then show up with four. There’s credibility there. The carrier knows what we book, and we’ll communicate with them as it gets closer. More or less, hopefully, they pen in our demand because they know it can be counted on.

JOC: Are you communicating with your carriers through EDI, the GT Nexus cloud platform? Is that one of the ways you’re doing that?

Halloran: I don’t think it’s relevant to the timing of our bookings, but, yes, we do book electronically using the GTN portal. But we do book as far out as the carriers will allow us, not with the intention of getting the containers sooner, but to give them a heads up that, in their planning process, Cardinal Health will need three containers here this week in this place. And they can count on it.

Harmon: We’ve seen a lot of improvement. We did make some changes to our network after we encountered some problems a couple of years ago. But the export market isn’t as robust as it was when we encountered those difficulties, so we haven’t had any problems with delays because of equipment on exports.

Widner: On the import side, there was a period during the summer out of Asia where capacity was a little tight on equipment. But all in all, it did a lot better than in 2011 when the carriers weren’t making enough new equipment to service all the new vessels coming out.

JOC: What will you be doing in the coming year on the environmental front?

Widner: I think that by improving efficiencies in the supply chain, there’s an inherent positive impact on the environment. Less fuel used and fewer miles driven and more direct routing. Our company strives to, and is actually very successful at — implementing award-winning green initiatives in the production process and final product — recycled material and more efficient ways of making the product. We’re constantly striving as a company to find green benefits. Ultimately, anywhere you can find green efficiencies, it’s going to impact your bottom line.

Harmon: We pride ourselves on our sustainability record. We have made announcements about migrating toward some alternative materials that are more sustainable to make our products. On domestic transportation it’s all about intermodal We’ve been a big proponent of this mode, so we’re putting whatever we can on the train. We’re also taking out miles and looking at our network optimization.

Halloran: We find that doing the right thing from a business point of view also is green — focusing on our packaging, optimizing our container space, using fewer containers and more or intermodal. We had a major expansion to our headquarters in Dublin, Ohio, several years ago, and it is a certified “LEEDS” building. It’s the right thing to do. Our EH&S group also leads companywide efforts on recycling programs and reduction in energy use, among other programs. As a matter of fact, they also monitor our carbon footprint for not only our transportation of cargo, but the flight I’m taking tonight gets registered as my contribution to the carbon footprint, and they monitor, measure and track it.

JOC: Why is that a contribution to your carbon footprint?

Halloran: If you don’t measure it, you can’t improve it, right? It represents the level of detail involved.

JOC: There’s a lot of talk about the decaying infrastructure and inadequate port infrastructure in the U.S. What impact does the state of infrastructure in the U.S. have on your business?

Widner: I think our infrastructure is exemplary in many ways when you compare it to a lot of other countries. But we’re certainly not the leader in progressive infrastructure, and it’s in a state of disrepair. I think it’s something the states and the federal government need to focus on for long-term competitiveness and for green initiatives and efficiencies, as well. When your trucks are idling at the port on a turn for three hours, for example, it’s a waste of resources.

JOC: Mark, you carry a very heavy product. Do you have problems on some roadways and bridges?

Widner: No, we don’t see any problems. If anything, I’d like to see the states make heavyweight corridors and exemptions for heavy international containers more available because, again, the more you can get into a container, the fewer containers you’re shipping. So from an environmental impact, it would be better. From a company cost base, it would be better. The road laws, or the weight limits across the states, are so different, not to mention the higher weight allowances from other countries, that you have to constantly keep up with and vary the weight you put in containers depending on which state you’re going into.

JOC: What about when you’re crossing a number of states to get to a market? That must be a nightmare.

Widner: Yeah, you use just the lowest common denominator. If you go into Florida, you can ship 60,000 pounds. You come into California, and it’s not more than half that sometimes, depending on where you’re going. So, there’s a lot of variation there, and it’s a juggling act. We come into just about every port in the U.S., just about every state, and it can be a challenge.

Halloran: I think sometimes we have a tendency to look at the negatives. If you look at the positives where the U.S. is concerned, I think we have one of the best rail freight systems globally, although not passenger service. Maybe that’s why we’re so efficient at intermodal rail and rail transportation in general for freight. In a country as large as ours, we’re pretty efficient at getting product from the interior to the port, especially if you look at other countries where manufacturing is clustered around a port because of the lack of inland infrastructure.

Harmon: If you look at roads here in North America, even though they’re considered decaying, we’re very much evolved compared to other parts of the world. I think some of the road capacity has been disguised with the downturn of the economy. When and if the economy does rebound, it’s going to put more pressure on our infrastructure. But the railroads have really stepped up and invested in a much better network that’s very friendly to intermodal. That’s one of their growth areas, and I think that’s done a lot in itself to take more trucks off the road.

Widner: The scariest thing for me when I think of infrastructure is the state of bridges in the country. We had the bridge collapse a number of years ago up north (in Minnesota), and I fully anticipate that we’ll have something similar at some time in the future. The states should get on board with examining and building up that infrastructure, as well.

JOC: If it were up to you, how would you pay for infrastructure projects and investment?

Halloran: Maybe I’m naïve, but I would say it depends on who benefits. Any investment, whether it’s public or private, should have a positive standalone ROI. But if the benefit goes to shippers or users, then the ROI should make it a win-win through greater efficiency or other advantages. Are you paying another dollar and getting $1.20 out of it in efficiencies? It’s like any other decision. But in many of these projects, part of the benefit, or all of the benefit, might go to society. And if it does go to society, whether through increased jobs or something similar, then it should be borne by the public at large through general taxes.

Widner: I think it’s only logical that the fuel tax goes up. When you compare it to other countries, it’s way too low. But we also see an increase in toll roads and toll bridges and those fees are paid directly by those that are using the resource. My concern with increasing the gas tax is whether or not the money raised actually goes toward reinforcing the infrastructure and building new construction, and isn’t bled off into some other government budget.

JOC: How would you classify the state of trucking and rail service?

Harmon: Trucking service has actually declined since capacity left the market in 2009. Also, you have the driver situation, turnover is high and there’s a lot of new drivers. There’s not as much reactive capacity out there. So, that’s been something we’ve been working closely with our carriers to improve. In terms of rail, I would again give the railroads kudos, because we’ve seen some improvement with on-time delivery, on intermodal, that has built confidence with both our internal and external supply chain partners to use this mode more. So, trucking, worse. Intermodal rail, better.

JOC: Are you shifting freight from truck to rail?

Harmon: Yes, we’ve been doing that since around 2008, and we continue to look at any opportunity we can to put our over-the-road freight on rail, at least in terms of part of the haul. So, absolutely. It’s one thing that also supports our sustainability initiatives.

Widner: Definitely. We’ve used rail all along. There are some great savings you can get from using rail, but it comes down to a matter of how long you can wait for the inventory. For example, my colleagues on the domestic side have partnerships with other shippers to co-load freight. Our product is very dense. You can put 200,000 pounds of our product in a boxcar and not get more than three feet off the floor of the railcar. But if you can co-load that with lightweight shippers and fill out the capacity, you can cube out that box and save both companies a ton of money, and cut down on the net capacity needed. There’s only so much capacity available in the market, and the more you can share that capacity, the better off you’re going to be for the economy, efficiencies, the environment and the bottom-line dollars for the company. Every dollar saved on transportation goes straight to the bottom line.

Halloran: Like everyone else, we’ve been shifting as much freight as possible from truck to rail. It’s the right thing to do, as we said, from a green perspective, but then also from a business perspective. And now we’re looking at potentially moving over some shorter-haul lanes from truck to rail.

JOC: Have you faced problems related to a shortage of drivers?

Halloran: There’s been a lot of talk about the driver shortages, but it hasn’t been an issue for us and may not be until, like we’ve all talked about, demand increases.

Widner: In talking to truckers, I know a lot of them have trouble recruiting drivers, and they have a lot of turnover depending on how good they are to their drivers. For us, I don’t think we’ve seen problems on an epidemic proportion. It’s spotty here and there depending on capacity in a particular market on a particular day. I think a lot of it comes down to the partnerships you make with your carriers. If you’re a consistent and good partner, they’re going to be a consistent and good partner for you, too.

Harmon: I want to pile on that one a little bit. We are seeing an impact from the shortage of truck drivers and it’s occurring with on-time delivery. The on-time delivery is just not as high as it has been in years past. And as you start to deep-dive on some of the reasons for that, it’s the reactive capacity, and the reactive capacity has to do with the fact that there’s not enough drivers in the seats on given days. The second problem is just trying to train the new people coming in and getting them familiar with what they have to do to be on time. It’s an issue. So we’re starting to see pockets of concern, especially if you’re a long-haul shipper. I believe this is going to be the No. 1 issue we’re going to be facing from a supply chain perspective in the not-too-distant future if the economy does come back.

JOC: Are there any particular areas of the country where it’s worse?

Harmon: The Northeast is a hard area to get into. The Southeast is constrained in the second quarter, around May-June, due to the seasonal freight spikes mentioned earlier.

JOC: Any new regulatory concerns this year?

Harmon: Yes, we’re continuing to keep an eye on the (trucking) hours-of-service changes currently being challenged. If they go through, it will have an impact by further reducing productivity, especially in North America.

JOC: What, if anything, do you hope Washington will accomplish?

Halloran: I’m still smarting from the Los Angeles-Long Beach port disruptions, so I hope Obama actively mentors the ILA-USMX contract negotiations to a successful conclusion.

Harmon: My wish list would be that our government use some judgment, especially on some of the regulatory stuff out there like the hours-of-service. I also look at the lack of standards on import and export compliance. I just hope there is improvement because some of the inefficiencies and productivity hits you take as a shipper just aren’t conducive to helping a weak economy get better. I guess I am a little bit pessimistic that this will not be a priority, given all the other issues our government is facing.

JOC: Does that include security issues?

Harmon: Security doesn’t come to mind. I think it’s just more the documentation, the lack of standards when you do experience an audit of some type. And then just some of the holdups you can run across trying to get your stuff either into or out of the country.

Widner: I would echo a lot of that. I think there’s a vast underestimation in the country of exactly how much damage the labor problems at the ports can cause the recovering economy. And just on an ongoing basis, I think it would be great if we could get U.S. Customs to standardize the process at the various ports and adopt some best practices. We ship through just about every port, and there’s a huge difference between the different ports and how Customs handles, holds and examines, how timely they are in getting cargo in and out the system. I understand Customs needs to be there, but it sometimes adds thousands of dollars to the cost of the shipment, and customs agents either don’t seem to understand that their inefficiencies are causing this (bottleneck and expense), or they just don’t care.

JOC: Have you seen any change in the way Customs does its documentation? Is the problem getting worse, better, or staying the same?

Widner: It hasn’t really changed all that much over the years. You have two or three ports around the country that are easy to deal with. They’re fantastic; they’re in and out, and they’re very efficient. And there are some you can’t even get them on the phone. They don’t care. The shipment will sit in the port for two weeks waiting for an exam, and it’s just ridiculous.

JOC: What are the good ones?

Widner: We have a lot of success in Houston and Florida. I think everybody would put Los Angeles at the top of their list for the worst port to conduct their business through.

JOC: Back to near-sourcing. Are China’s rising manufacturing costs impacting where you’re planning to manufacture your products?

Halloran: As with most global companies, we consistently evaluate and assess our alternatives, and there are pros and cons. What’s the political stability? What is their customs efficiency? Is there bribery? How’s the infrastructure? The one thing that concerns me is that for all the things we just talked about, if you turn the lens on us, on the U.S., and you’re a foreign buyer and you say, OK, how does the U.S. fit in that sense? Labor stability is one thing we look at if we’re looking at a new country. It’s interesting how a foreign buyer would look at us.

And it also ties into the export initiative. Are regulations hurting, or helping us? Is the labor situation stable? Can I get my product out of the country? So, we have to pay attention to that in terms of how we are competitive vis-a-vis other countries supplying the same thing.

Harmon: We refresh our network, and where changes are needed, we make them. That said, I have not seen any wholesale shift from China.

Widner: We get a lot of product out of China, not all of it porcelain or ceramic. We have a joint venture in China that we’re involved with that we get a lot of volume from, as well as some other suppliers. A lot of it is glass and things that we just can’t get here in the U.S. — stone, as well. When we look at a foreign market for production, at this stage, we’re looking at it more as a way to get into the local market, rather than as a source for U.S. products. When we look at needing to fulfill our sales needs, we first look at sourcing in the U.S. A lot it has to do with supply of raw materials, and the cost of getting them into the plants. Natural gas prices, obviously, play a big role in our production process, and it’s very low cost and in plentiful supply here. If you go to China or some other countries, a lot of those natural resources just aren’t available energy-wise. I think we’re probably better off with North American production, unless again we’re looking at using some of these manufacturing bases as a jumping-off point for sales in the local market.

JOC: How do the newly signed free trade agreements with South Korea and Colombia impact your business? Is the Trans-Pacific Partnership on your radar?

Widner: I don’t think the countries involved in the Trans-Pacific Partnership are going to directly impact us. But, in general, if you like NAFTA, you’re going to like any free trade agreement that comes up.

Harmon: We’re trying to sort this out. We have established businesses in South Korea and Colombia, and so to the extent there is any competitive advantage of getting our products to or from, we’ll certainly take advantage of that.

Halloran: I think it’s just like everything else. You go back to your sourcing equation. What are your duty rates or other trade barriers? What’s the power supply? But this does change — the FTAs change part of that sourcing equation, and potentially could offer some new market opportunities.

JOC: There’s been a lot of discussion here about labor. Do you think what we’ve seen this year and especially most recently in Los Angeles-Long Beach is an ominous sign that labor is getting more volatile?

Widner: The OCU (Office Clerical Unit of the ILWU) protest was a good example of what could happen. With as much of the market concentrated in the Northeast and on the East Coast, an ILA strike or lockout could be real damaging to the economy as a whole. And I think it’s actually a little embarrassing that some of the demands and arguments are coming from people making $200,000 and $300,000 a year with guaranteed jobs, when there are so many people in this country who are struggling to find any job.

JOC: Put yourself in January 2014. What are your top concerns?

Harmon: I guess my biggest concerns are related to the economy. We all hope it improves, and to the extent it does, it’s going to put pressure, I think, on all the things we’ve been talking about — infrastructure, driver shortages and inflation. What are we going to do to make sure we can offset these costs and do things more efficiently? And then, secondly, how are we going to make sure we’re able to mitigate any of these potential bottlenecks to ensure we’ve got a good flow of our goods and services to market?

Halloran: If our wishes come true and the economy does pick up, that’ll lead to other problems. But I’d rather have the other problems than perhaps a stale or stagnant economy. So, the stress of more cargo flowing, more people on the roads and heavier demands on our infrastructure, it’s something you need to plan for now, and to make sure that at least the plans are in place to address and spend the money wisely where it’s needed.

Widner: It seems like it’s the same song and dance the last few years. The rate and carrier stability in the market from an ocean perspective is a concern. I know they struggle. They’re up and down, and it’d be nice if they just got to a stable business model and got a control of their capacity. And the spot market, you know, I think carriers only have maybe maximum 15, 20 percent of what they carry under contract, and that doesn’t lend itself a lot to stability in the marketplace.

Patrick also brings up a good point that will relate to labor. A lot of what the employers are looking for in the ports is efficiencies. There is a lot of resistance to those efficiencies, but when the economy does pick up, those efficiencies are going to be extremely important to keeping the engine humming.

ILA, USMX DISCUSS ROYALTIES. INTERNATIONAL SHIPPING

 

ETC INTERNATIONAL FREIGHT SYSTEM

We keep you abreast of issues involving you. See below the JOC report.

 

ILA, USMX Discuss Royalties

Worker at port.

Representatives of the International Longshoremen’s Association and United States Maritime Alliance resumed negotiations today in an effort to head off a threatened Maine-to-Texas strike at year-end.

ILA wage-scale delegates voted last week to authorize union president Harold Daggett to call a strike if there’s no agreement when the union’s contract expires Dec. 29. Daggett said last week that if the two sides can make headway on the issue, he’ll call off the threatened strike.

Complete coverage of ILA-USMX negotiations

Today’s negotiations are focused on container royalties, which have emerged as a key sticking point in the bargaining. The ILA is resisting USMX’s proposal to cap worker payouts from container royalties at existing levels, which average $15,500, and use the excess to fund other ILA benefits. USMX also has proposed to eliminate royalties for new hires.

Besides royalties, contract issues include management proposals to provide local negotiators with more flexibility to address work rules that require high staffing levels, particularly in the high-cost Port of New York and New Jersey.

The coastwide contract already has been extended once, for 90 days past Sept. 30. As the new deadline approaches, shippers are growing nervous about the possibility of a year-end work stoppage.

Last week, 68 trade associations urged the ILA and USMX to continue negotiating until a deal is reached even beyond the current deadline of December 29. The National Retail Federation on Monday urged President Obama to seek an injunction under the Taft-Hartley Act if necessary to keep East and Gulf ports open.

Overseas shipping, International shipping, Global Logistics, Air, Ocean, Freight Forwarders in California

NITL Asks Obama to Act If ILA Strikes

The National Industrial Transportation League, the United States’ largest shipper organization, urged President Obama to intervene quickly if the International Longshoremen’s Association goes on strike at East and Gulf coast ports.

NITL President and CEO Bruce Carlton said in a letter to Obama that manufacturers, retailers, farmers and others would be hurt by an ILA strike. “We respectfully ask you to be prepared to immediately put into place measures within your authority to continue operations and services while more time is secured to reach an agreement through collective bargaining,” Carlton’s letter said.

The Taft-Hartley Act empowers the president to intervene to halt work stoppages that threaten national health or safety. The law allows the president to seek a court injunction for a back-to-work order during an 80-day cooling-off period. The law was last used in 2002 to end a 10-day lockout of the International Longshore and Warehouse Union on the West Coast. 

Complete Coverage of ILA-USMX Negotiations

 The NITL letter followed a vote this week by ILA delegates to authorize union president Harold Daggett to call a strike if no contract is reached by Dec. 29, when a 90-day extension of the current contract expires.

Representatives of the ILA and United States Maritime Alliance are scheduled to meet Tuesday to discusscontainer royalties, one of the chief sticking points in negotiations for an East and Gulf coast master contract. Daggett said this week that if the royalty issue can be worked out, the ILA will call off its strike threat.

Container royalties provide annual payouts to ILA members from ocean carriers’ per-ton payments on containerized cargo. The ILA is resisting USMX proposals to cap payouts at current levels, which averaged $15,500 last year, and use the excess to fund other ILA benefits, and to eliminate payouts for new hires.

ILA-USMX: Down to the Wire?

Harold Daggett isn’t saying so, but the International Longshoremen’s Association president seems to have opened the door for a second ILA contract extension.

That’s how I interpret the latest twist in eight months of negotiations of a Maine-to-Texas dockworker contract between the ILA and United States Maritime Alliance.

A small group of ILA and USMX representatives will meet next Tuesday to discuss container royalties. Daggett said that if those talks work out well, he’s prepared to call off a threatened year-end strike. He didn’t mention an extension, but if the strike threat is called off, it seems likely the Dec. 29 deadline could be pushed into January.

Daggett’s statement about Tuesday’s meetings capped three days of contentious bargaining with USMX representatives in Delray Beach, Fla., this week. “We did a lot of yelling and screaming, and got a lot off our chests,” Daggett said, in what others described as a rare understatement by the ILA president.

Before the initial session with USMX, Daggett won authorization from the ILA’s 200-member wage scale committee to call a strike if a deal isn’t reached when a 90-day contract extension expires on Dec. 29. The delegates’ vote was designed to bolster the ILA president’s negotiating stance and ratchet up pressure on employers.

USMX is resisting the pressure. In contrast to some previous negotiations, container ship lines and other employers this year seem determined to achieve productivity gains and rein in costs. Many USMX carriers are the same ones that took an eight-day strike this month by the International Longshore and Warehouse Union’s Office Clerical Unit on the West Coast.

Complete Coverage of ILA-USMX Negotiations

It will be interesting to see how the ILA and USMX address container royalties, an issue that’s difficult to consider in isolation. Annual royalty checks, financed by carriers’ per-ton payments on containerized cargo, are just one facet of a complex ILA wage-benefit package. If container lines are too generous with royalties, the carriers must make it up somewhere else. If the union makes concessions on royalties, it will seek offsetting gains.

That’s give and take, something that’s been in short supply in these negotiations. For weeks after their 90-day extension in September, the ILA and USMX made little apparent progress. It wasn’t until this week that the ILA, prodded by a federal mediator, fleshed out its general demands with specific contract proposals.

But now the two sides finally seem to have gotten down to business. If next week’s meeting can produce movement on the royalty issue, don’t be surprised if they agree to another short-term extension. Negotiators still have lots left to do, and little time before Dec. 29.

 
 

International shipping, ILA Authorizes Strike at Year-End

 

ETC International Freight System

To our air, ocean import & export international customers, a great many thanks for a sound 2012. We so very much appreciate your year in, year out patronage. With you, we can say that our customers' retention rate is unlike, we have ever seen in our fast moving shipping industry. Our freight, logistical knowledge & dedication to our customers are of paramount importance in the services that we render, which bear our name. Customer satisfaction is the guiding principle for all our activities.

Shipping, International shipping, freight forwarders in california Happy Holidays & best wishes for the New-Year

Reid Malinbaum

International shipping, Global logistics, Air, Ocean

The following article from JOC gives you a quick snap shot of what is in the store with the East & Gulf Coast ports. As you know, the Los Angeles / Long Beach strike is over.

ILA Authorizes Strike at Year-End

International Longshoremen’s Association President Harold Daggett won authorization from ILA delegates to call a strike if a bargaining impasse isn’t settled before the union’s contract expires Dec. 29.

The vote by the ILA’s 200-member wage scale committee moves East and Gulf coast ports closer to their first coastwide strike in 35 years.

Daggett asked the ILA’s 200-member wage scale committee for strike authorization after he delivered a speech accusing United States Maritime Alliance of trying to reverse gains the ILA has made in previous contracts.

The roll call vote in favor of the strike authorization was unanimous, ILA spokesman James McNamara said.

Complete Coverage of ILA-USMX Negotiations

The vote preceded a session today in which employer representatives presented USMX’s proposals to wage scale committee members meeting in Delray Beach, Fla.

Daggett’s speech to ILA delegates reportedly emphasized USMX’s proposal to cap container royalty payments to workers. USMX has proposed capping payments at current levels, which averaged $15,500 per eligible worker last year, and using the excess to fund other ILA benefits.

An ILA strike would affect container and roll-on, roll-off cargo covered by the ILA-USMX coastwide master contract. The ILA would continue to work breakbulk cargo and cruise lines that employ ILA labor but are not covered by the master contract, McNamara said. Perishables and military cargo also would be exempt, he said.

In addition to issues in the coastwide master contract, this year’s negotiations over supplementary local contracts have been contentious, especially in the Port of New York and New Jersey, where the New York Shipping Association is seeking changes in work rules, including requirements for extensive relief staffing.

ILA District Donates $250,000 to Hurricane Sandy Fund

The South Atlantic and Gulf Coast District of the International Longshoremen’s Association have donated $250,000 to ILA’s Hurricane Sandy Fund.

Clyde Fitzgerald, president of the district, which includes port areas from North Carolina to Miami, as well as the entire Gulf Coast, made the donation to ILA President Harold J. Daggett.

Fitzgerald said he hopes the money will ease the financial burden of those ILA members in the Greater Metropolitan area who suffered losses from Hurricane Sandy. “Those of us in the South and Gulf areas are certainly no strangers to the destruction that can be caused by hurricanes,” he said in a written statement.

LA-Long Beach Catches Up on Cargo Backlog

LONG BEACH — Terminal operators in Los Angeles-Long Beach late last week ran night and weekend gates to work off much the cargo that was backed up at the ports after an eight-day office clerical workers strike, so Monday was not as bad as some had feared.

“It’s busy, but manageable,” said Bruce Wargo, president of PierPass Inc., the agency established by terminal operators in Southern California to operate the extended gates program.

A strike that begin Nov. 27 by the Office Clerical Unit of International Longshore and Warehouse Union Local 63 shut down 10 of the 14 container terminals in the port complex. The OCU, which had been working without a contract since June 2010, reached to a tentative six-year contract with the Waterfront Employers Association on Dec. 4, and the terminals were back in operation the next day.

During the strike, 20 vessels either diverted to other ports, or deviated from their normal schedule to call first at Oakland, which was in full operation. A number of vessels, however, sat at anchor awaiting a settlement.

Terminal operators were concerned that Monday would be crazy as they would have to work the ships that were at anchor and at berth, the vessels that were being routed back to Southern California from Oakland and a whole new weekly round of vessel calls from Asia scheduled to arrive over the weekend.

However, most of the terminals added flex morning and evening gates and night gates last week, as well as a Saturday day gate, Wargo said. Friday was especially busy, he added.

Complete coverage of West Coast labor disputes

Fred Johring, president of Golden State Express, said his company by Saturday had caught up from the strike-bound cargo. However, Monday is always the busiest day of the week in the harbor, and Monday this week was even busier than usual with many of the ships that arrived over the weekend coming in full.

Wargo said that because of PierPass, the 14 container terminals in the harbor have a mechanism by which they can quickly increase the number of gates they run, so operations should return to normal as the week progresses.

International Shipping, Striking OCU

 

Reid / ETC International Freight System

International Shipping, Freight Forwarders, Shipping Air, Ocean, Global Logistics

Below is your update regarding the lack of progress with the strike affecting the ports of Long Beach & Los Angeles. News by JOC

Striking OCU, Employers Agree on Mediation


Idle cranes in Los Angeles

LOS ANGELES — Striking office clerical workers and their employers agreed Tuesday to accept federal mediation in an attempt to end the week-long strike that has crippled the ports of Los Angeles and Long Beach.

Port and terminal executives hope mediation can begin within 24 hours as the Office Clerical Unit of International Longshore and Warehouse Union Local 63 will maintain its pickets at 10 of the 14 container terminals in the harbor, and ILWU dockworkers are continuing to honor the pickets.

Los Angeles Mayor Antonio Villaraigosa participated in the negotiations all night, and he said progress was being made, but not enough progress to reach a settlement in the contract negotiations that have dragged on for more than two years.

Complete coverage of West Coast labor disputes

Meanwhile, more than 15 vessels have been diverted from Southern California to Oakland and ports in Mexico and Panama since the OCU struck the first terminal Nov. 27.

Dozens of trade and transportation groups have pleaded with negotiators to accept mediation in a dispute that has already cost the national economy billions of dollars. One hundred organizations signed a joint letter to President Obama seeking engagement from the White House, including a request for a Taft-Hartley back-to-work injunction if needed

West Coast Port Strikes Could Benefit Some Companies

Continued strikes by the Office Clerical Unit of International Longshore and Warehouse Union Local 63 at the ports of Los Angeles and Long Beach could potentially benefit some companies, according to Stifel NicolausTransportation & Logistics Research Group.

For example, air freight forwarders Expeditors International of Washington and UTi Worldwide, as well as express carrier FedEx, could gain business from the supply chain disruptions, the report showed.

Non-asset-based logistic providers in particular can solve shippers’ delay problems without worrying about having assets out of place, in case goods need to get to market quickly, the analyst said.

FMCSA's Safety Initiative a Work in Progress

In implementing 11 changes to the Safety Measurement System in its Compliance, Safety, Accountability program on Monday, the Federal Motor Carrier Safety Administration not only reaffirmed its commitment to keeping unsafe trucking companies off the road, but also indicated that the CSA initiative is a work in progress.

“We are improving our focus on the highest risk carriers,” FMCSA Administrator Anne S. Ferro said. “We’ve made a clear commitment to continue to enhance CSA.”

The commitment includes releasing a proposed rule that would create a new safety fitness determination process for trucking companies, Ferro told reporters.

She said a “very robust safety fitness rule” that would replace the current audit-based safety rating system would be proposed sometime in the first half of 2013.

The lack of a CSA-based safety rating system concerns shippers and brokers that fear a carrier's public BASIC scores could open them to liability in an accident lawsuit.

A three-part review of how crash accountability data can be incorporated into CSA scores, a major issue for motor carriers, will be completed by next July, she said.

Ferro defended the program against criticism from trucking and shipper groups that find fault with its methodology and lack of a new carrier safety rating system.

Told a recent American Transportation Research Institute survey found CSA was the top concern of trucking executives, she called that “great news.”

“The discussion is rightly at the top of everybody’s agenda,” Ferro said. “It’s on everybody’s list and people are paying attention to the program.”

Ferro attributed an 8 percent decline in the number of motor vehicle violations in roadside inspections and a 10 percent decline in driver violations to CSA. “That’s the most dramatic decrease in violation rates in a decade,” she said, adding that FMCSA's CSA Web site had more than 40 million visitors last year.

International Shipping, Freight Forwarders, Shipping Air, Ocean, Global Logistics

International Shipping, Strike Threats Gridlock i n LA-Long Beach

 

Reid / ETC International Freight System

Shipping International, Global Logistics, Air, Ocean, Overseas Shipping, Freight Forwarders

Below is an update from JOC regarding the ports of Long Beach & Los Angeles.

OCU Strike Threatens Gridlock in LA-Long Beach

Striking office clerical workers continued to cripple the ports of Los Angeles and Long Beach Thursday as 10 container terminals remained shut down.

A crisis has not yet developed at the nation’s largest port complex, but if the terminals remain closed through the weekend, some cargo interests and industry executives are predicting gridlock will result.

Members of the Office Clerical Unit of International Longshore and Warehouse Union Local 63 posted pickets at the terminals on Wednesday. ILWU dockworkers refused to cross the picket lines, ending cargo-handling operations at the facilities.

The OCU does not have contracts with four other container terminals in the harbor, and those facilities — one in Los Angeles and three in Long Beach — were operating normally Thursday.

Office clerical workers process shipping documents for shipping lines and terminal operators. They have been working without a contract since June 2010. The OCU union is affiliated with the larger ILWU, but the clerical workers have a different contract than ILWU dockworkers.

UPDATE: Port employers say they are ready to talk

It appears the OCU has the upper hand in the struggle now that the area waterfront arbitrator and the Coast Labor Relations Committee have each ruled the OCU has bona fide picket lines in Southern California.

Earlier in the week, the area arbitrator ruled the OCU’s job action targeting only the APM Terminal in Los Angeles was not a legal picket under the waterfront contract between the ILWU dockworkers and the Pacific Maritime Association. The longshoremen were ordered to return to work at APMT, but the dockworkers refused to follow the arbitrator’s order.

The decision by the OCU on Wednesday to post pickets at all of the terminals where office clerical workers have a presence was apparently enough to cause the arbitrator to issue a second ruling saying the pickets are bona fide. The Coast Labor Relations Committee late Wednesday reached the same conclusion.

The union’s main issue involves alleged outsourcing of jobs to non-OCU workers in other states and overseas. Employers continue to resist attempts by the union to maintain contract provisions requiring that jobs always be filled when workers are absent or retire, even if there is no work to be done.

The main concern of importers and exporters is with each day that goes by with two-thirds of the harbor shut down, a backlog will eventually cripple the ports. Some vessels conceivably could be handled at the four terminals that continue to operate, but they would have to be third-party shipping lines that do not have their own OCU-manned terminals in Southern California.

If a vessel operated by a shipping line affiliated with a terminal where OCU members work attempted to divert to a non-OCU terminal that remains open, the OCU pickets would most likely follow the vessel to that facility.

Reid / ETC International Freight System

Transportation, Global Logistics, Shipping

Also on the domestic front news from JOC

Call it cooperation or collaboration, the concept of “co-loading” has arrived at the truck dock. As retail inventories and truckload capacity get leaner, more shippers are considering sharing tractor-trailers to secure capacity, keep a lid on rising transportation and logistics costs, and meet sustainability goals.

That means getting over qualms about sharing equipment and pricing and cost data with other shippers, and working closely with third-party logistic provoders and customers to find opportunities to pack the most product into each trailer. And that requires a great deal of advance planning, synchronization and an openness about supply chain strategies and resources that is often rare among shippers, who see such information as important to maintaining their competitive edge.

Technology helps make it possible, but more advanced technology may be needed to truly make it work and to ensure all parties share in the benefits of co-loading.

Kimberly-Clark calls the idea collaborative shipping, and it already has helped the shipper improve service while reducing truck miles, according to Scott DeGroot, director of supply chain strategy and development for the $21 billion manufacturer.

For more than two years, Kimberly-Clark has been working with Colgate and drugstore retailer CVS Caremark, consolidating truckloads. Through co-loading, “we’ve been able to reduce the number of truck miles by 10 percent,” DeGroot said.

That represents real savings in terms of transportation costs and carbon emissions. The pilot project realized line-haul and fuel cost savings of 18 percent or more, according to data provided by Kimberly-Clark, but finding and keeping those savings isn’t simple. “The cost of bringing the freight together can eat into the savings very quickly,” DeGroot said. “It’s not really a big cost savings story yet.”

But there’s more to gain, he said, than lower trucking costs per cubic foot. “It’s not just money,” DeGroot said. “The gains could come from improved inventory efficiency and retailer support,” which generates more business from retailers.

For retailers, the most immediate benefit of supplier load-sharing is fewer trucks arriving at congested distribution center or store delivery docks. “CVS, like any other retailer, struggles at times with throughput in its distribution center network,” DeGroot said. “Their docks are congested. Eliminating trucks that otherwise had to touch their docks frees up their DC network, eliminating constraints and allowing us to drive reliability in replenishment.”

In an interview, DeGroot explained why Kimberly-Clark began co-loading and outlined the major obstacles facing companies interested in collaborative shipping. There are several reasons load-sharing will increase in the U.S., he said.

“First, we fundamentally believe that in the long run fuel costs will be much higher,” he said. “Also, everyone hates inventory and wants to get inventory out of the system. Retailers are becoming more aggressive in service expectations. And Kimberly-Clark and other manufacturers are becoming more environmentally sensitive and have sustainability commitments that require us to take truck miles off the road.”

Kimberly-Clark, which manufactures Kleenex tissues and other iconic consumer products, first encountered co-loading in Europe, where the power of large retailers and nature of the distribution network make shipper cooperation easier, DeGroot said. “When you’re dealing with a Tesco, for example, they’re almost in a position to mandate how products will flow to them.”

That’s increasingly the case in North America as well, as companies such as Wal-Mart raise the delivery bar with suppliers, setting tight delivery windows and penalties for missing them. “We saw what’s happening here, so we said, ‘Let’s start shaping the agenda before it shapes us,’ ” DeGroot said. “Our team sat down and thought about companies that might be potential partners. We thought about who they might be across a spectrum, big and small. We identified a list of potential partners — a dance card of sorts. And then we thought about which retailers might be most interested, who could we solve real problems with. We came down to Colgate and CVS.”

The companies launched a pilot project in Texas to determine whether co-loading was practical and beneficial. Colgate typically shipped a partial truckload of heavier products to CVS every two weeks that “weighed out” before cubing out, meaning there was plenty of air space in its trailer. Kimberly-Clark shipped three or four truckloads of higher volume, lighter weight freight to CVS each week.

“Our team and the Colgate team spent a lot of time looking at our processes and how our products flow” to CVS locations, DeGroot said. “Our vendor-managed-inventory analysts look at orders on Monday, and Colgate’s team does the same. Then we come up with the number of trucks per week that can be shared between us.” That allowed the shippers to eliminate a truck from the schedule every two weeks.

For Kimberly-Clark, that meant shifting some of its freight and delivery times as it planned inventory replenishment with CVS. “We had to take inventory out of our truck and make space for the Colgate orders,” DeGroot said. Because there typically was space in Kimberly-Clark’s trucks, the result was a fuller tractor-trailer. “When we sent four trucks a week, it was never really four trucks, but 3.7 or 3.8,” he said. By blending pallets from one Colgate biweekly truckload with its four weekly truckloads, “we were simply able to fill them better and reduce the extras.”

DeGroot identified four reasons success wasn’t really simple. First, Kimberly-Clark and Colgate needed to find a way to configure loads. “Our transportation management systems are separate and unique, so they’re not using matched data. That means we had to create manual spreadsheets to pull the freight together,” he said. “There’s no super system to optimize them together. The issue is that the work required for manufacturers to integrate their data is onerous.”

Second, unexpected increases in operational costs can eat into the benefits. Those costs included shuttling freight about 20 miles from a Colgate distribution center to a Kimberly-Clark facility and handling charges such as lumping fees. “It’s a thin line,” DeGroot said. “Delay costs or operational charges can mean there’s not much in the way of transportation costs to save, but a couple of peas to split between us.”

Third, the partnership isn’t just between two or more shippers and their 3PLs; it’s between suppliers and retailers. That adds another level of complexity to planning a co-loading program. And consumer product goods suppliers serve multiple retailers.

“If every retailer wanted to create its own specific solution, by mandating certain consolidation programs, that kind of solution wouldn’t create any incentives for the manufacturers,” DeGroot said. “What we need to do is take (inventory) costs out of the system, rather than shifting them to the manufacturer. There’s a great opportunity for manufacturers to take a leading role in this.”

The last major challenge is sharing the gain among partners. “How you do that really has to be thought through carefully,” he said. “If the process adds $20 of work a week to Colgate’s order management team, that needs to be accounted for. That could be hidden in the numbers, and you have to try to make up for that.”

Kimberly-Clark and Colgate came up with an algorithm that allowed them to determine how transportation costs would be divided. “The charges are divided based on a mixture of cube and weight that we think represents the flow.”

Kimberly-Clark was sufficiently satisfied with the results of the pilot that the company expanded it to the Southeast and California and partnered with General Mills. The company looks to expand collaborative shipping. “The southern half of the country may be where we’ll find the opportunity,” DeGroot said.  

 

Intrernational Shipping, Freight Forwerders, ILA One Way Street

 

Reid / ETC International Freight System

International Shipping, Global Logistics, Freight Forwarders

ETC Intl. Freight System is a licensed freight forwarder, NVOCC bonded & a California Corporation since 1984. Whether, you seek air or ocean freight & to our broad customer base, we offer warehousing, distribution, packing, crating, trucking, customhouse brokerage & inland delivery/pickup services. For more information or pricing through the web, please visit us at www.etcinternational.com.

 International Freight, Overseas shipping, Logistics

 

USMX's Capo: ILA Sees Talks as 'One-Way Street'

Management’s top negotiator in Maine-to-Texas dockworker contract talks said International Longshoremen’s Association leaders have shown an “uncompromising posture” and “view bargaining as a one-way street.”

James Capo, chairman and CEO of United States Maritime Alliance, responded to a statement last week by ILA President Harold Daggett, who said the union would not accept caps on workers’ container royalty bonuses and would resist changes to work rules and practices.

“The ILA leadership’s latest missive on the negotiations is yet another indication that ILA leaders view bargaining as a one-way street that leads only in their direction,” Capo said in a prepared statement. “It’s incredible that they continue to defend antiquated work rules, manning and other practices that have made many of the East and Gulf coast ports prohibitively expensive, harming our ability to compete and threatening the viability of port operations.”

USMX, he noted, has compromised by reaching tentative agreement last summer on a framework to protect workers displaced by automation, and on continued ILA jurisdiction over chassis repair.

“It is disappointing that ILA negotiators have refused to give the same consideration to issues that concern USMX and the employers it represents,” Capo said. “The ILA leadership’s uncompromising posture is contrary to the cooperation that has characterized bargaining and that for more than three decades has resulted in nine new master contracts without a single strike or coastwide work stoppage.”

The ILA and USMX have engaged in on-and-off contract negotiations since last spring. A federal mediator helped restart the talks in September, when the two sides agreed to extend their contract for 90 days past its Sept. 30 expiration.

The expiration averted the threat of a peak-season strike, but shippers  are at the point of decision on whether to divert cargo or pad stockpiles in advance of the new Dec. 29 contract deadline. The Federal Mediation and Conciliation Service continues to oversee the negotiations.

Daggett has called a meeting of the ILA’s 200-member wage scale committee for Dec. 10-12 in Delray Beach, Fla. The group must approve any contract agreement before it’s submitted to a vote by the ILA’s 15,000 members.

The exchange of statements by Daggett and Capo is a sign that despite reported progress, the two sides remain far from agreement.

Since his election as ILA president last year, Daggett has vowed to take an aggressive position in this year’s contract. Employers, meanwhile, are seeking to change work rules and practices that raise costs and reduce productivity, especially in the Port of New York and New Jersey.

Daggett’s statement emphasized ILA opposition to caps on bonuses supported by carriers’ per-ton royalties on containerized cargo, and to changes in work rules and practices. “They attack work rules in New York and look to strip the seven-man lashing gang in the South Atlantic," he said. "We understand that USMX has continually played one port against the other, but that strategy will not succeed.”

Capo said management acknowledges that changes in work rules and practices won’t change overnight, but he urged the ILA to engage in “meaningful discussions about these challenges to reach agreement on a new master contract, one that will preserve thousands of well-paying jobs averaging $124,138 a year in wages and benefits and ensure the viability of the ports for years to come."

“The current economic reality demands that we improve efficiency and productivity at the ports,” Capo said. “It also requires that we begin to control container royalty payments that have risen dramatically since they were first established in 1960, totaling $211 million in 2011 or an average of $10 per man hour. Employers are not seeking to eliminate these bonuses, only to cap them and use the extra money to help pay for benefits for ILA workers.”

Contact Joseph Bonney at jbonney@joc.com, and follow him twitter.com/JosephBonney.

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Infrastructure & our international shipping

 

Reid / ETC International Freight System

International Shipping, Global Logistics, Air, Ocean, Car Shipping

Positive information about our future state of affairs carry optimism that is encouraging. JOC News is relate it well.

Why an Obama Win Yields Hope for Infrastructure

At first glance, the Nov. 6 election barely changed anything in the nation’s capital. Voters gave President Obama four more years in the White House, kept Republicans in control of the House and Democrats dominant in the Senate.

Although few faces have changed, however, the tone on Capitol Hill has. With the election over, partisan rhetoric has given way to a sense that something must change if the United States is to put its fiscal house in order, become more globally competitive and preserve a slow but persistent economic recovery.

Starting in January, the so-called fiscal cliff — roughly $7 trillion worth of tax increases and spending cuts lasting a decade — will begin to take effect. Economic growth could shrink by 0.5 percentage point in 2013 as a result, pushing unemployment to 9.1 percent and putting the country back on the brink of recession, according to the Congressional Budget Office.

“The time for politics is over. The time for governing is now,” said Greg Casey, president and CEO of the Business-Industry Political Action Committee.

The failure to avert or significantly blunt the combination of spending cuts and tax hikes could cripple U.S. consumer demand, squeezing shippers’ supply chains. Many American businesses blamed election uncertainty for holding off on capital spending and hiring, and now the threat of the fiscal cliff is the new bogeyman.

Business concerns about Washington’s ability to get past political rhetoric and address the problem are estimated to already cost a 0.6 percent loss in GDP growth by the end of 2012, and that loss will expand to 12.8 percent over the next three years, said Jay Timmons, president and CEO of the National Association of Manufacturers. A weaker U.S. economy also would exacerbate the ailing European economy and slow Chinese production engines again — just as they have begun to regain momentum.

The pending federal cuts won’t endanger highway spending directly because transportation trust funds are exempt. Federal programs that directly and indirectly affect freight transportation, however, face more than $1.7 billion in cuts, according to an analysis of a White House report released in September.

JOC editors William B. Cassidy and Mark SzakonyiWatch Journal of Commerce editors William B. Cassidy and Mark Szakonyi discuss how the election results will impact transportation funding and regulation.

The faint silver lining for shippers and transportation providers is that more infrastructure funding could come out of a so-called Grand Bargain to deal with the fiscal mess. The most straightforward way of boosting transportation funding would be to raise the federal fuel tax for the first time since 1993. Americans are driving less and operating more fuel-efficient vehicles, resulting in less money flowing into the Highway Trust Fund. Congress repeatedly has offset an annual funding gap of some $44 billion by raiding the general fund, but that alternative looks less feasible as the nation’s purse strings tighten.

Just maintaining spending levels isn’t enough, however. The U.S. spends about $52 billion a year on surface transportation, providing the bulk of dollars for state projects. The country, however, needs to spend at least $101 billion annually, taking inflation into account, over the next 20 years to maintain the U.S. highway system, according to the Department of Transportation. The U.S. needs to spend another

$69 billion a year to improve its infrastructure, not just maintain it.

Unless funding increases or highway construction declines, the gap between federal revenue and planned spending will expand to about $147 billion by 2022, according to the CBO.

The underfunded freight system is reducing U.S. competitiveness, as evidenced by U.S. agriculture exporters losing global market share and mounting highway congestion that dampens productivity and creates a drag on the economy.

The devastating destruction of Hurricane Sandy and last summer’s drought-stymied transportation on the Mississippi River provided additional reminders of the cost of freight network inefficiency. In the World Economic Forum’s 2012 global competitiveness ranking, the U.S. fell two places to No. 7, with the fiscal debt and ailing infrastructure cited as causes.

And, although many reports decrying the “crumbling infrastructure” take too little account of the strong U.S. freight rail network and size of the country, the conclusion is the same: The U.S. is losing its competitive edge to move goods and materials.

While Congress and Obama show little appetite for raising the national fuel tax, local and state governments have had better luck convincing voters to get onboard. Sixteen of the 17 state and local ballot initiatives calling for more road and bridge funding passed on Nov. 6, according to the American Road and Transportation Builders Association. “The results show the American people are looking for solutions to address their transportation challenges and are willing to pay more if they know the revenue generated will be used for its intended purpose,” said Alison Premo Black, the association’s chief economist.

But breaking the states’ dependency on federal funding won’t be easy. More than half of the states rely on the federal government for 25 to 40 percent of their infrastructure dollars, according to a report by the Eno Center for Transportation and the Bipartisan Policy Center.

Major change comes from the top, though, as shown by President Eisenhower’s creation of the Interstate Highway System more than 50 years ago. The same goes for raising the federal fuel tax. President Clinton’s 1993 plan to reduce the federal deficit included a 4.3-cent-per-gallon fuel tax hike, the most recent increase, and President Reagan doubled the gas tax by hiking it 5 cents in 1983 as part of a broader effort to stimulate the economy.

Optimists take heart in that the Simpson-Bowles plan, a pitched roadmap to reduce the federal deficit, supported raising the fuel tax. Obama rejected the plan but has supported infrastructure spending, ranging from the $3.1 billion spent on transportation projects through TIGER grants to fast-tracking reviews of East Coast port projects.

But the president’s more expansive transportation investment plans have fallen flat. Congress, for example, blocked Obama’s plan to spend $48 billion more on transportation networks and create a national infrastructure bank. His pitch to boost investment by using the money saved through winding down of the Iraq war was widely seen as a non-starter on the Hill. Obama’s plan might still be feasible, but the president must give details on how it would work and push the idea harder, said Mortimer Downey, DOT deputy secretary under President Clinton and now chairman of the Coalition for America’s Gateways and Trade Corridors.

The chances of a fuel tax increase coming out of a Grand Bargain aren’t much better. The political will is still lacking and a transportation funding increase through a fiscal deal is still remote, said Jack Basso, director of program finance and management at the American Association of State Highway and Transportation Officials.

The odds of transportation funding needs being considered during bargaining likely would improve if Rep. Bill Shuster, R-Pa., heads the House Transportation and Infrastructure Committee. Shuster, who wants to replace John Mica, R-Fla., appears to be close with House leadership and could pressure House Speaker John Boehner to aid transportation funding through a Grand Bargain, said Joshua Schank, president and CEO of the Eno Transportation Foundation.

Whether Mica retains his spot as chair or Shuster takes the gavel, the committee will be key in crafting the next surface transportation bill and the long-delayed Water Resources Development Act. The two-year, $105 billion highway spending bill runs through Sept. 30, 2014, and Congress will have a tougher time plugging the funding gap because of scant budget offsets and increased pressure from fiscal conservatives to only spend what the HTF provides.

Transportation advocates hope the Senate again takes a bipartisan approach, even though the leadership dynamic in the Senate Environment and Public Works Committee also is changing. Sen. David Vitter of Louisiana is in line to replace to Sen. James Inhofe of Oklahoma as the ranking Republican committee member.

Transportation advocates hope that, despite their political differences, Vitter and Sen. Barbara Boxer, D-Calif., the committee chair, will continue to take a bipartisan approach like that of the latter and Inhofe. Boxer and Inhofe were influential in the Senate’s passing a surface transportation bill this year, while the Republican-controlled House failed and used a 90-day highway funding extension to begin conferencing with the opposing chamber.

Transportation policy experts also are keeping a close eye on Sen. Jim DeMint, R-S.C. The Tea Party champion is expected to become the ranking Republican on the Senate Committee on Commerce, Science and Transportation and has not been shy in trying to block legislation he doesn’t see as fiscally prudent. DeMint also tried to block the electronic on-board record mandate for the trucking industry and supports giving states more freedom to spend federal transportation dollars as they see fit.

Who heads the Transportation Department also will impact how well Republicans and Democrats work together on transportation policy. Secretary Ray LaHood, a former Republican congressman and transportation policy darling, initially said he wouldn’t serve more than one term, but recently hinted he’d be up for staying if Obama asked. Former Pennsylvania Gov. Ed Rendell and Los Angeles Mayor Antonio Villaraigosa, both transportation advocates, have been rumored as potential replacements.

Keeping LaHood as DOT chief could help the president achieve his goal of focusing on nation-building during his second term, and there would be no learning curve because LaHood already has displayed prowess in working with Congress, Downey said. He pointed to how former Transportation Secretary Norman Mineta succeeded in pushing key legislation, including SAFETEA-LU, after President George W. Bush kept him as agency head after his re-election.

Whoever heads DOT needs to “be very persuasive. (He or she) has a real opportunity, but that person needs to be someone who can work with both sides in Congress,” Basso said.

The first test to Democratic and Republican promises to work better to address the nation’s challenges will come with WRDA, the next major freight transportation bill. The legislation, last passed in 2007, is key to authorizing port and inland waterway projects, and to speed up construction by reforming the Army Corps of Engineers. With an earmark ban in place, Congress likely will struggle to rank potential projects, and reform of the Harbor Maintenance Trust Fund, the main engine for dredging funding, will come only when the country’s overall financial situation is remedied.

About half, or roughly $700 million, of the Harbor Maintenance Tax collected annually is used to plug other budget shortfalls, and a $7 billion surplus is expected by the end of fiscal 2013. Strongly worded language in legislation telling appropriators to back off likely won’t be enough, because those much-criticized offsets won’t end until the holes they plug aren’t filled or at least shrunk.

The challenges Congress and Obama face are historical in scope, but the sheer magnitude of the obstacles calls for bold solutions. Encouragingly, even in the midst of political gridlock this year, Congress still passed a two-year transportation bill, Schank noted.

“The first two years of (a president’s) second term are usually the most productive, and Republicans aren’t gunning for (Obama’s) head like they were,” he said. “The atmosphere is way better than it was in the last two years.”

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ETC Intl. Freight System is a licensed freight forwarder, NVOCC bonded & a California Corporation since 1984. Whether, you seek air or ocean freight & to our broad customer base, we offer warehousing, distribution, packing, crating, trucking, customhouse brokerage & inland delivery/pickup services. For more information or pricing through the web, please visit us at www.etcinternational.com.

 

 

International Shipping, Global Logistics lookout for Sandy

 

Reid / ETC International Freight System

Cozy with heavy taxes on businesses on the West Coast, see JOC report on the latest storm affecting the East Coast Ports.

International Shipping, Freight Forwarders in California, Maritime, Air

International Shipping, Freight Forwarders in California, Maritime, Air

 

Northeast Ports React As Sandy Takes Aim

NEW YORK — Seaports from New York to Virginia remained closed Monday as the Northeast and the mid-Atlantic braced for the huge hurricane that was slowly turning west and menacing the coastline.

Hurricane Sandy was gaining strength with winds up to 85 miles an hour and was expected to make landfall on the coast of New Jersey sometime Monday afternoon or evening.

All the marine terminals in the ports of New York and New Jersey, Philadelphia, Wilmington, Baltimore and Virginia were closed, as were rail and vessel operations.

The Port Authority of New York and New Jersey on Monday said it was closing the Holland Tunnel, one of the two tunnels between New Jersey and New York at 2 p.m. It also reduced speeds on the George Washington Bridge, the Outerbridge Crossing, the Goethals Bridge and the Bayonne Bridge to 35 mph because of the high winds.

It said the hurricane was expected to bring a near-record storm surge of six to 11 feet above normal high tide levels to northern New Jersey, Long Island Sound and New York harbor. “This is more than 5 feet above what we experienced during Hurricane Irene last year,” the agency’s announcement said. The storm surge in New York harbor during Hurricane Irene in September 2011 was four feet.

The port terminals that were closed include Port Newark Container Terminal, Port Elizabeth Marine Terminal, Port Jersey Marine Terminal, New York Container Terminal on Staten Island, Red Hook, and the Brooklyn-Port Authority Marine Terminal.  Deep-draft vessels left the terminals on Sunday and headed out to sea. The port authority said it was providing a safe berth for numerous barges, dredges and floating cranes.

Farther south, the Coast Guard closed the north and south access channels leading to the Port of Baltimore on Sunday afternoon. Ships not already in the Chesapeake Bay channels were not permitted to transit in. Any ships already in the channels needed to anchor until the end of the storm.

New York City residents of low-lying areas were evacuated from their homes by 7 p.m. Sunday. Most businesses in New York City, including the New York Stock Exchange, were closed Monday and planned to close possibly Tuesday as well.

Related:  Complete Hurricane Sandy Coverage 

Subways, public and private buses and commuter railroad lines were shut down in New York and Philadelphia. Maryland's transit system, serving some suburbs of Washington, said it would not open on Monday.

New Jersey Gov. Chris Christie suspended New Jersey Transit service. “I can be as cynical as anyone," Christie said on Saturday, announcing a state of emergency. "But when the storm comes, if it's as bad as they're predicting, you're going to wish you weren't as cynical as you otherwise might have been."

Amtrak canceled nearly all service on the Eastern Seaboard on Monday and said it would halt its service north of New York along the Northeast corridor beginning at 7 p.m. on Sunday.

Forecasters expected the storm to hit Monday afternoon, just when its impact on the coast will be magnified by the high tides drawn by the full moon.

Terminals in the Port of New York and New Jersey had already put contingency plans into effect on Friday, securing their equipment.

“We’re taking this storm very seriously,” said Jim Devine, president and CEO of Global Terminals, which includes Global Terminal in Jersey City and New York Container Terminal on Staten Island.

He said crews at NYCT were welding blocks onto the crane rails to prevent the storm’s high winds from moving them. They were also securing containers around the terminal’s modular buildings to create wind barriers that would protect them from being lifted off their foundations.

Crews at both terminals were lowering the stacks of containers down to two-high to keep them from being blown over. Global Terminal was locking down the rubber-tire gantry cranes.

Devine said he expected the storm to hit late Monday. “It will be an open question as to whether we will come into work on Tuesday. If we really get hit, we’ll just close the facilities.”

Across Kill van Kull in New Jersey, the Port Newark Container Terminal said it had taken necessary precautionary steps to secure all cargo and equipment, including cranes, containers, equipment and gensets.

It said it was taking the precautions to prevent any injury or damage and to enable it to quickly resume normal operations as soon as the storm subsides.

In Philadelphia, the Philadelphia Regional Port Authority was taking similar precautions at the Packer Avenue Marine Terminal.

“Every time we expect any kind of high winds, we make sure everyone’s got the cranes pinned down with a hurricane tie-down, and we knock any containers down from three- or four-high stacks, said Jim Walsh, PRPA’s director of operations. “We’ll secure any loose debris from the terminals and make sure all the building doors are closed.

For continuing coverage of the storm and its aftermath, see the JOC's Hurricane Sandy special topic page.

End quote"

ETC Intl. Freight System is a licensed freight forwarder, NVOCC bonded & a California Corporation since 1984. Whether, you seek air or ocean freight & to our broad customer base, we offer warehousing, distribution, packing, crating, trucking, customhouse brokerage & inland delivery/pickup services. For more information or pricing through the web, please visit us at www.etcinternational.com.

International Shipping, Commerce in our Global Logistics

 

Reid:

Here in the folowing JOC article, details of relevence help us see where the econnmy is going.

Global Logistics, International Shipping, Overseas Shipping, Maritime

 

Global Logistics, International Shipping, Overseas Shipping, Maritime

Port Tracker Reaffirms Import Forecast

Imports at 10 top U.S. container gateways are expected to increase nearly 10 percent in October as merchants wrap up their pre-holiday shipping season, the National Retail Federation and Hackett Associates said in their monthly Global Port Tracker report.

Containerized imports through the ports are expected to total 1.45 million 20-foot-equivalent units in October, a 9.9 percent increase from a year earlier, the forecast said. September was estimated at 1.49 million, up 8 percent.

The estimates were little changed from last month’s Port Tracker, which forecast 1.48 million TEUs in October and 1.45 million in September.

There had been speculation that October volumes could be affected by early shipments to avoid a threatened International Longshoremen’s Association strike on Sept. 30. The ILA and East and Gulf coast employers have extended their contract through Dec. 29.

The latest Port Tracker, however, showed little change from last month’s forecasts. “Inventories are up, which could be due to lack of demand but it could also be due to pre-stocking in anticipation of the dock strike that didn’t come,” said Ben Hackett, founder of Hackett Associates. “Either way, it is within a narrow range of movement and it does not suggest that we are sliding into another recession.”

Jonathan Gold, the NRF’s vice president for supply chain and customs policy, said import volumes are based on prospects for healthy holiday sales. “NRF’s annual forecast says retailers should see solid growth during the holiday season this year and these cargo numbers back it up,” he said. “Increased imports show that retailers have gauged the market and expect increased sales.”

Volume for August, September and October, the traditional peak season for imports, were up 7 percent year-over-year. Although cargo volume doesn’t correlate directly with sales, the NRF forecast last week that holiday sales would increase 4.1 percent to $586.1 billion this year.

U.S. ports followed by Global Port Tracker handled 1.42 million TEUs in August, the latest month for which after-the-fact numbers are available. That was up 6.7 percent from July and 3.3 percent from August 2011.

With most holiday merchandise already at least in distribution centers by the end of October, monthly cargo volume will drop off for the remainder of the year but will remain above 2011 levels, the report said.

November is forecast at 1.32 million TEUs, up 2.4 percent from last year and unchanged from last month’s Port Tracker forecast. December is forecast at 1.28 million TEUs, up 4.6 percent from a year earlier and slightly above the 1.25 million forecast last month. The January 2013 forecast is 1.28 million TEUs, down 0.5 percent from January 2012, and above the 1.23 million forecast last month. February is forecast at 1.19 million TEU, up 9 percent from a year earlier.

The first half of 2012 totaled 7.7 million TEUs, up 2.9 percent from the same period last year. For the full year, 2012 is expected to total 16 million TEUs, up 4.1 percent from 2011.

Import gateways covered by the report are Los Angeles-Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York-New Jersey, Virginia, Charleston, Savannah, Port Everglades-Miami on the East Coast, and Houston on the Gulf Coast.

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3/8/2012

 

News from JOC

Intermodal Shipping: Building a Better Intermodal Ride 
Maersk Line and BNSF offer day-definite intermodal delivery from Los Angeles to five inland destinations

Logistics: Helping Shippers See More Clearly 
New technologies help take the guesswork out of the supply chain, keeping goods and cash flowing

Trucking: The Road to the Ocean 
Solidly profitable LTL trucker ODFL is expanding its drayage operations, with an eye on the trans-Pacific

Maersk Vows to Defend Market Share Gains 
Maersk Line will not allow its renewed focus on profitability rather than cargo volume to eat into the significant gains in market share it achieved in 2011, the carrier said on Monday.

Cosco, China Shipping Consider More Vessel Sharing Pacts 
Cosco Container Lines and China Shipping Container Lines are looking to expand their vessel sharing agreements on China coastal and intra-Asia trade lanes to other routes, said Capt. Wei Jiafu, chairman of the Cosco Group.

Truck Volume Forecast to Grow 3.9 Percent in 2012 
The trucking industry will outperform the U.S. economy this year, with truck freight growing 3.9 percent, greater than overall GDP, according to FTR Associates.

Asia-Pacific Airlines' Freight Traffic 
Asia-Pacific based airline traffic in calendar 2011 declined 4.8 percent year-over-year as freight capacity inched ahead 0.1 percent. In contrast, January 2012 traffic plunged 13.7 percent and capacity declined 5.3 percent. The calendar 2011 cargo load factor was 66.6 percent, off 3.4 percentage points year-over-year, while January's cargo load factor was 65.3 percent, off 5.7 percentage points year-over-year.

UASC Seeks Second GRI on Asia-Europe Trade 
United Arab Shipping joins other major ocean carriers in seeking a second general rate increase this year on the troubled Asia-Europe trade lanes.

Chinese Manufacturing Expands on Export Order Rise 
Chinese manufacturing in February expanded at the fastest pace in five months, as export orders surged after a production lull caused by Lunar New Year celebrations.

Indonesia Poised for Major Logistics Growth  
Indonesia will see rapid growth in logistics demand this year but needs huge investment in transport infrastructure to realize its true potential, according to one leading analyst.

Saudi Airlines Cargo to Fly to Saigon 
Saudi Airlines Cargo will launch a twice-weekly B747 freighter service to Saigon, Vietnam, on March 25, linking the Southeast Asian country to the Middle East and Frankfurt, Germany.

 

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