Eric Joiner's Freightdawg.com - The Logistics and Supply Chain Blog!

100 Percent Cargo Inspection: Part Deux

Congress apparently didn't read my article of April 7th, 2007 on the practical difficulties of 100 percent cargo inspection called for under House bill HR-1.    HR-1 requires 100 percent cargo inspection of all air and ocean cargo.   This week the bill passed through the US Senate and now awaits final language refinement prior to submission to President Bush for signature (or veto).This bill has good intention but is practically impossible to implement near term. 

Forget that we don't have the current technology to perform the scanning.  Forget that there is no clearly defined mandate for what's to be scanned.  Forget that it will take a very long while to figure out the union rules on how this will take place.

The one concession I can see in the bill the Senate passed is that rather than completing implementation of this deal by the end of 2010, it has a 5 year implementation window with the ability of the Department of Homeland Security to extend the deadline 2 years.

What I am interested in is whether this will constitute a practical restraint of trade and a defacto  tax on imports. Costs for inspection will find their way into the costs of goods.  The practicality of the inspection activity will largely depend on quality of scanning, what we are specifically looking for, and how fast the scans can take place.  If implemented tomorrow, it would gridlock our ports and strangle trade.

The ILWU and ILA work rules on how scanning will take place in ocean ports, as well as how it will be handled at airports will take some time to work out as well. Security is important to society.  We need it.   However, what is the economic impact of a 100 percent inspection?  Once again I think reality and politics are at odds.

clipped from www.logisticsmgmt.com Politicians sign off on bill for 100 percent maritime, air cargo inspection Jeff Berman, Senior Editor Logistics Management July 30, 2007 WASHINGTON —In a decision which will have a major impact on how cargo moves through the global supply chain, the United States Senate and House of Representatives recently signed off on the conference report for—“H.R. 1 Implementing the 9/11 Commission Act of 2007,which will significantly alter how maritime and air cargo is inspected. The bill calls for 100 percent scanning of maritime cargo—before it is loaded onto vessels in foreign ports heading for the United States—to be required within the next five years (although the Department of Homeland Security may extend the deadline by two-year increments, if necessary). It also calls for scanning all cargo on passenger planes within the next three years. As of press time, the bill is now in the hands of Congress, where it is expected to vote on final language prior to it being sent to President George W. Bush. The Senate approved the bill by an 85-8 margin on Thursday, July 26, while the House vote the following day was 371-40. The bill will require specific annual benchmarks for the percentage of maritime cargo containers headed for the U.S. that are scanned at a foreign port, an analysis of how to best incorporate existing maritime security initiatives, including the Container Security Initiative and C-TPAT, and an analysis of the scanning equipment, personnel and technology needed to reach the objective of 100 percent container scanning, among others. And on the air cargo side, the Transportation Security Administration will be charged with establishing a system to screen all cargo transported on passenger aircraft operated by domestic or foreign air carriers to ensure the safety of all such passenger carrying aircraft.

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Cessna introduces the C-162 Skycatcher

Cessna Rolls out Light Sport Aircraft 

Normally on this blog, I focus on freight related stuff as well as the airlines.  That included some enthusiastic stuff on the Boeing roll out of the B787 on July 21.    However, there was another roll out that got less fan fare but is still important to the aviation community.  That is the roll out of the Cessna Aircraft C-162 Skycatcher.   

The Skycatcher is a light sport aircraft designed specifically for the Sport Pilot community.  This is a group of folks whose qualifications are less than a private pilots but still certified to fly very light aircraft in VFR conditions.   Many of these folks are either retired pilots with health issues or those of limited income who can't afford flying heavier general aviation aircraft.  

I'm absolutely delighted to see Cessna introduce this class of airplane because this is exactly the airplane I myself will one day wind up flying.  I had my pilot training many years ago in college, but kids, marriage and work prevented me from doing much with my interest in flying.   The Skycatcher puts that back in focus sooner rather than later.  Pretty darn cool looking plane to boot.

Check the video below on the roll out of the C-162.   Boeing has nothing on Cessna for theatrics!  The skycatcher puts aviation in closer reach of the masses.  In times where there is a professional pilot shortage with the airlines, introduction of light sport airplanes with modern avionics are a major weapon in developing our next generation of professional aviators.

(Note: Some corporate proxy servers ban video from youtube.com.  If you see white space below...you may be on such a network.  Please revisit from home or a connection that does not go through your company VPN.)

Eric

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Aviation News Today: Podcast for July 27th

Here's this week's edition of the fantastic Aviation News Today podcast.  Key information is included on activities with the DOT funding bill in congress. Especially important to this bill are FAA funds for improvement of Air Traffic Control facilities and technologies.  Information on Virgin Australia Airlines expansion to US markets in 2008 is also included.   Virgin America will start operations in September for limited US domestic service and should link to Virgin Atlantic and Virgin Australia long haul flights to Europe and Australia.  (Can Asia be far away?)   JetBlue isn't taking the Virgin America threat lightly.  It has announced matching fares for all VA routes.

Boeing may also have a shot at booking 1000 new orders in 2007. The huge number is largely driven by airline demand for the new B787.  Northwest Airlines continues to suffer from a pilot shortage that is forcing it to cancel some flights this summer.

(Note: Some corporate proxy servers ban video from youtube.com.  If you see white space below...you may be on such a network.  Please revisit from home or a connection that does not go through your company VPN.)

 

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Now this is Cool: DHL ShipRush

DHL Plug-in software integrates with PC applications

DHL is introducing a new and very handy desktop shipping tool that integrates shipping with Windows desktop applications such as Quickbooks, MS Outlook, or even e-Bay and Pay-Pal.  This allows small shippers to get address and labeling functionality directly out of their online or email contacts database.

In addition to printing a DHL shipping label from their own application, shippers using the new product can track and view shipments, print shipment activity reports, send automatic email notifications to recipients with the tracking number, and access discounted rates with a DHL account number.

For further information on ShipRush for DHL and for a free download of the software go to www.dhl-usa.com/shiprush

Eric

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FedEx Throws First Punch?

Life just got interesting in the LTL space.

On Monday, July 23rd, FedEx made major ripples in the US domestic LTL market by lowering their fuel surcharge 25% across the board for LTL shipments.  A move that is clearly a land grab effort designed to gain market share in a slow LTL market.    UPS and other Teamster LTL carriers face a renewal of union contracts in 2008, thus making 2007 a classic time for non-union carriers to gain market share as shippers prepare for strike contingencies.  The FedEx move accelerates that process at the expense of UPS, ABF and other LTL carriers.

UPS and FedEx acquired Overnite and Watkins Motor Lines respectively within the previous 12 months.   In that time, both carriers have aggressively worked to bring parcel time definite services to a market that has traditionally only been day definite.   FedEx's move raises the competitive aspect and seems clearly aimed at pressing a UPS vulnerability during union negotiations.   The Teamsters and UPS both commenced negotiations early in order to alleviate a strike possibility, but recently talks have bogged down on major issues such as pensions, though smaller local issue negotiations continue.

Analysts have asserted that the move by FedEx is well timed.  The discount could amount to a net dilution of 2 to 3 percent in their overall freight revenues, but if that results in a gain of a similar number of new customers, FedEx could gain overall. 

I suspect this is only the first volley in what could become a LTL price war.  LTL carriers were already crying about a lack of available freight.  FedEx's action heats that competition up.  While the shot seems aimed at UPS,  ABF and other union and non-union carriers are going to have to step up to keep the freight they have.

Whats really going to be interesting is what impact this action will have on FedEx's argument that as an airline, their drivers should be covered under the National Railway Act, not the National Labor Relations Act (NLRA) like UPS.   Fred Smith has argued as recently as last week that FedEx remains primarily an airline and as such drivers support air operations.   Ahem.  Last I looked "airlines" don't cut fuel surcharges to gain LTL freight.    Smith was quoted in Congress as saying that the remedy to the labor act issue was that UPS should be covered by the NRA!   Right.  I have have a bridge in New York to sell you if you believe that one.

In the famous words of  Bugs Bunny: "Of course you know.. This means War!"

Eric

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"Deathly Hallows" Taxes Muggles' Logistics Skills

Its 1:10AM here in Atlanta on July 21st.  I'm up because my 15 year old daughter and her aunt were out with the other Harry Potter crazies to get their hands on the last and latest Harry Potter book:  "Harry Potter and the Deathly Hallows".  This is the seventh and last in the series of J.K. Rowling's fantastic books on the escapades of the intrepid teenage wizard and his friends.  Will he live?  Will he die at the hands of the evil Lord Voldemort?

While the secret rests in the millions of books printed, it is up to dozens of book sellers and their supply chain partners to get the books to waiting hands.   12 million books were printed for the US market alone.  UPS, DHL, FedEx and the US Postal Service all carry parcel deliveries of the books, which by contract, could not appear in stores before mid-night July 21.   LTL carriers such as Con-Way, SAIA and others will make hundreds of LTL drop shipments across the US.

In previous years this exercise has caused many transportation and warehouse vendors to increase security and product tracking, as well as contractually guarantee delivery not early...not late...exactly on time!    God forbid the 12 year old next door gets her copy before your kid does!    Amazon is said to have shipped 2.2 million Harry Potter books for delivery on Saturday morning the 21st of July.    The US Post Office will carry 1.8 million books alone from warehouse sources.   

This isn't just a big deal in the US.  In Israel, bookstores violated Jewish Sabbath law to sell the young English Wizards adventures to waiting crowds.  Thailand, Cambodia, Singapore, India, all over Europe and Asia...the crowds waited.    In each case, a logistics company got the goods there.  Not Early.  Not Late. Just on Time.   

Author J.K. Rowling is scoring a double hit this summer with the release of a new HP movie: "Harry Potter and the Order of the Phoenix".  Phoenix is was the fifth book and the one that announced that either Harry or Voldemort must die. That clue alone skyrocketed Deathly Hallows sales as the climax of the story must now conclude. More sales, More books...more freight.

I am sad to see Harry Potter's adventures end.  Not because of the great stories.  I was never bitten by that bug.  But because Harry's adventures made our industry better in serving a public whose hunger for the tales of J.K. Rowling demanded perfect logistics.   

Frankly the only guy whose logistics may be better is Santa Claus.

What's your favorite "Harry Potter" logistics story?

Eric

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Trackpackages.com Releases new Widget

The popular package tracking search engine released a new Google Gadget for iGoogle users, and also a separate widget for RSS readers for tracking  UPS, DHL, USPS and FedEx packages.  The RSS version can also track LTL consignments from Averitt Express, Overnite/UPS Freight, LoneStar and Con-Way.

This is a very handy tool for online retailers and E-bay online auction sites as it can be added to your web site for package tracking across multiple carriers.

View the Google Gadget page for the Trackpackages.com engine here:
http://www.google.com/ig/adde?moduleurl=http://www.trackpackages.com/google.xml

Google Gadget XML - Add this URL directly in iGoogle where it says "Add by URL"
http://www.trackpackages.com/google.xml

Use the following URL for RSS feed readers:
http://www.trackpackages.com/rss.php

clipped from www.prweb.com July 19, 2007 -- TrackPackages.com has released a new version of the popular search engine tool for RSS readers, and also a new Google Gadget, which extends the functionality of the search box to personalized iGoogle homepages, other RSS readers and embedding in web pages or email.  This is a handy desktop tool for retail and auction buyers and sellers who regularly deal with multiple package tracking carriers, and prefer and single simple interface to begin their package search.  The gadget or RSS feed sits in a very compact spot on your homepage or feedreader, and launches your desired tracking carrier number from a single text box.  The Google Gadget supports UPS tracking, FedEx tracking, DHL tracking, and United States Postal Service USPS tracking from a single search box, with and option of going to any of these tracking package landing pages of their respective sites.

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Airline Profits: $1.77 Billion in Uncommon Ground.

July 18th, 2007 -  Delta Airlines announced profits of $1.77 billion dollars on $5 billion in revenues for the 3 month April-to-June financial period ending June 30th.

Delta emerged from bankruptcy on April 30th after removing several billion in debt and costs while in court protection.  Profit on the quarter was $274 million or 70 cents a share, when one time items are excluded.  These included $1.5 billion in income due to the discharge of claims and liabilities in connection with its bankruptcy and the adoption of fresh-start reporting.  Total revenue of $5 billion beat a year over year comparison figure of 4.74 billion for the same period in 2006.   Delta is now a cash liquid, profitable carrier able to deal with the competitive market.

Not so yet for United Airlines, which ironically posted a $1.77 billion dollar loss for the 3rd quarter. This is UAL's 21'st quarter in the red.  United is in the third year of bankruptcy protection and claimed that the loss was typical for a company in late stage Chapter 11 recovery.   The 1.7 billion dollar posting is due to non-cash aircraft restructuring costs.  UAL claims these will eventually be settled at a fraction of the posted cost on exit from bankruptcy.   Relief from such charges at the time of emergence from Chapter 11 protection should skew earnings substantially on exit in a fashion similar to Delta's earnings mentioned above.  Removal of the restructuring charges would have left UAL with a net profit of close to $70 million

Interestingly UAL projects a profit in 2008 but has a business plan that is based on $50.00 a barrel oil.  Oil prices continue to present a major dynamic in airline profitability.  Even airlines such as Southwest Airlines and Alaska Airlines, famous for aggressive fuel hedging, now struggle with the impact of fuel costs on their competitive positions.

Eric

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Moving Bio-fuels: Rail and Terminal Capacity

There's a very interesting article available at Progressive Railroading.com  regarding the impact of rising ethanol production on US railroads and Shippers.  The Bush administration has mandated that the United States increase its production of alternative fuels in order to lessen the impact of foreign oil.  Both shippers and railroads however are concerned about the impact of that increased traffic on US railroads.

Shippers are concerned that railroads will not have available capacity to move the extra freight. Further they are also concerned that the railroads won't charge a rate that shippers are willing to pay.   The Shipper groups like Consumers United for Rail Equity (CURE) claim that the Class 1 railroads will take advantage of plant locations that are only serviced by single railroads and charge very high rates.   The truth is though that that concern is probably true regardless of commodity if the plant location is ill suited.

The railroads argue that the problem is that ethanol processing plants historically have been serviced by pipeline or water transport and were therefore improperly located for service by rail.   Few have the capacity to handle full unit trains or high numbers of bulk cars.  In order to solve the problem,  some industry observers contend that new site locations should be served by short line railroads that connect to multiple long haul class 1 rail lines.  In the medium term, that's probably correct.

In the meantime, the federal government will need to support creation of rail - truck terminal transfer points in order to help alleviate congestion until plant logistics infrastructure is put in place.  Ultimately it comes down to the evolution of transportation to serve the markets.    In between, the government will likely have to help industry make the shift.   Single rail cars jam up the rail transport system, so until unit trains can be accepted by new ethanol plants, some sort of trucking infrastructure is going to be needed to take some capacity off the railroads.

Eric

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Aviation News Today: July 13, 2007

This is the July 13th, 2007 video podcast from Aviation News Today.  This is one of the most professional news blogs of any kind on the aviation industry.  ANT does a particularly good job of covering Washington DC events and political activities.

Key issues in this podcast include congressional activity on DOT and FAA funding as well as a new site established by American Airlines to brief the public on labor negotiations with the Allied Pilots Association and the Transport Workers Union. These unions cover pilots and dispatchers respectively.  The web site is www.aanegotiations.com.

(Note: Some corporate proxy servers ban video from youtube.com.  If you see white space below...you may be on such a network.  Please revisit from home or a connection that does not go through your company VPN.)

Eric

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