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

Airlines: Continental Stays the Course.

Continental Airlines has a long history of financial drama. I clearly remember the mess that Frank Lorenzo left the airline in back in the late 1980's. That guys' main claim to fame was building discount airlines and union busting. Along the way, he broke both Eastern Airlines and Continental.

Gordon Bethune and Greg Brenneman helped turn Continental into a reliable, good airline that made money. Brenneman was a former Bain consultant and Bethune was an former Boeing executive.  Both took a fresh approach to the airline business and made a significant difference in changing how Continental approached a market in which they were basically hated.

They used basic tenants such as "give the customer a meal if its mealtime." and a other logical methods to make flying Continental less painful than it had been previously. They also worked hard on employee pride. Continental employee morale improved considerably and we pax recognized it.

I remember in the late 90's when I got seriously mad at Delta. I mean really mad. My hometown airline had gone to hell in a hand basket regarding service, baggage handling, in flight service, pricing, reservations...just about everything. So I fired them. For two straight years I never flew Delta.  They fly 600 flights a day out of ATL and but I wasn't on any of em.

Looking back, I find irony in  "why I fired Delta" now.  The straw that broke the camels back is sort of silly in retrospect. It had to do with a completely offensive meal idea that Delta had called "Sky Deli".  Essentially you got an inferior sack lunch of tasteless, sub par foodstuffs. I thought I'd do better on a bus line than an airline with this kind of crap. That little marketing strategy sent me to the competition with GUSTO. I was offended. Garbage food, bad service and a passenger seat that gave you a wedgy wasn't for me.

For two years all I flew out of ATL was Continental.  I was working for the COO of P&O Containers at the time and flew with great regularity to Newark from Atlanta. I made platinum with Continental in a year. Consider at the time that was 90 round trips on an airline that only flew direct from ATL to Houston, Cleveland and Newark. I was willing to change planes to make my point. That was a very positive experience. So positive I took my 16 year old son to Japan on Continental frequent flyer points.

Theres a valuable lesson above.  With Delta and Northwest planning a major airline consolidation (it is a DAL acquisition if you haven't guessed this yet). I am delighted that Continental has decided to stay the course and remain independent. We need options as passengers.

I'm a platinum flyer nowadays on Delta.  Delta got my business back after my travel patterns changed and I HAD to use them. Delta's service, to their credit, also improved. However, now that we live in a land of airline consolidation and general unhappiness amongst the flying public, I am reminded to have a two airline strategy. I'm willing to give Delta some slack because I'm pretty invested in them with a BUNCH of frequent flyer miles that get me frequent flyer status. However, they've had to earn that investment.  I still don't trust any of the airlines.

Dear Continental: I may look like a stranger, but you may be getting some of my business back. Delta has 70,000 platinum flyers in ATL and I'm amongst them.   I am loyal to my hometown airline, but with the market as unstable as it is, I'm going to spread my business around as a defensive strategy.  Now don't blow this up by deciding later to get consumed in some mindless, serviceless, merger.

Eric

PS: Southwest, JetBlue and Airtran: Thank you for keeping prices reasonable in the markets in which you fly.  I've had it with "the major airlines" for charging 1300 bucks for tickets into markets that lack discount competition.  (helloooo... Louisville KY, Jackson MS, Charleston SC, Columbus Oh, Cincinnati Oh., etc.) 

Abusing the passenger is never the answer. I'm ready to teach another lesson. 

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Thanks for taking the Middle Seat.

Delta Airlines surprised me a few times today.   I was out on business all week and today I flew back from Phoenix to Atlanta.   I was originally scheduled for a 3PM flight, but my business got finished early, so I was able to move to the 1PM flight.  Flight 1570 was completely full but allowed me to get home earlier, so I sacrificed an upgrade opportunity.   Here's what I observed.

Delta has now started allowing passengers in coach to buy premium snacks and meals.   Rather than being forced to the Biscoff cookies and Sun Chips routine, for a sum between $5.00 and $8.00 you can purchase full meals and premium snacks.  I like this option as it gives choice to the passenger.  I appreciated having the option.  At least it gave the illusion of freedom of choice in a market where passengers feel like cattle.  I thought 8 bucks was a bit much for the offerings but at least I had the option to choose.

The particular Boeing 757 I was on had seat back video screens. Unfortunately this flight didn't have movies working, but its Direct TV access worked fine.   So I watched a few things then tuned in the evening news fed live.  What struck me as particularly ironic was that I tuned into CNN. CNN anchorman Lou Dobbs was asked whether the Delta/Northwest merger was a good idea.   I was very interested because I was somewhere over Arkansas in coach listening to this. 

Dobbs ranted that this merger was terrible and that the airline business should be re-regulated back to 1978 status.  He made no specific comments about the DAL/NWA deal that showed he knew much about it. Dobbs was generally tired of being treated like cattle on the way to slaughter. (methinks he has flown United lately.) Since Lou Dobbs is a journalist, I consider it irresponsible to make comments based on generic experience as a passenger rather than succinct comments on the economic and social impact of the merger objectively. Lou Dobbs had nothing specific to contribute other than he was unhappy with the general passenger experience.

The recent EU-US Open Skies agreement should provide a lot of freedom relative to the European market.  Foreign airlines understand service well beyond what's offered in US domestic transport.  Round Two of the Open Skies discussion may allow European airlines competitive access to the US market.   I would support that as I believe competition will "right size" the market.

Having gotten home tonight, and settled in to clean up my several email accounts,  I had a note from Delta.  A very surprising note.  They sent me a message that they noted that I had a middle seat in coach for my outbound flight on Monday from Atlanta.  The note said that they work hard to give Platinum flyers like me either an upgrade or at least an aisle or window seat.  However, since I got the middle seat, they were giving me 500 more frequent flyer miles as a way to "reduce my middle seat memory".   This is BRILLIANT marketing.

I have said several times that positive reinforcement could cure many passenger related issues that would improve airline operations.  Specifically, what if the same 500 miles were given because I check my bag every week instead of bringing it on board?  This would have HUGE fuel economy and aircraft turn time implications if Delta or another airline did this.  Get the business frequent flyer to check his back instead of putting it in the overhead bin and airlines will save major bucks. 

Dear Delta marketing team.  Your email to me tonight on the extra FF miles based on the middle seat was EXACTLY the right message.  The flight was full and I was thinking I was in steerage on the Titanic.   Good job in surprising me with a nice little perk.  Surprise your customers often and the passengers will follow. At least my 100K miles a year will.

Eric

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International Shipping and Global Commerce

While checking out some other video stuff at Youtube.com tonight I discovered the following video on international shipping. It is very well done and in a generic sense gives an overview of the magnitude of the shipping industry and its impact on the global economy.

There would be no modern China without shipping.  Japan would have no fuel. The US and European retail market places would also be much different. Certainly the growth of retailers like Wal*Mart, Tesco, Metro, Carrefour, Target, Best Buy and others wouldn't have grown so much without commensurate growth of international shipping.

It is said that shipping is the worlds second oldest profession. Certainly it's importance in our global economy remains very close to number one today.

(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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Finding Cheap Fuel with Gasbuddy.com

Are you as sick as I am of paying ridiculous fuel prices?  I was in Milwaukee this week and filled up the rental car at $3.70 a gallon.

I was Appalled

Gas in Atlanta is $3.39 and I think that's still exorbitant. With the oil companies raking in billions of dollars in profits, this is one issue that truly may sway my vote in November.  Energy costs have gotten out of hand in the United States.  They've been even higher in Europe for years.   Until the macro economic conditions allow for cheaper fuel at the pump, the best we can do is find the cheapest fuel available locally, then use it as wisely as possible.  That's where an excellent web site called Gasbuddy.com comes in.

Gasbuddy.com aggregates fuel prices from hundreds of fuel stations in the US and Canada and publishes a dynamic feed of gasoline prices in your local area, complete with Google-type maps and temperature maps that show fuel prices across the continent.  You can choose pricing options for all grades of fuel including diesel. Gasbuddy.com also provides helpful tips of fuel conservation, as well as historical data to track fuel pricing in your local area or area of interest.   Bloggers can embed Gasbuddy.com maps and highest/lowest pricing lists in your site as an RSS feed.

If ran a number of full line DC's with my own private fleet of trucks, tools like Gasbuddy.com would be an asset in figuring out where to source goods for maximum fuel savings.

Eric

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Container Shortages hamper US Exports

Tim Aeppel of the Wall Street Journal wrote an article that pretty well captured the difficulties American exporters face when trying to get ocean containers.  The dollar is weak, making US products highly affordable. Unfortunately, US exporters are having a pretty hard time getting access to empty ocean containers.  This is is a particular issue in the US Midwest, where agricultural commodities come from.

Food products and especially refrigerated goods are suffering with this issue.  However other specialized equipment types also are being priced at a premium.  I recently quoted on the use of a 40 ft open top container from Montreal to the Middle East.  The surcharge for the special equipment container type was 1000 dollars MORE than the ocean freight.

US exporters should be benefiting from the extra buying power that foreign consumers enjoy at the moment.  However, ocean carrier need to re-balance trades by moving empty containers to more profitable trades complicates the situation.   Having spent many years in the container shipping business, I am used to seeing "container mountains" in New Jersey and other excess capacity regions when the majority of trade was inbound from Asia.   Now that the US export trades are booming, its darned hard to get an empty box when you need one. Carriers used to provide very aggressive rates on exports if you could pick up a container in Memphis or St. Louis.  Not any more. 

APL introduced 53 foot ocean containers in the last few months.  I'd love to know what backhaul freight is going in those boxes nowadays. 

I remember the days when I thought Sea-Land would drop a box in the forest if they thought they could get a load. Thats how abundant their equipment was.   Nowadays, containers, and especially chassis are hard to come by. If you work for a company who sits on containers don't expect any mercy on demurrage!

clipped from www.baltimoresun.com Many U.S. companies hoping to profit from surging exports created by the weak dollar are facing an unexpected hurdle: There aren't enough of the big, metal shipping containers that help form the backbone of the global economy. The shortage is threatening to limit the benefits U.S. producers can reap from one of the few bright spots in an otherwise troubled economy. While housing and financial markets have slumped, many companies have seen a rise in their export business, helping offset the domestic slump and lessening what would have already been a far more painful downturn. Finding enough of the big metal boxes used to be a cinch, because the nation's massive hunger for imports meant they were constantly arriving and stacking up from Long Beach, Calif., to Long Island, N.Y. Shipping companies typically scoured the country for anyone willing to fill outgoing boxes. But with the slump in the value of the dollar making U.S. goods more attractive to foreign buyers and many overseas economies continuing to hum, the tide has shifted in recent months. Shipping containers -- and the way they're handled -- reflect how the U.S. interacts with the global economy, which is one reason the problem has emerged now. For years, the U.S. crafted a trading system that was designed to pull in masses of imported consumers goods such as sneakers and VCRs as efficiently as possible from countries like China. Far less was expected to flow the other way.

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DAL and NWA Agree to Merger

Delta and Northwest have agreed to a merger. The new airline will be called Delta. Delta CEO Richard Andersen will be CEO of the combined airline.   Much more will follow here when known.

The combination of Delta and Northwest will have major impact on the air cargo markets as well as the international passenger markets to Asia and Europe.

Delta has never been a major cargo airline other than the booking of belly space on passenger aircraft.   NWA Cargo however, has been a major player in the air cargo market for years.  How this plays out over time will impact both the cargo and pax markets.  

Northwest pilots, baggage handlers, ramp workers, mechanics, flight attendants and ticket agents are all unionized. None of these are unionized at Delta beyond the pilots.  Delta pilots union head Lee Moak has indicated he hopes cooler heads will prevail. That sounds like a guy whose company just took over. In any case, the US Federal government will have to clear anti-trust approval.

"A Delta/NWA merger would create the world's largest airline with combined annual revenue of over 31 billion dollars."

Click here to check out the internal memorandum that went to Delta employees on the merger.  This memo first appeared in the Atlanta Journal-Constitution.  Additional information can be found at www.newglobalairline.com.

clipped from news.yahoo.com Delta and Northwest agree to combine By HARRY R. WEBER, AP Business Writer ATLANTA - Delta Air Lines Inc. and Northwest Airlines Corp., squeezed by record high fuel prices and a slowing economy, are combining in a stock-swap deal that would create the world's biggest carrier. The boards of both companies gave the deal the go-ahead Monday. Delta said the combined airline, which will be called Delta, will have an enterprise value of $17.7 billion. It will be based in Atlanta, and Delta CEO Richard Anderson will head the combined company. Under the terms of the transaction, Northwest shareholders will receive 1.25 Delta shares for each Northwest share they own. The exchange ratio represents a premium to Northwest shareholders of 16.8 percent based on Monday's closing stock prices. Delta Chairman Daniel Carp will become chairman of the new board of directors and Northwest Chairman Roy Bostock will become vice chairman. Delta President and Chief Financial Officer Ed Bastian will retain his titles. The new board will be made up of 13 members, seven of whom will come from Delta's board, including Anderson, and five of whom will come from Northwest's board, including Bostock and Doug Steenland, the current Northwest CEO. One director will come from the Air Line Pilots Association, the union that represents pilots from both carriers. There will be an unspecified number of job cuts or transfers through the consolidation of overlapping corporate and administrative functions, Delta said. The two airlines employ more than 80,000 people combined. The company expects no involuntary furloughs of front-line employees and said the existing pension plans for both companies' employees will be protected.

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PRC Launches New Web Site

The Postal Regulatory Commission announced that they have a new web site designed to support public inquiry into PRC activity and regulation of the US Postal Service.

Quoting PRC online resources below:

"The Postal Regulatory Commission (PRC) is an independent federal agency that has exercised regulatory oversight over the Postal Service since its creation by the Postal Reorganization Act of 1970. The PRC is comprised of five Presidentially-appointed and Senate-confirmed Commissioners, each serving terms of six years. The Chairman is designated by the President.

PRC initially oversight consisted primarily of conducting public, on-the-record hearings concerning proposed rate, mail classification or major service changes, and recommending decisions for action by the postal Governors.

The Postal Accountability and Enhancement Act (PAEA) enacted on December 20, 2006, strengthened the Commission's authority to serve as a counterbalance to new flexibility granted to the Postal Service in setting postal rates. The Act requires the Commission to develop and maintain regulations for a modern system of rate regulation, consult with the Postal Service on delivery service standards and performance measures, consult with the Department of State on international postal policies, prevent cross-subsidization or other anti-competitive postal practices, promote transparency and accountability, and adjudicate complaints."

clipped from www.prc.gov A Word from the Chairman Dan G. Blair Chairman of the Postal Regulatory Commission My fellow Commissioners and I are pleased to present the Postal Regulatory Commission's new website. Our redesigned web pages provide timely information and better transparency of postal data to the users of the mail system. It is our hope that as you navigate the new website, you will find it useful. I would like to briefly highlight two new features of the design: the Newsroom and the Breaking News sections. The Newsroom includes Congressional testimony, speeches and press releases, while Breaking News is intended for more immediate information. Both sections will keep you informed and up-to-date on critical postal issues. As the Commission continues to implement its new responsibilities of the Postal Accountability and Enhancement Act, our website will be the focal point of information for postal customers on our progress and that of the United States Postal Service.

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10 Steps to Parcel Shipping

Mark Taylor is the Chief Logistics Officer at RedRoller.com. As a 30 year expert in the field of parcel shipping, Mark also maintains a really great blog called shippingcoach.com. Shippingcoach.com focuses on helping small to medium sized shippers get the most out of their parcel transportation budget and relationships.

Mark may be reached by email at mtaylor@redroller.com.

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Regardless of which parcel carrier you use, there are ten steps that every shipper must follow to insure that their parcels are delivered in the right condition at the right price.   

Here’s How:

1. Packing: The first step is to select the appropriate packaging for the item you are shipping. This could be a tube, soft package, cardboard envelope, or a box.
2. Weighing: Shipping rates are determined by distance, size, and weight, among other factors. An accurate scale is necessary to prevent carrier charge-backs. 
3. Measuring: If you have a package over 3 cubic feet (1 cubic ft for USPS), you will need to know its dimensions in order to obtain an accurate rate. 
4. Rating: To calculate the cost of shipping, in addition to the weight (and possibly the dimensions), you need the shipper’s zip code, the receiver’s zip code (or city and country), and to know whether the recipient is located in a business or residential location. There are options such as insurance, requiring a signature upon delivery, and Saturday Delivery, which can add to the cost. 
5. Selecting a Carrier: You are now ready to select a carrier. Enter the above information in a carrier’s website or a shipping software application; you will be provided with the choices and costs associated with the level of service desired. 
6. Processing: Once you have selected a carrier and service, you will need to process the information. This can be simply entering the address details into a website or manually writing it on a carrier form called a waybill. 
7. Payment: Your options are to pay for it with your own account (which you will have set up with the carrier), have the shipping charges billed to the receiver, or have the charges billed to a third party, such as your business, if you have the account number and authority. If you are going to use the US Post Office or carrier’s retail store, you can pay cash or charge it on your credit card. 
8. Labeling: The processing system will generate a shipping label on a plain piece of paper or a thermal printer. 
9. Sealing: Put one label inside the box, seal it with clear plastic shipping tape, and place a duplicate label on the outside of the box on the largest surface. 
10. Hand-off: This means getting your shipment to the carrier. You could drop it off at a carrier facility or drop box, or arrange to have the carrier pick it up. On-demand pick-ups cost an extra $3-4 per destination address.

Tips:

1. Some carriers will provide free packaging for certain services. The US Post Office will give customers free boxes and envelopes for shipping items Priority or Express Mail. All the other carriers will provide various containers if you choose their express services.
2. Shipping online at the carrier’s website is cheaper than going to their counter or store. 
3. You should make an extra label to put inside the box in case the label on the outside of the box comes off in the shipping process.
4. You can look online at the carrier’s website and find the closest location to your work or home to drop off your shipment.

Mark

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Boeing 777F Under Construction

Fleetbuzz has some exclusive pictures of the Boeing 777F freighter under construction at Boeing's factory in Everett, Washington.  This is going to be a huge main deck air freighter with some unusual design features, including an extra large main deck door behind the wing and cross loading capability with the B747F.

Air France will be the launch customer for the new 777. Aerologic, the JV cargo airline of Lufthansa and DHL Express, will eventually operate between 8 and 11 of the aircraft.   FedEx also has significant orders for 15 of the super freighters.

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ATA bankruptcy: SWA Can't take over Hawaii Routes

Last week Southwest Airlines marketing partner American Trans Air (ATA) filed for bankruptcy. ATA was a major player in the US-Hawaiian market. Southwest in the meantime, has gotten a number of customer inquiries as to why they can't just "takeover" ATA's route stucture.

Some of that has to do with federal regulatory issues, but for the most part, it has to do with the aircraft that SWA flies vs, whats needed in that long, over water market. SWA B737's are not ETOPS rated, meaning they are not rated for twin engine flight on long, over water flights.

Southwest has a pretty great corporate blog and has an article on this subject as noted below. I suspect the major beneficiary on the mainland US to Hawaii routes will be Delta and United.

clipped from www.blogsouthwest.com Why No Southwest to Hawaii? By: Bill Owen - Schedule Planning Lead Planner Everyone at Southwest Airlines was saddened by the sudden termination of service by our codeshare partner, ATA Airlines. Setting aside the business relationship for just a second, we appreciate the hard work of our colleagues at ATA, and wish them nothing but the best in the future. However, I thought I should post a quick blog about a question that’s come up MANY times since ATA ceased operating—why didn’t Southwest buy (or take over) ATA’s Hawaii routes? As much as all of us at Southwest would love to have done it, there are a few absolute brick walls that prevent us from just jumping in on short notice to fill the void left by ATA. The simple answer: we can’t.

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