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

The Mystery of Larry Hillblom - a DHL Founder

DHL today is a 64 billion dollar logistics company spanning the globe in movement of everything from envelopes to customer chartered jumbo jets.  Now a part of German conglomerate Deutsche Post,  few people know the history of the 3 Americans who founded the company in San Francisco, Ca. in the late 60's.  

A lot of people think DHL stands for something German, but in fact, it represents the names of the three founders.  Dalsey, Hillblom and Lynn.   

Larry Hillblom is probably the most infamous of the 3 amigos for the simple reason that once the company became successful in transportation of international documents, primarily shipping line manifests before the age of electronic media, he became an international playboy.  Hillblom moved to Asia, fathered multiple children and then died a mysterious death in a plane crash.   

The article below, from Fortune Magazine, reviews a new book on Hillbloms life.  I am surprised its not a major motion picture.  60 Minutes did a report on Larry Hillblom and his multiple illegitimate children some time ago.  

DHL today has nothing to do with the historical roots of the three American founders, but the history itself is interesting reading. 

__________________________________________________

FORTUNE -- Growing up fatherless on a peach farm in California, Larry Hillblom told friends he wanted to be like Howard Hughes some day. He came closer than anyone could have expected. Hillblom went into business, amassed a huge fortune, acquired an airline, built a secretive empire, sustained hideous injuries in a plane crash, and developed into a full-blown germaphobe eccentric.

For all that, there was an important difference between the two men. Hughes indulged his whims in Hollywood and Las Vegas, becoming an object of public fascination. Hillblom cut his wackadoodle swath across Micronesia, which is why you may not have heard of him.

Hillblom was the "H" in DHL, the international courier service, and is the subject of King Larry, a biography by James D. Scurlock. The author unquestionably has a nose for a good story. In 2006, two years before Lehman Brothers collapsed, he made a jeremiad movie called Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders. He published a book by the same name the following year.

With his new book, Scurlock has again hit upon a story that was crying out to be told. Hillblom, it seems, was a business monster -- a man with an unquenchable work ethic and no discernible moral compass. His principal hobby seems to have been deflowering virgins. A billionaire cheapskate, he was passionately devoted to a cause: shielding his money from the IRS. As soon as he had DHL up and running, he moved to Saipan, a U.S. protectorate with disputed (or at least disputable) tax regulations. There, dressing like a surfer and riding around in a DeLorean, he disported himself with breathtaking self-indulgence for 14 years.

via Click Here to read more of the original Fortune article

STS-135: Atlantis Takes the Greatest Transport System ever into the History Books

Yesterday, on July 8th, 2011, NASA launched the 135th and final space shuttle mission.   I had a lot of internal business stuff to take care of, so I worked from home.  I needed the alone time to get some stuff done, but selfishly, I also wanted to watch this lift off, which was scheduled for 11:26AM Eastern Time.    I have a small TV in my office, so I had it on in the background. I was listening to Anderson Cooper and the rest of the talking heads on CNN blather on about the Shuttle and NASA while the launch team worked through a weather delay, which stopped the countdown at about 9 minutes.

So, slogging through conference calls,  a couple of RFP's and some other business stuff, I kept peering over to see what was going on.   About the time my cell phone rang with a call from our Atlanta District Manager about some staffing issues,  NASA started the countdown again.   I had my back to the TV and was deep into the conversation, when I happened to turn around and saw the Shuttle had already launched and was screaming off into space!!!    My daughter was home at the time in another part of the house. 

Next thing she hears from me is "DAMN!, DAMN!, DAMN!!!!  I MISSED IT!!!"        

I know our local DM thought I had lost my mind. I started fussing "Dammit Rich, you made me miss the shuttle launch!!".    This guy is sitting in the office and and I am sure he thought I was sitting here in my Bunny Slippers.   The phone call ended quickly after that. 

I'm pretty attached to the Shuttles.  I grew up watching Gemini missions when folks like Walter Cronkite, David Brinkley and Eric Sevareid would announce the launches back in the 60's.   Then the Apollo missions came.   Alas, Apollo ended in the 1970's when the moon mission had fulfilled Kennedy's promise and the political juice ran out after the 1973 oil embargo.   

We waited 6 long years for the next launch system to come along.  It was the Space Shuttle.  Arguably the most complex, and most Herculean transportation system ever developed by man.    I vividly recall sitting in my parents home in 1981 when John Young and Bob Crippen took the first shuttle up from Cape Canaveral.   What an emotional event that was.    America was leading again.  Reagan was in the White House.  America was in the ascendency again.  Literally.

Then Challenger happened.   Like the Kennedy assassination and later 9/11,  I think every American remembers where they were when Challenger blew up.   I was in my office when my wife called and told me.  I felt like I had been kicked in the groin.  It hurt.  America hurt.    Two years later, the Shuttle returned, this time safer and NASA was humbled into a stronger, safer space program.    On the backs of Astronauts like Story Musgrave,  Hoot Gibson, Bruce McCandless, Sally Ride and others,  the Shuttle accomplished the launch of the Hubble Space Telescope,  its subsequent repair and ultimately the missions to build the first permanent International Space Station.   Despite the sacrifices of 14 American patriots in the astronauts who died in the Challenger and Columbia accidents,  the Space Shuttle has been an unparalleled success.

STS-135 was essentially a housekeeping mission, taking supplies to the ISS.  It wasn't even supposed to take place.  However, NASA has Atlantis ready to go as a back up shuttle for the earlier missions this year, and decided to fly one last time.  I'm delighted they did.

At some point in the future, America will have the political will to venture into space on its own again.  Whether through NASA and the Orion program, or through brilliant commercial minds who are developing private launch capacity,  America will go back to space.  I can't wait.   The sooner we get a Republican back in the White House again, the sooner that will be.

Enjoy the video above.  That's how I got to see the last mission blast off into space.  

Eric

Japan Radiation Threat Causes Cargo Screening and altered Operations

Everyone is watching and reading the News about the terrible after effects of the earthquake and Tsunami that hit Northern Japan and the subsequent explosive impact on several Japanese nuclear power reactors.  

As the Japanese struggle with the health and safety of their own people,  foreign governments including the United States are carefully watching cargoes and people transiting or originating from Japan.   So far, the US Customs and Border Protection (CBP) department issued the following statement on March 16th, 2011. 

"U.S. Customs and Border Protection (CBP) is monitoring developments in Japan carefully and is specifically assessing the potential for radiological contamination associated with the ongoing impact of the earthquake and tsunami to Japan's nuclear facilities. Out of an abundance of caution, CBP has issued field guidance reiterating its operational protocols and directing field personnel to specifically monitor maritime and air traffic from Japan. 

No aircraft entering the United States today tested positive for radiation at harmful levels.

To address radiological and nuclear risks, CBP employs several types of radiation detection equipment in its operations at both air and sea ports, and uses this equipment, along with specific operational protocols, to resolve any security or safety risks that are identified with inbound travelers and cargo.  In the air environment, CBP frontline personnel are equipped with Personal Radiation Detectors (PRDs) that can detect the presence of radiological materials, and all airports have more sensitive Radiation Isotope Identification Devices (RIIDs) to determine both the presence and type of radiation encountered. Travelers who manifest signs of radiation sickness are referred to health authorities and provided appropriate treatment.

At seaports, and in its international mail and express consignment facilities, CBP continues to use sensitive, large-scale Radiation Portal Monitors (RPM) and scans all maritime cargo and express consignment and mail arriving from Japan. CBP maintains similar protocols for identifying and resolving radiation alarms in these operations and will deny entry to contaminated cargo and mail. 

CBP will continue to evaluate the potential risks posed by radiation contamination on inbound travelers and cargo and will adjust its detection and response protocols, in coordination with its interagency partners, as developments warrant."

While the US government has discouraged citizens from visiting Japan, so far no passengers or luggage have shown signs of radioactive contamination.   Airlines are taking a wait and see attitude toward servicing Japanese airports.  Delta Airlines as an example is still servicing Narita airport but at present has ceased flights to Haneda.    Lufthansa however has not resumed flights to Narita so far.   Express carriers are continuing to serve Japan at varying levels with FedEx, DHL and UPS all making service announcements on their web sites.

Major container terminals are presently working at normal capacity, however port closures over the past weekend have caused congestion and backlogs.  It remains to be seen if the ports are impacted as days go on by lack of diesel fuel and gasoline, as well as inability of workers to get to work due to power and public transport disruptions.  Services to Sendai, Hachinohe, and Onahama have been suspended by some carriers including Maersk.   NYK Line, a leading Japanese flag carrier meanwhile has offered its services to the Japanese government not only in moving relief supplies, but in providing service vessels to serve as offshore staging platforms for helicopters and relief supplies. 

Home from Europe. An Old Friend Revisited.

Yes, boys and girls, Freightdawg is still an active blog, for those of you who have written me.   I took on some newly increased job responsibilities in December and those have kept me running all over the place, including Latin America, Europe and China (next week). I got home from Europe on Friday, having spent the week on planes, trains and automobiles all over the Netherlands and Budapest, Hungary.   I had not been to Budapest before, but this is one beautiful city that I look forward to visiting again once the snow stops flying. 

I've been to Europe many times, but I am always amazed at the efficiency and low cost of the Dutch railways.   I commuted over several days between Amsterdam, Maastricht, Rotterdam, Utrecht and back to Amsterdam Schiphol throughout the week.   Quick, on time and very efficient.   I wish we had these kinds of trains even regionally in the US.  Granted, Holland is a small country with short distances between metropolitan areas.   The citizens are also motivated by very high fuel prices, which push them to seek public transport as well as old fashioned means of commuting, included bicycles.  Of course, it doesn't hurt that the whole country is flat, making biking an easy business.

While I have been an international traveler for years,  for the past 3-4 years my job has put me mostly in the Americas.   I spent my time in North and South America.   I had not been back to Europe since 2003.  On that basis, returning was like visiting an old friend.   When I was with P&O and later P&O Nedlloyd, I spent considerable time in the UK and on the continent.  At one point I had more friends in England than I did in Atlanta.  In fact I once took a weeks vacation in the UK where I had drinks or a meal with different former colleagues daily.

From a logistics point of view, Europe has always been complex.  Historically, you had different countries, different currencies, different customs regulations and different market constituencies based on geographical location within the European continent.  Today, much of the same complexity remains, but now with different twists.  These include a common currency and customs regulations within most of the EU, but still geographical market pressure based on location, whether eastern or western Europe.

New security regulations governing the EU's Import Control System (ICS) are now burdening shippers whose freight is either destined for European consumption or transiting through Europe to other markets.   Following the US lead,  the EU is now requiring additional information on European shipments.   Both air and ocean carriers are putting surcharges on these shipments in order to cover the administrative cost of governmental reporting.

Russia is continuing to grow as a major market in Europe, but also remains complex due to factors that include high inflation, changing tax and customs codes, and security around product transportation.  One area I am now just learning about is the Pan-European trucking market, whether FTL, LTL or Part load shipments.   This business is somewhat different from the US version.  I have little knowledge of that trade, but one of the nice things about working for a major European logistics player is that we have an extensive network and lots of product expertise to draw from.

I look forward discussing some of these Euro focused topics in more detail soon.  Living in a global economy, its a good idea to understand that regional differences and nuances still exist.  Understanding those differences is critical to understanding and designing global supply chains that work, both physically and culturally.   The goal is still satisfying the end customer, whether he lives in Moscow, Russia or Moscow, Idaho.

I'm off to Beijing on the 27th of February.  I'll have more to post from that trip and more in between. 

Eric

Auburn Tigers: 2011 NATIONAL CHAMPIONS!!!

Ok this is a logistics blog, but not tonight.

 Tonight something incredibly special happened. Auburn University and their football team won the BCS National Championship 22-19.

I am 49 years old and an Auburn grad. We never saw this season coming.  We knew the football team would be good and that recruiting was going well. However, we had not heard of this guy named Cameron Newton.  Same guy who won the Heisman Trophy and lead AU to the SEC Championship and the National Championship. 

   So BIG UPS to Auburn.  And BIG UPS to all Auburn Fans.    Nobody can deny the fact that Auburn can handle the big show.  

I graduated from Auburn in 1984,   I am so proud of our kids.  WAR EAGLE!!!

Eric

 

An Old Dawg Talks about New Tricks. 2011 awaits.

My friend and former colleague Jerry Hempstead spent 32 years in the parcel business.  He "retired"...and I use that term loosely... in 2006.  In the meantime Jerry and his consultancy practice have been busier than most non-retired people I know.   Jerry possesses a passion for people, intellect for our business and street savvy that make him simply fun to be around if you are a freightdawg like me.  

I've been working in this field for 25 years and I learn every time I talk with Jerry.   Below he shares his thoughts for 2011.  This will be a challenging year in rebuilding the global economy.  Logistics players will be challenged across the board, ranging from carriers to 3PL's and forwarders to the integrators.   Nothing is as it was.

_____________________________________________________

I get a lot of what I would call "negative mail". Items that complain about the decisions being made by politicians. The state of the economy, the housing crisis, the dollar, our taxes and so on. Taken without context, its enough to make one depressed.

Today we are on the verge of entering a brand new year. Most who know me, realize right away that I'm an optimist. Just ask me how I'm doing when you call me... you'll know immediately.  I believe that no matter how bad things are,  I have a daily obligation to determine how I will relate to you. I choose to do so positively.

My life's passion is Logistics.   When I think about it and the future, I get excited.   I've been doing this for years, and I remain motivated about our field of endeavor. While I am retired from the firm I served for many years, I remain active in the industry I love as a consultant, enthusiast and confidant of supply chain professionals worldwide.

I'm a parcel guy first and I remain amazed at our postal system. We in the United States have the greatest postal service on the planet. I have lived overseas and can attest that our service is second to none, when you consider that every citizen has the right to home delivery six days a week. The Postal Service is actually one of the few things our Constitution says the government must provide.

The United States Postal Service employs over 500,000 people. Relative to any other postal service, ours is a bargain. $.44 for one to three day service just about anywhere in the USA is amazing. I think its the most complex logistics provider on the planet when you consider all the classes of mail, the number of pieces they handle and the myriad of sizes and shapes they transport.

As weird as it sounds, the USPS is one of the biggest customers of FedEx and UPS. Conversely two of the largest customers of the USPS are FedEx and UPS. I suspect that FedEx Smartpost gives the USPS more parcels today than any other mailer, and Smartpost has been the fastest growing FedEx service.

Two of the largest logistics players in the parcel world are U.S. companies FedEx and UPS. Take a look at how these two firms performed financially in 2010.  Fedex stock rose by 11% year to date and UPS is up 26%. I think between the two there are over 600,000 people employed globally. We can be proud of both these companies and be thankful they are American flag carriers.

I thought about our road system after seeing a television program on how our infrastructure is crumbling and that we are in crisis. I spend a lot of time "on the road", both here and abroad, and I can share with you that with all its faults our interstate and local road systems are the best there is in the world.

I have been on every continent except Antarctica and I can say that we are blessed to have the network we have today. No other country has invested like we have in our roads, with the possible exception of Germany. We have the most available and largest domestic trucking industry in the world and a workforce that for all its issues generally cares for the customer and about their mission in the transport and delivery process.

The United States has more technology, more ports, more rail track and more modern and sophisticated aviation infrastructure than any other country.  We are blessed.

I have had the opportunity to work for over three decades with a group of people who have passion for their work and for building enterprises that offer services that delight customers. I've witnessed incredible, exciting changes over those decades that have increased the speed, visibility and the consistency of the services being offered. Most of all I have shared my life with a community that has a tremendous work ethic and a wonderful sense of camaraderie that the logistics industry seems to engender.

I have made lifelong friends as a result.

So as we enter 2011 let's focus not on what the press is saying about how bad things are, and let's get to work making a difference each and ever day to make the situation better. Even if its just the pride at the end of the day, that you did your best and for those tasks to which you were assigned that day, you made a difference.

Do these Eight things in 2011.  They will not only improve your business, but your life.

1. Make every encounter with your peers, your customers, your family, your friends a positive one. Brighten up a room when you enter and not when you leave. 


2. Make an effort every day to improve yourself. don't let time get wasted away without content. Use the commute to listen to a book on tape, read a book or article, for goodness sake, what you are thinking is important, write an article. This will make you more valuable to your employer or when you might be seeking new employment or a promotion.


3. Dress like you care about how you look. People make judgements based on first impressions. Sorry but that's just life. Always look like you are enjoying the experience...over time you will.


4. Everyone wants to be assured that they are important, worthwhile and accepted. This includes your family and your colleagues. Take the time to send an email or better yet call or speak face to face and tell them they did a good job, or that you really appreciate something they did.  You will make friends for life.


5. Focus on doing the right things, doing them right and not having to do them over. Do everything as if your job depends on it. Have a sense of urgency and a sense of pride in what you produce. Be thankful you have meaningful work and know there are 400 people out these that would love to have your job (no matter how bad you think your job might be).


6. Get involved. if you are in the freight/logistics business you are remiss if you are not at least attending the local roundtable events hosted by CSCMP. There are other inexpensive and or free organizations that will expand your circle of contacts and if you pay attention will increase your knowledge of the business. Organizations like Toastmasters will help you in may ways to improve who you are and how you communicate and also make you some great friends.


7. Know what's going on with federal and local issues that impact your employer and your continued employment. Then get involved. You can communicate for free with your elected officials. Believe it or not,they keep track of what constituents are saying. You can be on the bus or under the bus. Your choice.


8. You are bright, intelligent, articulate, and motivated if you got this far in the article. Take that power and create a mission for yourself for 2011 and then put it on an index card and post it on your bathroom mirror. Make a decision that 2011 is going to be the best year of your life. List those things that are important to you and to which you will actually devote some time and create one or more things on your bucket list to accomplish in this coming year. My wife has always wanted to go to Poland, the land of her fathers ancestors. Number 1 on our list for 2011 is to get to Eastern Europe. What do you think my odds are of getting that accomplished?

Happy New Year

Jerry

SCDigest.com - Parcel Town Hall Redux

Dammit.  Sometimes I wish I didn't travel quite so much. 

I was in Brazil last week when my good friend and former colleague, Jerry Hempstead conducted an online townhall meeting in conjunction with Supply Chain Digest.com.  The online forum was interactive, involving Q&A with a fairly lively audience. I missed the live presentation, but Dan Gilmore alerted me to it.

The topic of the day was the 2011 rate increases for parcel carriers UPS and FedEx, including detailed analysis of both their rate increases as well as dim factor changes that will impact shippers going forward.

Jerry's analysis and candor are always very valuable for shippers, but to be honest, are also instructive to those on the transportation side.  Hempstead spent over 32 years dumpster diving for airway bills.  He knows his subject matter at a level many integrator sales people and executives do not.   For this reason he is highly respected as both famous and infamous. 

Check out this link from scdigest.com to register for free to see the presentation.  I do not normally recommend sites that require registration, but this one is both safe and well worth it.

http://www.scdigest.com/campaigns/On_Demand_Parcel_Rate_Hike_Town_Hall.htm

Incoterms 2011 - Revisions are Coming!

In January, 2011, the international commercial terms (incoterms) will be modified.  These are international trade terms used in determining where title to goods changes hands in a supply chain, amongst other things.  These are defined by the International Chamber of Commerce.  Every few years, these terms are updated to reflect changing trade practices.

Lance Scoular, The Savvy Navigator,  has produced a couple of really nice youtube videos that depict the upcoming changes.   Worth a view.

Part Two is viewable below:

Southwest Airlines: Coming to the ATL!

As a regular passenger on Delta Airlines out of Atlanta, I was super pumped to read that Southwest is purchasing Airtran.  Airtran has built a nice base of operations in Atlanta and is really the only major domestic carrier competition Delta has in this Market.   

Deltas dominance keeps airfares in our market higher than in more contested markets, especially to 2nd tier markets like Columbus Ohio,  Charleston, SC. etc.    Airtran has provided competition but not on the order, service consistency or market reach of Southwest.   For those of us who feel locked in,  now our choices are growing.  This is great news.

Operationally, it will be interesting to see how SWA integrates Airtrans fleet into its all B737 fleet.  Airtran operates both Boeing 717's as well as 737's.   The 717 fleet is relatively new, but I would not be surprised to see SWA liquidate that portion of the Airtran fleet over a near to medium term. 

This acquisition does nothing for the air freight market.  In this regard, I wish Delta had some more international competition, especially on South American routes where it pretty much owns the markets to Brazil, Argentina and Mexico.   Anything that would force Delta to upgrade it's inadequate old 767's on these routes would be a plus.

Airtran has built a competitive, quality discount air carrier.  Adding their talents and assets to the already great Southwest Airlines is a major boon to the Atlanta market and anywhere else served by Airtran. 

Lufthansa MD-11F Crash at Riyadh, Saudi Arabia

On Tuesday, July 27th, 2010, a Lufthansa MD-11 Freighter bound from Frankfurt, Germany to Riyadh, KSA crashed on landing destroying the air frame, however without loss of life.  LH8460 was subsequently scheduled to fly from Riyadh to Sharjah then on to Hong Kong.   Lufthansa only operates the MD-11 as a freighter. 

The MD-11 suffers from a bad reputation given its few numbers built (200 aircraft).   Of the 200 built, now 8 have crashed.   Three of those were FedEx freighters. Compared to other wide body jets this number of crashes is very high.  

Here are some comparisons to other aircraft currently flying.

• MD-11: 8 crashed out of 200
• B744: 3 crashed out of approximately 700 (166 pure freighters built)
• A340: 3 crashed out of approximately 390+
• B777: 1 crashed out of 860+

Previous MD-11 crashes are detailed here.

• 31-JUL-1997 MD-11F N611FE FedEx
• 02-SEP-1998 MD-11 HB-IWF Swissair
• 15-APR-1999 MD-11 HL7373 Korean Air
• 22-AUG-1999 MD-11 B-150 China Airlines
• 17-OCT-1999 MD-11F N581FE FedEx
• 23-MAR-2009 MD-11F N526FE FedEx
• 28-NOV-2009 MD-11F Z-BAV Avient

I'll be honest...if I was a FedEx pilot I'd be working on getting a rating to fly something else.  I have friends who are Delta pilots who "inherited" the MD-11 when DAL purchased other airlines.  There were always complaints that this aircraft was complicated to fly and was less-than-intuitive when it came to systems.  Most were not unhappy to see these birds retired.  

I will say as a passenger, I never liked the MD-11's older sister, the DC-10.  When American had the horrific crash at Chicago ORD many years ago, that crash scared me.   I always flew on the L-1011 because I thought it was a safer bird.   The MD-11 is a derivative of the DC-10. Perhaps the recent crashes are not linked, but as a guy who rides in back...I pay attention.

Lufthansa is still sorting out the freight manifest for this flight and as far as I know, no losses have been formally confirmed to freight forwarders or shippers with freight aboard.  That, I am sure is coming, but so far nothing has been put forward by the airline that I am aware of.

Eric