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

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. 

I left a week ago to go to China for business. What the heck happened with Gas Prices?

I left a week ago to go to China for business. Gas near me in the Atlanta area was $3.10 a gallon at the time. One week later, today...its $3.45 a gallon. Its enough to make one seriously pissed off. I've always suspected the oil companies of price gouging. How can the price of oil go up 1.00 a barrel on Tuesday and have it show up in the price at the pump on Wednesday?

Well, there is apparently a lot more to it that that, though the net effect is about the same. Check this good article out on how gasoline prices work.

http://news.yahoo.com/s/ap/20110307/ap_on_bi_ge/us_pricing_gas

In the meantime, check out one of my favorite sites, gasbuddy.com to find the lowest prices in your area.  For those of you who like me, find Twitter only marginally useful, one of the better ways it can be used is to share immediate gas price changes amongst local peers.

Fuel prices are going to rapidly show up in transportation emergency surcharges and later in the prices of goods.  Look first for these to show in the price of food.   

Somebody settle Libya and the folks in Egypt down because its making my veggies too expensive.

 

Obama 2012 budget lacks Infrastructure for US Ports

Check out this excellent analysis from Maritime Professional, on the Obama administrations 2012 budget as it regards US maritime port and logistics infrastructure.  

Beltway Blunder(s) - and what to do about them...

Joseph Keefe

Feb 16, 2011, 10:01AM EST

The six-year surface transportation spending plan, as a part of the President’s Fiscal 2012 budget request, focuses largely on roads, air and rail improvements. Federal efforts to improve transportation infrastructure continue to ignore the key maritime part of the equation and crime on the docks also takes center stage. If you work on the waterfront, this is your cue to sit up and take notice.

No Ports: No Commerce
As President Obama asks Congress to approve his $556 billion, six-year surface transportation spending plan, he argues that transportation spending will create jobs and thereby strengthen the economy. A key facet of the proposal calls for $8 billion to be spent in the coming year for Obama's intercity passenger rail program and a total of $53 billion over six years. Monday’s U.S. Department of Transportation press release also fleshes out the massive initiative, calling it “targeted investments in safe, efficient transportation that will spur growth. Nowhere in the statement is there any reference to the ports that carry and handle virtually 99 percent of the supply chain’s output.

U.S. Transportation Secretary Ray LaHood, in a prepared statement, said President Obama’s $129 billion budget for the U.S. Department of Transportation, the first year of a comprehensive six-year transportation plan, will lay a new foundation for economic growth and competitiveness by rebuilding the nation’s transportation systems, enabling innovative solutions to transportation challenges and ensuring the highest level of safety for all Americans. The press release also mentions “moving people, goods, and information more quickly and reliably than ever before.”  He then goes on to talks about rebuilding our crumbling roadways and runways, modernizing railways and bus systems, the “high-speed rail lines of America’s future,” repairing bridges and more than 55 separate highway programs. Conspicuously absent from any of that dialogue is any mention of the waterfront.

Maritime Professional - Beltway Blunder(s) - and what to do about them...

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

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:

Selling Products but Delivering Value

This is a post I wrote back in July 2008. Its as true today as it was then. Periodically I like to repost it because I think the message has value. Eric

Imagine that one evening you are relaxing at home watching television, when your spouse frantically tells you the refrigerator has just died. "Turn off that TV! We are going to buy a new refrigerator!" Immediately you set off because you know that food is spoiling. Better hurry! There are spare ribs in that freezer you want to cook on Saturday!

Clearly you are a Motivated Buyer with an Immediate Need.

You show up at the local appliance super center and after some shopping, you find an amazing refrigerator with new features, at a great sale price. Lo and behold! The unit can be delivered tomorrow! You pay for the new refrigerator and return home feeling relieved that a catastrophe has been avoided. Man, you love that super center. How convenient to have them nearby. What a deal! What value! You love Amerika! What a country!

Promises... Promises.

Mrs. Buyer takes half a day off to wait on the "morning" appointment to deliver her new Super Freezo Deluxe. 10...11...12...1pm. No delivery. Finally at 2 o'clock the delivery van shows up. The delivery men are rude and they smell. They suffer from undersized uniforms and over sized bellies. They don't attach the ice maker correctly and they leave the box in the middle of the kitchen. Mrs. Buyer is beyond livid. Boy, are you going to hear about this one. That great deal you got last night now doesn't look so great. You can plan on hearing about this fiasco for years to come. This delivery was a mess.

What happened?

The store sold the perfect product to the perfect buyer. However, in failing to deliver the product as promised, the expected value and goodwill created by the purchase was destroyed. Mrs. Buyer will absolutely tell her friends. Mr. Buyer will also tell his friends at work. He will talk about Mrs. Buyer's unhappiness as much as the delivery issue. Add a multiplier of negativity if they email anybody or post to an on-line forum. Both buyers will be seriously angry with the merchant and will be effusive in sharing that opinion with anybody who will listen for a time approaching the half-life of uranium 235.

"Google will store (and regurgitate) their unhappiness...Forever."

Guess what? The retailer that sold the product had contracted the delivery out to the manufacturer! But then it gets even richer. The delivery itself was contracted out by the manufacturer to a 3PL! The knuckleheads who blew the delivery were not only not from the selling merchant, they weren't even from the manufacturer! Whose reputation got destroyed in this? Certainly it wasn't the manufacturer or the 3PL.  Your receipt only says the name of the super center!

Delivery Failure will destroy all Value ever created by a Sale.

Sales and marketing are mainly about making a promise that your product can satisfy a customer's need. If the customer believes your promise and thinks you have priced your goods relative to his ability to pay, he buys your product. Delivery of the product on time, as promised, fulfills the customer's expectation and creates value. It is value for money that will entice a customer to purchase from you again. It is also what creates brand loyalty. Service above all will create a return customer. In an age where almost all products can be commoditized, it is service delivery that will break through the clutter to create brand equity. That's a supply chain thing as much as a product or pricing issue.

The Best Sales Companies are really Supply Chain Companies.

Companies like Nordstrom, Ritz-Carlton Hotels, and others have created substantial high value brands because not only do they make the promise, they deliver on it. The key is delivery. They have measured the promise they are willing to make, invested in the ability to perform, and then allowed talented employees to execute the fulfillment. 

Nordstrom is famous for allowing customers to return products regardless of whether the product was bought on-line, at a local store, or at a store in another state. Sales personnel are enabled to find products anywhere in the network and ship them to customers or to their store as needed. It's all about satisfying the buying experience. What enables that experience is having the supply chain systems and product visibility to execute. If you are more convenient to buy from you will get the business.

Decision empowered employees, with visibility to inventory available to sell, and the supply chain tactics to get the product to a customer will find themselves competing on the basis of customer satisfaction rather than price alone. In the mind of the customer, when the promise becomes an expectation, you have created brand equity.

Here is the real Secret: It's not really about selling.  It's about delivering service, goods, and experience to create value. If you can't deliver, you can't convert concepts to cash.

Five First Steps to controlling Branded Delivery

Make a Promise you can Keep - Many new companies underestimate the delivery requirements of their customers and find themselves with an inability to quickly get product to market. Businesses with perishable goods like the floral industry understand this only too well. Nothing is as perishable as money. If you promise next-day or 2^nd day delivery, select carriers who can get it there on time and work with 3PL's and warehouse operations that can execute same day outbound order turns.

Take Control of Transportation - New companies will often allow more experienced vendors to control delivery of products on either a drop ship basis or through a third party agent. You will find you can negotiate better terms with carriers and find more flexible delivery scenarios by controlling the freight yourself. Vendors often mark up transportation as an additional hidden revenue stream. Put that money in your own pocket.

Choose your vendors and carriers wisely - Insist that they provide you with on-line visibility to where your goods are in transit, whether inbound to your distribution center or outbound to your customer. Most carriers can provide online tracking for free. Also ask your carriers about hybrid delivery schemes that may combine long haul transportation with parcel distribution for the final mile.  Make measurable standards, and the tools to do the measuring,  part of your contract!

Outsourcing is a completely valid option, but hold service providers and carriers to the same standards you would hold your own employees. Use quarterly business reviews as a way to impart lessons learned to the 3PL at the same time you teach your own team. The 3PL is in fact an extension of your company in the eyes of the customer. The biggest reasons 3PL relationships fail is a failure to define and measure specific goals. If metrics aren't defined early, scope creep can enter into the relationship and soon, what the 3PL is asked to deliver isn't the same as what the contract called for. That's never a recipe for a happy family.

Empower your Employees - Allow your customer facing employees to make decisions to satisfy customers. Whether that means replacement of a product, providing credits for returns, or helping them choose alternatives when goods are not available, make your sales and customer service people "powerful" in satisfying customer needs. Allow them to fulfill the promise your marketing has put forward. You'll find this creates great company morale as well as satisfies your customer.

Eric

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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

Already Gone...

I've been in a rail fan kind of mood lately and reloaded Microsoft Train Simulator on my PC.  This is an old sim from almost 10 years ago, but being a transportation geek, I enjoy virtually moving trains around, especially Double Stack Trains and the old F and E unit car body locomotives... However, this is a French Duplex high speed train.  Speed to BURN baby.

That looks pretty cool...but this is a game. Check this video out. This is the real deal absolutely screaming across France.

Here's another video that compares the French TGV against the Japanese Shinkansen.  I've had the pleasure several times of riding the Japanese bullet trains.  They are fabulous.

And yes, I have a fairly current gaming computer.  I get over 50 frames per second in this old sim.

CSCMP Releases 2010 State of Logistics Report

Sponsored by Penske Logistics, the Council of Supply Chain Management Professionsl (CSMP) released their 2010 state of the logistics industry.

Check out this video with Rosalyn Wilson, author of the report.

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The 21^st Annual “State of Logistics Report^®,” released by the Council of Supply Chain Management Professionals (CSCMP) and presented by Penske Logistics, reveals that, continuing the decline reported in 2008, business logistics costs fell to 7.7 percent of U.S. Gross Domestic Product (GDP) in 2009, as compared to 9.3 percent the previous year.  Total U.S. logistics costs dropped again last year showing a significant decrease from 2008.  Interest rates remained historically low, and this, combined with lower inventory levels, pushed the interest paid on inventories down over 89 percent from 2008 levels. 

 The report, authored by Rosalyn Wilson, a transportation consultant for Delcan Corporation, was presented today at the National Press Club in Washington, DC. A panel of senior supply chain executives and academics from BNSF Railway, Covidien, Delcan Corporation, Jones Lang LaSalle, Miami University (Ohio), Penske Logistics, Staples, and Sustainable SC Consulting discussed the implications of the report’s findings on their companies, the logistics industry, and on the economy as it recovers.

via state-of-logistics.presslift.com

C&W comments on Commercial Property Trends

Cushman & Wakefield are global commercial real estate brokers specializing in commercial real estate space.  Their interests in both commercial office space and warehouses are substantial.  As a result, C&W have produced an interesting white paper that documents trends in commercial warehouse space in both the Americas and globally.  

Interesting findings include:

• Global industrial rents declined by an average of 5.5% in 2009
• While the Asia Pacific region saw the largest decline in rents (-6.4%), it is also the first to show signs of stabilizing due to an up tick in exports and rise in production
• Ottawa now replaces San Francisco as the most expensive city for industrial space in the Americas
• In the US, an increase in consolidation has caused a trickle down effect including an increase in supply of space and a downward pressure on rental rates
• Upturn in domestic consumption and regional trade will be the determining factors in the strength of recovery in occupational demand

The global info in the C&W white paper didn't surprise me.  However, some of the trends in the Americas were of interest. In particular the expense of commercial property in Canada and Mexico.  Both are growing markets, but the cost of commercial buildings surprised me given the downturn in the global economy.

Download the white paper here.

Eric

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