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

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"Taking Chance": HBO's most poignant logistics story

In 2008,  I wrote an article that appears below that gave some insight into the care and integrity that our military puts into the transportation and return home of our fallen soldiers.  That story was about an an Army sergeant named Robert Joe Montgomery. 

I was reminded of this article this past Sunday night when HBO aired a TV movie called "Taking Chance", starring Kevin Bacon.   It is about the death of a US Marine Corps PFC named Chance R. Phelps, from Dubois Wyoming and the Marine Lt. Colonel, Michael Strobl, who escorts him home.  PFC. Phelps died as a result of enemy fire in 2004.  

The movie is based on the story of moving Chance from Iraq back home to his hometown of Dubois, Wyoming and the lives he touched even in death, especially his escort, Lt. Col. Strobl, who did not know Chance Phelps, but was forever touched by him.   Its a story all Americans should watch and understand. 

This was a great movie. I recommend it to everyone.  If you have HBO, and missed the first airing on Feb 21, check here for future viewings.

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Tears of Transport: Fallen Soldiers - April 8th, 2008

I got an email recently from a friend who works for the Journal of Commerce. He brought an article to my attention that he thought readers here might be interested in. Chris Jones of Esquire magazine  has written a truly amazing article on the handling and tender care given to the remains of our soldiers, sailors, marines and airmen who are killed in Iraq and Afghanistan. This is the most tender and careful transport chain there is. It is about the logistical care given to a fallen soldier as his body is returned to his family.

Chris Jones article is entitled "The Things that Carried Him". It is about the death of United States Army Sergeant Robert Joe Montgomery Jr. of Springfield, Indiana and the transportation of Joey's body back home to his family.  The article is a poignant reflection of the care that the military gives it's dead and the pain that these deaths bring to families, the caregivers and communities.

For many years, the bodies of deceased military men and women were carried by commercial air carriers. Today however the bodies are carried (by law) on either military aircraft or military charters. An honor guard and a general officer meet each arriving aircraft. A general officer also attends every funeral of an Iraq or Afghanistan military casualty.

My own son is 21 years old. His best friend Ben is in Afghanistan now. Ben is a kid who is like my own. He has eaten more pizza and spent more nights here than I care to think about.  Clint and Ben have known each other since they were 3 years old.  Ben's Mom and Dad are godparents to our other kids. I pray everyday that his family (and ours) never has to be the recipient of the delivery this transport chain provides.

God Bless Joey Montgomery and all the other American heroes like him.  Rest in Peace.

Eric

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Perspective...

Last night I watched "60 Minutes"

It's an American television documentary-news show. They had a  piece that chronicled the hardship of the town of Wilmington, Ohio relative to the withdrawal and shut down of DHL Express US domestic service. 

The impact of DHL's service changes has had clear impact on this small town and southwestern Ohio as well.   While it's indicative of the hardship Americans are facing with the current economy, it's not the only company nor community that's hurting.  Taking our whole country into account, we are hurting in many areas.  

Here's just a short list of companies who have laid off employees.

• Sprint Nextel = 8,000 jobs
• Caterpillar = 20,000 jobs
• Home Depot = 7,000 jobs
• Microsoft = 5,000 jobs
• Washington Mutual = 3,000 jobs
• Starbucks = 2,000 jobs 
• Circuit City = 35,000 jobs
• General Motors = 2,000 jobs

Thats 82,000 American workers without even talking about the Automotive Industry.

That's NOWHERE near an exhaustive list!!   But the numbers are scary when you start adding them up. My 21 year old daughter was delighted to get a hostess job at an upper end restaurant today.  She commented that there were a lot of "clearly professional" people applying for the same job.  Times are HARD and a job is a job.  That lesson (surprisingly) wasn't lost on my kid. 

Even Google has laid off 100 recruiters. Google is still in growth mode, but perhaps it may take a pause in gaining new geniuses.  It may have enough for now.

The total personnel reduction at DHL will be over 20,000 folks as the company reconfigures to "International only" service.   However, a few things can be said. DHL never asked for a federal subsidy nor bail out.   Second, we never asked our customers to pay extra for our services in the face of difficulty.  Lastly, Deutsche Post put up serious money to assist outgoing employees with both job retraining and economic welfare.

The clear deal here is that DHL will focus on its core products and match its capacity to individual markets. To do anything else would not be smart.  

 I used to tell my customers back in the 1980's that "if you can't sell it, I can't ship it."  That saying is truer now than ever.  Let it be said that I am not an apologist for DHL.   I am a participant in the current economic adventure. 

Nobodys job is safe these days.  Mine included. 

Eric

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So Much for Freedom of the Open Road!

Truck drivers have always been an independent breed.

These are folks who prefer the freedom of time and distance in delivering freight on schedule.  Drivers are independent thinkers who are free to choose their lifestyle. Truck driving is an art mostly.

Between the distances demanded every day and the limits of how many hours a driver can drive, it becomes a stress factor for drivers to balance being legal vs being on time.

Over the years, technology has become available that helped track the efficiency within which goods were delivered by truck.  These included tracking driver hours, stops, GPS position, etc.

I recently had email from Steve Hensley, CEO of BlueSky Logistics on a new software package that tracks both driver and truckload behavior.  Steve was rightly highly pumped about the efficiency that this package creates for trucking operations.

I think this is great for performance measuring, but I wonder if the allure of the open road is now lost on the free spirits who used to choose this occupation?  I mean, lets face it...with this software a movie like Smoky and the Bandit could never have been made! 

Some of the stuff the new Bluesky technology tracks...

· Road segment by segment speeding.  With Google mapping.

· Unknown / unauthorized stops.

· Overages, Shortages and Damages.

· Later deliveries and late delivery notifications to a customer portal.

· Route tracking details.

· DOT violations.

· Over revs.

· Idle Time and excess idle time.

· Out of route mileage.

· Mile Per Gallon.

· On-time performance.

And all of this can be looked at by:

· Site

· Account

· Driver

· Driver Groups

· Vehicle

· Vehicle Groups

· Date ranges, including trending.

· And several other exception based parameter

Gone with the wind...

In the 1980's, when I lived in Charlotte NC, it used to be fairly common that inbound containers were delayed because of "flat tires" in Holly Hill SC.   Turned out that there was a "pleasure stop" located in Holly Hill.   This new software could do wonders to curb creative use of hardware.

Eric

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Yoram Bauman: The Standup Economist

A lot of the posts I've written lately have been about the hard economic times both the global economy faces as well as its derivative impact on logistics and supply chain.  This includes both the movement of freight as well as its impact on supply chain professionals in all categories.  

Now, just for fun,  I include the video below which is done by a real smart guy named Yoram Bauman.  Yoram is a PhD real economist who who has a heck of an ability to make this whole economics thing easier to understand for us freight sales types.  Check it out.

President Obama should probably name this guy to his happy-go-lucky staff as a diversity plus.

Dr. Bauman has a number of other routines worth watching as well!

Eric

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Happy New Year My Brethren.

Today is New Years Day 2009.  For we logistics and supply chain folks, we concluded a very tough year in 2008.  Lay offs, ships laid up, divisions closed, salaries and benefits cut,  all in the name of making the business fit the market. 

More transportation and logistics folks got laid off this year than in any time I can remember since the container shipping business melted down in the mid 1980's.  It used to be that kids with degrees from Ivy league schools wanted to join international transportation companies.   That hasn't happened in a very long time.  Lets just say my son will be applying to law school this spring and nobody I know of in his age group is even considering our industry. 

Normally I'm very optimistic at the new year.  New budgets, new RFQ's and customer bids, generally a new chance at business and at life.  I think this is a season and a time over the next couple of years, where the business veterans will leverage their experience to make things work.  Hard times will distinguish whats "real and whats Memorex".

There is an Opportunity Here. 

Shippers are looking to avoid the same pitfalls we are.   Moving goods "fast for cheap" has always been the goal, but more than ever, I see my clients looking for solutions.  These are the fruits of our experience. What modes best fit the customer's client need?

More than ever, I find myself thinking about my customers customer. What promise has been made in terms of service delivery?    Are there other ways to accomplish the same thing with perhaps a day or two later delivery at a lower cost? Are there alternative origins where rates may be more advantageous?

I also spend more and more time with my customers international trade compliance team. Today, Compliance folks route freight. Being compliant with ever strengthening regulations in the United States and abroad gives these folks both clout and legitimate business influence. Being conversant in customs regulations and trends is something that I've had to work on. However it's made me an asset to my customers, which ultimately means my company and our relationship has more value beyond a simple freight rate.

There is a proverb which is said to be of Chinese origin. "May you live in Interesting Times".  I used to think this was a blessing until a great friend of mine told me that this is actually a curse.  I truly believe we live in times that will be very interesting in the next 2-4 years.  

Having said that, and since I borrowed my wifes ipod while writing this, I share also one of my favorite REM songs (daysleeper) which I think fits the mood.

God Bless everyone in our industry.  This will be a hard year.  Having said that, I look forward to making opportunities out of challenges.  We all have no choice!

Eric

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A Tangled Web for Christmas This Year

For years I have told my customers that as a carrier,  we were more of a part of each others business than either truly appreciated.   In fact, I used to say, "If you can't sell it, I can't ship it".

Nowhere is that saying more apparent than in today's retail market. Even in this holiday peak season, parcel volumes are well down.  DHL is quickly leaving the US domestic (only) market, yet FedEx and UPS are not full because major online shippers are not hitting the sales volumes of years past.

DHL has been well publicized (and criticized) for it's restructuring efforts in the US parcel trades, but this week FedEx announced salary reductions and changes in bonus and benefits structures that will hurt their exempt employees all the way up to Fred Smith, CEO of FedEx.   These are tough times that hurt everybody.

There are parcel aircraft that were flying last year that are sitting in the desert this season because of lack of volume.

However, the US and global economic downturn extends to all facets of business.    The US government is struggling to figure out how to bale out the US automakers, whilst other industries including high tech and manufacturing firms are turning away from parcel and air freight and more toward slower, extended modes of transport like ocean.  I know that every time I talk about LCL or any deferred freight product, my customers perk up considerably.  While shippers struggle to figure out how to deal with this economy, carriers are doing what would seem crazy 12 months ago. 

These include:

• Maersk Line laying up ships to reduce available capacity.   These are capital assets which are of greater value not earning any money than incurring any costs. 
• APL announced lay offs of up to 1000 employees and a probable change of headquarters addresses away from expensive but historically significant, Oakland, California. (now announced as moving to Phoenix!)
• DHL announced and is in progress of withdrawing from the US parcel business, whilst keeping traditional US international services.  The cost to serve is just too expensive.  This was accompanied by lay offs of a major portion of the US company in resizing the business.  
• FedEx announcing salary reductions for exempt employees as well as senior executives.  A hiring freeze.  Reductions in 401K benefits for a period up to a year as well as other bonus and compensation reductions.  I will say that this decision probably saves FedEx from firing people at least near term.
• Numerous commercial passenger and air freight airlines have either restructured or shut down capacity on key lanes.  This drives up cost to shippers and limits options on multiple lanes within major markets.

This is just part of a longer list, but these are major, global transportation companies whose employees are feeling (directly) the pinch of "If you can't sell it, I can't ship it".  That's not to blame anybody, its to highlight the fact that all of us work in a tightly woven, interconnected global market place.  

I don't have a recipe for a cure here, but I will say that smart managers are reacting to tough times both authoritatively and probably too severely, but only hindsight will tell that.    In the meantime, families of employees of many transportation companies this year will have a leaner Christmas than in years past.  They will share that experience with the families of their customers.   

Perhaps that will create a bond for discussion in the new year. The US government will have new leadership in late January that appears motivated to do "something" toward economic stimulus.   Transportation infrastructure will be a key part of that package if the new team is wise enough to realize it.

In the meantime, we all better buckle our seatbelts for a long ride. I ask that you pray for peace and your fellow man harder than ever this year.  Many, many families will need it.

Merry Christmas and Happy Holidays

Eric

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Far afield: The Dangers of Far flung International Operations

 I don't talk about my employer a lot, but I'm proud to work for DHL.

We have global operations in over 220 countries worldwide. Usually when I say that, it's in the context of telling customers that we can get their goods from one point to another worldwide. That's an abstract concept generally because most people haven't been to the far corners of the earth. Its an abstract concept to me too. I'm pretty well traveled, but I haven't been to all of the "high risk" parts of our global operations.

DHL has always had extensive operations in the Middle East. On Saturday, October 25th, the risks of working in this environment became very real. Two DHL Express executives were murdered in downtown Kabul, Afghanistan by a security guard hired to protect them.

David Giles of Great Britain was deputy director for DHL Afghanistan. David died in the company of Jason Bresler from South Africa, who was the Kabul station manager. The security guard, who had been a DHL employee for a month, took his own life as well.  Somewhere now, three mothers grieve.

Folks forget that shipping is an art. Getting goods from point A to point B across the globe engages challenges with weather, politics, time, machinery reliability, human frailty and many other factors.  Much of that hasn't changed since man first set out upon the seas.  Nevertheless, demands are made to track packages, send data to ERP systems and feed databases. In the quest to do just that, people in far away lands do many things to satisfy customer and company needs.  In every country on every continent, there are guys like David and Jason, doing the job. 

DHL is the only express parcel company with an office in Kabul. 

Eric

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Port of Lazaro Cardenas, a Southern Alternative

Best of Freightdawg.com Article

Alternative ports both north and south of the US borders have taken on increasingly important roles as carriers add these ports to vessel strings in the transpac trade.   This article was published back in December 2007 but is more relevant now more than ever.

The other day I wrote about the Port of Prince Rupert, BC in western Canada.  Prince Rupert Island is positioned ideally as a natural northern alternative to congested US west coast ports. The combination of Prince Ruperts location plus speedy Canadian National Railroad connections across the top of North America can get shipments from Asia to the US heartland in record times.   That article also mentioned the development of port facilities in Mexico as possible alternatives.   The Port of Lazaro Cardenas, located on Mexico's west coast in the state of Michoacán is one worth considering.

The port of Lazaro Cardenas as well as the port of Manzanillo are both on Mexico's west coast.   Lazaro Cardenas is smaller, but has a key asset in that the on dock rail facilities are provided by Kansas City Southern de Mexico S.A. de C.V..    KCSM is a subsidiary of American railroad, Kansas City Southern.    That linkage gives Lazaro Cardenas on-dock intermodal links directly into the southern US as well as the shortest route to Mexico City.

Kansas City Southern purchased controlling interest in Transportacion Ferroviaria Mexicana (TFM) in April of 2005, enabling TFM, KCS and The Texas Mexican Railway Company to operate under common leadership, creating a single, 1300 mile rail system connecting the Midwestern United States, central Mexico and Mexico’s Pacific seaports.  KCS also makes connections to other US Railroads. One example would be delivery on the 7th morning into Atlanta from Lazaro Cardenas via a connection with Norfolk Southern.

The LCT Terminal was developed and managed by major international terminal operator, Hutchison Port Holdings.  That means the port is managed by experienced, professional terminal operations managers, and has the latest in terminal facilities.   LCT also offers a dedicated customs inspection area for railroad, truck and reefer cargo. 

Lazaro Cardenas is expected to handle over 2 million TEU's a year with future expansions.  LCT's deep water harbor features a natural 59 foot draft, capable of handling the most modern transpacific containerships.

Lazaro Cardenas Terminal is equipped with the latest in security technology, using pre-screening methods and advanced manifesting to alert both US and Mexican customs on the details of imported goods transiting the port.  New rules by Mexican customs authorities allow US importers to post a single $55,000 continuous bond for goods transiting Lazaro Cardenas for the US.  This move alone allows for significant savings over importation through LA or Long Beach.    Shippers also do not have to pay US harbor maintenance taxes for movement via Mexican ports.

Currently there are five shipping lines calling at the port of Lazaro Cardenas.  Maersk Line, NYK Line, COSCO, Evergreen and APL, with more to follow.   

Carrier strategies in vessel rotations can include LCT as a port call on a West Coast US String, as a port call on a West Coast South American rotation, as a first port of call prior to Panama Canal transit to the US East Coast, or as a connection to feeders for movement throughout Latin America.

With economies becoming global and international supply chain growth, use of alternative ports will become both economically and environmentally critical to the efficient movement of goods.   US West Coast ports will continue to grow, but alternatives provide not only a needed check valve to expansion pressures, but new jobs where there were few before. Those jobs will be true, new jobs, not ones taken from other markets.

Eric

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Economic Downturn Spells reduction in Container Capacity

Everybody expected that the airlines would reduce capacity this fall.  They have been saying this for months. Shippers planned for it.  I'm less sure however of how many US importers expected a reduction in container ship capacity.  The US and global economic downturn definitely has taken a toll on ocean carriers. They've just been a bit less visible in terms of planning for the crisis at hand.  

APL has now announced a reduction in capacity in its east-west trades between Asia, the US and Europe.   This is not surprising given the reduced demand created by the weakening in consumer confidence as well as fuel volatility particularly in the North American market place.  It also does not surprise me since APL CEO Ron Widdows is an operations guy.   He thinks in terms of ships and capacity.

What APL doesn't say is what they will do with their ships.  Containership capacity doesn't just "go away".  It gets laid up.  APL has made a calculated decision that ship capacity is cheaper being parked than moving freight.  Don't expect APL to be the first to make this decision either.  Consortium partners will naturally have to consider the impact, not only of APL's decision, but whether they themselves should also consider parking some tonnage to wait out the storm.   

Maersk, Evergreen and major Japanese carriers no doubt will be considering this as well even within their own homogenous, but huge fleets of container vessels.  The goal is matching market capacity against shippers ability to pay the highest rate that can be negotiated.  If ships are not available, rates go UP. Carriers are betting on this with fleet reductions. Much of it however is a reflection of re-balancing of trade. Ships follow the business. Current economic pressures will squeeze new origins and port pairs. APL is being very smart in waiting to see how this all balances out.

APL slashes capacity on major trade lanes Updated October 21, 2008 9:14:52 AM Peter T. Leach / The JOURNAL of COMMERCE ONLINE Today APL announced it is slashing vessel capacity on the major east-west shipping lanes and restructuring its network in response to what it called "increasingly challenging conditions in the major container trades". The subsidiary of Singapore-based Neptune Orient Lines, and the eighth-largest global liner company, said the capacity reductions would amount to 25 percent on the Asia-Europe trade and 20 percent on the trans-Pacific. "The traditional seasonal softening of demand in the main container trades has been compounded by the global financial crisis and economic slowdown," said APL President Eng Aik Meng. On the trans-Pacific trade between Asia and North America, APL already has suspended the PS3 (Pacific South Express 3) service. To cover the loss, it has upsized the PCX (Pacific China Express) service and revised its port rotation as follows: Ningbo, Yangshan, Kwanyang, Pusan, Long Beach, Oakland, Pusan, Kwanyang, Ningbo. The liner operator also has suspended the PSW (Pacific South West) service. In light of this change, the SAX (South Asia Express) service now makes additional calls at Yantian and Chiwan. The revised SAX rotation is: Singapore, Yantian, Chiwan, Singapore, Kaohsiung, Chiwan, and Singapore. The PCE (Pacific Coast Express) is omitting calls at Xingang and Nagoya, but includes an additional Pusan call in the eastbound direction. Revised coverage is Qingdao, Pusan, Yokohama, Singapore, Oakland, Dutch Harbor, Yokohama, Pusan, and Qingdao.

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