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

Busy Week

This has been an interesting first two days of the week.  On Monday, June 21st,  I attended the graduation of a cousin of mine from the United States Merchant Marine Academy at Kings Point, NY.

Kings Point cranks out experienced young people with more sea time than any other Maritime academy including Annapolis.   It was my first time to KP.  What an impressive place.  With a motto of "Acta non Verba" (Action, Not Words),  The USMMA trains young people who are ready for the operational end of our industry.  

The graduating class of 2009 was composed of only about 150 graduates.  However among them were an impressive number of young women. In fact the valedictorian of the class as well as the class president were both female, one of which was matriculating with a degree in intermodal logistics.   It's not unusual to find that the senior management of shipping companies, terminal operators and related firms all have Kings Point grads at or near the top.

My cousin will go directly to a destroyer based in Yokosuka, Japan for active duty with the Navy.   Given the crazies in North Korea, I worry our young man will be in Harms Way, sooner rather than later.

Kings Point is a small school, but they usually draw important visitors.   The kids graduating Monday received commissions from the Army, Navy, Marines, Air Force and Coast Guard.  In almost every case, there was a flag or general officer present to commission the new ensigns and lieutenants.    The graduation keynote speaker was US Secretary of Transportation Ray LaHood.   LaHood is a career politician and Obama appointee new to his job.  As a result his comments were brief.   However, he did report that the 2010 federal budget would contain approximately 12 million dollars for KP to maintain and renovate facilities.   With that being the extent of his salient comments, I'm not sure what that means for our transportation department!

Flying back to Atlanta from New York wasn't without tribulation.   Having spent 20 minutes in a holding pattern over Greenville SC,  the rocket scientists at Air Traffic Control diverted our Delta MD-88 to Birmingham for fuel.   We sat there for an hour, before being vectored back to the ATL.   Total flight time from NY to ATL: 8 Hours.  That one made me wish our Secretary of Transportation could be aboard.  No such luck.  Guys at his level fly in private jets!

Eyefortransport 3PL Summit, Atlanta Georgia

On Tuesday,  I attended the Eyefortransport 3PL Summit here in Atlanta.  I'm on the board of the American Society of Transportation & Logistics, so I was asked if I would attend if given a free ticket.   I've attended various eyefortransport events over the years including events in Hong Kong and Amsterdam.  They are usually well attended by important folks on both the 3PL and customer sides of the fence.  Not so much this year.    Only about 145 people attended.   I suppose this is a result of the tight travel and entertainment budgets most firms have in place today.   Nobody has the extra cash to attend a business conference.    That would have been the case with me, but I live in Atlanta and the ticket was free!

On the whole the conference was valuable, with keynote speakers from Maersk Logistics (soon to be Damco), MeadWestVaco and other firms, subjects like compliance and risk management were discussed and presented.  These conferences are about people however.  It takes a quorum of industry professionals sharing their knowledge that keeps these things interesting and valuable.   In this regard I think EFT missed the mark this year.   For the most part I think that's not their fault.   In case you haven't noticed...the economy sucks.

In Obamaland All You Need Is The Willing Suspension Of Disbelief

Some people are just pathologically honest.  Check out the blog article written by my friend Mike Regan of Tranzact Technologies.   Mike calls em like he sees em.   I typically agree with his positions.  Check out his excellent article today at Logistics Managements web site.  Mike is a Chicagoan and highly familiar with the ways of our President.  Given that our SecTrans is also a Illinois career politician, some comments apply to Ray LaHood as well.

Eric

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Railroad Security: CSX Leads with SecureNOW

One hundred years ago, railroad police were mostly focused on the security of railyards, preventing robberies of trains en route and keeping "non paying" passengers off their trains.  Today,  while many of those responsibilities remain,  the job of keeping the rails secure has multiplied many fold, especially since 9/11.   

Today,  rail operations and security teams must not only protect rail assets and the public, they must defend against unknown and unseen threats from terrorists.     After 9/11, the rail industry established industry standards for rail security and the sharing and reporting of threats.   The key mantra of that initiative was "Recognize, Record and Report". CSX has taken that industry standard and built upon it.

As a class 1 railroad, CSX operates 1000 trains a day over 21000 miles of track.   If it moves from Chicago eastward in the United States, there's a good chance its moving on a CSX train.  To protect the rail  network, CSX has developed a web based workstation application called SecureNOW.  SecureNOW stands for Secure Network Operations Workstation. 

Using SecureNOW, rail operations teams can see, in real time, the location of every train and every rail shipment on the CSX network.   Further, they can isolate hazmat shipments within the train consist to determine geographic location, shipment details, rail car type and class as well as hazmat emergency information.   

SecureNOW also uses GoogleMaps type technology to allow zoom in geographic mapping to allow operations teams to see exactly where a rail car is relative to cities, towns, shipper plants and  facilities etc.     Suppose there is a fire at a shipper rail facility.  Also suppose that there is a tank car of hazardous toluene on the rail siding.    CSX can immediately see where that car is located and report the threat to local fire and police authorities.

  The beauty of SecureNOW is that this system is designed to share information.   CSX has made it available to state and federal authorities in many states with intent to share with all agencies across its network.  For law enforcement authorities this is great technology for understanding both potential and actual risk in their communities.   The railroad has SecureNOW active in 5 states within the CSX network

Future versions of SecureNOW will allow display of information on intermodal and ocean containers.  With the TSA focused on 10+2 and other information transparency initiatives, the railroads will have to develop this capability in order to show hazardous or high risk shipments within ocean containers.  For doublestack train consists, the ocean carrier is the shipper of record as far as the railroad is concerned, but the manifest for the container and shipping information will need to be available to systems like SecureNOW in due course.

 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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CSX Trip: Windy City Follow Up!

On October 7th, I and a number of other bloggers had a unique chance to visit with CSX Railroad management in Chicago. CSX invited a number of social media folks to come to Chicago to see their newest genset locomotive technology, as well as to provide access to CSX's communications and operations staffs.   About 15 people from sites such as Ars Technica, mattgoesgreen.com, ecollo.com, travel, trains and other things and others visited the CSXT intermodal railyard and got schooled on both Chicago local operations and how railroads work. I was the only logistics geek there, but that's good for freightdawg.com!

CSX is spending considerable money on establishing their brand and their mode of transportation as an efficient and eco-friendly way to transport goods.   That's not a touchy-feely thing as much as a solid approach to new media as part of a multi-media advertising campaign.  CSX advertisements directly claim that rail transportation is an efficient and environmentally friendly way to move goods.

By inviting professional and industry related bloggers to come see for themselves, CSX is underscoring their branding while providing legitimacy to their environmental investments.    Bloggers are usually good at unvarnished opinion. CSX has provided key bloggers with direct access to their communications teams for information when needed, as well as taking influential bloggers on site to see how the business operates.   This a very sophisticated approach for an old school transport mode and shows tremendous understanding of how Internet social media works.

Check out this link to mattgoesgreen.com and the pics and video Matt Trachtenberg took.    Personally, I got to meet some new and very smart people who are covering the Green side of business today. A very nice way to spend 2 days of vacation time!

Eric

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Supply Chain and Food Trading: AJC International

This article is about a story I have personally observed for over 35 years.   It is a story about my Dad and his company. Eric J. Joiner, Sr. is vice chairman of AJC International. 

Founded in 1973, AJC is a food trading company whose business has grown from 3 guys in a small office to a billion dollar company with a dominant position in the international trading of protein products. With headquarters in Atlanta, Georgia, today AJC has 11 offices located all over the world and does business in over 140 countries.

Proteins consist primarily of frozen poultry, but beef, pork and other products are also traded. Key markets include Europe, China and Russia. Emerging markets such as India and Africa are targets but lack the cold chain infrastructure to support the demand.

Check out this podcast!

Recently Dad did a radio interview with a local Atlanta radio station.  The content of that interview can be listened to here.   

The interview is potentially interesting to the freightdawg.com audience because not only did the company founders come from transportation backgrounds but the key competitive differentiators for AJC today are in supply chain.   

Trading companies are fundamentally supply chain based.   This interview gives some excellent insight into that fact.  It also discusses the current international environment that trading companies must deal with.

For those who are interested in entering the international food trading environment for a career, significant insight is given on how these markets work and the personal prerequisites needed.

Eric

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Ike Spikes Class 1 Railroads

Hurricane Ike, which ripped the Texas coast over the weekend blew inland and has caused numerous problems with Class 1 rail lines running throughout Texas, Oklahoma and Louisiana.

BNSF, KCS, NS and UP all had rail lines impacted by flooding and wind blown debris. Intermodal traffic headed eastbound is likely to be delayed as much as 48 hours.

clipped from www.progressiverailroading.com Ike wreaks havoc with four Class Is' operations Like Hurricane Gustav two weeks before it, Hurricane Ike left an imprint on rail infrastructure along the U.S. Gulf Coast. After hammering large portions of Texas and some parts of Louisiana over the weekend, the storm prompted Kansas City Southern to close segments of its mainline between Dallas, and Vicksburg, Miss., because of floodwaters, damage and debris. Prior to the hurricane, KCS embargoed traffic for Beaumont and Port Arthur, Texas, including interchanges with Union Pacific Railroad and BNSF Railway Co. in Beaumont, and UP in Port Arthur. KCS also issued traffic embargoes in other parts of Texas. UP also shut down portions of a line between Dallas and Shreveport, La., because of signal outages and numerous fallen trees lying across tracks. The Class has suspended all operations into and out of Houston, which was pummeled by the storm. Because of KCS' and UP's line closures, Norfolk Southern Railway issued an alert to intermodal customers to expect transit delays from 24 to 48 hours on traffic moving between Atlanta, Shreveport, Dallas and Los Angeles.

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Big Boxes bring Big Questions

Thoughts about APL's new 53 ft. ocean containers

I spent part of the weekend thinking about APL's new 53 foot ocean containers. These new containers should be a major boon to US retail importers.   However, I also had several questions about their operational practicality.  In writing these down however, I realized that these same questions applied back in the last century when APL introduced the 45 footer.  Given today's challenges with port congestion, pollution and a weak dollar, these questions still seem relevant.

How will the Big Box 53's impact Decon Operations in So Cal?

One of the advantages of APL's new 53 foot containers is the possibily of skipping deconsolidation / transload facilities in Southern California while still retaining transportation efficiency.  New Balance and Toys R Us were the first to try the new containers on the South China to Los Angeles tradelane.  Footwear and toys are nice cube cargoes. While this increases speed for these customers, the value may not translate equally for all retailers.  Importers who can create pre-distribution lists while the cargo is still in Asia can take advantage of the savings created by skipping the deconsolidation step.  Unfortunately many retailers still have order systems that can only allocate goods to the stores once it is received into a warehouse.

Deconsolidation still allows merge-in-transit, value added services such as kitting and other product manipulation opportunities. Transload/Decon is not going away. However, the customer base that will use it will become smaller and transportation efficiency won't be as much of a key selling factor because 53 ft containers will be a potential alternative.

In order to be used in ocean transport these new boxes are said to be stronger than the 53 ft units used in US domestic commerce. What do these new boxes weigh?  Does the additional box strength come with a premium on additional weight?

Will the new containers require new chassis?  How will that chassis fleet compete with land at the already congested west coast ports?   When 45's were introduced,  sliding chassis that could be extended to 45 feet came into use.  This is a very economical solution.   What I don't know is will a sliding chassis work with a 53 ft ocean container that is heavier than its domestic cousin?  JB Hunt and others who use all steel domestic 53's use a fixed 53 ft. chassis.  Those new chassis may require additional investment by the line, and will have a footprint of their own on ocean terminals.

53 ft. containers work beautifully for import cargoes from Asia, where the goods are volumetric. However, how is APL going to manage the back haul to Asia?  US Exports tend to be raw materials such as chemicals, paperboard, lumber, clay, etc.  These are dense materials not suited to these big boxes. Will APL be building the cost of the back haul into the head haul? If so, the economics could be offset in premium rates.

How long before Maersk, Evergreen, NYK, MOL and most of the other first tier ocean carriers have the same equipment?    What will that do to port congestion?   

A rising tide raises all boats.  APL is introducing disruptive technology.   How long will APL have the advantage?   Have they ordered enough equipment and will they have it quickly enough to impact the transpacific retail trade for the 2008 peak season?  Slots will be limited and so will the equipment.  You can bet APL will be charging a premium for the big box "value".  If I know anything about APL, availability of this equipment will also be tied to the size of the service contract signed!

I am a big supporter of this new box size, but the efficiency of the extra cube, may well have some operational trade offs that will show up in the freight rates.

Eric

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Are Bigger Trucks a Good Idea?

Bigger isn't necessarily Better.

With highway congestion at an all time high, the economy tottering on a recession, pollution up and the dollar down,  shippers are clamoring for any angle to increase efficiency. One of the ways to do that is to consider increasing the amount of freight that can move in a single truck.

Congress is now looking at whether bigger, heavier trucks, capable of heavier loads would be good for the country.  Presently 6 axle trucks have a weight limit of 80,000 lbs.   In Canada however that limit is 97,000 lbs.   Canada has more rural area though. 

While shippers and some trucking companies are for the increase, which could increase revenue per ton mile for the truckers,  some are also against the concept.  Independent truckers would have to get new equipment to handle the heavier loads.   Impact on highway fatalities could also increase.  I know on I-75 near my home in Atlanta,  the size and speed of the current semi-truck fleet is enough to blow a motorist off the road.   Adding another 17,000 lbs to a vehicle moving at 70 miles an hour is scary indeed.

Various Port authorities have had waivers for trucks hauling containers for export for years.    South Carolina used to have a law on the books that any load moving for export through the SC Ports could weigh up to 90,000 lbs.   That did a lot to move lumber and Kaolin clay loads away from Georgia Ports and through the neighboring SC Ports. 

Simply for safety reasons, I'm against bigger trucks.  I'm for fuel efficiency, newer, greener equipment rules and increased intermodalism. The present van sizes fit well onto railroad equipment and our highway network.   If a larger truck comes into the market, I would like to see it restricted to western states, long haul routes  and possibly specific commodities.

Congress will consider this in a 2009 Transportation Bill.  In the meantime, Labor, shippers, safety groups and the government will all wrangle.   

clipped from www.logisticsmgmt.com LAS VEGAS—Shippers could be enjoying as much as $50 billion in savings through greater productivity from their motor carriers if longer and heavier trucks are allowed when Congress crafts the next federal-aid highway bill in 2009. Miles Mittelstadt, associate general counsel of Schneider National, the nation’s second-largest truckload carrier, said at the 21st annual membership meeting of the North American Transportation Employee Relations Association (NATERA) that the long-term trend in logistical savings has reversed. During World War II, logistics was as high as 30 percent of Gross Domestic Product. It is now about 10 percent of GDP, compared with about 18 percent when trucking was deregulated in 1980. “It seems like those improvements have bottomed out,” Mittelstadt said, noting that congestion, environmental concerns and higher fuel costs have hurt trucking productivity. Still, longer and heavier trucks would not come without costs. Larger vehicles would cost the public about $6 billion per year in improvements in bridges, intersections and pavement improvements. That amounts to a “tax” of about 4 cents per mile for carriers. That would be offset somewhat by alleviating congestion. “The people who would really benefit would be the shipper community,” Mittelstadt said. “They would benefit from economies of scale.” Schneider National’s internal estimate is that as much as $50 billion in shipper savings would be gained by greater use of longer, heavier trucks.

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Ports of LA/Long Beach: Clean Air Creates a Major Stink

Monday, October 15th, 2007  is "Blog Action Day".   A day when thousands of bloggers will write about the need to clean up our planet and preserve natural resources.   Everybody loves these ideas.  "Green" is the political color of choice.   How can it not be?   We borrow this planet from our children.  With those kinds of ideas in mind,  it would seem logical to think that recent efforts by the California Ports of Long Beach and Los Angeles to improve air quality would be universally cheered.    Not so!

In the spring of this year the Ports proposed the San Pedro Bay Ports Clean Air Action Plan.  This plan called for drastic action to clean up air pollution largely created by the 16,000 trucks that service the ports complex every day.   Many of these trucks are older and produce exhaust emissions that damage the atmosphere.  The plan is to force the trucks to be upgraded or even better, replaced, with newer, greener vehicles.    The idea is to eventually force the older smoky trucks off the port entirely.  To fund this plan, the ports proposed a fund of 1.8 billion dollars to provide subsidies to truck operators to make the necessary modifications or replacements.   To create the fund, a Port imposed "truck impact fee" would be charged to trucks that are non-compliant.  That fee amounts to $34.00 per gate move.   The plan is to have only port licensed truckers operating "green trucks" accessing the ports.

While the goal of the plan sounds great,  the opposition to the way its being implemented is almost a perfect storm of logistics groups ranging from the NIT League, to the Pacific Merchant Shipping Association, to the Intermodal Motors Carrier Conference, The Toy Industry Association and even the National Customs Brokers and Forwarders Association.   The groups claim the plan damages independent operators in favor of larger, unionized trucking companies.  Further they claim that the plan will force an increase in port drayage rates by more than 80%.    The opposition groups think that elimination of pollution is a good idea, but oppose the truck centric way it is being implemented.

"As currently envisioned, the ports’ trucking plan is dressed-up as an air quality initiative but its result is an anti-competitive reorganization of the logistics industry."    

- John Ficker, President , National Industrial Transportation League.

Changes to the plan are being suggested by groups such as the Intermodal Logistics Association,who worry that the fees will disrupt intermodal freight movement as well as port activity.  Shippers are also asking that pollution related impact fees be used for port projects only – not projects such as the Alameda Corridor. Finally, shippers are demanding that “user fees” not penalize intermodal rail by charging both a fee and a separate toll on the Alameda Corridor.

The Federal Government hasn't gotten involved in this issue yet, but its coming.   The Intermodal Motor Carrier Conference has complained to the Federal Maritime Commission that the port plan will cause economic hardship to shippers by forcing an increase in drayage rates and a reduction in available service.   That is a violation of The Shipping Act.   

The Clean Air Action Plan is an effort by the City Councils in Los Angeles and Long Beach to appease environmental and labor interests in Southern California.   The problem is that the "solution" puts all of the burden on industry without their necessary involvement to solve the issue in a way that keeps the economy moving.

Any way you look at this issue, the idea is good but the solution stinks.  It's bad for truckers, it's bad for shippers and it's bad for affiliated businesses like 3PL's, Forwarders, Brokers and the economy.

Eric

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Sun Microsystems: A one TEU Data Center

"Project Blackbox" packs an Entire Live Data Center into one 20 ft. Container

Sun Microsystems has developed what has to be one of the most creative uses of the standard ocean shipping container yet.  By building an entire electronic data center into a 20 ft container, Sun has developed a full strength, highly portable platform that can be rapidly deployed virtually anywhere.

The "Blackbox Project" as it is known is designed to contain a full data center with densely packed racks to hold a highly configurable combination of servers, storage and cooling systems.   Several patents are pending for the environmental monitoring system, rack designs and servers.

The Blackbox Project idea comes from a need to serve everything from the military to remote science stations with computing power only found at large data centers.   Natural disasters, developing nations, and other emergency response applications are envisioned.

The Blackbox is designed to hold 250 Sun Fire servers configured for grid computing. These are stored in seven custom racks.  The servers are supported by another rack containing cooling units, switches and dehumidifiers. Equipment from other companies can also be inserted into the Blackbox so long as components fit within the Sun designed rack system.

Sun also sees the Blackbox as a "green" solution to data center computing by containing the entire data center footprint in a 8ft. x 8'6" x 20 ft. space. When the box needs moving, standard shipping conveyance can be used, ranging from ship to truck to intermodal flat car.   The Blackbox can be stored virtually anywhere because of its wind and watertight container.   The portability of the Blackbox system also means that it reduces the possibility of a data center being a terrorist target.   Blackboxes can be deployed on roof tops or on ships or even in the corner of a distribution center.  For major corporations with operations in politically unstable regions, or in turbulent weather regions, the Blackboxes potential as a full data center back up is huge.

Disposal of the Blackbox can be done through Sun Microsystems, who will take back any Blackbox container (and its contents), anywhere in the world, and reuse, recycle, or dispose of it in an environmentally responsible way.

Practical Stuff to think about... How well will the Blackbox hold up when the container gets a hole in the roof, gets intensively inspected by US Customs, or lets say, Customs officials demand that the box be "stripped"?  What if a DEA official gets a drill and starts poking holes?  (Like in Miami for instance.) C-TPAT clearance of the Blackbox container will be interesting indeed.   What if some foreign customs group demands to inventory the data on the computers?   These units are painted black. 150+ degrees Fahrenheit inside the container is likely in the summer.  Sun seems to have thought about cooling, but what about a "Keep From Freezing (KFF)" program in the winter?  When the unit is on a chassis, will it's native cooling units hook up to a genset? This is one instance where the customs broker for these containers better go early to Customs in any country to explain what these units are.  This is an unusual case where the container and the product are unitized.  Failure to do so in a port that has not seen this kind of cargo before could be a disaster as a result of damaging inspection.

Blackbox units are now in early deployment. Sun says limited quantities are available with more on the way.

Make sure to check out Sun's Blackbox Demo Tour.   I particularly love the segment on shipping containers where a Sun Microsystems vice president evangelizes about Malcolm McLean and development of the ocean container.

Old school innovation meets new school.   I love it when that happens. Check here to see where the Blackbox is today.

Eric

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